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STRONG PAPERS, Strong to Norman, 1923 - 1924 (List redone 5/2004, to include all materials)

(February 16)
(February 21)
(February 21)
February 22
(February 28)
March 6
May 15 (from Case)
November 23


January 4
(January 11)
(January 11)
(February 15)
(February 19)
February 21
March 3
March 6
March 11
(March 17)
(March 17)
May 29 C
June 3
July 9 (original list: June 9; assume it was typo)
(July 9)
(July 15)
July 25
[September 10 (to Lubbock)]
October 20 (from his secretary)
October 28
November 4
November 6
November 18, with clipping
December 2
December 8
December 10

Strong Papers Key:
= At earlier date, item was listed as present but no original or copy is now in Papers
( ) = At earlier date, item was not on list but original is in Papers and was copied if no copy existed

STRONG PAPERS, Strong to Norman, 1923 - 1924
(list redone 5/2004, to include all materials)

February 16
February 21
February 21
February 22
February 28
March 6
May 15
November 23


January 4
January 11
January 11
February 15
February 19
February 21
March 5
March 6
March 11
March 17
March 17
May 29 C
June 3
July 9
July 9
July 15
July 25
October 20
October 28
November 4
November 6
November 18
December 2
December 8
December 10



Strong to Norman, 1923 - 1924

Feb. 22
Mar. 6

May 15 (from Case)
Nov. 23


Feb. 21
Mar. 6

May 29 C
June 3
June 9
July 9
July 25
iept-_10 (to Lubbpck),,

/ Nov.4
Nov.18, with clipping,

Oct. 20(from his secretary)


February 16, 1923.


C. Norman, Esq.,
Governor, Bank of England,
Threadneedle Street,
London, E. C.

2, England.

Dear Norman:

I take pleasure in sending you herewith a copy of the
Eighth Annual. Report of the Federal Reserve Bank of Nev York for
the year ended December 31, 1922.

On page 34 you will find references to our transactions
with the Bank of England.
Very truly yours,

Benj. Strong,







February 21, 1923.



I take pleasure in introducing to you the bearer of this letter,

Mr. G. B. Ceccato, rho has for ten years been attachod to the Italian Embassy
in Washinton and in. charge of the various official Italian business offices
in Ne.7 York.

ter. Coco to is nol to be att-ched to tae Italian Emba,:ey in

London, .hith the rank of CommerciU Col.nselor.


Ceccato is not

knohn to me personally, he is vouched for by one of the Vice ?residents of
ay old institution, The 'Bankers Trust Company.

I am advised that during his long residence in America Mr. Ceccato
has, through his skilful handling of the many I.robloma of an important nature
which have. arisen during that period,

friendship of a very large group.

on for himself the admiration and
It is a great pleasure to be able to put

him in touch Witt you and to spy that anything you could do to facilitate his
zork in London from time to time would be greatly appreciated by my friends
in Amorica.

Sincerely yours,

74r. 1:ontagu C. Norman,

Covornorp.Bank of England,
Threadneedle Street,
London, England.




Mr. Norman

amjercentere in like period since Civil war(barring late ear).



Rether general labor shortage.
Convincing evidence that any further supiliee of our credit. to

would accomrlish no more than to merk up prices, with no incre-se in

production, and propsbly support an extending epecul'tion.
Never, I en pose, hPve the factors which ahoul' move us in our rate

policy been so carefully examined and considered, as recenti.

The results con-

vineed me that our action wee required, and that with our excessive gold stock
we must entirely ignore any statutory or traditional percentage of raeerve, and

give greater weight to what is taking p1Pce in pricer, business activity, employment, and credit volume and turnover.

Of course we must not close our eyes to the bearing this may have upon
Europe, simply in its indication of our state of mini, end of future policies.

Enlightened opinion on this score mutt appreciate that should we dissipate our
credit resources in speculation and price boosting, in the long run Europe will

The advantage, - a very temporary one, - of a high price merkot in which

to sell us goods would be more than offset by the ultimate disorders of readjustment.
With the debt settlement concluded, I ^m coming to feel that the future,
in many respects, is more in your hands than ours.

Should it now be possible to

put sterling, yen, guilders, end possibly a few other currencies firmly at gold
parity with our dollar, - and keep them there, - then with resumption of free gold
payment our mutual problems of rates, reserves, credit and prices would lereely
solve themselves.

You met be sure that inflation has no charms which have not been

Analysed by Reserve ?anl men and rejected te spurious.

Please send me a letter with your views when you can, end be generous
in judging my delay in writing you.

Mr. Norman


I'll not comment on the debt settlement until my next letter.
Beet regerde to you,
1lLVery sincerely,

Mr. Montagu C. Normsn,
Bank of Fngland,
Threadneedle Street,
Lorr!on, Fak7land.


P. S.

Sometime you might tell He.wtrey that his understanding of American
Credit and of the Federal Reserve SyRtem iR too much from ty,oks end
I uwallly disagree
mngazines and not sufficiently from the source.
with him on those subjects, ss I do that "money is one of the concepts which, like n teaspoon or en umbrella, but unlike an esrthquake
or R buttercup, are definable primarily 5y tte use or purpose which
they serve! !Chapter I "Currency and Credit")



March 6, i923.

Dear Norman:

I have gone over the documents which you were good

enough to send me with your note of February 25 aith a ereat
deal of interest.

At the time I can sand you no more than this

acknowledgment, but I do want to say that one of these


as I sae it, our various difficulties in setting up real

rnong, banks of issue will be solved!

With kind personal regards, I am,
Sincerely yours,


Mr. Montagu C. Norman,
The Bank of &igland,
Threadneedle Street,
London, Encland.



ay 15, 193.

Dear Governor Norman:

I have your letter of May 2 and am obliged to you for the explanation of
your cable of April 28.
bank wil

As you sugg =est, loans in increasing amounts to the Reiche-

undoubtedly have an unhealthy effect on your market through easy money

and low rates, which may result in some inflation and be likely to depress further
the New York - London exchange.

The recent weakness in sterling and the disparity

between your bank rate and ours suggests to you, I understand, the poseible need
for an advance in your rate as the normal corrective of these conditions.

As to the other methods which you suggest in your letter to counteract
advances to the Reichsbank, i.

e. either borrowing in London or elsewhere, perhaps

New York, might not the former accomplish the desired results more readily?


borrowing here you would, of course, strengthen your exchange and tend to ease our
money rates.

This course, while tending to ameliorate conditions with you, resulting

from the Reichsbank loans, would not, it seems to me, actually curb inflationary tendencies on your side, as would be the case if you borrowed directly in your market.

You will, of course, appreciate that borrowing here, whether by means of advances from
us or by sale of bills, would have to be done at a higher rate than you are loaning to
the Reichsbank.

It does seem likely, as you suggest, that the Reichsbank must event-

ually contemplate the probability of repayment by sale of the gold, and in that event
it would sooner or later come to us.

An inflationary impetus has already been given

to this market through the importation of gold during the past two years.


this connection I might mention that one of the banks here is shortly bringing in




Governor Norman.



