tend to keep capital from investing in this field. Although the act is only a few months old, the public is already beginning to change their opinion. They are realizing that instead of being a hindrance to the growth of large corporations, it is only placing restrictions to prevent overcapitalization and unnecessary competition and acts as an insurance to the investor.

"A bond is, to all intents and purposes, a mortgage and constitutes a lien upon certain property. It is to the interest of bondholders to know that the property is ample to secure their lien. Although this is not the prime object of this act, it is one of the natural results, and I think the tendency will be to attract the investor rather than drive him away.

"The fifteen banks doing a trust business in this State report a very successful year. The capital invested and the surplus and undivided profits of these departments has increased about $2,045,000; while the deposits have increased about $525,000.

The

total resources on June 14, 1912, of trust companies and banks with trust departments, were $12,013,523.89. Crop reports indicate a healthy year throughout the State, although somewhat lower prices have prevailed. The development of our exceptional natural resources is progressing very rapidly, so that by the time the Panama Canal is opened California will be prepared to handle the large volume of business which is bound to accrue."

MISSOURI

Mr. R. L. Rinaman, vice-president of the Tite Guaranty Trust Company, St. Louis, and vice-president for Missouri, reports; "Little change has taken place in the trust company situation in Missouri during the past year, and but for my desire to have my State represented, a report would be uncalled for.

"Two trust companies have been organized in the interim-one at Bloomfield, with a capital stock of $50,000, and one at Hannibal, with a capital stock of $60,000. Using figures represented by call of June 14the last call available at the time this is written the capital stock of the trust companies within the State decreased by $708,250, as compared with 1911; the aggregate surplus increased $111,187; the undivided profits, net, increased $134,574, and the aggregate deposits of the trust companies in Missouri increased $7,874.429.

"Missouri and its sister States to the South, Southwest and West have been blessed with exceptionally large crops, and

we have every reason to anticipate for the fall and winter an unprecedented volume of business, with the usual accompaniment of profits and prosperity."

FLORIDA

Mr. Henry G. Aird, vice-president of the Guaranty Trust & Savings Bank of Jack-. sonville, and vice-president for the State of Florida, reports: "Until last year the State of Florida had no law for the incorporation and regulation of trust companies. The trust companies that were in operation had been organized either under special acts of the Legislature before the general corporation law had been enacted or under charters obtained under the general corporation act after its passage. Where the corporation did a banking business also, it was necessary to obtain a charter in compliance with the general corporation act and also the laws governing banking corporations.

"Last year a trust company law was enacted by the Legislature, granting broad and liberal powers to such corporations, but surrounding their organization and management with safeguards that give assurance of unquestioned safety and satisfactory service. In brief, it provides for the double liability of stockholders; for a deposit with the State Treasurer of municipal or county bonds or first mortgages on real estate to the value of twenty-five per cent. of the capital stock of the company, but in no event less than $25,000; for the segregation of trust funds from all other assets. so that they shall never be subject to the debts of the corporation; and for the examination and supervision of the corporations by the State Banking Department.

"Under the new act trust companies are authorized to act in every trust capacity under the appointment of the courts or otherwise and are not required to give bond. The law also provides for a banking department with all the powers of a general banking corporation. The sentiment in favor of employing trust companies as executors, administrators, guardians and trustees is growing slowly but surely in the State of Florida, and the new trust company law has given this sentiment a decided impetus."

CONNECTICUT

Mr. F. L. Wilcox, president of the Fidelity Trust Company, Hartford, and vicepresident for Connecticut, reports: "In fulfillment of an annual duty and privilege, I forward this brief word concerning the trust companies of Connecticut. In the report of last year I mentioned the statutory

taxes levied on trust companies, with their distribution to the home towns of the companies; and how this charge against the privilege of conducting business was an excellent source of revenue to the State, as well as a negligible quantity to the stockholder for no dividends have decreased, while there have been increases in several notable instances. These beneficial laws are still in full force and effect.

"The last General Assembly of the State of Connecticut failed to enact a 'General Banking Law' which would very materially change present conditions. The proposed bill called for a bank commissioner with a staff of examiners and with powers that would provide more frequent as well as more thorough examinations. Any wise legislation designed to reduce irregularities to the minimum and to assure the public. that its financial institutions are worthy of all confidence should be welcomed by every bank official and client. Such a law will doubtless again be presented and pressed for passage at this winter's session of the State Legislature.

