have power" to carry on the trust, deposit and security business as specifically provided in Sections 9 and 10. By necessary implication, corporations not organized under the act are prohibited from exercising the powers conferred by it. The rule expressio unius est exclusio alterius applies, and the prohibition is as effective as though it were expressed in so many words.

The further contention of counsel for the respondent bank is that the question of State policy is not involved, and that it matters not what the State policy may be so long as that policy is not set forth in an express statute. We submit, however, that a State policy declared by the court is as much the law of the State as though it was written in the statutes. This point is clearly covered by the cases of N. Y. Mortgage Loan Company vs. Secretary of State (150 Mich., 197), discussed in our principal brief, American T. & T. Company vs. Secretary of State (159 Mich., 195), and N. Y. Life Insurance Company vs. Hamburger (174 Mich., 254).

In the telephone case it was held that a foreign corporation authorized to do both a telephone and telegraph business could not do both classes of business within this State, although domestic corporations could be organized for

doing either class of business; and in disposing of the question, Mr. Justice Brooke uses the following language:

"Applying the foregoing reasoning to the facts in the case at bar, we find there is no room for doubt as to the legislative intent or the policy of the State. For reasons good or bad, but satisfactory to itself, and presumably in the interests of its citizens, the State has chosen with great deliberation and certainty, to maintain as separate and distinct agencies telephone and telegraph companies. To overturn this settled policy on the part of the State would, it seems to us, be as unwise as unwarranted."

In the Hamburger case, Mr. Justice Kuhn defines public policy as follows:

"When we speak of the public policy of this State, we mean the law of the State, whether found in its constitution, the statutes or the judicial records" (p. 258).

It is respectfully submitted that the relief prayed for in the information should be granted. GRANT FELLOWS, Attorney General.

HENRY M. CAMPBELL,
JOHN G. JOHNSON, '

Counsel for Relators.

That the maximum of safety and stability in management is attained by trust companies of the United States is again emphasized in the compilations of 1915 bank suspensions compiled by Bradstreet's. Although the past year was an unusually trying one because of the many new and unprecedented financial factors created by the European war the record of banking and trust company solvency in this country was most credible. Trust companies, however, contributed not only the smallest number of suspensions but also by far the smallest amount of indicated total assets and estimated liabilities involved. As compared with 43 suspensions by State banks, 18 private banks, 12 National banks and 6 savings banks, there were only 6 trust company suspensions during the past year. The stability of trust companies stands forth, however, in more bold relief in comparing the amount of assets and liabilities involved.

Savings bank suspensions, although only six in number, represented the largest amount of liabilities amounting to $13,715,000, with indicated total assets of $9,425,000. National bank

suspensions to the numbers of 12 involved total estimated liabilities of $11,093,496 with indicated assets of $7,315,000. State bank suspensions, numbering 43, involved total estimated liabilities of $4.757,347 with indicated assets of $3,626,425. Private bank suspensions, numbering 18 represented estimated liabilities of $3.421,446 and indicated assets of $1,793,723. The 6 trust company suspensions involved total liabilities of only $425,450 and indicated assets of $222,270.

In all there were eight-five suspensions of banks and trust companies in the United States during 1915, with assets of $22,382,418 and liabilities of $33,412,739. This was only threetenths of I per cent. of the total number of banks in the country in June, as shown by the Comptroller of the Currency. Furthermore, it was only four-tenths of 1 per cent. of all the failures or suspensions in commercial business during the year, but this small number of failures accounted for 11.6 per cent. of all the liabilities. In 1914 banks suspending made up seven-tenths of 1 per cent. of all suspensions or failures and accounted for 13 per cent. of all the liabilities.

