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----TGOIrernpr-Benjaztlin Strong9

62 Cedar Street,

New

Governor Strong:

'forDear

Tii.anlc you for your

letter of August 14th/giving your opinion
in regard to the exchange situation,
sincerely hope sore way out may

be found and I believe there will bee
McAdoo is a1J:4 to the situation and
believe he will cooperate with you in
/
every way possible°
7akthful3.y yours,
I.

Manchester,

Massachusetts

August 16.411,

'

1915.
4,q7A4-e_

Form 260

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G EORGE W. E. ATKINS. VICE,

RECEIV5 No.

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U.S.Senate, 74th Cong.,2nd sess.,Special Committee
investi
gating the munitions Industry, Hearings pursuant to
S.
Res. 206, part 26, p.7861 (washington,
MUNITIONS INDUSTRY
1537)7861

loan here. I have reluctantly approved of delegation going your side if only
to let authorities and joint stock banks appreciate at first hand real conditions
United States. I am tired of explaining difference between your market and
-ours. Only remedy seemed to me to let them go and see for themselves.

Chancellor was grateful for your offer of issue of 1-year notes, but had

evidently been persuaded to accept joint stock banks' advice which I hope may
turn out to be wise policy.
Authorities absent till Monday evening.

That plan they talk about with the Allies undoubtedly refers to a
cable that he sent us on August 18th, 6867:
For J. P. Morgan. For your information only. Exchange situation. No
definite steps have yet been taken but as far as I can gather, last proposal is
to arrange shipment up to 1100,000.000 from Allies. This is not authentic, and
sent only to keep you posted as to rumors.

That is gold, of course.
Senator CLARK. I call attention to a letter from the files of Mr.

I

Benjamin Strong, dated Aupst 14, 1915, indicating that he was
getting into the situation, directed to Colonel E. M. House, Manchester, Mass. [reading "Exhibit No. 2217']
MY DEAR COLON

HOUSE:

Referring to our conversation of a week ago. You have doubtless observed
that matters are developing along the lines of our discussion. Sterling exchange
sold yesterday below 4.71.

This was the 14th. That was the very day that you stood out
from under, was it not?

Mr. WHITNEY. The day after.
Senator CLARK (continuing reading) :
The newspapers are reporting very considerably cancelations of foreign

contracts for wheat and other commodities. The cancelation of contracts for
grain is reported to be due to military developments at the Dardanelles, which
may shortly release large quantities of Russian wheat. This seems hardly
probable and, if rumors now appearing in the newspapers are well-grounded
(although I suppose they are considerably exaggerated) I am inclined to
believe that the cause is inability to get remittances. It is a striking illustration of the possible effect upon our trade growing out of inability to arrange
credits in this country.

If exchange declines very sharply so that all the profit on a purchase

o'f goods contracted for in this country is gone before the goods are exported,
and the purchaser is in a position to cancel the contract, he will, of course,
cancel in every instance even thoinzla he has to buy again later, possibly after
-contracting for his exchange in advance.
The situation is undoubtedly growing increasingly difficult with each day's
decline in exchange and while I don't see anything yet to be alarmed about,

I still believe that at present rates, with the prospect of still lower rates,
the influence is gradually growing stronger to curtail our export business.
With kindest regards, I beg to remain,
Very truly yours,

The document referred to was marked "Exhibit No. 2217" and
appears in full in the text.)
Senator CLARK. Do you know anything about Governor Strong's
writing this letter to Colonel House?
Mr. LA.MONT. What is the date of it?
Senator CLARK. Dated August 14.
Mr. LAMONT. I could not know anything about it.

Senator CLARK. Did you, so far as you know, or any member of
Your firm, discuss the matter with Governor Strong?




Al h.3L Siwr

OCrernOR5Fenjamin Strong,

'15

62 Cedar Street, Ntm York,
Dear Governor Strong:

if

Thank you for your
letter of August 14t giving your opinion

in regard to the exc ange situation,
I sincerely hope some way out may

be found and I believe there will be.
McAdoo is ali e to the situation and
I believe he will cooperate with you in

//---

every way

Fa4hfully yours,
6P6441,c
Manchester,

Massachusetts,

August 1tIh,




1915,

_

[Copy]

JULY 7TH, 1917.

MY DEAR COLONEL HOUSE: In preparing a memorandum of our conversation

of Tuesday, I find we covered so much ground that to do so with necessary
brevity may impair its usefulness. The paper enclosed, however, will suggest the
detail of our discussion and I hope will be of service.
As to certain difficulties which have developed: What I stated to you was with

a desire to be helpful, as every consideration is due to those who are trying to
carry too heavy a burden of work to do it justice. The trouble was primarily
due to failure to develop and conclude a program in advance of transactions
actually taking place; such a program not having been developed, both sides
apparently failed to realize that without it misunderstandings were inevitable.
Besides that, as I stated to you quite frankly, the Department is underorganized
and badly needs skilled help with such division of responsibility and authority
as will relieve the Secretary from the necessity of too detailed an examination of
matters requiring final decision.

On the other hand, some of the representatives of our Allies have failed to
consider that they are dealing with subjects with which they have had three
years', and we only three months', experience and they have doubtless expected
too much in the way of co-operation in these early stages of our participation in the
war.
A misunderstanding of a rather serious character has developed in regard to the

method of repayment of loans of the British Government negotiated through

Messrs. J. P. Morgan & Company, aggregating $400,000,000 which is carried by
67 banks and may be called for payment at any time. If it is paid out of advances
being made by our Government to the British Government, it would by so much

expand the program of advances and shorten the period which can be covered
by available credits. I have come to the conclusion, however, that it is absolutely
necessary that these loans, or at least the greater part of them, must be paid off
in cash and it should be done at exactly the right time. In fact, this payment
can be utilized to our advantage in connection with future financing.
be arranged to repay these loans in installments of $100,000,000 each, timed so as
to anticipate large further borrowings by our Government, the effect would be
to create easy money all over the country as it would at once reduce interest rates
in New York both time and demand, which would be reflected in every other
money market in the United States. The money, at least in part, could be drawn
from Government deposits in other Reserve districts.

My recommendation, therefore, would be to have the Treasury face this

matter squarely, include the payment of the $400,000,000 as a part of the program of the next few weeks or months, and let that be the means of preparing
the market for future operations.
Admitting that this will necessitate application to Congress for further legisation, might not the President make this the opportunity of bringing the country
to realize the gravity of the war situation, the immense demands to be made upon
use if the war is to be won, and frankly ask Congress for the financial support
necessary? Hesitation in regard to this course has been expressed for fear of
giving comfort to Germany. My own feeling is that whatever comfort they may
get out of it is a small price to pay for the many advantages of being able to rush
all of our resources to the front at the earliest possible moment.
The enclosed memorandum was dictated immediately on my return but I
was obliged to go to Washington and its completion has been delayed until
today.
I understand the tentative program suggested on the first page is now being
considered by Secretary McAdoo but he is very much hampered by the knowledge
that the credits and cash at his disposal are inadequate to meet all demands.

My visit with you was a most enjoyable one and I hope you will give me
opportunity to repeat it. I am leaving for Denver on Sunday.
With kindest regards, I remain,
Sincerely yours,

BENJAMIN STRONG, Jr.

Colonel E. M. HOUSE.




MUNITIONS INDUSTRY

9561

MEMORANDUM

Advances to Allies.-A constructive program reaching certainly six months
into the future, or, still better, a year, should be developed as soon as possible.
As that will take time, our Treasury might well determine what advances could
be made for, say, the next two months and within that limit credits could then
be apportioned among our Allies according to a tentative program laid out in
conference with them which would not commit us or them as to a further period
until the comprehensive program was developed. I should suppose that from
$1S0,000,000 to $200,000,000 a month for Great Britain and about $100,000,000
for France would cover their needs for the next two months. As to Russia and
Italy, the need is not so pressing nor for so large amounts at present.
Announcernents.-The policy of announcing each advance as made strikes
me as liable to cause embarrassment to us and to our Allies. If the Secretary
would announce total advances to the Allies, say once a week, it would overcome
this difficulty.

Financial legislation.-I am convinced that the amount provided by Congress
for advances to our Allies will be inadequate for even a six months' program,
that generous financial support promptly accorded at this time will be of greater
value than later, and I hope that our Government will find it possible to secure
all necessary legislation at this session of Congress to enable our Treasury to
give our Allies the fullest possible support.

General organization.-The development of a program (financial, food, munitions, shipping, etc.), based upon existing legislation cannot be concluded satisfactorily without a better understanding of the requirements. To accomplish
this, possibly the following principles might be helpful.
The whole subject of furnishing food, military supplies, transportation, and
credit should be governed by considerations of military necessity. These considerations can only be weighed at the seat of war. The general policy might,
therefore, be worked out by an international commission on which all of the
Allies would be represented (United States, France, Great Britain, Russia, Italy),
which would sit permanently in Paris the membership of which should be composed of the ablest men available to deal with commercial, industrial, and transportation questions, as well as finance. The members of such a commission should
be supported by an adequate staff of experts. It would determine priorities
between the Allies, each nation retaining priority for its own needs, out of its own
resources.

If such a commission were created, this country would shortly occupy its
natural position toward the war. We must organize as an immense farm to produce food, an immense factory to produce military and other supplies, an immense
transportation system to furnish rail and water transportation, and an immense
bank to finance the purchase and transportation of material.
The organization in this country would properly direct its efforts to furnishing

those things and in such quantities to the respective allied powers as recommended
by the commission sitting in Paris.
The local organization in this country might consist of:
First. A purchasing board: This board would distribute and execute orders

and its technical staff would see that quantity, quality, and deliveries were
as required.
Second. A price fixing body or board: Such an organization would stand
between the country's regular commerce and industries and our Government
in its war requirements and settle questions of prices.
Third. A priority board: This organization would settle all questions of
priority of delivery as between our Government and its Allies on the one
hand; and other customers on the other. It should co-operate with the commission sitting in Paris.
Fourth. Foreign representation: Each of the Allied Governments must, of
course, be represented here by competent commissions with full authorities,
whose functions should be exercised in co-operation with the purchasing
board and would include making contracts, including financial arrangements
with our Treasury, paying for goods purchased, inspection before shipment,
etc.

Fifth. The Treasury: The function of our Treasury in such a scheme of

organization would be the normal one of raising funds, apportioning credits
according to the agreed needs, and paying the bills, being governed by representations made by our representatives on the commission sitting in Paris







9562

MUNITIONS INDUSTRY

The organizations subordinate to the purchasing board would have a useful
place in such a scheme but would be controlled in their activities, first, by the
purchasing board; second, by the board fixing prices; and third, by the priority
board, all of which would co-ordinate through the purchasing board as the central

organization.
This general plan is based entirely upon the principle that our participation in
the war and all activities growing out of it must be governed by military necessity
which can only be determined at the seat of war.
Government Loans.The experiences of the past three months convince me that
a much larger credit will be needed than that now provided by Congress. A per-

manent, Nation-wide organization must be created at once in order to facilitate
Government borrowing. Congress should, I believe, authorize a large issue of
short-term notes with a greater variety of character so as to meet the needs of
different classes of investors and savers and it should confer greater authority
upon the Secretary of the Treasury in fixing rates of interest.
A permanent paid organization should be promptly developed by the twelve
Reserve banks which could be expended and contracted as new loans were placed.
At the same time a separate organization should be provided at once to develop
saving in detail among all classes of people. These savings should be segregated,
temporarily invested in the Government's short obligations, and then converted
into permanent loans when issues are made. Only such a plan, which anticipates
and earmarks in advance, will avoid increasing pressure upon our banking system
and possibly its dislocation.
Currency.Our participation in the war makes a certain expansion of bank
credit necessary and inevitable. This can be sound or unsound according to the
skill with which it is managed. All necessary legislation has now been enacted
with the passage of the amendments to the Reserve Act and a perfectly sound
expansion of vast proportions is possible, provided the Reserve banks are able to
assemble a much greater proportion of the country's gold supply even than the
amount already held, about 51,300,000,000. This requires large issues of Federal
Reserve notes, to take the place, dollar for dollar, of small denomination gold
certificates, but if successfully conducted will place an immense burden of expense
upon the Reserve banks.
I would strongly urge that the Secretary of
immediately discontinue issues of gold certificates in denominations of ten and
twenty dollars and that the Federal Reserve Board instruct Federal Reserve
banks to furnish all requirements for currency in their respective districts by
issues of Federal Reserve notes on which they should pay the shipping charges.
Congress could then be asked to make an appropriation to enable the Bureau of
Engraving and Printing to defray the cost of preparing Federal Reserve notes.
The saving to the Government on other currency, the cost of which it now bears,
will largely offset this added expense.
We are facing the possibility of a great shortage of bills of one and two dollar
denomination. This can be met in advance of the fall demands, which will be
heavy, by reissuing large denomination silver certificates and United States notes
in one and two dollar denominations. Each Reserve bank should be instructed
now to accumulate these bills against the fall demand. This will increase the
vacuum to be filled by further issues of Federal Reserve notes, and the simultaneous withdrawal of gold certificates above suggested would automatically draw
gold into the Reserve banks without causing comment or possible alarm.
This accumulation of gold will offer a basis for credit expansion which can be
controlled within safe limits by the discount rates of the Reserve banks.
Trade with the enemy.House Resolution No. 4960, introduced by Mr. Adamson,
covers transactions in goods, but fails adequately to impose restraint upon foreign
exchange transactions and shipments of gold and provides no organization for
supervising such transactions. A body should be created for the purpose of
supervising all possible enemy exchange operations and gold shipments, and this
body should have power to require reports and production of papers and records.
A letter covering this matter has been sent to Mr. Frank L. Polk, of the State
Department.
Gold.At the present time we are importing gold from England which is being
re-exported to Spain, Cuba, Japan, Canada, and South American countries. The
unwisdom of this development is apparent. The demand upon our credit system
will shortly be so great that we must not only preserve but augment our gold base,
even if it involves curtailing trade and credit transactions with neutral countries.
Whatever organization is developed to deal with foreign exchange should have
authority to deal with this matter.




