The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-09-30
BANKS MUST COOPERATE,
MADOO SAYS IN THAT WAY
T''EY WILL AID COUNTRY
IN CRISIS.
Secretary OF Treasury Sends Messages
to Clearing Houses i'm New York.
Boston, Chicago and st. Louis Ex-
hOrting Them to Keep II, Down.

Washington, Sept 25.-Secretary
McAdoo today sent kilograms to the
chairmen Of the clearing house asso-
Citations in New York, Chicago, Boston
and ST. Louis. complaining of high in
terest rates in those cities and appeal
ing for aid in remedying that condi-
tion.
The telegram said: II have received
complaints about the high rates of
interest which are being charged by
the national banks Of New York, Bos-
ton, Chicago and other reserve cities.
1t is alleged that the New York banks
arc requiring their correspondent
banks throughout the country to pay
per cent for loans and to maintain
a balance with the New York banks,
which makes the money cost the cor
respondent 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 to pay these high interest
rates.
IF New York charges the eQuiva-
lent of 8 per cent interest to the cor
respondent banks OF the South, these
Southern banks must, in turn, charge
q still higher rate to the small banks,
xs.I n in, f,,r hnt
ents, thus making the money cost
the ultimate borrower very high if not
exOrbitant rates. From all the evil
dence before me 1 can not feel that
the charge Of or s per cent inter-
est by the New York banks is justi-
fed in the circumstances. Within the
past six weeks have approved the is
suance to the national banks Of New
York city Of more than $140,O0O,O00
of new or additional national bank
currency. This was done for the pur-
pose Of helping the situation generally.
have taken the position with all the
banks Of the country that / will not
knowingly issue additional national
currency or deposit government funds
with banks which charge excessive
rates Of interest or which are refus-
ing to meet legitimate demands for
credit. I have also taken the posi-
ton that I will withdraw government
deposits from national banks which
are boarding money and restricting
credits through the maintenance of
excessive reserve.
THE New York banks generally
Lave not been boarding money or
maintaining excessive reserve, but
they appear to be charging higher
rates Of interest than conditions seem
to justify. / am using every just ef-
fort to persuade the banks throughout
the country to extend reasonable
credit and at reasonable rates of in
terest to meet the existing unusual
conditions caused by the European
war, which if dealt with in a helpful
ameliOrate. i should like to see the
New York banks take the lead in es-
tablishing and maintaining moderate
rates Of interests for accommodations,
as their example always has large
influence on banking action and senti-
ment in the country.
'If this course is pursued by the
leading banks in New York and other
great money centres, real public
service will be rendered and return
to normal conditions Of business will
he quickened. l have been using to
the utmost every power Of this de-
partment to assist the general busi-
ness situation and the banks and
ask only for cooperation on the part
of the banks in an unselfsh and pa
triotic spirit"
Secretary McAdoo tonight made
public a list of nearly 250 national
banks outside reserve and central re-
serve cities, which are carrying re-
serves i'm excess of legal requirements.
The list shows that reserves in these
banks run from % per cent to n
per cent, the legal minimum being
Is per cent
IF" said Mr. McAdoO, i'm Il state
ment given out with the list, "the
large amount of loanable funds that
are kept from active employment, as
indicated by these figures, was in
vested i'm commercial or agricultural
paper or loaned on proper security the
present situation would be greatly re-
lieved."
The seCrctary's statement referred
to the list rs showing "some Of the
national banks carrying excessive re-