EXHIBIT D.

LETTER TO THE PRESIDENT OF THE UNITED STATES FROM THE SECRETARY OF THE TREASURY TRANSMITTING THE PROCEEDINGS OF THE PAN AMERICAN FINANCIAL CONFERENCE.

TREASURY DEpartment, Washington, September 6, 1915.

SIR: The diplomatic and consular appropriation bill approved March 4, 1915, contained the following provision:

The President is hereby authorized to extend to the Governments of Central and South America an invitation to be represented by their ministers of finance and leading bankers, not exceeding three in number in each case, to attend a conference with the Secretary of the Treasury in the city of Washington, at such date as shall be determined by the President, with a view to establishing closer and more satisfactory financial relations between their countries and the United States of America, and authority is hereby given to the Secretary of the Treasury to invite, in his discretion, representative bankers of the United States to participate in the said conference, and for the purpose of meeting such actual and necessary expenses as may be incidental to the meeting of said conference and for the entertainment of the foreign conferees the sum of $50,000 is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to be expended under the direction of the Secretary of the Treasury.

In pursuance thereof the Secretary of State extended in your behalf an invitation to the various South and Central American Republics to attend a conference with the Secretary of the Treasury in the city of Washington on the 24th day of May, 1915. This invitation was cordially received and accepted by all of the Governments concerned. Following is a list of the Governments represented, with the names of the delegates appointed by them to attend the conference:

The Secretary of the Treasury was authorized to invite, in his discretion, representative bankers of the United States to participate in said conference. In the exercise of that discretion I extended invitations to a representative body of our bankers and business men. A list of them will be found on page 44 of the proceedings of the conference.

The members of the diplomatic corps of the Latin American Republics, the members of the Cabinet of the United States, the chairman of the Committee on Foreign Relations of the Senate (Hon. William J. Stone), the chairman of the Committee on Foreign Affairs of the House of Representatives (Hon. Henry D. Flood), the Assistant Secretaries of the Treasury, the members of the Federal Reserve Board, the members of the Federal Trade Commission, and the chairmen of the boards of directors and the governors of each of the Federal reserve banks were also invited.

Through the courtesy of the governing board of the Pan American Union the conference was held in the Pan American Building in the city of Washington. The first session began at 10 o'clock a. m., Monday, the 24th of May, 1915. The Secretary of the Treasury presided, and the proceedings were opened with addresses by the President and Secretary of State of the United States, to which responses were made by representatives of the visiting Governments. The sessions continued until the 29th of May, 1915.

A full report of the proceedings is submitted herewith. I shall not attempt to review these proceedings; I shall merely summarize the most important results.

There was unanimous opinion that two things are essential to the development of trade and improved relations between the LatinAmerican nations and the United States, viz:

1. The granting by United States bankers and business men of ample credits to Latin America and the prompt provision of the necessary organization and facilities for this purpose.

2. The prompt establishment of adequate steamship facilities between the leading ports of the United States and South America, which the conference, by resolution, declared "a vital and imperative necessity."

As to the first of these necessities, viz, credits, Central and South America have heretofore relied almost wholly on Europe for their financial requirements. The great war has seriously disturbed and injured those countries by the sudden derangement and withdrawal of European credits. United States credits must be substituted if the orderly development and progress of Latin America is to continue and if we desire to enlarge the trade and financial influence of the United States in those countries.

Manifestly enlightened interest in the welfare of our friendly neighbors should induce us to extend to them every facility that our

resources will permit. Such a policy will inure to their and our advantage.

It is nothing short of providential that the Federal reserve system has been established. Happily it offers the means by which the great objects in view can be largely, if not wholly, attained. The Federal reserve act has so consolidated and organized our credit resources that our bankers are for the first time in our history able to engage in world-wide financial operations. We now have the available resources. It is merely a question of their intelligent use. The first step should be the establishment of the necessary branches or agencies in the leading cities of all the countries of South and Central America by a bank or banks having the necessary resources to take the business that is open to them. One of our largest banks has had the enterprise to establish branches in some of the largest cities in South America, but manifestly the resources of a single bank or of several of our largest banks are insufficient to meet the demands of the situation as it now exists and as it will develop in the future. What is needed is the use of the consolidated banking power of the United States applied through agencies established in the leading cities of Latin America.

The Federal reserve act has supplied the necessary authority, and it only remains for the Federal reserve banks, with the approval of the Federal Reserve Board, to make practical use of that power. Section 14 (paragraph e) of said act gives every Federal reserve bank the right

To establish accounts with other Federal reserve banks for exchange purposes and, with the consent of the Federal Reserve Board, to open and maintain banking accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purpose of purchasing, selling, and collecting bills of exchange, and to buy and sell with or without its indorsement, through such correspondents or agencies, bills of exchange arising out of actual commercial transactions which have not more than 90 days to run and which bear the signature of two or more responsible parties.

In addition to these powers, the Federal reserve banks may, "under rules and regulations prescribed by the Federal Reserve Board, purchase and sell in the open market, at home or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals, cable transfers and bankers' acceptances and bills of exchange of the kinds and maturities by this act made eligible for rediscount with or without the indorsement of a member bank," and may "deal in gold coin and bullion at home or abroad, make loans thereon," etc., and "buy and sell, at home or abroad, bonds and notes of the United States," etc. Enlargement of these powers would be desirable to increase the usefulness of foreign agencies of Federal reserve banks, and it is probable that the Congress would grant such enlarged powers upon good cause shown.

