The Washington times., 1915-04-17

uona banks 10 mold their capital ana
property assets as first lien for trust
creditors; there Is nothing about invest
ment of trust funds in legal securities.
On the other hand, the law says that
national banks may exercise trust pow
ers under such 'sules and regulations
as the said board CFeieraI Reserve
Board) may prescribe"
Conflict With State.
or course. the Federal Reserve Board
will require national banks to submit to
State regulations and restrictions. But
In case Of failure or liquidation, has the
state any power to enforce segrega-
ton or first lien assets in regard to a
foreign chartered corporation which is
acting ultra wires? There are numer-
Gus court decisions that national banks
are not fully amenable to State courts
In the first place. there Is section 5l54
or the Revised United States Statutes
junction. or execution shall be issued
against such association tnational
banD or its property before final suit
or proceeding in any State, county. or
municipal court" This means that a
beneficiary Of a trust requiring a pre-
liminary injunction against q national
bank acting as trustee could not OBJ
tain this immediate remedy in a State
court in the Jurisdiction of which the
trust was being administered
If he happened to be a resident citj-
zen of the same district in which the
national bank had its principal office
ne could not obtain this relief in a
United states court. for no different
verse citizenship with reference to ma
tional banks than to other corporations
Mr.. Welliver refers to the statement
appearing In the New York newspap pers
that Mr.. stuart g. Gibboney appeared
at the hearing at Albany as a repre-
sentative Of the Federal Reserve Board
This statement has never been made
by anyone authorized to speak for the
trust companies. What transpired was
this: Mr.. Gibboney. who was counsel
|, for the Federal reserve organization
committee, appeared at the Albany
hearing. which was scheduled for
March 80
Principle To Be Defended.
There was no formal hearing at that
time. but Mr. Gibboney expressed him
self as being there in advocacy of the
Marshall bill. He was asked as to his
interest in the bill, and he stated in
the presence of half a dozen trust
company representatives that he was
asked to attend the hearing at the sug-
gest!on OF the Comptroller of the Cur
rency. who is eX-officio a member of
the Federal Reserve Board. The trust
company representatives properly ques-
tlon the propriety of an officer of the
Federal Administration delegating an
agent TO appear at the hearing with
the obvious intention of influencing
State legislation.
This is a time for sound Judgment
and clear analysis OF fact. not person
alltles or hasty action. The trust COM
pan.es are genuinely interested in the
success Of the Federal Reserve system
and maintain that tn extension OF trust
powers to national banks Is not GER
name. Why this haste to clothe ma
tlopal banks with powers having moth
ing in common with the implied"
powers given to national banks under
be rescinded by an adverse supreme
Court decision.
The States will jealously guard their
rights and authority. In practically
every State where legislatures are in
session. and where trust companies
have been accorded an opportunity to
appear at public hearings. the EN-
abllnH bills have been adversely re-
ported or sidetracked pending final ad-
judiCation.
1T is curious that in the States OF Vir-
gina, Indiana. and Washington whore
such enabling bills have been passed,
no public hearing was accorded and
bills We're put through with unwarrant-
ed precipitation. Would it not be far
more commendable If the Federal Re
serve Board should recognize that the
states have been laboring for years to
build up every kind of safeguard and
restriction around the administration of
estates and execution of trusts by cor
porations? Is this not a principle which
ought to be defended instead of Violated
by the Federal authorities?
c. A. LUHNOW.
Publisher. Trust Companies Maeazine
New York, April l3.