Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1904-12-12

National chartsrs for Trust Companies
One new recommendation made by
Secretary Shaw i'll his annual report
has aroused much interest in banking
circles. and although it is matter OF
SO much Importance that no i'm
mediate action is likely yet it may lead
In legislation in the future. 1t is the
suggestion that trust companies be in
corporated under national law, in
stead Of state law as at present. with
corresponding regulations and super
vision. In recent years these trust
companies have multiplied at great
rate in all parts of the country, doing
a wide range Of business and often ex-
ercising under one capital many diff
ferent franchises. This growth has.
been in many cases at the expense of
the national banking system. In
New York city. for instance, the trust
COMPANIES have increased from q to
A. in 10 years, while the national banks
have decreased from 40 to Al. The
deposits in the trust companies of the
cities have grown 240 per cent. as
against 100 per cent. in the national
banks. In Chicago the number Of
tins, companies has increased from s
to u in 10 years. and the number of ma
tional banks has decreased from q to
Il. and the deposits in the trust Com
panies have increased 14Oc per cent. as
against lis per cent. in the national
banks.
SAYS Secretary Shaw: "Other large
cities exhibit similar conditions.
Many trust companies hold CONNER
ciaI accounts and are regularly en-
gagged in discounting paper. and they
hold in the aggregate more than ~
900. 0O0. 900 in deposits. Few. if any. of
the states have any statutory require
ment respecting reserve, and few of
the companies are members of clear
ing houses 1t is manifest that these
institutions in our great cities. helpful
as they have been to American de-
velopment and commerce. unless con-
servatively managed, may become an
element Of danger to our financial sys-
tenn. They are already national in
character, and several of them are OF
international influence"
Of &ral n
fore makes the suggestion that trust
companies be allowed the privilege Of
incorporating under federal law. He
thinks that the more conservative
would accept the opportunity to cone
| under federal regulation and super
| vision. Those who stood out would
by that course advertise the fact that
they preferred the privilege of carry
ing on an extra hazardous. u.lcon-
trolled business to the limited aud
supervised business required by fed
eral law. The secretary goes on to
| say. 1T would not be necessary TO OK
tend to them the distinctive pre-
| negatives of national banks beyond
the capacity of being designated finan-
| cial agents Of the government. thereby
justifying federal jurisdiction: nor
should they be brought into COMPETE
ton with commercial banks. but they
should be required to keep an appro-
pirate. though relatively small. reserve
within their own vaults. lest in times
of financial distress their large de-
posits With national banks increase
rather than diminish the evils of fl
nanclal papics. These great concerns,
if properly and conservatively conduct
ed, may prove of great and even un-
fcreseen advantage to public as well as
to private interests; and the best time
to safeguard the country is when skies
| are clear