Benjamin Strong Jr. to William G. McAdoo
Title
Benjamin Strong Jr. to William G. McAdoo
Creator
Strong, Benjamin, 1872-1928
Identifier
WWP18612
Date
1918 November 25
Description
Benjamin Strong Jr. writes William G. McAdoo to say that he regrets McAdoo's resignation as Treasury Secretary.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
Dear Mr. Secretary:
I am writing this letter with the greatest possible reluctance and regret, for I realize that it is quite impossible to express my disappointment in learning of your decision to relinquish your office as Secretary of the Treasury, and the difference it will mean in my personal relations with your department.
No one, I believe, realizes, either in the Treasury or outside of it, what a splendid administration you have had quite so well as I do. It is best illustrated by a comparison of what has been done by the Treasury Department in this war and what happened during our Civil War. Through Secretary Chase, as I recall, the Government, shortly after the war broke out, paid as high as 12% for temporary loans. By the first of January, 1862, the Government, and practically all of the banks of the country, had suspended specie payment. In the later days of the war the Government sold its bonds bearing 6% interest at the equivalent of about 45% of par value, gold basis, and the entire cost of the war was less than a third the cost of this war, and much less than the total amount of the Fourth Liberty Loan. We abandoned sound principles of finance in favor of fiat money and started the country on the rampage of speculation, witnessing at one time, in consequence of our defective policy, a quotation of 280% for gold in exchange for paper money or bank credit.
When the history of the Treasury in this war comes to be written, it will be found that the Government never paid over 4 1/2% for bank loans or over 4 1/4% on its bonds; that there has not only been no premium on gold, but, in fact, that gold payment has been continured by every bank in the country, and by the Treasury as well; that we have adhered to sound banking and monetary principles; and that during this year and one-half bank failures have probably been less in number and amount than during any similar period for a great many years past.
I recite this simply to give you a very slight evidence of the extent of the loss which I believe the country suffers by your retirement. Your administration has been a notable success - a great personal achievement for yourself - and I know that you will be rewarded by the satisfaction which it affords you to have served your country so splendidly.
In conclusion let me say that I suffer a real and grevious personal loss to have out association ended.
Wishing you in your future affairs success and happiness and everything which you so justly deserve, I am,
I am writing this letter with the greatest possible reluctance and regret, for I realize that it is quite impossible to express my disappointment in learning of your decision to relinquish your office as Secretary of the Treasury, and the difference it will mean in my personal relations with your department.
No one, I believe, realizes, either in the Treasury or outside of it, what a splendid administration you have had quite so well as I do. It is best illustrated by a comparison of what has been done by the Treasury Department in this war and what happened during our Civil War. Through Secretary Chase, as I recall, the Government, shortly after the war broke out, paid as high as 12% for temporary loans. By the first of January, 1862, the Government, and practically all of the banks of the country, had suspended specie payment. In the later days of the war the Government sold its bonds bearing 6% interest at the equivalent of about 45% of par value, gold basis, and the entire cost of the war was less than a third the cost of this war, and much less than the total amount of the Fourth Liberty Loan. We abandoned sound principles of finance in favor of fiat money and started the country on the rampage of speculation, witnessing at one time, in consequence of our defective policy, a quotation of 280% for gold in exchange for paper money or bank credit.
When the history of the Treasury in this war comes to be written, it will be found that the Government never paid over 4 1/2% for bank loans or over 4 1/4% on its bonds; that there has not only been no premium on gold, but, in fact, that gold payment has been continured by every bank in the country, and by the Treasury as well; that we have adhered to sound banking and monetary principles; and that during this year and one-half bank failures have probably been less in number and amount than during any similar period for a great many years past.
I recite this simply to give you a very slight evidence of the extent of the loss which I believe the country suffers by your retirement. Your administration has been a notable success - a great personal achievement for yourself - and I know that you will be rewarded by the satisfaction which it affords you to have served your country so splendidly.
In conclusion let me say that I suffer a real and grevious personal loss to have out association ended.
Wishing you in your future affairs success and happiness and everything which you so justly deserve, I am,
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,” 1918 November 25, WWP18612, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.