was instituted by the Banking Department, and I confess that I was amazed at the extent to which the president of this company, either with the passive acquiescence of the directors, or without their knowledge, had committed his company. Through the power given me by the law I was enabled to save all depositors from loss, and the company from dissolution, by using its entire surplus and one-half of its capital stock of one million dollars. The publicity of this affair did more to discredit the trust companies in the city of New York, and especially some of the newer organizations, than anything that has happened for years. It has, at the same time, furnished a salutary lesson and warning.

But let me emphasize that I must not be understood as asserting that there is no opportunity for improvement in the general administration of these companies' affairs, though I do wish to dispel the impression that they are as a class engaged in dangerous and speculative enterprises, or are being conducted in a reckless and unsafe manner. Their stability and soundness have been too well tested during the long years of their operation in New York State to require other refutation of this general insinuation, and instances of unlawful procedure or reckless investment by them are too infrequent to warrant any general distrust of their stability. If the laws under which they are organized are imperfect or inadequate, they can be amended. If the powers of the Superintendent are insufficient, they can be increased. If the Superintendent is incompetent or neglectful of duty, he can be replaced.

There is no general law in the State of Massachusetts for the organization of trust companies. There is, however, a bill now before the Legislature of that State for that purpose, drawn largely upon the plan of the New York law. A bill has also been introduced compelling trust companies to keep reserves, and regulating the amount. There is a general law of the State (Chapter 116 of the revised law) which provides that domestic trust companies incorporated subsequent to the 28th day of May, 1888, shall be subject to its provisions, and that any such corporations chartered prior to that date which have adopted, or which shall adopt, according to law, the provisions of that chapter, or any section thereof, or the corresponding provisions of earlier laws, shall be subject to the provisions

Michigan has a very comprehensive general law for the organization and control of trust companies. Organization under it, however, is unrestricted.

Maine has no general law for organization or control. All trust companies in that State are organized by special legislation. Before 1893 these special charters contained various provisions such as might suggest themselves to the parties seeking them. Since that time, however, they have been modelled after a general form regulating their powers, and providing for State control and supervision to a limited extent.

In Illinois trust companies are quite generally organized under the banking act, which confers upon State banks the power to accept and execute trusts. Before assuming the exercise of such powers, however, they must deposit certain securities with the State Auditor.

Connecticut has no general law whereby any bank, savings bank, or trust company can organize or do business. Each derives its powers from special legislation. It has, however, a general law governing State Banks and Trust Companies, but the power of supervision is inadequate.

Pennsylvania does not seem to have any general law for the organization of trust companies. They are organized under the General Corporation Act of 1874, and their powers are defined in various supplements to that act, passed in 1885, 1889 and 1895. It, however, has a general law very much like that of New York providing for supervision and defining the powers of the Commissioner of Banking.

New Jersey has a general act under which trust companies may be organized, and defining their powers. This act is also very similar in many features to the New York law.

New Hampshire and Vermont have no general laws upon the subject so far as uniform method of organization is concerned. In Vermont many of the trust companies have the words "savings bank" in their titles, although they have no savings bank powers. Ohio and Minnesota both have general laws for the organization of trust companies, and defining their powers and privileges and providing for their supervision.

The banking law of Wisconsin makes no provision whatever for the organization, supervision or control of trust companies. So I

assume that the institutions of this kind in that State, if any exist, are the creatures of special legislation.

