The year 1915 has witnessed a marked expansion in the business of the trust departments of the trust companies of this city and of Massachusetts in general. It has been the subject of frequent comment in these columns that the trust companies of Boston were not obtaining their due share of fiduciary business to which they are entitled because of the expert and capable services which they are in position to render as trustee, executor, administrator, guardian, etc. Judging from the returns of the past year the public is now evidently beginning to show a due appreciation of the superior character of trust company services, as contrasted with individual management. Although one of the wealthiest cities in the United States, yielding a correspondingly large volume of estates and trusts, heretofore the major portion of post-mortem wealth has been assigned to the custody of individual trustees and executors. Appeals to legislatures to remove the handicaps which confronted trust companies in soliciting fiduciary business, proved unavailing. The taxation laws, as applying to estates and trust property, are still unduly burdensome and afford individual trustees and executors some palpable advantages. But the situation is rapidly changing, as shown by the larger number of wills filed in which trust companies are named in trust capacities.

Practically all of the leading trust companies here have shared in this increase in trust department operations, including the New England Trust Company, Old Colony Trust Company, Boston Safe Deposit & Trust Company, American Trust Company, Liberty, State Street, Beacon, International, Dorchester, Federal and others. The Boston Safe Deposit & Trust Company, for example, reports an increase of 26 per cent. in the volume of trust department resources during the twelve months ending last November 10th. This "awakening" of the public is also due in a large measure to the effective literature and publicity campaigns which leading trust companies have been conducting.

Notwithstanding the extremely doubtful character of the authority conferred upon National banks in exercising the powers of trustee, executor, administrator, etc., under the Federal Reserve Act several of the large local National banks have established trust departments and energetically solicited business. The announcement recently from Illinois, however, that the Supreme Court of that State has declared the

provisions of the Federal Reserve Act unconstitutional, under which National banks obtained permission to engage in trust business, has operated as a serious check. Nearly all of the National banks, outside of Boston, which received permission from the Federal Reserve Board to act as executor, trustee, administrator, etc., have not made any special effort to assume such responsibilities. They prefer to await a final decision by the United States Supreme Court as to whether Section 11, paragraph k is valid. There is the further question to be decided in regard to the right of National banks to exercise trust powers under the laws of Massachusetts.

It is understood that an effort will be made to secure an amendment which will enable trust companies in Massachusetts to invest in AngloFrench 5 per cent. bonds. A ruling was recently made by Bank Commissioner Thorndike that these bonds are not legal investments for trust companies.

New Trust Company Organizations If we may judge by the exceptionally large number of new trust companies chartered and organized in Massachusetts during the past year and the several conversions of National banks into State institutions the Federal Reserve system has had the effect of stimulating demands for State charters. Advocates of the Federal Reserve system predicted that the tendency would be henceforth to organize new National banks rather than new State banks or trust companies. The contrary has been true, so far as this section of the country is concerned. Trust company charters are more popular than

ever.

Here is a list of new trust companies chartered and organized in Massachusetts during the past year, including conversion of National banks:

Prudential Trust Company, Cambridge, capital $200,000.

Merchants Trust Company of Lawrence absorbed the business of the Pacific National Bank.

Commercial Trust Company of Springfield organized with capital of $350,000 and $105,000 paid-in surplus.

Park Trust Company of Worcester organized with capital of $300,000 and surplus of $100,000.

Metropolitan Trust Company organized as result of consolidation of Mutual National Bank of Boston and First Ward National Bank of East Boston.

Quincy Trust Company organized at Quincy. Charter has been granted for organization of Hingham Bank & Trust Company at Hingham with capital of $100,000.

Charter for a trust company has been granted to the Worcester Hebrew Credit Union to be established in Worcester.

Application has been filed for permission to organize the Melrose Trust Company to sucIceed to the business of the Melrose National Bank of Melrose which commenced business in 1892.

Application has been filed to organize the Manufacturers Trust Company at Cambridge with capital of $200,000 and surplus of $50,000.

Under the laws of Massachusetts there are obvious reasons for preferring trust company to National bank charters. Among the advantages are the privilege of making loans on real estate, the power to conduct commercial banking as well as transact trust business. Indeed, it is possible that an additional number of National banks, especially those located in smaller communities, will be converted into trust companies in the near future.

