The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1910-01-30
TRUST COMPANIES AS
FACTORS IN BUSINESS
By WILLIAM D. HOOVER.
By WILLIAM D. HOOVER.

The Importance OF the trust companies
of Washington, as factors in it's business
affairs. is perhaps equal TO that OF any
other class OF its institutions, notwith-
standing the fact that not one Of these
companies has been in existence much
more than twenty years.
Their growth has been exceedingly
rapid. and in large measure has been due
TO the necessity for the establishment OF
such institutions in order TO adequately
provide for the demands Of the business
conditions of to-day.
An idea of their magnitude can be OBJ
tanned from the fact that at the time Of
the last published report OF the condition
OF the financial institutions Of Washing
ton, in November. 1893. their deposits
amounted to S95O00.000. and the loans
made by them 10 $240O00Oo.
Very few persons who have not at some
time had transactions with trust COM
panies realize even TO slight degree
how far reaching are their capabilities OF
diversified business transactions. As q
matter Of fact. their functions are so
numerous and varied that almost any
demand OF a client may be met.
Il is probable that those who have
given the subject any thought, know that
the trust companies receive money on
deposit and pay interest upon 1t. and
that ordinary deposits are subject TO the
checks Of the depositors They no doubt
also know that aside from these ordinary
deposits subject to check, money may
also be deposited for a definite period, in
which event the depositors receive a
higher rate Of interest.
This branch OF a trust company
business is but one OF many, so that to
those who do not understand In what
other methods these companies are daily
serving their clients, a short recital OF a
few transactions Of ordinary occurrence
may not be without interest
A person owning a parcel Of unimproved
real estate upon which he has been pay
ing taxes without realizing any return.
desires to improve it in order to obtain
an income Accordingly. his agent visits
a trust company with the plans and speci-
fcations and asks for a loan with which
TO pay the COST Of the proposed improve
ments. IfSthe plans and specifications
and the amount desired are satisfactory,
the trust company agrees to make the
loan. AS soon as the title TO the prop
erty has been examined and the deed OF
trust executed and recorded the money
representing the loan is placed TO the
credit of the borrower in the banking
department Of the trust company. and
thereupon he is enabled 10 proceed with
out delay with his building operations,
As the Improvements are being con-
strueted, the owner from time to time
draws checks against his account, which
are promptly paid when accompanied by
certificates signed by the architect In
charge of the building operations. show
ing that the work has sufficiently pro-
crossed TO entitle the owner 10 payment
of the checks. IN due course OF time the
building is completed and the building
fund drawn from the trust company by
the borrower and used in payment Of the
balance Of the cost Of the improvements
During the time the money is on deposit,
interest at the customary rate is paid
upon it by the trust company. Il re-
suits, therefore, that during the building
operations, the rate of interest paid by
the owner Of the property is only the
difference between the rate mentioned in
his notes secured by the deed Of trust
and that allowed upon his deposit
This liberal business proposition from
the trust companies results IN carrying
forward satisfactorily many local build
ing enterprises. A great many loans Of
this character are made with eminent
satisfaction TO the borrowers. who are
enabled TO deal with local institutions
and with men whom they personally
know, and in whom they have confidence.
Another instance of the utility Of trust
companies IS that Of acting az the pur-
to secure desirable securities for invest
ment. Upon instructions. the companies
VIII buy stocks, bonds. or any other
character Of securities directed by the
client. and. if requested. will lend rea-
sOnably large proportion or the purchase
price, taking the notes Of the purchaser,
with the securities, as collateral. charg-
ing a moderate rate OF interest upon the
amount lent and permitting payments at
any time upon the notes. IN this way
the client obtains his securities and pays
for them at his own convenience, with
out even the necessity Of renewing his
notes from time to time. A great num-
Der of such transactions are consum-
mated by the trust companies, which.
through their proper officers are always
ready 10 give advice and to make care
full and diligent inquiry in respect TO
desirable investments
Perhaps the most striking and inter
esting instance Of what trust companies
DO for their clients occurs In the case OF
persons who desire TO retire from bust
ness and thereafter be relieved of tho
cares incident thereto, or who are about
to leave the city for an indefinite period
Such a client visits his trust company
and perhaps asks information in respect
to the best method OF disposing Of his
business affairs, so that thereafter he
need give them no further thought or
worry. He is promptly informed that the
matter is a simple one. which can be
arranged at any time without delay, She
method being this:
THE client opens an account with the
banking department and directs that the
items of income from his estate be de-
posted to the credit Of this account. He
then proceeds to the real estate depart
ment. where a list is taken Of his real
estate. and directions are given by him