Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-07-29

Americans wanted to use other peo-
pies money so much last year that they
spent S1,254, $4,000 for the privilege.
The figure understates the full amount,
for 1t relates only to what was paid
in interest on loans made at banks
which are members of the Federal Re-
serve System. The statistics for 1927
have just been made public by the Fed
eTal Reserve Board at washington.
There are some thousands of State and
private banks which do not belong TO
the Federal Reserve System and what
they collected in interest from the pub
lie is not published.
A billion and a quarter dollars is a
sum of money so vast that in the in
fancy of this republic the Government
itself could not have dreamed OF COM
handing such an amount as a capital
sum, yet in 1927 the American people
we're able to pay out that much merely
as rent for the use of much greater
amount.
The capital amount of money Dor
rowed from these member banks OF the
Federal Reserve System in 1927 reached
the total of $23.279,515,000 This is a
sum not far short of what the Gov
eminent borrowed to fight the Euro
pean war. Great Liberty Loan drives
mately this amount, and the Govern
ment begged years in which to pay. The
amount borrowed at the banks last year
by the general public in the ordinary
course Of business was paid back quick
~. Some of it was paid back in is
days; some was borrowed for as long as
months.
Short Term Loans.
THAT &c ft.a aoA fx,o
difference between private finance and
government finance. The United States
lent billions to its allies in Europe
as a war measure. 1t has given them
81 years in which to repay, and there
has been a great deal of fuss and fury
about that, some nations, France nota-
bly,, complaining that Uncle Sam is a
harsh and exacting creditor. But If the
private citizen went to bank and Sug-
geSted that he would like to make a
loan for So years, the whole bank staff
from the president down to the runner
would laugh in his face.
Most bank loans are made for a pc
Rod of from 30 to so days. A sug-
gestion that France or England or any
other debtor nation pay up in so Or
90 days would not prove very success
full Private finance is UNNECESSARILY
DlBSeT IIidLl puUIlC luIdllCS anu IL ID dal
carried on quietly.
The billion and quarter dollars paid
Ior the use of money is. indeed, great
sum, but when 1t is considered that 1t
represents but small fraction of the
money used, the matter assumes an al
tered aspect.
Interest Rates Lower.
In 1927 member banks of the Federal
Reserve system earned An average OF
$3.50 for every 500 lent to the public
This compares with S5.A6 for 1926. In
terest rates were generally lower
throughout the country in the latter
| year.
This is by no means what is popularity
called velvet for the bank The cost OF
lending money must enter into the
equation just as much as it must enter
| into any business transaction. Expenses
of one kind and another eat up mos
of the rent money, or interest. In 1927
abe net profits of banks amounted Il
only 81 IS for every 500 lent compared
with $l.37 in 1926.
The principal expense Is the amount
of money which the banks must pay in
| interest to depoSitors In the fina
analysis. there is little difference be-