New Britain herald., 1917-06-11
NATIONAL BANKS
 WINS TEST ACTION:
Supreme Court Rules They May
 Act As Trustees of Stocks

Washington, June 11.-In the first case involving the federal reserve act the supreme court today upheld as constitutional the laws clause author izing national banks to act as trus- tees. executors, administrators and registrars of stocks and bonds.
 Upon the United States supreme courts decision in the first proceed ing raising question as to the con- stltutionality of provisions of the new federal reserve act, depended whether about 7,6O0 national banks can or cannot act as trustees, executors, ad- ministrators and registrars of securi- ties in competition with state banks, trust companies and others. Trust companies throughout the country were especially interested in seeking to prevent the national banks from performing such business functions.
 The clause of the federal reserve act of 1913, creating the federal re- serve board and prescribing the new monetary system, which was attacked as unconstitutional by the trust com panies, is a subsection of Section Kill, providing that:
 The federal reserve board shall be authorized and empowered ..... to grant, by special permit to national banks applying therefor, when not in contravention of state or local law, the right to act as trustee, executor. administrator or registrar of stocks and bonds, under rules and regula- tions as the said board may describe"
 That such functions are private, subject to local and not federal regu- lation, and beyond the power of con- gress to confer on national banks, through the reserve board, was con- tended by the trust companies.
 The clause was held unconstitution- al in the test case by the Michigan supreme court; also, in another case, of the First National Bank of Jol1et H.. 8 similar finding was made by the Illinois state courts.
 In the present proceeding, the First National Bank of Bay City. Mich., was given a permit by the federal reserve board to act as trustee, etc. The Unon. Detroit and Security Trust com panies of Detroit and the Michigan and Grand Rapids Trust companies of Grand Rapios joined in 8 quo war ranto suit, brought in the name of Attorney General Grant Fellows of Michigan, to enjoin the Bay City bank. The injunction was granted by the Michigan supreme court in Sep tember, 1916.
 Upon appeal to the United States Supreme Court, the Department of Justice intervened as friend of the court in behalf of the Federal Re- serve board, joining with the Bay City bank in asking the court to sus- fo3 3ve ofv that congress has power to extend functions of national banks within it's discretion, in preserving and extend ing the national banking system and successful operations of national banks, it was contended, are enjoyed by congress and the reserve act, 1t was asserted, does not delegate such powers to the Federal Reserve board. The additional business functions au- thorized in the clause. it was contend ed, are ordinary commercial and fi- nancial operations. necessary to pre- serve the business of national banks in competition with state banks and trust companies. Forty-four states were said to give state institutions such powers.
 The trust companies contended that the powers given are not normal, natural or necessary as pertaining to national banks, but are private and exclusively within state authority to bestow and regulate. That the clause was inserted in the reserve act at the eleventh hour" and is ".utopian and parental plan" also was insisted. Ex- ercise of these powers by national banks, under scant supervision, it was said. would create. an "intolera ble condition"
 The Department of Justice, in denying that the Michigan courts had Jurisdiction to entertain the trust