Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-06

Cotton, who IS
trust officer Of the -
District National
Bank. Many OF B. L. Cotton.
the leading trust
oficers in the local banks ana seVeFal
guests were present. -. :,
In his address, Mr.. Reilly oWeN a.
length upon the new problems Oh Iluu0l
arv service which have arisen out OF
the late stock market debacles and the
apparent disposition on the part OF
some courts to regard corporate trustees
as virtual insurers Of the funds placed
under their control.
New Responsibility Seen.
"These factors" declared Mr.. Reilly,
"have qickened appreciation on the
part of corporate f1duciarles OF tne sig :
nal Importance of equipping themselves
to furnish a thorough and comprehen--
siye quality Of investment management
for trusts in their care. To insure thelL
nosition as foremost conserYatorS o!
funds set aside for the protection OF
families. they have been jealous 10
provide not merely unQuestloned noeIlty'
but able, active and expert SUPERVISION
of investments, contemplating lniCal
ANALYSIS in the light OF all coroiiary
facts affecting the benefciaries, Iegal
RESTRICTIONS and investment science, as
well as constant supervision OF eacn
issue Incorporated in the trusts ano
f1eriodic review of each trust as sep
arate business entity.
DIyersification Held Vital.
"Recent disouieting trends in many
security markets have impressed alert
f1d,Iciaries not only with the importance
of maintaining diversiflcation OF in
vestnents along sound lines, but also
of examining most carefully into the m
vestnnent quality of the holdings. Inc
degree of adverse fluctuations which
obtains in securities having the hlghesI
ratings is of comparatively Sllgnt mo-
ment when contrasted with the ADVERSE
fluctuations suffered by issues OF lesser
quality and lower rating
"The alert fiduciary is equipped not
only to properly evaluate and interpret
these factors, but also to take appro-
pirate steps for the protection OF the
trusts in its care whenever changeo
economic conditions or disturbances
within particular industries prompt re-
vision Of ratings and consequent altera-
ton Of the investment quality INTENDED
to be maintained"
Mr.. Reilly is trust counsel OF Moody S
and legal editor of Trust Companies
Magazine, former member Of the faculty
Of the washington College Of Law and
of the College Of the City Of New York.
He was in Washington during the war,
bainc connected with the War Finance
Corporation His magazine articles on
fiduciary subjects have drawn vide at
tenticn.
Many Important Factors.
He stressed the fact that each trust
must be given its own special attention.
In some cases only long-term invest
ments are desirable. In others the
Weld has to be given most importance
II a bond is selling at 103, or some
higher figure, but is callable in year
or two, it should not be retained in
the trust as only 100 will be paid Tor
its redemption. 1t should be the aim
of the trust officer to see that trust
contains almost nothing but triple A,
double A and A rated bonds In case
cash is needed for the owner OF trust,
the greatest possible care should be
taken in deciding what issue Is TO be
scld.
Mr.. Reilly believes that the trust com
mittee Of every bank should be made
up of the directors. At the same time
they should have the fullest tnforma-
ton from the trust officers, who are IN
closer touch with the individual issues
than the directors are. In reply TO q
question, Mr.. Reilly said that he would
- include investment trust shares IN
estates. 1t is the duty CT the trust
officers, he says, to decide on the d.
versifcation themselves, and not dele
gate it to any one else.
The fact that common stocks are sc
popular in trust investments aroused
particular interest as 1t Is evident that
the leading bankers of the country still
consider that sound stocks are 50 sound
that they are desirable in the most con-
sentative investments. In some cases
the speaker said. common stocks have
been switched to preferred issues, all
these selections being based on yields
earnings. prospects, management anc
the outlook in particular industries.
While much of his talk was more OF
less technical Reilly presented severa
charts which made his points especially
clear. He closed by streSslng the grea'
responsibility placed upon bank official;
in charge of trust funds.
Heard in financial Districts.
The Washington Bond Club has de-
cided upon the Manor Club as the place
for holding the annual outing and cleo
ton Of officers which takes place on
Friday. May % r. c. Montgomery OF
Waggaman Brawner &; Co. is chairman
of ire General Committee.
About 400 leading insurance men IRON
Washington, Baltimore and other part
Of Maryland are expected To attend tn
annual sales conference, which opens
the Shoreham Hotel tomorrow morning
AT 10 O'Clock The program. alread,
published. indicates an unusually meri
torious days sessions President John H
Snyder Of the District Underwriters As
ISOLATION presides at the morning ses'
sion
The McCrory Stores Corporation 70
dav reported April earnings rs S3703
243. against 1851 o40 in April, 1880,
gain IN sales Of IA per cent. Fer IN
f1rst months Of 1891 sales increased q
per cent. The company now operate