New-York tribune., 1907-12-18

ness as evidenced by the figures submitted. They
receive deposits. issue pass books. and the de
This we believe open to severe criticism but
think it is matter to be dealt with by the super
separate trust business proper from what is bank
ing business pure and simple in the trust compa
ing savings bank business from ordinary bank bus-
The committee closes its report with this general
recommendation:
The laws governing banking corporations should
cation they contain certain minor defects not af-
fecting the actual business but nevertheless sus-
ceptible of Improvement The provisions covering
related features are often scattered. the result OF
much additional legislation since the last codifica
ton. Some provisions are duplicated and alto
gether the body OF the laws is in confusing form
This report is signed by A B. Hepburn, Stephen
Baker and Andrew Mills. A S. Frissell makes the
following exception:
With the exception OF the reserve of Is per cent
cash for trust companies, which 1 regard too
low I concur in the above report and Will forward
q memorandum on the subject of reserve.
Edward w. Sheldon and E. S. Marston append
the following:
With the exception of the recommendations rela-
tive TO the reserves Of banks and trust companies
concur in the foregoing report. our conclusions
upon that subject are set forth in the accompany
ing memorandum
SHELDON AND MARSTON ON TRUST cos.
On trust companies Mr.. Sheldon and Mr.. Marston
say:
marked distinction should be made between
trust companies and banks OF discount. whether
state or national in respect to reserve reqnlre m E
rapidly increased in the last ten years and are
national banks. it should also be remembered as
showing the comparative inactivity OF trust com
Panies in Manhattan are only about thirteenth
of the clearings OF the associated banks
been required invest their capital in real estate
mortgages or in bonds OF this state or Of the
J,,s..a nP tiaS 81 he -
Section 15s They must also deposit % with , the
'i IN ab bonds SS or r IN real estate
mortgages. On the aggregate capital OF the trust
reserve equal to about per cent OF their ag-
No further provision for trust company reserves
made until last year when The whole subject
he T BY Section
Briefly stated. that law requires 10 per cent re, re,
one-third must be actual money, not more than
one-third may be in bonds of the character de
be deposit IN approved banks or trust compa-
MES In other parts Of & the state tns
must be money, not more than three-tenths may
be in bonds and not more than four-tenths IN
This reserve law of 1905 doubtless due to the
fact that after the enactment of the general trust
company law in 1887 many new trust companies
were formed. the corporate activities of some of
which had grown more and more like the business
OF banks This change in corporate functions has
6ser e the due en to ree sanoy
the ordinary bank deposit business or a trust com.
pany could De DdSeQ Is tOuilG IN Va
Section l56 where power Is given TO trust companies
ito receive deposits OF trust moneys securities and
pc1ritias The obvious intention of this clause
which was taken from the charters of the specially
Incorporated trust companies, was to permit more
or less permanent deposits OF reserve and trust
funds upon such terms as TO repayment and to
interest might be agreed upon ,
deposits subject to check at sight. is indicated in
two other places in the banking law-iirst, in Sec
"a corporation formed for the purpose of taking
aeHepng ahd &c If snS cng as I trustee in the
cases prescribed by law and receiving deposits OF
obligations therefor. and of loaning money on
real and personal secgres ~ and trsf sefondy. ndI
pany as corporation engaged In receiving de.
the receipt of such deposits of money was intended
to be incidental and III sense AKIN 10 the prlncl
of trusts In receiving and paying out these de-
posits, actual money transactions have not Of, been
common Each trust company has had ITS own
banks of deposit. and payments of deposits have
trust company's check on one of its banks, In
some of the companies too. large portion or me me
posit or draft accounts: has been payable on time
The practice of allowing r aetye check IN i6 ut
few years. and almost always We think, among
the newly formed & companies s. r.ctcs,, no tr,st
business. and instead OF being merely deposors IN
By By way Of retaiatng: perhaps. most of the banks
have adopted the habit OF allowing interest on de-
YisabIe on every ground that the essential distnc
between banks and trust companies sHoulu %
restored. In this way only can the evil of the
situation be eradcated. and any reform
story legislation should have that end in view The
dificulty with the reserve recommendations or the
vain to lie In the fact that
they probably would have the effect of encouraging
insfead of restraining the fuSng in corporation
~ Two distinct classes Of corporate business, with
The result OF compelling trust companies to become
more and more Ike banks From that policy It's 1t IS
an easy step to allow banks to transact trust
company business ,,,o =. =.
suggested that in cities OF upward OF SoOU inhao-
itan}s a lawful money reserve for trust companies
~ TX ner cent upon all deposits PAYABLE on de-
mand in addition to the reserve supplies by their
"a anIta1 Investment and the 10 per cent guaranty
fund would be adequate. In other, parts Of the the
rtata lawful money reserve. equal to that Wffcn
80, u. found proper for state hanks in the same
incsIity should be required all demand deposits