.41.443
AUG 1 6191:'
r

Governor Benj. Strong,
Federal Reserve Bank,
Dear Gov. Strong:

New York.

I want to thank you

for your letter of July 7th with its
enclosed memorandum which will be very

helpful.
I am sorry you will be so far
away during the next few weeks and I

shall look forward to your return.
Sincerely y
Magnolia,

Mass.

July 9,

1917.

Exhibit No. 3161 strong to House, july 7, 1917, personal file,
St:"Iigl(P:I4())

xhibit No. 'U61 Strong to House, July 7, 1917, Personal file, Strong (n.9500
U.S.Congress 74th Cong., 2nd Sess., Special Committee Investigating the Munitions
Industry, Hearings pursuant t4o(SRes. 206 (Washington, 1937)
Exhibit No. 3161
[Cory]
July 7th, 1917
mY DRAT? COLONEL HOUSE:

In Preparing a memorandum of our conversation of Tuesday, T find
we covered so much ground that to do so with necessary brevity may impair
its usefulness.
The paper enclosed, however, will suggest the detail of
our conversation and T hope will be of service.
As to certain difficulties which have develoned; Vhat T stated to you
was with a desire to be helpful, as every consideration is due to those who
are trying to carry too heavy a burden of work to do it justice. The trouble
was primarily due to failure to develop and conclude a program in advance of
transactions actually taking place; such a proglyam not having been developed,
both sides apparently failed to realize that without it misunderstandings were
inevitable
Besides that, as T stated to you quite frankly, the DePartment is
underorganized and badly needs skilled help with such division of responsibility
and authority as will relieve the Secretary from the necessity of too detailed
an examination of natters requiring final decision.
.

On the other hand, some of the representatives of our Allies have failed
to consider that they are dealing with subjects with which they have had three
years', and we only three months', experience and they have doubtless expected
far too much in the way of co-operation in these early stages of our narticipatiOn in the war.
A misunderstatding of a rather serious character has developed in
regard to the method of repayment of loans of the British Government negotiated through Messrs. J. P. Morgan + Company, aggregating Wo,000,000 which
is carried by 67 banks and may be called for payment at any time. If it is
paid out of advances being made by our Government to the British Government, it
would by so much expand the program of advances and shorten the period which can
be covered by available credits.
I have come to the conclusion, however, that
it is absolutely necessary that these loans, or at least the greater part of them,
must be paid off in cash and it should be done at exactly the right time. In fact,
this payment can be utilized to our advantage in connection with future financing.
If it could be arranged to repay these loans in installments of $100,000,000 each,
timed so as to anticipate large further borrowings by our Government, the effect
would be to create easy money all over the country as it would at once reduce
interest rates in New York both time and demand, which would be reflected in
every other money market in the United States. The money, at least in part,
could be drawn from Government deposits in other Reserve districts.
My recommendation, therefore, would be to have the Treasury face this
matter squarely, include the payment of the $400,000,000 as a part of the program of the next few weeks or months, and let that be the means of preparing the
market for future operations.
Admitting that this will necessitate application to Congress for further
legislation, might not the President make this the opportunity of bringing the
country to realize the gravity of the war situation, the immense demands to be
made won use if the war is to be won, and frankly ask Congress for the financial support necessarr
Hesitation in regard to this course has been expressed
for fear of giving comfort to Germany. My own feeling is that whatever comfort
they may get out of it is small price to pay for the many advantages of being
able to rush all of our resources to the front at the earliest possible moment.




- 2 -

[Exhibit

3161 continued]

The enclosed memorandum was dictated immediately on my return but 17

was obliged to go to Washington and its completion has been delayed until today.
I understand the tentative program suggested on the first page is now
being considered by Secretary McAdoo but he is very much hampered by the knowledge
that the credits and cash at his disposal are inadequate to meet all demands.
My visit with you was a most enjoyable one and I hope you will give me
opportunity to repeat it. I am leaving for Denver on Sunday.
With kindest regards, I remain,
Sincerely yours,
BENJAMIN STRONG,

Colonel E. M. HOUSE.

R.

1p.9560]

MEMORANDUM
Advances to Allies.- A constructive program reaching certainly six months
into the future, or, still better, a year, should be developed as soon as
possible. As that will take time, our Treasury might well determine what
advances could be made for, say, the next two months and within that limit
credits could then be apportioned among our Allies according to a tentative
program laid out in conference with them which would not commit us or them
as to a further period until the comprehensive program was developed. I
should suppose that from $180,000,000 to $200,000,000 a month for Great Britain
and about $100,000,000 for France would cover their needs for the next two
months. As to Russia and Italy, the need is not so pressing nor for so large
amowits at present.
Announcements.- The policy of announcing each advance as made strikes me as
liable to cause eFbarrassment to us and to our Allies. If the Secretary would
announce total advances to the Allies, say once a week, it would overcome this
difficulty.
Financial legislation.- IT am convinced that the amount provided by Congress
for advances to our Allies will be inadequate for even a six months' program,
that generous financial support promptly accorded at this time will be of
greater value than later, and 17 hope that our Government will find it possible
to secure all necessary legislation at this session of Congress to enable our
Treasury to give our Allies the fullest possible support.

General Organization.- The development of a poogram (financial, food, munitions,
shipping, etc.), based unon existing legislation cannot be concluded satisfactorily without a better understanding of the requirements. To accomplish this,
possibly the following principles might be helpful.
The whole subject of furnishing food, military supplies, transportation,
and credit should be governed by considerations of military necessity. These
The general policy might,
considerations can only be weighed at the seat of war.
therefore, be worked out by an international commission on which all of the
Allies would be represented (United States, France, Great Britain, Russia, Italy),
which would sit permanently in Paris, the membership of which should be composed
of the ablest men available to deal with commercial, industrial, and transportation iqueetions, as well as finance. The members of such a. commission should be
It would determine priorities besupported by an adequate staff of experts.
tween the Allies,

http://fraser.stlouisfed.org/
awn resources.
Federal Reserve Bank of St. Louis

each nation retaining priority for its own needs, out of its

-3[Exhibit 3161 continued]

If such a commission were created, this country would shortly occupy
its natural position toward the war. We must organize as an immense farm to
troduce fobdi-.attimmente factory to produce military and other supplies, an
immense transportation system to furnish rail and water transportation, and
an immense bank to finance the Purchase and transportation of material.

The organization in this country would properly direct its efforts to
furnishing those things and in such quantities to the respective allied powers
as recommended by the commission sitting in Paris.
The local organization in this country might consist of:

First. A purchasin

board: This boa2d-wotiddistrilatte':and'7

oxecute orders and its technical staff would see that quantity,
quality, and deliveries were as required.
Such an organization
Second. A price fixing body or board:
would stand between the country's regular commerce and industries
and our Government in its war requirements and settle questions
of prices.
This organization would settle all
Third. A priority board:
questions of priority of delivery as between our Government and
its Allies on the one hand, and other customers on the other. It
should co-operate with the commission sitting in Paris.
Fourth. Foreign representation: Each of the Allied Governments
must, of course, be represented here by competent commissions with
full authorities, whose functions should be exercised in co-operation
with the purchasing board and would include making contracts, including financial arrangements with our Treasury, paying for goods
purchased, inspection before shipment, etc.
Fifth. The Treasury: The function of our Treasury in such a
scheme of organization would be the normal one of raising funds,
apportioning credits according to the agreed needs, and paying the
bills, being governed by representations made by our representatives on the commission sitting in Paris 1'0.9561]

The organizations-subordinate to the purchasing board would have a
useful place in such a scheme bout would be controlled in their activities,
first, by the purchasing board; second, by the board fixing prices; and
of which would co-ordinate through
.third, by the priority board,
the purchasing board as the central organization.

nll

This general plan is based entirely upon the principle that our participation in the war and all activities growing out of it must be governed by
military necessity which can only be determined at the seat of war.
that
Government Loans.-- The experience of the past three months convince me
a much larger credit will be needed than that now provided by Congress. A
permanent, Nation-wide organization must be created at once in order to facilarge
litate Government borrowing. Congress should, I believe, authorize a
issue of short-term notes with a greater variety of character so as to meet the
needs of different classes of investors and savers and it should confer greater
authority upon the Secretary of the Treasury in fixing rates of interest.




A letter from the files of

mr.

Benjamin Strong:

FExhibit 2217]

[August

14, 1915]

MY nEAR COLONEL 'ROUSE:

Referring to our conversation of a week ago. You have doubtless
observed that matters are developing along the lines of our discussion.
Sterling exchange sold yesterday below 4.71.
The newspapers are reporting very considerably cancelations of
foreign contracts for wheat and other commodities. The cancelation of
contracts for grain is reported to be due to military developments at
the Dardanelles, which may shortly release large quantities of Russian
wheat. This seems hardly probable and, if rumors now appearing in the
newspapers are well-grounded (although I suppose they are considerably
exaggerated) I am inclined to believe that the cause is flability to
arrange credits in this country.
If exchange declines very sharply so that all the profit on a
purchase f goods contracted for in this country is gone before the
goods are exported, and the purchaser is in a position to cancel the
contract, he will, of course, cancel in every instance even though he
has to buy again later, possibly after contracting for his exchange in
advance.
The situation is undoubtedly growing increasingly difficult with
each day's decline in exchange and while I don't see anything yet to be
alarmed about, I still believe that at present rates, with the prosPect of
still lower rates, the influence is gradually growing stronger to curtail
our export business.
With kindest regards, I beg to remain,
Very truly yours,
[Benjamin Strong]

U.S.Congress,74th Cong., 2nd Sess, Special Committee Investigating the Munitions
Industry, wearings pursuant to S. Res. 206(73d Cong.) Part 26, Jan. 9 and 10,

D.7861.




196,

COPY
F

Letter from the personal files of Benjamin Strong, July 7, 1917 to Colonel E. M
House (..Thich has not been located at the Bank or in the papers of Benjamin Strong,
Jr., which he acquired after his father's death in 1928).1

July

7, 1917

My Dear Colonel House:
In preparing a memorandum of our conversation of Tuesday, I find we
covered so much ground that to do so with necessary brevity may impair its
usefullness. The paper enclosed, however, will suggest the detail of our
discussion and I hope will be of service.
As to certain difficulties which have developed- What I stated to you
was with a desire to be helpful, as every condideration is due to those who are
trying to carry too heavy a burden of work to do it justice
The trouble was
primarily due to failure to develop and conclude a program in advance of trans
actions actually taking place such a program hot having been developed, both
sides apparently failed to realize that without it misunderstandings were inevitable. Besides that, as I stated to you quite frankly, the Department is under
organized and badly needs skilled help with such dividion of responsibility and
authority as will relieve the Secretary from the necessity of too detailed an
el animation of matters requiring final decision
On the other hand, some of the representatives of our Allies have
failed to consider that they are dealing with subjects with which they have had
three years', and we only three months', e perience and they have doubtless
expected too much in the way of co operation in these early stages of our participation in the war.

A misunderstanding of a rather serious character has developed in
regard to the method of repayment of loans of the British Government negotiated
through Messrs. J P. Morgan + Company, aggregating $400,000,000 which is carried
If it is
by 67 banks and may be called for payment at any time.
acvances being made by our Government to the British Government, it would by so
much epand the program of advances and shorten the period which can be covered
by available credits.
I have come to the conclusion, however, that it is ab solutely necessary that these loans, or at least the greater part of them, must
In fact, this
be paidroff in cash and it should be done at e actly the right time.
If
payment can be utilized to our advantage in connection with future financing.
it could be arranged to repay these loans in installments of $100,000,000 each,
timed so as to anticipate large further borrowings by our Government, the effect
would be to create easy money all over the country as it would at once reduce
interest rates in New York both time and demand which would be reflected in every
other money market in the United States. The money, at least in part, could be
drawn from Government deposits in other Reserve districts.
My recommendation, therefore, would be to have the Treasury face this
matter squarely, include the payment of the $400,000,000 as a part of the program
of the ne,t few weekb-lor months, and let that be the means of preparing the
market for future operations.
Admitting that this will necessitate application to Congress for further
legislation, might not the President make this the opportunity of bringing the
country to realize the gravity of the war situation, the immense demands to be
made upon use(sic) if the war is to be won, and frankly ask Congress for the
financial support necessary? Hesitation in regard to this course has been e,
pressed for fear of giving comfort to Germany. My own feeling is that whatever
comfort they may get out of it is a small price to pay for the many advantages
 of being able tb rush all of our resources to the front at the earliest possible
http://fraser.stlouisfed.org/
moment.
Federal Reserve Bank of St. Louis

The enclosed memorandum was dictated immediately on my return but
I was obliged to go to Washington and its completion has been delayed until
today.

