Moneymarket

Manhattan banks raised interest rates on 90-day loans to 7%, threatened even higher rates if the demand were heavy. In only three of the last thirty years, and not since the deflation days of 1921, had time money been so high. Many were the grumblers. Among the loudest, most bitter, was Columnist Arthur Brisbane, who is first a businessman, then a reporter.

Columnist Brisbane did more than grumble. He sneered: "Borrowers should send three large gilt balls to be hung above the Federal Reserve Bank entrance, and similar ornaments to some of the big banks." He threatened: "This is what the law of New York State says, Section 370: 'The legal rate of interest shall not be more than $6 on $100 for one year.' Every bank charging more than 6% interest is violating the law and knows it.

". . . When men extort eight per cent for loans on absolutely good security, somebody ought to go to jail, beginning with the responsible respectability in the Federal Reserve."

But Manhattan's bankers failed to tremble. They answered neither sneers nor threats. Had they wished, however, they might have said: "We charge no more than the legal 6% interest rate. The additional 1% is a carrying fee, to compensate us for our trouble in carrying the account." This was, of course, one of many current evasions of the law's letter.