The 12 Federal reserve banks could, with the consent of the Federal Reserve Board, establish joint agencies in each of the countries of Latin America, their interest in such agencies to be in proportion to the capital stock and surplus of each participating Federal reserve bank. The combined capital stock and resources of our Federal reserve banks, utilized in this way for the extension and promotion of our foreign commerce, would give them unrivaled financial

power. They could maintain themselves in foreign fields in competition with the world and perform a service of incalculable value to the American people.

During the Pan American Financial Conference the suggestion was made by some of our leading bankers that the national-bank act might be amended so as to permit a number of the national banks to become stockholders in an independent bank organized for the purpose of doing business in foreign countries. This plan, even if it were not open to objection, would be manifestly inferior to the agency of the combined Federal reserve banks. The Federal reserve banks comprise in their membership every national bank in the United States, as well as a number of our leading State banks and trust companies. They constitute a financial organization of unequaled strength, and their operations in foreign countries will be for the common benefit of all of the national banks, State banks, and trust companies composing the Federal reserve system. These agencies in foreign countries could, in addition to their banking business, render a great service to American business men and bankers by furnishing credit reports and general information about trade and finance in the various countries in which they operate.

The power of the Federal reserve banks to establish such joint agencies in foreign countries, with the consent of the Federal Reserve Board, appears to be beyond question. The initiative rests with the Federal reserve banks. While they can not be compelled to establish such agencies, I believe that upon a careful study of the situation and with the encouragement of the Federal Reserve Board they will be prompted to take this important step.

The establishment of Federal reserve agencies will not prevent the member banks from carrying on and enlarging the business they are now doing in foreign countries. It is gratifying to note that many of our national banks and trust companies are showing commendable enterprise in supplying credits to Latin America.

As to the second necessity, namely, the establishment of adequate steamship facilities: The Pan American Financial Conference, by unanimous vote, adopted the following resolution:

Resolved, That it is the sense of this conference that improved ocean transportation facilities between the countries composing the Pan American Union have become a vital and imperative necessity, and that every effort should be made to secure at the earliest possible moment such improved means of ocean transportation, since it is of primary importance to the extension of trade and commerce and improved financial relations between the American Republics.

The committee on transportation filed a report recommending, among other things, that the Secretary of the Treasury of the United States, as chairman of the conference, appoint a permanent committee, to be composed of representatives of the United States and Argentina, Brazil, Uruguay, Chile, Ecuador, and Peru, "to obtain and furnish information pertinent to the subject and to put into effect the plans outlined in the reports of the subcommittees above alluded to, and, further, to consider and report to the chairman of the Pan American Financial Conference any other feasible and effective plan for the establishment of the desired expansion of shipping facilities." There were two subcommittees of the transportation committee. each of which presented a report containing recom

mendations. The report of Señors Aldao, Cavalcanti, and Cosio, representing, respectively, Argentina, Brazil, and Uruguay, suggested the advisability of calling for bids not later than December 31, 1915, for the establishment of a regular line of fast mail steamers between United States ports and Rio de Janeiro, Montevideo, and Buenos Aires, "bidders to state the compensation demanded and the period of the contract," and subject to other conditions outlined in the report, and concluded as follows:

The Governments of the respective countries to agree upon the proportion which is to be paid by each and upon all other details.

The report of Señor Vergara, representing Chile, recites that the delegate of Peru, Dr. Alzamora, and the delegate of Ecuador, Dr. González, although approving his report, could not sign the same for want of the necessary authorization from their Governments. Señor Vergara's report recommends the organization of a large company, subscription to the capital stock of which may be made by the public, the balance of the stock, if any, to be taken by the Government of the United States and the Governments of those LatinAmerican Republics interested, in proportions to be agreed upon; the company to be organized under New York laws; the steamers to be registered in the different countries in proportion to the capital subscribed, and to fly the flag of the country of their registration. It is unnecessary to recite the other features of the report, as it is the principle that is important.

I stated to the conference that I did not think it wise to appoint the international committee on transportation, as suggested, because I should, as Secretary of the Treasury of the United States, have to appoint a committee composed of representatives of foreign countries to deal with matters in their own States; that I did not believe it practicable, and that it seemed to me that each country would have to handle the matter in its own way; that this was not a convention for the purpose of determining national policies, but a conference for the purpose of exchanging views and suggesting remedies; that we could not with propriety discuss Government ownership or subsidies or any other such matter; that the shipping question had become something of a political controversy in the United States, and that the conference was not the place to thresh it out; that I thought the conference should confine itself to a consideration of the resolution to which I have already referred, and which was unanimously adopted by the conference. I respectfully invite your attention to pages 283, 284, and 290 of the proceedings and to the report of the committee on transportation, which will be found on page 305 of the proceedings.

It is appropriate to quote, briefly, from the remarks of Dr. Samuel Hale Pearson, of Argentina. chairman of the committee on transportation, who said:

It has been the unanimous opinion of all of us North Americans and South Americans that there is absolute necessity, in the interest of commerce and for a better knowledge of each other, that some method be arrived at for the establishment of fast steamship communications between North and South America. * Everybody knows that we want fast steamers, and fast steamers are the basis and the foundation of banking, trading, and all sorts of commercial