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In August, 1915, the membership of the American Bankers' Association passed the 15,000-mark. The increase in membership is significant of the advantages of co-operation and the benefits that result from it. There has been a constant increase in the efficiency of the service the association renders its members and a constant demand for service of increasing efficiency. Every department of the organization and every section found new demands from members and new opportunities. some extent this was due to the changes incident to the operation of the Federal Reserve Act and the departure from banking rules and laws long established. New problems have been constantly presented for discussion and the majority of them have had a vital influence on the conduct of the business of banking in all its branches. Much of the work incident to these changes has fallen to the sections of the association. The discussion of particular problems falls within the scope of sectional activity rather than within the field of general association operations.

Clearing House Section Activities

The Clearing House Section which has heretofore dealt with banking questions of a rather technical nature was called upon to consider the matter of intra-district and inter-district check collections by the Federal Reserve banks and, so far as these plans have been developed, much credit was due to the work of the secretary of the Section. There is apparently much more work to do in this direction. The plan is so far from a success in relation to inter-district collections that the Federal Reserve Board is much concerned. It has asked an opinion of the Attorney-General of the United States as to its power to make membership in this clearing organization and contributions to the gold settlement fund compulsory. The AttorneyGeneral has not yet rendered this opinion and there is no assurance that compulsory membership will make the plan more successful or have any influence except to antagonize many banks.

Savings Banks. and Federal Reserve System

The Savings Bank Section has viewed with much solicitude the operations of the Federal Reserve system and has considered the relations of savings banks thereto. At first sight it might be considered that mutual savings banks, having no capital stock, can have no particular relations with the Federal Reserve system. It must be remembered, however, that if it is a correct assumption that the financial stability of a nation is built up on a foundation of gold and public confidence, any plan which provides only for the mobilization and economical use of gold stocks has prescribed only a half-remedy. Public confidence, considered a matter of equal importance, is in the keeping of the savings banks. Savings banks obliged to invest their funds in non-liquid securities. However ingenious a savings bank manager may be in arranging the maturities of the securities held by his bank it would be little short of a miracle if he would be able to secure through instant conversion of his assets enough cash to meet unusual demands.

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The laws of the States, recognizing this situation, permit savings banks to exact from their depositors notice of intention to withdraw funds. This remedy is considered unsatisfactory so far as the upholding of public confidence is concerned. In fact, recourse to such notices by the savings banks has a tendency to impair confidence. It has been suggested that the savings banks should be given by law some relation to the Federal Reserve system which would enable them to secure currency when there is an unusual demand for it. The Aldrich-Vreeland Act permitted the issuance of currency against certain classes of bonds in which savings banks deal. Under the Federal Reserve Act currency can be secured only through the process of re-discounting commercial paper of a kind in which savings banks do not customarily deal and to deal in which is, in many States, forbidden to them by law. In the event of an emergency, therefore, the savings banks which are the guardians of confi

dence could have recourse only to the notices permitted by law. It is a maxim of savings banking that when depositors can secure their money they do not want it. An amendment to the reserve Act which would provide a means whereby savings banks could secure currency seems to be necessary for the psychological effect it would have. It is the belief of savings bank men that the Federal Reserve Act makes entirely inadequate provision for the safeguarding of public confidence.

The National Thrift Campaign

The other matter with which the Savings Bank Section has been chiefly concerned during the past year was the preparation of the campaign for thrift. This campaign which is to continue throughout 1916 has been undertaken as the means of celebrating the centenary of the establishment of the first savings bank in the United States. Much of the active work, which is designed to inculcate habits of thrift and savings in the people, will be done by the various chapters of the American Institute of Banking. The newspapers have shown themselves more than ready to co-operate in this work and to aid in many ways both by the publication of thrift material and active assistance in the establishment of school savings banks, to bring home to the people the bene; fits to them and to the country from the ac1 cumulation of funds in savings banks.

Important Matters Engage Trust Company Section

The Trust Company Section has been particularly interested in the test suits which were brought by arrangement of individual trust companies, to determine the constitutionality of Section 11 (k) of the Federal Reserve Act. In Illinois the Supreme Court has already decided that this provision of the Reserve Act contravenes the laws of that State. That suit, however, was not brought by the trust companies. It was begun by a National bank which had been authorized to do a trust company business by the Federal Reserve Board. It was necessary that this bank have a certification of authority to do such business from the State Auditor. On the advice of the AttorneyGeneral of the State this official refused to give the certification and a mandamus was sought to compel such action. The Supreme Court upheld the State official. It is understood that the case will be appealed to the Supreme Court of the United States and, pending a decision from that tribunal, National banks in Illinois will not exercise trust company functions.

The suit attacking the constitutionality of Section 1 (k) in Michigan is of greater interest. It was brought by the Attorney-General of that State on the relation of the five

trust companies of Michigan. Under the laws of Michigan State banks are not allowed to perform trust functions and trust companies are forbidden to do a banking business. A condition which permitted National banks to do that which is forbidden to the State banks would be an anomalous one in Michigan. In that State the control of the property of decedents has always been jealously guarded and permission for organizations having National charters and beyond the control of State laws to exercise trust functions in regard to such estates would be an assault on the spirit of Michigan law. There are, however, many lawyers who believe that Section 11 (k) is not unconstitutional and it is likely that it will be some time before the question at issue is determined by the court of last resort.

