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STRONG PAPERS, Strong to Norman, 1923 - 1924 (List redone 5/2004, to include all materials) 1923 (February 16) (February 21) (February 21) February 22 (February 28) March 6 May 15 (from Case) November 23 1924 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: 06/01/04 = 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) 1923 February 16 February 21 February 21 February 22 February 28 March 6 May 15 November 23 1924 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 PAPERS, 0. 410 Strong to Norman, 1923 - 1924 1923 Feb. 22 Mar. 6 May 15 (from Case) Nov. 23 1924 ,J'T1174 Feb. 21 Mar.3 Mar. 6 Mar.11 May 29 C June 3 June 9 July 9 July 25 iept-_10 (to Lubbpck),, rdet.28 / Nov.4 Nov.6 Nov.18, with clipping, Dec.2 Dec.8 Dec.10 Oct. 20(from his secretary) FEDERAL RESERVE BANK OF NEW YORK February 16, 1923. :ontagu 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, Governor. Enclos'Ire FEDERAL RESERVE BANK copy 'ERA!, RESERVE BANK 01: NEW YORK S February 21, 1923. Deer Norman: 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. Whila 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. 1 2.22.23. Mr. Norman amjercentere in like period since Civil war(barring late ear). 111, 9. 10. t. 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 suffer. 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 2.22.23. 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. BS.MSB 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") FEDERAL RESERVE BANK S I 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 days, as I sae it, our various difficulties in setting up real cooperation rnong, banks of issue will be solved! With kind personal regards, I am, Sincerely yours, C Mr. Montagu C. Norman, The Bank of &igland, Threadneedle Street, London, Encland. BS.C.:43 FEDERAL RESERVE BANK OF NEW Yo R K CONFIDENTIAL 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? By 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. In this connection I might mention that one of the banks here is shortly bringing in 111 1 ESERVE BANK OF NEW YORK Governor Norman. 2, 5/15/23. 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, J. H. CASE, Deputy Governor. Montagu C. Norman, Esq., Governor, Bank of England, London, England. MIL 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 week. The throat seems to stand the racket alright. The regular semi-annual meeting of the Reserve Bank officers was held in Washington during all of last week. I did not creside but sat at the meeting and felt that I was gradually learning a little of what had taken place during my absence. 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 observed. 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 1!.r.. 2 litiluIrst 111:a.t Governor Norman of enthusiasm from the newspapers and from taxpayers. November 23, 1923. I 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 gradual liquidation or When 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. This 3 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 proposal. l cannot be 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 impoverished; 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 its parties November 23, 1923 Governor Norman 4 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 411.ist 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. news- 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 duty 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 regards hopeful and many good wishes one. to you, Very sincerely Right Honorable Montagu C. Norman, c/o Bank of England, T "." L'n r. A yours, 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; Second, 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. "ans. 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. Fv) 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. http://fraser.stlouisfed.org/ BS.,31 Federal Reserve Bank of St. Louis copy 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, Governor. Right Honorable Montagu C. Norman, Governor, Bank of Fngland, Threadneedle Street, London, England. BS.M7 FEDERAL RESERVE BANK PERSONAL 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. BS.VM n OONFIDEBTIAL 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 Steamer. 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 .t.dvancing 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 2 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 The 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. But 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, are. Yours sincerely, Right. Hon. Montagu C. Norman, o/0 Bank of England, London, England. March 8, 1224. 2 It would oonvenienoe me a good deal if you could give me some hint 411/ 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. BSMM Varch 11, 1924. PERSONAL 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 definitely. 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. BS.Mi COPY OF CABLE':'' OUTGOING May 29, 1924. Bank of England, London, England. No. 47 STRICTLY CONFIDENTIAL FOR GOVERNOR: 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 Canada. Norman H. Davis whom you know might also be considered. idea whether any could be secured if wanted. Reply delayed by absence in washington. Have no Strong Is OCAMEhTIAL June 124. 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 ecei.er 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; that temporary necessity cannot be a matter of controversy nor even of opinion; will ho erranzed by natural law, not by wish or design. it 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 deserved. 2 1924. Jene tK, flovernor Norman Also I find at home growing evidence of bueineee recession. Political 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. 'ours, 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. BSMM trk July 9, 1924. CONFIDENTIAL 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. 2. 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 position. 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. en 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. Our interests in this subject are mutual and interdependent end should not be the 2 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 IP to return to a gold basis. 3. 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: (a) To a smell extent of the influence of eold imports upon money ('L.) To some extent, of no mean importance, of the policy of the rates. Deserve Banks in building up a portfolio of short paper. (c) 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. causes. 