and the respondents were asked to indicate any additional departments of service. This question was checked by another question (in another part of the questionnaire) asking the trust company to name special services which it regarded as original with it. A compilation of the returns on these questions may be taken to present the aggregate of trust company services in the United States, and is presented below, arranged along the plan of a departmental classification: 1.-Corporate Trust Department a.-Trustee under corporate mortgage. b. Transfer agent and registrar of stock. e.-Depositary for subscriptions to stock and bond issues. g.-Agent for disbursing dividends or bond interest. h.-Registrar of corporation collateral notes. i.-Trustee for collateral securities of bond issues. j.-Conducting a business pending reorganization. k.-Depositary under reorganization plans. 1.-Depositary for protective committee in foreclosure proceedings of bondholders. m.-Financing of new enterprises. n.-Escrows under a variety of circumstances. 2.-Personal Trust Department A. Voluntary or Living Trusts a.-Caring for investments in securities or other property (custodian accounts). b. Caring for real estate, buying, selling, renting, repairing, etc. c. Real estate trusts-holding title to allotment property pending payment in full. d. Receivership and bankruptcy. e.-Escrows under a variety of circumstances. f.-Financial secretary for individuals, corporations, clubs, associations, etc. ad Jefore h.-Trust funds for distribution of income of an estate nies, g. The insurance trust. death, e. g., to married children. i.-Trust funds for the application of income to support or education of relatives where direct giving would be inconvenient. j.-Trust funds-income to trustor. k.-Trustee in participating mortgages. 1. Cemetery trusteeship. m.-Registration and identification of trust deeds and notes. n.-Trustee for funds for any lawful purpose. B. Testamentary Trusts a.-Executor or coexecutor under will. b.-Trustee under will or by appointment of the court. c.-Agent for executors, or trustees, etc. d.-Guardian of property of an infant. e.-Committee for a lunatic, incompetent or habitual drunkard. 3.-The Community Trust 4.-The Investment Trust 5.-The Bond Department (including investment information service) or Investment Department 6.-Safe Deposit Department 7.-Real Estate Department (performing some of the services already listed above, but in separate department) 8.-Certificate of Deposit Department 9.-Real Estate Loan Department (sometimes maintained separately) 10.-Title Guaranty Department (conveyancer and title guaranty) 11.-Fidelity Insurance Department (for bonded officials, employees, etc.) 12.-Life Insurance Department (sometimes a separate department also for Life Insurance Loans) 13.-Fire Insurance Department (a few companies reported fire insurance business) 14. Savings Bank Department (includes numerous club plans, Christmas savings, travel, school, vacation savings, etc.) 15.-Information Department 16.-Commercial Banking Department 17.-Foreign Banking Department 18.-Other miscellaneous services reported a.-Women's bank. b.-Banking by mail. d.-Abstracts of title. e.-Guarantors of mortgages. No single trust company has all of these departments of service. Some of them do no banking business and thus do not have banking departments. A few of them have no bond departments. Others have no title insurance, fidelity insurance, life insurance or safe deposit business and thus do not have those departments of service. No doubt in the cases of most of the trust companies (as the characteristic organization plan has indicated) the scope of services is simpler than the above aggregate of trust company services; but in most states it would be legally possible to develop practically all of them in a single institution. Administrative Departments. In addition to the service departments which have been listed above, every trust company large enough to be organized into departments at all has one or even several non-service departments as a part of the organization. These may be broadly classified as pre-service departments, which includes such departments as "The New Business Department," and "The Publicity Department,' "Public Relations Department"; the general administrative departments including such departments as "The Accounting Department" or the "Accounting Divisions" of the separate departments, "The Stenographic Department" and the stenographic divisions of separate departments, and "The Employment Department" or "Bureau," or Personnel Department, etc.; and post-service departments such as "The Auditing Department." All of these may be broadly referred to as Administrative Departments. A Suggested Method of Departmental Organization. Assuming a proper administrative organization of the trust company, the most efficient method of organization for the fiduciary department, or the subdivisions of that department if any, is as follows: 1 'Through the generous hospitality of several New York City trust companies, especially The Guaranty Trust Company, the writer was enabled to make a study of the internal organization of the trust company. The information obtained by visits to such institutions is used as the basis for the generalizations made in this chapter. It is not intended to particularize as to the special type of organization of one institution, but credit is due to the Guaranty Trust Company of New York for the principle involved in the subdivision into executive, research, and operating units. 1.-The executive unit. This unit consists of the officer or officers of the department, or the subdivision of the department. It passes upon all questions of policy, and is responsible for everything done in the department or subdivision. In a large institution the executive unit would probably consist of a vice-president and one or more junior officers. Needless to say the greater responsibility must fall upon the senior officers. 2.-The research unit. This unit consists of a group of expert analysts to study documents in connection with the type of business handled by the department-indentures, trust deeds, etc., to determine just what is to be done, and instructs an operating unit how to act. All instructions of the research unit except routine matters are passed upon and approved by the executive unit. 3.-The operating unit. This unit consists of the clerks, accountants, etc., necessary to carry out the instructions of the research unit and the executive unit in taking care of the business of the department. In the case of a large trust company such as the Guaranty Trust Company of New York, each of these units may be found to consist of several divisions. Thus in the Personal Trust Division of the Fiduciary Department of the Guaranty Trust Company, the executive unit consists of a number of senior officers each of whom is the head of an important section of the division. The research unit consists of a number of sections, as follows: The estate section. The trust section. The real estate section. The income tax section. and the operating unit of this department of the company consists of a number of divisions or sections, too, as follows: The securities and collection section. The payments section. The accounting and statement section. The filing section. The stenographic and typing section. The bookkeeping section. As a new trust company expands it seems that it would be better to subdivide itself into these three types of units: namely, executive, research, and operating units, rather than the old em pirical subdivision into new service departments. The research unit could be so organized as to serve as instructor to several operating units, as could the executive unit also. Then with the necessary development of larger service departments the research unit could be split up so that there would be a separate one for each operating unit to the extent that specialization becomes appropriate under the new conditions. Such a method of subdivision could be made on a more permanent basis because it can readily be adapted to the needs for new types of services with changes in the conditions of the community served without necessitating a reorganization of all the departments of the trust company. It might be described as developing the trust company, whereas the other method is just letting it grow. Functional Classification of Services. It has been noted that the organization classification of services is inadequate for purposes of analysis and textual treatment, because of the lack of uniformity in terminology and the failure of such classifications to establish definite lines of division between various types of services, and indeed even properly to distinguish the types of services at all. Before a satisfactory classification can be made it is necessary to establish the basis of classification, and in the case of the trust company the best basis seems to be the function performed by the company; in other words, what is needed is a functional classification of trust company services. This may be regarded as the primary classification. A secondary or crossclassification may be logically made, based upon the type of client for whom the service is performed. This second classification is a simple one, there being three groups: 1 (1) Services performed for individuals. (2) Services performed for corporations (includes municipalities). (3) Services performed for either individuals or corporations. Before proceeding to make the primary classification, it is necessary to decide upon the meaning of terms used, and inas 1 This is the principle of classification used by Sears, Trust Company Law, (1917) pp. 5-6. The same principle is partially realized by others. Cf. Westerfield, Ray B., Banking Principles and Practice, Vol. I, p. 192; and Langston, L. H., Practical Bank Operation, (1921) Vol. II, pp. 489–90. |