Benjamin Strong Jr. to William G. McAdoo


Benjamin Strong Jr. to William G. McAdoo


Strong, Benjamin, 1872-1928




1914 August 8


Benjamin Strong Jr. tells William G. McAdoo that $3 million dollars has been sent on the Tennessee for the relief of American holders of Traveller’s Cheques and credits in England and Europe.


Benjamin Strong Jr. Papers, New York Federal Reserve Bank




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In order that you may be fully informed, and particularly of the arrangements respecting shipment of gold to London by cruiser Tennessee and its disbursement there, I quote the following cable sent to Mr. Kent last night:
“Personally delivered three million dollars in gold in double eagles to United States Assistant Treasurer on Tennessee tonight for relief American holders of Travelers’ Cheques and credits and she has sailed, destination English port to be advised to you later. All insured without war risk. Gold accompanied by John P. Grier, Henry W. Lewis, Arthur I. Jones, Elliot Tuckerman and Harvey D. Gibson as accredited agents New York Committee, with written instructions for delivery gold to the London City and Midland Bank on delivery of gold to them in England by United States Government. Committee is sending written instructions in duplicate to London City and Midland Bank, London, to place gold at disposal of your London Committee, increased by adding representatives nominated by Morgan Grenfell, Brown Shipley, Baring Brothers, Guaranty Trust Company of New York, London, American Express Company, also Henry King Smith, representing the Farmers Loan, and L. M. Jacobs, representing the National City Bank, all in London, with yourself representing the Bankers Trust Company. These appointments are official and necessary. Reimbursements of drafts against travelers’ credits are to be in New York funds in New York at 4.90 plus interest and all expenses when ascertained, and clause to that effect to be endorsed on draft. Reimbursement in New York of travelers’ cheques is to be made at their face; payments to be made exclusively to holders of travelers’ cheques and credits, after verification in usual way. All checks and drafts are to be cashed in Sterling, under direction of London Committee. Checks and drafts are to be forwarded to Bankers Trust Company for collection and reimbursement. Endeavor to secure advance at once against gold in transit for such amount as you will require before arrival. New York Committee recommends moderate advance to each applicant. Committee’s only protection for repayment in advance is through collection of New York drafts and checks cashed in London. Committee is advised Morgan is arranging to deposit three to six million gold for credit Bank of France, to be immediately disbursed in Paris for similar purpose there. Particulars will be cabled you shortly, so that London Committee may cooperate with Morgan Harjes. Necessity for depositing balance of gold here to establish Paris credit reduced London shipment to three million from amount originally advised. Understand Government shipment on Tennessee one million, five hundred thousand, regarding which cooperate with Government officials in charge. Have endeavored to conform as near as possible to suggestions in your latest cable. Hope above will fully meet situation. To authenticate this duplicate will be cabled to Brown Shipley & Company of London. Please compare.
(Signed) Benjamin Strong Jr. Chairman.
The above message replied to a message received from Mr. Kent that he must anticipate arrival of the gold by honoring all good credits in London against its arrival, which credits the banks will hold as collateral until the gold is received. He can arrange at once to make payment on all good credits against the government or general bank fund shipment. The hotels in London are doing wonders in advancing credit but have reached their limit. Necessary that he should have London Committee of bankers give assurance to hotels that credits honored by them will be paid according to London method when decided upon, such credit at present only being used by board. It is his idea that the various London bankers on whom credits are drawn should make out the drafts in the regular manner, but to the order of the hotels which take them in settlement for bills. The banks will then certify such checks and the hotels will thereby be assured that they can deposit them when cover is provided. This will divide the work among the banks properly and prevent any distribution of cash for boarding (this word may have been intended for hoarding) and will at once allow payment of cash in small amounts. Quoting from cable he says:
“Government gold would only be held pending ultimate collection good credit and government would receive certified paper referred to as collateral from banks in meantime.”
He also says that people have about exhausted their resources and must have relief at once. We are having some delay in exchange of cables, by reason of the censorship which we are asking the State Department to endeavor to eliminate by instruction cable to Ambassador Page. We would appreciate Secretary McAdoo’s cooperation.
I am in receipt of definite advice from London City and Midland Bank, our bank correspondent in London, that they have released to Mr. Kent seven hundred thousand dollars of gold, which I advised Secretary McAdoo, and Secretary Bryan on Monday last we would endeavor to place at the disposal of the government, and I assume that Mr. Kent has met the emergency in London by the use of considerable part of this gold in advance of its arrival, and of the arrival of the gold shipped on the Tennessee by the Government. It is quite possible that this gold has been used to complete the credit of three hundred thousand dollars which Mr. Kent arranged for Ambassador Page. I am, therefore, sending Mr. Kent the following cable:
“Government shipping million half gold on Tennessee. Understand will be disbursed in cooperation with your committee by officers in charge. This includes the three hundred thousand made available to Ambassador Page by State Department. Wire immediately if further instructions on that matter are required. Hope everything now in good shape.”
In order that reimbursements may be effected, either to Mr. Kent or to our London banks, to whom the gold was consigned, it will be necessary for the State Department to cable explicit instructions to Ambassador Page and convey instructions to the representatives of the Government in charge of the Government gold shipped by Tennessee to apply so much of the million, five hundred thousand dollars of the Tennessee gold to the repayment of whatever amount was used out of the seven hundred thousand dollars of gold placed at the disposal of the Government, pending arrival of Tennessee.
I am this morning advised that the arrangements for the disbursement of the credit arranged with the Bank of France, through J. P. Morgan & Company and Morgan, Harjes & Company are substantially completed. The money is already being disbursed and details in respect of the method of effecting disbursements at Paris will be conveyed to Secretary McAdoo just as soon as they are completed.
I believe it is exceedingly important that instructions be conveyed to those in charge of the gold shipped by the Government on the Tennessee, informing them that the London and Paris arrangement which was in course of completion when the Tennessee sailed, will be perfected and in complete operation by the time of their arrival, and further instructing them to take advantage of this machinery and cooperate with the London and Paris committee.
At our meeting in Washington Monday night I asked the Secretary of State if arrangements could not be made to furnish the Commander of the Tennessee with credentials issued by the embassies of the various foreign governments with respect to whom any question of belligerency or contraband might arise. While we in New York regard the possibility of difficulty on this score as very remote, we do feel that it must be covered. Might not this be done by wireless communication if it was not covered before the cruiser sailed?


Original Format



McAdoo, W. G. (William Gibbs), 1863-1941



Strong, Benjamin, 1872-1928, “Benjamin Strong Jr. to William G. McAdoo,” 1914 August 8, WWP18448, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.