Russell Cornell Leffingwell to Benjamin Strong Jr.
Title
Russell Cornell Leffingwell to Benjamin Strong Jr.
Creator
Russell Cornell Leffingwel
Identifier
WWP18642
Date
1919 April 22
Description
Russell C. Leffingwell writes Benjamin Strong Jr. regarding the rate being charged on Liberty Loan bonds.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
Personal
Dear Strong
Someone told me today that a business company he knew had been asked by a bank in New York to put in a subscription for its account without disclosing the source. I am getting really worried lest the banks take the Victory Loan, or a substantial part of it, for their own account. I had a letter from you this morning on the same subject. I am even beginning to wonder whether, after all, you may not feel it necessary to consider the possibility of some modification of your action as to the fifteen day rate, so far as it concerns Victory Notes. If the banks should get it into their heads that they could borrow indefinitely at a 3/4% spread, and load up with the Notes, it would derange badly our whole financial program, which contemplates heavy borrowing on Treasury Certificates after the Loan at the 4½% rate. I remember you said something once about the possibility of forbidding or restricting renewals at the fifteen day rate on the Notes.
After a good deal of consideration, I concluded not to oppose the action which the Chicago bank wanted to take, which, as I understand it, continue the 4% rate as to certificates, but fixes the rate on bonds and notes at 4¼%. Of course, you could not make any change so far as bonds are concerned. Please consider this as an informal telephone message for your personal thought only. I tried to call you up late this afternoon, but could not reach you.
Dear Strong
Someone told me today that a business company he knew had been asked by a bank in New York to put in a subscription for its account without disclosing the source. I am getting really worried lest the banks take the Victory Loan, or a substantial part of it, for their own account. I had a letter from you this morning on the same subject. I am even beginning to wonder whether, after all, you may not feel it necessary to consider the possibility of some modification of your action as to the fifteen day rate, so far as it concerns Victory Notes. If the banks should get it into their heads that they could borrow indefinitely at a 3/4% spread, and load up with the Notes, it would derange badly our whole financial program, which contemplates heavy borrowing on Treasury Certificates after the Loan at the 4½% rate. I remember you said something once about the possibility of forbidding or restricting renewals at the fifteen day rate on the Notes.
After a good deal of consideration, I concluded not to oppose the action which the Chicago bank wanted to take, which, as I understand it, continue the 4% rate as to certificates, but fixes the rate on bonds and notes at 4¼%. Of course, you could not make any change so far as bonds are concerned. Please consider this as an informal telephone message for your personal thought only. I tried to call you up late this afternoon, but could not reach you.
Original Format
Letter
To
Strong, Benjamin, 1872-1928
Files
Collection
Citation
Russell Cornell Leffingwel, “Russell Cornell Leffingwell to Benjamin Strong Jr.,” 1919 April 22, WWP18642, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.