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failed to settle the matter, however. Four years later the same court passed upon the question again, and concluded that trust companies may not receive demand deposits, unless they pay interest.53 Hence the receiving of demand deposits by trust companies in that State now has legal sanction. No rate being specified by the court, the payment of merely nominal interest would suffice, so far as the law is concerned. There is a law of competition, however, which is another thing.

The examples just related illustrate how the trust company, unlike the National bank, has developed according to natural rather than artificial laws. The law and its interpretation have been moulded to suit the ascertained needs of the business, instead of the business being moulded to conform to the law. There are those who believe that this process has evolved a more scientific system of banking than that of the banks themselves.

GENERAL STATUTES REGULATING TRUST COMPANIES.

During the decade of the eighties the growing attention to the trust company as an institution was further evidenced in some of the States by the passage54 of general laws regarding this class of institutions. New York passed such a law in 1887, since which time companies have usually been incorporated under the general law, although some have been organized under special acts.55 We have already referred to the Corporation Act of 1881 in Pennsylvania, which dealt with trust companies. It was further amended in 1885.56 Illinois passed a trust company law in 1887.57 Several States passed laws during this period for the purpose of regulating or restricting the business of trust companies. This subject will be discussed more at length in a subsequent chapter.

GROWTH OF THE COMPANIES IN NUMBERS AND RESOURCES.

Returning now to the consideration of the growth of trust companies in number and resources, the task is much simplified by the availability of statistics which, while incomplete, furnish the means of forming a tolerably accurate idea of the progress of these institutions.

From the year 1875 or, the reports of the Comptroller of the Currency give statistics of the trust companies reporting to that official. These reports do not include all of the trust companies in existence at their several dates, as the Comptroller had no authority to compel the sending of returns from State institutions. The number of companies reported for the year ended June 30, 1875, was thirty-five.

53 Ibid., Vol. LVII, p. 16.

This num

54 The tendency to the passage of general laws was not confined to trust companies, however, but extended to other State banking institutions. See "State Banking in the United States," by George E. Barnett, p. 22 and passim.

55 Circular published in 1900 by the New York Superintendent of Banks, giving historical sketch and digest of banking laws.

56 Act of June 11, 1885.

57 Act of June 15, 1887.

ber is, of course, somewhat less than the number actually doing business, and it is impossible to learn the exact number. The United States Mortgage and Trust Company, of New York, has annually, since 1903, published a book entitled "Trust Companies of the United States," which gives complete returns from practically all of the trust companies in existence, with the dates of their organizations. An examination of this work shows that of the companies reported, fifty had been organized during or before the year 1875. But, as the writer has ascertained by correspondence with these companies, some of them were not organized at first as trust companies. On the other hand, as already shown, a number of trust companies organized in these early years have gone into liquidation, and their names do not appear in the book above mentioned. A rough estimate, however, shows that these two considerations about offset each other, and the number of companies in existence in 1875 was probably nearer fifty than thirty-five. The former number is insignificant enough as compared with the other financial institutions at that time. As against the thirty-five trust companies, there were in 1875, according to the Report of the Comptroller of the Currency for that year, 551 State banks, 771 Savings banks and 2,087 National banks. The trust companies had deposits of $85,000,000, while the State banks had $166,000,000, the Savings banks $924,000,000 and the National banks $679,000,000.

Of the thirty-five trust companies reported, New York State had twelve, Connecticut ten, Pennsylvania seven, Massachusetts five and Rhode Island one. The incompleteness of this list is shown by the fact mentioned by the Comptroller, that while Illinois is credited with no companies in the list, the Financial Editor of the "Chicago Tribune" reported that there were in Chicago, June 30, 1875, five trust companies, with aggregate deposits of $5,688,574.58

A general idea of the growth of trust companies from this time on will be gained most easily by reference to the charts presented herewith. Chart A is designed to show the growth in the number of trust companies year by year. The heavy line follows the number of companies in existence each year as reported by the Comptroller of the Currency. The dotted line follows the total number of companies organized at the close of each year, as shown by figures compiled by the writer from the work "Trust Companies of the United States, 1903," already mentioned. The heavy line shows less than the actual number of companies in existence at any given time; because, as already stated, the reports of the Comptroller do not contain complete reports of all the trust companies in the country. It is probable, however, that this line does indicate pretty accurately the relative gain, from year to year, in the number of companies; and this is the essential thing that the chart is intended to show. It will be noticed that the general trend of the two lines is the same.

