oreign exchange depreciation and fluctuations would give unstable value to an international paper currency and that exporters would be unwilling to accept such currency at face value in payment for exported commodities.

The plan suggested by Sir George Paish for issue of bonds guaranteed by the League of Nations and tax free, is also questionable, because the League is still in a nebulous state and because of the apparently insurmountable difficulties of allocating guarantees. More to the point is the recommendation of Mr. Hoover for the Grain Corporation to use its billion dollar wheat guarantee appropriation to further exports of food and the plan by which European manufacturers may pool their credits and give first liens on their plants and output for payment of loans. Not only is Europe concerned in securing large credits but it is highly essential that the future of the American export movement be protected against the possibility of even greater collapse of exchange rates. Sentiment may have proper place in relieving Europe but it is also the duty of Great Britain, France and other European Governments to support their exchanges. The low level of exchanges plainly militates against American exports and in favor of European countries in developing their foreign trade, as so frankly stated by Lloyd George. Sterling and francs were "pegged" during the war at the cost of dollar exchange and it is only fair that the foreign Governments should cooperate to sustain their exchanges instead of permitting them to decline to levels which will drive our foreign trade to other markets. The foreign exchange problem is an economic one and should be settled according to economic and not philanthropic considerations.

INDEMNIFYING TRUSTEE IN

CASE OF DEFAULT HE Superintendent of Banks of California recently made a ruling which in effect excludes from trust indentures securing bond issues the standard provision requiring bondholders to indemnify the trustee against costs and expenses for taking action in case of de

fault. This is one of the provisions incorporated in the standard set of trust forms prepared by a special committee of the Trust Company Section of the California Bankers' Association. The Superintendent also requires that the trustee shall take notice of all defaults of the bonding company.

These rulings are far-reaching in their bearing upon trust companies and have been the subject of conferences between trust company officials and also with the Superintendent. The requirement would make the trustee under a bond issue an insurer for the bondholders, something that is contrary to accepted law and jurisprudence. In behalf of the trust company contention a brief is being prepared, based on data from leading trust companies throughout the United States, which is to be submitted to the Superintendent in opposition to his ruling. If the Superintendent maintains his position the California trust companies have only two alternatives; either to decline to accept trusteeships under bond issues which come under the jurisdiction of the Superintendent or to charge a fee (which must necessarily be high) sufficient to cover the service and liability required.

NINTH ANNUAL TRUST

COMPANY BANQUET

The ninth annual banquet of the Trust Companies of the United States, given under the auspices of the Trust Company Section, American Bankers' Association, will be held on Friday evening, February 20th, at the Waldorf-Astoria Hotel in New York. Attention is called to the necessity of making hotel reservations and securing train accommodation in advance owing to changes in railroad schedules. Preceding the banquet there will be a mid-winter conference of trust company representatives at the Waldorf-Astoria to discuss subjects of mutual interest regarding trust company methods and policies as well as new plans for constructive work. Requests for banquet and hotel reservations should be addressed to the Secretary of the Trust Company Section, Leroy Mershon, 5 Nassau Street, New York. Speakers of national reputation will be on the banquet program.

With banking resources of $11,150,000,000, equal to nearly 25 per cent. of the combined banking power of the nation; with individual trust and estate funds and property of over $11,000,000,000 in their custody and with corporate trusts of various descriptions estimated at face value of from $60,000,000,000 to $65,000,000,000, it is readily conceivable that the trust companies of the United States today occupy the most responsible position in supporting the structure of American finance and banking. Even more impressive than these colossal figures is the record of fidelity and faithful stewardship in administering the vast amount of trust and estate funds and in the discharge of their obligations as trustees under corporate mortgages, as fiscal agents, transfer agents and registrars and in other capacities, which the trust companies have maintained during periods of war and peace, of alternating seasons of national prosperity and financial depression. No other type of financial or fiduciary institution in the country can point to such a splendid record of solvency, of immunity from default either through lack of sound judgment, negligence or dishonesty as the trust companies may properly lay claim to in the administration of their diversified affairs.

