Boston Special Correspondence Acceptances and Reduction of Discount Bankers and dealers who are in close touch with the acceptance situation look forward to a substantial broadening of the open market for this class of paper as soon as the Government has liquidated its Treasury certificates and the $4.300,000,000 Victory Loan has been successfully floated. Advices from Washington indicate that as soon as war financing is concluded the Federal Reserve Board will make the rate of discount on prime bankers' acceptance paper lower than the rate of Government paper. This is regarded as one of the most vital requirements to place acceptances on a basis which will stimulate their use both in domestic and international business. At the present time there appears a lull in the development of the acceptance market, the volume of both trade and bankers' acceptances having shown a decrease since the signing of the armistice, due largely to the general decline in commercial borrowing and reflecting decline in commodity price as well as contraction of business. The most reliable figures obtainable here place the aggregate amount of acceptances outstanding in the United States at about $770,000,000 as compared with $450,000,000 on December 31, 1917. It is significant of the broader open market absorption of acceptances that while the Federal Reserve banks reported bills bought in the open market on October 25th at $398,623,000, the amount on February 28th shows a decline of such holdings to $276,919,000, practically the same amount reported December 28, 1917. The principal factor which has militated against a stronger purchasing demand for acceptances has been the necessity of absorbing Government paper. Because of their attractive character as short term investments many banks and trust companies have employed their available funds in purchasing Treasury certificates of indebtedness. Moreover, the Federal Reserve bank rates of discount have been unfavorable to the purchase of bankers' acceptances. Member banks' notes for 15 days or less, based on same paper have been discontinued at the same rates as bankers' acceptances. Dealers in acceptances have also found it difficult to carry bills without loss of interest. There is a clearly expressed demand for amendments to the Federal Reserve Act removing the present limitations on the power of member banks to utilize their acceptance power. On the present basis, as stated by Governor Harding of the Federal Reserve Board recently, the unused acceptance power of all the member banks in the eastern district from Boston down to Savannah is limited to $238,000,000. It is suggested that this limitation may be properly increased to 200 per cent. where a bank's total liabilities, namely deposits, rediscounts, bills payable and outstanding acceptances do not exceed twelve times its capital and surplus and providing further that not more than one-half of the aggregate amount allowed should be in domestic acceptances. Directors of the Market Trust Company of Boston recently voted to increase the capital from $250,000 to $400,000. Mutual savings banks of Massachusetts, judging from a recent inquiry, are not favorably disposed toward the proposed amendment to the Federal Reserve Act admitting mutual savings banks to membership in the Federal Reserve system. The women employed in the various departments of the Old Colony Trust Company of Boston have organized a women's club to be known as the Oseeteco Club with a membership of 221. WRITE FOR OUR BOOKLET "THE MANAGEment of TruST PROPERTY" ROGER PIERCE, VICE-PRESIDENT JAMES R. HOOPER, PRESIDENT ALEXANDER COCHRANE, VICE-PRESIDENT ARTHUR ADAMS. VICE-PRESIDENT ARTHUR F. THOMAS. ASSISTANT TRUST OFFICER THE OLDEST TRUST COMPANY IN BOSTON Victory Loan Outlook in New England The opening drive of the Victory Loan campaign in the New England States, which are called upon to raise $334,000,000, is most encouraging from the standpoint of popular support, especially in Boston and the larger centers. No doubt is entertained that the First Federal Reserve district will "come across" as valiantly as in prvious campaigns and the only question is as to the proportionate amount of subscriptions which the banks and trust companies may be required to carry either in their own behalf or on the instalment loan basis. The fact that the First district was the first of the twelve Federal Reserve disricts to report its quota completed under the Fourth Loan and that $1,659,931,000 Liberty bonds have been taken up in New England States for the four Government issues, dispels all uncertainty as to the success of the last Government war loan. The business and financial situation in New England is favorable to the Victory Loan campaign. March bank clearings for Boston aggregated $1,282,549,946 as compared with $1,110,357,000 for the corresponding month last year and $971,569,000 in 1917. Savings deposits continue to show marked increase while banks and trust companies generally are in good shape. Trust Estates and National Banks The trust officer of one of the Boston national banks, which was the first to apply for authority to conduct a trust department under the provisions of the Federal Reserve Act, speaks of the development of this branch of its business as follows: "I think well of the development of a trust department as a collateral branch of our business. The fees for the care of the trusts themselves, unless the business amount to a very large volume, are small, but as a means of rounding out our service to our customers and incidentally attracting banking business, I believe it to be well worth while. As you probably know, the active deposit accounts of trust estates in this locality are quite properly carried in banks