I understand the tentative program suggested on the first page is now
being considered by Secretary McAdoo but he is very much hampered by the knowledge
that the credits and cash at his disposal are inadequate to meet all demands
My visit with you was a most enjoyable one and I hope you will give
me opportunity to repeat it. I am leaving for Denver on Sunday.
With kindest regards, I remain,

Colonel E. M House.

[signed Benjamin Strong,Jr.

United States Congress, 74th, 2nd Sess., Senate, Special Committee Inves5igating
the Munitions Industry, Hearings on S.R 206, Part 30, p.9560)




Golotal

lo

A miaueimrotandirg of a rat?;or

d In regard to

t1=0,

vtrratt

mottod of repayv4.1"1
thro,401:' Vfasta
July 7th, 1917.

its

My dear Colonel Housa.:,

In preparing a memorandum of our conversation of Tuesday, I find we covered so much ground that to do
ry brevity may impair its usefulness.

so with

necessa-

The paper enclosed, how-

ever, will suggest the detail of our discussion and I hope will
be of service.

mmrt

As to certain difficulties whicti have developed:-

'hat

_ stated to you was with a desire to be helpful, as every considerat4on is due to those who are trying to carry too heavy a burden
_

of work to do it justice.

The trouble was primarily due to fail-

ure to develop and conclude a program in advance of transactions
actually taking place; such a program not having been developed
both sides apparently failed to realize that without it misunderstandingewere inevitable.

Besides that, as I stated to you quite

t frankly, the Department. is underorganized and badly needs skilled

help with such division of responsibility and authority as will relieve the Secretary from the necessity of too detailed an examine..

tion of matters requiring final decision.
On the other hand, some of the representatives of our
Allies have failed to consider that they are dealing with subjects
with which they hnve had three years', and we only three Months',
experience and they have doubtless expected too much in the way of
co-operation in these early stages of our pnrticipation in the war.




-2-

To

Colonel house,

7/7/17/

A misunderstanding of a rather serious character has develo .ed in regard to the method of repayment of loans of the British Government negotiated through Y.essrs. J. P. Morgan & Company,

aggregating $400,000,000 which is carried by 67 banks and may be
called for payment at any time.

If it is paid out of advancettaat

being made by our government to the British Government, it would

by so much expand the program of advances and shorten the period
whic# can be covered by available credits.

I have come to the con-

clusion, however, that it is absolutely necessary that these loans,
or at least the greater part of them, must be paid off in cash and
it should be done at exactly the right time.

In fact, this pay-

ment can be utilized to our advantage in connection with future
financing.

If it could be arranged to repay these loans in install-

Lents of $100,000,000 each, timed so as to anticipate large further

borrowings by our government, the effect would be to create easy
money all over the country as it would at once reduce interest rates
In New York, both time and demand, which would be reflected in every
other money market in the United States.

The money, at least in

pert, could bedrawn from government deposits in other reserve districts.

My recommendation,tierefore, tould be to have the Treasury face this matter squarely, include the payment of the $400,000,000
as a part of the program of the next few weeks or months and let that
be the means of preparing the market for future operations.
Admitting that this will necessitate application to Congress




for

further legislation, might not the President make this the

-3-

opportunity of

To

bringing the

7/7/17.

Colonel house.

country

to realize the gravity of the

war situation, the immense demands to

be made upon us if the war

is to be won and frankly ask Congress for the financial support
necessary?

Hesitation in regard to this course ha; been express-

ed for fear of

giving

comfort to Germany.

My

own feeling is

that

whatexer comfort they may get out of it is a small price to pay for

of our resources

the many advantages of being able to rush all

to

the front at the earliest possible moment.

The enclose(i

mcmoranaum was dictated immediately on my

return but I was obliged to go to lashington and its completion has

been delayed until to-day.
I understand the tentative program suggestei on the first
page is now being

considered by Secretary :. cAdoo, but he is very much

hampered by the knowledge that the

credits and

cash at his disposal
Ifi

are inadequate to meet all demands.

My visit with you was a most enjoyable

will give me opportunity to repeat it.
Sunday.




I

one and I hope you

am leaving

for Denver

on

r,15.

With kindest revrds, I remain,
Sincerely yours,

A

id

V.

ter4 Z

6 of our

16-4r .4




Benj. Strong,

Govern

Federal Reserve Bank,
Dear Gov. Strong:

New York.

I want to thank you

for your letter of July 7th with its
enclosed memorandum which will be very

helpful.

I an sorry you will be so far
away during the next few weeks andI

shall look forward to your return,
Sincerely yourii?
Magnolia,

Mass.

July 9, 1917.

Avast 13, 1917.

_Jeer Colonel HOUSE):

Nearly every day's mail brings a variety of suggestions,

really

criticisms, etc., that is

I have, however, received a letter from a very

serve attention.

wise and

influential man up
worth while

the state, which is so much in line

to me While in the West last month, that

with what became apparent
I think it is

Few of these de-

beyond belief.

sending it to you.

Extract from the let-

ter is enclosed.

The

gentleman who writes this

discriminating

years ), is a very
the

letter ( a man well along in

observer of public opinion.

If

right kind of

publicity is employed just now, it will popularize

if news

is stifled the reaction to a state of indifference

the war;

is bound to come until our armies are actually fighting.

England

went through this same experience and finally met a demand for pub-

licity hich I

believe brought good results.

I knew nothing
trol this matter but
news about our men is

of the methods or machinery amployed to con-

feel quite satisfied
having a bad effect

that the entire absence of
on our country.

I send you this with considerable reluctance realizing that
it is none of my business whatever.

Faithfully yours,
Colonel E. M. House,
Magnolia, Mass.
BS/VCM




.

laloust 139 1917.

Dear Colonel IT.oum

Yearly every ezly's mail brlus a variety of suestions,
crit1cisu:39 etc., that is really boyond belief.
serve attention.

Fc7; of those de-

I haves however, received a letter fromavery

wise and influential man up the state, which is so much in line
with what become aoarent to me while in the 7,est last month, that

thiua. it is worth while sending it to you.

:ztract from the let-

ter is enclosed.
The z;entle'zan who writes this letter ( a man well alongin

years ), is a very discriminating observer of public minion.

If

the ric,ht kdni of publicity is caloyed just nai9 it will polularize
thow,;.r; if nsaa iii tifled the reaction to a state of indifference
in becald to co:-.2e trAtil our armies are actually fijhtirc.

7.,n:aand

went through this same eperiehco and finally net a tic-Jana for rub-

licIty ,hich j believe brou:;ht sool results.
mow nothing of the methods or machinery employed to con-

ti this matter but feel quite satisfied that the entire absence of
mis about our men is having a bad effect on our cowitry.
1 sand you 'C.-21s with coneidorable reluctance rcalicin;. that

it is mono of my basins,s whatever.

Faithfully yours,
Colonel

:T.ouse,

araoiic. ::ass.

B170071



"There is very little enthusiasm for the war.
I see in some
towns in this state every man drawn claims eemption.
On the street,
in the offices, in the smoking-room of the sloe-per, the war is not the
'prine subject of conversation. There are :early thoughtful men who have it
constantly in mind and say nothirn about it, but even their mental attitude towards it is all er:{presaed by the phrase of Anthony Trollope,
doo;ed that ,Joes it."
I attribute this condition very largely,
to the childish censorship in..Jashington and secondly, - to the
distrust of T.LI.ker and Daniels.
The latter evil seems beyond removal,
but the other ought to be remedied.
It is well nough to say nothing
about what troops are ombarkin on a certain day for ;,'rance, but when
they are once landed no amount of inform.etion regarding the number or names
of the reJ:ments can by any possibility hurt the cause or help the enemy.
All of our papers Ethould be full of things accomplished. The knowledge
that we h:d throe hundred thousand men in training over there would wake

"It's

first -

up our people and discourage Jer:::any. ..1,s things are, you will find
you will not get the same effort from the ban:,rs that you did before.

that
That

effort enteiled an immense amount of work ohich is far from complete. It
ent:-.1.1ed in the agregate a large cost whiOh the banks will hesitte to
gain meet.
Instead of being dragged for:/ard by the bans, the ordinary

a .a

le have got to be

brought for;7ard voluntarily and, to do this, the.'

to be interested far more deeply than they are to-day in the great

effort.
If

pose of

:-_;reel sad all the

uould use his influence- with the -President to dis-

vee,ty nonsense of his de-nartment, take

the aeoie

into his confidence sod 1-,:a7::e them realize that it is their fight, your wof::

would go very differently from the w.ay it seems likely to go to an outsider.
"I take it that the men of area i wealth have secured about all
the -tends theye
and when you come to distribute such on issue in units
of less ti-aim ten thoaean,-: dollar's, you have ,:t;ot to reach a tremEnso number
.of buyers.
-%ictorTi would do it.
defeat night do it.
In the absence
of either victory or defeat, the only thing which I can see, which is lia:ely
to -pro,:uce the result is' fall and free and constant
;1-.aon a
regiment _or division. is orered to 0 there should be great 7,ublia domcnstrations Which need 11t reveal the day or line of de:arture, :.ut would wake
code up,,, and so with all the o!.,her things.
qive us news!
Let the news.:_

info=tion.

'..capers orLat a:lything they want and :amplify all they will and lot der;:.any
:.ake the best of it."




5)

"There is very little enthusiasm for the war.
I see in some
towns in this state every man drawn claims exemption.
On the street,
in the offices, in the smoking-room of the sleeper, the war is not the
prime subject of conversation. There are many thoughtful men who have it
constantly in mind and say nothing about it, but even their mental attitude towards it is all expressed by the phrase Of Anthony Trollope, "It's dogged that does it."
I attribute this condition very Largely,
first, - to the childish censorship in.Washington and secondly, - to the
-distrust of Baker and Daniels.
The latter evil seems beyond removal,
but the other ought to be remedied.
It is well enough to say nothing
about what troops are embarking on a certain day for France, but when
they are once landed no amount of information regarding the number or names
of the regiments can by any possibility hurt the cause or help the enemy.
All of our papers should be full of things accomplished.
The knowledge
that we had three hundred thousand men in training over there would wake
up our people and discourage Germany.
As things are, you will find that
you will not get the same effort from the hanks that you did before.
That
effort entailed an immense amount of work which is far from coMplete.
It
entailed in the aggregate a large cost which the banks will hesitate to
again meet.
Instead of being dragged forward by the banks, the ordinary
people have got to be brought forward voluntarily and, to do this, they
have got to be interested far more deeply than they are to-day in the great
effort.

"If Mr. McAdoo would use his influence with the President to dispose of Creel and all the petty nonsense of his department, take the people
into his confidence and make them realize that it is their fight, your workwould go very differently from the way it seems likely to go to an outsider.
"I take it that the men of great wealth have secured about all
the bonds they want, and when you come to distribute such an issue in units
of less than ten thousand dollar's, you have got to reach a tremendous number
of buyers. A victory would do it.
A defeat might do it.
In the absence
of either victory or defeat, the only thing which I can see, which is likely
to produce the result is full and free and constant information.
When a
regiment, or division is' ordered to co there should be great public demonstrations Which need not reveal the day or line of departure, but would wake
people up, and so with all the other things.
Give us news!
Let the newspapers print anything they want and amplify all they will and let Germany
make the best of it."







August 13th, 1017.

Dear Colonel House:

ry holiday in the Vest is now over and 1 n1 glad
to say I vas able to stay avIly long enouvh to eseqpa the

not veathcr.
good friend, Mr. Curtls, ha o aol:od mr to stand

codfv.ther for h!,f, boy and as they are to have a eiristening

party on the 25th of tl/is zonth, I 'All be in your iruediate heighborhood for a day or -1.vo and cm rritirg to in:olire

if it will be entirely convenient for me to call.
Hoping that yoTheap ve11 and with kindest regards
to you and Nrs. Houso, I am,

Very truly yours,

Colonel E. L. House, -

ra?-yolia, rase.
133/1TCY.




August 13th, 1917.
Dear Colonel House:

Yy holiday in the rest is now over and 1 RM glad

to say

was able to stay away long enough to escape
not weather.

he

My good friend, Pr. Curtis, has ashod me tn stand
godfs.ther for hie boy and am they ars to have a christening

party or the 25th of this month, I 111 be in your immediste heighborhood for a day or uwv nne am writing tn inquire

if it will be entirely eonvenient for re to call.
Hoping that you keep well RC(' with kindest regards

to you and Mrs. House, I

am,

Very truly yours,

Colonel E. M. House,
Yagnolia, Mass.
BVITCY:

Governor Benj. Strong,
Equitable Building,

New York.

Dear Governor Strong:

I shall be de-

lighted to see you when you come to
the :North Shore.

My telephone number is Manchester

640 and, if you wi4call me up, we
will make an engagement convenient to
us both.
Sincerely youri-",

Magnolia,




August

1
/
MOsachusetts.