Al`bout t.15,000,000. in gold from the Aeichsbank, while at least one of the other banks

"If issue which you mention is gradually selling its American bill holdings in this
market for the purpose of stabilizing its exchange.

You have probably observed that there are indications of some slackening
of business here during the past few weeks, and the pace does not seem to be as
rapid as it was in March and April, particularly in the matter of forward buying,

This is undoubtedly a healthy sign but it is not

which has slowed up considerably.

expected to affect materially the volume of production, distribution and consumption.

The recent suspension of a number of large new building projects is particularly
note-worthy and has been brought about by rapidly advancing costs of construction.

The stock market broke sharply at the beginning of last week, rallied, and at the
end of the week was again weak.

As to money, the tendency towards firmer rates,

which was in evidence during March, abated somewhat last month and the trend now
seems to be toward greater ease.

Similarly with bank credit, the increasing volume

of loans by member banks for commercial purposes during March, which was accompanied
by a reduction in their investment holdings, has been followed by a more moderate
expansion in such loans.

It is apparent that since the middle of March the demand

for credit for commercial purposes has distinctly moderated.

These changes in

the loan accounts of our leading member banks have been almost without reflection in
Imports of gold and liquidation of investment

the Federal reserve banks' figures.

holdings have enabled member banks to meet the credit demands of their customers
without recourse to the reserve banks.
With kindest personal regards, believe me,
Faithfully yours,

Deputy Governor.

Montagu C. Norman, Esq.,
Governor, Bank of England,
London, England.


November 23, 1923.

My dear Norman:

The sign for which you ask must have reached
your hand but g day or two
after despatching your letter of November
13, as I think I wrote you somewhere
around the $1th or 7th of November,

after seeing Dr. Coal ley.

I an here at the
apartment, both the boys being home,
and still able to send a good
report after
seeing both of my doctors again this
The throat seems to stand the racket
The regular semi-annual meeting
of the Reserve Bank officers was held
Washington during all of last week.
I did not creside but sat at the
and felt that I was gradually learning
a little of what had taken place during

The two new members of the Federal
Reserve 3oard, James of Tennessee
and Cunningham of Iowa, the latter
being the farmer appointment, have
turned out
very well indeed.
Of course, they are neither bankers
nor economists nor specialists
in any line in which we are directly
interested, but both seem to be practical, good
common sense fellows with minds open to
conviction and keen to bear from the
men who
have been running the System.
I was much encouraged by what I
Mellon keeps astonishingly well,
but as
Mr. Gilbert's resignation
has just taken effect, and he has
a new Under Secretary to breal
in who has had no
experience in the Treasury, I fear that the
Secretary will have to carry s heavier
load than heretofore.
Mr. Mellon's tax reduction proposal has
brought forth a




Governor Norman

of enthusiasm from the newspapers and from taxpayers.

November 23, 1923.

am not as optimistic

it will kill bonus legislation and go through promptly as some people are, but it

Aa move in the right direction.

The return flow of funds to New York has started and we are liable to see easy
money rates for a time.

I doubt if we have any such ease as will justify reductions

The Reserve System's position is briefly as follows:

o f rates.

In January of 1922 we were lending to the banks of the country in one form
or another between $1200 and t1400 millions.

The Reserve Banks purchased at that time

something over $500 millions of short-time Government securities which enabled borrowing banks to repay to us their borrowings of almost exactly that. amount,

so that at

one time, I think it was in August, 1922, they were only borrowing t400 millions.

things got booming a bit too fast last

spring, a


liquidation or


most of the

balance of our investments, which had been under way for some months, threw the burden
back on the banks of borrowing from us the equivalent of what we had 'urnished the
market through our investments, so that our loans to the banks directly havegone up
to around $900 millions again, which, with our investments in bills and a few Government securities, leaves us with about t1100 millions of earning assets today.

I have

a feeling that t;900 millions of bank borrowings from the Reserve Banks results in a

little pressure being put upon borrowers a]' over the country, and our job now is to
determine whether that pressure has been on long enough or in fact possibly too long
and whether it should not be relieved.
In past years we have had so many hitches in our inter-bang_ relations and

between the banks and the Treasury that we finally agreed among ourselves to put the
handling of the management of the entire open market ocerations of all twelve banks
in the hands of a committee of five of the Governors, that is, 3oston, New York.,
Philadelphia, Cleveland and Chicago.

I shall remain as c

and the program will be to have the committee meet at regular intervals with the
Board, agree upon a policy, and then turn its execution over to the committee.



November 23, 1923

Governor Norman

els, of course, quite confidential, but indicates that circumstances gre stronger

Wan anything else in controlling these developments, and the need for uniformity
An what we do must eventually tie these Reserve Banks and their affairs together
just as tightly as the lawmakers thought they should be kept apart.
There are some signs of business reaction developing.
mills are pretty slack;

unfilled steel orders are falling off;

rather sudden letdown in the automobile tire business;
in the agricultural implement business;

we have had a

there has been some setback

we have had, as you know, six or eight

months of liquidation in the stock market;
is in hard straits;

New England cotton

the wheat farmer in the middle northwest

and finally, there seems to have developed a gross overproduction

of hogs in the corn section which may become a bothersome problem within
so that

a few months; -

our own skies are not entirely cloudless.
Compared to your situation, however, it seems calm, here indeed.

understand your Prime


l cannot


There mayTand doubtless are

certain industries whic!, will actually reauire tariff protection, possibly of a

temporary character, during this period when continental labor is so frightfully

but it struck me that the announcement of this most radical charge

by the present government, followed so immediately by an election, would not give the
British public, and especially that class of public in the northern industrial centers,
an opportunity to find out what it is all about.

He is a rather slow thinking fellow,

and unless I am mistaken, this generation in England has been brought up in the belief
that free trade was settled for the country 40 years ago or thereabouts.

Isn't it

a bit like asking the American public to vote on the acceptance or rejection of the
fourth dimension or Einstein's theory of relativity?
The inflation scare that you mention shocked me a ;;pod deal.

the moment whether all the anchors were not dragging in Europe; but

I wondered at
Didn't it grow

out of tfcKenna's resistance to deflation being interpreted as advocating a policy of
inflation 2

Then again, I was encouraged by the appearance of a better alignment

of your


November 23, 1923

Governor Norman


which might result after this election in having an opposition which

at, least neither socialistic nor labor.

This was the natural conclusion which

Mame to us after hes.ring that George and Asquith had patched up matrimony again after
their temporary separation.

The Scandinavian bank rates are a bit of a puzzle to me.
what is going on.

I don't know

Your own bank rate from the traditional standpoint of the

protection of the foreign exchanges seems to have been a failure, and I an inclined
to think that politics has had more to do with the failure than an urgency to buy
cotton or anything else from. us.

Is it not a fact that the climax in the Entente

led many timid people to convert securities and buy dollars?
little in New York of French, SWiCE',
transferred to this country.
than I seem able to.

