The Washington times., 1911-08-06
IN LOCAL FINANCIAL CIRCLES
By I. A. FLEMING.

Washington bankers, in common with
the fraternity all over the country, are
decidedly interested in the investigation
now being conducted by committee of
the House of Representatives, and by
the Secretary of the Treasury, into the
trust company adjunct of the national
! bank. one of the popular methods OF
taking advantage OF opportunities that
have been adopted and quite generally
in some Of the larger cities in the last
decade.
1t is written in the national banking
act that national bank cannot own
stock in another banking corporation;
nor yet in an industrial corporation;
that it shall not make loans on real es-
tate. In the event of collateral loans
being unpaid, title may be taken to the
security, but if 1t is corporate stock,
merchandise, etc, immediate sale is
obligatory.
Yet national banks do own stock in
other banks, but the shares are held in
the names of private individuals, in
dorsed and securely located In vaults.
National banks may loan on one or two
name paper, and they ara not enjoin-d
from accepting a few real estate notrs
as collateral-at least not in Washing
ton.
But the modern trust company is
hampered with none of these restric-
tions. hence the growing popularity of
the trust company, restricted a little in
the District by the provisions of the
law that demands sl,OOo.O0O capitaliza-
tion. The trust company adjunct gath
ers the loaves and fishes, and the inter-
est; the national bank attends to the
interest very closely.
Capital, that is sizable capital, fire.
quently has opportunities in fiotations
not actually withdrawn from the vaults
for a minute, to make handsome
bonuses, largely through the use of a
good name. The profits frequently come
in stocks. Not .infreQuently much
would be lost by immediate sale, the
the profits would be lost.
Time and aagin, when money is plenty
and the demand is light. the two going
together, the banks of New York, State
and National, make both ends meet
and little more By temporary invest
ments on Wall street, both of bonds
and stocks and the placing Of call loans
secured thereby.
In these days of strict hewing to the
line in fear of the inquisition or the
investigation, which have come to mean
about the same thing, the trend to-
ward the trust compsny has been but
lie rlTSl NdIlOHdl DdHh VI
Chicago inaugurated it; Chicago has the
fever so that 1t has come to be a side
issue with many Of the National banks.
The National City Company was in
tended to be Just such side issue to
the National City Bank, a gigantic in
stitution in power and influence. This
time the cry of the money trust" went
up, and investigation followed. rep
resentative of the bank Informed the
lawmakers that there was nothing new
in the niovement-that they had dis
covered something ten years old. Chi
cago bred and born. Moreover, the
solons (0 and the Secretary Of the
Treasury were informed that they did
not need court case to dissolve the
National City Company, that all was
needed was the assurance and confirma-
ton of the fact that one law was vio-
lated when the dissolution would follow
of the National City tniative.
The National City Bank is supposed
to have considerable interest in the
Riggs National Bank Of this city,
therefore the local Interest In the out
come of the matter Probably Wash
ington will have another trust company
before very long, with national bank
affiliations, they also being necessary
adjuncts. ... j. \
Alfred ]. McGrath, hitherto acting
manager of the Washington branch Of
the International Banking Corporation,
has been appointed manager.
Practically all banking institutions,
with the exception of some Of the