Work of the New National Bank Section Nothing has been of greater interest or importance in the activities of the American Bankers' Association than the authorization and organization of a National Bank Section. Preliminary steps to the organization of such a section were taken at the Seattle convention in September and completed at a meeting of the Executive Committee in New York in November. Cards for the enrollment in this section were sent to eligible National banks on December 18th and before January 1st, of the 5,700 National bank members of the association, nearly 5,000 had enrolled.

The Executive Committee of the National Bank Section met with the Executive Committee of the Conference of Governors of Reserve banks in Washington on December 14th and will meet again with the full Conference of Governors on January 19th. Members of the Federal Reserve Board and the governors of the Reserve banks expressed themselves as greatly pleased that the National bankers have now a representative organization and a committee with which they can consult. At the meeting in Washington the operations of the Reserve banks and possible amendments to the reserve Act were discussed at length. There was particular interest in future payments of reserve funds under the Act, changes in capital requirements, domestic acceptances, interlocking directorates and branches for National banks. Much emphasis was laid on the fact that the reserve funds now held by the twelve Reserve banks are ample for any conceivable emergency. As to capital requirements it was contended that if the subscribed capital were returned to the banks and converted into a liability the resources of the Federal Reserve banks would still be approximately $400,000,000. Experience seems to have shown that the resources to this extent are sufficient in view of the fact that the

Because of the eminent and distinctive position held by the Merchants Loan & Trust Company as the oldest existing bank in the city of Chicago, and as one of the senior and most successful trust companies in the United States, unusual interest attaches to recent announcements of proposed changes in official manage

ment.

After completing 32 years of continuous service with the Merchants Loan & Trust Company, administering its affairs as president since 1898, Mr. Orson Smith advised stockholders at a recent meeting that he had decided to relinquish the active duties of that office. In order to retain his counsel and co-operation in the shaping of administrative policies, action was deferred until February 1st to effect a change in the by-laws for the purpose of creating the position of chairman of the board to which Mr. Smith will be elected. At the same time Mr. Edmund D. Hulbert, who came to the company in 1895 as second vice-president, and was elected first vice-president and a director in 1898, will succeed Mr. Smith as president. The presidency of the Merchants Loan & Trust Company carries with it a rare distinction. It is indeed inspiring to trace the history of this strong trust company since the early pioneer days of 1857 when Chicago was practically a frontier city; when "wild-cat" and irresponsible banking was in its zenith and there were mutterings of the great crisis which brought on the Civil War. The organization of the Merchants Loan & Trust Company at that early and somewhat nebulous period in the history of American banking represented the efforts of the sound business men and financiers of Chicago to create an institution that should offer responsible and scientific service, growing business, mercantile and manufacturing interests. Like a rock this trust company withstood the tragic years of civil warfare. It emerged from the Chicago fire in 1871 with added prestige, and recurrent financial crises failed to hamper its remarkable growth. The traditions and sound policies of the institution were rigidly observed by the men of sterling character and high ability who served as executive officers and directors.. Its success w2s

due in a large measure to the type of men who served as presidents, from the time of incorporation, including such names as J. H. Dunham, Henry Farnam, Solomon A. Smith, John Tyrrell, J. W. Doane and Orson Smith:

The election of Mr. Edmund D. Hulbert to the office of president will be especially gratifying to the readers of TRUST COMPANIES Magazine to whom he is known, not only because of his splendid qualities as a trust company executive, but also because of his masterful grasp of current banking and economic affairs as shown in his public addresses and in articles which this publication has been privileged to present. No banker has expressed his views with such frank courage and adherence to his own convictions regarding the reform of our National banking and currency system as has Mr. Hulbert.

Mr. Hulbert will enter upon his duties as president of the Merchants Loan & Trust Company at the prime age of 57. He has been in the banking business continuously since he started as a messenger for the Hurlbut National Bank of Winsted, Conn., at the age of 17. Mr. Hulbert made only two changes since that time. From Winsted he went to Winona, Minn., in 1877, where he entered the employ of the First National Bank. He was cashier of that bank when he left in 1895 to become second vice-president of the Merchants Loan & Trust Company of Chicago. Mr. Hulbert has also served as a member of the Executive Committee of the Trust Company Section and maintains a close interest in the general advancement of trust company affairs.

Although Mr. Orson Smith will be relieved of the more active administrative duties, he will continue to devote much of his time to the Merchants Loan & Trust Company as chairman of the board. His name has been prominently associated with the development of banking and trust company affairs in Chicago. He became associated with the Merchants Loan & Trust Company some thirty years ago having occupied the position as cashier of the Corn Exchange National Bank. He was elected second vicepresident in 1884, first vice-president in 1892