"Connecticut trust companies have won and rightly maintain a steady growth in popularity, business, and assets. Total deposits have increased, and additions have been made to surplus as a safeguard to the larger responsibility of liability to the deposits. This happy state of affairs is due to the conservative and faithful service of officers and clerical force, as well as to the fact that no depositor has lost a dollar entrusted to a trust company in Connecticut. More and more are thinking people using. trust companies in their material affairs while living, and confidently entrusting the charge and keep of their families and of their estates to these beneficent institutions.

"On September 1, 1911, there were thirtytwo trust companies, and on September 1, 1912, there were thirty-seven trust companies in the State of Connecticut. Total assets of September 1, 1911, were $39,269,808, and the total assets June 14, 1912, were $44.749.451. Within the past few months there has been somewhat of a healthy awakening in general business that has had an appreciable effect upon banking activities. The public seem to feel that the country will be saved in some miraculous way, notwithstanding the tremendous unrest and unjustifiable belief that there have been grievous errors in the methods which have forced this country into prosperity and made it the envy of, as well as an example for imitation by, all nations."

PENNSYLVANIA

Mr. George M. Stuart, assistant treasurer of the Girard Trust Company, Philadelphia, and vice-president for Pennsylvania, reports: "Among the important banking features occurring in Pennsylvania during the period since the last convention, although a local one, is that of the admission of State institutions to the Philadelphia Clearing House. Following the action of the New York Clearing House, the Clearing House in Philadelphia extended on January 1, 1912, full privileges to State institutions having a capital and surplus of $500,000, such institutions to maintain a reserve of twenty per cent., as against twenty-five per cent. for the National banks of the reserve city, said reserve to consist of at least 72 per cent. cash in vault, the balance on deposit in National banks. More than onehalf of the trust companies became eligible under the provisions, but although only six have availed themselves of the privileges, they represent an aggregate of ninety-three millions of deposits, or over forty per cent. of the entire deposits of the Philadelphia trust companies. This movement has unquestionably effected a stronger banking fabric in this center, and the membership will doubtless increase as the advantages are recognized.

"During this period the general tendency to consolidate in the banking communities has also been felt in Philadelphia, some six trust companies having merged. It is with gratification that we are able to record no failures of importance within the State during the year. Money, in sympathy with all other Eastern centers, has remained very easy, call rates in Philadelphia having failed to rise above four per cent., while during most of the period 31⁄2 per cent. obtained. The decidedly more cheerful tone in general trade has engendered a conservative optimism in the banking community, which feeling is strengthened by the general prospects of the season's crops."

Agricultural and Vocational Education

President B. F. Harris, of the Illinois Bankers' Association, recently appointed a committee for the purpose of drafting a bill to be presented to the Illinois legislature, the object of which is to establish agricultural and vocational education in the schools of the State. The project involves the expenditure of approximately $1,250,000 as an initial cost to the State of installing the agricultural and vocational courses of study.

The following is an extract from an address by James B. Forgan, president of the First National Bank of Chicago, before a meeting of his employees September 23, 1912.

My friends and fellow workmen :-I have been asked to tell you in a few words how I regard the American Institute of Banking.

I have read with great interest your 1912 year-book which contains in itself a striking evidence of the development of business talent in the Chicago Chapter and is certainly a credit to the executive officer or officers who got it up.

In it I find published among others an endorsement of the Institute written by me some time ago and I can add but little to what I then expressed.

As to the advantages to be derived from and the opportunities offered by membership in the Institute, there is certainly little to add to what is placed before you in this wonderfully compact and admirably gotten up booklet. I presume you have all read it carefully, or will have an opportunity of doing so.

If after reading it you do not at once see for yourselves the desirability, or to put it more strongly, the necessity of belonging to the Chicago Chapter and thus put yourselves in touch with the work and objects of the Institute, you must be lacking in that ambition, which alone leads to advancement in your chosen calling, and blind to your own best interests.

But right here I want to give you a word of caution. No human organization is perfect and unless it is properly used and its object fully understood it is liable to be handicapped with some bad element. The good in it has to be taken advantage of and nurtured while the bad should be avoided and if possible destroyed.

