General Committee: Meeting Minutes

General Committee: Meeting Minutes

Strong, Benjamin, 1872-1928

WWP18447

1914 August 6

This is a record of the minutes for the General Committee about the use of the gold fund.

Benjamin Strong Jr. Papers, New York Federal Reserve Bank

English

MINUTES of a meeting of the General Committee held at 10:00 o’clock A. M. Thursday, August 6th, 1914.
PRESENT: Messrs. Strong, Chairman; Benedict, Hemphill, Brown, Morgan, Gardin, Agnew, Alexander and Taylor. There were also present Mr. Harrison, Counsel for the Express Company, and Messrs. Fay and White.
The Chairman read to the meeting, a cable just received from Mr. Fred I. Kent, making suggestions as to the method of handling the gold fund, and criticising suggestions made to him from New York. The Committee voted that as far as possible, the instructions as stated in such cable to Mr. Strong should be carried out. The Committee voted that Mr. Kent be authorized to work out a plan of handling the Fund, as he might see fit, under the supervision and government of a London Committee to represent this Committee, which should include in its membership a representative from Messrs. Morgan, Grenfell & Company, from Brown, Shipley & Company, from Baring Brothers & Company, from Guaranty Trust Company of New York (maintaining a branch in the City of London), and from American Express Company. Such London Committee should also include Henry King Smith as representing The Farmers Loan & Trust Company, Fred I. Kent as representing Bankers Trust Company, and Lawrence M. Jacobs as representing National City Bank (of New York). Mr. Strong and Mr. Brown were authorized by the Committee to carry out the details of instructing Mr. Kent as to the action of this Committee in such respect.
The Chairman and Mr. Brown were authorized to formulate the instructions of the Committee to Mr. Kent and transmit them either by cable or by letter, bearing in mind provision, if possible, to secure reimbursement in New York fund, payable in New York City, for all amounts of the fund used in cashing Travelers’ Credits
.Mr. Morgan announced that he expected to have established a gold credit with his Paris firm, Messrs. Morgan, Harjes & Company, in the amount of $6,000,000. and that he was willing to set aside for the purposes of the Fund, $3,000,000. of such $6,000,000. gold credit, if the ten Original Contributors to the Fund would be willing to become Ccontributors to such $3,000,000. on the same basis on which they had contributed to the Fund to be sent to London. All the members of the Committee on behalf of the institutions represented by them, accepted Mr. Morgan’s offer.
The Chairman outlined to the Committee the Special Committee’s recommendations covering rates of exchange to be followed in cashing travellers’ credits from the fund, and method for reimbursement to the fund for expenses to be incurred, etc., (all as set forth in the minutes of such Special Committee), which such Committee had agreed upon at their meetings, held August 5, 1914, and such recommendations were approved.
The Chairman announced that insurance as yet had not been effected, but the underwriters were in conference endeavoring to arrange for at least $3,000,000. insurance.
The Committee authorized Messrs. Taylor, Harrison and Fay to confer with the Sub-treasury and formulate a receipt to be given by the Government against the gold to be shipped via the “Tennessee”.
The Committee agreed that the shipment going via the “Tennessee” should be sent to the London City and Midland Bank, Ltd., London, to be placed in its custody, to be held by such Bank at the disposal of the London Committee above mentioned.
The Chairman stated that the Government officials had limited the number of agents of the Committee to accompany the “Tennessee” shipment to five men, and such five men were thereupon designated by the Committee as follows:

Messrs. John P. Grier,
Henry W. Lewis.
Arthur R. Jones,
Eliot Tuckerman,
Harvey D. Gibson.

The Chairman was authorized by the Committee to give all letters necessary as credentials of such five agents.The Chairman was authorized by the Committee to prepare an announcement to be given to the press and others interested. Thereupon, the Committee adjourned until 4:00 P. M. the same day
.The Committee at 4:00 P. M. reconvened, the entire Committee except Mr. Norton being present.
The Chairman stated that in view of the probability of the $3,000,000. gold credit to be established, for the Fund in Paris, with Messrs. Morgan, Harjes & Company, it might be desirable to limit the shipment by the “Tennessee” to $3,000,000. in gold.
The Committee thereupon voted to limit the shipment via the “Tennessee” to $3,000,000.
The Chairman stated that insurance to cover the entire value of such shipment had been obtained, written in the name of the Secretary of the Treasury of the United States, and that the receipt to be given by the Government against such shipment provided that such Secretary of the Treasury would hold such insurance for the benefit of the Fund. Such action was approved.
The Chairman stated that word had just reached him that afternoon (August 6) that the United States Government proposed to make a freight charge for transporting the gold shipped on account of the fund by the “Tennessee”, and that he was surprised at such proposition in view of the entire failure of the Government previously to mention any such charge
.The Chairman mentioned that he had been conferring with government officials since Monday evening (August 3); that at Washington on that evening he had informed them of the $700,000. gold shipment made by the Bankers Trust Company then in transit; that Mr. Kent in London had been insistent to obtain for immediate use $300,000. for relief; that the Bankers Trust Company was willing to divert from commercial uses to relief uses $300,000., so asked for by Mr. Kent, out of the $700,000. shipment; such $300,000. to be reimbursed from the then proposed government appropriation for relief use.
The Chairman stated at all conferences, whether held at Washington or over the telephone, and in all correspondence, the relief character of the fund had been brought to the government’s attention.
The Committee voted to acquiesce in the Government’s present intention to make a freight charge, but with the purpose to bring all the facts to the Government’s attention, showing the propriety of remitting such freight charge.
A form of preliminary memorandum outlining the control of the fund by the Committee and the limitations of the risks assumed by the Ten Original Contributors, was thereupon executed by all members of the Committee on behalf of the institutions respectively represented, constituting the Ten Original Contributors.
The original of such Memorandum was ordered filed with the Chairman.
It was understood that counsel should formulate, in reasonable detail, a statement of the Plan relating to the fund, setting forth the powers and authority of the Committee in the receipt, transmission and disposition of the fund, to all the terms of which the certificates evidencing contributions to the fund should state that all contributions (whether original or additional) should be subject.
The Committee was informed that the situation still required an actual shipment to London, it still being impossible to establish by cable a gold credit in London against offsetting gold credit set up in New York
.The Chairman thereupon stated that everything was in readiness to effect the “Tennessee” shipment.
On motion the meeting then adjourned.

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