-w-i; 1 r j)rivfVj"'
V ' I V!?
wnv "
V.
IS .
n
Rt ,
The Commoner
'VOL. 14, NO. 10
R ':.
12
""'vrymw!
K
v -'
rV
m
nl
;i
,
i
v.
Fri
T.. -
W
I fe
. t.
Secretary McAdoo Warns Banks Against the Hoarding of Money
0,0000000000000000
9 ' i
0 f McADI)0S VIEW 1SKOAD AND SOUND
0
0 (From tho St. Louis Times.) 0
0 Tho nation in to 1o congratulated upon
0 . tlto docidod stand (aken by -Secretary
0 McAdoo, demanding that the banks na-
tional and state and trust companies
lend gonerously and liberally to all
branches of trade and commerce.
Through tho onactmont of recent na-
tional legislation, the banks have been
placed in a special, in fact, a favored
class. Congress has passed laws which
mako it impossible for solvent banks to
bo disturbed in tho slightest degree, if
managed with intelligence and courage,
for tho reason that they can at any timo
0 got all the currency necessary to expand
their loans to meet tho legitimate re-
0 quiremonts of their customers, wJiother
they bo depositors or borrowers.
Then, too, Secretary McAdoo has taken
the broadest kind of view in meeting tho
new conditions occasioned by the Euro-
peau war; has gone into the treasury to
deposit tho government's money with the
national banks; has extended national
banks overy facility for securing emer-
goncy currency; and these banks stato
0 and national and trust companies that
do not lend most liberally and generously
to the farmer, merchant, manufacturer
and cotton grower of the nation, aro not
only doing an injury to themselves, but
aro a menace to their community.
0 0
00'0
Following is a dispatch carried by the associ
ated press:
Washington, ,Sept. 23. Secretary McAdoo
adopted, stringent measures tonight to urge na
thnuT banks to extend credit and charge normal
"fatereat rates on loans. He telegraphed to ten
national banks in tho four reservo cities in the
south that their requests for additional crop
moving funds from the federal government
would not bo granted at this time, and made it
cloar that his action was taken in consequence
of reports of excessive interest rates and restric
tion of credit.
In a statement made public with tho telegram
Mr. McAdoo declared:
"The reports of national banks now being re
ceived by tho comptroller of tho currency in re
sponse to his call for a statement of their con
dition as of September 12, indicate an extraor
dinary hoarding of money by many national
banks in various sections of the country.
"CONTRARY TO PUBLIC INTEREST"
"I am astonished that so many of the national
banks are pursuing a course so contrary to the
public interest and so Indefensible from any
point or view. There is neither occasion nor .ne
cessity for it.
"I intend to begin issuing daily a list of the
banks which are hoarding money by maintain
ing excessive reserves, in order that the country
may know how they are performing thoir public
duties.
"My purpose is to focus attention upon the ex- .
cesslvo reserves carried by those banks, for tho
reserves indicate whether the banks are using
their full resources for the relief and accommoda
tion of business in their respective communities.
SAYS IT IMPAIRS CONFIDENCE
"I am satisfied from certain reports which
have come to me that many of the state banks
are hoarding money and refusing to extend le
gitimate credit. I shall ask the superintendents
of banks in the various stateB to co-operate with
tho government by supplying reports of the con
dition of the state bankB and trust companies .
"Tho banks that are hoarding money should
discontinue It. Such action, more than any other
agency, tends to impair confidence and injur
business.
"If all the .banks of tho country will do their
duty in the present circumstances by extending
legitimate credits, at reasonable rates of inter
est, the most serious of our difficulties will
promptly disappear.
"Tho economic and financial condition of the
country is sound throughout. Tho most essen
tial thing now for our prosperity is the prompt
conduct of business on a normal basis."
FINDS SOME RATES EXCESSIVE
In notifying the ten southern banks of his
position, Mr. McAdoo's statement said:
"I have decided not to deposit tho second In
stallment of crop moving funds with your bank
at this time. You can, however, if you desire,
withdraw one-half of your securities deposited
by you and use them as security for the issue of
additional currency if you make application
therefor.
"I am Informed that many banks in your stato
aro refusing to make any loans for crop moving
purposes, and that in many cases good loans are
rejected or unreasonable rates of interest are
asked.
"I am also informed that many banks which
have takdn out additional currency aro refusing
to use it in spite of great demands for money. I
trust you aro not doing this,
THREAT TO WITHDRAW DEPOSIT
"I shall withdraw all government deposits
from banks charging excessive rates of interest,
or which refuse reasonable accommodations, and
I shall refuse to issue so-called emergency cur
rency to banks which aro not making use of it
on reasonable terms for the benefit of the busi
ness community.
"It is essential in the present situation that
everybody pull together in an unselfish spirit for
tho good of tho country.
"I, of course, expect the banks to make a rea
sonable charge for accommodations. My point is
that the charge must be reasonable, as the co
operation and help of the treasury will not be
extended on any other basis."
The secretary's statement was issued after the
federal reserve board, of which he Ib an ex-officio
member, had listened for several hours to pleas
for assistance from the "committee of forty" of
the farmers' union, which came to Washington
to urge direct federal loans to cotton producers.
The committee was told that it was impossible
for tho government to do more than it had done.
STATE BANKS ALSO WARNED
Following is an Associated Press dispatch:
Washington, Sept. 24 The anti-money-hoarding
campaign launched by Secretary McAdoo
against national banks, particularly these which
have taken out emergency currency, was broad
ened today to take in state institutions. Mr.
