The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1915-09-25
HEAVY INTEREST CHARGE,
BANKS IN SOUTH ASK FOR Zig
BONUS SAYS HARDING.
Outlines Conditions, Saying None I'm
South Carolina Ask Over Fifteen
Per Cent on Loans to Farmers.


by national banks throughout the
country. particularly in the South
were disclosed by w. u. G.. Harding
of the federal reserve board in a
speech today before the Raleigh
Chamber of Commerce. Mr.. Harding
was explaining the reserve board reg
ulations granting preferential redis-
count rates to notes secured by staple
commodity warehouse receipts pro-
vided the maker has been charged
not more than 6 per cent. interest,
and defending the action Of Secretary
McAdoo in depositing $15,00O,OO0 in
the Southern federal reserve banks to
aid In financing the cotton crop.
THE comptroller of the currency"
he said, "has information from sworn
reports to his office regarding the
maximum and average interest rates
charged by national banks throughout
the United States. From the eport
of June 23, 1915, it appears that there
are five national banks in Alabama
whose maximum rates of interest
average 26 per cent, the rate in one
case being 60 per cent; in another
"a per cent. The average rate of in
terest which one Of these banks was
charging on all of it's loans amounted
to IL per cent; another 10 per cent.
In Arkansas one national bank ad-
mitted making a loan at a rate as
high as 120 per cent; another one at
so per cent. another at GO, and an
other at 25.
I'm Georgia there were IL banks
where the average maximum rate of
interest was about 80 per cent. The
maximum charged by one Of these
banks was 40 per cent. and the aver
age on all loans was Is per cent.
No banks in South Carolina admit
ted charging more than is per cent.
In Texas a number of banks report
ed rates in excess of 100 per cent. and
many of them stated that their aver
age rates on. all loans were / per cent.
per month OF more.
These high rates, however, are not
confined exclusively to the South. for
the reports show occasional rates Of
90 per cent. In the East and North. as
well as In the Far West and South.
Twelve per cent seems to be regarded
still as not extraordinary by the coun-
try bankers of Minnesota, Wyoming,
Kentucky and California. Owing either
to the rigid usury laws of North Car
olina or to the natural shrewdnes of
your citizens, tho average interest
rates In your State are lower than
elsewhere In the South; while one
bank in North Carolina admitted
making a loan at as high as so per
cent. its average rate on all loans was
less than 1-2 per cent. and the aver
age rate for loans by all national
banks in your State was slightly over
per cent"
Mr.. Harding said hat Secretary
McAdoo in making crop deposits in
the Southern reserve banks could not
be charged with discrimination I'm
favor of one section, for ne had Offer
ed to deposit treasury funds with fed
eral reserve banks in other sections,
which deposits have been declined.
Il fully agree that from a purely
banking standpoint and eliminating
all other considerations the deposits
were not essential said Mr.. Harding.
The situation as a banking PROPOSE
tion could have been cared for by The
Southern reserve banks, either by an
expansion of their note issues or by
rediscounting with other federal re-
serve banks, but the human equation
mas to be recokOned with, particularly
when ii comes TO dealing with South
ern farmers The federal reserve sys-
tenn still is new. On the other hand.
the farmer knows about the govern
ment funds.
In my opinion tho secretary, who
was born and reared i'm the South and
Is familiar with the Southern tenn
permanent. felt that by announcing his
intention to deposit government funds
with Southern banks to assist i'm NOV
ing the cotton crop simultaneously
with Great Britain's announcement of
the contraband against cotton, he was
availing himself OF the psychological
moment for restoring confidence. As
i"r rs cotton Is concerned the recent
advance in the price of that staple
seems to afford ample justification for
the course pursued"
I'D GONGInED rpDI-xTx-