Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-23
Growth of Public Demand for
Executor Service Shown
in Reports.
INVESTMENT IN STOCKS
FOR ESTATES DISCUSSED
Branch Banking and Compensation
Charges Considered
at Meeting.
BY EDWARD C. STONE.


Local bankers declare that the Mid
winter trust conference in New York
brought out some tremendously inter-
esting facts on the growth of this serv-
ice in banks and trust companies and
at the same time focused attention on
some extremely battling points in the
handling of estates. People are becom-
ing more and more trust minded
each year as the So-called trust idea
steadily tightens its grip.
Branch banking came in for a lively
discussion, the claim being made that
the small community can be supplied
with metropolitan trust service only by
the big banks taking over the smaller
ones. The question of what earnings
trust departments should show and the
compensation they should charge for
their service brought to light many facts
regarding the inside workings of banks.
One Of the most interesting addresses
related to the deSirability of purchas-
ing common stocks for estates placed
in charge of banks, provided the char
acter of the trust agreement permits
such action. H. F. Wilson, jr, vice
president of the Bankers Trust Co., New
York. discussed Common Stocks in
Trust Accounts" and incidentally men
toned the effect of the stock market
N@0oA 1kfo4 SAANAAs
"Blue Chip" Stocks Put Down.
The market crash, he pointed cut,
put down blue chip" stocks just as
badly as other stocks because they had
been pushed to unjustified heights. The
moral Is that trustees should be wary
and handle trust investments in COM
mon stocks gingerly. In this connec-
ton he cited remark by Darwin P.
Kingsley. president of the New York
Life Insurance Company, that had that
concern been an investor in common
stocks during the Sc days from Sep
TENDER to October %, 1929. 1t would
nave lost. based upon market averages,
S50S.0oo, 900.
However. even what might have hap
pened to trustee accounts in common
stocks during the market break does
not cool Mr.. Wilson's interest In conn
mon stocks, though he admitted that
no general rule for investment of trust
funds in them could be laid down.
Each proposition must be considered on
Its merits. Yield Is a good indicator.
Many stocks, he said, would not have
been purchased before the crash had
yield been thought about. Another
thing a trustee should consider is not
only the investments he makes as trus-
tee, but those he inherits in the trust.
The latter, he pointed out, are some
times In the class with Pat. looking
for 3 wildcat: 1--WE got it, but for
heavens sake come and help me let it
CO."
Statistical Data Held Vital.
Statistical data should always be
CONSIDERED carefully in considering the
subject" said Mr. Wilson. "In cases
MI l.
factory over q period of years, from
the standpoint Of earnings, manage
ment, asset position, the nature of the
industry and its prospect for the future,
We would seem to be justified in pu~-
chasing . small proportion of carefully
selected common stocks for certain
trust accounts. Whenever the Weld
rom common stocks is less than the
yield from high-grade bonds it Is time
70 stop-look-and listenl
The price Of good bonds is USUALLY
controlled largely by the price OF
money; the prices of even the best
stocks are frequently controlled by
speculative forces and are often entirely
unJustined. Another important factor
to consider is this: When the Weld from
nlgn-graoe stocks is considerably more
tnan the yield from high-grade bonds
(unleSS We are in q very EASY money
market) 1t Is time to determine whether
any such stocks should be purchased
Tor any trust accounts. At the same
time TOO high q yield is often a danger
sign.
Normal yields usually indicate nor
MAJ conditions. OF course. said Mr.
Wilson. only a reasonable portion OF
each trust fund should be irlveste :
IN common stocks, even in cases where
~ seems desirable and Is permitted bV
the terms of the trust. The propor-
ton which may be invested in COM
mon stocks depends upon the facts OF
each case. Some trustees feel that nc
trust funds should be invested In COM
mon stocks, but as the landlady said
TO the boarder when he complained In
pubic about the hash: There is a time
and place for everything Pointing al
be the time Well, there is a time anG
place to buy common stocks"
Proper Compensation Necessary.
The necessity of trust companies set.
ting an adequate scale of compensatio.
in the handling Of trusts was stressed
by L. H. Roseberry, Los Angeles banker
practical reasons for establishing "liVinf
trusts were explained by Lane D. Web.
ster Of San Diego, Calf, and the bes
ways Of spreading the trust idea were
PACoCAOCA ny T. ". DcIucLlQS Oh LOS An
geles.
Funds for charitable purposes admin.
tstered through community trusts nov
exceed $32 900 900, and have doubled il
the last two years, Ralph Hayes, direc.
tor OF the New York Community Trust
informed the conference. There arr
now rs community trusts in the United
States, he said, distributing annually
more than $500, 000
These trusts, he said, utilize bank.
and trust companies in their variou
cities as fiscal custodians, but the In
come from the trusts is distributed un
der the supervision of committee ap
pointed by the banks and the public
This committee in every case, he ex
planned, has the power TO amend tn
purposes for which q fund is used II
the event that changed conditions max
its original purpose obsolete. The frs
community trust was established II
Cleveland in 1914, he said.
Financial District Notes.
One of the most important announce
ments made in the local financial dis
trict during the week was the statemen
Of Secretary c. j. Gockeler that tn
Washington Stock Exchange had sc
cured new quarters because of tn
American Security & Trust Co.'S pro
posed building program
The Washington Building was select
! ed by the special exchange committee
made up Of George o. Watson, Eugen
n e. Thompson and Edward L. Hillyer