McAdoo sent a telegram to -superintendents of
banking in each state announcing the restriction
of credits by national banks and the high inter
est rates charged and appealing for all available
information regarding state banks and trust
companies. He declared that if banks will be
persuaded to use resources intelligently the pres
ent situation will be greatly relieved.
This was the secretary's second move today in
the campaign. Earlier he made public a' statement
in which he announced if the state of Tennessee
continues to find bankers unwilling tor renew a
$400,000 loan, ho himself will take up the task
of finding banks who will make such a loan.
It was understood that a list of banks which
are piling up reserves or hoarding money will be
made public tomorrow, and that as announced
last night, the practice will be kept up as long
as there is occasion for it.
TELEGRAM OF THE SECRETARY
Mr. McAdoo's telegram to the state banking
superintendent follows:
"Reports now being received by the comp
troller of the currency from the national banks
throughout the country indicate that a money
scarcity is being occasioned in large measure be
cause of the. hoarding of funds by many national
banks, 'which are carrying reserves in some cases
two or three times as great as required by law,
and also that credits are being restricted and
excessive rates of interest aio being charged to
customers. There is at this time more currency
in the country than at any-time in its previous
history, there having been issued through the
treasury department since August 4, more than
$300,000,000 of additional national bank cur
rency, which together with the relaxation in
business should create an abundance of loan
able funds. This department will withdraw gov
ernment deposits from banks found to be hoard
ing money and charging excessive rates of inter
est and redeposit them with banks whose funds
are being loaned at reasonable rates to meet the
legitimate demands of business and for movintr
tho crops. b
"This department would likevery much to
have your co-operation in its efforts to remedy
those unsatisfactory conditions, and respectfully
asks if it would not be possible for you to secure
from all state banks and trust companies in your
state, statements which will show their cash re
serves as of a recent date, the rates which they
aro demanding for new accommodations and give
this department the benefit of the information
disclosed by these reports.
"It is confidently believed that if all banks
can be persuaded to use their resources intelli
gently and considerately and at reasonable rates
of Interest to meet the legitimate demands in
their respective communities, tho whole situa
tion can be greatly relieved and business re
stored to a satisfactory, if not entirely normal
basis. Kindly answer."
NO MONEY TO RENEW NOTES
In connection with the alleged refusal of na
tional banks to extend credits, Secretary Mc
Adoo today issued this statement:
"Senator Lea of Tennessee Informed me that
the state of Tennessee has $1,600,000 of short
term notes maturing October 1; that the state
desires to renew or extend $1,400,000 of these
notes; that a commission representing the state
has been in New York for some timo trying to
effect this loan but without success.
"It is preposterous that one of the great states
of the union should find it impossible to procure
from the banks such a comparatively small
amount of money. Senator Lea' informs me that
he was going to New Yo-lc last night for the
purpose of joining the commission in its efforts
to obtain the needed loan.
"If Senator 'Lea and his associates are unable
tfc procure from banks in the city of New York
or elsewhere, today and on reasonable terms, the
desired loan, I will myself see if banks can not
be found to take up this loan for the state of
Tennessee on the first of October next, on rea
sonable terms and at a reasonable rate of interest."
MAKES PUBLIC NAMES OF BANKS
Continuing his campaign against high interest
rates and the hoarding of money, Secretary Mc
Adoo on September 25th made public a list of
nearly 250 national banks in all sections of the
country. According to a press dispatch, the sec
retary's statement referred to the list as show
ing "some" of the national banks carrying ex
cessive reserves and it was understood that fur
ther lists will follow in accordance with his re
cent announcement. Following is a special press
dispatch to the New" York World:
Washington, Sept. 25. Secretary of the
Treasury McAdoo made public today a list of
national banks which are carrying reserves large
ly in excess of the legal requirements, as shown
by their reports to the comptroller of the cur
rency as of September 12, 1914. Each of the
banks in the list given out is required by law
to carry a reserve of only 15 per cent. The re
serves they are holding range from 25 to 74 per
cent.
The. secretary states that if the largo amount
of loanable funds kept from active employment
was invested in commercial or agricultural paper,
or loaned on proper security, the present situa
tion would be greatly improved.
The list comprises 250 of the 7,500 national
banks in the country. The list is1 not complete,
as many of the national banks have yet to make
their reports to the comptroller of the currency
under the last call. The secretary's statement
shows that at least one out of every thirty na
tional banks throughout the country is violating
the federal banking law by hoarding money and
by holding reserves far beyond the limit allowed.
Most of the banks referred to are in the rural
districts, and their average capital will not ex
ceed $100,000.
Secretary McAdoo sent today the following
telegram to the chairmen of the clearing house
associations of New York, Chicago Boston and
St. Louis: '
"I have received complaints about the high
rates of interest which are being charged by tho
national banks in New York and other reservo
cities. It is alleged that the New York banks aro
requiring their correspondent banks throughout
the country to pay 7 per cent for loans and to
maintain a balance with the New York banks,
which makes the money cost tho correspondent
banks the jquivalent of 8 per cent or more.
"Specie cases have been brought to my at
tention where banks in cities of the south have,
been required to pay these high rates of inter
est. Fuom all the evidence before me I cannot
feel that the charge of 7 or 8 per cent interest by
r
Qi, ;i
'
A