Evening journal., 1921-08-03
WILLIAMS HITS
Federal BOARD
Former Comptroller Tells
Commission Board Fav-
ored Eastern Banks
SOUTHERN BANKS
BIG BORROWERS


WASHINGTON. Aug. al John
Shelton williams. former Comptrol-
Ter of Currency, appeared yesterday
before a joint congressional COM
mission considering agricultural
problems, to criticize administration
of the Federal Reserve Banks. Gov
ernor Harding. Of the Federal Re
serve Board sat in the audience.
IT did not agree with the policy
OF the reserve board in indiscrimin-
ately raising interest rates in 1919"
Mr.. williams said, nor did l agree
with it previously in a policy OF
making prodigal advance to institu-
tions in the East to the disadvantage
of the West and South.
Il found that the board in 1919
was advancing directly and indirectly
total sum of 13O,000,O00 to a
single institution in New York CITY,"
Mr.. williams read statistics, which,
he said, showed New York, Chicago
and other city banks were getting
more reserve loans than all the
country banks at the period. Rep
resentative Mills. of New York,
asked that he present 1921 figures.
too and Mr.. williams promised to do
so.
The New York Reserve Bank, Mr..
williams said, always was tremen-
dous borrower, ito the extent of
four times its capital, for use in
speculative operations and promo
tions."
Aren't you giving these figures
without any reference to the assets
and deposits of the borrowing
banks?" Mr.. Mills asked.
II prefer to have the board, whose
members I see here, ask questions
as to their administration" Mr.. VIII.
liams replied. adding that the board
!, adopted general rules which con
trolled the amount OF credit granted
to Individual banks and that thes'
rules varied with varying conditions
in the different reserve districts. I
was developed that the Reserv'
Board established basic lines" com
pounded from resource totals o
banks which controlled amount o
rediscounts.
ION December 26, 1919. said MI
Williams. "the report showed tn
New York Federal Reserve Banl
had lent to one New York banl
$3.50. 900. 900"
Mr.. Williams said he had protestei
to the board at the extent of tn
credit because the bank was con
spicuous for its speculative activi
ties"
'sThis was not a national bank :?
s Chairman Anderson asked.
# ut was not" Mr.. Williams re
, turned. 'T asked a special examina
ton of its condition. but il was nc
Il allowed, on the ground that tn
/, boards Intervention might alarm tn
state banking authorities"
Senator Harrison. Mississippi
asked IL the reserve law did not fol
bid speculative borrowings" NJ
J. Williams said 1t did.
II "But that does not prevent an In
a stitution from borrowing 100000
IS in Liberty Bonds" Mr.. William
IS added. "and rediscounting it wit
n the reserve system. and then lendin
IS the money to It's president for spect
is lative operations"
II isn't it true that that institutio
= is largely engaged in lending none
Z for export OF grain, all other far
., products and manufactures
.e lrEurope?" Mr.. Mills asked.
a 'I presume It is largely so ei
n gagged" Mr.. williams replied. II
n funds were largely loaned 10 its e
h ecutive officers for speculative oper
tions."
- THE Reserve Board has alwa
loaned largely and at low rates Of Il
- terest." Mr.. williams continued, .
certain New York institutions, al
maintained the practice In go'
times and hard times alike, VIII
the board was forcing liquidation
immense sacrifices TO borrowers
Richmond, Atlanta and Dallas dl
tricts."
do you contend any Federal r
serve Bank has violated the law
Mr.. Mills asked.
It make no such charge" Mr.. W
liams said.
Mr.. williams referred to previo
testimony OF Governor Harding as
Reserve system lendings to agric'
tural interests during 1920 and /
early part Of 1921.
"rhere is ground for the farme
complaint Of discrimination in cre
given" he said.