The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-18
n. Y. BANKERS AGAIN
ACCUSED OF USURY
Comptroller Williams Calls
Method Of Fixing Call Money
Rates O. Menace.
ENTIRE U. S. AFFECTED
Shrinkage of Billions of Dol
lars in Securities Laid by
Him to System
Special Despatch TO THE New YORK HEEALp.
New York Herald Bureau,

Special Despatch TO THE New York HErALD.
New York Herald Bureau.
Washington, ID. c., Oct. II.
/, In new and sweeping attack on call
money rates IN New York city the
Comptroller OF the Currency. John Skel-
ton Williams, issued an official state
! ment to-day reiterating his charges OF
usury against New York banks ana
bankers Tho Comptroller pictured the
method OF fixing call money rates as
offering a vast opportunity to few
for personal enrichment. and declares It
an evil and a menace to the broader re-
quirements of banks and business. A
few brokers, the Comptroller declares.
fix the rates and they have, whether 1t
is exercised or not, the opportunity to
profit largely by the movement of prices
| on the Exchange as q result of rates
| fixed.
THE evils and dangers of such meth
| DDS could be recited indefinitely" the
| Comptroller said, land they reach to
| the remotest corners of the Union
| Tho high rates of few months ago
! were responsible. he declares. for the
| shrinkage of billions of dollars in secur-
| tiles values, particularly in bonds, in
| Guiding Liberty issues. They were also
| blamed by them for the difficulty Of the
] railroads and other great corporations
in obtaining money for capital require
ments without paying high interest rates
for long time loans. The same causes,
he continued. may wreck or ruin a small
business or country storekeeper. Mr..
Williams says it is no part of a public
officials BUSINESS to moralize on specu-
lation. but that he Is performing a acc
essary public duty In informing the
public OF the conditions that prevail.
Grip ON CommSrce's Heart.
Mr.. Williams said In part:
| 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 commercial. 1t per-
mits such interferences as fallible
human judgment, within or interest may
direct with the natural and orderly
movements Of money, the life blood OF
| business.
THE direct tendency is to reverse one
| 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. Excessive
/, interest rates offered in New York arti-
| ficially draw money away from outside
communities through their banks, and
| often leave legitimate enterprises
starved or pinched. while feeding specu-
| lative movements which may be adding
nothing TO real Industrial or commercial
| wealth."
Mr.. williams declared that although
the renewal rate fixed by the rate COM
mttee was not regarded as compulsory
by tho Stock Exchange authorities, IL
nevertheless was admitted by practically
every bank that it's rate on call loans
was changed TO conform with the posted
rate. AS result, Mr.. Williams said.
st would be vain obviously for bor-
rover to hope to obtain money In New
York mt lower rate by shifting his loan
to some other bank"
! Inside Cotcric of Brokers'.
Concerning the "coterie" OF brokers
who fix the call interest rate. Mr.. Will
Jams said that inquiry disclosed it
usually consisted OF "a TO 8 or more"
and that the Stock Exchange usually
was represented by tho president or
ono or more of its governors" lie said
the fluctuations of the posted" interest
rate on brokers' loans had ranged from
s to II per cent
"It Is my belief" continued the Comp
troller. that II the call money rates In
New York had been maintained at s per
cent. or at the maximum rates which
are charged In other money centres. as l
believe could have been done with a
reasonable degree OF cooperation upon
the part of the New York banks the un-
precedentod shrinkage in security prices
in the past 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
Jams said. showed that more than 1000
loans had been made by the New York
banks between October |, 1919, and Au-
gust 1, 1890. at rates of "15. 90, 25 and
80 per cent" In three of the largest
banks, loans made at those rates and
between those dates aggregated more
than 5000, o0o. 900. no declared.
| AS TO remedy for the situation. Mr..
Williams said only tho hope that pub
lie sentiment will be strong enough to
bring about reforms" and expressed the
belief that the tremendous RESPONSE
biites' Of the New York bankers and
financiers would. sooner or later be real
ICED by those who carry those RESPONSE