We hear quite a

3ritish, and, of course, German funds being

I wish I could see the picture abroad more intelligently

My long absence has given ma altogether too much of the

paper flavor of things.


A visit with you would help tremendously if I could only

brim; myself to believe that another absence from the office could be

thought of.

esoecially want to see the picture through your eyes, notwithstanding that your
61hsses are generally too blue.

TAis is a rambling sort of letter without any real point to it except
to make clear that I am back here, able to keep my correspondence going, and expecting gradually to work into active

couple of hours mornings and


at the bank.

So far I only go down for a

then only about four times a week.

Please remember me

to your associates, and write me a little more fully about politics.

the outlook for

something of

any opinion myself.

I would tell you

our election next year except that I have not yet formed

I am, however, very sure of one thing, an:: that ie that it was

a colossal mistake not to go ahead with Mr. Hughes' program on some reasonable basis,

even though that program
With my warmest

itself was not a very



and many good wishes


to you,
Very sincerely

Right Honorable Montagu C. Norman,
c/o Bank of England,
T "."


r. A



January 4, 1924.

I eould like very much to hear something about you and your personal
Our new building will be completed in
My own -re reasonably unoertein.
Alp few months and I expect by mid-summer we will be all settled and working smoothly
The temptotion is constantly before me to wind up my work end
in the nee plant.
Both the boys
quit, do some travelling, a little writing, and take things easy.
are contemplating matrimony, which will justify a reorganization in my domestic
So far, however, I em simply flirting with the
plant: and leave me much freer.
First, the family;
idea es it depends ujon three major consideretions:
and Third, of course, my heelth.
the bulk end developments in the heserve System;
Ao to the leat, I :lave been taking the very : :.est care of myself, comine to the
office mornings only, resting every afternoon, end the effect of this good
Er. Miller tells me tart my lenge ire In the best
tebevior if dietinctle Ca:an.
shape they have been in for years, end Ter. Ceekley e-ye that the cure cf my throat
iE cemplete, end even the fd6I tissue, of Atice there was e certain emount is the
larynx, is being absorbed and is disappearing.


been much interested ty the nzre rtporte of your prospective
Visaing the
service on this commission of inquiry and then of /cur etirement.
It ei11
matter from thie dietenoe, I em glad you are not involvaetthet jot.
be e puzzline and difficult one and only too likely to encounter failure or a
deadlock, and your own stunning success in the bank and various cutside ectivities
I fftree might be marree by the outoocie cr thie metter.
Sometime ago you or one of your eseocietes trete about the possibility
of sending two of our men to London to make a viuit to the henk elmiler to what
I have been concidering th/c e good deal end eonder
y-ur men did eith us.
whether it could be satisfeotory to you to have us send Mr. Stewart - who occupies
a position rith the Federel hestrve Doerd someehte similer to Spyderte, end eh°
is a. perfectly delightful fellow tad very reliable - together with one of our
If Stowert went, he would rent to meke e retler broad
own men from this beak.
study of the London money merket, and I have tentatively committed myself to
On the ocher bend, the is all a very eentative idea, anyway,
go rt flee etme time.
and I am writing to ask you to express your vi erne most frankly.
A reek from Sunday I em leaving for the South and rill probably expend
two or three weeks. nt Pala: Beach, playing golf eltb eon.e friends, as Dr. Miller
tents me to get more exeroise and says that with this little preliminary preparation, I can ceunt upon pleyine golf regularly thie eemmer.


Co write me ehen you hevc opportunity, end give ell the neer, end
especially whatever you feel willing to send me about your on pereonel plans.
3incerely ycurs,

Right Hon. Montagu C. Neiman,
Thorpe Lodge,
Cempden Hill,
London, England.
Federal Reserve Bank of St. Louis



January 11, 1924.

Dear Mr. Governor:

This note will be prevented to you by my old friend and associate,
Mr. Gatos r. McGarrah, Chairmttn of the Board of Directors of the Mechanics &

Metals national Bank of this city.

Mr. McGarrah was a direotor of the

Banknrs Trust Company from the time of its organization, and now is a director
of the Federal Reeerve Bank of New York, so we have been associated in one way
or another for a good many years.
I am sending him with every commendation, both as a friend and as

an associate, and will be grateful to you for any courtesy which you are able
to extend to him while he is in London.
Kith cordial regards, believe me,.
Yours very truly,

Benj. Strong,

Right Honorable Montagu C. Norman,
Governor, Bank of Fngland,
Threadneedle Street,
London, England.





February 21, 1924.

My dear Norman:

The circumstances relating to my attempt to slip over to visit you
for a week or so have altered from day to day, and I am still unable to send
you a final definite cable, which I hope, however, to send early next week.
In the -eantime, I am not attempting to answer your last letters,
which would he superfluous if I succeeded in getting away.

Mr. Wallace has been here, and I am proposing to take him to Washington
with me tomorrow to jive him a little look at the Capitol, as I must be there on
Monday to attend a Committee meeting.

The limitations upon my activities have

been such that I may have appeared a little indifferent to his visit, but I

think he thoroughly understands that, and indeed you may be willing to explain
it to him when he returns.

With every good wish to you, old friend, and hoping greatly that I

can image to see you soon, I am,
Faithfully yours,

Right Honorable Montagu C. Norman,
c/o Bank of England,
London, England.



March 3, 1924.

My ueal Bierman:

i;1. last I seem able to send you the beginning of a reply to your letter
Since its receipt I have been obliged to be in Washington for eo
of Janu,ry 30.
much of the time, and the situation as to a possible trip to Europe has been in
such suspense, that I hardly felt it was worth while to write you when everything
was ee indefinite.

As to a trip abroad just now.
Litt:cut going into particulars, a
variety of things combine to make it impossible.
Until a few ways Lie.
a lingering hope that I might sail on the Olympic with Cullen and Wallece but
that hope feded too shortly before selling day to permit me to write you by that
There is a tiny remnant of a chance that I may eet away on her next
sailing on the 22nd of March, returning on the same boat, and having just a few
days zitn you in London fora discussion of all of the matters which seem to
require face to face treatment.
A number of things have been causinie me t bit of uneasiness.
One was
the possibility of a conflict of fundamental policy between your new Government
and the Bank.
My uneasiness on this point was relieved by the pronouncement
that the general features of the Cunliffe report would be the guide to the
present Government in monetary setters, which i interpret as being the reply
of the Government, on the one hand, to inflationists, and, on the other hand, to
those who deprecate aiming at the ultimate goal of returning to the gold standard.

Theo I have been worF3,,ring Whether your own rate policy may not be
hereafter and might not have been in the past too much inspired by consideration
of the condition of she sterling exchanges and given too great emphasis to t'le
hope of an infleence on the dollar rate which could not be realized.
discount r_tee in various quarters abroad for a time had a rather ominous appearassociated as they were with the general uneasiness due to the belief that
I really feel too much
the flight of capital to this country was extending.
out of touch with your own situation to discuss it in a letter, and you doubtless
feel the same as to ours;
so the need fore meeting has been growing in my mind
for sometime.

