The Birmingham age-herald., 1918-03-07
CONSULTATIONS OF
 TRUST COMPANIES
ny HOLLAND

New York, March 6.-(Special. 1.-The be- lice is commonly held that the merger or the Central I'rlst col.lpany with the Un- | ior Trust company will be followed by | other consoldat4cI which, when per- 1 fected will considerably reduce the num- 1 Der of trust institutions in New York and in place of them will establish four or five new and very strong institutions. ! One of the reasons given for the growth of this tendency is the belief that even before the close of the war and certainly after the war is ended, the readjustments in the industria, and business life of the United States and also the readjustment of the relations of the railroads to the people, will entail such vast changes as to make it inevitable that strong in stitutions, with sufficient capital and large resources, be established This be- lief is reflected in the support given by majority of the bankers to the plan for creating great banking institution controlled by the government with capi- tai of $500, ,0oO,0c0 and with the privilege of issuing notes up to s4o0o, 000
 The changes in the management and lnetHOuS Cl tHe trust iliSlitutiOiio VI A'S" York that have taken place in the past 20 years are so great as almost to revoiu- tionize the kind of banking which was
 at first carried on by the trust com panies Originally these companies were organized solely for the purpose of act 1 ing as trustees for estates, for mort gages and for like purposes. They did i not seek a large deposit line. They trans +l ;aI l For some years it was the custom of the | trust institutions which acted as trus- 1 tees for railroad mortgages or which l held securities in escrow to charge certain fixed rate propoftlonate to the | size of the transaction for this service. For instance the trust institutions were accustomed to charge at the rate Of $l 1 for each bond for countersigning the bonds. The aggregate of these transac-
 ticns in the course of a year represented
 a considerable revenue. Nobody thought
 the price was excessive. It was an es- tabished custom.
 | The first trust institution to break away from this custom was the Central Trust which is about to complete mer-
 ger with the Union Trust. To the aston i ishment and dsmay of other trust ln- stitutions, the announcement was made 1 that the Central Trust would thereafter
 
 signing a bond. Subsequently this price
 was reduced. The exabple was followed 1 and was even exceeded by Boston l trust institution which fixed the price ! of countersigning bonds at 10 cents per | bond.
 l Gradually the trust institutions, or l some of them, were pursuaded 10 unuer- write various promotion propositions Sometimes transactions of that kind nr0fit a | i infreQuontlN
 happened, however, that the trust in stitutions were compelled to carry the ! stocks which they underwrote. So grad ! ually these institutions expanded then ! business until they became to greater extent commercial banking institutions than those occupied with business of l ltrusteeship. At last some of them ven I tured into the field of foreign exchange 1 and one of them in a single year recently
 handled considerably more than one-hal1 of all the foreign exchange which rep resented exports to Europe.
 1 There occasionally arose suspicion tha' l some of the trust company managers were tempted to venture into speculation l not on their own account, but for gain l ing large profits for the institution. I Gradually but steadily the trust institu. tions are accepting membership in the | federal reserve system, and an associa ton of that kind while it is likely tt increase the safe and profitable business l of the trust institutions. Is also certan
 to restrain managers of these institutions who otherwise might be tempted to tak'
 a risk in the hope that it would prove favorable and yield large profits to thu
 institution.
 | It has been observed that those wE5
 have been seeking railroad transporta
 ton to the south, especially to Florids <r,