New-York tribune., 1920-10-18

~, 'vwSrsa ,,ss simultaneously did rot bear
,ur uhder his investigation. Mr.. vii.
,isms asserted. He cited records which
ne SAID showed apparent discrim;na.
ION on loans equally well secured and
Tor similar purposes. '''''
for example" he continued. "when
.ne renewal rate for a certain day>with.
m .ne M tast twelve months was posted
81. on ene stock Exchange at l6 per cent,
bank showed that ON that date th;s
oank was charging on loans for itself
and ITS correspondents per cent on
sa,soo'oo0; 8. .. Id and is per cent
or Sl,42S,OO0; 18 per cent on $3.50 COO.
Zo per cent on $42, 100 ,0O0e 25 per cent
000." p'' 'e"' oh S9oo'-
Concerning the "coterie" of brokers
wnich fixed the call interest rate. Mr.,
Williams said. that Inquiry disclosed It
usually consisted of "four to eight OF
more, and that the Stock Exchange
usually was represented by "the presi-
dent or 'one or more of it's governors. J,
ne said the fluctuations of the post
ed interest rate on brokers' loans had
ranged from 8 to II per cent between
November 10, 1919, and jury 27 last.
On July 81; he Acalled, he had issued
a statement assailing the high rates.
and declared that since that date the
posted rate had not exceeded 10 per
cent.
Capital Drawn From Industry
''lt is no part of the function Of a
government official to moralize on
speculative operations" Mr.. Williams
said. "My attention is demanded when
such operations produce conditions re-
tarding the development of the country
and endangering the stability of its
business. Corporations, individuals
and investors generally are drawn
prises by the prospect of 10 to 20 per
cent interest
THE effect of these rates is seen
whep the general managers or execu-
tives of railroads or other large cor
porations visit New York to raise
money necessary for the redemption
of retiring loans or for the extension
and promotion of new business. The
bankersand bond houses solemnly
point to the high rates paid for call
money, and corporations whose credit
abundantly justified or per cent
interest basis, have been forced to pay
Z or 8 or 10 per cent on loans for one
year, three years or five to ten years,
and are sometimes persuaded by the
bankers through whom they obtain the
funds that they are doing we'll to get
money even on such terms, because
money on call has been advanced, often
artifcially, to ~ or Is or 20 per cent
for a few days at a time.
"The same cause that cripples and
hampers a great railroad system or a
municipal government also deprives
and Injuries or ruins country store
for Eo az
)! :. large or little manufacturing en-
terprise.
THE high rates for call money in
New York have thus shut off large
part of the investment. demand for
securities, which, during the last twelve
months, largely because of these dis
turbing conditions. have been forced
down to the lowest prices reached in
forty years.
ut is my belief that if the call money
rates in New York had been maintained
which are charged IN other money
centers, as l believe could have been
done with reasonable degree of CO.
operation upon the part Of the New
York banks, the unprecedented shrink
age in security prices in the last twelve
months would not have taken place and
the apparent loss of billions of dollars
in values would have been avoided.
Sworn reports to his office, Mr.. Will
liams said, showed that more than
1000 loans had been made by the New
York banks between October l, 1919,
and August l, 1920, at rates of "15, 20.
% and 80 per cent" In three of the
largest banks, loans made at those
rates and between those dates, aggre-
gated more than S600,000,O 900, he said.
The figures, he added represented only
the loans made by the banks for their
own account and not for their cor
respondent banks. "The record also
shows" Mr.. Williams declared, "that
the total loans outstanding upon which
interest at Is to 80 per cent was being
charged by portion OF these banks
on fortytwo different days, for which
cports were received from them, aggre-
"ateu more than $1,100,000, 600.
"The records also show that the
am cunt Of loans made during the same
period, at rates in excess of 10 per
cent and up to but not Including Is per
cent, amounted to more than $1,400,-
600, 900, there being more than II 900
of such loans.
Street Loans Swell Total
"In addition to the above, the aggre-
gate of the loans upon which a portion
of the banks reported that they were
charging, on eighty-one different days,