I had


Governor Norman

March 3, 1924.

again we may have to faoe decisions here in regard to rates
It is very difficult
It has been distinctly
to appraise the future of the New York money market.
easier since the turn of the year, Aed we have had an immense inflow cf currency
and a sharp reduction in the earning assets of the Federal Reserve System. Besides
Were we to Elide
that, the influence of the inflow of gold is constantly felt.
into a period of dullness this summer with consequent eased money, our whole rate
But then our discount rate
structure might require review and possibly revision.
is very different in its relation to the money markettand changes in our discount
rate have a very different relation to the money market than have yours.
reserve percentage has lost much of its significance, and the important factor in
the relation of the Federal Reserve Syotem to the money market is the total of our
The effect of changes in the discount rate is more like a sledge
earning aaeots.
hammer blow to sentiment, while the effect of our transactions in the open market
in the purchase and eale of bills and Government obligations is much gentler.
Besides that, this is a political year with political high lights almost unendurable to the eye, and the noise of politioal developents deafening to the ear.
. 'pendent
.,pendent upon what unfolds eithin the next month or two.

I shall write you again when I as able to do some pork quietly up town.
But this letter is prirticularly to let you know that there is still -; remote
possibility of my sailing on the 22nd; but if that fails I may then urge you to
carry out your plan of coming over here a little lc.ter, or in foot just us early
My plane must be shaped a little bit by Ben's
as you can arrange to do so.
It is an event of too great
expectetion of being married on the :5th of April.
consequence for me to be away except because of dire necessity.

Wht I wrote you about the
Now a personal word about my own plane.
Possibly it meant that at
possibility of retiring indicated nothing imminent.
My health is better than it has been for years.
the moment I was tired.
thankless job, that I have pcid a tromendous
do sometimes feel that thie Is
price for carrying on, ana that selfish considerations finally justify my seeking
leisure and more especially freedom from the rr!rponsibility of it all.
As to the inwardness of the Peserve System, I think the fcar co often
We will always be
expressed that politics is creeping in is really unfounded.
Maybe it is good for ue.
subject to a certain amount of nagging by Congress.
We enjoy the most complete freedom from anything like Treasury domination, and
in respect of that particular fear that you may have heard expressed by Americans
abroad, I don't think you need have concern.
Owing to my absence in Washington, I missed opportunities for anything
like a decent visit with Cullen. He we only here a week, one-half of which I
was in Washington. nut I did Lave 80M0 interesting times 4ith Mr. Wallace, all
of which he will tell you about.
Flease understand that this is preliminary to a more detailed reply to
I wish I could be a more systematic correspondent.

your letter.

Let me know just how you feel about my plane, and please understand that
It delighted me
I have the keenest possible desire to have a good visit with you.
to hear that you appeared well and vigoroudi and not es much worried as you sometimes
My beat to you, old man, as always,
Yours sincerely,
Right. Hon. Montagu C. Norman,
o/0 Bank of England,
London, England.


March 8, 1224.


It would oonvenienoe me a good deal if you could give me some hint

as to a suEgestion to the bank of France.

Do you buy bills for them?

We have an account with them - not as much as the one with you, but still
with a substantial balenoe, and I shall defer writing them until I hear from
you in regard to our account with you.
Yours sincerely,

Right Honorable Montagu C. Norman,
Bank of Ebglan
London, England.


Varch 11, 1924.


Dear Norman:

It hardly seems worth while to write you letters when almost fro--

day to day I have some expectation of being able to sail and have a short

visit with you.

It now seems a little more :ikely that I may be able to

et away on the Olympic on the 22nd.

In fact, I have my reservations made

and am only awaiting the arrangement of some final details before deciding


7eantime, I shall not inflict you with a long letter. There

is much that I must talk with you about, and I would sail a week earlier

were it possible for me to get away, which it is not.
With best regards,
Very sincerely yours,

Right Hon. Montagu C. Nor Tran,

Sank of England,
London, England.




May 29, 1924.

Bank of England,
London, England.

No. 47


Your No. 80

Paragraph 4

Bank officers and bankers havilg needed experience and theoretical

knowledge will not likely be interested on account of generally larger
incomes and greater opportunities here.

A year's service might be tempting

to some for example James S. Alexander John E. Rovens17 or Joseph A.
Broderick of National Bank of Commerce George E. Roberts National City Bank.
As advisers without iraotical banking experience

E orne

university men might

be considered fcr example E. W. /Cerrnerer of Princeton Henry E. A. Chandler
of National Bank of Commerce Walter S. Stewart Federal Reserve 73oard '.7esley

C. Mitchell of Columbia J. H. Roberts of University of Missouri.

Two men

of high character and good ex7orienoe now free are Alfred L. Aiken formerly
governor Boston Reserve Bank and chairman Shawmut Bank S. H. Voorhees
formerly vice president National Cit;,, Bank and New York manager Royal Bank

Norman H. Davis whom you know might also be considered.

idea whether any could be secured if wanted.

Reply delayed by absence in


Have no





Dear horman:

Since returnint home I cave been commuting back and forth to Washington
and found little time free to write you et any leneth about the Aty I find things.
You will 'ee elad, I am ture, to learn that Dr. Miller tee given me a
very excellent report on shat he found a most careful examination made by

him and by my croteer.

lie describes L40 occurrence in Perie es simply an

accieept and nut an ineication of any development that need cause me eoneern.
One of the first things I encountered wee the report of tie Federal
Advisory Council on the Dawes plan, in which were interjected certain remarks in
regard to dollars and sterling!

It somceimes atrikes me that we are unduly

burdened with people in this world who believe that human ingenuity and efforte
of imaeinetion can nerform miraclee.

My own view of the stabilization cf eerman currency I think jou understand.

If they are poing to have a gold valued currency, they mutt rely to e

very great extent at first upon dollers, which means American credits;


temporary necessity cannot be a matter of controversy nor even of opinion;
will ho erranzed by natural law, not by wish or design.


Then when you and your

oonfrerea are ready to put sterling back to per and keep it there end get back
on a gold basis, the question will be entirely eliminated as eubject for controversy or discussion.

I can't see any edvantaee in raising the question anyway

just now, and the report seems to nave called for more comment than the subject



Jene tK,

flovernor Norman

Also I find at home growing evidence of bueineee recession.


and other developments have made people cautioue in come linee, notably the motor
industry, where there has undoubtedly been some overproduction.

The result of

this slowine down of buainess end of the jeneral feeling of caution - and, of
course, of gold imports, - all mekee for easy money.
lower retee than we have seen for many a long day.

I lock "or a period of
Feet, unfortunately, our

declining prices mey add somewhat to your exchange difficulties and I am wondering just *het, if anything, you propose to do.

Thinking aloud, my general

inclination here woule ee to favor developing just aueh e dieparity between your
rates and ours ac would promote more borrewine in this market and less in

and generally work towerd such a prorem Fs we discueaed in London.


