The Live Stock Exchange National Bank recently decided to establish a "merit system" as a means of raising the standard of service and improving the general deportment and dependability of every employee of the bank who participates. The plan has been in operation since last February and has thus far given very satisfactory results. It has also been an influence in bringing in new business and it is my belief that such a system in any bank would prove more than valuable both to the bank itself and the employees. While our plan does not benefit every man, it has in the great majority of cases, aroused a keen competition among the boys as well as an aggressiveness that is bound to count in favor of the bank as a whole. A reading of the method employed will show that we have excepted the men who have been ten years or more in the service for the reason that by the time a man has put in such a length of service our confidence in him has been established and he most generally has come to a realization of the part he plays in the bank's success. Likewise the bonuses offered go a great deal farther with the younger men who are growing up with the institution.

The first requirement of the plan is to keep a proper record of all male employees who have seen less than ten years of service and all who are in the employ of the bank who can qualify will be eligible. Anyone taken into the employ after the plan is in operation must be in service six months before being eligible for competition. Merits and demerits are made by an officer, the chief clerk and an employee who has been ten years or more in service, and who is chosen by the employees.

Rules and Requirements of the "Merit System

"

The conditions of the system are as follows: Each teller, or head of a department of the bank, is authorized to report each morning to the chief clerk, the name of any clerk under him who is responsible for a mistake, resulting in the department, having to waste unnecessary

time in the location thereof, also any mistakes that, while not resulting in the loss of time. reach the hands of our customers and competitors. Also, a report should be made on any disobeyance of orders or ignoring of instructions of the heads of the various departments. It is further proposed to merit or demerit a man for the neatness of his work, in his own case or in his department.

Merits or demerits are to be given also for the following:

For being late or early.

For being excused or being absent, whether sick or not.

For direct or indirect securing of new ac

counts.

Adopted suggestions for the good of the

service.

Conduct around the bank during business hours.

Courteousness to fellow employees.

Carelessness in figures or work resulting in another department having to locate a difference.

The appearance and condition of books and records when they are ready for filing. Carefulness or carelessness in the use of supplies. Tidiness of a man's desk, night and morning.

Anything in the judgment of an official of the bank not mentioned above may also be subject to merit or demerit. The percentage of every employee at the end of each three months will be established on the following basis: Each man will be given a percentage of 500 to start with and every merit or demerit will be used as I per cent. Any man who willfully withholds any information relative to these merits or demerits is automatically denied the privilege of competition for the bonuses offered.

Finally, the five employees having the highest percentages at the end of each three months will be awarded in their order of percentage as follows: Ist, $15.00; 2d, $12.50; 3d, $10.00; 4th, $7.50; 5th, $5.00.

The growth and varied character of trust company business renders interesting a study of the laws and recent legislative enactments in various States as to the rights of a trust company to act in different corporate and individual trust capacities in States other than that in which it is domiciled. The question was raised recently in connection with the failure of passage of Assembly Bill No. 250 in the 1916 session of the New Jersey legislature. This measure was designed to prohibit foreign trust companies from acting as executor under the will of a testator domiciled in New Jersey, and from acting in any other trust or fiduciary capacity under the order or appointment of any court of New Jersey. The theory of excluding foreign trust companies and other banking institutions must repose, it seems to us, upon considerations growing out of the necessity for banking supervision. Manifestly difficulties arise in controlling the banking operations of a corporation not situated within a State and already subject to supervision within its own State.

Where Banking and Trust Service Differ But in the matter of personal service, like trusteeship, guardianship and administration of estates, there is no such corresponding difficulty. If the appointment of a foreign trust company is made by a testator, he is presumed to know what he is doing and would ordinarily be qualified to judge of the responsibility of his executor or testamentary trustee. Where the appointment is made by a court, the presumption in favor of ability to select a responsible concern is even greater than in the case of a natural person making his will.

From the viewpoint, moreover, of extension of proper trust company activities in the field of personal service, there seems to be every reason in favor of permissive legislation as against restrictive legislation. Such an attitude is reflected by Section 223 of the New York Banking Law, which permits a foreign trust company to accept appointment as executor or

The

trustee under a will "provided trust companies of this State are permitted to act as such executor or trustee in the State where such foreign corporation has its domicile." New York statute requires as the only formalities the appointment of the superintendent of banks as agent to receive service of process, and the filing in the superintendent's office of a proved copy of the charter of the foreign corporation.

Regulations of Different States Compared

The proposed New Jersey statute was intended to disqualify every foreign trust company from acting as executor or as trustee or guardian under the appointment of court. The reciprocal feature was wholly lacking. A complete exclusion was aimed at. As far as we are aware, the only directly corresponding statute in any other State is the North Carolina amendment L. 1915, C. 196) which declares every foreign corporation to be ineligible as executor, administrator, guardian or trustee under the will of any North Carolina citizen. We leave to others the question whether the rights of a North Carolina citizen can constitutionally be thus abridged. The primary object of this law, however, was to prohibit the exercise of trust business by National banks under permission granted by the Federal Reserve Act and which are regarded as "foreign corporations" having Federal charters.