THE ESCHEAT

DEPOSITS

By an Act, approved June 7, 1915, Pennsylvania has provided "That every person, bank, safe deposit company, trust company and cor.poration, organized or doing business under the laws of this Commonwealth, except mutual savings fund societies not having a capital stock represented by shares, which receives or has received deposits of moneys, shall make a report to the Auditor General, under oath, in the month of January of each year hereafter, of such deposits of money which shall have not been increased or decreased, or, if not increased or decreased, on which interest shall not have been credited in the pass-book, at the request of the depositor, within fourteen or more consecutive years next preceding the first day of said month." Keepers of safe deposit vaults are required to report property to which actual access shall not have been had by the person for whom it is held within seven or more successive years. Every corporation, including trust companies, must report all dividends declared by it and not paid for three or more successive years, and all debts and interest on debts due by it to any creditor and all property held by it for the benefit of another person, "which property shall have been demandable by such other person for seven or more successive years and shall not have been received by such other person." The report must show the names and addresses of the depositors and the nature and amount of the deposits or property. The Auditor General is required to keep an alphabetical index of the information received and to furnish a search thereof for a nominal fee. Notice is sent by mail to each depositor and the list is also published. If a deposit is not increased or decreased, within seventeen years or property stored has remained without access by the owner for ten years, it escheats to the State of Pennsylvania. The escheat is enforced by a court proceeding under direction of the Attorney-General, or by an officer known as an Escheator.

The penalties for not complying with this law are severe. Failure to report renders the delinquent liable to pay interest at the rate of twelve per cent. on the omitted item. A wilful false oath in any report constitutes perjury,

punishable by a fine not exceeding ten thousand dollars, or by imprisonment not exceeding one year, or by both, in the discretion of the

court.

This law brings to our attention the necessity of carefully considering the subject of unclaimed deposits, lest acts of this nature be passed in other States without due deliberation and without respect, to the burdens they cast upon trust companies, safe deposit companies and banks, burdens that are not compensated by results to the interests intended to be served.

The relation between bank and depositor being that of debtor and creditor the statute of limitations might be thought to be applicable, so as to wipe out the obligation to account for long neglected deposits, if there is not some phase of public policy which properly differentiates the relation of debtor and creditor when existing between bank and depositor and that relation when existing between other persons. That such a public policy exists would appear from the enactment of legislation in this country and abroad, within the last decade, seeking to protect those entitled to neglected deposits from losing their claims. It should be kept in mind, however, that large deposits are seldom or ever lost in this way. The Bankers' Magazine of England for August, 1908, a time when an unclaimed deposit law was under consideration in Parliament, pointed out "that unclaimed balances consist chiefly of small amounts, which have been allowed to remain with banks merely to keep the particular accounts open, and then been forgotten, or have resulted from miscalculations on the part of current account holders when withdrawing what they believed to be the balance at their disposal. The depositor, as we know him, is a much more careful guardian of his own rights than his latest critics appear to consider him to be. He does not leave balances of any size in banks and forget them."

Legislation of this class should be undertaken with a poise that takes into consideration the real and not an exaggerated view of its need. It should, at least, provide a method of enforcement which will not encumber banks with unnecessary clerical labor and bookkeeping.

Our banks and trust companies, some of which employ as many as five hundred men, are in a sense factories into which there enters business each day as raw material which goes out again during the day, by messenger or customers or in the mails at night, as a finished product. Let us consider the functions of bank clerks in various capacities. A bookkeeper, for example, is like a mechanic in that in entering his various items on the ledger he has certain definite physical moves to go through. We may make an accurate study of these motions and with a stop watch obtain a set of time tables. We may go further and increase his mechanical efficiency by the reduction of the useful and the elimination of the useless movements; by the proper arrangement of his desk; by taking care that he has the best facilities in regard to light, heat and ventilation. Having increased the general efficiency of the bookkeeping department, we may not assume, however, that a man who can "put through" one hundred (100) items while the man writing at his side can take care of only seventy-five (75) is necessarily 4-3 as efficient as his fellow. He may have made more errors. Much of the increase of speed is negatived if a debit item is posted in a credit column, or if John Smith is charged with the checks of John A. Smith. Then the fundamental difference between a bookkeeper and a mechanic is that the real value of his action depends not so much upon the speed with which it is performed, although that is important, as upon the correctness of the determining act of judgment.

Mechanical Efficiency of Paying Teller Even as with a bookkeeper, the mechanical efficiency of a paying teller may be and actually is greatly increased by the definite arrangement of his bills and coin into packages of known value, by the telephone at his elbow, by means of the automatic change machine, by the telautograph which permits him to obtain your balance while apparently conversing about the weather. The gain derived from these aids, however, is somewhat lessened if he gives three one-hundred-dollar bills in payment for a two-hundreddollar check, or if he fails to recognize and consequently honors a forged signature.