44,

1917.

elvu44__




27km, 6

August 31st, 1917.
Dear Colonel House:

A ratter has come up which may be of interest te the
War Department but which I feel unable to deal with without
your advice.

A warn personal friend and forner business associate,

?:r. Ambrose ronell, who is President of the Internaional
el Company is very anxious to undertake some work for the government end has made a suggestion to me uhich impresees me as

being well worth Secretary Baker's consideraion.

Lr. ronell

would like to go to France and take entire charge of organizing

and constructing a plant and machinery far all types of repair
work for our an-ly.

In this he wo,ld include repairs to artil-

lery, machine guns, rifles, transfort equipment, aeroplanes in fact everything which re:lu;red the application of mechanical

ability.

No better man to place in charge of this vork could

in my opinion be found.

r.Yonell is a technical engineer, his earlier experience having been with the CarneTie Company where I believe he *-2=s

classed as metallurgical chenist.
and speaks French.

He is a university graduate

Then the Steel Cortoration was formed, ha

beca:e 7rer,ident of the international nieLel company end devel-

oved that organization with the present success.

He has been

1

- 2-

interested

it

a very important tay in oi-ganizing the Yddystone

plant '1.1,5.61 is about to begin the manufacture cf rifles for

the United States Army and during the period of the i:;ar has

been engaged in various enterprises, including th6 manufacture

of gvna and shells.

He has also had advisory direction in cne

of the largest autemobfle true?: enterprises in the country.

I

regard him as one of the most akillful and intelligent organizers
of manufacturing enterprises in the country. He is a younr; man -

only a little over forty, has magnificent health, independent morns
and yould expect to vork for the government for i;:thing.

or twelve or fifteen years past rr. ronell has had a
good deal of business in France and direct contact vith many :In-

nortant French mnufacturers. He also knows the countryvell. It

would be difficult to find a man who is better equipped for taking

charge and direction of plants and their operation.

He tells me

that the nickel Company, the Iddystone plan and the Reminton .rms
Company, as tell as the International 7uotcr:, Company, in all of

vhich he has been apoving spirit, are now so organized that they
can run ssloothly and sixcessfully without his giving -Clem any per-

sonal attention and he could f,..c to France at once preared to t-Ae

up the tork.

He also informs me that he would h ve a; his con,:and

the necessary force of experts, aould be able to organize them and
tnderte:e the work vhenever the government wished him to and that

he could also command a nucleus of skilled labor famili-x with 'Imer-

ican rr-.chincry so that ihere .:ould be no delay in starting the work.
(3)
Will you Advise me how best this matter could be
placed before the proper people in Washington?
Digitized for Colonel E M.House
FRASER
http://fraser.stlouisfed.org/
Magnolia, Mass.
Federal Reserve Bank of St. Louis

With kind regards, I am,
Sincerely yours,

leeflorteetati ie t va.




Ayttone

tertecet 4tar

August 31st, 1917.

be

Dear Colonel House:

A matter has come up which may be of interest te the
War Department but which I feel unable to deal with without
your advice.
A warm personal friend and former business associate,
Mr. Ambrose feonell, who is Presidont of the international Nick-

el Company is very anxious to undertake some work for the government and has made a suggestion to me which impresses me as
hr. eonell

being well worth Secretary Baker's consideraeion.

would like to go to France and take entire charge of organizing

and constructing a plant and machinery ler all types of repair

In this he weld include repairs to artillery, machine guns, rifles, transport equipment, aeroplanes work for our army.

in fact everything which required the application of mechanical
ability.

No better

man to place in charge of this work could

in my opinion be found.

Monell is a technical engineer, his earlier experience having been with the earne ie Company where
classed as metallurgical chemist.
and speaks French.'

1

believe he was

He is a university graduate

41Rhen the Steel Cornoration was formed, he

beeeee 'resident of the International Pickel company and devel°rod that organization with the present success.

He has been




-2-

interacted in a very important way in organizing the Fddystone

plant which is about to begin the manufacture cf rifles for
the linited States Army and during the period of the war hac

been engaged in various enterprises, including the manufacture
of gune and shells.

He has also had advisory direction in one

of the largest automobile truck
regard him as one of the

enterprises in

the country.

most akillful and intelligent organizers

of manufacturing enterprises in the

country. He is a young man -

only a little over forty, has magnificent

health, independent means

and would expect to work for the government for

or twelve or

eething.

fifteen years past Mr. Yonell has had a

good deal of business in France and direct
portant French

I

manufacturers.

contact with many im-

He also knows the countrytell.

It

would be difficult to find a man who is better equipped for taking
charge and direction of plants and
that

their

operation.

the Nickel Company, the Eddystone plan and the

He

tells

me

Remington Arms

Company, as well as the international totors Company, in all of

which he has

been a

moving spirit, are now so organized that they

can run smoothly and seccessfully
.

sonal attention and he could
up the work.

without his giving then any per-

go to Trance at once

He also informs me

that he would h-ve at his command

the necessary force of exnerts, would be able
undertake

the work

prenared to take

to

organize

them and

whenever the government wished him to and thret

he could also command a nucleus of skilled labor familiar with American machinery so that there would be no

delay in starting the work!

2
you advise me hov! best this matter could be

placed before the proner people ir '%shington?
With kind regards, I ara,

Sincerely your,

Colonel 7.

House,

P,ass.
119/101"




*

00.17

2-

COPY
Letter from the files of Mr. Benjamin Strong, Aug. 14, 1915, to Colonel E. M
House (which has not been located at the Bank of in the papers of Benjamin Strong,
Jr., which he acquired after his father's death in 1928)
My Dear Colonel House:

Referring to our conversation of a week ago.
observed that matters are developing along the lines of our discussion.
Sterling exchange sold yesterday below 4.71.

You have do

The newspapers are reporting very considerably cancelations of
foreign contracts for wheat and other commodities.
The cancelation
for grain is reported to be due to military developments at the Dardanelles, which
may shortly release large quantities of Russian wheat.
This seems
and, if rumors now appearing in the newspapers are well grounded (although I
suppose they are considerably exaggerated) I am inclined to believe that the cause
is inability to get remittances
It is a:striking illustration of the
effect upon our trade growing out of inability to arrange credits in this country.
If e:change declines very sharply so that all the profit on a purchase
of goods contracted for in this country is gone before the goods are e ported,
and the purchaser is in a position to cancel the contract, he will, of course,
cancel in every instance even though he has to buy again later, possibly after
dontracting for his e hange in advance.

The situation is undoubtedly growing increasingly difficult with each
day's decline in e change and while I don't see anything yet to be alarmed about,
I still believe that at present rates, with the prospect of still lower rates, the
influence is gradually growing stronger to curtail our export business
With kindest regards, I beg to remain,
Very truly yours,

iBenjamin

trongl

United States Congress, 74th, 2nd Sess., Senate, Special Committee Investigating
the Munitions Industry, Her2I1-13ga_on_Sj*art 26, p.7861 (Washington, 1937)




Aug. 14 1915.

dear Colonel House:

Referring to our conversation of a week agog You
have doubtIees observed that matters are developing: along

the lines of our discussion. Sterling exchange sold yesterday below 4.71. The newseepers are reporting very consider-

able cancellations of fereign oontracts for theet and other
commodities. The -cancellation of contracts for grain is re-

ported to be due to military developments at the Dardanelles,
which may Shortly release large quantities or Russian wheat.
This hardly seems probable and, if rumors now appearing in
the newspapers are well-grounded (although I suppose they

are considerably exaggerated;, I am inclined to believe that

the cense is inability to get remittanees. It is a striking
illustration of the possible effect upon -our trade growing

oust of inability to arrange credite in this coiettry.
If exchange declines very Sharply so that all the
profit on a purdhase of geode contracted for in this country
Is gaaa before the goods are exported and the purchaser is in




Colonel E4 U. House,

8/14/16,

evoeition to cannel the contract, he will, of course, cancel
in every instance even though he has to buy again later,
voesibly after contracting for his exchange in advance.
The situation is undoubtedly growing Increasingly

difficult with each day's decline in exchange and, while I

don't see anything yet to be aIarmed about, I still believe

that at present rates, with the prospect of still lower
rates, the influence is gradually growing stronger to curtail
our export business,

th kindest regards,. I beg to remain,
Very truly yours,

.Colonel E. U. House,
Mancheeter, Mass.

InariPE




'r
FEDERAL RESERVE BANK.
OF NEW YORK




d11
Sent by

COPY OF TELEGRAM

(SEND TO FILES)




estr.siila

.t
Governor Benj. Strong,

013rn
/Sr

rt) #1

Federal Reserve Bank,.' New York.

A

'
Dear Governor Strong:

irk,

l

ii

I will see what I can

do towards furthering the desires of your
friend Mr._AMbrose Monell.

At the moment,

I cannot think of more efficient service
that the one he proposes.
I take it that

the

plant which he

desires to construct and operate is to be

wholly

Government owned and controlled.
I know Mr. Monell and share your

high opinion of his ability-.
Sincerely yours,

Magnolia,

Massachusetts.

September 2,

1917.

SEP- 4 1917




2riF011

)22

Governor Benj. Strong,
Federal Reserve Bank, New York.
Dear Governor Strong:

I will see what I can
do towards furthering the desires of your
-

friend Mr. Anbrose Monell.

At the moment,

I cannot think of more efficient service
that the one he proposes.
I take it that the plant which he
desires to construct and operate is to be
wholly Government owned and controlled.
I know Er. Yonel) and share your

high opinion of his ability.
Sincerely yours,
Magnolia,

Massachusetts.

September 2,

191,7.)
I

SEP- 4 1'.31




)ex. 4,1917.

Dear Colonel Hauee.

Than:c you for your note of September 2nd.

Jr. Lonell desires to place his services and
his experience at the Govermentts disposal in any
caracity whore ho niz;ht be found'of use, and I think

his idea was sir:ply to take charge of the construction
and operation of such plant or plants as the Government
miaht desire to construct in Prance.
Very truly yours,

Colonel

::,.. Houses

Eaz;nolia, Lass.




September 4, 1917.

Dear Golonel.y5s#4,m,,,,,
Thank you for your note of September 2nd.

Mr. Motion desires to place his services and
his experience at the Government's disposal in apy
capacity where he might be found of use, and I think

his idea was simply to take charge of the construction
and operation of such plant or plants as the Government

might desire to construct in France.
Very truly yours,

Colonel 3. M. House,
Magnolia, Mass.
B3/11.411

September 8, 1917.

Dear Colonel IDUSO:

I know you will be in erected in ro,dir, the enclosed, which will be sent out by the Federal Eeserve Sank
when

1.)praV.0.1 by the Liberty Loon Committee.

The 1st, 2nd and 3rd will Jicclose what our d;ner-

ous liabilities are.

The 4th and 5th will disclose what

available reourcos we have to meet tier.

Oar underta%-ins

mast be to convert these resources so that the: can be rode
availalae to met the liabilities. I am confident that it
can be done.

Eay I ask you to return the enclosed after read1n3;
Very truly yours,

Col. E. LI. Housee.
Lasnolia, riass.




BS/IiAH




September 8, 1917.

Dear Colonel House:

I know you will be inlerested in reading the enclosed, which will be sent out by the Federal Reserve 3ank
when approved by the Liberty Loan Committee.

The 1st, 2nd and 3rd will dieclose what Jar danger-

ous liabilities are.

The 4th and 5th will disclose what

available resources we have to meet them.

Our undertaking

must be to convert these resources so that the- can be made

available to meet the liabilities. I am confident that it
can be done.

May I ask you to return the enclosed after reading?
Very truly yours,

Col. E. M. Housee,
Magnolia, Mass.
BS/ RAH

Encs.




October 18th, 1917.

Dear Colonel House:

With further reference to the printed plan regarding control of security issues, this is to advise that
the copy which I sent you was ohly a draft of the report
and that the committee is still working- on it.

No doubt

a number of changes will be made and when it is finally com
pleted I

will

have a copy forwarded to you.

This matter seemed of sufficient importance to

send you this note of explanation.
Very truly yours,

Colonel

4.4.01ouse,

115tricot 53rd Street,
New York City.

VCk

ant4a

SitT,Z12,11t-1,7-:

Dear Sir:
transfers
In order to oomplete arrangements for handling the large

of cash and credit

which

will be necessary at the tine of payment for the next

certain information
issue of Liberty Loan bonds, this bank desires to obtain
enable it to
daily from the banks and trust companies of New York City to
deal with the matter intelligently.

FIRST

The information desired is as follows:

Total amount of balances carried with the reporting
institution by banks, trust companies and savings
banks located outside of the City Of New York.

by the rencollp Total amount of strict call loans carried out-of-town
the account Of
porting institution for
banks, bankers, firms and corporations.

THIRD

Total amount of strict call loans carried by saoh re(Call loans
porting bank for its awn account.
classified as strict
specified in 2 and 3 to be
call loses should generally be those made to brokbe
ers and security dealers, payment of which may
required an the day Galled, in accordance with
stock exchange practice, or an at least not more
than three days' notice.)

