Pittman Silver Advances
Title
Pittman Silver Advances
Creator
Strong, Benjamin, 1872-1928
Identifier
WWP18647
Date
1919 May 17
Description
Benjamin Strong gives a report about silver purchases and value.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
Draft of May 17.
Pittman Silver Advances.
I. Of the obligations of the British Government held by the United States Treasury, $122,017,633.57 are regarded as having been given for Pittman silver purchases. The interest on these obligations has been paid up to but not beyond the following dates, viz: as to 60% of said principal amount April 15, 1919, and as to 40% of said principal amount May 15, 1919. Demand obligations of the British Government now held by the Secretary of the Treasury, aggregating in principal said sum of $122,017,633.57 will not be exchanged for obligations having a fixed date of maturity, but the principal thereof and the interest thereon are to be paid in accordance with the following arrangement.
II. The British Government will forthwith repay $17,633.57 of said principal amount and in addition the interest accrued thereon, at the rate of 5% per annum to the date of payment from, as to 60% of said principal amount, from April 15, 1919, and as to 40% of said principal amount, from May 15, 1919.
The British Government will repay the remaining $122,000,000, together with the interest accrued and to accrue thereon:
(A)As to 60%, of the aforesaid $122,000,000, to-wit the sum of $73,200,000, together with the interest accrued and to accrue thereon as follows:
On the 15th day of April in each of the years 1921, 1922, 1923 and 1924 on account of principal the sum of $18,300,000.
On the 15th day of April, 1921, the interest accrued on said sum of $73,200,000 from April 15, 1919, to April 15, 1921, at the rate of 5% per annum; and on each 15th day of October and 15th day of April thereafter a semi-annual installment of interest at the rate of 5% per annum, which has accrued up to said respective date ...
(B) As to 40% of the aforesaid $122,000,000, to-wit, the sum of $48,800,000, together with the interest accrued and to accrue thereon, as follows:
On the 15th day of May in each of the years 1921, 1922, 1923 and 1924 on account of principal the sum of $12,200,000.
On the 15th day of May, 1921, the interest accrued on said sum of $48,800,000, from May 15, 1919, to May 15, 1921, at the rate of 5% per annum; and on each 15th day of November and 15th day of May thereafter a semi-annual installment of interest at the rate of 5% per annum, which has accrued up to said respective date, upon the portion of said principal sum of $48,800,000 from time to time remaining unpaid.
III. Until the payment in full of said principal sums with interest, in order to afford American nationals an opportunity to acquire rupee credits at the same cost as such credits are offered to British nationals, the British Government will arrange, within the limits and in the manner hereafter stated, to make available rupee credits to the United States Treasury at the cost and otherwise as hereinafter provided.
Telegraphic notices will be sent to the Federal Reserve Bank of New York reasonably in advance of each and every weekly or other offering of rupee credits by the Indian Government in London or elsewhere in Great Britain. The Secretary of the Treasury, through the Federal Reserve Bank of New York, may make tenders to purchase rupee credits so offered by the Indian Government. To the extent that such tenders are accepted, the British Treasury will make payments therefor in sterling for account of the Federal Reserve Bank of New York, and the Federal Reserve Bank of New York will forthwith pay the equivalent amount in dollars to Messrs. J.P. Morgan and Company for credit of the British Treasury Account. Payment in dollars shall be made at the cable rate for sterling fixed by the Federal Reserve Bank of New York at noon of the date of such sterling payment in London request of the Secretary of the Treasury, will, in addition, place at the disposal of the Federal Reserve Bank of New York rupee credits at the rate of exchange of 48 2/3 cents per rupee in amounts not exceeding 1 crore in any one month and not exceeding 7 crores in any one year. Forthwith upon the sale of such credits by the Federal Reserve Bank of New York payments therefor at the rate aforesaid will be made to Messrs. J. P. Morgan and Company for credit of the British Treasury Account.
Rupee credits thus acquired may be availed of by cable transfers upon the Controller of the Currency, Calcutta, by the Federal Reserve Bank of New York, and may be disposed of by said Bank but not at a lesser price than their actual cost to the Federal Reserve Bank of New York. The dollar amounts so paid for repee credits forthwith, upon their deposit as aforesaid, shall be used by the British Treasury to repay the principal of the obligations hereinbefore mentioned not previously paid. Accrued interest upon the principal amounts so repaid to date of payment shall simultaneously be paid by the British Treasury. All principal amounts so paid in any year shall reduce correspondingly the fixed annual installments of principal payable in that year as hereinbefore provided, and payments of interest thus made shall reduce the interest payments to be made as hereinbefore provided.
IV. The aforesaid payments are to be made at the place and otherwise as provided in the demand obligations for the payment whereof, both principal and interest, provision is made as aforesaid.
V. So long as the arrangement hereinbefore set forth is being carried out the Secretary of the Treasury will not demand, nor will the British Government made, payment of the principal or interest of the aforementioned demand obligations in the principal amount of $122,017,633.57, except only to the extent that such principal and interest will become payable under the terms of this arrangement.
VI. Without prejudice to the obligations of the British Government both under the arrangement hereinbefore set forth and upon its demand obligations held by the Secretary of the Treasury, the British Government is released from its obligation contained in Lord Reading’s letter of May 28, 1918, to Assistant Secretary of the Treasury Leffingwell to make further payments in gold for Pittman silver purchases.
