The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-10-18

| WASHINGTON. Oct. fs,-"unIus.
tifiable interest sxasted On demand
loans by Nsw Work city banks has
been an active contributing cause Of
the huge shrinkAae' in all security
values during the last year" Comp
troller Of One Currency Williams de-
elared in Q formal statement. He
charged that call NOISY ratea in NsN
York were the highest In Che world
and that renewal" rates fixed daily
by q ssAsII lotteries of stock e9-
change brokers governed ''the inter
ed charged % brokeEv loans 10
nearly all New York banI~
"The raising O. lowering q the
renewal rates % the exchange" said
Mr. Williams. lis frequently accom-.
panied by upward or downward
and those responsible for the fixing
OF the rate therefore have the OPP
portunity, whether exercise0 or not,
OF profiting largely by operations on
the stock market, which Is so often
and directly affected by the cEll
money situation. do not. Of course,
undertake to say that this formal
money committed does take i'm
proper advantage OF their foreknowl-
edge, but there Gre critics who Sc
verely censure the existing arrange
ments.
Power to fix money rates for all.
or nearly all Of the banks In New
York city and to change them daily,
is a grip on the heart OF our COM
merco. II permits such interferences
as fallible human judgment, whim or
interest may direct with the natural
and orderly movements OF money.
the life blood OF business. The mat
ter Of arbitrary fixing money rates
at the money center. possibly re-
versing the natural and healthy flow
and effecting, directly or indirectly
billions of dollars of security values
and other property, is left to a small
and varying number of private Citt-
zens without official responsibility.
Touch Every Glass"
THE evils and dangers OF such
methods could be recited indefinitely.
They reach to the remotest corners
of the union and Its possessions, and
touch harmfully every class of peo-
pie. The direct tendency Is to re-
verse one Of the fundamental pur-
poses of the federal reserve act which
is to promote orderly distribution of
money through the country to meet
the needs of commerce and agricul-
ture. Excessive interest rates Of
fered In New York artificially draw
money away from outside communi-
ties through their banks. and often
leave legitimate enterprises starved
or pinched, while feeding speculative
movements, which may be adding
nothing to real Industrial or COM
mercial wealth.
Il reiterate the statement pre-
viously made that the excessive rates
on call money, arbitrarily fixed and
tolerated In New York. in my opin-
ion, have been potent influence in
depressing seriously the prices of all
investment bonds and standard
past IL months has amounted. in
GLIDING the depreciation In Liberty
bonds, to several billion dollars"
Mr.. Williams declared that al
though the renewal rate fixed by the
rate committee was not regarded as
compulsory by the stock exchange
authorities II nevertheless was ad-
mitted by practically every bank
that It's rate on call loans was
changed to conform with the posted
rate. As result, Mr.. Williams said,
ut would be vain. obviously, for a
borrower TO hope to obtain money in
New York at a lower rate by shift
ing his loan to some other bank"
The statement OF the New York
banks that all broker loans were
raised or lowered simultaneously did
not bear up under his Investigation,
Mr.. Williams asserted. He cited
records which he said showed ZAP
parent discrimination" on loans
equally we'll secured and for similar
purposes.
Four to Eight in "Coterie."
Concerning the "coterie" Of bro
kers which fix the call interest rate,
Mr.. Williams said inquiry disclosed
II usually consisted OF -four TO eight
or more" and that the stock ex-
change usually was represented by