Nicholas Kelley to the Federal Reserve Bank of New York

Nicholas Kelley to the Federal Reserve Bank of New York

Nicholas Kelley

WWP18783

1920 July 16

Nicholas Kelley sends the New York Federal Reserve Bank a proposed sale of American silver to India.

Benjamin Strong Jr. Papers, New York Federal Reserve Bank

English

C O P Y
TREASURY DEPARTMENT
WASHINGTON

Confidential

Dear Sirs:
I enclose a memorandum of an agreement proposed to be entered into between the United States Treasury and the British Treasury concerning the repayment by the British Government of certain of its obligations held by the United States Treasury in the amount of $122,017,633.57 regarded as having been given by the British Treasury for advances made to it by the United States Treasury in order to enable it to purchase silver under the Pittman Act.
You will observe that sub-division III of the proposed agreement provides that 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 to make available rupee credits to the United States Treasury as set out in the proposed agreement, which provides for arrangements to be carried out by the Federal Reserve Bank of New York.
I also enclose a copy of a letter dated June 30, 1920, from Mr. B. P. Blackett of the British Treasury to the Secretary of the Treasury, in which he states that the proposed agreement has been laid before the Secretary of State for India with a view to the concurrence of the Indian Government being obtained, and that the Indian Government has expressed agreement in the proposals as a whole, but points out that under the rules applying to the sale of bills and telegraphic transfers on India it will probably be necessary under the arrangement for the Federal Reserve Bank of New York to have its own agent in London for the purpose of submitting tenders and suggests that it will be unnecessary for His Majesty’s Government to engage to give notice of each weekly sale to the Federal Reserve Bank in New York. The copies mentioned in Mr. Blackett’s letter of the rules applying to the sale of bills and telegraphic transfers on India have not been received. Subject to receiving copies of the rules, and in view of the assurances contained in Mr. Blackett’s letter of June 30, the Treasury is inclined to believe that telegraphic notice to the Federal Reserve Bank in New York in advance of weekly or other offering of rupee credits by the Indian Government in London or elsewhere in Great Britian can be waived on the understanding that in lieu thereof, similar notice shall be given in writing to the agent of the Federal Reserve Bank in London. The Treasury will be glad to know whether in case an agreement is ientered into between the Two Treasuries, either in the form of the memorandum or in the form of the memorandum as modified regarding notices as above mentioned, the Federal Reserve Bank of New York is prepared, if the Secretary of the Treasury shall so request, to act under it. Of course, until an agreement is finally concluded, no action under the proposed arrangement is to be taken.In order that it may inform the British Treasury, the Treasury will be glad to learn whom the Federal Reserve Bank of New York would wish should act as its agent in London for the purpose of making tenders and receiving notices in case the proposed agreement is entered into between the two Treasuries, and the Federal Reserve Bank of New York is prepared to act thereunder. In such circumstances I assume the Federal Reserve Bank of New York would wish to meet the convenience of the Government of India by giving as long notice as possible when it proposed to apply for rupee credits at the fixed rate of exchange of 48-2/3 cents per rupee.

N. KELLEY

Attention:Mr. J. E. Crane

Letter

Federal Reserve Bank of New York