Bank Directors Held Liable for
Embezzlements

Some novel questions regarding liability of National bank directors are presented in a decision rendered recently by Judge Bingham of the Federal District Court. The president and four directors of the National City Bank of Cambridge are found guilty of gross negligence in connection with the failure of this institution which was wrecked through the defalcation of the bookkeeper, George M. Coleman. The court's decision was based on a suit brought by former Governor John L. Bates as receiver in which it was asserted that the president and directors were liable for failure to discover the misconduct of Coleman. It appears that the bookkeeper was able to conceal his operations for several years. The court holds in effect that directors are in duty bound to make their own examinations and that examinations by Federal examiners afford no immunity. Doubtless the case will be appealed to the higher court.

Proposed Tax and Banking Legislation With Republicans in control of both branches the Massachusetts legislature convened on January 5th. Taxation will occupy much of the time of the legislators, the adoption of the constitutional amendment last fall paving the way for important changes. Under this amendment the Legislature is empowered to tax socalled "intangibles" at a different rate from real estate and personal property. A report presented by the Special Taxation Commission recommends the levying of a 6 per cent. tax on income from bonds, notes, money at interest and other debts and on dividends on shares of corporations and associations. Exemptions are suggested in the case of dividends from Massachusetts corporations, interest on savings bank deposits and on mortgages on Massachusetts real estate and income from Federal, State, city and town notes and bonds.

Annual Winter Gathering of Massachusetts Bankers' Association

Fully 800 bankers and guests attended the recent annual banquet of the Massachusetts Bankers' Association. Visiting bankers from New York, Philadelphia and other cities attended. President Ashton L. Carr, vice-president of the State Street Trust Company, presided. The speakers were Myron T. Herrick of Ohio who spoke on rural credits; C. Stewart Patterson of Philadelphia who discussed railroad regulation and Thomas Mott Osborne, until recently warden of Sing Sing prison. The bankers manifested their warm approval of the humane and enlightened policies introduced by Mr. Osborne in prison reform by tendering the speaker an ovation.

The Old Colony Trust Company reports under date of November 10th total resources of $127,887,278, deposits of $115,101,148 with capital, surplus and undivided profits of $12,588,334.

A Prosperous Connecticut Trust Company

Substantial growth is reported by the Connecticut Trust & Safe Deposit Company in a statement rendered November 10th. Assets aggregate $8,008,238 embracing loans and discounts of $5,913,438; railroad bonds $845,352 ; town, city and other bonds $291,184; due from banks $560,622 and bills and specie $397,641. Deposits amount to $6,373,956, capital stock $750,000, surplus $750,000 and undivided profits $109,639. The officers are : Banking department: Meigs H. Whaples, president; John M. Taylor, vice-president; Nathan D. Prince, vicepresident; Hosmer P. Redfield, treasurer; Allen H. Newton, assistant treasurer. Trust department: Arthur P. Day, vice-president and trust officer; J. Lincoln Fenn, secretary; Albert T. Dewey, assistant secretary; Clement Scott, attorney.

Capital..

Surplus and Profits.

Deposits, December 31, 1915.

Trust Resources, December 31, 1915. Trust Resources, November 10, 1910. CHARLES W. BOSWORTH, President CHARLES H. CHURCHILL, Secretary

Six Million Deposit Increase by Northern Trust Company of Chicago Aggregate deposits reported by the Northern Trust Company of Chicago on December 31, 1915, amounted to $35,078,597, as compared with $29,394,075 one year ago. During that period combined resources increased from $34,299,396 to $40,681,186. Loans, bonds and stocks amount to $28,611,667 with cash resources of $10,666,969, embracing cash on hand, due from banks and checks for clearings. The capital stock is $2,000,000, surplus fund $1,500,000, undivided profits $1,243,252, the latter item showing an increase of $169,458 after payment of dividends and other charges out of earnings. Of the total deposits of $35,078,597 demand deposits amount to $19,389,285 and time deposits $15,689,311.