It may be

helpful in more ways then one.
I em not commenting on the ne7ment on the lith, concerning which I have
been cabling you, as anythine by mail would be out of date in arrive'.

I may

cable you again in n dey or two.

It is difficult to make sugeeetions about those technical advisers in
Austria and in Hungary.

Our most experienced benk men who have developed just

the right kind of knowledge together with adequete sense of responsibility, as
you know, get very large salaries - far beyond anything which could be paid for
the services that are needed - and I believe the only inducement to such men
ae I hove named to undertake the work would be the interest and experience ana
th ©n probably for a limited time only so es not to interfere with their careers
at home.

Cn the other hand, some of our Univereity men who eet very small

saleriee are able to get a year off now end then, and some of them are very able

men indeed and well qualified to act as el:Mears, although possibly not so well
ualified in operating matters.
The world has suffered during the last ten years from bad advice from
this class of gentlemen here and there.
greatly through ignoring their advice.

On the other hand, it has suffered

Governor NOTMtn

June !, 1924.

Onthe whole, I think you have recommended one of the best men who
might be available (Davis), and if you need my assistance with him or in any
other direction, please do not hesitate to call on an.
Since dictating the above, your letter of the 17th of May has just
arrived, but I shall reply eeparately on returnin5. from a trip which I must make
to Ilaehington this week.
Nith best ragTards to you and to your 1.87.ociates, bell eve no,

Faithfully yours,

Right Honorable Montagu C. Norman,
Governor, Banx of England,
London, Eaeland.


July 9, 1924.


My dear Norman:

It was most satisfactory to have your long letter of June 31, but
as you say, the scenes change so rapidly thmt letters are out of date before
they are received.

As I think I wrote you, I am most regretful ttet anything of a

controversial nature on the subject of edollare versus "pound" should have
arisen upon whet appears to be initiative on this side.

Fheteeer may be our

views of the present, I am sure that you and I seree that this question will
solve itself in the future, i.e. - whenever sterling returns to its former

I have believed and stated that under present conditions it is

natural to expect that the London money market by reason of its better organization and its better knowledge of rermen conditions rill he able to do more
in the way of credit assistance for Germany than we can expect to do et first;
that that ftect should be recognized, certainly to the extent that no discrimination should be directed against the London market in the pending plans.


the other hand, it will obviously be to Germany's advantage to obtain all
possible credits in this market because (a) it is the gold market, (h) it is
to the advantage of Germany to borrow in the market where the currency is not
at a discount with gold so as to escape the loss which might arise through
the enhancement of the value of sterling via -a -via a German currency et par

with gold, and (c) because the credit burden on the London market is one of
the present difficulties in the way of a return of sterling to pair.


interests in this subject are mutual and interdependent end should not be the


July 9, 1924

Governor Norman

subject of any controversy or dispute.

It is also obvious, as you stated in

London, that embarrassment will arise to you if Germany does succeed in
stabilizing her new currency at per with ours, unless England is also prepared


to return to a gold basis.

The reduction of our rate to 3 1/2 per cent., which has been

generally followed throughout the System by reductions to either 3 1/2 or 4 per
cent. is an indication, to my mind, of three developmente:

To a smell extent of the influence of eold imports upon money


To some extent, of no mean importance, of the policy of the


Deserve Banks in building up a portfolio of short paper.

Of some recession in business which has resulted in releasing

funds end sc caused further eeee in money.

You will, of course, have in mind our discussion in regard to policies.
My own belief is thet your interest in price changes and the reaction upon the
exchange rate is really greater than ours, but that at the present moment our
rate policy, 'Ilia has been made to conform to conditions as they develop in
this country, ehould be helpful to you, especially at this juncture when an
advance in your bank rate might prove emberraseine because of unemployment.
But both your prices and ours seem to be declining.

However, so fer as the

price equation is concerned, I cannot see that you have eained anything as yet,
nor in fact have I ever believed that general prices are or could be so strongly
influenced by hank rate under present conditions as to give you any power or
control which would be effective towards the objects which you outlined to me
in London.

The changes are too slow, and arise from too great a variety of
Nothing has occurred to alter my belief that the first step towards

your own monetary reconstruction is the adoption of the Dawes plan and its
successful inauguration through the placing of the 800,000,000 mark loan.


next step, in order to create a sound basis for your own return to gold payment,


Governor Norman

July 9, 1924.

is just what it has been for five years, - that is to say, debt readjustment on

a basis of certainty rather than uncertainty, and within tie capacity of the
Were these two steps taken, I believeAthat money market and credit


oonditions in this country and yours favor a policy along the lines we discussed,

and that they present some prospects of success provided your own local and
political conditions (especially unemployment) do not make an advance in the
bank rate impossible.

It ie difficult just now to forecast what further

changes in our discount rate may take place.

On the whole, I feel that we

should await further developments in the money market before considering any
further change.

As you say, there may be no areat hurry in returning to gold

parity, but there ie need for taking advantage of the opportunity which now
seeme to exist for pursuing 9 policy by progressive stares which will facilitate
that object, whether it be at the end of months or a year or years.

Your reliance upon an advance in bank rate to help the exchange

has always struck me as somewhat open to question and based upon past experience
in a free ,:old market.

Aside from its possible influence upon prices, are

not the direct results of importance, usually but three:

A transfer of balances to London.


Discount of bills elsewhere (New York).


Reduced foreign loans in London.

As to (1), I apprehend that so lon7 as you are not paying gold and
sterling fluctuates over so wide a ranae,the risks of exchange lose will deter
this movement and London balances will remain at a minimum, at least so fLr ae
American houses are concerned.

As to (P), the total cannot be very large in any event, and as to all
hills owned by American banks, which are drawn in sterling, they will not be
"carried" in London with American funds, to any rarest extent, again on account
of exchange risks.

As to (5), undoubtedly our market now becom's more attractive for
foreign loans than it was, but your bankers are too reluctant to forego the

Governer Women


Jely P, 1924.

bueiness to make this market any permanent, relief, and investment funds here


will likely demand higher returns Ftill than in the English market.


tunity for safe and profitable investment here is still the chief factor.
So on the whole I do not look for any great results in the exchange
rate until something more fundamental ie undertaken than simply an increree in
your rate.

Since your letter sae written, the New York bankers grouped under

the leadership of leseere. Sreyer & Company have successfully cold !r7,500,000
of the Hungarian login.

One' of the issuing houeee informs me that the bonds

were very well distributed.

What you say shout the relation between the

Hungarian currency and sterling end dollar, ie sneuered by what I have written
in regard to the German currency.

The erme principle applies in both cases,

but of course Hungary will experience even greater difficulties in getting
credits in We, York, than will Germany.

This is inlicated by the fact that

while your market takes nearly eight million sterling of the Hungarian loan and
our market only seven and a half million dollars, the diecus3ion in regard to
the German loan seems to aeeuee that our market will take at least one-half
of it.

After all, the relation of Hungarian currency to sterling and dollars

will no longer be t problem when eterling is once more at par, and the question
uppermost in my mind is whether sterling is not now rather far behind in the

Fhat you write about Logan is most interesting and illuminating.