It will be seen that each State is a law unto itself in the matter, and that the variety of powers, privileges and purposes of trust companies in the country is only limited by the conditions and necessities existing in different localities and the conceptions of human ingenuity. The Federal government has not the power to regulate or control in matters of this kind. This power must be left to the respective States, where I believe it can safely remain, though it is to be recognized that the question ought to have the best and most careful consideration that financiers and publicists can give to it. The one tendency most to be feared regarding it is the too great readiness of some legislatures to grant to trust companies charters containing almost unlimited powers. The possession of power carries the temptation to use it, and if a corporation has the legal right to exploit a railroad or a mine in China or Timbuctoo, or to finance speculative schemes wherever it may choose, it is almost certain that some restless, not to say reckless, mind will be found in its directorate who will not be content while such power stands unemployed. The way of safety is, therefore, for legislatures to deny applications for trust company charters that permit any extraordinary latitude of operations out of which disaster might result. The ideal system would undoubtedly be a conformation ultimately of all charters of institutions of this class to some one general plan based upon conservatism and safety. This is probably not as yet practicableperhaps not even advisable at present; for, while in my opinion it would be well if substantially uniform laws, liberal enough to include all desirable features and privileges, and yet sufficiently restrictive to prevent unsafe practices, could be enacted by all the States, diverse conditions existing in the different States might make it necessary to add to, or take from, general privileges, or it may be require more or less restrictive features in some localities which would not be salutary in others.

Experience is a great teacher, and the defects in our laws relating to trust companies, the mistake of granting of savings bank, banking, insurance, title guarantee, safe deposit and trust company privileges all in one charter, the granting of too generous privileges, or the enactment of excessive restrictions, will, in my opinion, all

be righted and regulated eventually, as experience and considerations of public safety, backed by an enlightened public sentiment, shall demand. Much has already been accomplished; evolution in this field having been going on for years, and still continuing. Especially is this true of the great financial centers of the East. I do not believe that there was ever a time when the general condition of the trust companies of New York was better than at the present. It must be remembered that they have more than doubled in number during the last six years, as they have also doubled in deposits and general resources. The marked depreciation in values and depression in business which have taken place in the last two years have been a great strain upon all financial institutions, and when we remember that not a trust company in the State of New York has become insolvent through it all, or failed to pay all debts upon demand, there would seem to be slight cause for apprehension regarding their safety, or room for criticism of their management.

I speak of my own State freely because I am familiar with conditions there, and can speak from knowledge. There is no reason why results should be different in other States where conditions and laws are substantially the same. I do not hesitate to state that the practices of some companies have met with just condemnation. Occasionally I have had reason to deplore and criticise the general condition and the policy of some companies under my supervision, but anything of a nature serious enough to imply failure or disaster, or to produce an unsafe or unsound condition, is exceedingly rare. Unsafe or even unlawful practices cannot be eliminated wholly in trust companies or other financial institutions so long as human. nature remains fallible.

Aside from the conservative management which these institutions enjoy, I believe that the laws of the State of New York have done more to conserve their welfare than any other thing. Your president (and I hope I am not violating any confidence) in a letter to me used the expression "unregulated developments in matter of trust companies." In some States organization is unrestricted in the sense that no officer has the power to prohibit, provided the procedure is in accord with the statute, but in New York and in some of the other States a trust company can not be organized without the consent of the Superintendent of Banks, based, as has

been suggested, upon the fitness of the proposed incorporators and the advantage and convenience of the public; and, while many trust companies have been organized in the State of New York in the last six or eight years, more applications have been refused than have been granted.

Since the business of the country became less active, and business incorporations and combinations less frequent, the desire for trust company organization has proportionately abated. I am unqualifiedly in favor of State control, adequate and close control, not only of trust companies, but of all institutions of a financial nature which invite the public confidence and deal with the people's money. This control should be sufficiently comprehensive to regulate the organization, provide ample supervision, and restrict investment, in a way that will conserve, in so far as human ingenuity can provide, the interests of the public. Investment by such institutions, in untried securities, promotion of questionable enterprises, speculative underwriting of stocks or bonds, and all other acts of a nature involving dangerous investment or promotion of individual interests, should not only be prohibited, but made a penal offense if indulged in contrary to law. It would be well if the name "Trust Company" could have a uniform meaning throughout the land, always implying strict compliance with wise laws, adequate State supervision and control and conservative and safe management.