Benjamin Strong Jr. to Russell Cornell Leffingwell
Title
Benjamin Strong Jr. to Russell Cornell Leffingwell
Creator
Strong, Benjamin, 1872-1928
Identifier
WWP18694
Date
1919 July 25
Description
Benjamin Strong Jr. writes Russell C. Leffingwell regarding Allied war debt.
Source
Benjamin Strong Jr. Papers, New York Federal Reserve Bank
Language
English
Text
Dear Leffingwell
Encolosed is confirmation of a cable which I sent you through Ambassador DavisJohn W. Davis, in the Embassy code, and which may astonish you a bit; so I am writing you an explanation.After talking with the officers of the Bank of England and with a very able, intelligent and thoroughly reliable newspaper man named Kiddey whom Norman invited to his house for dinner for the purpose, and after talking yesterday with the Chancellor, I am convinced that the immediate task now ahead of us which will help conditions over here more than anything else is to get some sort of a definition of the terms of the debt of the Allies to the United States, and particularly of the British debt. I shall not attempt to repeat conversations in detail, but there is undoubtedly in existence here a latent underlying feeling that the Allies have made the great and most vital sacrifices in the war, both of men and finance and in material damage suffered; that our sacrifices have been slight and our profits immense, and that the existence of this great debt due on demand is a sword of Damocles hanging over their heads.The premium on dollars, now increasing so rapidly, gives them a feeling of great concern as to how they are to meet the interest payments, particularly this fall when they feel matters will more or less reach a crisis, without paying so heavy penalties as to be embarrassing and humiliating, and to contemplate going into the market to raise $100,000,000 in exchange, at present rates and under present conditions, is really a cause of great anxiety.I saw the Chancellor yesterday under the following circumstances: Tuesday night Governor Cokayne had a meeting with him and told him I was here, and he sent word to me through Governor Cokayne that he hoped I would be sure and see him before leaving for Paris and finally made an appointment for 4 o’clock yesterday (Thursday, the 24th). We had a chat of about an hour and a quarter, much of the time merely discussing matters of mutual interest such as our program and theirs, taxes, reconstruction, etc., etc. I have made no suggestions nor have I in any way disclosed our views or feelings except to state that England and the United States must in some way preserve good relations and work together; that the means must be found to overcome the difficulties in the way of getting investment money from America to help proper reconstruction work, and that now that the treaty with Germany is formulated it might be well for these discussions to take place at Washington with thoroughly responsible people there for the purpose. I did point out how important it was that Great Britain should be well repsented at the Embassy in Washinfgton when Reading’s place is filled, and how important it was that we should be well represented on the Reparations Commission. As to the latter, he assured me that if the man to whom the position had been offered would accept it we would be thoroughly satisfied. He made no reference to a definition of the terms of their debt to us until about as I was leaving it came up in response to my inquiry as to whether there were any pending tangles between the financial departments of the two governments that were unadjusted and causing difficulty. This led him to remark that as to the debt he thought it would be improper for the debtor to approach the creditor with proposals.You may be sure of my discretion in discussing these matters with him, or with anyone else, but I cnan see the need of prompt treatment of this matter. Possibly you will consider that I have changed my views because I recall stating to you that I did not think it was our duty to approach the debtor. In that I believe I was wrong.I gather by implication that there is a feeling here that we shoukld try and have some cancelation of debt all around. It was too indefinite for me to suggest any particulars, and it is hard to say how such a cancelation could take place without an actual reduction in indebtedness due us, which is not to be contemplated, in my opinion.I am sending this letter in the Embassy pouch. It is quite informal and confidential, but I thought you would like to have a line on how things are going.On arriving I found that the Bank of England expected me to make my office with them while in London, and my old friend Norman took me right to his house where I have been staying since arrival. They have made me feel most at home and there is the keenest possible desire that in every way relations between America and England should be strengthened. In a sense it is pathetic. Englishment have betrayed so little of that sort of thing in the past and it emphasizes their need at the moment.The whole German gold matter is held up until I see Hoover in Paris, and there is nothing to report on that.The coal strike at York, of which you doubtless see much in the newspapers, has some quite serious aspects. The difference is over adjustment of piece work, in which the Government seems to have played a rather stupid part, but the younger mine workers have broken away from their older leaders and are making rather unreasonable demands.One serious development is the use of the strike for political purposes, the so-called “Triple Alliance” of labor unions at a meeting now being held proposing frankly that the strike be used to force the discontinuance of conscription and the withdrawal of troops from Russia.The picture of the situation here, as I gather it from only a few days visit, is really distressing alongside of our situation at Home, and naturally one’s sympathies are aroused. I cannot believe, and so far have received no evidence to justify the belief, that any such condition exists as Vanderlip pictured on his return.There is not time now to write you as fully an account of some of these matters as I would like to, but when I reach Paris there will be, and I will write you through the Embassy at length.With warmest regards to all in the Treasury, and particularly your good self,
