The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-12-18

90 in recommending positive enactments on
this subject.
The foregoing would not apply 20 Federal,
STATE or municipal obligations. Discussing
undorwritings the report says;
Such responsibilities NAV with prOpriety
be undertaken by individuals or private
banking houses. but an Incorporated bank
or u trust company assuming to discharge
trusts Of the highest fduciHry nature has
no right to be- engaged through The instru-
mentality OF "A syndicate or
agreement in the construction d. trolley
lines, power plants OF other enterprises
of like character. The securities OF such
undertakings have no market. Their real
value can' only he tested by the earning
capacity OF the enterprises after completion.
I underwriting agreements are frequently
participated IN by people who have no idea
Of furnishing funds for the enterprise. hut
expect the bank or trust company TO carry
their obligation in the form Of u loan until
the property il completed and the securities
sold. and thus realize a profit without having
incurred any responsibility other than the
lending of their names in the meantime.
II has been suggested that banks and trust
companies be prohibited by Law from Joining
! ~ indicates or 1Oauing upon syndicate enter
prises aud underwriting agreements. II
may bp well 10 forbid these institutions from
becoming members of syndicateS ~ the
ordinary promotion class. but = positive
prohibition against all syndicates and under
writings would prove detrimental to the
legitimate enterprises.
our studies lead IA to the conclusion that
a reserve Of p per cent. should be maintained
by the trust companies IN the city OF New
Ork proper thorough Of Manhattan. of
which H. per cent. be cash on hand and ~
per cent. cash In some bank or trust company
approved bv the Superintendent Of Banks.
~ the same time all limitations aS To the
Investment at trust company capital should
be- removed. The limitation imposed IL "A
hardship to the companies aud has failed TO
atord that protection to the public which
was houed for. Trust companies have no
claim to special indulgence ON the part Of
the State. Their banking power nearly
equals that. Of discount banks aud their
responsibilities. 50 far as they do a banking
business, should he the same.
State banks aud trust companies located
ia Brooklyn aud Albany should keep the same
reserve ~ national banks located therein.
state banks and trust companies ia all other
places in the state should keep 10 psr cent.
reserve. two-ifths tor q per cent. in cash
in bank and the remainder In come bank
or trust company approved by the Superln-
tendcut of Banks.
Touching receiverships the commission
says.
The superintendent of Banks should bv
law be made the receiver of all faded cor
poratiOns subject TO his Jurisdiction. or
receivers should be appointed by the su-
perintendent precisely as receivers of ma
tiOnal banks are appointed by the Comp
trOller of the Currency.
On the question Of reserve Mr.. Frissell
SAYS:
A reserve for the State banks and trust
companies in the Borough of Manhattan
of - per cent. in cash will put them on a
par with che national banks and will. make
the banking system uniform as regards re-
serve. Should this reserve prove too difficult
Of accomplishment the reserve called for
In the national bank act could probably Ice
modified At present the national banks
are harasscd by the unfair competition lof
the trust companies ~ shown bv the intro
ductiOn Of q bill IN Congress tending to give
them a better chance TO compete with the
trust companies.
In a minority r. orr on the reserves Of
trust companies Mess--. Sheldon and Mar
stOn say.
II Is suggested that in cities OF upward of
Sn1.n1 inhabitants a lawful money reserve
for truHt companies of IL per cent. on all de-
posts payable on demand. in addition 20 the
reserve supplied by their capital investment
and the ~ per cent. guaranty fund. would be
adequate. In other parts Of the State a law !
ful money reserve equal TO that which may be
found proper for state banks in the same
locality should he required on all demand