The Washington times., 1915-04-17
Imperils Protective Restrictions.

In this connection, let US call atten-
ton to the tact that at a recent meet
Ing of the executive committee of the
Trust Company Section OF the Ameri-
can Bankers Association, two eminent
authorities on constitutional law, At
| torneys John c Johnson, of Philadcl-
phia. and Henry NJ. Campbell. OF De-
troit, were retained to take proper steps
to have the provisions of paragraph *
section II. tested in the United States
supreme Court. Numerous briefs and
opinions have been written by fore
most authorities on constitutional law
which affirm that the right to delegate
trust powers is lodged exclusively in
the state, and that II national bank
cannot derive such authority from Con-
gress. the State legislatures are with
out authority to Cndow a national bank
with iiduCiary functions which 1t can
not derive from its source. That is
declared to be an axiom of constitu-
tlonal law.
The trust companies oppose these bills
not primarily on the ground OF possible
competition. but because an indiscrimi-
nate extension Of trust powers en-
dangers the protective restrictions and
the integrity Of state control over the
exercise of such sacred and responsible
functions
If the Supreme Court decides that par
agraDh *. section II, is constitutional,
the national banks will not lose any
thing by the delay. II It should be de-
Clared unconstitutional. they will have
incurred expense in establishing trust
departments What is more serious is
That they will be in position which Is
unfair to benetiCisries of trusts an
the wishes of testators in cases where
they have been appointed as executor,
trus tee or administrator The trust COM
panies submit that national banks ough:
to be equally interested with trust COM
ranies in having the skies cleared up
before they assume right which may
later prove untcnable.
Goes Into State Rights.
This grant of corporate powers con-
cernlhS private property and contra ct
relations which have to do with purely
intrastate affairs goes deeper into the
issue of State rights than the Federal
ircomc tax law, to apply which Con-
gress found it necessary TO secure q
constitutional amendment affirmed ny
the different States.
We quote from 10 less an authority
than Counsel A. Ueland of the Mime
apolis Federal Reserve Bank as to the
emasCulatio1 of State rights If the con-
tentiOn of the Federal Reserve Board is
upheld that II can permit national banks
to engage in trust business in a State
whore no enabling legislation has
been passed as in Massachusetts and in
the District of Columbia. Mr.. Iceland
says:
For If Congress can create a corpor-
alton, or endow a corporation which
II has previously created, with the
power to act as executor or administra-
tor of the estate of a deceased person.
or to hold property in trust for widows
and minors. it Is impossible to name
anv property or business so private and
so disconnected with the affairs of the
National Government as NOT to be sub
ieCt to the authority and control of that
Government"
Despite the disclaimer OF the Federal
Reserve Board. II Is contendeds that
very serious questions as to State hank
inc department and probate or surro-
gate court Jurisdiction are raised by this
premature grant OF trust powers. In
the FIRST plR - there Is no word in the
Federal Reserve act as to compel ma