Let us enter the Transfer or Trust Department of a trust company. No increase in the celerity of issuing a new stock certificate will decrease the liability of the trust company if the issue is permitted upon an irregularity in the original assignment. The gain in mechanical efficiency in examining bonds for execution and certification counts for but little if the actual certification takes place upon a misconstruction of the mortgage.

Psychical Elements of Efficiency

I think we need go no further to show that in nearly all banking operations it is the determining act of judgment which is of paramount importance, and that the physical are always subject to the psychical elements of efficiency. We might turn to the applied psychologist for aid and ask him to determine for us those especially endowed with the qualities of a transfer clerk or paying teller. Not only have street

railway companies looking for good motormen done this, but also steamship companies in search of men for the bridge who would not make mistakes in time of a crisis.' For the present however, we shall assume that by the process of training, natural selection, and the survival of the fittest, that those who are paying tellers or transfer clerks are the individuals best fitted to perform the functions of those offices. Although we conclude, because of the relative unimportance of mechanical efficiency, not to make it our chief aim, we should not forget that there is in this respect much to be done.

Reducing the Chance for Error

We may first of all endeavor to lessen the chance for error. The fact that nearly every bank has adding machines, change machines, card indices and other means for recording and making accessible vital knowledge, is but an evidence of the universal recognition of this phase of the question. We may work toward the same and along different lines, by trying to lighten the load on busy days. We know that the first, fifteenth and last days of the month are extremely busy ones in all departments of the bank; while on some intervening days there may not be sufficient work to keep all the men employed. We know, furthermore, in advance, that there is certain work to be performed on or by these days--part of the work to be done is then predetermined in its nature. If we make a careful study and crosssection of any department and from this study compile a schedule. reasonably correct and always kept up to date, we may reduce our knowledge of the determined factors to something like mathematical accuracy. We must, however, bear in mind that efficiency is ever the handmaiden of economy and simplicity and thus realize that to make the keeping of this schedule a matter so complicated as to result in a system of super-imposed bookkeeping would be a grievous fault.

With this schedule as our chart we now endeavor, as far as possible, to distribute the work of the busy days among the leisure ones; lightening the load in one place and increasing it in another. For example we will on the twenty-third of the month write letters enclosing remittances to go on the first of the next month, or as far as possible figure interest and commissions in advance. Now, when the first of the month comes, with the hustle and confusion, much of the work will have been completed and by so much will the strain and tension be decreased. We will have more time to cope with what we may call the undetermined factors, and with this increase of time comes an

1 See "Psychology and Industrial Efficiency" by Hugo Munsterberg, Chap. 8-9.

opportunity for greater concentration and consequent speed and accuracy. In other words, we have, by the use of forethought, endeavored to reduce the evil effects of the fluctuating character of the banking business.

The Element of Mechanical Equipment

Even as in a factory we may seek to increase the output per man, thereby reducing the cost of unit production. This has nearly always been accomplished by the performance by machinery of what was heretofore done by hand. We have long written letters by a machine, the typewriter, and we have long used the adding machine to add. We have, however, been somewhat slow to adopt the combination of these two machines to keep books. There is no question but that a typewritten record is more readable than one made by hand. If a bookkeeping machine will accomplish more work than a man, either because it will perform a greater number of the same functions in a given time, or because it will perform several functions at once, the case for the machine is won. Many large mercantile houses and banks have already adopted machine bookkeeping, and not to do so is to set one's foot against the tide of progress.

The Human and Economical Aspects

We must not forget, however, either the human or the economical aspect of this question. The expense of each such machine is great, and, of course, each machine must earn the interest on its original investment plus a certain yearly amount for depreciation. It seems to be the consensus of opinion of economists that wherever machine has replaced manual labor that the wages of the laborer have not been directly increased thereby.' Here, also, having reduced the number of bookkeepers by the introduction of machines, the next natural step in our desire to make the machine pay for itself, or to make a good showing of how cheaply we can run our department, is to reduce the pay of each operator. This world in which we live, and this struggle for existence, in which we all take part, is on the whole one of stern realities, and there is not even room for a doubt but that it is economically right to do everything as cheaply as possible because any reduction in the cost of production ultimately accrues to the general good of humanity. There, however, lies at the door of the officials of any bank,

1 See "Machinery and the Laborers," by T. N. Carver, Harvard University, Quarterly Journal of Economics, February, 1908.

See "Effect of Labor-Saving Devices Upon Wages" by Alvin S. Johnson, Columbia Quarterly Journal of Economics, November, 1905.

