Evening journal. [volume] (Wilmington, Del.) 1888-1932, 1909-12-06
DUTY OF THE
STOCKHOLDERS
Treasurer Of Equitable G. 6
7. Co. Writes on Subject in
Bankers Journal

]
| Companies" Richard Reese. treasurer
Of the Equitable Guarantee and Trust
Company, has the following article on
the subject THE Duty of Stock
holder TO a Trust Company"
The initial success Of any scheme de-
ponds upon the promoters and the pre-
paredness Of the public for the new
venture. If the project is well man
ned and we'll timed. there is a strong
/ probability that enough people with
money to invest will be found to pro-
vide funds TO launch It. It's future
success. It appears. must depend en-
/ tlrely upon those who were responsible
for it's inception and those who provide
/ the bulk Of the money are perfectly
willing that the officers and director
Of a corporation so formed should TAX
the entire responsibility This T.
eminently proper. because they have
/ been elected by the stockholders for
that very purpose. But because the
stockholders have met and elected
them officers and directors, is that a
good and sufficient reason why they
| (the stockholders) should lose all in
terest I'm their company except as far
as dividends are concerned?
In the event of the corporation thus
formed and financed being trust COM
pany, its future success is largely in
the hands OF the public and the in
nueucc of its friends is, I'm a large
measure. responsible for the amount
of patronage II enjoys. and who could
more properly be called it's friends
than those who have invested their
money In the enterprise? The circle
of acquaintances of the company's
officers is necessarily limited as COM
pared to that of its entire list of
stockholders and the officers solicita-
ton Of business from his personal
acquaintance must therefore result in
small returns as compared with what
might be done if every stakeholder
would enlist his service i'm the cause
Of securing business for his COM
pany--a company in which his money
has been invested with a view TO pro-
ducing the largest possible return and
for which he has paid the same price
per share as tho officers and directors
and 10 whom increased business
means as much as Il does to those con-
nected with the company in an official
capacity / don't believe that many
stockholders in financial corporations
realize the Importance Of directing to
their particular institutions he bust
ness that they influence or could in
tluence. We will take, for instance, a
trust company capitalized at $4,000
with two hundred stockholders, twenty
of whom are officers and directors of
the company, the number of depositors
is five thousand and the average
amount II money standing to each
ones credit is four hundred dollars,
making an aggregate Of two millions
of dollars in deposits. With this
amount OF deposits the company Is en-
abled to earn 16 per cent net on its
capital stock. Now presuming the
| twenty officers and directors are credit
cd with producing or influencing one
half OF the amount of deposits, see
what tho result would be II the one
hundred and eighty remaining stock
holders would turn IN and through
their influence produce IN proportion
ono-fourth Of the amount Of deposits
received through the influence Of di-
reotors and officers.
Tho deposits would be increased two
and one-quarter millions to S4,250, 900,
which should produce "a per cent. net
on the capital stock. thus more than
doubling the earning capacity Of the
! company Tho chances are that not
more than one-half of the stockholders
are depositors themselves but keep
/ their accounts In other institutions in
which they have no invested interest
and thus increasing the earning power
of some other persons capital rather
than his own.
There are instances, Of course, where
/ Il Is a matter of considerable incon-
venience for person to keep his in
dividual account in the institution in
which he is interested as stock
holder, especially when his place OF
residence Is remote, but even so, It is
possible that he may have, from time
to time. funds awaiting investment
taht could readily be deposited in what
he could properly call his own bank.
There are also persons who have an
Investment interest in more than one
financial institution, in which event,
II he cannot use them all It Is plainly
his duty 20 use his influence to direct
what business he can 20 those he does
not patronize, but In which he is a
, stakeholder.
This applies not only to deposits in
the case OF the trust company. but to
any and all classes Of business within
the scope Of its powers Each indi-
: vidual stockholder of trust company
in order to further strengthen his in
vestment. should have his will drawn
naming his company as executor and
trustee-as this is one of the important
sources Of trust company revenue-and
deposit the win with the trust COM
pany, where II will be kept free of
charge until called for. And he would
do his company a great service il n,
would influence his friends 10 do like.
wise.
This idea should be impressed upor
the minds of an holders of trust com
pany's stocks and Il is hoped it will be
and produce a train of thought to
wards the duty Of such stockholders T.,
the companies they have helped {,
create.