accumulation of trust business, which increased at a satisfactory rate;" although it seems not to have made this business its main feature at first, as did the Pennsylvania Company from this time on.

The year 1836, then, saw in active pursuance of the trust business in the United States four companies, two in New York city and two in Philadelphia. During the years that immediately followed and down to the present time, their business in the trust department, as well as in other lines, has steadily grown, and they are among the leading companies of to-day. The Pennsylvania Company had, in 1863, accumulated a surplus of profits equal to its original capital of $500,000, and thereupon increased its capital to $1,000,000, distributing a stock dividend of 100 per cent. to its shareholders. In 1869 its business was divided into departments the trust department, the department of insurance on lives and granting annuities, and the banking department. But no life insurance policies have been written since 1872, nor any annuities or endowments since 1873. The safe-deposit department was added in 1872, in which year also the capital was increased to $2,000,000. In 1895 the company controlled one hundred and thirty-six millions of securities held in trust, taken at their par value, and received during the year more than a million dollars for rentals. On May 28, 1907, it reported a capital of $2,000,000, surplus and profits $3,721,404, deposits $17,355,322. The amount of funds held in trust, invested and uninvested, was $138,311,425, besides which it held other trusts representing large amounts, not readily expressible in exact figures.

The Girard Company, which on June 22, 1899, changed its name to The Girard Trust Company, reported on May 28, 1907, capital $2,500,000, surplus and profits $9,773,805, deposits $29,976,098. It held trust funds, invested and uninvested, amounting to $76,538,089, and the amount of trusts under corporation mortgages and trusts of securities held by the company as depositary and trustee for issues of collateral trust bonds is given as $253,281,595.

The Farmers Loan and Trust Company, of New York, had on January 1, 1880, accumulated deposits of over $6,000,000. This increased to $24,000,000 in 1890, and to $41,500,000 in 1900. The company's statement for August 22, 1907, shows capital $1,000,000, undivided profits $6,469,185. deposits $81,921,575, total resources $90,104,020.

The New York Life Insurance and Trust Company had on August 22, 1907, total resources of $42,240,726: the capital being $1,000,000, surplus and profits $4,022,104, deposits in trust $33,712,743, annuity fund $2,326,150, life insurance fund $381,504. This company, already stated, has no deposits other than trust deposits.

as

Of all the trust companies now in existence, these four were the only ones which began business prior to the year 1853. There were, however,

7 Letter from the trust officer of the company.

8 Sketch of the Pennsylvania Company, pp. 45, 49, 51, 52, 136, 144.

9 Cator, p. 75.

a few other companies incorporated in these early years which have long since gone out of business, and which bore the name of trust companies.

The Ohio Life Insurance and Trust Company, of Cincinnati, was incorporated February 24, 1834, and began business in January of the following year. It had a trust department and a banking department. Its powers included the issuance of circulating notes, and the leading object of its incorporation seems to have been the supplying of capital for the business of the community. For many years the company did a large business, though, on account of losses, its dividends were not so great as had been hoped. For the first seventeen years they averaged not quite six and one-quarter per cent. per annum. Early in 1852 the trust department had assets of $2,750,000. In addition the banking department had assets of over $1,345,000. The last years of this company were filled with troubles over the State tax question, the company being called upon for taxes of about $100,000 per year. The failure, which occurred August 24, 1857, and which precipitated the panic of that year, was attributed by the President of the company to "loans to parties unable to respond at this time."11

The passage of the Free Banking Law in New York, in 1838, was followed very soon (in July, 1838) by the incorporation of the North American Trust and Banking Company, of New York city.12 Under the law, the company could discount bills and notes and other evidences of debt, and loan money on any kind of security, real or personal. The company had a brief but strenuous existence. Its capital "in cash, bonds and mortgages was between two and three millions of dollars, and upon this the directors and managers contracted debts and loans to the amount of $18,000,000."13 In January, 1839, the company purchased $1,200,000 bonds of the State of Indiana, giving its notes in payment. It also bought Ohio State stocks, giving negotiable time certificates of deposit. For many years after the failure of the company the courts were occupied with litigation regarding the legality of these transactions, and the creditors included many anxious investors on the other side of the Atlantic. Another concern that passed like a comet through the financial sky of these days was the Kentucky Trust Company, which failed in 1854, after a very brief career. It had been chartered with an unlimited capital.