See "Machinery and Labor" by Henry White, General Secretary United Garment Workers of America. Annals American Academy of Political Science, 1902.

or other institution, about to inaugurate a system of machine bookkeeping a great opportunity to alleviate as far as possible the hardships of readjustment.

The Need of Fundamental Knowledge The output per man can be increased further if each has more than a "rule of thumb" knowledge of the fundamental reasons for his actions. A bank is a business institution and not a school; and yet we all live to learn. Although a man's worth to any community, and more especially to one of a business nature, is measured ever by character rather than by knowledge, and although the former is indispensable, surely when accompanied by the latter its value is enhanced. Why is the bank liable if it honors a forged signature, and not the customer, against whose account the check is drawn? What are the essential features of a negotiable instrument? What are Clearing House certificates? Will the new Federal Reserve Act affect the capacity of any bank to increase its business? Will it be advantageous for any bank to become a member of the new Federal Reserve system? Questions such as these are inseparably woven into the very woof of the everyday transactions in which each bank clerk takes part-yet where does he find his answers? The American Institute of Banking by its system of lectures, has endeavored to meet the situation; but this can do it only inadequately, however good may be its intentions. The goodly number attending these courses is proof that there is a strong desire on the part of many to get at the roots of these matters; and this desire should be fostered.

Advantage of Educational Facilities for Bank
Employees

If we were to make a careful and comprehensive study of the chief operations in a bank, and determine a standard and best method of doing the same; and if then we made a logical, but not an elaborate correlation, of one step with all the others we would be far on our way toward greater efficiency, because we would have shown that each operation, if not an end itself, was at least a means toward a greater end. A library accessible to all the employees, with pertinent books on banking, would not be an unwelcome addition to any institution. Many a great commercial organization educates its employees assiduously because it knows that it is only trained men who will survive in the competition with other trained men. This solicitude on the part of the employers is not generated by beneficence but by an endeavor to answer a question whose determining factor is "dollars and cents." As yet banks have not been swung into the mill race of competition,

but have proceeded slowly in the safe and calmer eddies near the shore. Perhaps banks will never be subject to the stringent demands of keen commercial rivalry, yet they are becoming more and more competitive and it would seem that the more of an educational institution a bank becomes, the better men it will attract to its service, the better men it will raise up for its service, and the better it will serve both itself and the public.

Relation of Executive and Clerical Staffs

Let us now turn our attention to organization, the typical form of which in a large bank is a combination of line and staff. The building superintendent cares for the office, the auditor has charge of the bookkeepers, the treasurer is at the head of the loan department, while the secretary supervises all matters pertaining to stock transfers. Each of these officials is line officer in that he has the seniority and is the chief executive in his own department. Each is a staff officer in that he is an expert in a certain specialty and is, in matters of policy, subject to the orders of some higher official who is purely a line officer. The combined knowledge of these men covers the whole banking field and is at the disposal of a chief executive.

We would seem to have a complete organization, yet there is one official whom we might add to our staff, and that is a "supervisor of employment." If we assume that an institution employing four hundred men has a payroll of four hundred thousand dollars ($400,000) a year, we find that these men, at the rate of four per cent., are earning the return on, and therefore represent an invested capital of ten million dollars ($10,000,000). This amount equals the paid in stock of many a large manufacturing concern or would build a modern battleship, and is surely an investment worthy of careful consideration. Our imposing banking houses, with their invincible doors in front, and unprotected windows behind; with their massive columns which appear to be solid marble, but which are often not so; with their grills, rich desks and ever-tinkling telephones, are merely the stage setting in this drama in which we participate, and our incongruities are only the more sharply accentuated if we choose Caliban to play Brutus or Ariel to act Hamlet. As a matter of interest, the largest and most reputable investment bankers in Boston have the least attractive offices.* It is the men that count even though they be scene-shifters or appear in the mob. Yet we oftentimes hire men with less care than we would exercise in purchasing a bond, and consider their defects or progress with somewhat less care than those of our auto

*Lee, Higginson & Co.