The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-08-02
LEGAL RESERVE NOT REQUIRE

LEGAL RESERVE NOT REQUIRED.
Unlike the national banks Crust COM
panies do not do a regular banking bust
ness, the trust companies not required
To maintain legal reserve. National banks
are required to keep reserve of Is per cent,
of their total deposits. which consist of le-
gal tender notes, gold and silver and de-
posits approved by the reserve centers. The
approved reserve agents of the Indianapolis
national banks are St. Louis, Chicago and
New York The average reserve maintained
by the Indianapolis national banks out of
their cash means ranges from 301s to 6G&4
per cent.-an average of nearly so per cent.
AS safeguard in the place of a reserve
such as is maintained by the national banks
the trust companies have rule by which
deposits cannot be withdrawn without no
tice ranging from one week To ninety days,
the length of the notice to depend upon the
sum to be withdrawn. Some of the COM
panies do not keep this rule in operation all
the time. but it is their prerogative, when
they wish to exercise it, to demand notice
from all depositors, no matter how small the
amsunt deposit, before their deposits
can be withdrawn.
BY not having to maintain a reserve of
companies realize more profit on their de-
posits than the national banks. The trust
companies have authority TO loan out their
deposits to as great an extent as they wish,
on the kind of security of course. prescribed
by law. The trust companies pay depos-
itors per cent. on all deposits. They are
able to do this because they have the power
to do a larger loan business than the banks.
BANKING BUSINESS TABOOED.
Trust companies are not permitted to do a
regular banking business. A large number
of the trust company loans areslong-time
loans. while the national banks do not
make most Of their loans for longer than
ninety days. The banks accept no realizes
tate security loans, but take personal
paper and personal collateral The trust
companies do not take personal notes. but
do accept first mortgage real-estate secur-
ity. The statutes limit the business Of the
trust companies as follows:
mo such corporation shall engage in any
banking, mercantile, manufacturing or
other business. except such is hereby ex-
pressly authorized: Provided, that any
promissory note, bond or instrument in
writing made negotiable by the laws of this
State, when payable at a bank within this
State, shall in like manner be negotiable if
made payable at the Office of such corpora
ton; it shall not loan its funds, moneys.
capital. trust funds or other property what
soever to any director. officer, agent or en-
ploye thereof, nor shall any such director,
officer, agent or employee become in any
manner indebted to said corporation by
means of any overdraft, promssory note, ac-
count Endorsement, guaranty or other con-
tract whatsoever"
In Indianapolis the same as in all the
large cities. the trust companies are closely
affiliated with the national banks. John p
Frenzel, vice president of the Merchants
National Bank. is president of the Indiana
Trust Company, and Otto n. Frenzel, pres
ident of the bank, is a member of the direc-
torate of the trust company. John H. Hol-
liday is president of the Union Trust Com
pany and member of the board of direc-
tors Of the Indiana National Bank Vice
President A. A. Barnes, of the Columbia
National Bank. is a director of the Union
Trust Company. President Mortimer Lev
ering of the Columbia National Bank, and
Americas C. Daily, director of that bank
are directors of the Security Trust Com
pany. Mr.. Daily is president OF the Secur-
ity Trust Company, also. S. j. Fletcher,
president of the Fletcher National Bank.
is a director and one OF the large stockhold-
ers OF the Marion Trust Company. William
j. Richards. president Of the Union Ma
tional Bank, is a director OF the Central
Trust Company. 1t is understood that the
Commercial Trust Company has no partic-
ularly close relations with any OF the ma
tional banks The American National is not
affiliated with any of the trust companies
The trust companies of indianapolis were
organized primarily to engage in a general
business of managing large estates Up to
the passage OF the act, in 1898. authorizing
the incorporation and operation Of trust