United
FOURTH The amount of (a) unpledged obligations of the
warrants, (c) comStates Government, (b) munioipal
mercial paper and (d) acceptances owned by the reporting bank, which are eligible either for discount or as collateral for loans at the Federal re(Definitions of eligibility of these
serve bank.
classes of securities as specified by the Federal
Reserve Act or by the regulations of the Federal
Reserve Board are attached.)

Pim

Seouritiis owned by the reporting bank in addition to
end not included in those reported under No0 4, arid

which may be accepted by the Federal reserve bank as
collateral to secure Government deposits as prescribed by Treasury Department circular Bo. 81 and
by subsequent rulinge of the Department modifying the
(A statement of the securities define& by the
same.
This
circular and rulings referred to is attached.
is subject to changes as and when made by the
Treasury :Department, of Which you will be kept ad-

visd.)
It is requested thr*- r7rrIrt.?

railed. to the TWerrl reoerve bank

oFw

Ce-nv-n-erevyt.e
41, IPA




close

Or business

meinees d:

4

A

the figures to include the

.2report is made, and to be furnished upon.
transactions of the day on which the
by this bank.
forms which will be provided
classes
eligibility of may securities of the
If doubt exists as to the
information
bank will be glad to furnish any
referred to, the °filters of this
required.

to plans which are being developed by
This request is made pursuant
General Committee of this discooperation with the Liberty Loan
this bank in
of the next Goverment
object of facilitating the financing
trict, with the
A special
disturbance to the money market°
avoid =emissary
Loan so as to
Io. Baker, Walter B. Frewg Gates Wo
committee consisting of Messrs. George
Wallace9and Benjamin
A. Vanderlip, James W.
MoGarrah, Charles H. Sabin, Frank
of dealing with this
has been appointed for the purpose
Strang, Chairman,
tor.

that a prompt response to this reIt is the belief of the committee
it is addressed will be in the
cooperation of the banks to whom
quest and the
ratioulll interest.




The committee will

appreciate a response to this letter.

(Copy)

Dear Sir:

In order to complete arrangements for handling the large transfers of

cash and credit which will be necessary at the time of payment for the next
issue of Liberty Loan bonds, this bank desires to obtain certain information
daily from the banks and trust companies of New York City to enable it to
deal with the matter intelligently.

The information desired is as follows!

FIRST Total amount of balances carried with the reporting institutions
by banks, trust companies and savings banks located outside of the
City of New York.
SECOND Total amount of strict call loans carried by the reporting institution for the account of the out of town banks, bankers, fixms and
corporations.

THIRD Total amount of strict call loans carried by each reporting bank
for its own account.(Call loans specified in 2 and
to be classi'
fied as strict call loans should generally be those made to brokers
and security dealers, payment of which may be required on the day
called, in accordance with stock exchange practice, or on at least
not more than three days' notice.)
FnURTH The amount of (a) unpledged obligations of the United States Government, (b) municipal warrants, (c) commercial paper and (d) acceptances owned by the reporting bank, which are eligible either for
discount or as collateral for loans at the Federal reserve bank,
fDefinitionS.:_oftlfgibility of these classes of securities as speci
fied by the Federal Reserve Act or by the regulations of the Federal
Reserve Board are attached.)
FIFTH

Securities owned by the reporting bank in addition to and not included
in those reported under No.4, and which may be accepted by the Federal
reserve bank as collateral to secure Government deposits as prescribed
by Treasury Department circular No.61 and by subsequent rulings of the
Department modifying the same. (A statemenitof the securities defined
by the circular and rulings referred to is attached.
This is subject
to changes as and when made by the Treasury Department of which you
will be kept advised.)

It is requested that reports be mailed to the Federal reserve bank close
commencing...
Sept.
of business day each business day,/ the figures to include the




ELIGIBLE FOR DISOCUNT OR
RESERVE BANK. MENTIONED lg
AS OOLLATRRAL AT in:MAL
PARAORAFR METE.

IMORIPTIOff Of ssamens, ETC.,

(A) UNITED STATES GO-MtENYIN71'EON2§__AnD

These may include any bonds, notes or certificates cf indebtedzei:e

issued by the Government of the United States.

(B)11211=thiraaanc.
litznicipel warrants must consist of bills, notes, revenue bonds ane_
wcrrantr with u naturity from date of purchase by ths Federal reserve bank of
not exceeding six months, issued in anticipation of the collection of taxes
or cf the receipt of assured revenues by any State, County, district, po1it!c,.11

eul)divi,slon or muniotpality in the continental United States, including irriga-

tion, drainage and reclamation districte.
For further details us to eligibility of munioipal warrente, nee

Regulation "E", Series of 1917, of the Federal Reserve Board,

(C) =amnia rAmpo
3ligible commefeial paper naat consist of a note, draft or bill of
r.rohanaehaving a maturity of not more thAn ninety days9 exclusive Cf days of
grace, except parer drawn,or issued for mripultural purposes or based on live
of dr.ys
ston;c, which may hate a matUiity of not rore than six mouths, exclusive




The paper must be a note, draft or bill of exchange, the proceeds of

rre been used er are to be nee In an actual commereial transaction,in one or more of the stay;
71 purch;-,elm7, cnrryins or markettnp goods,

cess of production, mannfacture, or distribution; and rust not be
1-,oat or fed IntwvAmen`n of any 171nd, ouch us Llna, builtangE
'or invastrifInt F

"' rCtv anecul at lye clin.raeter,

The ell!dbility of the peper is not affeeted
tho pledge of .epods or other collateral.

its beine cee!

The agereeate of notes. dr-ftc

bills bearieg the signature or indoreement of any one borrower rediscount,:
any one member

banks shall be no tine sceed

surelts of welsh bane:

lop% of the unineuirod

but this restriction does not nnply to the rediscouet

of bille.of exchange drumn in geod faith against aotually existing velues,
?or

a

ftrther detailed description of eligible commercial paper. seo

Regulation eA", Series of 1917, of the Federal peseree Bourd, Sectioee
2 for notes, drefte and bills of exchanee;

Section 5 for traet acceptances

aM Section 6 for agrioeltural paper.
(D)

agelaagEe

An acceptance (other than a trade acceptance)

It

be a draft or

bill of exchange of which the accepter is a bunk sr trust company, or a firm,

person, company or corporation engaged in the bueiness of greeting blnors
ecooptunce credits.

rediacount by the

The bill must have

a naturity at time of purohnee or

Federel reserve bank of not Tv:me than t)tree months, exclu-

niee of deyo of grace, and must have been drawn under

a

credit arened for the

purpoee of conductinz or eettling accounts resulting from a tmnseotion or
trensactions involving -

The shipmett of goods between the rhited States and any
foreign country, or between the United States end eay
of its dependent:tee or insular peseessions, or between
foreign °sentries, or

The shipment of eede within the United States, provided the b1/1 at the tine of itc acceptenee is eccompanted by shipping documents, or

reef steraeo elthin the

meltetiblegokls,

rated States

of readili

nrovided the acee0,11

of

is secured by wo.rebouee, terminal r other
ceipt, or
(.1)

The storage within the rbited Stutee of geode whih here
nrovided the accepter ef the bill'
been a0t3a1l7

in severed 'by the pledre of sudh goode

;ir it



1U &rave

-

it

4 r.

.4Afvendimay sr tnoniar ;sonstzoion of the Mite, States for the ptrpece of fuT-

aiehing dollar exdbmge

ta this latter case the badl: or banker drawimr ths

'All mist 1)0 in a cctmtry, aovendency, or possession whose tzagos of trade
71Rve 1-i en determined. by the Federal Feserve Boae to require the drumine of

billn of this Character.
For further detailed description of eligible tocoptances, use
Ft,bulatton '1E", Series of 1917, of the Federal Reserve Po ard, Section 4




jel2nign0lfaLeb:

(1.)

Bonds and Cortifloates of Indebtedness of the United State' Governmemt of any

tL)

Batas issued under the Dated States Farm Loan Act and bonds of the
Philippine Islamise Porto Rico and the District of Columbia; all

(C)

Botds of any State of the United States: at market value not exceeding pare,

CD)

Territory of Hawailv 3 1/4 bonds at 90% of par. Other bonds of said territory at market value not exceeding parn
Bomds of the Manila Railroad Oompalys at 90% of market value not exceeding

issue, including bonds of the Liberty, loan and interim certificates for p47ments therefor; all at par.

at ear,

90% of ear

4) Dollar bards and obligations of foreign Goverements (and of the dependenoioe
thereof) ergaged in war against Germany and issued since July 30, 1914s
at 90* of the market value thereof not exceeding 90% of par.

.4;

CoUnty or City bonds of any County or City in the United States which are
direct obligation' of the County or City as a whole; at 75% of the merket
value thereof not exceeding 75% of par-

Railroed mortgage bonds secured by direct mortgage upon lines of railroad
within the United 2tates, but not including any such bonds Which OL L147

£3, 1917, wore at e market price to yield more than 8 1/4 if held to
maturity acoording to standard tables of bond valuess at 75% of the
aarket value thereof_ not exceeding earn

thi,J

Commercial paper which it eligible for rediscount or eurohaee by Federal
Reserve Beek.; end which has been approved by the Federal Reserve Bare

of the district in leech the depositary bank is located
eper mast bear the indorseplent of the depositary bank

(I;

A.31 sunh

TotesD certificates of indebtedness and Torrents issued by any State of the
United. States 0 00;: of their maxicat va1t riot 'rrceoding rar
REnroad equipment and trust obligatioes at 75% of their marltet vaino.
exceeding par. but not including any such obligutions Which or Lay 0.7-.
1917, were at a market price to yield. more than 5 114 e'er annum if
held +o maturity acoording to standard tables of bond veltes.

cf electric railroad on4 traction companies= telephone end teleeraeh comeatiee ene nleotec light, power and as comories, aecured
direct mortgavz ul.f.in their*physical properties it the TinitV
..'-tea and listed on soma recognized atodk exobarge, taken at 'eel ee
eerket ralua thereof. mt exoveding par, but not incJudincl
bonds
1917,_uer at a merest price to
th:71 F
annurl If teld to materity according tr.




:ireillreseisaerame

(N AI. it E

0w

A

Close of business

on (date)
isalances of out-of-town oorresrondentE

,

o

Call loans for out-of-town'oorrespondents
Gall loans of this bank

THIRD

6YRTE

Iligible at Federal Reserve Bank
iirsible (excluding Fourth) for Government Deposits

4

Cashier,

Federal Reserve L-




VetW York,

October 18th, 1917.

Dear Colonel House:

Vith further reference to the printed plan re-

garding control of security issues, this is to advise that
the copy which I sent you was only a draft of the report
and that the committee i8 still workin,7 on it.

No doubt

a number of changes will be made and when it is finally com-

pleted I will have a copy forwarded to you.
This matter seemed of sufficient importance to
send you this note. of explanation.
Very truly yours,

Colo."' F.
.4a0,
115g50 4,1i rd
^,




New"rect
City.
Ne

A

MEMORANDUM.

ADVANCES TO ALLIES:

bettsr ur

At

A constructive program reaching certainly six months

into the future or, still better, a year, should be developed as
As that will take time, our Treasury might well

soon as possible.

determine what advances could be made for, say, the next two months
and within that limit credits could then be apportioned among our
Allies according to a tentative program laid out in conference with
them which would not commit us or them as to a further period until
:.

,o

the comprehensive program was developed.

I should suppose that

from $180,000,000 to $200,000,000 a month for Great Britain and about
'sri

$100,000,000 for France would cover their needs for the next two
months.

As to Russia and Italy, the need is not so pressing nor

for so large amounts at present.
ANNOUNCEMENTS:

The policy of announcing each advance as made strikes

me as liable to cause embarrassment to us and to our Allies.

If

the Secretary would announce total advances to the Allies, say once
a week, it would overcome this difficulty.

FINANCIAL LEGISLATION:

I am convinced that the amount provided by Con-

gress for advances to our Allies will be inadequate for even a six
:WS

AFT

months' program, that generous financial support promptly accorded
at this time will be of greater value than later and I hope that our
government will find it possible to secure all necessary legislation
at this session of Congress to enable our Treasury to give our Allies
the fullest possible support.

0'
GENERAL ORGANIZATION:

The development of a program (financial,

food,

mu-

nitions, shipping, etc.), based upon existing legillation cannot be




concluded satisfactorily without a better understanding of the requirements.

To accomplish this, possibly the following principles

might be helpful:

The whole subject of furnishing food, military supplies,
transportation and credit should be governed by considerations of
military necessity.
the seat of war.

Those considerations can only be weighed at
The general policy might, therefore, be worked

out by an international commission on which all of the Allies would
be represented, (United States, France, Great Britain, Russia,

Italy),

which would sit permanently in Paris, the membership of whichzispuld

be composed of the ablestmen available to deal with commercial, industrial and transportation questions, as well as finance.

The mem-

bers of such a commission should be ssupported by an adequate staff of
experts.

nation

It would determine priorities between the Allies, each

retaining

priority for its own needs, out of

its own

resources.

If such a commission were created, this country would shortly occupy its natural position toward

the

war.

We must organize as

an immense farm to produce food, an immense factory to produce military and other supplies, an immense transportation system to furnish
rail and water transportation and an immense bank to finance

the

pur-

chase and transportation of material.

The organization in this country would properly direct its
efforts to fur4ishing those things and in such quantities to the respective allied powers as recommended by the commission sitting in
Paris.

