Norwich bulletin., 1920-10-18

ierest exacted on demand loans" by New York city banks has been an active con tributing cause of the huge shrinkage" | in all security values during the East | year Comptroller of the Currency Will 1 Hams declared tonight in a formal state | ment He charged that call money rates in New York were the highest in the world and that renewal" rates fixed l daily by a small "coterie" of stock OK change brokers governed the interest uAX-Eed on brokers los-s fl nearly all New York banks
 '--fe raising or lowering of the renew ar rate on tho exchange said MT. Will Hams lis frequently accompanied by upward or downward movements in stocks and securities; and these respons- ihlc for the fixing of the rate therefore have the opportunity, whether exrc sed or not. of prohting largely by operat .ons on the stock market. which is so often and directly affected by the call money situation l do not of course, undertake to say that this informal money com mittce does take improper advantage of fhe.r foreknowledge; but there are critics who severely censure the existing arrange rncnts Certainly all prudent and thinking businessmen will agree that there is dan ger in the concentration of such opportun- ity and power in. the hands cf a few po~- sons Temp ations 10 use this power fer individual nr0lt must GT4Se. anu HuIHEN nature Is not changed by high position in the financial world.
 Power Co hx money rates for all. or nearly all Of the banks in New York city and to change them daily. is grip on the heart of our commerce. It per rniis such intarfercaccs as ftliih'c human Judgment. whl or interest may direct win the natural and orderly movements of money. The life blood of business. Frrt.- -r ro -ii fyinU rates at the money center. possible re vcrsi7r the natural and healthy flow and cting. directly or indirectly. billions Of dollars of security values and other prep erty. Is left to a small and varying num- Der Of private citizens without official responsibility, deciding in moment and in secret
 .The evils and dangers of such me hods could be r7ci.ed indefinitely They reach to the remotcst corner of the mon and its possessions and touch harm fu'lv every class of people. The direct tendency is 10 reverse one of the funda- mental purposes of the fedral reserve act which Is to promote orderly distribu'lon Of money through the country to meet needs of commerce and agriculture
 Excessive interest rates offered in New yo-k artifciaIly draw money away from optside communities through the'r banks s1d often leave legitimate enterprises starved or pinched. vhre feeding speculative movements v-b ch may be adding nothing 10 real lh- dusiriaf or commercial wealth. :. .,T raiterate the statement previously r,,de that the excessive rate on cal -,o1ev arbitrarily fixed and tolerated n N-.u- yo-;, in my opinion. have been -,tsnt influence in depressing seriously ,hc nrioes of all investment bonds ana s.s,dard shares. the shrinkage in whch sr ,b. mast 1z months has amounted iA- rl7ding the depreciation in Liberty oonos to several billion dollars.
 Mfr William declared that although the renewal rate fixed by the rate commute -.s m, revarded as compulsory by the s.ort. sxch7nrs authorities. it neverthe' i.-s was admitted by practically every h,,t that its rate on call loans was cLa1red 10 conform with the posted rate Ass resul, Mir. Williams said it woulo h. vain obviously for borrower 10 hol'' Cd ohtair money in New York at lowe rate by shifting his loan to some o'ne' bank" - 1--,- b,,,,
 The statement of the New York oanK that all broker loans were raised or low
 s -i,,,,Itaneouslv did not b"ar up un de- his investigation. MT. Wllilans as s.-,ed He cited records which ne sa'' shoued "apparent discrimination oi ia.rs s,ually well secured and for sln ANf%t'
 far purposes. -,,-.d mvvhe,
 For example,. he continued, WYE .s tho renewal rate for certain day wl'h in the last twelve months was posted D the stock exchange at l5 per cent, 'I
 a-. of mo n1rt'cular New York ban
 e. tb,t on that date this bank Wa sh--~i,s m loans for itself and it's corre S,o,sents: ! per lent on SiGlV,uo d a 14 and IS per cent. on sl.42S,ooo 1s nor cent. on sT5o.000; 20 pr cent: Q efs,ne mo 25 rer cent. on S3,55o,OVo ard 20 per cent on s9oo,o0O.
 C,,cerninr the "coterie" of broNei --rics 6x the call interest rate. MT. WI iians said that Inquiry disclosed It usua Iv consisted Of 10 or more ana tl' 4be stock exchange usually was repr'
 -.,a b,, "ehs president or one or nor ss. -9,.sr1ors" He said the fluctu; ..ons' of the posted interest rate broEers' loans had ranged from 8 to per cent. =, r,. s7 last. On JI'y 31, he recalled he hs t4sued A statement assailing the nl' sr,.e, and declared that since that da ,he "r.osted" rate had not exceeded
 per cent.
 s'It is no part of the function of 20 ~rnment official to moralize on specpl five operations" MT. Williams sa' ssMV attention lS GeInhHueu NH@h o" ope-ations produce conditions retarol 4hs development of the country and Q danrering the stability of it's businei corporstions. individuals and investo rsnera1y are drawn away from legi mate investments in new enterprises a 5n the shares and bonds of existing e terprises by the prospect of 10 to 20 I cent interest.
 The effect of these rates is seen wh the general managers of executives
 railroads or other large corporations vi New York 10 raise money necessary 4he redemption of retiring loans or the extension and promotion ct new bu nsss The bankers and bond hou: so'ennly point to the high rates paid
 call money and corporations whc credit abundantly justified a per co or 6 per cent. interest basis. have b' forced tJ pay per cent. or per cel or 10 per cent. on loans for one ye three years or Ave to ten years; and sometimes persuaded by the bank through whom they obtain the funds tl they are doing well to get money even such te.a1s. becausS r5oney on call heen advanced often artifcially to per cent or 15 psr cent. or 20 per ce For few days at time"
 ~The same cause that cripples g