Arizona republican., 1920-10-18
WILLIAMS SAYS
 RATESFOR GALL
 MONEY IN HANDS
 IF FEW BROKERS
Unjustifiable Interest o n
 Demand Loans Is Cause
 Of M n y Shrinkage Say Comptroller Williams
IRepubIIcan A. p. Leased wIrel

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 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 interest charged on brokers loans in nearly all New York banks"
 'The raising or lowering of the re newaP rate on the exchange" said MT. Williams, lis frequently accompanied by upward or downward movement in stocks and securities; and those re- sponsible for the fixing of the rate therefore have the opportunity, whether exercised or not, of profiting 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 the informal money committed does take improper advantage of their | forelnowledge. but there are critics | who severely censure the existing ar engagements. 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 a few persons. Tempta- ton to use this power for individual profit must arise and human nature 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 the heart of our commerce. It | permits such interferences as fallible
 human judgment, whim or interest may direct, with the natural and or derly movements of money, the life
 blood of business. The matter of arbi-
 trarily fixing money rates at the
 money center, possibly reversing the
 natural and healthy flow, and affect mig directly or indirectly billions of
 dollars of security values and other property. is left to a small and vary ing number of private citizens without official responsibility, deciding in
 moment and in secret.
 Evils of Practice Numerous "The evils and sdangers 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 J of the fundamental purposes of the
 federal reserve act which is to pro-
 mote orderly distribution of money
 through the country to meet the needs
 of commerce and agriculture. Ex-
 
 York artificially draw money away from outside communities through
 their banks, and often leave legitimate
 enterprises starved or pinched, while feeding speculative movements which VI may be adding nothing to real indus trial or commercial wealth. \ "T reiterate that excessive rates on
 call money, arbitrarily fixed and tol- ,l erated in New York. in my opinion
 f,,Ff. s~ do d pressing seriously the prices of all in- ,f vestment bonds and standard shares n the shrinkage in which in the past 1: N months has amounted, including tho ,r depreciation in Liberty bonds. to sev.
 eral billion dollars"
 ,s Mir. Williams declared that although ,y the renewal rate forced by the rat, 70 committee was not regarded as com p~ pulsory by the stock exchange author a- ities, it nevertheless was admitted b- . practically every bank that bid rate - - on call loans were changed to conform ,s , with the posted rate. As a result, MI '. Williams said, "it would be vain ob A0 viously for a borrower to hope to ob ou tain money in New York at a lowe tr rate by shifting his loan to some othe LII bank"
 m The statement of the New Tor
 banks that all broker loans were raise H LHl. or lowered simultaneously did not bea e,I up under his investigation, Mir. Vii ,s Hams asserted. He cited records whic iu he said showed apparent discrimina
 tion" on loans equally we'll secured an ',a for similar purposes.
 For exmaple," he continued, "whe the renewal rate for a certain da ~ within the last 12 months was poste ,, on the stock exchange at 10 per cen
 the report of one particular New Tor in bank showed that on that date tn he bank was charging on loans for itse if and it's correspondents: per cent c .as s4,900,000; 8, g, 14 and IS per cent c ,-S SLABS, 900: IS per cent on S75O 900: nc per cent on S42100,000; 25 per cent c a,s $2,550,000 and 30 per cent on $500, ,000 ,at Small coterie Rules Mart n Concerning the 'coterie" of broke in which fix the call interest rate, M ell Williams said that inquiry disclosed ,@s usually consisted of A to s or mor .ed and that the stock exchange usual
 was represented by the president ,an one or more of it's governors" red He said the fluctuations of Il lily posted interest rate on brokers loal
 had ranged from to r per cent b ,n- tween November 10, 1919, and July bor last.
 in "The effect of these rates" he sa 100 "is seen when the general manage
 of railroads or large corporations vii
 ! New York to raise money neceSSa
 for the redemption of retiring loans The for the extension and promotion nan new business.
 ac- 'The same cause that cripples a The hampers a great railroad system or The municipal government also depriy n a and injures or ruins a country stoI of keeper a small farmer or the owner
 large or little manufacturing entt . prise
 "The high rates for call money D New York have thus shut off a lar
 part of the investment demand for be curities, which, during the past ne months, largely because of these q he turbing conditions. have been fore o- down to the lowest prices reached os 40 years.
 rs, Tt is my belief that if the e , money rates in New York had be ne maintained at six per cent, or at - maximum rates which are charged 'u other money centers, the unprecedel .t Continued on page 9