A better theory of such legislation, we think, is disclosed by the South Dakota corporation law (L. 1913, C. 140) which permits the admission of foreign corporations and requires the payment of taxes and the deposit of money or securities only in such cases as required in the State in which the foreign corporation is organized, and only to the extent required in such foreign State. Obviously if a statute like this South Dakota statute were in force in all States, the tendency would be toward the repeal of statutes imposing heavy burdens upon foreign corporations seeking the right to transact their business. Such a tendency would be

(in the field of personal service, we repeat) a desirable one.

Right of the Testator to Make Selection One of the carefully guarded features of this Republic is that its citizens (natural persons) may go freely into all States and transact business there at will. It was because of this theory that the Supreme Court of Indiana, some years ago, declared unconstitutional a statute prohibiting a non-resident American citizen from accepting trusts of real or personal property within the State of Indiana. (Roby vs. Smith (1891), 131 Ind. 342, 30 N. E. 1093, see also "Trust Estates as Business Companies," §129). The Indiana Court did not squarely pass upon the constitutionality of the statute as respecting foreign corporations, and lawyers in Indiana are in doubt on the subject to this day. Instances can be cited where a natural person resident trustee has been joined with a foreign corporate trustee, and perhaps an equal number of instances where a foreign corporation is made sole trustee of property in Indiana. The Missouri statute, requiring a natural person co-trustee resident in Missouri for the purpose of foreclosing mortgages, seems to be generally accepted as enforceable only in the State courts of Missouri. Certainly in various railroad foreclosures the Federal courts have not inquired into the matter of compliance with the Missouri provision. The Illinois statute is an illustration of a permission coupled with a somewhat expensive requirement. A deposit of securities to a considerable proportion of the capital of the foreign trust company is required and must be kept good. The magnitude of the trusts of property wholly or partly in Illinois, which New York and other foreign trust companies have been called upon to accept, has apparently deterred none of them from meeting the somewhat expensive requirements of the IIlinois authorities.

The Massachusetts Law

A provision in the laws of Massachusetts with respect to the use of the word. "trust" prevents foreign trust companies from operating therein, at least under their own names. Chap. 116, Revised Laws of Massachusetts, Section I states:

"No person or association and no bank or corporation; except trust companies incorporated as such in this Commonwealth, shall use in the name or title under which his or its business is transacted the words 'trust company' even though said words may be separated in such name or title by one or

more other words, or advertise or put forth a sign as a trust company or in any way solicit or receive deposits as such. Whoever violates any provision of this section shall forfeit for each offence one hundred dollars for each day under which such offence continues."

What the Oregon Statutes Provide

Oregon has particularly provided for foreign trust companies in a manner which by implication appears to exclude them for some purposes including the administration of personal trusts. Thus, Section 24, Chap. 354 Laws of Oregon 1913, reads as follows:

"No foreign co-partnership, firm, joint stock company, association or corporation shall hold real or personal property in trust in this State, nor act in any trust or fiduciary capacity therein, unless it shall have complied with all the provisions of this act; (i. e., incorporated as a trust company with approval of Superintendent of Banks, etc.) provided, that a corporation qualified to act as a trust company in the State of its domicile, may act as trustee for an issue of bonds, debentures or notes issued under the terins of a mortgage or deed of trust duly recorded in some county in this State; and provided further, that such foreign trust company shall have appointed and shall maintain an agent or attorney in this State, upon whom or upon which legal notice or process may be served, and provided further, that this act shall not apply to any foreign co-partnership, firm, joint stock company, association or corporation engaged in the business of loaning money on mortgage security, which does not accept deposits or receive from citizens or residents of the State of Oregon property or money in trust, or deposit, or for investment. In case any foreign co-partnership, firm, joint stock company, association or corporation whose name contains the word 'trust,' or whose articles of incorporation empower it to do a trust business, desires to engage in the business of loaning money on mortgage security in this State, it shall file in addition to its articles of incorporation or association, a resolution of its governing board, duly attested by its president and secretary, expressly stating it will not receive deposits in the State of Oregon, or accept from citizens or residents of the State of Oregon, property or money, in trust for investment."

The 1915 Legislature of Oregon provided for the appointment of a commission to draft a new trust company law to be presented to

the next session, namely, in 1917. (General Laws of Oregon, 1915, page 615.) It is hoped that this commission will recommend more liberal treatment of foreign trust companies than is afforded by the present law.

Review of Laws of Other States Pennsylvania specifically requires foreign trust companies, engaged in the negotiation or sale within Pennsylvania of their own securities to secure a license from the Commissioner of Banking. (Act approved June 7, 1907.)