The year 1853 was marked by the incorporation of the first company organized in this country to transact exclusively the business of a trust company. This was the United States Trust Company, of New York city, created by an act of the Legislature April 12, 1853. "Its charter was the basis of all special charters of a similar character afterward granted. in New York, as well as of the general law for the incorporation of trust

10 Bankers Magazine, July, 1852, Vol. VII, p. 74.

11 Ibid., September, 1857, Vol. XII, p. 240.

12 Ibid., November, 1854, Vol. IX, p. 349.

13 Ibid., November, 1852, Vol. VII, p. 341.

companies, which was adopted in 1887 and which has terminated the granting of special charters for such purposes."'*

This company has had an important place in financial history during its fifty-odd years of life, and its list of directors and officers has included men of national prominence. During the last two years of the Civil War, when the financial problems of the Government were most serious, John A. Stewart, then Secretary of the company, at the earnest request of President Lincoln, undertook the work of Assistant Treasurer of the United States in the city of New York. Mr. Stewart became President of the company in 1865, and served with conspicuous success until 1903. when he tendered his resignation. He was succeeded by exSecretary of the Treasury Lyman J. Gage.

During its half century of life, the company has paid to those who entrusted to it their idle moneys for accumulation more than thirty millions of dollars in the way of interest on such funds.15 Its statement on July 1, 1907, shows total resources of $77,711,640; capital $2,000,000; surplus and profits $12,513,709, and deposits in trust $61,455,947.

In 1857 the Merchants' Loan and Trust Company, of Chicago, the oldest existing bank in the State of Illinois, was granted a special charter by the Legislature of that State. Under this charter the company was authorized to do a general trust as well as banking business; but it did no trust business until about 1880, and did not make a specialty of such business until recent years. Its trust department was organized in 1901.16

There were some other companies with the word "trust" in their titles incorporated in Illinois at this time and a little later, but they were essentially State banks with a different name. Among these were the Chicago Loan and Trust Company, chartered in 1857, and the Real Estate Loan and Trust Company. Neither is now in existence.17

It is thus evident that down to the time of the Civil War the number of companies having the word "trust" in their titles was very small, and the number that actually undertook the trust business probably did not exceed half a dozen. That there were not more trust companies organized during this period seems at first thought somewhat remarkable in view of the success of the four companies first mentioned, and in view of the fact that this period was prolific in the formation of State banks. President Jackson's successful fight against the second Bank of the United States, followed by the removal of the public deposits to "pet banks," and the downfall of the Government bank, opened the field for new financial institutions. That field was, however, almost wholly for concerns that issued circulating notes, and this function was evidently not a part of the business of insurance companies, which were at that time, as

14 Fiftieth anniversary circular of the company, 1903, p. 8.

15 Ibid., p. 7.

16 Letter from the Secretary of the company.

17 Cator, p. 19.

As

we have seen, the only corporations engaged in the trust business. several recent writers have pointed out, the business of handling deposits, which is now so important to most trust companies, was then of slight consequence as compared with that of note issue.

RELATIVE PROGRESS OF TRUST COMPANIES AND SAVINGS BANKS.