The history of the American trust company movement now covers a century of continuous growth, steadily increasing influence and constant extension of new features of service. Possessing in its organization the quality of adaptability to every new and modern requirement of business and society the trust companies have nevertheless remained true to those immutable traditions and principles of corporate trusteeship which furnish the corner stone as well as the secret of trust company success in the annals of American economic and financial evolution. While there has been a continuous refinement of method and efficiency in the machinery of trust company organization during the past century and especially during the last twenty-five years, the one unchangeable element in their operations has been adherence to the highest conception

of business integrity and fidelity to the letter as well as the spirit of all trust obligations.

The path is not without its wreckage here and there, due to defective State laws which encouraged reckless disregard of legitimate banking and trust functions. The fact remains that in only two States have there been losses of a comparatively trivial amount to trust creditors, namely in California and Kentucky. In other States where there have been suspensions or failures the suspended institutions have either resumed business under new auspices or have been absorbed by other trust companies or the dividends derived from liquidated assets and double liability of stockholders have been sufficient in practically every instance to cover trust department indebtedness. In such States, for example, as New York, Pennsylvania, Massachusetts, Connecticut, Rhode Island, Ohio, Illinois, Missouri, Michigan, Maryland and other commonwealths where trust company growth and volume of business is most pronounced, the court records contain no instance of malfeasance of trust obligations or loss of trust funds. Compare these "clean bills of health" in all but two or three of the whole constellation of States, with the record of many millions of trust property and funds lost, squandered or stolen by individual trustees and executors, and we find the key to trust company progress.

A review of the most reliable statistics and available trust company returns during the past twenty-five years shows that their growth and increase in volume of business has been uninterrupted, save for the panic year of 1907. The most accurate trust company figures are those compiled and published in the book "Trust Companies of the United States," which has been revised and issued annually by the United States Mortgage & Trust Company of New York. These summaries, however, relate only to the banking resources of trust companies and do not comprehend the great amount of holdings and funds in the trust and other departments. In the absence of official returns from trust companies in all

but three States, covering their trust department operations, it is possible to arrive at an approximate estimate of their various trust holdings and obligations only by reference to other corporation statistics and by comparisons of returns from individual companies.

In estimating the volume of corporate trust business there are several sources of fairly reliable information. The bonded indebtedness of our railroads is approximately $12,000,000,000 and their capital stock about $9,000,000,000. Practically all of this $21,000,000,000 of bonded indebtedness and capital stock is represented by trust companies as trustee under corporate mortgages and equipment obligations or handled by them as transfer agent or registrar. This does not take into account the vast capital and bonded indebtedness of industrial and public utility companies which are similarly represented by trust companies. It is conservatively estimated that trust companies are fiscal or trust agents for over 300,000 corporations, representing $40,000,000,000 of bonds, notes and stocks. Owing to the listing requirements of the New York Stock Exchange, which make it obligatory to have a trust company act as registrar or transfer agent as a prerequisite to trading it may be safely stated that 85 per cent. of the bonds of corporations whose securities are listed on the New York Exchange is secured by mortgages under which trust companies act as trustees or other fiscal capacities.

While no accurate statistics of the banking resources of trust companies were available until 1903 when the United States Mortgage & Trust Company began publishing its book there are earlier figures in the annual reports

9,380,886,051 11,150,446,087

of the Comptroller of the Currency which show that in 1884 there were 44 trust companies with total resources of $239,000,000. In 1887 there were 120 reporting trust companies with resources of $441,000,000 and in 1894 there were 228 trust companies with resources of $705,000,000. In 1900 the Comptroller reported 525 trust companies with individual deposits of $1,028,000,000 as compared with deposits of $8,776,347,000 and resources of $11,150,446,087 shown in the 1919 edition of "Trust Companies of the United States" which has just been issued by the United States Mortgage & Trust Company. It is from the annual returns of this volume that the accompanying table of trust company growth since 1903 is compiled:

It is interesting to note that the trust companies of the United States experienced their greatest growth in banking resources during the recent war period, showing an increase from $6,328,454,000 in resources in 1915 to $11,150,446,000 reported on June 30, 1919, representing a gain of $4,821,992,000 as compared with a gain of $1,718,080,000 for the previous five years from 1910 to 1915 and of $808,563,000 during the five years from 1905 to 1910.

