and the companies within their borders have between them assets of about $82,000,000.

From the state departments of the middle states I have received official figures from all but Ohio, Wisconsin, and Iowa. No failures are shown except one of this year in Indiana, where the company has paid its creditors in full; and one in Minnesota in 1903, with liabilities of $412,000, forming less than one-tenth of one per cent. of the assets of the middle states.

The western states, because of the absence of laws governing trust companies, or the recent enactment of them, have been rather barren as to figures in connection with my investigations. North Dakota, Kansas, Wyoming, and New Mexico report no failures, and I am not advised of any in the other states.

The Pacific states also, either by reason of lack of records in their governments or for other causes, have not furnished information as to any failures, and I am happy to say that I know of none.

The data at my command do not include the total assets of trust companies in the United States for the several years prior to 1903, but basing a calculation upon the figures of 1893 and averaging the growth of companies during the succeeding ten years, it would seem that the average ratio of the liabilities of failed companies throughout the country to the total average assets of all the companies has been approximately 9-100 of 1 per cent.

It is rather interesting to note that while one thousand trust companies in the United States have aggregate resources of $3,600,000,000, and the above result is obtained as to failures, the average ratio of liabilities of failed national banks to the total assets of national banks in the country during the same period-the last ten years--has been 28-100 of 1 per cent. From the last of the reports of the Comptroller of the Currency, from which I have compiled this result, I find that there are five thousand and forty-two national banks with total resources of $6,300,000,000, or more than five times the number of trust companies with less than double the assets.

Failures among us, therefore, seem to be reduced to a minimum. They would seem to have been brought about by imprudent management, depreciation of securities, and excessive loans to clients; while in only one instance has there been assigned as a cause of

insolvency the defalcation of an officer. The thing, therefore, that would be most hard to guard against is palpably absent from the list of misfortunes, and this is a tribute to the class of men that guide our companies. That the people realize their solidity is shown by the enormous bulk of their deposits, and that they are profitably managed for their stockholders is evidenced by the fact that from the compilation I have made of the dividends paid by six hundred and two companies that have been in existence for over two years, it would seem that their stockholders receive an average rate of 9.4 of 10 per cent. upon par of their shares. This exceeds the rate of 8.7 of 10 per cent. which is given in the Comptroller of the currency's report as the return to stockholders of National banks in the country.

THE BUSINESS IN FOREIGN COUNTRIES ANALOGOUS TO THAT OF TRUST COMPANIES IN THE UNITED

STATES

ADDRESS DELIVERED BY HON. CHARLES FRANCIS PHILLIPS, PRESIDENT OF THE CORPORATION TRUST COMPANY OF DELAWARE, NEW YORK, BEFORE THE AMERICAN BANKERS' ASSOCIATION, AT MILWAUKEE, OCTOBER, 1901.

THE subject upon which I am asked to speak is one abounding in interest, and concerning which a great deal may be said that is eminently suggestive and practically useful; but it cannot be treated in precisely the way in which a casual observation of its title in the program would lead one to expect.

As a matter of fact, and in the strict sense of the term, there are no trust companies in Europe or the Orient, and none in the Latin-American countries, barring the Mexican Trust Company, a purely American foundation, and one or two others, all in a nascent state; nor, so far as I am aware, have corporations, any where outside of the United States and some portions of Canada, yet undertaken to do, in a conjoint and aggregate form, any substantial portion of the work which is customarily and regularly performed by trust companies among us. Indeed, the ideas underlying corporate fiduciaryship are the product of our special development, at once vigorous, rapid and intelligent, in the realms of industry,

commerce, and finance; though the source whence these ideas have drawn their inspiration may be easily discovered, not only in the teaching, but also in the practice, of the financiers of the Latin race, to whose superb gift of analysis and co-ordination, and to whose profound knowledge of basic principles, the modern business world of both hemispheres is indebted for its best theories and its most successful methods of exploitation and management.

But, if actual conditions make it impossible to institute direct comparisons, it is easy, and let us hope that it may be somewhat profitable, to observe in what way the functions analogous to those of American trust companies are performed in the older world.