Ohio stipulates the capital requirements of foreign as well as domestic trust companies and provides that no "foreign" or domestic trust company "shall certify to any bond, note or other obligation to evidence debt, secured by any trust, deed or mortgage upon, or accept any trust concerning property located wholly or in part in this State (i. e., Ohio) without complying with the provision requiring deposit of securities with the State Treasurer," and that "any trust deed or mortgage given or taken in violation of the provisions thereof shall be null and void." (Section 9778-9780, General Code of Ohio 1910). Foreign companies which do not submit to regulation by the Ohio Superintendent of Banks, may not use the word "trust" in their name. (State Constitution, Article XIII, Section 3, and Act passed April 17, 1913.)

The terms of a Florida statute are broad enough to include foreign trust companies. Section 10 of Chapter 6426,' approved June 7, 1913, provides that:

"No corporation organized to conduct either a banking or trust business or any part of such business shall engage in either the banking or trust business or any part thereof unless and until such corporation shall have complied fully with the banking and trust laws of this State and shall have been authorized by the Comptroller of the State of Florida in the names provided by law to engage in any such business in this State."

Where General Corporation Laws Apply to "Foreign Companies"

In addition to acts particularly referring to foreign trust companies the laws of nearly all the States pertaining to the admission or licensing of foreign business corporations requiring the filing of a copy of the charter, the appointment of an agent for service of process and the payment of fees and taxes, are broad enough in their terms to include foreign trust companies "doing business" therein, in the technical sense of that expressión. Thus the laws of Alabama provide that "every corpora

tion not organized under the laws of this State shall, before engaging in or transacting any business in this State, file an instrument of writing," etc. (Section 3642 Code of Alabama, 1907).

Alaska requires "All corporations or joint stock companies organized under the laws of the United States, or of the laws of any State or Territory of the United States shall, before doing business within the District, etc. file" etc. (Compiled Laws of Alaska, Section 654.) Similar expressions are found in nearly all the other general foreign corporation laws. The application of such general laws to foreign trust companies appears from the wording of the Wisconsin statute which excepts trust companies in a particular instance thereby raising the implication that in other instances they must qualify. The act provides that "no corporation incorporated or organized otherwise than under the laws of this State....shall transact business or acquire, hold, or dispose of property in this State" until it has filed a copy of its charter, etc., except that "any bank or trust company may, in its corporate name, and without being licensed to do business in this State, advance and loan money therein," (Statutes of Wisconsin 1898, Section 1770 b, as amended). Maine specifically excludes "trust companies" from its general foreign corporation statute. (Chapter 113 Public Laws of 1909, Section 2.)

etc.

Reciprocal Laws Are Needed

Though not exhaustive, the foregoing review indicates we think that the subject has not received in a number of States the broad consideration that it deserves. With the steady increase of the use of the telegraph and telephone and the tendency to concentrate business at important points within the several Federal reserve districts, the efforts of farsighted bankers should be directed toward liberalizing statutes affecting foreign trust companies so far at least as concerns their strictly fiduciary services.

New Trust Company in Detroit

The new Guaranty Trust Company has been organized and recently opened for business, with the following officers: President, Frank H. Bessenger; vice-presidents: Edward E. Hartwick and Harold R. Martin; secretary and office manager, William V. Butler; treasurer,

Charles L. Vieman.

The company has a capital of $300,000, with $150,000 surplus, and will transact a general trust company business with facilities for handling real estate loans of the bond and mortgage character.

to those who have savings accounts in the Mercantile Trust Company:

Have you made your savings deposit this week? What are

set aside to-day for addi

Put Your Savings in Circulation

Let Them Pay Wages

Of the total savings on deposit in this to aid in the erection of bed ings, and for other improvements en

The many loaned is used to pay for bedding materials and for nor in other words, all of it is eventually paid as wages to the men who do the war Increen in movings soments than make an increase of employment: and the depositor therefore benefits Mimosit and the entire community at the

Why not put YOUR savings in civala. time by placing them in an account with this Pank

German American TBank

Security or Chance?

"Security is more important than profit."

More than 96,000 depositors in this Bank are proving the wisdom of that statement.

When tempted to "take a chance, think of these things:

The Security has been under the same management from its organization over 27 years.

Every director of the Security has been a residest of this community from 20 to 50 years.

Your principal and interest are guaranteed by over $46,000,000 of resources in the Security. Better be safe than sorry.

SECURITY TRUE

CRAVINGE BANK

The Oldest and Largest Savings Bank in the Southwest

SPOKANE & EASTERN TRUST COMPANY

The Staunch Friend

A complete comencing service This institution is acting as Auardian during the infancy of minors, it is encouraging habits of thrift during youth, it is con structively helping to solve the financial problems of manhood: it is acting as trustee or agent during the years of retirement and old age, while as executor, it is fulfilling the last will

of the deceased testator

and it continues as the business counsel and finan cial adviser of the widow and surviving heirs

Pentylashing and net of
Put of our heart
tbou pre few v