During the past year to June 30, 1919, their resources increased $1,769,560,035, equal to 18.8 per cent.; while deposits increased $1,363,384,399; capital increased $46,914,897; surplus and undivided profits increased $37,827,356; stock and bond investments increased $477,418,746; loans, notes and mortgages increased $852,259,306; cash on hand and in banks increased $297,812,579 and other resources increased $101,630,120.

The following summary from the 1919 edition of "Trust Companies of the United

States" shows resources and liabilities of the trust companies of the country from June 30, 1915 to June 30, 1919:

Stocks and Bonds.

Loans, Notes and Mortgages. Cash on Hand and in Bank.

Real Estate, Banking House, Furniture and Fixtures, and Safe Deposit Vaults...

Other Resources..

Total....

210,576,474.59

3,231,331,094.79

1,271,315,100.31

1,529,926,579.40

253,465,539.89 293,804,823.06 390,002,583.83 491,632,703.83

Total...

The 17th edition of "Trust Companies of the United States" is the first to be issued since the close of the war and in a prefatory the following brief mention is made of the achievements of the trust companies in their relation to the great conflict:

"When this country actively entered upon hostilities the trust companies responded with prompt decision and patriotism to the needs of the hour. Contributing very largely on their own account to the success of the five great Loans, they exerted a powerful influence upon their clients and friends to the further great assistance of the Government. Their support of other war measures was likewise of inestimable and immediate value, as was also their co-operation in the distribution of War Savings Stamps and the encouragement of a policy of thrift.

"The impressive total of $11,150,446,000 trust company resources for 1919, a gain of $1,769,560,000 or 18.8 per cent. over last year, is a most gratifying evidence of growth, affording as it does fresh proof of the spirit with which the trust companies have met the increasing responsibilities placed upon them and the assurance of continued healthy progress in strength and influence."

The 1919 edition contains, besides the financial statements of 2,173 reporting trust companies, revised information as to officers, directors, stocks- quotations, dividend rates, digest of State regulations and other statistics. By making this information available to the public the United States Mortgage & Trust

publications as the standard text book of trust company progress.

Trust Funds Held by Trust Companies

As an indication of the individual trust and estate funds in the custody of trust companies the official returns of the trust companies of Pennsylvania showed an aggregate in last year's returns of over $1,500,000,000 with Philadelphia trust companies reporting trust funds of over $1,200,000,000 and corporate trusts of about $3,200,000,000. Although Philadelphia as the "cradle of American trust companies" shows a larger proportion of estate and trust funds committed to trust companies than the general average throughout the country, this official showing plainly indicates that the above quoted aggregates for all the trust companies are conservatively estimated. If anything, the holdings of trust funds is higher than the estimated total because of the exceptionally large number of important estates conveyed to trust companies during the past year, including the estates of the late Andrew Carnegie, Henry Clay Frick, Henry M. Tilford, Mr. Juilliard, Jacob C. Schmidlapp, and many others, including also the very substantial amounts held by trust companies as trustees in connection with the Community Trusts and Foundations established in most of the prinIcipal cities of the country.

Custody of Charitable Funds and Important Estates

The criticism which occasionally emanates

from legal and even judicial circles that wealth is being too largely concentrated in the hands of the trust companies falls flat when it is understood that a very large proportion of such trust and estate funds are designated under testamentary provisions for charitable, educational and humanitarian purposes, as for

example the large bequests under the Carnegie, the Schmidlapp, the Sterling, Kneeland, Dunwoody, McKay, De La Mar, Campbell, Calvery Morris, and hundreds of other important wills of American men of means who have preferred trust companies to individuals to carry out their plans after death.