Benjamin Strong Jr. to William G. McAdoo
Title
Benjamin Strong Jr. to William G. McAdoo
Creator
Strong, Benjamin, 1872-1928
Identifier
WWP18554
Date
1917 April 11
Description
Bejamin Strong Jr. writes William G. McAdoo regarding financial issues and World War I.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
Dear Mr. Secretary:
Our association and friendship of the last two and a half years is excuse for this letter.
For some months past letters have been coming to me from our mutual friends, almost all of them referring to the great pressure under which you are working and the severe hours of work that have been imposed upon you. May I offer myself as an example of the consequences of trying to do too much one’s self. I am writing this because you have just lost two valuable assistants in Mr. Malburn and Mr. Peters, and I hope that in this crises in our affairs where your labors mean so much to the nation, that you will take the wise course of selecting a staff of competent assistancets to relieve you of the burden of detail and give you opportunity for some fresh air and recreation. I have been hoping to read in the newspapers that you have appointed a special staff of assistants to deal with the particular problems arising out of war and shall be grievously disappointed if you are not willing or do not find it possible to adopt that policy.
May I also venture one or two suggestions in regard to the financial program?
Under Chancellor McKenna’s budget, Great Britain in the fiscal year ending March 31st collected over $2,800,000,000 from taxes, a sum sufficient to discharge the present funded debt of the United States Government and of every state, county and municipality. This country has more than twice the wealth of Great Britain and it should certainly be possible, by an equitable distribution of taxes, to pay a large proportion of our share of war expense by that means, rather than by permanent borrowings. England’s financial history during the Napoleonic war, the Crimean war and the Boer war demonstrated that a program of war finance must be based upon tax revenues sufficient to meet the normal expenses of the Government, interest, sinking fund and a large margin in excess of that for security. I sincerely hope, therefore, that the Government will not hesitate to meet the present situation by an extensive program of taxation, equitably distributed among all classes.
We are about to ask the people of the country to subscribe to a very large loan, but must recognize that if the war continues it will be only the first of a number of such loans. I hope that the experience of the belligerent nations will govern our policy in arranging the terms of the pending loan. It is absolutely necessary that the loan should be over subscribed and sell instantly at a premium. What might appear to be an immediate loss to the Government in the rate of interest fixed in order that the loan shall bring a premium at once, will ultimately be a source of economy in the ease with which subsequent loans are placed and the certainty, if handled in that way, that subsequent loans may be placed on better terms than the original loan, which is the great desideratum. Therefore, I hope that Congress will vest in you all discretion necessary for determining the terms of the loans and that you will decide to make an issue at par, fixing the rate of interest and terms so that there will be no question as to the premium which it will command.
These are just a few of the things that I would have had opportunity, no doubt, to express had I been able to attend the last conference of Governors.
Again assuring you of my hope and desire to be of some service to the Government and to you personally in connection with these matters, I beg to remain,
Sincerely yours,
Our association and friendship of the last two and a half years is excuse for this letter.
For some months past letters have been coming to me from our mutual friends, almost all of them referring to the great pressure under which you are working and the severe hours of work that have been imposed upon you. May I offer myself as an example of the consequences of trying to do too much one’s self. I am writing this because you have just lost two valuable assistants in Mr. Malburn and Mr. Peters, and I hope that in this crises in our affairs where your labors mean so much to the nation, that you will take the wise course of selecting a staff of competent assistancets to relieve you of the burden of detail and give you opportunity for some fresh air and recreation. I have been hoping to read in the newspapers that you have appointed a special staff of assistants to deal with the particular problems arising out of war and shall be grievously disappointed if you are not willing or do not find it possible to adopt that policy.
May I also venture one or two suggestions in regard to the financial program?
Under Chancellor McKenna’s budget, Great Britain in the fiscal year ending March 31st collected over $2,800,000,000 from taxes, a sum sufficient to discharge the present funded debt of the United States Government and of every state, county and municipality. This country has more than twice the wealth of Great Britain and it should certainly be possible, by an equitable distribution of taxes, to pay a large proportion of our share of war expense by that means, rather than by permanent borrowings. England’s financial history during the Napoleonic war, the Crimean war and the Boer war demonstrated that a program of war finance must be based upon tax revenues sufficient to meet the normal expenses of the Government, interest, sinking fund and a large margin in excess of that for security. I sincerely hope, therefore, that the Government will not hesitate to meet the present situation by an extensive program of taxation, equitably distributed among all classes.
We are about to ask the people of the country to subscribe to a very large loan, but must recognize that if the war continues it will be only the first of a number of such loans. I hope that the experience of the belligerent nations will govern our policy in arranging the terms of the pending loan. It is absolutely necessary that the loan should be over subscribed and sell instantly at a premium. What might appear to be an immediate loss to the Government in the rate of interest fixed in order that the loan shall bring a premium at once, will ultimately be a source of economy in the ease with which subsequent loans are placed and the certainty, if handled in that way, that subsequent loans may be placed on better terms than the original loan, which is the great desideratum. Therefore, I hope that Congress will vest in you all discretion necessary for determining the terms of the loans and that you will decide to make an issue at par, fixing the rate of interest and terms so that there will be no question as to the premium which it will command.
These are just a few of the things that I would have had opportunity, no doubt, to express had I been able to attend the last conference of Governors.
Again assuring you of my hope and desire to be of some service to the Government and to you personally in connection with these matters, I beg to remain,
Sincerely yours,
Original Format
Letter
To
McAdoo, W. G. (William Gibbs), 1863-1941
Files
Collection
Citation
Strong, Benjamin, 1872-1928, “Benjamin Strong Jr. to William G. McAdoo,” 1917 April 11, WWP18554, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.