$500,000.00

775,905.59

10,324,071.89

3,358,832.63

1,719,158.80

WILLIAM E. GILBERT, Treasurer DALE S. TATE, Trust Officer

Nine Million Deposit Gain by Illinois Trust and Savings Bank

A comparison of the statements of the Illinois Trust & Savings Bank of Chicago as of December 31, 1914 and December 31, 1915 shows an increase in deposits from $98,504,791 to $107,972,619 with an increase in total resources of from $115,068,176 to $124,818,588. Resources include demand, time and other loans of $72,419,695, cash and exchange $29,494,511, stocks and bonds $22,904,381. The capital is $5,000,000, surplus fund $10,000,000, undivided profits $878,469 and deposits $107,972,619, of which $51,086,938 constitute demand deposits and $56,885,681 time deposits.

Whether due to unscientific banking and currency methods in the past or to natural economic causes it has become axiomatic that this country has become accustomed to jumping from prosperity to hard times and vice versa. In analyzing the present activity in business, trade and industrial affairs the one fact comes clearly to view that there has been no overextension or weakening of the credit structure. Chicago banks and trust companies-and that isn't true of the rank and file of banks and trust companies in the great Middle Westhave not been stampeded by speculative infiuences. They have scanned and applied the acid test to every application for credit. They have husbanded their resources and refuse to make long term commitments when the future is shrouded in such doubt. They are not deceived or stimulated to any extravagant optimism by the thought of a tremendous export balance, but the wealth which has rolled into this country through the marketing of surplus food and supplies and manufactures for war-plagued nations. A study of the individual statements of the leading banks and trust companies of this city affords conclusive evidence of the "go slow" policy. There is no such thing as tying up bank funds in a way that might cause embarassment in case of a quick reversal in general business or financial affairs. The possibility of peace in Europe is an ever present hanker in the minds of bank and trust company executive; a factor which must enter closely into his calculations in considering supplies of loanable capital, interest rates and general trend of business.

This is what some of our foremost bankers have to say in regard to current conditions: James B. Forgan, chairman of the board of the First National Bank of Chicago, says: "What conditions may prevail after the war or when the war may end no one can foresee. The former problem depends largely on the latter and both are at present equally insoluble. We should foster preparedness in more ways than one and should not forget that 'after a period of over-stimulation of commerce and trade fostered by a period of too easy credit the tide must inevitably turn and the greater the extreme to which low rates had gone so the greater must be the force of the reaction upon the turn of the tide.'

"The expansion of business and credit now

under way must sooner or later be followed by. reaction and contraction. When this takes place the efficacy of the protection afforded under the Federal Reserve system will be tested and it is my belief that it will not be found wanting if the State banks doing a commercial business will only look ahead, rise to the occasion and assume their share of the responsibility of preparedness by joining the system now."

George M. Reynolds, president Continental & Commercial National Bank of Chicago: "When peace is declared there will be another readjustment here, but it should not be so drastic as the one that occurred in the fall of 1914. There should not be anything in the nature of a panic, but rather a gradual return to normal conditions and a more certain prosperity. Some day the entire world will have to suffer because of the loss of life and waste of capital in Europe. That period may come in two, three, or five years, no one can tell, but our unprecedented trade balances and importations of gold are fortifying us so that our share of the burden should be borne without the degree of hardship likely to be the portion of other nations."

Charles G. Dawes, president of the Central Trust of Illinois: "Notwithstanding the almost unprecedented rate of business recovery since the depression of 1913-14, there is little likelihood during the coming year of any strain upon our money market. The end of the war during 1916 should have no immediate effect upon general business. If our business men keep their heads-if rank speculation and the creation of debt for speculative purposes can be discouraged-in just that proportion will the time of real prosperity continue."

Some excellent investment offerings are inIcluded in the January circular issued by the bond departments of the Continental and Commercial Trust & Savings Bank and the Northern Trust Company.

William J. Calhoun, former Ambassador to China, and Henry J. Evans, director of the National Biscuit Company, have been elected directors of the Central Trust Company of Illinois to fill the vacancies caused by the retirement of Max Pam and Adolph Uhrlaub. No other changes were made in the board.