available data. It is an estimate of the distribution of capital among property owners in the Continental United States, as of December 31, 1921. The total number of property owners is estimated at 40,908,324; and the total aggregate capital at $281,157,000,000. The following table and graph show the distribution of capital as estimated by King: TABLE III THE ESTIMATED DISTRIBUTION OF CAPITAL AMONG PROPERTY OWNERS IN THE CONTINENTAL UNITED STATES, DECEMBER 31, 1921 It will not be concluded, therefore, that the extensive advertising campaign of trust companies is wasted so far as estates below $10,000 are concerned. It is true that it requires the education of 77.5% of the population to get the business involving estates $10,000 or smaller, and after the business is gotten it comprises only 13.5% of the total potential personal 1 King, W. I., "Wealth Distribution in the Continental United States," Journal of the American Statistical Association, Vol. 22 (June, 1927), pp. 135-53. trust business-the remaining 86.5% of the capital is in estates of larger size. But this publicity must be viewed as a matter of "joint cost." The trust company derives its great value as an institution for corporate trust services, particularly the fiscal agency and syndicate work for both public and private corporations, from the fact that it is widely known as an institu GRAPH III PERCENTAGE OF CAPITAL OF THE CONTINENTAL UNITED STATES OWNED BY SPECIFIED PROPERTY-OWNING GROUPS % of total number of property owners. 100% Under $1,000 $1,000 to $10,000 $10,000 to $50,000 $50,000 & over tion of unquestioned integrity. It is through its personal trust services very largely that it must win this reputation and goodwill. Consequently the cost of extensive advertising for personal trust accounts even of smaller size must be considered to be carried jointly by the corporate trust department and the bond trading department as well as the personal trust department. Furthermore, according to King's estimates of the distribution of capital among living property owners, 33.63% of the total capital of the United States is in the hands of individuals owning from $1,000 to $10,000. This group of individuals constitutes 76.34% of all property owners, or over 30,000,000 people; and an extensive advertising campaign would be required to cover this large field for trust company service. This group of individuals owns nearly as much capital in the aggregate as the group with individual capital over $50,000. The group of property owners ($50,000 and over) owns in the aggregate 37.25% of the total capital of the United States and constitute 1.54% of the property-owning population. An aggregate of capital of 27.85% of the total capital of the United States is owned by individuals worth from $10,000 to $50,000 who constitute 9.19% of the total property-owning population. Finally, only 1.27% of the total capital of the United States is represented by the group of individuals worth less than $1,000 who constitute 12.93% of the property-owning population. But it is to be noted that while this 1.27% of the total capital seems to be insignificant by comparison with other groups of property owners, in absolute figures it is a very considerable amount, aggregating over $3,500,000,000. There are other factors that enter into the problem of determining how small a trust fund may be profitably handled by the trust company: 1.-As the number of accounts increases, it becomes more and more difficult for the trust officer and even junior trust officer assistants to keep in personal touch with every individual estate. To the extent that the trust company official loses this personal touch, the real object of fiduciary service is defeated. 2.-Due to the methods of accounting for trust funds the mechanics of the accounting system become more and more complicated as the number of funds increases. This complexity increases at a greater rate than the total value of trust funds, as smaller and smaller trust funds are accepted. 3. To even a greater extent, the problem of investment of trust funds as a whole becomes more complicated on account of the fact that each fund is treated as a unit so far as investment policy is concerned. 4.-But the investment problem in relation to individual trust funds, taken separately, becomes simpler with the smaller estates due to the decrease in tax complications, possible diversification of investment, etc. 5.-There is a large element of fixed costs in the organization of the personal trust service. There must be experts on questions of investment, research experts, tax experts, etc., whose salaries have to be paid regardless of the number of trust funds handled. To the extent that an additional number of small trust funds contributes to these fixed costs, they are profitable because they reduce the proportion of fixed costs that has to be charged to the administration of large estates. Thus even though the administration of small estates yields no net profit, it makes possible a larger net profit from the administration of large estates. 6.-Practically the only way in which large estates are obtained in personal trust service is through personal solicitation by a highly paid trust official. On the average, the holder of a smaller estate is less likely to have knowledge of financial affairs and therefore his confidence may be won by a less costly interview, once the prospective client has been prepared by systematic written publicity material. As has been pointed out the cost of this printed publicity should be considered to be carried at least in part by other departments of service. 7. In its capacity as conservator of private property, and as stabilizer of enterprise, one of the most effective ways in which it can accomplish those ends is by the thorough education of that 77.5% of the population which has only 13.5% of the capital of the country. If such people regard the activities of trust companies as something of a mystery, the social and political services of the trust company for the rich property-owner will be looked upon with suspicion. The old social outcry against the "money trust," and costly public investigations result from such suspicion, and sympathy for inheritance tax reduction is lost. From the point of view of a healthy development of the trust company in a democratic society, it should avoid so far as possible the growth of the notion that the trust company is "the rich man's bank." 8.-The small estate owner is a potential customer because he is a "comer." A great field of new business opens up before trust companies which appeal not only to the man who "has arrived," but which will do teamwork with the man who is seeking ways to organize his investments and to create an estate. A trust company that makes it a policy to encourage those who are at the threshold of achievement, or well on their way, will have, ten years from now, a valuable business.1 1 1 Cf. Blodgett, Harvey A., "The Trust Company as an Estate Builder," Trust Companies, Vol. 32 (Feb., 1921), pp. 157–8. Thus, while the distribution of capital would seem to indicate that the field for personal trust service could profitably include only large estates, other factors must be considered. Of these factors, listed above, the first three are unfavorable to smaller accounts, whereas the last five are favorable to smaller accounts. The discussion of the possible limits to the field of personal trust services may be concluded by presenting the results of Question I, of the Trust Company Questionnaire of 1925. This question appeared on the questionnaire in the following form: Question I-Size of smallest acceptable and of smallest desirable trust fund? (Kindly place check mark in columns (1) and (2) opposite sums which answer the two questions for your company.) How small a trust fund are you How small a trust fund do you Amount $ 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 5,000 The replies to the question have been summarized in two tables: Table IV-Smallest Acceptable Trust Funds, and Table V-Smallest Desirable Trust Funds. In each case, the summary is subdivided into four parts to show the difference, if any, between the characteristic reply of small trust companies and large trust companies. For this purpose the replies are divided as follows: (1) Replies of trust companies with assets |