58 Report of U. S. Comptroller. 1875, p. XCVII.

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The heavy line shows interruptions in the increase of the number of companies, in the years 1889, 1892, 1894, 1897 and 1898. For details of this kind, however, it is not safe to trust the chart, owing to the incompleteness of the statistics on which it is based. The dotted line shows that there was no year since 1881 in which no new companies were organized. This line would show no interruptions in the increase of companies, if there were any, because it is based on figures showing only the number of companies organized in each year, taking no account of companies which ceased to exist. Following the general trend of the lines, and averaging their courses, it will be seen that there was no marked change in the number of companies until about 1885, when there began an increase which reached its climax about 1891. From 1891 to the beginning of 1899 the increase went on, but at a less rapid rate. From 1899 to 1907 inclusive, excepting the years 1903, 1904 and 1906, the in

CHART A. showing growth in the number of Trust Companies. 1875-1907.

As reported by the Comptroller of the Currency.
Tumber organised, as shown by "Trust Companies

of The United States",

1475

1450

1425

400

1375

1350

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1250

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1100 075

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925

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875

850

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775

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crease has been at a very much greater rate than in any of the preceding years. It seems probable that the considerable increases in the heavy line in 1888 and 1893 are due not to an actual increase in the number of companies existing so much as to greater success on the part of the Comptroller in getting reports from companies which had not hitherto reported.

The following table shows the number of companies at the dates

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The striking thing about the table is the remarkable growth in the number of companies since the year 1900. While the number of companies doubled between 1890 and 1900, in the seven years 1900-1907 the number increased 504, or about 174 per cent., according to the Comptroller's figures, and 962, or about 186 per cent., according to the other authority.

The figures for 1908 reflect the effects of the panic of 1907, which put an abrupt stop to the organization of new companies, and caused the Liquidation of a number of old ones.

Chart B shows the growth of individual deposits of trust companies, and also of Savings banks, State banks and National banks. Following the course of the heavy line, which shows the increase of trust company deposits, we find much the same general features as in the line showing the growth in the number of companies, save that there is a considerable gain from 1880 to 1885. Especially marked is the increase from 1898 to 1902, inclusive.

COMPARATIVE GROWTH OF BANKS AND TRUST COMPANIES.

An interesting thing is the coincidence in the general features of the lines showing deposits of trust companies and of State banks. It is also to be noted that from 1897 all four classes of financial institutions had increases of deposits much greater than ever before. This does not seem to corroborate the popular impression that the trust companies are making their gains by taking business from the regular banks. It rather indicates that the trust companies are sharing with the others in a general prosperity that is unprecedented.

The following table gives the individual deposits of the same four classes of institutions for the years named, as reported by the Comptroller of the Currency:

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It thus appears that during the ten years from 1890 to 1900, the Trust Companies gained in individual deposits $692,000,000, or about 206 per cent.; the State Banks, $714,000,000, or about 129 per cent.; the Savings Banks, $925,000,000, or about 61 per cent., and the National Banks, $1,008,000,000 or about 63 per cent. The amount of the gain for Trust Companies was less than that for the other classes of institutions, but the percentage of gain was much larger.

During the seven years from 1900 to 1907, the gains were, for Trust Companies, $1,033,000,000, or about 100 per cent.; for State Banks, $1,801,000,000, or 142 per cent.; for Savings Banks, $1,045,000,000, or 43 per cent., and for National Banks, $1,878,000,000, or 72 per cent. During these years, therefore, the amount of gain in dollars was less for Trust Companies than for any of the other classes, while the percentage of gain was greater than that of any but the State Banks, which made a remarkable gain.

The figures for 1908 show that all the institutions lost in deposits during the panic of 1907, but the trust companies lost most heavily.

As regards a comparison of the figures for Trust Companies and for the other financial institutions named, it is important to bear in mind that the reports of the Comptroller give the statistics for all National banks, and that said reports are fairly complete for State Banks and for Savings Banks; while the statistics for Trust Companies are very far from complete. Thus, the Comptroller's report for 1907 gives the total resources of the Trust Companies of the country as 3,073 millions, whereas the figure given by "Trust Companies of the United States" is 4,285 millions. The Comptroller's report for 1907 contains figures for but one Western State,-Kansas, and for but one Southern State,Kentucky. It omits a number of important Trust Company States, among which are California and Ohio, the combined resources of whose Trust Companies in 1907 were not less than 324 millions. This incompleteness is not the fault of the Comptroller, but is due to the fact that he has no authority to compel the making of reports of Trust Company statistics by the different States.59

Two

59 As another instance of incompleteness, take the Report for 1897. hundred and fifty-one companies are reported, with total deposits of $566.922.205. But the Comptroller calls attention to an investigation made by the New York Financier of returns nearest to January 1, 1897, showing 458 companies, with deposits of $675,100,000. (See Comptroller's Report 1897, page XXXVIII.)

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