The citizen. [volume] (Berea, Ky.) 1899-1958, 1922-02-02
President investigates Reports
Of High interest for
Federal Funds.
UNCOvERS FINANCIAL SCANDAL
Secretary Of interior Fall Tells cabl-
net Members Millions Of Govern
mont Money ReIoaned at
usurious Rates.


scandal Of nationwide Importance
was unearthed ut a cabinet meeting.
President Harding was Informed by
Secretary Of the Interior Fall that
millions In government money are be
Ing reloaned by private bankers In the
West and Southwest to farmers and
live stock rsisers at usurious rates.
Secretary Fall, who has just re-
turned from two months trip
through the West, cited Instances Of
abuses which astonished the President
and the cabinet.
II was shown that funds Of the War
Finance corporation loaned to banks
ers In the present agricultural emer-
gency at 81 and 9 per cent we're re-
loaned as high as II per cent. In ad-
diuon, many Of these banks are alleged
to have charged an extra commission
on these loans.
"The government Ia not going to toll
crate usury." President Harding Is re-
ported to have said.
Meyer Called Into Conference.
The President called into conference
Eugene Meyer. Jr., chairman Of the
War Finance corporation. Mr.. Meyer
stated that II conditions as reported
by Secretary Fall exist the banks con-
cerned were violating both the letter
and the spirit of the law.
Both Meyer and Secretary Of the
Treasury Mellon told the President
that practically all OF the government
money IL being loaned at 5h per cent
and they denounced the practices re-
vealed by Secretary Fall as unlawful.
The legal requirements. Mr.. Meyer
Informed the President. are that when
banks reloan government funds they
shall not charge more than 2 per cent
additional. The hanks also agree TO
charge no commission for reloans.
This agreement is alleged by Secretary
Fall to he widely violated. In some
instances stock growers had been
charged as high as 5 per cent for six
month loan OF government money.
Mr.. Meyer stated that the per
cent allowed TO private bankers was
more than ample to cover the cost OF
their Investigators and their risk with
profit. This would mean, that the total
interest rate on the loan should not
exceed IN per cent.
President Harding asked Mr.. Meyer
directly II all interest charges OF more
than IN per cent were not usuryf
"Ordinariiy that is So" was Meyers
reply.
Expects Newspapers to Help.
President Harding told the newspa-
per correspondents that he relied upon
the American press to help terminate
this evil. broadcasting the facts to
stock growers and farmers that II they
are charged more than 7h per cent In
terest for government money they are
being defrauded.
withdrawal OF government funds
from the offending banks will be the
first step taken by the administration
to check the rapacity Of the bankers
concerned. In addition, Il is expected
that the government will permit the
institution OF suits TO recover over
charge Of interest. Treasury agents
will be instructed Immediately to In
vestigate the situation and make re-
ports OF misuse Of government funds
by the private banks.
President Harding. II Is understood,
has instructed both Secretary Mellon
and Mr.. Meyer that the evil must be
removed at the earliest possible mo-
ment.