organized with a capital of not less than $150,000 in any city containing more than 25,000 inhabitants and less than 100,000 inhabitants, and with a capital of at least $100,000 in a city or town the population of which does not exceed 25,000 inhabitants."

The laws of New York prescribe that the number of directors must be not less than thirteen nor more than thirty; the exact number, within these limits, being left for determination by the by-laws of each company. The number necessary to form a quorum may be determined by the by-laws or organization certificate, but "such quorum shall not be less than one-third of such board of directors, and in no case less than seven." No person can be a director who is not the holder of at least ten shares of the stock. "The persons named in the organization certificate, or such of them respectively as shall become holders of at least ten shares of such stock, shall constitute the first board of directors, and may add to their number not exceeding the limit of thirty, and shall severally continue in office until others are elected to fill their respective places." Within six months from the commencement of business they must classify themselves, by lot, into three classes, as nearly equal as may be. The term of office of the first class shall expire on the third Wednesday of January next following such classification; the term of the second class expires one year thereafter, and that of the third class two years thereafter. As the terms of the various members of the board expire, others are elected to fill their places by the stockholders, who may vote in person or by proxy. Proper notice of the regular meetings for such elections is required. If the stockholders fail to elect new members at the appointed time, the directors have power to fill the vacancies, as well as to fill any vacancies occurring in the interval between elections. Each director "shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such corporation, and will not knowingly violate, or willingly permit to be violated, any of the provisions of law applicable to such corporation, and that he is the owner in good faith, and in his own right, of the number of shares (ten) required by this section, subscribed by him or standing in his name on the books of the corporation, and that the same is not hypothecated or in any way pledged as security for any loan or debt.” A certified copy of this oath must be transmitted to the Superintendent of Banks and filed and preserved in his office.

CARE IN THE SELECTION OF DIRECTORS.

The choice of directors is a matter of supreme importance to the interests of the company. Unless they are men of known integrity and business capacity, the company will have difficulty in making a success. It has already been urged that the stockholders of the company should be men of good standing in the community, and the best men among these should be chosen as directors. Upon them will devolve the responsibil

ity for the general management of the company. They will choose the officers who will have charge of the active management of the company, but both the stockholders and the public expect, and have right to expect, that the directors will see to it that these officers manage the company in the best way. No man has a right to accept the election as a director of a trust company who is not willing to give enough of his time and attention to know that matters are being properly conducted. One cannot too strongly deprecate the practice followed by some, of accepting places on such boards without intention of giving any thought or time to the trust thus accepted. Suits at law have been instituted against such careless officials when their inattention has permitted losses to stockholders and depositors alike, and the laws of some States hold them responsible.

Whatever the legal aspect of the case may be, one who accepts such a trust and then gives it no attention, is morally guilty of criminal carelessness. He jeopardizes the property of others, and perhaps the very means of subsistence of widows and orphans.

Having completed the adoption of by-laws, decided the membership of the first board of directors, and chosen officers, and carried out the legal requirements already described, the organization of the trust company is complete. While these things are being attended to, it is presumed, as already stated, that the material equipment of the company is being made ready by those who are to be in charge of it. The offices of the company will be more or less elaborate in their arrangements, according to circumstances. It is not often that too much money is spent in making the quarters attractive and convenient, both to customers and to the workers. The general public is certain to judge an institution largely by appearances, and an attractive looking suite of rooms is very apt to add largely to the success of the company. Much difference in the customs in this matter is observable in different cities. In some it is the usual thing for banks and trust companies to be equipped in elaborate fashion. In such cities a new institution must, of course, see to it that its quarters compare favorably with others. In some cities comparatively little attention is given to making the offices attractive and convenient. A new institution starting in such a city will manifestly be the gainer by starting an improvement in this matter.

Many of the larger trust companies of to-day own their own buildings, which are constructed specially for their use. The advisability of this depends largely upon local conditions, but in most communities has much to commend it. A building is an asset that people can see, and tends to give a feeling of confidence.

The vaults of the company should be strictly up-to-date, and large enough not for the present only, but for probable future needs. The mistake of having them too small is much more common than that of having them too large. A trust company will ordinarily have use for a larger vault or vaults than an ordinary bank, because of the securities

of others that must be cared for in addition to its own securities and records. If only one vault is erected, that part used by the banking department should be separated by a grill from the portion used by the trust department. If a safety deposit department is to be conducted, of course a special equipment is necessary.

