The New York herald., 1921-12-17
RESERVE BANK HOME
CALLED A SCANDAL
Ex- Comptroller Williams Puts
Expense at $4,000, 900,
Not $1e,000,0OO.
BUILT ON COST PLUS BASIS
Gust Strong, Improve System.
He Urges-Hints at Con-
nivance in Loans.

The building now being erected in
Nassau street for the Federal Reserve
Bank of New York is denounced as "a
monumental scandal" and Benjamin
Strong, Jr., governor of the institution.
is attacked by John Shelton williams.
former Comptroller of the Currency. in
a letter addressed to Senator Lee S.
Overman. and made public yesterday.
The letter is an energetic continual
ton of Mr.. Williams's charges of ex-
travagance. discrimination and mis-
management of the Federal Reserve
system and particularly the New York
branch. The former Comptroller says
that the report furnished by the Reserve
Board in response to a resolution Of
fered in the Senate by Senator Overman
shows that the extravaganza OF the
Federal Reserve Bank of New York
was far worse than he had charged.
"The actual figures of the Reserve
Board show that the latest estimated
cost Of the elaborate buildings of the
New York Reserve Bank, instead Of be-
ing l6.00o.0OO. is more than S25.O0O.-
o00," he says in the letter, which is
dated December 2.
After calling attention to the audi
torium, seating 1000 persons. the two
clubs, the use Of marble. gymnasium
OF $500 square feet. and two restau-
rants. Mr. Williams inquiries:
What do the millions of the unem-
ployed who have no lunch think Of con-
traction policies which shut down plants
and apply money called in from use in
legitimate business for the erection at
this time of the most costly banking
ediflce in the world?"
Erected on Cost Plus Basis.
He points out that the building is be-
ing erected on cost plus basis. and
adds:
Il understand that the general con-
tractor Mr. Eidlitz. is president of some
Federated association or union of en-
ployers which figured somewhat con-
splcuousiy In the recent investigation
of the building trades in New York
city, so ably conducted by Mr. Inter
myer, and as result of which certain
flagrant offenders were sent to prison."
fees paid to architects and engineers
Sl,lO6O00. he says. would be sufficient
to build ten post office buildings in
ten cities where they are badly needed
He cites items such as furniture, &c,
Ssoo.coo; kitchen equipment. $4,000; toilet
accessories, aoo s3S.Soo; refrigeration plant
10000; lighting fixtures and reflectors
and low tension. 1900. and total equip
ment, $1,319,269
The record thus shows that while
the Federal Reserve Board was sane
tioning these vast expenditures" he
says, the Reserve banks were insist
ing upon the contraction and repayment
OF loans in districts where funds were
greatly needed for pressing require
nents or farmers and merchants. For
example, from January q, 1921, to
February 2S, 1921. the contraction in the
loans OF the Federal Reserve system
amounted to $l19. 100000. and the con-
traction has been kept up steadily from
that time to this"
The actual contraction or reduction
IN all accommodations granted by all
Twelve Reserve banks. including bills
discounted and purchased, from October
20. 1920. when members OF Congress-
farmers and business men were he
seeching the Reserve Board to relax
the ruinous pressure" to November 49,
1921, amounted to 81, ,7s4, 200, or about
90 per cent. of all loans held by the
banks year ago. he says.
Uses Tweed Ring Com mparison.
Mr.. Williams. in speaking of the ney
building. says: Such a waste of pub
iic funds is rightly regarded as mon
strous, and have in fact heard it COM
pared by well balanced critics to the
palmy days Of the Tweed ring in New
York city"
The salaries of thirty-three officers
OF the bank increased to $40 per cent
or their former pay; twelve increased
TO 546 per cent, he declares, while no
increase was given in the same period
to Cabinet officers. Senator's. Repre-
sentatives and other Government Off
cials. OF the forty officers, drawing
S5O9,sOo year in salaries, twenty four
were clerks. who on entering the bank
or before entering 1t drew from $1,000
to $1,000. Ten officials are drawing more
than the Chief Justice Of the United
| states supreme Court, nine more than
Ambassadors to Great Britain OF France
ana twelve more than Gen. Pershing
Mr.. Williams charges that institutions
10 which the New York bank was lend
ing most heavily "were calling in loans
made to legitimate business enterprises.
While continuing to carry loans made
| directly and indirectly to their own
OFFICERS and syndicates in which those
officers were interested on highly specu-
lative securities"
Loans on agricultural and live stock
paper by six Federal banks to 400
member banks totalled $15,642, 900 at a
time when the New York bank had
made loans to two member banks, "both
conspicuous for their speculative activi-
ties" of over $3.50. 100000, he said
In his conclusion Mr.. Williams says:
"As to the New York Reserve bank
officer whose salary exceeds that OF
four Cabinet Ministers-let me say that
1t Is. of course, entirely conceivable that
a man may possess combination OF
character, brains and force which might
make his services worth $4,000 n year
or more; but J must say regretfuliv
that have not been able to discover
any premonitory symptoms OF such
| combination In this case. And do
know that there are eminent men OF
unimpea chable character and standing
conversant with this situation who
think, and have said, that II would b.
better for the Reserve system IL Gov.
Strong-the larger part OF whose time
during several years in the past has
been spent travelling abroad. or IN
/ lttr ha