New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-09-26
Secretary of Treasury
Says Interest Is Much
Too High.
GOVERNMENT FUNDS
MAY BE WITHDRAWN
Local Clearing House Asks
Washington for Specific
OVercharge Cases.
ll'rom The Tribune Bureau. ]

Washington, Sept 25.-With a view
to preventing eXOrbitant rates of in
terest on loans by national banks of
the principal reserve cities, Secretary
McAdoo sent a joint telegram to-day to
the heads of the Clearing House asso-
Citations Of New York, Chicago, Boston
and st. Louis, urging that banks can
operate with him in IAN unselfsh and
patriotic spirit" in assisting "the gem
eral business situation"
Mr.. McAdoO made public, together
with the telegram to the Clearing
House heads. list Of national banks
which are carrying reserves largely in
excess of the legal requirements, as
shown by their reports TO the Con-
trollcr of the Currency as of September
u. The banks in question are required
TO carry a reserve of only 10 per cent,
but many banks have reserves amount
ing from rs TO "a per cent.
The telegram sent to the Clearing
House Chairmen reads:
81 have received complaints about
the high rates of interest which are
being charged by the national banks of
New York, Boston, Chicago and other
recerve cities. Ii is alleged that the
New York banks are requiring their
country to pay per cent for loans
and to maintain a balance with the
New York banks, which makes the
money cost the correspondent banks
the equivalent of per cent or more.
Specific cases have been brought to my
attention where banks in cities of the
South have been required 10 pay these
high interest rates. II New York
charges the equivalent of per cent in
terest to the correspondent banks of
the South, these Southern banks must,
in turn, charge a still higher rate to
the small banks which are, in turn,
their correspondents, thus making the
money cost the ultimate borrower very
high, if not eXorbitant, rates.
High Rate Not Justified.
From ali the evidence before me
cannot feel that the charge of Z TO &
per cent interest by the New York
banks is justified in the circumstances.
Within the last six weeks | have APP
proved the issuance TO the national
banks of New York City Of more than
Sl4O,000000 Of new, or additional, ma
tional bank currency. This was done
for the purpose of easing rates and
helping the situation generally.
nave ldhen the position WIN III
the banks of the country that | will not
knowingly issue additional national
hank currency to or deposit government
funds with banks which charge excess
sive rates of interest or which are re-
fusing to meet legitimate demands for
reasonable credits. have also taken
the position that ! will withdraw gov
eminent deposits from national banks
which ar" boarding money and restrict
ing credits through the maintenance Of
cXces sivc reserves. The New York
banks generally have not been hoard
ing money or,maintaining excessive re-
serves, but they appear to be charging
higher rates Of interest than the con-
ditions seem TO justify.
81 am using every just effort TO per-
suadc the banks throughout the coun-
try to extend reasonable credits and at
reasonable rates of interest to meet
the existing unusual conditions Great
cd by the European war, and which, il
dealt with in a helpful spirit by all
concerned, should quickly ameliOratc.
New York Should Lead.
81 should like to see the New York
banks take the lead in establishing and
maintaining moderate rates of interest
for accommodations, as their example
.1u.aI.s has q large influence upOn bank