The advantages and opportunities offered you through membership in the Chicago Chapter of the American Institute of Banking are much greater and broader than the opportunities offered to young men in similar positions in my day; and if you are wise and want to succeed you should certainly take advantage of them.

Since I left Scotland there has been established there an Institute of Banking to which all young men entering banks now belong. Regular examinations are held an

Trust company interests throughout the United States will be interested in a test suit which has been instigated by the California State Banking Department to ascertain the proper or improper use of the word "trust" in the title of a corporation. The defendant in the suit is E. D. Wilbur, president of the "Pacific Coast Trust Company," who claims exemption from the law prohibiting the misuse of the title "trust company" and also from supervision by the State authorities. It is charged that the defendant is conducting the "Pacific Coast Trust Company" in violation of section 12A of the State banking law which provides that no corporation or individual may use the word "trust" in a business title unless such enterprise is under the supervision of the State Banking Department and has a deposit of $100,000 with the State and a paid in capital of not less than $200,000.

In answer to the charge the defendant asserts that no banking or trust company business is being conducted by the "Pacific Coast Trust Company" and it does not, therefore, come within the meaning of the law. It has been frequently pointed out in the pages of TRUST COMPANIES Magazine that the title "trust company" is being wrongfully employed by promoters, speculators and professional stock jobbers to mislead the public. Should the court decide that the trust company in California is exempt from the provisions of the law steps should be immediately taken to amend the banking law to prohibit any enterprise from using the title "trust company" which does not transact actual trust business in the meaning of the statutes.

The Detroit Trust Company has issued a most interesting pamphlet entitled "Administration of Receiverships" which affords eloquent testimony as to the successful manner in which insolvent business, manufacturing and mercantile establishments have been either liquidated to the complete satisfaction of creditors or have been restored to a solvent basis. The booklet also presents printed comments which trade publications and creditors have made as to the results of such receivership. The article is as follows:

"The administration of a receivership has become almost as much of a science as the normal operation of a solvent business. The old-fashioned method (and one too often employed nowadays) was to take an inventory, hold an auction sale, and distribute the net proceeds to the creditors after payment of expenses.

"When operation of the business was attempted by the receiver, it was naturally subject to handicaps such as lack of capital, the knowledge of the trade that the business was under the limitations of a receivership, and the necessity the receivers were under to plan operation from 'hand to mouth.' As a result, the assets were not only diminished in value, but the cases were not infrequent in which the receivers found difficulty in realizing enough to pay their own expenses of operation, the creditors receiving nothing.

"It is being gradually realized, by those who have suffered losses from business failures, that efficient management of a receivership requires special experience. This is particularly true in cases of manufacturing concerns. Paying well for the services of receivers of experience has proved to be much better than sustaining losses which have resulted from efforts to economize by the employment of inexperienced receivers.

"In planning and conducting manufacturing operations under a receivership, there are certain rules to be observed which should not be followed-and in fact it would often be fatal to follow some of them in the operation of a solvent manufacturing business. It is for this reason

that in some cases receiverships have resulted disastrously, the plan of operation of which has been controlled by those who managed the company prior to the appointment of receivers. In practically all cases, however, the services of some of the managers of the business are necessary to successfully handle the receivership. To know what part of the product to manufacture, how much and what material to buy, how far ahead to buy, how to regulate the selling and to fix prices, what expenses to cut off. how to finance the operation, when to cease manufacturing, etc., etc.-all this can be acquired only by extended experience in handling successful receiverships.

"The Detroit Trust Company has acted as receiver of a large number of mercantile and manufacturing concerns, both large and small. This work is under the supervision of officers of the company whose experience extends over a period of from eight to seventeen years. The Detroit Trust Company does not profess to have an expert knowledge of all lines of manufacture. Its policy is to employ in each case those who are familiar with the technical operation of the business, and to itself control the management in the manner which its experience has shown will produce the best results for the creditors. It is also better equipped than an individual to finance the operation.

"Each receivership presents a problem of management or handling which is peculiar to itself. It must be carefully studied and worked out. One may consist largely of partly manufactured goods, the value of which should be saved by a limited kind of factory operation; another may consist principally of accounts and bills receivable, which should be collected in the course of the operation of the business; and still another may require operation, pending reorganization, to preserve good will. The plan of management of these would be somewhat different in each case. The framing of the plan and controlling the policy of management is what requires extended experience.

"The Detroit Trust Company has recently