ORGANIZATION OF TRUST COMPANIES BY SPECIAL CHARTER.

As already stated, trust companies in some States are incorporated only by special charter granted by the Legislature. In these States, after it has been decided to apply for a charter, a committee of the persons interested is appointed to draw up, under legal advice, an act of incorporation involving such provisions as are wanted (being sure to specify a wide range of powers), and to arrange for the introduction of the bill to the Legislature by some member thereof. If the Legislature sees fit to grant the charter, either as presented or amended by the Legislature, the company is usually authorized to begin business as soon as it wishes after the passage of the act.

Such special acts, in the absence of general laws regulating the business of trust companies, define the powers and limitations of the company. If general laws for such regulation of trust companies exist in the State, then the special act merely names the corporators, creates them a corporation under the name chosen, and confers upon them the authority to transact a trust company business under the general laws in force relating to such corporations.

ters.

The charters of companies established in the early years of the trust company movement have had added to them numerous amendments granting larger powers, as the Legislatures became more liberal in such matThe amendments are passed by the Legislature in the form of special acts, and become part of the charter upon their formal acceptance by the company. In cases where general laws regulating the business of trust companies have been passed subsequent to the granting of special charters, such general laws, or parts of them, become part of the charter of the company upon their acceptance by the latter. The following charter of a large Boston company,* doing both a banking and a trust business, will illustrate the usual form and scope of these special charters and of acts amending same:

COMMONWEALTH OF MASSACHUSETTS.

THE NEW ENGLAND TRUST COMPANY.
ACT OF INCORPORATION, GRANTED APRIL 22, 1869.

SECTION 1. Nathaniel Thayer, John C. Lee, Benjamin T. Reed, their associates and successors, are hereby made a corporation by the name of "The New England Trust Company," to be located in the City of Boston, for the purpose of holding property in trust, and for other purposes hereinafter set forth; and

Trust companies in Massachusetts were formerly incorporated only by special act. They may now be incorporated under the general incorporation law for trust companies, signed by the Governor May 25, 1904.

subject to all the duties, restrictions and liabilities set forth in all general laws which now are or may hereafter be in force in relation to such corporations.

CAPITAL.

SECTION 2. The capital, stock of said corporation shall be an amount not exceeding in the whole the sum of one million dollars (as amended March 30, 1871), divided into ten thousand shares of one hundred dollars each, and the same shall be paid for at such time and in such manner as the board of directors shall decide; provided, that no business shall be transacted by the corporation until the whole amount is subscribed for, and at least one hundred thousand dollars shall have been actually paid in and invested according to law, and no shares shall be issued nor dividends made until the par value of such shares shall have been actually paid in cash.

POWERS.

SECTION 3. The said corporation shall have power to receive and hold moneys or property in trust or on deposit from courts of law or equity, including courts of probate and insolvency, executors, administrators, assignees, guardians, trustees, corporations or individuals, upon such terms or conditions as may be obtained or agreed upon.

SECTION 4. Any court of law or of equity, including courts of probate and insolvency of this State, may, by decree or otherwise, direct any moneys or property under its control, or that may be paid into court by the parties to any legal proceedings, or which may be brought by reason of any order or judgment in equity or otherwise, to be deposited with said corporation upon such terms and subject to such instructions as may be deemed expedient by said court; provided, however, that said corporation shall not be required to assume or execute any trust without its own assent.

INVESTMENTS.

SECTION 5. It shall be lawful for said corporation to invest its capital and all the moneys intrusted to it, or in any way received by it, in the authorized loans of the United States, or of any of the New England States, or cities or towns of this Commonwealth; in the stock of national banks organized within this Commonwealth; in the first mortgage bonds of any railroad company which has earned and paid regular dividends for two years next preceding such investment, or in the bonds of any such railroad company as is unincumbered by mortgage, or in the stock of such railroad companies incorporated by this State; and the said corporation may make loans upon mortgages on real estate within this Commonwealth, or upon the notes of corporations created under the laws of this Commonwealth, and the notes of individuals, with a sufficient pledge as collateral, of any of the aforesaid securities; but all real estate acquired by foreclosure of mortgages, or by levy of execution, shall be sold at public auction within two years of such foreclosure or levy.

