New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-04-11
BANKERS TO TEST
U. S. RESERVE LAW
ConStitutionality of One
Part of Act Doubted by
Some Experts.
CAN NATIONAL BANKS
BE TRUST COMPANIES?
Present Statute Permits This, So
Question Will Be Taken to
the Courts.

The constitutionality of at least one
section Of the Federal Reserve act is
10 be tested by the trust company
section Of the American Bankers As
ISOLATION. according 10 Uzal Il. Nc
Carter president Of the Fidelity Trust
Company Of Newark and chairman Of
he executive committee Of the trust
company section.
Mr.. McCarter made his statement
in Newark yesterday in response TO a
number Of requests from all parts OF
the country for information as to
what would be the attitude Of the trust
companies toward that part Of the
Federal Reserve act allowing national
banks. where state laws did not inter
vene. TO exercise the powers Of trust
companies.
The proposed test Of the Federal law
was decided upon at a recent meeting
Of the bankers in New York at which
a resolution was adopted retaining
John G. johnson Of Philadelphia and
Henry NJ Campbell of Detroit as
counsel for the executive commit
tee Of the trust company section,
and a committee Of FIVE was named 20
arrange the details in connection with
the proposed litigation. The COM
mittee is made up Of Mr.. McCarter,
IS chairman; Ralph N. Cutler, OF
Hartford: John H. Mason, Philadel-
pbia: John ". Platten, New York, and
L. D. Hubert, Chicago.
They consulted Mcssrs. Johnson ana
Campbell. who expressed doubt OF the
u,constitutionality, Of Section H.
Article II Of the Federal Reserve act.
The committee was instructed to pro-
coed as speedily as possible to test the
entire matter, IN SO Ear as 1t relates
TO the assumption by the national
banks Of trust company powers.
This course" said MIR. McCarter, re-
ferring 10 the executive committee s
action, Seemed 20 be made imperative
because Of the decision Of the FeueIAi
Reserve Board that IT was no part Oh
IFS duty to test any constitutional ques-
lions i'm regard to the law under when
IL was acting: that ID must take the Ia"
as IL found il. and that, II the act or
any part Of il, was of doubtful consul
tutionality, the initiative must faI upon
those who raise the question.
Having in mind the ruling, ana ac'-
mo upon the theory that IT is OF as
much Importance to national banks 80
n is TO trust companies to have Tor
over settled the constitutional doubts
60 persistently raised, the chairman OF
the committee and others urged upon
the association the wisdom OF under
taking the proper test before any ma
uonal institution became engaged IN
any trust business.
IAN our efforts along this line were,
however. fruitless, and in order to keep
entirely out of the matter as an organl-
7ation. the association. through Its ad-
,oinistrative council, directed the gen
eral counsel Of the organization not TO
furnish the executive committee or Its
officers with any written opinion on the
subject. This attitude on the part OF
the general association having been
thus clearly and definitely dehned, the
members Of the trust company section 3
executive committee, feeling that the
entire subject Of corporate trusteeshlp
was in jeopardy and that the interests
Of the trust companies Of the country
were adversely affected, unanimously
passed. after complete discussion, the
resolution 10 make the test"