Another point of interest in this connection is the relative progress of the savings bank and the trust company movements. Each had its origin in semi-philanthropic effort (as did also the insurance business), though doubtless the savings bank movement partook more especially of this characteristic. The two classes of institutions were established at about the same time, the first savings banks in the United States having begun business in 1816-one in Philadelphia and one in Boston. The growth of the savings banks, after the first few years of experiment, was rapid, and they became an object of public interest almost from the start. There were thirty-six savings banks in the country in 1830, with deposits of nearly $7,000,000; in 1835, fifty-two banks, with deposits of over $10,500,000; in 1850, 108 banks, with deposits of over $43,000,000. In 1885-about the time that the trust-company movement began in some earnest-there were 646 savings banks, with deposits of $1,095,000,000.18 Trust companies, on the other hand, were established half a century before they began to attract general attention, and where known at all in the early years the trust business was looked upon as only one of the less important functions of insurance companies. For this marked difference in the early history of the two classes of institutions, one explanation suggests itself which is quite sufficient to account for the difference. It is that the savings-bank movement began when the country had reached a condition wherein its need was felt, while the trust company was established in advance of any recognized need. Indeed, as we shall see, the conditions which make possible that part of the trust company's business which has to do with large enterprises of a corporate nature have not existed until within the last two or three decades.

It will be interesting to get an idea of the way in which the trust business was regarded in New York about the middle of the last century. In THE BANKERS MAGAZINE for November, 1854,19 there appeared an article on "The Trust Companies of New York." These are given under three heads, viz.:

1. The New York Life Insurance and Trust Company.

2. The United States Trust Company, of New York.

3. Life Insurance Companies.

The Farmers' Loan and Trust Company is included with regular life insurance companies under the third head. Of the United States Trust

18 Report of Comptroller of the Currency, 1902, p. 420.

19 Bankers Magazine, Vol. IX, p. 321.

Company, it is remarked that it does no life-insurance business-only "receiving moneys on deposit, and executing trusts." The figures are given for the two companies above named, among the items for the New York Life Insurance and Trust Company, being "deposits in trust, trust accumulation, life insurance, annuity granted, and receivership account." After a description of the two companies, the article proceeds: "There are other companies in the city which, if not strictly termed trust companies, are yet so in fact, as they are the depositories of funds that will not be demanded for a long series of years, and on the solvency and stability of whose affairs much depends. We allude to the life insurance companies."

ORGANIZATION OF TRUST COMPANIES AFTER THE CIVIL WAR.

The last year of the Civil War and the years immediately following saw a very distinct movement toward the formation of trust companies, and marked its spread into new territory. Of the companies now in existence over forty began business during the years 1864-1875.20 However, many of these companies were in their early years not trust companies, but ordinary banks. The States represented were Pennsylvania, New York, New Jersey, Maryland, all the New England States except Maine, Illinois, Iowa and Georgia. In the eight years following 1865 about thirty-seven new charters were granted in Pennsylvania; very few of them, however, were used.1

The Union Trust Company, of New York, was chartered in 1864 and began its work in 1865; as did also The Provident Life and Trust Company of Philadelphia, both companies transacting a trust business from the beginning." The Trust and Deposit Company of Onondaga, at Syracuse, N. Y., began business in 1866, undertaking from the first such trust business as was committed to it. The year 1867 saw the beginning of the Safe Deposit and Trust Company, at Pittsburg, Pa., and of the Rhode Island Hospital Trust Company, of Providence, R. I. One of the leading objects of the organization of the latter was to serve as a pecuniary helper to the Rhode Island Hospital, then in its infancy. This company, which was modeled in part after the United States Trust Company, of New York, was given a threefold character by its charter: "First, a bank, with all banking powers except that of issuing a currency; second, a savings institution; third, an incorporated executor, administrator and trustee of the estates of decedents and of the living who might desire to avail of its services.'

9924

20 See dates of organization of the various companies, given in "Trust Companies of the United States," published by the U. S. Mortgage and Trust Co., of

N. Y.

21 Cator, p. 16.

22 Letters from the trust officers of the companies.

23 Letter from the Secretary of the company.

24 Circular issued by the company, giving its history.