other than the bank acting as trustee, the result of which practice is that we have some large trust accounts at the present time of estates for which we should prefer not to act as trustee, as we doubtless make more from the account than we should make from the trust estate." A referendum issued by the Boston Chamber of Commerce recently showed that 784 out of 870 ballots cast favored the immediate return of shipping in this country to private control. Timely Publications by Old Colony Trust Company The Old Colony Trust Company of Boston has been issuing many thousands of copies of booklets dealing with absorbing topics of the day. During March the Company's publicity department distributed 40,000 copies of its booklet containing the first text of the proposed "League of Nations." Another popular publication is that which contains a full reproduction of the famous debate at Symphony Hall on March 19th on the proposed League of Nations between Senator Henry Cabot Lodge and President A. Lawrence Lowell of Harvard University. The publicity department of the Old Colony also has in preparation a new edition of its booklet entitled "War Loans of the United States." The Manufacturers Trust Company is being organized at Haverhill, Mass., a petition for the charter having been filed recently with the Board of Bank Incorporation. Richard DeB. Boardman has been elected a member of the board of directors of the Beacon Trust Company of Boston. Alfred B. B. Mahoney was recently elected assistant treasurer of the Federal Trust Company of Boston, and Arthur Lovering was promoted to assistant secretary. CONDITION OF BOSTON TRUST COMPANIES Furnished by L. Sherman Adams, Member of Boston Stock Exchange, Specializing in Bank, Mill and Industrials Securities *Stocks must be offered to Directors before sales can be made elsewhere. Chicago Special Correspondence Trust Estates and Federal Taxes A noteworthy result of Federal taxation on incomes and supertaxes is the effect on investments of large estates, many of which are held in trust and administered by trust companies. Where estates embrace large real estate holdings the executors or trustees are pursuing a policy of disposing of such property or leaseholds and investing .proceeds in tax exempt Liberty Bonds. One instance is the Marshall Field estate, which has a real estate property account estimated at $40,000,000 and with fees aggregating $10,000,000 of that amount. These fees carry title to some of the most valuable properties located in the loop district. In negotiating these leaseholds the trustees calculated upon a return of 4 per cent., but with the levying of Federal taxes, especially on large incomes, the net return on such leaseholds against fees owned is not more than 1.32 per cent. By liquidating such holdings and investing in tax-exempt bonds the trustees are assured an income return of at least 31⁄2 per cent. While this situation has created an unusual and difficult situation in the real estate market it has rendered tax-exempt Government bonds more attractive from the standpoint of trust investments. Many millions of trust and estate funds held by trust companies in this city are now invested in Liberty Bonds and constitute an important factor in the Liberty Bond market. The policy of converting trust assets as well as employing income from large estates in Government bonds is furthermore encouraged by the fact that Federal super and income taxes will continue to run at a high rate for some years to come because of Government requirements to meet interest and provide sinking funds for cancellation of national debt. Look for Successful Flotation of Victory Loan Chicago bank and trust company officers are more sanguine as to the successful distribution of the Victory Loan. issue. De spite the liquidation of commercial accounts, the deposits of banks and trust companies continue at high mark. The March 4th combined statement of local national banks, State banks and trust companies shows aggregate Ideposits of $1,607,852,405, representing an increase of $65,500,000 since the first of the year. Loans have expanded but a fraction of one per cent. during the same period while cash resources show a decrease of 4.5 per cent. THE HE facilities of our Trust Department are at the disposal of banks and bankers for the handling of all fiduciary matters. Both active and inactive accounts solicited, 3% interest being paid on dormant deposits. Personal interviews or correspondence cordially invited. First National and First Trust and Savings The deposits. of the associated First National Bank and First Trust and. Savings Bank of Chicago are steadily climbing, the latest reports showing an aggregate of $279,549,000. The First National has resources of $261,420,080, with deposits of $206,351,628; capital $10,000,000; surplus $12,000,000 and undivided profits $2,387,199. The acceptance account is $10,883,275 and liability under letters of credit $3,563,783. The First Trust and Savings Bank has total resources of $87,804,046 and deposits of $73,197,489. Savings deposits show a substantial increase. Early in January the First Trust and Savings had over $45,000,000 savings deposits representing over 100,000 savings depositors, equal to one account for every twenty-five souls in Chicago's population, inIcluding children. Report of Big Trust Company Merger It is reported in Chicago banking circles that plans are under way for the merger of the Illinois Trust and Savings Bank and the Merchants Loan and Trust Company of Chicago, although no official statement has thus far been forthcoming. The two companies have aggregate deposits of over $200,000,000. It is also stated that a joint option has been taken on he old Grand Pacific Hotel property. |