Omaha daily bee., 1920-10-18
Williams m S
Raps Call
Loan Plan
Comptroller of Currency De.
clares Existing System Re.
sponsible for Shrinkage
In Security Values.
Public Opinion Remedy
by The Associated Pr.ss.

Washington, Oct l7.-"Unjustifi-
able interest enacted on demand
loans" by New York City banks. has
been an active contributing cause OF
the huge shrinkage" in all security
values during the last, year, Comp
troller of the Currency Williams
declared, in q statement. He charp-
ed that call money rates .in New
York were the highest in the world
and that renewal rates" increas ed
daily by small coterie of stock ex-
change brokers governed the prices
OF brokers loans in nearly all New
, York banks.
The raising or lowering of the
relewar rate on the exchange"
said Mr.. Williams, rs frequently
accompanied by upward or down
ward movements in stocks and Sc
curities and those responsible for
the fixing Of the rate therefore have
the opportunity, exercised or not.
to profit largely by the operations
of the stock market which is so Of.
ten and directly effected by the cali
money situation.
Certainly all prudent and think
ing business men will agree that
there is danger in the concentration
OF such opportunity and power'in the
hands of few persons. Tempta-
ton to use this power for individu-
al profit must arise, and human ma
ture is not changed by high posi-
ton in, the financial world.
Grip on Commerce. 4
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 the heart of our
commerce, 1t permits such inter-
ferenccs as fallible human judgment,
whim or interest may direct, with
the natural and orderly movements
of money, the life blood of business.
The matter Of arbitrarily fixing
money rates at the money center.
possibly reversing the natural and
healthy flow and effecting. directly
or indirectly, billions of dollars of
security values and other property.
is left to a small and varying num-
Der Of private citizens without Off
cial responsibility, deciding in mo-
mcnt and in secret,
"The evils and dangers Of such
methods couid not pc rccited i'm
definitely. They reach to the re-
itiotest corners of the union and is
possessions, and touch narmfully
every class OF people. The direct
tendency is TO reverse one of the
fundamental purposes of the federal
reserve act. which is to promote
orderly distribution of money
through the country to meet the
needs OF commerce and agriculture.
Excessive interest rates offered in
New York, artifcially draw money
away, from outside communities
through their banks: and often leave
legitimate enterprises starved or
pinchcd, while feeding speculative
movements which nay be adding
nothing to real industrial or COM
mercial wealth..
Causes Big Loss.
II reiterate that excessive rates on
call money, arbitrarialy fixed a.ld
tolerated in New York. in my opin-
ion, have been potent influence in
depressing seriously the prices of all
investment bonds and standard
shares, the shrinkage Of which. in
the last IL months, has amounted,
including the depreciation in Liberty
bonds. to several billion dollars"
As to remedy for the situation,
Mr.. Williams saw only the hope that
public sentiment will be strong
enough to bring about'fcform," ahd
expressed the belief that "the tre-
mendous responsibilities" of the
New York bankers and financiers
would sooner OF. later be realized
BY those who carry those RESPONSE
bilities. He said that some of them
honestly and censcientiously" OBJ
serve the obligation to the general
public now and that they realize the
*direct and distinct duties" which
they owe to all communities.