Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1922-02-02
HARDING To s|FT
UsURY CHARGES
To Probe Report of High Interest
for Federal Funds.
FINANCIAL SCANDAL SEEN
secretary Fall Tells Cabinet Members
nat Millions of Government Money
Is Reloaned by Private Bank
ers at Big Profit.

washington, Jan. 2S-A financial
scandal OF nationwide importance
was unearthed at a cabinet meeting.
President Harding was informed by
secretary OF, the Interior Fall that
Millions in government money are be-
ng reloaned by private bankers in the
vest and Southwest to farmers and
live stock raisers 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.
1t was shown that funds of the War
Finance corporation loaned to banks
for the use of farmers and stock rails
ers IN the present agricultural emer-
gency at 51a and per cent were re-
/ loaned as high as II per cent. In adj
dition, many of these banks are alleged
to have charged an extra commission
on these loans.
The government is 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 if conditions as reported
by Secretary Fall exist the banks con-
cerned were violating both the letter
| and the spirit Of the law.
nf hn
Treasury Mellon told the President
that practically all Of the government
money is 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 banks also agree to
charge no commission for relOanS.
This agreement is alleged by Secretary
Fall to be 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 2 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 ~ per cent.
President Harding asked Mr.. Meyer
| directly if all interest charges OF more
| than ~ per cent were not usury?
"Ordinarily 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, broadcastlng the facts tC
! stock growers anu farmers that if they
are charged more than 71A 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, it 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, it is understood
has instructed both Secretary MelloI
and Mr.. Meyer that the evil must bt
removed at the earliest possible mo
ment.