The local organization in this country might consist of:
First.
A Purchasing Board:
This Board would distribute
and execute orders md its technical stati would see that quantity quality and deliveries were as required.




-3she:

Second.
A Price Fixing Body or Board:
Such an oreanizationwould stand between the country's regular commerce
and industries and our government in its war requirements
and settle questions of prices. eve.

Third.
A Priority Board:
This organization would settle all questions of priority of delivery as between our government and its Allies on the one hand, and other customers
on the other.
It should co-operate with the Commission sitting in Paris.
4U Q.C$':
A
Fourth.
Foreign Representation:
Each of the Allied
governments must, of course, be represented here by competent commissions with full authorities, whose functions
should be exercised in co-operation with the Purchasing
Board and would include making contracts, anoluding financial arrangements with our Treasury, paying for goods purchased, inspection before shipment, eta.

Fifth.
in such a

The Treasury:

The

function of

echeme of organization would be the
1 raising funds, apportioning credits according
needs and paying the bills, being governed by
made by our reprosentativen on the commission

our 'Treasury

normal one of
to the agreed
representations
sitting in Paris.

The organizations subordinate to the Purchasing Board would
have a useful place in such a scheme but would be controlled in their
activities, first, by the Purchasing Board; second, by the Board fixing prices and, third, by the Priority Board, all of which would coordinate through the Purchasing Board as the central organization.
This general plan is based entirely upien the principle
that our participation, in the war and all qctivities growing out of

it

must be governed by military necessity which can only be deter-

mined at the seat of war.
GOVERNMENT LOANS:

The experiences of the past three months convince me

that a much larger credit will be needed than that now provided by
Congress.

A perganent, nation-wide organization must be created

at once in order to facilitate government borrowing.




Congresq,,

-4-

should, I believe, authorize a large issue of short term notes
with a greater variety of character so as ts meet the needs of
different elases of iimestors and savers and it should confer
greater authority upon the Secretary of the Treasury in fixing

rates of irterest.

14'

A permanent paid organization should be promptly developed by the twelve reserve banks which could be expanded and

contracted ae new loans were placed.

At the same time, a sepa-

rate organization should be provided at, once to develop saving
in detail among all classes of people. '

These savings should be

seggregated, temporarily invested in the government's short obliga,ione and then converted into permanent loans when issues are
Only such a plan, which anticipates and earmarks in admade.
vance, will avoid increasing pressure upon our bankihg system and

possibly its dislocation.
Our participation in the war makes a certain expansion of
bank credit necessary and inevitable. This can be sound or un-

CURRENCY:

sound according to the skill with Which it is managed. Al]. necessary legislation has now been enacted with the passage of the
amendments to the Reserve Act and a perfectly sound empansion of
vast proportions is possible, provided the reserve banks are able
to assemble a much greater proportion of the country's gold supply
even than the amount already held about l,300,000,000. This

reeuires large issues of Federal reserve notes, to take the place,
dollar for dollar, of small denomination gold certificates, but
if successfully conducted will place an immense burden of expense




upon the reserve banks.

I would

strongly urge that

the Secretary

of the Treasury immediately discontinue issues of gold certificates
in denominations of ten and twenty dollars and that the Federal Reserve Board

ments for

instruct Federal

reserve banks to furnish all require-

currency in their respective districts by issues of Fed-

eral reserve notes on which they should pay the shipping charges.

Congress could then be

asked to make

the Bureau of Engraving and

ing Federel reserve notes.
currency, the cent of which

an appropriation

to enable

Printing to defray the cost of preparThe sovirg to the government on other

it now bears, will largely offset this

added expense.

To are fecirg the possibility of a great shortage of bills
of one and two dollar denomination.

This can be met in advance of

the Fall demands, which will be heavy, by reissuing large denomination silver certificates and United States notes in one and two dollar

denominations.

Each reserve bank should be instructed now

bills

to

This will increase
the vacuum to be filled by further issues of Federal reserve notes
and the simultaneous withdrawal of gold certificates above suggested
would automatically draw gold into the reserve banks without causing

accumulate

these

comment or possible

against the Fall demand.

alarm.

This accumulation of gold will offer a basis for credit
expansion which can be controlled within safe limits by

the discount

rates of the reserve banks.
TRADE WITH THE ENEMY:

House Resolution No.

4960, introduced by Mr. Adam-

goods, but fails adequately to impose
restraint upon foreign exchange transactions and shipments of gold
A
and provides no organization for supervising such transactions.
son, covers transactions ir

body should be created for the purpose of supervising all possible



-6enemy exchange operations and gold shipments, and this body should

have power to require reports and production of papers and records.
A letter covering this mmtter has been sent to Mr. Frank L. Polk of
the State Depkrtment.
At the present time we are importing gold from England which is
COLD:
being re-exported to Spain, Cuba, japan, Canada and South American
countries. The unwisdom of this development is apparent. The demmd upon our credit system will shortly be so great that we must

not only preserve but augrert our gold base, even if it irvolvss
curtailing trade and credit transactions with neutral countries.
Whatever organization is developed to deal with foreign exchange

should have authority to deal with this matter.







WELLIVER, Judson Churchill (wEl'i-vEr), corp.
exec.; -b. Aledo, Ill., Aug. 13, 1870; 0. Morrison and
Alum (Ilarroun) W.; di. pub. schs., Fort Dodge,
Ia., Cornell Coll., Ia.; m. Jane Douglas Hutchins,
July 3, 1899; childrenEdward M., Allan J., Sarah
H. Jane Douglas_ Newspaper work, Sioux City Journal, Sioux City Tribune, Des Moines Leader; later
pont, editor and editorial writes Washrngtoo Times,
and Frank A. Munsey newspaper.; sent to Europe by
President Roosevelt, 1907, to report upon waterway
systems of Europe and Great Britain, the companies'
laws of Great Britain, and railroad situation in
Europe, report pub. in Report Inland Waterways
Commn., 1908; London corr. and European mgr. N.Y.
Sun, 1917-18; In charge publicity at Harding hdqrs.,
Marion, 0., Miring 1920 campaign, and attached to

the White House organization atter Mar. 4,

1921,

occupying a confidential relation to Presidents Harding.
and Coolidge until Nov. 1. 1925, resigned; dir, public

relations with Am. Petroleum Inst., 1925-27; editor
The Herald, Washington, D.C., 1928; asst. to ores.
of Pullman Co., 1928-31; di, public relations Sun
Oil Co.. Phila. Clubs: Players (New York); NAIL
Press (Washington); Pen and Pencil, Penn Athletic
(Phila.). Conlin. to mugs. Address: 1605 Walnut
St., Philadelphia, Pa. Died Apr. 14, 1943.

January 17, 1S)23

Dear Jud:
A

guess

have to hand it

to you as the boy what knew vot's wot
and why. But if he can understand
the wave of banking expansion now under
way, and do what he may to keep it within
bounds, he will surely deserve well of his
country.
With warmest regards,
Always yours,

Judson C. Welliver, T4sq.,
TNecutive Mansion,

Washington, D. C.




TH WH I YE HOUSE
WASHINGTON
January 22, 1927:.

Dear Carl:

I do not kn w whether anybody in authority
will agree with m views, but personally I
think you are pain lly correct in your information that another in ation is under way and
that there is danger t at it might have disastrous consesuence.
1 you are in this town
any time soon I would lik a Chance to talk
with you abo
I thi , the administrahave need t
tive author
exercise a good
deal of wis
t a time when
atever they
.t

may be is certain to be a in of violet Vcriticism. It was my personal i41-f-epme1444aLJOIA__

'E.

cV-,

the big inflation or 1919 might have been discouraged by timely effort to enforce moderation;
but instead the screws were applied
after it was too late.
serious results.
I an certainly hoping that
a re-Ai:ion of that experience can be
anci7ould be mighty glad to have your avoided/
information about what ought to be done about it.
SLLoerely yours,

1,r. Carl ,-.;:hyder,

15 Nassau Street,
New York City.




We al




I

THE WHITE HOUSE
WASHINGTON
January 22,

192:',4

Dear Carl:

I do not kn w whether anybody in authority

-

will agree -with
\views, but personally I
think you are pain -11y correct ih your informa-tion that another in at ion is under way and
that there is danger t at it might have disastrous consequence.
'f you are in this town
any time soon I would lik a chance to talk
with you abo
I thi
the administrative author
have need t exercise a good
.

deal of wisdwt a time when
may be is certain to be a

atever they

-t

n of violet VL---

criticism. It was my personal 1-R-geiftWN2_1112I____

'

cVL-._

the big inflation of 1919 might have been discouraged by timely effort to enforce moderation; but instead the screws were applied
after it was too late.
We alltknow the
serious results.
I an certainly hoping that
a repetion of that experience ban be avoided
and would be mighty glad to have your inforation about what ought to be done about it.
Sincerely yours,

rl Snyder,
ssau Street,
ew York City.

Mr.
15

.LIkette.t.t.t2,1

C




No

Federal Reserve Bank

STRO IUG P PP ER S

District No. 2
Correspondence Files Division

SUBJECT




S PRes/DEAri-S

/7/4 -

-

(/.




ot,
'

/71




Form
OF SERVICE

SYMBOL

Day Message

ICLASS

Day Letter

Blue

Night Message

Nile

Night Letter
NL
If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

WESTE0,sm UNION
TEL
AM
WESTERN UNION

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

RECEIVED AT

CLASS OF SERVICE

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Nite

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If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

-)enver, Colorado,

December 21, 1916.

Honorable Joseph P. Tumulty,
The "Alite House,

Washington, D. C.

All you kindly convey to the President my conviction that
his efforts to restore peace in Europe will be rewarded with success
and with the enduring gratitude of the world. His determination that
our awn country shall share in the obligations and benefits of some
arrangemont between the nations to prevent future warfare cannot fail
to remove the chief obstacles to success :.Ind I believe will receive
the support of public opinion hare and abroad.
Benjamin Strong.

Chg..- Benjamin Strong,
4100 Montviaw Blvd.,
Denver, Colo.

SYI

Day Message




Form
CLASS OF SERVICE SYMBOL
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WESTE

47ASKNA

Nile

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NL
If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the
symbol appearing after the check.

WESTERN UNION

TEL

IRLNWIN

UNION

AM

Day Letter

Blue
N ite

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If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

Denver, Colorado,
December 21, 1916.
Honorable Joseph P. Tumulty,
The White House,
';iashington, D. C.

Will you kindly convey to the President my conviction that
his efforts to restore peace in Europe will be rewarded with success
and with the enduring gratitude of the world. His determination that
our awn country shall share in the obligations and benefits of some
arrangement between the nations to prevent future warfare cannot fall
to remove the chief obstacles to success and I believe will receive
the support of public opinion here and abroad.
Benjamin Strong.

Chg.

Benjamin Strong,
4100 Montview Blvd.,
Denver, Colo.

SYI

Day Message

Night Message

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

RECEIVED AT

CLASS OF SERVICE




THE WHITE HOUSE
WASHINGTON

Dear Mr. Strong:
I aril sending you herewith a letter

of introduction to our Ambassador at Paris,

which I hope will

be of service to you.

With best wishes for an

enjoyable and

safe trip,

Cordially yours,

SecretEry to the President.

Hon. Benjamin Strong, Jr.,
62 Cedar Street,
New York City.
enclosure.




January 24th, 1916.

dear Mr. Tunulty:

Your favor of the 22nd, enclosing a
letter of Intl-eduction to our Anbassador at Paris

is just received and greatly appreciatea.
Please accept my thPrks and believe me,

Cordially yours,

J. P. Tunulty, Esq.,

The White Aouse,
Washington, D. C.
VCI'd

Denver, Coloradov.

karCh $0, 1917,

Dear!. President:
have just received the following'telegram fram my son;
'Regiment mobilized. 11ay leave today. Destination

7

uncertain."

-

He is twenty years Old and. a Sophomore at ',11.*cOoton University.

.0

He joined the National Guard about a year aSo_pf hisiorn volitim, and
.. 4..._
-----:------1 i
-

solely from

sense of duty. He is one ofmanythousands of boys who
----..,

are doing the same thing, from the ati;Tiabtives. Esving cls;erfully al-

V
/,/
lowed him to volunteer for the,:Conntry's service, I feel justified in
/7/
,,,,
,

1

3

expressing my protest against the ndowooratle, unoise and dangerous
,..'
-

4" astem of volunteer military-Berne°, 7anyhich our country must now
-,\

1/7
depend unless our laws are
_

i

4

--

\s
\

Any system for I should say 1'

oul

_c
.

