The Washington herald., 1920-10-18
Ruinous Rates Fixed on Bill
lions of Loans, Declares
Comptroller.
BANKS UNDER SWAY
Official Says Small Coterie
Meets Daily to Weld Ex-
traordinary Control.
(By Universal Service. }

interest rate charged for renewal
control all financial operations in
Wall Street and throughout the
country. according to a statement
issued yesterday by John Skelton
Williams, Comptroller of the Cur
rency.
The group varies from four to
eight on different days, the Stock
Exchange, Mr.. Williams says, being
usually represented by either the
president or one or more of its gov
ernors.
Between October l, 1919. and Au-
gust l, 1920. the Comptroller finds
no less than 1900 loans, aggregat-
ing s1,40O,OOO 900, were made at from
10 to IS per cent interest, while
on forty-two different days nation
al banks participated in loans ag
gregating s1.10O, 900. 900 at from Is
to 80 per cent.
The rates for all these loans, the
Comptroller asserts. were arbitra-
rily fixed by the same little group.
Nearly every national bank in
New York has admitted" Mr.. Will
Jams asserts, that when the rate
is posted the rates charged on
brokers' or Street loans are changed
TO conform.
Control Rates Generally
BY raising or lowering the rates
they are able" Mr.. williams says,
ito govern the movement of stocks
and bonds. and to control rates for
interest and call money throughout
the length and breadth of the
country.
The unjustifiable Interest exacted
on demand loans aggregating bill
ions Of dollars" he says, ARE an
active contributing cause of ex-
orbitant rates for new capital
charged cities, railroads, industrial,
public and private enterprises. 1t is
responsible for the huge shrinka ge
in security vaIass-agEing the past
year.
The New York call money rates"
he said, are the highest in the
world" The Comptroller continues:
Mr.. Lincoln's axiom that God
never made a man good enough to
be entrusted with unlimited power
over another man may be supple
mented with the suggestion that no
four, six, or eight men are strong
and pure enough to be entrusted
with unlimited power over the f.
nances of a great country without
direct responsibility and accounting
for their acts to the public or some
other Intelligent authority.
Grip Heart of Commerce.
Power to TX money rates for all
pr nearly all, of the banks of New
York City, and to change them daily
Is grip on the heart OF our COM
merce. 1t permits such Interference
as fallible judgment, whim or in
terest may direct with the natural
and orderly movements Of money,
the life blood of business.
We condemn radical writer's and
speakers who advocate such inter
ferences and regard them as public
enemies. Yet the matter of arbitrar-
lily fixing money rates at the money
center1 possibly reversing the nat
ural and healthy flow and affecting
directly or indirectly billions of dol
lars Of security values and other
property is left to a small and vary
ing number of private citizens with
out official responsibility, deciding
in a moment and in secret.
The evils and dangers of such
methods could be recited indefinite
ly. They reach the remotest cor
ners Of the Union and its posses
siOns, and touch harmfulIy every
class of people. The direct tendency
is to reverse one of the fundamen-
tai purposes of the Federal reserve
act, which is to promote orderly
distribution of money through the
country to meet the needs of COM
merce and agriculture.
Excessive interest rates offered
in New York artificialIy draw
money away from outside commu-
mites through their banks, and Of
ten leave legitimate enterprises
starved or pinched, while feeding
speculative movements which may
be adding nothing to real indus
trial or commercial wealth.
Enormous Rates Charged
The sworn reports to this Of
fee show that during the period
from October l. 1919, to August l,
1920, there were made by the ma
tiOnal banks in New York City more
than 1000 loans at rates of Is. 20
and 80 per cent per annum, and
that the amount of these loans ag-
gregated over S6OO,OOO, 900.
The records also show that the
total loans outstanding upon which
interest at Is to 80 per cent was
being charged by a portion of these
banks on forty-two different days
aggregated over S1.1OO, 100000. In
my statement of July 81 the banks
were charged with making loans at
10, IL and Is per cent. The actual
facts indicate that my statement
was extremely conservative.
The records also show that the
amount Of loans made during the
same period at rates in excess of
10 per cent and up to Is per
cent, amounted to over s1,4OO, ,O0o,-
900. there being over 1000 of sucn
loans.
In addition to the above the
aggregate of the loans upon which
a portion of the banks reported that
they were charging, on eighty-one
different days, interest in excess OF
10 per cent and up to Is per
cent, was about 5000, 900. 900. The
brokers" or street loans" upon
which the New York banks during
the period referred to, were charg-
ing more than per cent per
annum and up to 10 per cent. reach
In the aggregate some billions of
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