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. The next step, in order to create a sound basis for your own return to gold payment, 8 Governor Norman July 9, 1924. is just what it has been for five years, - that is to say, debt readjustment on 411 a basis of certainty rather than uncertainty, and within tie capacity of the indeed Were these two steps taken, I believeAthat money market and credit debtors. III 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. 4. 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: 1. A transfer of balances to London. 2. Discount of bills elsewhere (New York). 3. 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 4 Jely P, 1924. bueiness to make this market any permanent, relief, and investment funds here II/ 4, will likely demand higher returns Ftill than in the English market. Oppor- 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. 5. 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 procession. 5. 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 7. 1111 01/ 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; 8. 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. P. 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. Ae 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 hay" 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. 4 July 9, 1224. My 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 J'aociation 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 hl.ve .ome :Aart of t. letter from you which would contin 3ome Indic' Lion of the sentiment' value which you ,A,t1.ch 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 ou.-;Jed 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. I th_t I mv,y hnve - look A, it. ,.;43 Your. oincerely, Hight honorable Mont_gu C. Norm_ii, Governor, BeAlk of England, London, Engl-nd. ttJ. ........., I' .--.-....".1 ...,,Ir FEDERAL RESERVE BANK OF NEW YORK July 15, 1924. e PERSONAL: 24/ 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 ...1-, 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. ..e 1 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, Wa - . -- i I. 4,-,(1 (fl: i ,, - - :' . BENJ. STRONG, Governor. 7. - CO , Right Honorable Montagu C. Norman, Governor, The Bank of England, London, England. GZA.; ' .., N.e.--,1 I: (.14',, , ( -'r!- tit, Ctit..tr tf ,t , (.., ! . , r /, I , i c' ''!..f ., v_ 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, always, Tours sincerely, Right Honorable Montagu C. Norman, Governor, Bank of England, London, England. 135.YV Oct:ber 20, 1924. Personal 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 5179. 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, !muted e.,5 only now reIdl.rm iccurnf.ation mail, lIcladlne your lettere of and October 1(. September take not e tune to repty to the Tt latter. But 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 I [10 h, V all e t a rather Woodwird thot;-.1-2.t toot re oilEtt tc hive ft .tCii)p but, rE/6iLifi for foal, lotter not you. have much :,referred to tv...ve 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 r 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. .M3B anc, 10 #2 11/4/24. 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 merkets, 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 resulted the transfer the New York merset, and the move So fsr se our 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' r, 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 the 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 N5 The Right Honorable Montagut C. Norman 11/4/24. 411116 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. I 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 circuletion. We cannot tell whet the early effects of this retirement of n,tional bank note currency ;ill be. retes. 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. The 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 S:4 The Right Honorable Montagu. . C. Norman 11/4/24. I have elwa 41.y take. int the exchan chenge are inelined movement W cost him, o the value l puretelaing sterlinr, the dcllrr valu without nn coramcditiem parity price currencies standerdize differences ecalen and the pricee w It present lev ent, or, exp amount of you are it p higher 1 eve turers who materlele #5 The Right Honorable Montagu k: .. C. Norman 11/4/24. eed by the higher purohening velum of kight iionorable iwontagu C. No:mart 11/4/24. Thu Fictt Eanomble Vorstezu t7 C. Norman 11/4 /P4. PUF;CO88 *honorer you hive one. ple.n 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 F Please wri.L.ss 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 . 4 Youro The Right Honorable Montagu of Uovornor, Threadneedle Street, LonaoA, Ei5/ILSB C. Norman, sinws:rely, 44k ashington, D. C., Nevomber 6, 1924. iection Day and I brought it In the meaner and mail. not only has Coolidge uth, 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. sincerely, RETAIN MONTAGU NORMAN. 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 Probably 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 exchanged. 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 reduction 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 influences expect before afoot which may Force rates quite a the end of this year, bit higher 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 as 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 ,111 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. Sincerely, BriMJ. STRONG Right Hon. Montagu C. Norman, auvernor, Bank of England, Governor. A.^ December 8, 1929. Dear Norman: enjoyed naving Mr. Fe Scott end his an-11 ; aete.:ciaLee t. 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 They the engineer who told, 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 and 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 the 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 complete the whole structure that he feeler sary for someone to come over for a period of two undertake that, can even any 14e drafting the If you should room with adequate light, what these the greater proposes any radicel change in such operations, mattere. lookint,, 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. and 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 clerical or it equipment is Mr. Re is a young fellow, but tremendously 2 12.8.24. Rt. Hon. Montagu C. Norman AO' 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. The fact is he became so interested in the work for us that he was quite neglectful mr% 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, I 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. 'S. SHIFT 4 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 teere 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. Plemee Mr. Aneeraon that. I shill be unlighted to see him here with you, area am looking forward with keen aaLicipatian far 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.