I sincerely hope that he has not aroused any prejudices and would be surprised
to learn that he had.

During his ion,/ service in Furore he has done much for

the United States end much for Furore as will;

he is a high-minded conscientious

and energetic fellow devoted most earnestly to Udiru; in the solution of these
serious problems.

Governor Orman


Jury 9, liW4

AE you bay, it i6 difficult to sugoeet anyone suitable for these

poeitione in Austrian and Lungary.

I mould like very such to help.

One of

the best nen suggested in ay cajole is 6tewart who is now the technical adviser
of the Federal Reeerve Lcard.

he is a quiet unassuming person but thoroughly

eound from the theoreticel point of view, raid I relieve he ie s nen of some
tdminietretive ability;

but of course he belongs to the Univereity type.

Mr. Saunders has returned and 111643 much pleated at the couttesy

you shows! him.

I hope you had a good visit with Ceee.

He ie due home next

week, and Jay sails Saturday.

I have just left my doctor - James A. Miller - who gave me

last thorough everhauline before he exile for Europe.

He telle me that my

throct now eneers to him to be about normbl with no evidence of activity in
the old infection whatever.

Au to my lunge - he eeye notwithet.endinp the

accident in Paris, be considers them in better conOition then at any time
during the past eight or nine years that he hat been tekine care of me.


he expresees it, he is convinced thtt chile I may be a chronic old case, I am
ae tough as e piece cf shoe leather and something else than T.E. will "get me"
in the and.

This is shout all the news except politics, concerning ehich I


such h f'eeling of aeersion that I am not ooine to inflict you with even e line
on the subject.

My best to you, good friend,

Don't work too herd, and if

you find that you can blip away for a few recite this summer do come over and
see me.

You will be interested to know as

last word that Owen Young and I

had one very good meeting tith some of our lashington friends, 5nd I think we
have illuminated them a good deal as to the situation in Europe.
Yours sincerely,

Right Hon. Montagu U. Norman,
Governor, Bank of England,
London, England.

July 9, 1224.

r Norm_n:
Your letter of June lgth troubled se becf.d:::e I now fear thIA,

the expre3dion3 I Lieci in my letter on the subject of the Houblon t.nk rd
The Clearing Hou..;e
were not L:f, ,droit -3 they might tive been.
I took the
really would like very much to crry out ouch L progreA
liberty of -.5uggeAing on my own reponAbility, but they felt they should .ome :Aart of t. letter from you which would contin 3ome Indic' Lion
of the sentiment' value which you ,A, to the piece of silver.

Voodw%rd, Ch-irmAa of the
Why not write a letter to Mr.
giving him
Clearing Houe Committee, care of the Hanover h_tion:.1
the hiotory of the t,:ink:Ird, refer to the convertion thich I laci with you
in London :.bout it, ,And

that while the 1-!._nk of EnglOwil c nnot very well

reLLue-st the return of the raiece of oilver to which Atech a-bciatione of
neverthele. you under-t_na I live di3such moment for the Clearing
plan by which it, return might b.3 arranged :..nd that anything that
the Clecring Hou-,e ;eodocil.tion decidt.:. to do ._bout the matter would be
gratifying to you end to your associated, Aad that you .:.;.preci.:.te his
pooijou pl..-c, but do put me in
'Word it ,ny
friendly interent.
maggest LILA you :.41ad the letter through me,
tion to get it done.
th_t I mv,y hnve - look A, it.


Your. oincerely,

Hight honorable Mont_gu C. Norm_ii,
Governor, BeAlk of England,
London, Engl-nd.



I' .--.-....".1 ...,,Ir


July 15, 1924.



My dear Norman:
(s-)There has been some unavoidable delay in sending a reply to your
letter bf May 17 in regard to the investment of some portion of the balance
carried by the Federal. Reserve Bank of New York with the Bank of England.

Your proposal that E100,000 of this balance should be made productive is satisfactory, the arrangement, however, to be considered for the
As to how this sum
present as an experiment, subject to rendjustment.
should be employed, your proposal that £50,000 should be invested in commercial bills and a like amount for short periods at interest under the
Bank of England's guarantee will be satisfactory to us, with the understanding that the Bank of England is responsible for the payment of the commercial',
bills in the same fashion that we have been in the case of bills purch9sed
for the Reparations Funds.

As you know, we cannot purchase the obligations of foreign governmanta, so we would understand that the amount employed at interest by the
/Bank would be in fact a special interest account and _not an investment in
On the other hand,
obligations whick_the_l_aw does_not_permit_us_to buy.
we are not limited by law to the purchase of bills bearing American names.(-- C.C.O. ?SD
It might be preferable for us, as a matter of practice, to have American
names on the bills if it is convenient to furnish them, but English names
would in fact be quite satisfactory with the general guarantee of the Bank.


I think it would be appreciated by my associates if the Bank of
We will handle it in any way that
England carried some balance with us.
you suggest, but we would not wish it to be in any way a burden to you to
Possibly you will have an opportunity to discuss this with Mr. Jay
do so.
And if any question arises, you and he could agree
when he is in London.
upon a cable.
Sincerely yours,



-- i I.


,, - -





- CO ,

Right Honorable Montagu C. Norman,
Governor, The Bank of England,
London, England.





I: (.14',,








(.., !




i c'




July 25, 1424.

Deer Li.. Governor:

It ,& most kind and thoughtful of you to send us copies of
those two old pamphlets - ''grief Account cf the Intended Beni of England"
They bare been reId by me tan by some of my
and netful Reflections."
aseociates tit!. a great deal of interest, and I :aunt confeet, in places
with some ChUee for Lmueement; but at once the reflection is uneecapable
that we is tic country are indeed intents in experience and tradition
when compered to the venerable institution over which you so ably preside.
It 11..s r etrange coincidence that at the stne time that these
little %closet reached me, I Ltd just Lad delivered a set of the medals
of the Preeidente of the United States stitch tre struck off by our mint,
unuer some old statute, &Lich I had the opportunity to acquire and which
One of our
I am vending to ycu with our compliments and best wishes.
directors, kr. Clarence toollsy, ic selling to-morrow and will Lake the
They would have teen mounted in a eui table form were
poke with him.
it not that I had no means of surmising just what cisposition you would
Doubtless when youenew building is completed, you
like to make of thee:.
will wish to put them in bone of the drawer& where articles of this sort
are allowed to accumulate until age und aseociation rive them some value.
I am,


Tours sincerely,

Right Honorable Montagu C. Norman,
Governor, Bank of England,
London, England.

Oct:ber 20, 1924.

Sight Honorable Montagu Q. Norman,
Bank of England,

London, %gland.
My dear Governor Norman:

Mr. Strong's
1 regret to advise you ta4t, in inetellinr7
the Yelephone
private telephone at hi9 new resilence, 270 PRrk Avenue,

Company found it nec9esary to tizain chinge the number


The servios 19 noa in operation under this number.
disregard the
Will you, therefore, plenee be good enough to
advice sent to yo4 under date of 3eptemter 25.

