Evening star., 1927-11-13
by I. 4. FLEMING.

The Federal Reserve act gave TO
national banks the privilege to assume
duties that had been previously ac-
credited entirely to the trust com
panies. holding, however. that national
banks mus: comply with local laws,
which, i'm the case of the District OF
Columbia, required that such bank or
banks should have a capitalization and
surplus of not less than one million
dollars.
MANY of the larger institutions
operating under National Bank act
immediately announced their intention
of availins themselves of the oppor-
tunity granted and applied to the
Federal Reserve Board for the needed
authority and since have been active
in building up this feature of their
business.
Some question as to the constitu
tionality of the Federal Reserve law
being raised, many large banks re-
Trained from assuming trust company
functions until 1917, when the United
States Supreme Court gave its official
O.. X. to the Federal Reserve act and
removed all doubt of the rights given
under it.
In Washington nearly all the ma
tional banks have their trust depart
ments in fine working order and are
gradually building up valuable bust
neSs that promises steadily to increase
as the years go by.
There were a number of handicaps
that seemed to check the progress of
trust departments. one of the most
potent being the fact that the char
ters of national banks. no less than
the life of tho Federal Reserve system
itself was for a period of years. with
no promise of perma anency. 1t was
supposed to be an easy matter TO re
new charter of national bank fol
an additional 20 years. but Washlng'
ton recalls an instance where that the
question of charter extension seemed
to hang on the will of a controller
of the currency.
Handicaps Removed.
BY 1917 the Federal Reserve act
had demonstrated its full worth in
the splendid manner in which it func-
toned during the war. not only in
Liberty bond financing, but in
enabling our bankers to care for the
flood of European and English liquida-
ton of American securities immedi
ateIy following the outbreak of war
and in financing loans to allies.
The McFadden amendments. when
the measure and especially gave
| charters in perpetuity to the system
and to its member banks.
National banks now go on continu-
| ously in the same manner that trust
| companies do. so that the handling Of
an estate. no matter how long 1t may
| REQUIRE. is possible
1t Is expected that the McFadden
| amendments may aid i'm bringing sav.
| ings banks into the Federal Reserve
| system. and that they will also have
| a very positive effect in checking the
| REIMBURSEMENT of national bank char.
| ters. which at one time seriously
| threatened the system itself.
On Assuming Trust Functions.
When a national bank assumes
| TRUST functions it Is necessary to
| establish separate trust department,
| under a trust officer or officers whose
! duties shall be ordered by the board
| of directors. Separate books and rec.
! ords must he kept for all fiduciary
business. files containing the original
| document creating trust or properly
authenticated copy or copies. vouchers
showing payments. proper reports to
| court or courts and two custodians of
securities. the latter having access
both custodians are present in person.
Must Give Collateral Security.
In the event OF funds awaiting in.
vestment being transferred to the
deposit account of the bank, pending
investment. it will he necessary for
the c'-itodans to obtain collateral
security for the amount involved.
1t is permissible for national banks
to add trust company" to their titles,
If they so desire. this latter right
being subject to approval Of the con-
trOller of the currency.
With June, 1927. there were 1908
national banks exercising trust com.
| pany functions. with over a billion
dollars in individual assets under adj.
ministration and over billion dollars
| collateral trust bonds out tsta nding
where banks were acting as trustees.
In the Richmond reserve district
! there are 17S banks holding the right
| to do a trust company business. but
only 1872 banks so functioning, accord
| ing to figures based on June reports.
At the beginning of the corporate
year there were AS national banks
holding permits as corporate trustees.
For the calendar year 1926 the earn.
| ings of the trust departments OF
|
| SIS. 900 900.
Nearly third of the entire number
| Of national banks have received per.
mission to engage in this feature OF
| the business and more applications
| are being filed with each succeeding
| day.
Splendid Publicity.
The demand for the right kind of
publicity for this feature of the ma
tional bank business has resulted in
| the development service of the nigh .st
order usually sold to one bank In
| city.
Usually this service covers the
various follies of men in naming
friends as trustees, of trusting to rela-
tives to manage an estate, OF dying
intestate, of leaving business troubles
for the wife who has never had bust
ness experience and of risking the
children's future in the care of some
| one who may betray a truSt-uninten-
| tionally. of course, hut the suffering Is
| the same to the victim as IL inten.
tionai
These are the subjects usually
covered, but they are dresced in new
and novel garments and made very
attractive to the reader. told so i'm.
| pressively that they really should have
a decided effect in bettering things
Making a will Is the duty of every man
and woman having anything to leave.
and homemade will as remarked on
many previous sions Is an incen.
tive to trouble that should be avoided.