-

-

of system, which encourqges

-\

i
boys of his;.t.ge to spade what kind Iof duty they shall perform in

time
_hi
of Nat1 onal peril is wronzsp---Censideration cannot be given under this

syst

//

-----'''

\\.'

to special qualifications of the individual. Those whose trainin3.
1-\\

i

miz;h make thorn of greater value elsewhere than in the army or the DaVj,
..\

//

arc aft rded no opoor_tunity or encouragement to give their best service.
The great raid-OT those who voluntarily enlist, possibly to go to the

front and lose their lives in the ranks, are those who can least be spared
and, generally spvIcirtg, I believe they arc the ones whose enthusiasm for
public service would enable the to qualify most promptly as efficient

officers.




am letting this boy leave college for military duty in the

2.

conviction that ho vill be doing a large share of the service Which
should be done by men viilo stay at home, who are glad to stay at bone, who

are glad to escape risk and hardship by taking advantage of his patriotism,

and all because our Government does not see fit to equire a fair and
equal distribution of service of this kind 0302%:.; its cit 'seas.

i(//
Should our country depend for its prrection in time of war upon
the gift of the lives of the best youth of ha country any mbpe than it
1

should depend for its revenues 1;91.ra-of-tease upon dona ons of money

by those who are patriotic elle) gh tO give itf
Mot respectfully 1 4141 writing to urge

grass and the

resIonke oA

at it is tine that Con-

ars of our GovArnment undertook to remedy

this Matter. There are man-fathei's-of-boys who, like the writer, believe
-

that their sons are

lik/
ely

o ome the victims of a perilous weakness

in our Country's affaira, and rtho,'are looking to you, as I am, to urge

Cong4to wet a .114pOr dlitary service law.
Resnactfully yours,

Hon. Woodrow

?resident of he United States,
Washington, . C.

BS/CC.







THE WHITE HOUSE
WA S H I N GTO N

April 3, 1917.

My dear Mr. Strong:

For the President I beg to acknowledge
the receipt of your letter of the 30th of
March.

I shall be glad to call it to his

attention at the earliest possible moment.
Sincerely yours,
-

Secretary to the President.

_

Mr. Benjamin Strong,
4100 Montview Doulevard,
Denver, Colorado.

Misc. 34

1DERAL RESERVE BANK
OF NEW YORK

Sent by

morem

(SEND TO FILES)

IPAT DAY MESSAGE

COPY oT13917tttGRAM
rilLJUNCI K1,
JUN -11917

ZulLre
May 31, 1917.

Joseph P. Tumulty,

White House,

Washington, D. C.

Would it be possible for me to have an appointment to see the
President for a few minutes at any time to meet his convenience?
Stop. Ulm go to Washington any time. Stop.

Would appreciate re-

ply by telegram.

Charge

B-5


LibsstyxLetn, Treasury Dept.

Benj. Strong.

120xlitilkarty4 Official business.
Government state.

CLASS OF SERVICE

CLASS OF SERVICE SYMBOL

SYMBOL

Day Message

Day Message

Day Letter
light Message

Blue

Day Letter

Blue

Nita

Night Message

Nits

Night Letter

NL

Night Letter
NL
If none of these three symbols

If none of

appears after the check number of
words) this is a day menage. Otherwise its character is indicated by the

appears after the check number of

worde)th is isaday message. Otherwise Its character Is Indicated by the

symbol appearing after the check.

GEORGE W. E. ATKINS, FIRT VICE-PRESIDENT

NEWCOM B CARLTON, PRESIDENT

RECEIVED AT

r'

B147W 20 GOVT AN ANS
THE WHITE HOUSE

A SHINGTON DC 12461' 1

BENJAMIN STRONG
NEWYORK

TELEGRAM RECEIVED THE PRES I D
NOW WOULD APPRECIATE A LETT




these three symbols

REGRETS HEbANNOT SEE YOU

J P TUMULTY.

symbol app acing after the check.

1







JUN --41917

arA2ri lb/J.2

Jane 2, 1917.

Dear Mr. Trtmulty:

have received your telegram with regard to

an appointment with the President and, of course, realize
the bxtent of demands of this character upon his time.
.A statement outlining the matter with regard
to whioh I wish to see him will be prepared and sent to
him as soon as possible, and if arrangements can later

be made for re to have the interview I will greatly aRre-

elate it.
Very truly yours-,

Oovernor.

Honorable Joseph

Tumulty,

Seeretary 60 the President,

'Washington, 1.). C.
BS/ RAI

'DERAL RESERVE BANK
OF NEW YORK

(FOR BINDER)

SentbellS:VDM

FAST DAY MESV.'i
,ESTER UNION
flg(77.

COPY OF TELEGRAM

October 8, 1917.
Joe. P. Tumulty.

TrirlIntteiriftW
Warhingtcn, D. C.
Tried to roach you On Saturday and Sunday

in endeavor to find if you could

hold out any encouragement regarding subject of our conversation in connection with meeting at Carnegie Hell on eighteenth. Stop. Have discussed

matter with associates here and they think it exdeediegly important that
thiu plan be carried out if possible along lines of What is at stake in the
war. Stop. We all feel this would stimulate the whole country as well as
Liberty Loan Organizations to greater effort, which is much needed,as returns

re somewhat discouraging. Stop. Have arranged to hive Committee go over to
aehington if you can offer any encouragement but pressure of work on Liberty
Loon is so great they await word from you before doi,g no. Stop. Will be

glad to go over again myself if necessary and you think it advisable. Stop.
Am anxiously awaiting an ewer.


http://fraser.stlouisfed.org/
5-4
Federal Reserve Bank ofcherre
St. Louis

Stronr, Governor.
.3,MOIllI1 V

...los L-ara

WASHINGTON
9 October 1917.

,

emit el Ihit

cr4

Dear Governor Strong:

Your telegram of yie ninth of October
is before me, and I

hive

taken its contents
He does not feel

up with the PresideXt.
P

that the time is

pportune for him to speak

in behalf of thi Liberty Loan; but as there
are several mcke campaigns of this sort to

come, he th

ks he ought to reserve himself

,

for a late
should p

effort in case the subsequent loans
ve more sluggish than this one.

am sure/you will appreciate the situation.
Sincerely yours,

Secretary to the President.

foil. Benjamin Strong,
11:' S. leedere.Reserve Bank,
.

New York City.




I

October 10, 1917.

Dear 1r. uraralty:

Your note of yesterday has just reachdd me and naturally is disappointing.

It seems to be necessary that I should explain the exact situation in retard to the Liberty Loan, as it will meke clear why I have felt
so urgently the need for assistance from the President at this time.
war.

The people of this country do not yet realize the issues of the
The object of the meeting in earnetie Mall, when Lord Reading ie to

make an address, is to submit to the peoele of the country the fact that the
issue in this war is constitutional government. The president alone can
give the meeting exactly the character and influence desired.
But there are other considerations bearing on the success of the
loan which are causing us much anxiety.

The burden of taxation to be imposed by the new revenue bill will necessarily be very heavy. It partic-

ularly applies to corporations which, while they have wade large profits,
have at the same time so increased investments in plant and inventory that
they must borrow heavily in order to pay their taxes. And to add to the

difficulties of a very complicated situation, many of the large railroad systems of the country and the holders of their securities are also beginning
to have gravd anxiety as to their ability to raise money or absolutely necessary purposes, including refunding, and to make heavy tax payments, during
the period that such enormous demands are being madd by the Government upon
the money makkets.




It is no exaggeration to say that the country's money center has

Joseph P. Tumulty, Esq.,

#2

12/107.

developed a desperately gloomy view of the outlook, which is seriously af-

fecting the results of our labor of placing the Government's bonds.

I

believe this can all be sweet away and the last weak of our campaign be made
a stampede if the President could arrange to make an address in New York and

make it one of confidence and reassurance.

It is probably unnecessary for me to state in detail what is being
done here to insure stable monetary conditions in the Government's interest.

This bank Is lending its resources just as freely as may be demanded of it.
The banks of the city are taking hundreds of millions of the Government' obligetions every weak or two in order that temporary finencing may be successful pending the bond issue.

sixty seven of the largest New York City banks

and trust companies have undertaken to lend generally in the money markets a
total of 4231,000,000., which amount they will
firms end institutions

increase if necessary.

The

represented on the Liberty Loan Committee, of Which I

am chairman, heve just entered into an obligation to purchase up to 4100,000,000
of the outstanding 3

1/2% bonds and the new 4% bonds in order that they may

not sell below par while the new issue is being placed.

with total resources of e1,600,000,000. have
Reserve System.

Trust companies

been brought into

the Federal

Other things of less importance are being done as needed,

but it is nevertheless a feet that e ereat deal of concern exists in financial circles as to the outlook for the railroads and corporations that must
soon be heavy borrowers. and nothing will change this situation so positively

as an address by the President.
I also want to point out one important feature of this loan.

minimum of 0,000,000,000. must be greatly exceeded.

If this loan is very

heavily over-subscribed, succeeding loans will be undertaken with a degree
of confidence that will not exist




if this one is barely sold and no more.

Tumulty, Esq.,

10/10/17.

In other words, I believe, to make this loan a success will have a greater
effect upon subsequent loans than anything else that can be done, and it is
most important that we should not approach the spring, when even larger

borrowings must be effected, with a feeling that the financial situation
mast be rescued, but rather that it does not need rescue.
You will be interested to know that we have now, according to the

best estimate, about one hundred thousand people in this district working on
the loan.

They themselves today need encourarTement.

I regret very much feeling the necessity for writing so urgently

on this matter, but feel sure that the President realizes that the men who
are associated with me in this work are devoting evc;ty energy and resource
at their command to make the loan a success, and I am convinced that nothing

will be so encouraging and contribute so greatly to making their labor a success as the support of the President's well known courage, publicly stated

at this time.
Very truly yours,

Governor.

Joseph -5?. Tumulty, Esq.,

Secretary to the President,
Washington, D. C.
Bs/Titin




September 21, 1916.

My dear Mr. President:
Your kind letter of 3eptember 1011 is received this morning,

and makes me feel rather guilty in possibly having appeared a little
insistent about our invitation.

You must, I am sure, understand the

earnestness with which this great entreprise is undertaken by our
entire organization, and it may be on that account

that

we do not

always consult the convenience of others as fully as we should.
really hesitated to send you an invitation at all.

ly inspired

by

I

It -vas particular-

the fact that after a year an a half, during which the

people of this city, and particularly the bankers, have submitted themselves in wonderful fashion to the views

all matters pertaining to the war, any
at this time would be the greatest

and wishes

of the Government in

recognition which could be made

possible

assistance in connection with

the loan, and, if I may say it, to me, personally, in a very arduous
task.

We all wish for you the greatest possible freedom from anxieties,
in these days when it seems as though new anxieties developed every day,
and, particularly, health and strength to complete your great work.
Cordially.
To the President,
The ';,:hite House,

Washington, D. O.

BS/1433




Governor.




THE WHITE HOUSE
WASHINGTON
2 October, 1918.

dear Governor Strong:

That wee certainly a most generous letter you wrote
me on Monday, and I thank you for it very warmly.

You may be sure

I rendered such service as I did render with the best will in
the world and most gladly.
Cordially and sincerely yours,

Hon. Benjamin 2trong,
Governor, Federal lieserve Bank,

New York, N.Y.

THE WHITE HOUSE,
WASH I NGTON.

To the President:

Cables from France today indicate
a continuous advance of the American forces
over a front of twenty (20) miles from the

Argonne Forest to the Valley of the Meuse,
North of Verdun, passing beyond the Hindenburg
line on the entire front and gaining back
one hundred square miles of French territory.
The movement was sharp and rapid.
casualties were light.




MARCH

Our

November 26, 1918.

Dear Ur. Zumulty:

I am to-day addressing a letter to the President,
of which a copy is enclosed, and am anxious that it should
reach him at the earliest possible moment.
If you find opportunity to also convey a message

to the president from me, I would greatly appreciate your say-

ing to him that if there is anything bearing upon this important
matter concerning which I am writing him, which could be in any

way elucidated by my going to Washington to see him, I will go

instantly that I get word, which could be conveyed to me over
the Treasury Department private telephone line.

With kindest regards, I am,
bincerely yours,

Honorable J. P. Tumulty,

Secretary to the President,
The White House,
Washington, 0, a,,
B3/USB

Enc.




November Z6, 1918.

,;ear Ir. President:
My only justification for writing you thls personal letter
is tbo sonosrn which I oar. UJLhelp feeling As to the Goverament's fi-

nauoial program fol1owini3 Secretary MCAdoo's resignation, and I venture

to write yau this frank letter containing au ailression o: my osn views
with the hope that you will realise that it Is dictated solely by a
destrs to be of some slidht survise in this matter.
iisoretary loAdoo has acoomviishad, in his administration of the
Treasury, a most wonderful achievement, largely because of his sourage
nld Liz full appresiation of Vas sound monetary And financial principles
union mast govern the finanoing of t4e war if 0122 country io to escape
suan disastrous oonsequences as nross through the raiz-handling of cur
finances during the Oivil War, and snah au I fear will be encountered
by some of the belligerent nations of Zurope in futuro years. He is

leaving hia office I am sure from nesessity which is santrolling, at a
ticsv'ren our problams ars inoreasinz in difficulty, rather than the
reverse, and when it will require a strong band and sound judgment to
ie U.3 from the undoing of much of hi a good woric of the past.

