The Washington herald., 1920-10-23
WILLIAMS ADDS
TO HIS CHARGES
AGAINST BANKS
Says "a in New York City
Collected $l00, 100000
Interest in 6 Months.
i25% RATES ALLEGED
Existing Conditions, Not In
tentions, Are What Count,
He Tells Critics.
1870 RATES ALLEGED


similar receipts for the correspond
ing period in 1917, according to a
statement issued last night by John
Shelton Williams, Comptroller of
the Treasury.
His statement followed passage
of a resolution by the American
Bankers Association "deploring and
protesting" charges, made last Sun
day night by Williams, that "a lit
tie coterie of bankers and brokers'"
in New York have greatly depressed
the value of securities throughout
the United States by the arbitrary
eXaction of eXorbitant rates of in
terest on call loans. In it he offers
new figures as additional proof of
his allegations.
25 Per Cent Interest Charges.
The Comptroller's statement, head
ed Billion Dollars of New York
Loans Constantly Affected by Rates
lArtificially Fixed" included exam
pies of loans by banks on which
20 and 25 per cent were charged.
1T is of interest to the public"
said the Comptroller, that most of
| lhOSt we" 1OTh DdHhS, wnlle lend
ing at these very indefensibIe rates,
sometimes 25 and 80 per cent, were
being accommodated at the same
time at Al per cent to per cent
by the Federal Reserve Bank of New
York, with sums as great or greater
than their loans recited above. They
were, therefore, occasionally charg-
ing borrowers 20 to IS per cent more
Interest than the rates they paid the
Reserve Bank.
All Records Broken.
The amount actually collected for
Interest and discount by the thirty
four national banks in New York
City for the six months ending June
80, 1920. exceeded all previous rec
ords, and amounted to approximate
ly. sfa0, 00O, 900. which, was nearly
s50,e0O,O 900. or nearly 100 per cent
in excess of similar receipts for
the corresponding period in 1917.
I'm February last, the renewal
rate in New York City for the whole
month averaged above 10 per cent.
This was more than double the nor
NAL average for call money
while nearly every national bank
in New York City has admitted that
its rates on the sO-called street
or brokers' loans are marked up
or down automatically, from day to
day, according to the fluctuations
of the call money rate, yet reports
from some banks show a marked
discrimination, and that they ex-
act on some of the well-secured
loans rates considerably in excess
lof the so-CaIled daily renewal rate.
while other banks adhere quite
closely to that rate.
Charges Vary.
"As to the large amount of call
loans held by national banks for
account to correspondents lover
$500, 000,0O0), it may be of interest
to state that the New York banks,
for their services in handling these
loans, make varying charges-some-
times a fractional commission is
charged; sometimes, in view of the
deposit balances carried, no charge
is made, while at other times the
New York bank and it's outside cor
respondents divide evenly the in
terest collected in excess of per
cent per annum.
New York, as 1 have stated be-
fore, is the only city of any i'm
! portance in the world where such
/ interest rates as these exist or are
tolerated. They have, in my opin-
ion been most costly to the entire
country and cannot be justified on
any basis of economics or ethics.
Wants Change in Policy.
THE plainly, indisputably proper
course is change of policy and ref
ormation of abuses which have
come almost imperceptibly. not loose
and wholesale criticism of the man
trying to heave the lead line and
give warning of shoals. The point
is not the qualities of intentions of
the official, but whether the shoars
are there My work is to report
them and prove where they are.
My strong faith is that the
| bankers of the country will find
and apply a cure for the evil that
has been shown. They have on
them now some of the heaviest and
most difficult responsibilities when
ever rested on a financial body.
The welfare not only of their own
country, but of the world. depends
in a great measure on their wisdom
and character. I believe they Will
meet the test.
The most important part of the
l
as he may. There is no better way
to help them to detect and point
out obstacles and perils in their
path toward performance of the
tremendous work they have to do"
Bankers "DepIore" Utterances.
The statement from the Comp
troller of the Currency came on the
heels of the passage by the con-
vention of a resolution, offered by
Francis H. Sisson, of New York,
chairman of the resolutions COM
mittee, "deploring utterances made
against the integrity of the bank
ers of America" The action was
taken without directing the resolu-
tion to any particular government
official.
The sessions of the convention
were concluded yesterday with the
most important business transacted
during the closing hours. Sweep
ing tax reforms, and especially re-
vision of the excess profits tax, were
urged in the report of the resolu-
tions committee formally adopted by
the association.
The resolution, favoring a modifi-
cation of the excess profits tax as
s-fFTfN = WIsr ~.