Amended Charter-Section 2. It shall be lawful for the said corporation to invest its capital, and all moneys held by it in trust, in the authorized loans of any of the counties, cities, or towns in any of the New England States, or to loan the same to this Commonwealth, or to any county, city or town therein; and said corporation may also invest such capital and moneys in any other securities in which savings banks now are or hereafter may be allowed to invest, and shall be subject to and governed by the provisions concerning savings banks which are contained in sections one hundred and forty-three and one hundred and forty-six of chapter 57 of the General Statutes.*

General Statutes, Chapter 57.

Section 143. "No such corporation shall hold, both by way of investment and as security for loans, more than one-half the capital stock of any bank, nor have more than seventy-five per cent. of its deposits invested in mortgages of

BANKING-HOUSE.

SECTION 6. Said corporation may hold real estate in the City of Boston, suitable for the transaction of its business, to an amount not exceeding two hundred thousand dollars.

EXAMINATION BY SAVINGS BANK COMMISSIONER.

SECTION 7. The said corporation shall semi-annually make a return to the Commissioner of Savings Banks of this Commonwealth, on or before the second Mondays of May or November, which shall be signed and sworn to by a majority of its board of directors, stating the full amount of its capital stock and of all moneys and property, in detail, in the possession or charge of said company, as deposits, trust funds, or for purposes of investment; and the Commissioner of Savings Banks shall have the same access to the vaults, books, and papers of this corporation, and it shall be his duty to inspect, examine and inquire into its affairs, and to take proceedings in regard to them in the same manner and to the same extent as if this corporation were a savings bank, subject to all the general laws which now are or hereafter may be in force in relation to such institutions in this regard.

TAXES.

SECTION 8. Repealed by the amended charter, and the following substituted: Section 8. Said corporation shall be subject to the provisions of chapter two hundred and eighty-three of the acts of the year eighteen hundred and sixtyfive, and any acts now existing, or which may hereafter be passed in amendment or lieu thereof; it shall also, annually, between the first and tenth days of May, return to the tax commissioner a true statement, attested by the oath of some officer of the corporation, of all personal property held upon any trust on the first day of May, which would be taxable if held by an individual trustee residing in this Commonwealth, and the name of every city or town in this Commonwealth where any beneficiary resided on said day, and the aggregate amount of such property then held for all beneficiaries resident in each of such cities and towns, and also the aggregate amount held for beneficiaries not resident in this Commonwealth, under the pains and penalties provided in section fourteen of chapter two hundred and eighty-three of the acts of the year eighteen hundred and sixtyfive, and acts in amendment thereof, for corporations failing to make the returns provided by said act. Said corporation shall annually pay to the Treasurer of the Commonwealth a sum to be ascertained by assessment upon an amount equal to the total value of such property at a rate to be ascertained and determined by the tax commissioner, under section five of chapter two hundred and eighty-three of the acts of the year eighteen hundred and sixty-five and acts in amendment thereof.

No taxes shall be assessed in any city or town for state, county, or town purposes, upon or in respect of any property held in trust as aforesaid; but such proportion of the sum so paid by said corporation, as corresponds to the amount of such property held for beneficiaries resident in this Commonwealth, shall be credited and paid to the several cities and towns where it appears, from the returns, or other evidence, that such beneficiaries resided on the first day of May next preceding, according to the aggregate amount so held in trust for beneficiaries residing in such cities and towns respectively; and, in regard to such tax so to be assessed and paid as aforesaid, said corporation shall be subject to sections eleven, twelve, thirteen, the last paragraph of section fifteen, and section seventeen, of chapter two hundred and eighty-three of the acts of the year eighteen hundred and sixty-five and acts in amendment or lieu thereof, so far as the same are applicable thereto.

real estate, nor invest more than ten per cent. thereof, and not to exceed one hundred thousand dollars, in the capital stock of any corporation."

Section 146. "No member of a committee or officer of such corporation charged with the duty of investing its funds, shall borrow or use any portion thereof, be surety for loans to others, or in any manner, directly or indirectly, be an obligor for money borrowed of or loaned by the corporation."