The Washington times., 1916-01-10
Comptroller, in Annual Report,
Urges Action to Protect BOr-
roWers Against Usury.
1000 PER CENT is CHARGED
Sworn Statements Show Many
National institutions Collect
Exorbitant Rates on Loans.

us,lry. are urged by COMPTROLLER OF the
Currency John SHELTON William in his
annual report made public today
The Comptroller asks particularly for
an amendment to permit the Depart
lnent Of Justice to bring suit AGAINST
usurers on information FURNISHED ny
the Coinptroller's office. He Incorporates
in his report to support this plea, sworn
statements from national banks In
Texas, Georgia, Oklahoma and Louisi-
ana, showing they mad been lendinE
money at rates OF from 20 to 1000 per
cent.
COMPTROLLER williams asks in all for
twenty.four amendments to strengthen
the Federal banking laws against inn
proper practices. lie reviews at great
length a consistent campaign made by
him over a period of several months
to force the diScontinuance Of the nrac-
tee by many hanks of charging usuriors
rates. lie publishes correspondence
with the banks, with the National
Banking Associations, With State su-
perintendcnts. and others on the sub
sect. This correspondence shows, he
Gays, that there have been many shall
law attempts TO Justify usurious charGes.
One bank president. he shows.
sought to defend usury on the ground
lndE IL WAS II iOHk SbhhphSHCu ~ H@hN'E'
Othets declared that it meant failure
to small banks, but the Comptroller
points out that no bank has been forced
out of business because compelled to
keep within the law in its interest rates.
Urges Bank Consultations.
He suggests in small communities
where hanks eliegedly can't get Slong
ON the legal rates, that number Of
small institutions, unable to prosper
be consolidated. thereby saving the
overhead expense that some such cities
and towns can not carry.
AfTidavits from some ffteen or TWEEN
ty national banks, are submitted in the
report. giving q list of the usurieGs
loans made by these different banks for
various periods. The names OF the
banks, and the borrowers, however, are
omitted. The tables give the amount
IF the loans, the time for which made,
and the rate OF interest charged in each
instance. The rates run in some cases
mp to more than 600 per cent; Refer.
which have admitted under oath that
the average rates which they charge
on all loans are 25. rs and 40 per cent
Attention is called to the fact that
usurious charges are in the main
exacted from helpless borrowers,
caught in the pinch OF necessity. the
Comptroller urges that for the protec-
ton Of the faithful and intelliSent
bankers OF the country constituting the
vast majority from unfair conpetltion
and unjust odium, the laws should FORCE
the unfaithful and incompetent to con,
form to sound banking principles ana
tc aid in developing instead OF Destroy
ing communities.
show the growth and strength OF the
national banks. the Comptroller taxes
up his suggestions to strengthen the
banking laws and protect stockhold-
ers, depositors, and the pubic
Safeguard For Banks.
THE Establishment of the Federal
Reserve Bank" he says, makes 1t
practically impossible for any ma
tional bank operating in accordance
with the provisions OF the national
bank act and managed with ordinary
honesty, intelligence, and efficiency to
fail. Banks nearly always are brok-
en-, not by the failure of customers to
whom they have lent money, not by
bank robbers who have come from
the outside, but by the tying up or
dissipation of the banks funds
through loans to their own offtcers
and directors. or to interests allied
with or controlled by those officers
and directors. or else by direct defal :
cations and embeSzlements by trusted
OHlCGTb. II lnGHt evils arc
and they can be remedied II certain
simple and much needed amendments
can be secured to the national bank
act-:failures among national banks
can be reduced TO a negligible num-
her, or be absolutely eliminated"
The Comptroller then repeats the
recommendations made II his last
annual report and urges these twelve
additional amendments:
THAT officers OF national bank be
prohibited from borrowing funds OF
the banks by which they are en-
"That no loan be made by any ma
tional bank to any of Its directors or
to a frm in which director may be
a partner without formal authority OF
the board of directors of the bank.
That all officers Of a national bank
having the custody OF its funds. money
OF securities, and all OFFICERS. teilers,
or other employees of the bank en-
gagged I'm the handling of its money
shall furnish surety bonds, preferably
the bonds OF an established surety
"To limit direct and indirect loans
to one individual Arm, or corporation
ITO prevent or limit overdrafts.
Certificates of Deposit.
"That all certificates Of deposit mus
he signed by two officers of the bank
and a penalty provided for the issue o.
any such certificate not signed by tive
officers.
TO forbid any officer or employe o
a national bank from erasing or caustnI
10 he erased or removed. either by aci'
or abrasion. any entries on the books
~ any national bank Where entries
have been made inadvertently or CHROME
uusly and Il 10 desired TO correct them
theN should be Cancelled bv having TIRE
lines drawn across them in black or re-
ink in such a manner as 10 indicate II
cancellation but not to make II tmpoSsi
hlA to declpher the original entry, Ma
,ionAl hanks have suffered serious losss
FROM erasures aud chanRed entries D.
dishonest bookkeepers and Officers [
conceal OF 10 falsify transactions,
To limit interest paid on deposits Il
"A maximum Of peT cent, unless tn
highest rate charEed on long time pape
bY tile Federal reserve bank OF the dis
A.,inI shall he hirhnr. In MhiCh even