New-York tribune., 1920-10-18
Williams Saws
Brokers Dictate
N.Y.MoneyR Rate
Excessive Interest Exacted
by Banks Is Said To Be
Fixed by Coterie of Men
Who Operated in Stocks
Chance for Abuse Great
Financial Conditions of En-
tire Country Imperilled,
Declares the Comptroller

WASHINGTON, Oct. 17.-"Unjustifi-
.hle interest exacted on demand loans"
bv New York City banks has been an
active contributing cause of the "huge
.hrinkage" in all security values dur
ing the last year, Comptroller of the
Currency Williams declared tonight in
= formal statement. He charged that
call money rates in New York were the
highest in the world and that ere
rewsl" rates fixed daily by small
eoterie of Stock Exchange brokers gov
erned "the interest charged on brokers'
loans in nearly all New York banks"
"The raising or lowering of the re
newal' rate on the exchange" said Mr..
Williams, "is frequently accompanied
by upward or downward movements in
stocks and securities, and those respon-
sibIe for the fixing of the rate there
fore have the opportunity, whether ex-
ercised or not, of profting largely by
operations on the stock market, which
Is so often and directly affected by the
call money situation. l do not, Of
course, undertake to say Ahat this in
formal money committee does take
improper advantage of its fore
knowledge, but there are critics who
severely censure the existing arrange
ments.
Sees Dangers in Situation
certainly all prudent and thinking
business men will agree that there is
danger in the concentration of such
opportunity and power in the hands of
fov1, /
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. 1t
permits such lnterferences as fallibe
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 CEN
ter possibly reversing the natural and
healthy flow and affecting. directly or
indirectly. billions of dollars of Sc
curity values and other property, is
left to small and varying number
Of private citizens without official re-
sponsibility, deciding in moment and
In secret
Entire Nation Affected
"The evils and dangers 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
Of the fundamental purposes of the
Federal Reserve act, which is to pro-
mott ori,, I;r+r of
through the country to meet the needs
Of commerce and agriculture Excess
sve interest rates offered in New York
artifcially draw money away from out
side communities through their banks,
md often leave legitimate enterprises
starved or pinched, while feeding spec
lla.ive movements which may be add
ing NOTHING to real industrial or COM
mercia wealth.
II reiterate the statement previously
made that the excessive rates on call
money, arbitrarily fixed and tolerated
In New York, in my opinion. have been
potent influence in depressing seri-
cusly the prices of all investment
bonds and standard shares, the shrink
age in which in the last twelve months
has amounted, including the depreca-
ton in Liberty bonds, to several bill
lion dollars"
Mr.. Williams declared that although
the renewal rate fixed by the rate COM
mittee was not regarded as compulsory
BY the Stock Exchange authorities, it
nevertheless was admitted by nearly
every bank that its rate on call loans
was changed to conform with the
posted rate. AS a result. Mr.. Williams
said, at would be vain, obviously, for
borrower to hope TO OBTAIN money in
New York at lower rate by shifting
his loan to some other bank"
Discrimination in Loans Charged
The statement Of the New York