And here, on the very threshold of our subject, it becomes necessary to remark that long centuries of sincere and enthusiastic devotion to the principle of concentrated, as opposed to divided or collective, authority, and the sentiment, sustained as well by habit as by tradition, of respect for personal prominence and ability and of confidence in the leadership of the specially trained and experienced few, have operated, in substantially every part of Europe, to cast upon chosen individuals those duties and responsibilities which, more and more each day, become, within our own confines, the prerogative of associated effort and of combined obligation. Even in England, which has given us, along with our language, so large a part of our laws and customs and so many of the components of our national character, the individual trustee is in such esteem as to make the success of corporate trusteeship on a very large scale, at least for the immediate present, extremely doubtful. You all remember, I fancy, the effort made by J. Spencer Balfour, about the year 1885, to turn to account through the Trustees, Executors and Securities Company, the idea which finds so ample and so profitable an expression in many of the financial institutions of our great cities; and, doubtless, you remember quite as well the absolute failure of that company to realize its purpose, outside the field of simple promotion. For a while it promised exceedingly much under the auspices of those who had created it, and its founders' shares, whose par value was only ten pounds, were sold, when they could be bought at all, for the enormous sum of eight thousand pounds; but lack of achievement, enforced modification of plan, and complete reorganization followed only too soon.

In England, and, generally speaking, throughout British territory, great enterprises are sustained far more largely than here by credit, independently of direct security; and in all those sections of the world the moral risk of an undertaking, which has always to do with its promoters and managers, and the inherent merit of the scheme itself, as a basis of development or improvement, are more closely scanned and more seriously weighed than the possible lien of the values emitted. Hence, English railroad and other industrial mortgages, which, if they were very numerous, would suggest the formation of trust companies on the American plan, are scarce commodities in the market; various sorts of debentures and preference shares taking their place, in obedience to the instinctive belief of the business community that personal worth and responsibility, coupled with thorough knowledge and wide experience, are, as elements of protection, superior to material and legal guarantees in the shape of fixed encumbrances. It may therefore be said that the trust companies of the British Empire are, in effect, its men of character, skill and wealth, whose names mean more to the investing public than liens of any sort. Much fiduciary work of a qualified character is, of course, done by the banks; but it is done as an incident to their general business, and not as a specific undertaking.

In judging the situation as it stands in relation to our AngloSaxon brethren, we must, however, remember that England, which is the soul of British finance all over the globe, is an ancient, a small, and a homogeneous country, with traditions that are, in many respects, more powerful than laws, and which has not to face, as this country has, the problems arising from the absorption of foreign peoples, the rapid increase of population, the restless aspirations of the multitude, the ceaseless development of a practically unlimited home territory, the incessant creation of new enterprises, and the important political isues which are inseparable from the freshly assumed responsibilities of a world power. Hence, although everywhere and always it is the individual mind, moved by providential vocation, that guides human destinies, whether they be material or moral, and however they may be influenced by what we call general conditions, it is nevertheless true that in this country, largely dominated as it is by the direct action of the masses, the aggregate man and the aggregate form of effort have a prominence

which they nowhere else enjoy, whether in the domain of government or in that of economics. Other countries may, sooner or later, find it advantageous to imitate many of our institutions, and our trust companies among the rest; but the trust company as we know it here is likely to remain for a long while a distinctively American form of business facility.

It is true that a few of our greatest trust companies, as, for example, the Guarantee Trust Company of New York, have established branches in London and some other foreign cities; but the officers of these institutions assure me that the operations of their branches are, from necessity, confined mainly to the issue of letters of credit and to the purchase and sale of exchange and of current securities designed for investment. These transplanted financial models may, however, serve as educational factors, and so, in the long run, do a work for which they were not specifically or even consciously established. They have, in fact, helped to stimulate the creation, on a considerable scale, of safe deposit vaults and like conveniences; though they have failed thus far to give any noticeable impulse to the extension of fiduciary work through corporate mediumship.

As to the provision so necessary to be made, in an active community, for the care of long-time deposits, both the English and continental banks and similar institutions have, from time immemorial, done more than has ever been undertaken by either banks or trust companies in America, and have done it more broadly, more efficiently, more cheaply and more satisfactorily, thus furnishing us with precedents eminently worthy of respectful study.

In Germany, Austria, and some other parts of continental Europe there exist, in great numbers, what are called mortgage banks, institutions created to aid agriculture, which must always need considerable funds for uncertain periods, and to promote the interests of rural and urban land owners, large and small; and these banks, which subsist on their own capital and on deposits received under special conditions and paying a fair return, undertake, to a certain extent, some classes of work which are commonly assumed by trust companies here, such as the receipt, exchange, and distribution of securities in cases of organization, reorganization, and consolidation; but their fiduciary activities are neither numerous nor of