Very truly yours,

Secretary to
Mr. Renl. Strong.

....)ctoner 28, 1924.

My dear li!onty:

You hive learned from lettere from elme of ry iesociatec that
svta not Quito he r;r:i l sic, I
I me off for month's vr-ostion, am!,
be, I
nu correspondence at ill while I wax away,
e.,5 only now reIdl.rm
mail, lIcladlne your lettere of

and October 1(.


take not e tune to repty to the



to the forizer, pleAse don't fee:. that Lubbacx 111:14i

real I y concpi rod in r.lie ratttc r of thgt tank :rd.

Our C earl (IF :louee

Quito Ice on to carry out the augeoution I
for WA: e



h, V

all e t a rather

Woodwird thot;-.1-2.t toot re oilEtt tc hive

ft .tCii)p


rE/6iLifi for foal,

lotter not you.

have much :,referred to the action a.pperr qui

not expected, but now that It le done, - Fmt: I

I 'multi

voluntary emu

delight-6d that it hue been

done, - I hope thmt it prc.,vee to be a little nouvcnir of 6.6 Lo ci Ltio r.

respect which will reiroin in


ory of our etocc;ii tee for come time.

en grnteful to you for finOing a way to put your name to

three lettore, stir-'_: tort: that metnw of Cringiwg thie cll b:Oaut.
Very eincerely yours;,
LThe I'll,gt: t riono rrble r on tapu C. No nil Fn,
13!.,,nk. of Er bland,

Threadneedle Street,
1,- ,neon, England.






part at least, contributed toward estebliehing e, lo er level of interest

which has, in

in Net York

The Right Honoreble Montagu C. Norman

And I think it is safe to 'Atribute in ,.;art to this

than in London.

present relation of our two money


o.-- the demane for foreign loans from the
nient of belt.soces

the arrest os imports of gold,

London to

from New York to London.

oure) ie concerned, it hss at least


the transfer

the New York merset, and the move

So fsr se


creoit policy (both

yours and

in a situation rather favorable to your

plans, and se must consider whether this can lest much longer and what influences may
now develop which \would cause higher

rates in this

country and wipe out

between the tao merkete, upon which we must Botticwhat

to goio

that disparity

rely for your suceessful return

pc_p ant.
You know thors is no great eurplue of loan able

banks generally.

The surpluu which is so much advertined in the piper is that ropre-

eentes Ly the large reserves of the Recerve Peaks;

country ie t'


banking funds held by American

and the

very easy money in this

result of the competition for loane between member tanks which

have re-

cently has some moderate surplus reF.erves beosuse of gold Imports, and, lattsrly, bec,iuse

of our invoetments in the

market, - thin surplus only

...rising after

lees York Reserve Bank were entirely liquidated last summer.

borrowiass from


Today we re lending

nothing to the large semeer banks. Therefore a continuance of easy mossy depends u-..on
the extent to which it is safe and we sre wi I Sia,y, to u6r, our funds in the musket in
making investsents, and not to the willingness of.member banks to borros from us in order
to meet custosera, ciesands.

Aith our 3 discount rate they cannot borrow !roe, us

profitsbly, en:: with the credit saw economic situation

sFs it ler the Federal Reserve

banks from not on will probably make no further purcheses in the market beyond (e) those

which are see,se more or lees automatically in the form of bills, end f,b) such eff-211 pur-

chesee as may be nectsseary fros time to time to offset any lose of gold.
As to the former,

our till holdings are constantly increasing a.nd it seems

likely that they will do so z

long as ac are willing to take bills from the market at

2-1/4%, which is promoted by our discount rete for come(rciel loans of 3%.

As to the


The Right Honorable Montagut C. Norman



latter, ee have, in fact, as a result of the large foreign loans tnd for one reason or
,nether, had quite a demene upon us for shipping ,presently) and earmarking gold.


expect the Reserve System, or the market as a whole, may lose something over 1:e100,000,000,

ieclaeine what we hove elready set aeide in the course of the pest few weeks.

This has

a eendoecy to stiffen money rates because it operates airectly to reduce the reeerves
of oer mertere.

The Secretary of the Treasury has .renounced thet the 4% Government LOAM of

1925 wil: to pair off on Februery 1 next.

There .re :18,000,000 of these bonds eut-

stending, of which something over $00,000,000 are pledged to secure netionsl bank note

We cannot tell whet the early effects of this retirement of n,tional bank

note currency ;ill be.

Probably it will hove some effect to slightly harden money

Of course this can. be oefset, as in the cese of .sold experts, by our eerchases

in tLe market.

But there ie %nether feotor ehich my become cf lontrolling imeortenos.


election now se- ms certein to be overehelminely for Coolidge, notwithstanding the con-

fueion of havirg three csndidutea in the field.
the Republicans may gein

And there is even a possibility that

ntjority in both the House an

isfotory to Teat bueinee aen.

the Senate.

This will be sat-

Laurin; the past few months there have been many signs

of a gredual improvement in business, and if the election is setiefectory to the business
interest:: of the country, it will be further etimuleted.

This will, to bp sure, take

place, if it does occur, at e eeeson of the year when money uslelly flows back to
New York from the agricultural sections and after the holiday demand, end the immediate
effect upon the money market may not at once appear.

But in the long run bueineos ac-

tivity in this country 'Beene demande upon the Federel Reserve Beaks, cud demende eeon

ue will moan higher rates unless we ere willing to run the risk of en inflation which,
once under way, might be difficult to arrest.
So we must also convider the $ubject of relative price levels, concerning which



The Right Honorable Montagu. . C. Norman


I have elwa

take. int

the exchan

chenge are



cost him, o

the value l


sterlinr, the

dcllrr valu

without nn


parity price




ecalen and

the pricee w


present lev

ent, or, exp
amount of

you are it p

higher 1 eve

turers who



The Right Honorable Montagu


C. Norman


eed by the higher purohening velum of


kight iionorable iwontagu

C. No:mart


Thu Fictt Eanomble Vorstezu


C. Norman

11/4 /P4.

PUF;CO88 *honorer you hive one.
cuter into any a6reeutente %Lich buuld ineke
1 nt:u a vary tiojoy4blu visit with Eooz,h, but our engs;:ements interfered with
of the new bunk.
having mere 1.1rAn on: af-toraoun together. He will tell you something

Please a

know what, ii- anythiuti, I sun

to do so, end let me

you ."in.c.' time

t:s of-Len

4,7..t-.1 jou

inrormktion or uggeotion ,khoot

your plans v,aluit may 1;o of v..Uue.
with ktialf1001. re6ar.i.i.4 I




The Right Honorable Montagu

Threadneedle Street,



C. Norman,



D. C.,
Nevomber 6, 1924.

iection Day and I brought it
In the meaner and mail.
not only has Coolidge
te outside of the

a2ollot; but thereis a
urns are in that the Republican
ly in the House, but in the

e concluded that after the
are facing a period of
ious consequence with the
er7o System, excojt such
character. At least I
vie- from the fueling of
my associates, both
me of tho election, and the
us differences between the
he CovslrneLt, or a possible
ongress which :.:fight have
g any sound line.



