Benjamin Strong Jr. to Colonel House
Title
Benjamin Strong Jr. to Colonel House
Creator
Strong, Benjamin, 1872-1928
Identifier
WWP18499
Date
1915 August 14
Description
Benjamin Strong Jr. writes Edward M. House concerning the monetary exchange.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
My dear Colonel House:
Referring to our conversation of a week ago: You have doubtless observed that matters are developing along the lines of our discussion. Sterling exchange sold yesterday below 4.71. The newspapers are reporting very considerable cancellations of foreign contracts for wheat and other commodities. The cancellation of contracts for grain is reported to be due to military developments at the Dardanelles, which may shortly release large quantities of Russian wheat. This hardly seems probable and, if rumors now appearing in the newspapers are well-grounded (although I suppose they are considerably exaggerated), I am inclined to believe that the cause is inability to get remittances. It is a striking illustration of the possible effect upon our trade growing out of inability to arrange credits in this country.
If exchange declines very sharply so that all the profit on a purchase of goods contracted for in this country is gone before the goods are exported and the purchaser is in a position to cancel the contract, he will, of course, cancel in every instance even though he has to buy again later, possibly after contracting for his exchange in advance.
The situation is undoubtedly growing increasingly difficult with each day’s decline in exchange and, while I don’t see anything yet to be alarmed about, I still believe that at present rates, with the prospect of still lower rates, the influence is gradually growing stronger to curtail our export business.With kindest regards, I beg to remain,
Very truly yours,
Referring to our conversation of a week ago: You have doubtless observed that matters are developing along the lines of our discussion. Sterling exchange sold yesterday below 4.71. The newspapers are reporting very considerable cancellations of foreign contracts for wheat and other commodities. The cancellation of contracts for grain is reported to be due to military developments at the Dardanelles, which may shortly release large quantities of Russian wheat. This hardly seems probable and, if rumors now appearing in the newspapers are well-grounded (although I suppose they are considerably exaggerated), I am inclined to believe that the cause is inability to get remittances. It is a striking illustration of the possible effect upon our trade growing out of inability to arrange credits in this country.
If exchange declines very sharply so that all the profit on a purchase of goods contracted for in this country is gone before the goods are exported and the purchaser is in a position to cancel the contract, he will, of course, cancel in every instance even though he has to buy again later, possibly after contracting for his exchange in advance.
The situation is undoubtedly growing increasingly difficult with each day’s decline in exchange and, while I don’t see anything yet to be alarmed about, I still believe that at present rates, with the prospect of still lower rates, the influence is gradually growing stronger to curtail our export business.With kindest regards, I beg to remain,
Very truly yours,
Original Format
Letter
To
House, Edward Mandell, 1858-1938
Files
Collection
Citation
Strong, Benjamin, 1872-1928, “Benjamin Strong Jr. to Colonel House,” 1915 August 14, WWP18499, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.