Encolosed is confirmation of a cable which I sent you through Ambassador DavisJohn W. Davis, in the Embassy code, and which may astonish you a bit; so I am writing you an explanation.After talking with the officers of the Bank of England and with a very able, intelligent and thoroughly reliable newspaper man named Kiddey whom Norman invited to his house for dinner for the purpose, and after talking yesterday with the Chancellor, I am convinced that the immediate task now ahead of us which will help conditions over here more than anything else is to get some sort of a definition of the terms of the debt of the Allies to the United States, and particularly of the British debt. I shall not attempt to repeat conversations in detail, but there is undoubtedly in existence here a latent underlying feeling that the Allies have made the great and most vital sacrifices in the war, both of men and finance and in material damage suffered; that our sacrifices have been slight and our profits immense, and that the existence of this great debt due on demand is a sword of Damocles hanging over their heads.The premium on dollars, now increasing so rapidly, gives them a feeling of great concern as to how they are to meet the interest payments, particularly this fall when they feel matters will more or less reach a crisis, without paying so heavy penalties as to be embarrassing and humiliating, and to contemplate going into the market to raise $100,000,000 in exchange, at present rates and under present conditions, is really a cause of great anxiety.I saw the Chancellor yesterday under the following circumstances: Tuesday night Governor Cokayne had a meeting with him and told him I was here, and he sent word to me through Governor Cokayne that he hoped I would be sure and see him before leaving for Paris and finally made an appointment for 4 o’clock yesterday (Thursday, the 24th). We had a chat of about an hour and a quarter, much of the time merely discussing matters of mutual interest such as our program and theirs, taxes, reconstruction, etc., etc. I have made no suggestions nor have I in any way disclosed our views or feelings except to state that England and the United States must in some way preserve good relations and work together; that the means must be found to overcome the difficulties in the way of getting investment money from America to help proper reconstruction work, and that now that the treaty with Germany is formulated it might be well for these discussions to take place at Washington with thoroughly responsible people there for the purpose. I did point out how important it was that Great Britain should be well repsented at the Embassy in Washinfgton when Reading’s place is filled, and how important it was that we should be well represented on the Reparations Commission. As to the latter, he assured me that if the man to whom the position had been offered would accept it we would be thoroughly satisfied. He made no reference to a definition of the terms of their debt to us until about as I was leaving it came up in response to my inquiry as to whether there were any pending tangles between the financial departments of the two governments that were unadjusted and causing difficulty. This led him to remark that as to the debt he thought it would be improper for the debtor to approach the creditor with proposals.You may be sure of my discretion in discussing these matters with him, or with anyone else, but I cnan see the need of prompt treatment of this matter. Possibly you will consider that I have changed my views because I recall stating to you that I did not think it was our duty to approach the debtor. In that I believe I was wrong.I gather by implication that there is a feeling here that we shoukld try and have some cancelation of debt all around. It was too indefinite for me to suggest any particulars, and it is hard to say how such a cancelation could take place without an actual reduction in indebtedness due us, which is not to be contemplated, in my opinion.I am sending this letter in the Embassy pouch. It is quite informal and confidential, but I thought you would like to have a line on how things are going.On arriving I found that the Bank of England expected me to make my office with them while in London, and my old friend Norman took me right to his house where I have been staying since arrival. They have made me feel most at home and there is the keenest possible desire that in every way relations between America and England should be strengthened. In a sense it is pathetic. Englishment have betrayed so little of that sort of thing in the past and it emphasizes their need at the moment.The whole German gold matter is held up until I see Hoover in Paris, and there is nothing to report on that.The coal strike at York, of which you doubtless see much in the newspapers, has some quite serious aspects. The difference is over adjustment of piece work, in which the Government seems to have played a rather stupid part, but the younger mine workers have broken away from their older leaders and are making rather unreasonable demands.One serious development is the use of the strike for political purposes, the so-called “Triple Alliance” of labor unions at a meeting now being held proposing frankly that the strike be used to force the discontinuance of conscription and the withdrawal of troops from Russia.The picture of the situation here, as I gather it from only a few days visit, is really distressing alongside of our situation at Home, and naturally one’s sympathies are aroused. I cannot believe, and so far have received no evidence to justify the belief, that any such condition exists as Vanderlip pictured on his return.There is not time now to write you as fully an account of some of these matters as I would like to, but when I reach Paris there will be, and I will write you through the Embassy at length.With warmest regards to all in the Treasury, and particularly your good self,
Original Format
Letter
To
Leffingwell, R. C. (Russell Cornell), 1878-1960
Files
Collection
Citation
Strong, Benjamin, 1872-1928, “Benjamin Strong Jr. to Russell Cornell Leffingwell,” 1919 July 25, WWP18694, Benjamin Strong Jr. Papers, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.