Reelection as Governor of Bank of
England Is Recommended.
LONDON, Nov. 14.-The directors of
the Bank of England have unanimously
recommended that the proprietors reelect Montagu Norman Governor of the
bank for the coming year, this to make
his sixth consecutive year In office.
Such an honor is unprecedented, The
governorship is nominally limited to two
years. a previous rare exception being
Lord Cunliffe, who served five years.
While it is recOgnized that the directors have paid a high domplIme.nt to Mr.
Norman, It is also, pointed out that the ber 18, 1424.
post-war financial problems; such as the
funding of the pritIsh debt to America
and participation in European reconstruction schemes, have made continuity
of the governorship almost a necessity.
It is understood that the customary twoyear limit will be resumed when the

situation 133C01110,4 normal.

Dear Monty:

The newt of thT. ection of the diroctor3 of the
Bank of England in recommending to the proprietors that you
be reelected Governor for the coming year reaches me, and
poesiely quite naturally, through a cable dispatch from London
to the Ness York Times.
Some intimation of the possibility of this hac: already
reacheu me, and to tell you the truth, I had been waiting with
a iood, deal of anxiety for some word on the subject.

You will now have another year within which to complete
you are the one person in the world who '/InTs bettor thin anyone
else Los anxious 1 am that you ahall succeed in everything that
you set out to accomplish, not the lep:zt imortant beta; to leave
with the pound sterling and the gold dollar
the 1-dul'o: of
Whet e great achievement,
firmly established ae before the war.
indeed, will tli8 be!
4 spletidid work, which I know is very near your heart.

I send you my warmest good wishes for success and do
not hevitate to express my confidence thtt you will have the satie:ction of eccompliehing it.
lours sincerely,

The Right Honorable N.ontagu C. Norman,
Thorpe Lodge,
Canpden hill,
London, England.

December 2, 1924.
Lear tiorman:

I em enclosing coni.irme.tion of the confidential cables which we have recently


r'pid change
The reason fer suseeting an earlier visit is bcceiuse o:' the rather

almost impossible
which is taking place in our money situation, the future of which it is
to forecast.

of the

Ordinarily we would expect considerable activity from now until

LI- e end

year, and somewhat higher rates; after the turn of the year considerable

in our circulation and some easing of money rates.
There are, however,

than Ae

would ordinarily


expect before

afoot which may Force rates quite a
the end of this




and without as much reaction

level of interest
after January 1 as usual at that oeason, in khich event the whole market,
rates may be established somewhat higher
forcing our hand somewhat


hen during the recent

period; possibly even

to our viscount rate.

This, of course, has an intimate bearing upon your program for the future concerning 4.hich I


very much in the dark, (and probably you are also).

most in my mind is uncertainty

to whether you would be able and willing to meet a

slight rate advance by this bank, say to 3j, either by a similar
by your market policy,- or

Just now what is

advance in

London, or

hetht.r you would feel that such a move by you would be unwioe

or injurious if undertaken tinder present conditions.
It may be that I shall cable you the substance of this in a day or two, after we

gain a little further insight into local conditions.

It would be a ,00d plan for you to,

will be
write we as fully as you can, and possibly cable me, all of which, of course,

dealt with most confidentially.


Right Hon. Montagu C. Norman,
auvernor, Bank of England,



December 8, 1929.
Dear Norman:

enjoyed naving Mr.



end his

an-11 ;



while I have been too buey to give the: very amen time pereoaally, the :wen who

are especially informed about our building and its conatruction have, I u
made every

effort to

the engineer who


further the object of their trip.

have had contact with

the architect eon general contractor, with

the power, heat, 11 ht

superintended the installation of


ventilating plants, and they have done a good Deal of work with the man
own superintendent, who has

desie,ned the office equipment, as well As 'kith our

been associates with


bank in its building operations from the very beginning.

Mr. Scott, on Friday-,

expressed himself as

well eatiefite with the

result of his visit, except that there ie so much to do in order to gain a

knowledinl of


the whole structure that he feeler

sary for someone to come over for a period of two
undertake that,

can even




If you should

room with adequate


what these

the greater

proposes any


change in such operations,



employment of machines in the punk, it would, of course,

involve some study of

organization as distinguished

from equipment.

The very beat man that I knows of in the "tatter of

Abell, who did our work for us.


gentlemen have told

differences between your method and ours in verioue Usechanical

If the Bank of England

say, to

three months.

help that stiOtt be needed.

I have been a good deal impre.,eed by

me of

might later be neces-

have ample facilities to make whoever comes comfortable, and

arrange the necessary space for a




equipment is Mr.

Re is a young fellow, but




Rt. Hon. Montagu C. Norman


thusiaetic about the work.

He hes done a wonderful job for us and I have no

doubt would be of great value to you if you decide to engage such a man.


fact is he became so interested in the work for us that he was quite neglectful

of his own personal interests, and I fear that his work for us hob been done
under a rather improvident contract which he mode with our contractors and that

it has, for the moment, resulted in a large financial loss to him.
endeavorint, to find means to relieve him of this misf,rtune.

We are

I want you

to know that it this qucetion should come up, I could endorse Abell very fully
as the best possible man !ou could have.

If your studies are intended to go further than thin, in fact into
organi ation matters,


think I could arrange to lend you one of our men

who is peculiarly competent along those lines. He would, of course, find it
necessary to go to London for the purpoae.

All of this, of course, is just by wey of act:tiring you that we
wish to do ever thing possible to place our own expt;rience at your service.
It was a great eleasure to hhve these :-en.tlemen with us, and we

feel that it was a compliment for you to send them.
With kindest regards, I am,
Most sincerely yours,

The Right Honorable Montagu C. Norman,
Governor, Bank of England,

Threadneedle Street,
London, England.



December 10, 1224.

Dear :lore


?hie letter will be very much out of d-ate by the time
it reaches you, on eecount of our frequent exchanges or ceblee.
I km uelightee by the probpect of eeeing you ano
hr. knderson.
Ae I hill living at the hotel Marguery,
210 Palk
Avenue, I hive taken the liberty of mating reeervations
of two beoroome with bathe, sno a sittine room, t..nd they will
have a room aleo for Dick.
Liy ?doe :ortune I belie:To ie eiii
be eoeuible to get rooms on the earn_ floor that I
m on.
I shall feel gratified in being able to show you a
little hospitality at lade., evea ehough iL is
ocy in A hotel.
Mr. Aneeraon that. I shill be unlighted to see him
here with you, area am looking forward with keen aaLicipatian
your arrival.
I mill attend to all the mrran6ewente about disembarmiing, which I hope can to done in each a way that
your visit here
will not be known to the press.
leith beet regarde,

Sincerely yours,

Right honorable Montagu C. horman,
Thorpe Lodge,
Cempden Hill,
London, Ea land.

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102