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"A verbal understanding confirmed by correspondence, extended 

Great Britain a two hundred million dollar gold loan or credit. All 

negotiations were conducted between Benjamin Strong, 

 

Governor of 

the Federal Reserve Bank of New York and Mr. Montagu Norman, 

Governor of the Bank of England. The purpose of this loan was to help 

England get back on the gold standard, and the loan was to be met 

by investment of Federal Reserve funds in bills of exchange and foreign 

securities."

The Federal Reserve Bulletin of June, 1925, stated that:

"Under its arrangement with the Bank of England the Federal Reserve 

Bank of New York 

 

undertakes  to  sell  gold  on  credit  to  the  Bank  of 

England from time to time during the next two years, but not to 

exceed $200,000,000 outstanding at any one time."

A two hundred million dollar gold credit had been arranged by a 

verbal understanding between the international bankers, Benjamin 

Strong and Montagu Norman. It was apparent by this time that the 

Federal Reserve System had other interests at heart than the financial 

needs of American business and industry. Great Britain’s return to the 

gold standard was further facilitated by an additional gold loan of a 

hundred million dollars from J.P. Morgan Company. Winston Churchill, 

British Chancellor of the Exchequer, complained later that the cost to 

the British government of this loan was $1,125,000 the first year, this sum 

representing the profit to J.P. Morgan Company in that time.

The matter of changing the discount rate, for instance, has never been 

satisfactorily explained. Inquiry at the Federal Reserve Board in 

Washington elicited the reply that "the condition of the money market 

is the prime consideration behind changes in the rate." Since the