Omaha daily bee., 1907-11-15
CONTROL TRUST COMPANIES
]. F, Flack Says National Government
Should Exercise Authority.
OTHER BANKERS FOR STATE LAW
+. II. Davis says Nebraska Laws Are
Sufficient ~ Only Enforced and
v. n. Caldwell Doubts Adj
visibility of Federal.

Every financial institution which ac-
cepts the money Of the people on deposit
should be subject to federal regulation and
inspection" said John II. FlacK, president
OF the City Savings bank and vice presi-
dent of the Conservative Savings and Loan
association, in discussing the matter OF
state or federal control Of trust companies
as suggested by The Bee. while It may
not seem that the federal government has
a right to control trust companies which
have tendency to perform all the tunc-
tions of a bank, a way could doubtless be
found to justify federal regulation. 1t
seems to me that control of trust compa-
nies should go even further than Is now
necessary with the banks There should
be limit to the amount Of securities OF
any particular class which bank may
hold. This was demonstrated in the crash
of some Of the New York trust companies
which held millions of dollars worth of
second mortgage bonds
mo trust company nor savings bank
should be afraid TO publish list of the
securities in which it has invested the
money of the people. In a general way
report should be published setting forth a
list Of the securities and investments.
"As to the reserve which a trust COM
pany should carry much depends on the
location. II trust company Is depos-
! itory for banks or other companies, as
| some of them are the reserve should be
larger than If the company is conducting
| straight business of it's own. When 1t Is
! depository II may have to stand the drain
| of other institutions and should be pre-
pared to pay large amount at any time.
! "I believe thoroughly in uniform inspec-
! ton and regulation of the companies by
| the government but I never want to see
| the. time when the government will go into
the banking ana trust company business
r. II. Davis Emphatic in It.
Vice President +. II. Davis Of the First
| National bank was unequvocal in his
| declaration with The Bee that the trust
companies should be subject to control the
| ssmo as banks
THE Nebraska laws are SUFFICIENT to
keep trust companies within bounds said
Mr.. Davis "and when an attempt was
made at the last legislature 20 allow trust
companies to do banking business with
out meeting the requirements of the bank
ing laws the sound financial men and bust
ness men of Nebraska, defeated the. at
tempt 1t is the practice OF some banks,
that desire TO depart somewhat from the
regular business which they can legally
cannot do through the bank, they put
through the trust company. This has been
true in New York where the laws are very
easy on the trust companies. believe that
every institution, which receives deposits
should be under the same restriction as
the banks, whether it be a trust COM
pany or known by some other name. The
Nebraska laws are rigid enough on the
% subject and If other states pass laws
similar reoccurance of the present finan-
cial trouble will be long ways on"
Caldwell and harlow Say state.
IT don't believe federal control of the
trust companies will be possible" said
Victor Caldwell, vice president Of the
United States National bank. 1T would
be class legislation and probably prove to
be unconstitutional 1t is the function of
the states to regulate the trust companies
and most of the regulations is needed In New
York. where we understand things have
been too easy for the trust companies. That
is why we are having trouble today in the
financial world, but we have had enough
lof Il TO force the state OF New York to
look to the control and regulation OF the
trust companies. They will be regulated
now and II they propose to do the bust
ness Of banks, they will be compelled to
meet the same requirements as the banks. "
I'VE don't have trust companies out
here in Nebraska. because the Nebraska
laws are ideal for forcing them TO con-
form to the banking laws" said Milton T.
Barlow. president OF the United States
, National bank. state regulation ia
enough, and when the trust companies
which assume TO do q regular banking busi-
ness, in everything but issuing national
bank notes, they must conform to the
banking laws. They should by all means
be subject TO inspection and be required to
! make statements OF the securities held"