New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-27
THE UNION TRUST COMPANY.
IRIS M1sMANAGEMENr EXAMINED.


ACrER.
To the Edtt0r OF The Trtbnne
SIR: The affairs of this Company have for sons
time past attracted the public attention, but moi
more than they deserved IL the first insftu
ton that succumbed TO the panic and this failure
had greater influence in extending its range. and
causing general distrust in the financial circles Of
this city than any other that has occurred. Va
rious and conflicting reasons have been assigned by
its friend. for its failure, none Of which, shall
show, were the cause. AT first. immediate resump-
ton was prom ised, and the very day fixed. This has
been postponed from time to time, and is still uncer
tain The subject assumes greater importance from
the fact that it is not ordinary banking financial
company bnt trust institution, the legal custodian
ofithe property Of married women, widows aud or
phans the guardian Of the wards Of the Court, the
trustee for all kinds Of trusts and hduciary engage
ments
Trust companies are novel in their character and
objects If properly managed they VIII be OF great
benefit to the community and their stockholder
but if they the first to feel the effects OF every
financial storm which passes over the community
their usefulness il at end They should be wOuDd
ND at once, aud not expose those dependent upon
them to the loss of that property which they rey
for their support. The charter of the Unioc trust
Company was granted to gentlemen we,i known Tor
their wealth. standing. and char ter excelled by
none in the State; the Legislature considered then
names sufficient Guarantee for the faithful per-
Torrance of the trusts delegated TO them.
1t was therefore provided by their charter.
passed in 1854 and amended in 1876, tia!
" no bond OF other collateral security shall be ~
qrIired from said Company when appointed guar
dian, receiver or depositary." The State. in commit
ing to it the performance OF duties heretofore ds
charged by private trustees and guardians. pro
ceeded on the ground that trust funds could be moro
safely placed with such company. because it would
be managed by trustees of high standing, and have
a large capital owned by stockholders who would
look for their dividends from large deposits safely
and securely invested beyond the possibility Of loss
Therefore investments 10 all speculative stocks vera
prohibited by the charter No large sum was
to be held in any private company.
no matter how strong it might be.
II was expected that it's officers would be men Of
tried integrity skilled in general knowledge ola
business where great financial abilities were not ~
much demanded as honesty good judgment, and
above all a strict execution of the provisions OF tho
charter But this confidence was misplaced and NOS
Que but many Of these provisions have been disrs-
carried Nand by violation OF them It's fahurs
was caused That there is need OF such an iusuta
tim is shown by the success il obtained Though IN
its infancy it not only paid large and regular di'i
dends Cd its stock but it had accumulated nominal
surplus equal to its entire capital. twas authorized
60 take deposits not exceeding S5OOOOOO and 10 have
outstanding loans for S6000000, sum equal b tho
amount OF its capital aud deposits. It's doPosis
were nearly S5,OO0600; ts loans. S6,S09o0o or $780,
900 in excess of the amount authorized.
The general public aud most Of its stockholders
and trustees seem to have forgotten what its powers
WERE and to have acted as if it was an ordinary
al auft tn y,.l
and make loans on eolaterals and therefore reauir
ing great financial ability in its officers, and thor
ough acquaintance with all the intrioace5 of the
New-YOrk Stock Exchange differing little from
bank save in its inability TO issue bills or discount
ordinary mercantile paper. This belief is fully justi
fled by a knowledge Of its management 50 far "a u
Is known to the public indicated by tho published
statements of its affairs. No one who should OK
anime its schedule of assets would dream that they
belonged to trust estate The charter says II
"shall not hold stock in any private Incorporated
company beyond $4,000" Its schedule shows that
it hold as owner $40 shares Pacific Mail 1900 shares
Union Pacific. 600 shares Western Union Telegraph
Company, and 400 shares Columbus, Cincinnati and
Indiana Railroad, as part Of its capital. Among
other assets of this Trust Company are loans on
$4,000 Consolidated Boat Company. s5o5,o)O Stats
of Arkan sas bonds 225O shares Franklin Telegraph
Company. 1900 shares Utah Railroad.
1t is only by reference to its charter that We
ascertain tho object for which it was incorporated
and the investments it could make. and by cOmpar-
ing what it has done with what 10 was authorized 70
do that we learn how far it has violated its charter
Ii authorized to receive moneys IN trust to lc
cept and execute trusts, and 10 hold trust property
transferred or assigned TO it, to execute trusts fof
married women for wards of tho court. It. capital
was to be invested in bonds aud mortgages on real
estate in stocks of the United States or OF this State
or in stock or bonds of cities of this State. The
money received III trust was to be invested IN ina
above stock and bonds in real and personal secun
ties not exceeding $4,000 III stock Of any priva's
company. Almost all the securities which 1t held
it was prohibited by its charter from hnldiug.
Its managers not directors but trustees du'
ties were stamped upon by its very name it's depos
its were largely composed of trust estates the property
of widows and orphans made with il because the de
postors believed the trustees were gentlemen whd
would administer the affairs Of company rs faith
fully as they would their II one Of these gen
tlemen had been trustee in his private capacity fo'
one of these depostors and had failed, his principals
would have felt no uneasness for they would ba"
known that their funds. invested according 10 the
indenture Of trust were perfectly secure. Hown
it with deposits received by these gentlemen actins
as Board Of Irusteesf Have they faithfully
performed the trust tney assuieu iuNeSt" '"''
deposits as they have their own property, as taey
would have invested trust funds held by them indi'
viduallyi Have they even invested them according
to the provisions of their charter or have thoy CON
trned the truth of the old adage. that corpoIaona
have no souls
shall show hereafter that its management wS
confded TO small executive committee who 10 tns
conduct of its affairs betrayed the trusts commttoo
to them by their fellow trustees, the depositors W
the company and by the State; and that the faiufs