The Washington herald., 1913-01-23

Gay, Indicating that the weeks spurt was
over and that things, generally speaking,
were back in normal channels.
I or this issue, 81, 900 sold at the uni
form price of I03
Railway and Electric shares were quiet
but very strong on reported excellent
earnings. net figures being considerably
over the earnings in the previous year,
and the. depreciation and maintenance
charges liberal. The common sold at 80,
ana the preferred at 81.
Washington Gas sold at silk Stock was
offered at S4saS5; Sf4 freely bid.
g Commercial National Bank stock, the
late center of interest, did not get on the
sales records. The first bid was 200, fol-
lowed quickly by 2O5 without dislodgtng
any stock. United States Trust, I'D 10
III, latter price bid at the close.
Announcement was made of the decia-
ration of a "a dividend on National Saw
ings and Trust stock.
The New York stock market opened
firm and in the last two hours OF the
session gained in strength rapidly. The
big news of the day was the peace story
from London, the end Of negotiations
being at hand and the resumption OF
the status quo without a European war.
The immense short interest in the mar
ket is it's chiefest cause of strength. The
bears have made rich profits and have
overextended themselves. The leading
stocks averaged about a point rise while
some in the lesser groups made 1t 11sa2
points gain.
The street feels that the negotiations
now being carried on for the Union Pa
cific by F. "A. Vanderlip, director OF the
Union Pacific, and Attorney General
wickersham for the government, IN
Washington, must come to some dennite
conclusion within a day or two.
The entire sales were but 10000 shares.
the market at no time showing activity
except in the last few minutes OF the
session.
Sentiment is didecidedly mixed. Bearish
talk is not as unanimous, while buIlisn
gossip is guarded.
Corporate Financing.
Until the general business expansion of
the country during the past twenty-five or
thirty years and, more especially of late
years, the organization Of larger CONNER
cial units with their requirement of new
and greater facilities, the trust company
did not find the services of its corporate
trust department in such demand as 1t is
to-day. Before that time corporations
borrowed needed capital by selling mort
gage bonds to small groups of investors,
one of the individual members of which
acted as trustee of the mort
gage; to-day these corporations borrow
from one to one hundred millions Of dol
lars at time. secured by mortgages to
issues sold t6 the investing public of this
and Europe.
The trust companies hold in trust the
mortgages against which mortgage bonds
are issued: they also hold in trust great
blocks of securities pledged for collateral
trust bonds; they act for holders of equip
ment trust bonds; they are Intermediates
in escrow transactions between corpora
tions: they hold in trust millions in stocks
and bonds deposited in connection with re-
mergers. &c.
On an average the new issues Og bonds.
stocks, notes, and other obligations placed
on the market aggregate about sl,5OO.
000.OO0 year or SIS. 900 per month,
which are offered for investments to in
banks, private investors, both
here and abroad. OF this vast amount
1t can only be estimated how much is
held in trust by trust companies exer-
cising their various functions, but 1t is
known that approximately S5 per cent Of
the bonds of corporations whose securities
are listed on the New York Stock Ex-
change is secured by mortgages under
while the great city insti-
tutions act as trustee for large issues
representing many millions of dollars.
the trust companies in the smaller com
throughout the country act as
trustee for local issues which in their
aggregate reach an enormous total.
The New York Stock Exchange and
nearly all other stock exchanges in the
country require in their constitution
hot oil arfi - i
and that IA trust company or some other
responsible agency shall act as registrar
or transfer agent Since il has been
found, in practice that the trust company
is the most responsible agent and be-
cause it has the necessary equipment
practically all corporations. with but few
enlist the services of trust
in these capacities.
While the courts have held that trust
as trustee under corporation
mortgages, or as registrar and transfer
agent, are not to- be regarded as guar
anteeing the value of the property un-
ierlying securities. it is nevertheless
true that trust companies exercise every
care as if they were actually responsible.
Investors know this and therefore prac-
tically require of corporations that they
shall call in the aid of trust companies
The service which trust companies Of
TO not only
under corporation mortgage
in issuing securities. acting as depository
for securities pledged for issues of collat-
eral trust bonds and as registrar or
transfer agent, but also consists of act
ing as depository when reorganizatiOns
are necessary, as receiver. assignee, and
fiscal agent. In fact, there is hardly
anything which a corporation attempts to
do in order to create new obligations
where the trust company is not neces-
sary. In order to prevent fake" in
vestments, the suggestion has been made
by many authorities on corporation law,
that the laws of the States should re-
luire the appointment of some respon-
sible agent to act in trust capacities for
any corporation that issues securities
The public would then know whether
or not investments have been passed
upon and approved by trust companies