The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1920-10-18
WILLIAMS ATTACKS
THE n. Y. BANKE ERS,
SAYS UNJUSTIFIABLE INTEREST
RATE CHARGED ON DEMAND
LoANs-COMPTRoLLER GEN.
ERAL OF CURRENCY BLAMES
GROUP FOR CALL MONEY
RATES, NOW HIGHEST INTHE
WORLD.

able interest exacted on demand
loans" by New York City banks has
been an active contributing cause of
the "huge shrinkage' in all security
values during the past year, Comp
troller of the Currency Williams de-
clared tonight in a formal statement.
He charged that call money rates in
New York were the highest in the
world and that renewal rates fixed
daily by a small "coterie' of stock
exchange brokers governed "the in
terest charged on brokers' loans in
nearly all New York banks"
"The raising or lowering of the re-,
newal rates on the exchange said
Mr.. Williams, "is frequently accom-
panied by upward or downward move
ments in stocks and securities and
these responsible for the fixing Of
the rate therefore have the opportuni
ty, whether exercised or not of profit
ing largely by operations on the stock
market which is so often and directly
affected by the call money situation.
I do not, of course, undertake to say
that this formal money committee
does take improper advantage of their
foreknowledge, but there are critics
who severely censure the existing ar
Certainly all prudent
and thinking business men will agree
that there is danger in the concen-,
tration of such opportunity and power
in the hands of few persons. Temp,
tations to use this power for individ-
ual profit must arise, and human ma
ture is not changed by high position
in the financial world.
"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 it's heart of our COM
merce. It. 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
matter or arbitrary fixing money rat
es 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 small
and varying number of private citi-
zens without official responsibility,
deciding in a moment and in secret.
"The evils and dangers of such
methods could be recited indefinitely
They reach to the remotest corners of
the union and it's possessions and touch
harmfully every class of people. The
direct tendency is to reverse one of
the fundamental purposes of the fed
eral reserve act which is to promote
orderly distribution of money through
the country to meet the needs of COM
merce and agriculture. Express in
.terest rates, offered in New York, ar
tifcialfy draw money away from out
side communities through their banks.
and often leave legitimate enterprises
starved or pinched, while feeding
speculative movement which may be
adding nothing to real industrial or
commercial wealth.
Concerning ythe "coterie" of brok-
ers which fix the call interest rate,
Mr.. Williams said, that inquiry dis
closed it usually consisted of "four to
eight or more" and that the stock ex-
change usually was represented by
."th he president or 'one or more of its
governors" He said the fluctuations
OF the "posted' interested rate on
brokers' loans had ranged from 8 to
II per cent. between November TO-,
1919, and July II, last. On July 81
he recalled he had ISSUED a statement
assailing the high rates and declared
that since that date the "posted" rate
had not exceeded 10 per cent.
Rush for Profits.
"It is no part of the function of
government officials to moralize on
speculative operations" Mr.. Williams
said. "My attention is demanded when