The Im-

portance of the program of tax legislation he 4as Pally realized. I am
:pot so sure that his ouoseasor will. The future borrowino of LLe Government for at least six months, and possibly longer, will probably be of
larger amount than at any period, and the difficulty of placing these
loans will now be vastly greater than the diffiaulties encountered during
the perio4 of ,, ative hostilities. Thero is owirs.; to us eight billion
dollars by foreign governments, the terms for the adjustment of which indcbtadseas hnvo not .;, ot ,bosit rettlol, end, upon tho settleyent of these
terms very much of our future prosperity will depend. Problems will
shortly arise in the international exchanges growin out of the trellondoas
otlatv,Ti in our International trade, waioh 044 only be dealt with by one
uf the
fully familiar with the ieloji hiJtory 32 tho
Treasury Jepartmeht up to the present time. As a result of the elections.
We 41'0 .

41.1:rozturvately, Q.'Jaroated with the deporable situation where an

adverse, and possibly hnstil° politleal party will be in control of dongress
aad will not sontinuo a symnathetio-..upport of Use policies or -She admi.nistration. We may L,e threatened by a revival of demands for a protective
tariffi which would mermaoe j1.22' futnre prosperity aed finhnaial security.
It is not impossible that, strive as you may to avoid such a development,

the results of she peace conference will not protect the world Against a
reversion to a speoies uf commercial barbarism in the strife which may be
sr.:nested to arise in the effort of the crippled nations of urope to reestablioh and rehabilitate their foreign business.




Sheet No. 2

Henorable

oodrow 411son

11/26/18.

All of the various difficulties reach into And effect aur

demestic finanoial position, and in an important way our international
fir-ncial relatieos. Probably you unleretarl elate fully thet my or
relations with eecretary licAdoo and his associates and, generally,
with the nreasurs Derartmeat, heve affoedel me a knowleege of the
worleini;s of the department, of the men in the organization, and of the
prebleme with whie, it ha e ieelt, of more intimate a nature than almest
aayone outside or the department itself. The object of ttis letter le,
teorefore, meet respectfully to urese upon your Attention the grave
noeeesity that Secretary e:cedoo,e suocesser shar be a men of the
greateee
thet oen bo found, who would un6ertake the work still
unfinished in the e,pirit of patriotism and with no other purpose tnen to
cc the eeuntry -t,t1,1f4 ansi fertifted ageinet the piny dengere which menace
arAlvea and the thole world.

I am fully aware, Xr. Preeident, that a situation He grave

an

that eitak whleen 4e are Low eonfronted eonid 8602 to demend the apnointment of aome one who would commnnd the oonfidence of everyone by reason
Of a reeerLI with whie everyone le tally acquainted. It is probably a
fact that 7ecretary cedoo has been able to aommand, to a degree never

aajeyed by ley of hie 17redecessora, the oonfidence and respect of the
benkere of the country. This haz been due to his courage. ability and

resoarcefulnees, end, in pert, to the admirable selection of associates and

assistants that be hns !le.

I know all of them, and know of the un-

eelfisil, patriotic epirit in ei.ice they have undertaken their duties.
Dolieving as l do that no consideration will be allowed to enter into this
matter except that of the public welfare, I have become convinced that the
interests of the netion will be best served if ciroumstances permit of the
akpointmert of e7r. Leffingwell to sueceed Seeretary UcAdoo.

lie has

carried a very large share of the burden of that office during the period
wher. necretery Kcloe has been in charge of the railroads. Aecesearilye
he has had a very intimate and direct contact with the Eederal reserve

ben:es and generally with the benlecre of the country. He commands their
reepect and confidenoe. The advantage of appointing eomeone Of hie experience and irtinate kuoeledere of the vane-tie problems, to which I
or
outweighs, I believe, every consideration that might be advanced in favor

of eome other avointment, such, for Inetance, as the advantage of ap-

pointing someone who is better known as a financier and statesmen.
The chancee are that he hts not the remotest thought of such an appointment, and were it suggested to him I an inclined to believe that he would

not feel ::eeltfied to accept it. I am oonfident, hover, that ha is
fully capable of filling the office; that he will do so with credit to
himuelf and to tha Jepartment and to the entire satisfaction of the

country generally and particularly of the bankers who must be relied upon
still for many months to come for unreserved support of the Treasury




3heet No, 3

Honorable Toodrow Wilson

11/L6/18.

:Afepartment.

-

You will, I am sure, understand the object of this letter.
:::tve never before fell; justified. it addressing si:loh a letter to you,
, do so
only '000aase of vau onoloqs-les of tho imlort,ine of
matter and of Lly intkmate familiarity with the voec of the
,asury Dekartment.

With aesuranles of m4 esteem,

bcz to ramain,

Respectfully youl%-,,

o tho Present,
The "vhi.te 1101148,




c.




THE WHITE HOUSE
WASHINGTON
November 27, 1918.

lay dear Governor Strong:
I have received your letter of

ovan

26th, and, in accordance with your request,
have brought the communication to

Whi h you

refer to the attention of the Presiptent.

Sincerely yours,

Secretary to

President.
IftemMMOKSEINIINMOWTOMPAPia.

Hon. Benj. Strong,
15 Nassau Street,
rew York City.




THE WHITE HOUSE
WASHINGTON
Novenber 27, 1916.

lay dear Governor Strong:

//

I have received your letter of Novem
26th, and, in accordance with your recilrt,
have brought the communication to Whi,Ch you

refer to the attention of the kresiAent.
Sincerely yours,
'4e

Secretary to

Hon. Benj. Strong,
15 Nassau Street,
Eew York City.

4

President.

cc
Cs.

THE WHITE HOUSE
WASHINGTON
28 November, 1918.

My dear Mr. Strong:
Thank you sincerely for your
26th.

etter of November

This is a very brief acknowledgement, because of

the hurry of the day, but you may be sur14 that your advice
will not receive brief consideration.

/

and sincer ly yours,
/Cordially

Hon. Benjamin Strong,
15 Nassau Street, New York, II Y.







THE WHITE HOUSE
WASHINGTON
28 November, 1918.

Ly dear Er. strong:

Thank you sincerely for your rter of November
26th.

This is a very brief acknowledgement, because of

the hurry of the day, but you may be sulè that your advice
will not receive brief consideration.

/

Cordially and sincer i( yours,
ly

Hon. Benjamin Strong,
15 Nassau Street, New York, N Y.

Form 1220
iMBOL

CLASS OF SERVIC : SYMBOL
Telegram

i.4111fr Blue

Day Letter

Nite

NL
If none of these three symbols

NL
-bree symbols
the check (number of

Night Letter

,..

is a telegram. Otheraracterit Indloatedbythe
appearing after the check.

Blue

Night Message

Nite

appears after the check number of

words) this is a telegram. Other-

NEWCOMB CARLTON, PRESIDENT

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

wise its character is indicated by the

symbol appearing after the check.

&COVED AT 40 BROAD STREET, NEW YORK CITY

47:; AON 102 GOVT
TH

4UITE HOUSE WASHINGTON DC 345P

16

Sti3

BENJAMIN STRONG
FEDERAL RESERVE BANK 15 NASSAU ST NEWYORK NY
AM DESIROUS OF INCLUDING YOUR NAME IN THE FORTHCOMING CONFOlitfl
ON UNEMPLOYMENT TO BE HELD IN WASHINGTON IN ABOUT TEN DAYS ST',.

OBJECT OF THE CONFERENCE IS TO INQUIRE INTO THE VOLUME AND
DISTRIBUTION OF UNEMPLOYMENT TO ADVISE UPON EMERGENCY MEASURES
CAN BE PROPERLY TAKEN BY EMPLOYERS AND LOCAL AUTHORITIES AND
BODIES AND TO CONSIDER SUCH MEASURES AS WOULD TEND TO GIVE IMftL_
TO THE RECOVERY OF BUSINESS AND COMMERCE TO NORMAL STOP
GLAD IF

I

COULD HAVE YOUR ACCEPTANCE STOP

I

I

W01.11-1=

DO NOT PROPOSE TO MAKE.

ANY PUBLIC ANNOUNCEMENT UNTIL THE LIST IS COMPLETE
WARREN G HARDING
403P

11




4a.




./

Ytt

THE WHITE HOUSE
WA SHIN GTO N

September 26, 1921.

My dear Governor Strong:
I had your note of September 20th
and very much appreciate the spirit of helpfulness

which is given expression therein.

I have told

Mr. Hoover of its contents,and have no doubt he
will welcome the helpfulness which I know you
will be able to afford him.

Please know of my

awn appreciation.
Very truly yours,

Hon. Benj. Strong,
1718 H Street,
Washington, D. C.







çJ
I-'

/1

IN

VCTHE WHITE

HOUSE

WASHINGTON

September 26, 1921.

My dear Governor Strong:

I had your note of September 20th
and very much appreciate the spirit of helpfulness
which is given expression therein.

I have told

Mr. Hoover of its contents,and have no doubt he
will welcome the helpfulness which I know you
will be able to afford him.

Please know of my

awn appreciation.
Very truly yours,

Hon. Benj. Strong,
1718 H Street,
Washington, D. C.

May 26, 1922.

My dear Mr. President:
With considerable' reluctance I am asking for sufficient of your time

to read the following comments, which I em taking the liberty of addressing to

you, in regard to the bill which has just passed the Congress, providing for an
additional member of the Federal Reserve Board,

and containing

in addition a

provision that no building shall be constructed by a Federal reserve bank at an
expense in excess of *250,000 except

with the approval of Congress.

The

latter provision I understand does not apply to buildings now in course of

construction.
As to

the

provision

regret its necessity.

enlarging the membership of the Board, I deeply

It appears, however,

to afford the opportunity, if you

should think it wise to do so, to reappoint Governor Harding as a member of the
Board and Governor of the

This I believe is essential to the welfare

Board.

of the System.
As to the limitation upon building operations of

the reserve banks,

that this is the first step by Congress in
the direction of a political and legislative control of the affairs of the
permit me to respectfully maggart

banking system, which, if extended as may indeed be

impair its usefulness hereafter

legislative restriction, which

and to

subject

the case, is liable to

it to repeated and progressive

in the long run will be dangerous if not fatal.

Executive assent to this first step would appear to me to be encouraging

to those who are now criticizing
legislative supervision.




the Syetem,towerd the extension of this sort of

May 26, 1922.

2

You will, I am sure, understand, my dear Mr. President, that I am submitting this personal expression of views to you most respectfully from the most
disinterested motives and because I believe it to be in the interest of the Federal
Reserve System and of the country that the bill should be vetoed.
as to the bank

buildings were

If the provision

omitted I would not feel this way - in fact, in my

last talk with Secretary Mellon I took the liberty of expressing the view to him
that I thought the enlargement of the Board by the addition of one member, as proposed by the bill, was the only method by which the subject of agricultural

representation ma the Board could be dealt with se as to avoid sacrificing Governor
Harding.
If it might appear to you that I am guilty of any impropriety in writing
to you directly on this subject, I hope that you

will

ascribe it to the deep

interest which I feel in the welfare of the Federsl Reserve System, with which I

have been connected since its organization, and in the service of which I have
given some years of hard work and anxious thought.
With g-.seurance of my esteem, believe me,

Respectfully your,

Benj. Strong,
Governor.

To the President,
The White House,
Washington, D. C.
BS.Mik







- WHITE HOUSE
WASHINGTON

FILES
JUN 9

ADERAL

1.4."''

Riii, RyyjifikV,

1922.

,JF

My dear Mt. Strong:

I am writing to acknowledge yours
of May 26th, which came to me through the Secretary
of the Treasury, expressing certain Objections to
the amended Federal Reserve Act as presented to me
for signature.

I recognize the force of some of

the objections offered, but I very much question
the wisdom of returning the act without approval
an that account.

I trust we shall be quite able to

maintain a helpful and dependable course under the
modified provisions of the act.
Very truly yours,

Mr. Benj. Strong,
Federal Reserve Bank of New York,
New York City, N. Y.




E VVH ITE HOUSE

FILES 0

WASHINGTON

JUN 9
ELEAL

-

P_FZ-t R

\iTjt*V)

1922.

Nzvi

My dear Mr. Strong:

I am writing to acknowledge yours
of May 26th, which came to me through the Secretary
of the Treasury, expressing certain objections to
the amended Federal Reserve Act as presented to me
for signature.

I recognize the force of some of

the objections offered, but I very much question
the wisdom of returning the act without approval
an that account.

I trust we shall be quite able to

maintain a helpful and dependable course under the
modified provisions of the act.
Very truly yours,

Mr. Benj. Strong,
Federal Reserve Bank of New York,
New York City, N. Y.

jek4,43

rHE WHITE HOUSE
WAS SHIN GTO N




September 12, 1922.

My dear Mr. Strong:

I am grateful to you for your message
of September 11th.

It has been comforting

and encouraging to know of the interest and

good wisheswhich your message conveyed.
Gratefully yours,

Er. Benjamin Strong,
15 Nassau Street,
New York City.




30

Ce`_,--'1-HE

WHITE HOUSE
WASH IN GTO N

September 12, 1922.

Lay dear Ir. Strong:

I am grateful to you for your message
of September 11th.

It has been comforting

and encouraging to know of the interest and

good wishes which your message conveyed.
Gratefully yours,

Mr. Benjamin Strong,
15 Nassau Street,
New York City.

ft




F./

(La Whom
he it itncitun that b

rrnt

1ritt tome

irtuz of autkoritR intresteb in nme

lierrtp caimtitute

a a.a.ciate Itteratv
of tile

HARDING _MEMORIAL




ASSOCIATION
PRESIDENT.

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