Benjamin Strong Jr. to Joseph P. Tumulty

Title

Benjamin Strong Jr. to Joseph P. Tumulty

Creator

Strong, Benjamin, 1872-1928

Identifier

WWP18581

Date

1917 October 10

Description

Benjamin Strong Jr. writes Joseph P. Tumulty regarding the liberty loan program.

Source

Benjamin Strong Jr. Papers, New York Federal Reserve Bank

Language

English

Text

Dear Mr. Tumulty:
Your note of yesterday has just reachded me and naturally is disappointing.
It seems to be necessary that I should explain the exact situation in regard to the Liberty Loan, as it will make clear why I have felt so urgently the need for assistance from the President at this time.
The people of this country do not yet realize the issues of the war. The object of the meeting in Carnegie Hall, when Lord Reading is to make an address, is to submit to the people 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 particularly applies to corporations which, while they have made 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 gravde anxiety as to their ability to raise money for absolutely necessary purposes, including refunding, and to make heavy tax payments, during the period that such enormous demands are being madde by the Government upon the money makrkets.
It is no exaggeration to say that the country’s money center has developed a desperately gloomy view of the outlook, which is seriously affecting the results of our labor of placing the Government’s bonds. I believe this can all be swept away and the last week of our campaign be made a stampede if the President could arrange to make an address in New Yorik 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’ obligations every week or two in order that temporary financing 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 $231,000,000., which amount they will increase if necessary. The firms and institutions represented on the Liberty Loan Committee, of which I am chairman, have just entered into an obligation to purchase up to $100,000,000 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. Trust companies with total resources of $1,600,000,000. have been brought into the Federal Reserve System. Other things of less importance are being done as needed, but it is nevertheless a fact that a great 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. The minimum of $3,000,000,000. 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. 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 must 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 encouragement.
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 every energy and resource at their command to make thise 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.

Original Format

Letter

To

Tumulty, Joseph P. (Joseph Patrick), 1879-1954

Files

http://resources.presidentwilson.org/wp-content/uploads/2017/03/D08045.pdf

Tags

Citation

Strong, Benjamin, 1872-1928, “Benjamin Strong Jr. to Joseph P. Tumulty,” 1917 October 10, WWP18581, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.