Pittman Silver Advances.
I. Of the obligations of the British Government held by the United States Treasury, $122,017,633.57 are regarded as having been given for Pittman silver purchases. The interest on these obligations has been paid up to but not beyond the following dates, viz: as to 60% of said principal amount April 15, 1919, and as to 40% of said principal amount May 15, 1919. Demand obligations of the British Government now held by the Secretary of the Treasury, aggregating in principal said sum of $122,017,633.57 will not be exchanged for obligations having a fixed date of maturity, but the principal thereof and the interest thereon are to be paid in accordance with the following arrangement.
II. The British Government will forthwith repay $17,633.57 of said principal amount and in addition the interest accrued thereon, at the rate of 5% per annum to the date of payment from, as to 60% of said principal amount, from April 15, 1919, and as to 40% of said principal amount, from May 15, 1919.
The British Government will repay the remaining $122,000,000, together with the interest accrued and to accrue thereon:
(A)As to 60%, of the aforesaid $122,000,000, to-wit the sum of $73,200,000, together with the interest accrued and to accrue thereon as follows:
On the 15th day of April in each of the years 1921, 1922, 1923 and 1924 on account of principal the sum of $18,300,000.
On the 15th day of April, 1921, the interest accrued on said sum of $73,200,000 from April 15, 1919, to April 15, 1921, at the rate of 5% per annum; and on each 15th day of October and 15th day of April thereafter a semi-annual installment of interest at the rate of 5% per annum, which has accrued up to said respective date ...
(B) As to 40% of the aforesaid $122,000,000, to-wit, the sum of $48,800,000, together with the interest accrued and to accrue thereon, as follows:
On the 15th day of May in each of the years 1921, 1922, 1923 and 1924 on account of principal the sum of $12,200,000.
On the 15th day of May, 1921, the interest accrued on said sum of $48,800,000, from May 15, 1919, to May 15, 1921, at the rate of 5% per annum; and on each 15th day of November and 15th day of May thereafter a semi-annual installment of interest at the rate of 5% per annum, which has accrued up to said respective date, upon the portion of said principal sum of $48,800,000 from time to time remaining unpaid.
III. Until the payment in full of said principal sums with interest, in order to afford American nationals an opportunity to acquire rupee credits at the same cost as such credits are offered to British nationals, the British Government will arrange, within the limits and in the manner hereafter stated, to make available rupee credits to the United States Treasury at the cost and otherwise as hereinafter provided.
Telegraphic notices will be sent to the Federal Reserve Bank of New York reasonably in advance of each and every weekly or other offering of rupee credits by the Indian Government in London or elsewhere in Great Britain. The Secretary of the Treasury, through the Federal Reserve Bank of New York, may make tenders to purchase rupee credits so offered by the Indian Government. To the extent that such tenders are accepted, the British Treasury will make payments therefor in sterling for account of the Federal Reserve Bank of New York, and the Federal Reserve Bank of New York will forthwith pay the equivalent amount in dollars to Messrs. J.P. Morgan and Company for credit of the British Treasury Account. Payment in dollars shall be made at the cable rate for sterling fixed by the Federal Reserve Bank of New York at noon of the date of such sterling payment in London request of the Secretary of the Treasury, will, in addition, place at the disposal of the Federal Reserve Bank of New York rupee credits at the rate of exchange of 48 2/3 cents per rupee in amounts not exceeding 1 crore in any one month and not exceeding 7 crores in any one year. Forthwith upon the sale of such credits by the Federal Reserve Bank of New York payments therefor at the rate aforesaid will be made to Messrs. J. P. Morgan and Company for credit of the British Treasury Account.
Rupee credits thus acquired may be availed of by cable transfers upon the Controller of the Currency, Calcutta, by the Federal Reserve Bank of New York, and may be disposed of by said Bank but not at a lesser price than their actual cost to the Federal Reserve Bank of New York. The dollar amounts so paid for repee credits forthwith, upon their deposit as aforesaid, shall be used by the British Treasury to repay the principal of the obligations hereinbefore mentioned not previously paid. Accrued interest upon the principal amounts so repaid to date of payment shall simultaneously be paid by the British Treasury. All principal amounts so paid in any year shall reduce correspondingly the fixed annual installments of principal payable in that year as hereinbefore provided, and payments of interest thus made shall reduce the interest payments to be made as hereinbefore provided.
IV. The aforesaid payments are to be made at the place and otherwise as provided in the demand obligations for the payment whereof, both principal and interest, provision is made as aforesaid.
V. So long as the arrangement hereinbefore set forth is being carried out the Secretary of the Treasury will not demand, nor will the British Government made, payment of the principal or interest of the aforementioned demand obligations in the principal amount of $122,017,633.57, except only to the extent that such principal and interest will become payable under the terms of this arrangement.
VI. Without prejudice to the obligations of the British Government both under the arrangement hereinbefore set forth and upon its demand obligations held by the Secretary of the Treasury, the British Government is released from its obligation contained in Lord Reading’s letter of May 28, 1918, to Assistant Secretary of the Treasury Leffingwell to make further payments in gold for Pittman silver purchases.
Original Format
Draft
Files
Collection
Citation
Strong, Benjamin, 1872-1928, “Pittman Silver Advances,” 1919 May 17, WWP18647, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.