(6) Broad scope of financial services available at the trust company,—-Realization of value inherent in trust services by business which has in turn stimulated trust companies to plan better and more complete service. Breadth of services rendered. Extensive services rendered. Wide variety of services. The diversified services rendered by trust companies including in part not only usual banking facilities, but services of trust department, real estate department, investments, safe deposit, etc. Adaptability to handle any banking business and willingness to serve. The complexity of business life has made it necessary to find some organization which can handle a great many problems which are outside of the field of the ordinary commercial bank. In other words, the trust company has been found to be of growing importance in business economics. (7) Advantages of trust company over its competitors for fiduciary busi ness, Desire on the part of clients for organized financial responsibility. The superiority of corporate management as compared to individuals. Failure of individuals in fiduciary capacity. Continued existence, skilled service, expert knowledge as to investments, taxes, death duties, etc. Innumerable difficulties encountered by individual executors, trustees, etc., on account of tax laws. Uncertainty of individual management and superiority of corporate supervision. General need for non-dying executors, administrators, guardians, trustees, receivers, agents, etc. Superiority of the system in accomplishing the desired ends. Realization on the part of experienced business men that a corporation can function much better than an individual as executor, guardian or trustee. Desire of individuals to place business in hands of competent, experienced and responsible institutions. People understand the desirability of avoiding changes of trusteeships owing to death of individuals as trustees. Unfortunate experiences with individual trustees. The trust company is better qualified now than attorneys to handle tax matters, inheritance, estate, and income; and to handle the preparation of accounts. Formerly the executor (an individual) was a figurehead, the attorney did all the work. The advantages of trust company management over individual in fiduciary capacities. Conservative investing and permanent character of such fiduciary service. Small charge in proportion to service rendered. Uncertainty of individual judgment. (8) Perfection of internal organization of the trust company,— Accuracy. Trained investment managers. Personal solicitation by officials. Permanent, secure, and efficient accounting. The splendid manner in which companies operate. Institutions of modern equipment. Personal acquaintance with officers by customers. Standardization of methods. (9) Reputation of trust companies for service at low cost,— A large number of replies specified "reputation for service" or some equivalent term. Other ways of saying the same thing were: Excellent service rendered. Record of safety. Service and saving to the public. Low cost of having property cared for by trust company. Reasonable charges. Efficiency, performance, reliability, economy. The large fees charged by lawyers. Necessity for such service, permanence, efficiency, economy, impartiality. Good returns on trust investments. Good services and satisfied customers. (10) Coöperation of attorneys, and other affiliations,— Coöperation of lawyers. Need for conservation of insurance estates. We believe that coöperation with the attorneys and prompt and careful services have been our greatest assets. Change in life insurance from lump sum payment to monthly checks. The reference of all legal questions to reliable attorneys. The reluctance of good lawyers to act as guardians and trustees. There were a number of other factors of an artificial nature or indicating special conditions, such as the payment of interest on deposits, severity of national banking law, etc. Numerous statements of such a general nature as to be impossible to classify, such as "necessity," "inherent value," of the service, etc., were made. One reply, "The need for funds borrowed on real estate credit" is rather suggestive of an underlying economic force manifested by an ever-increasing call for long-time funds with the progress of modern business methods. This could be listed under No. 6-Broad scope of financial services available at the trust company. But it might better be conceived of as a broader and more fundamental factor than any of those mentioned above. Just as the commercial bank is looked upon as a merchandiser of short-term credit; so, more and more, the trust company is becoming the merchandiser of long-time credit. The place the trust company fills in modern economic society as a merchandiser of long-time credit has been discussed in Chapter IX, under the heading "Stabilizer of investment." This broad service fits in with the other economic functions of the trust company-conservator of private property and stabilizer of industrial finance. Thus may be listed the forces which have caused rapid trust company development in the past; and no doubt they will continue to stimulate future growth as well. CHAPTER XVII THE INVESTMENT OF TRUST FUNDS BY CORPORATE FIDUCIARIES An ever-present problem of the fiduciary is the investment of the funds intrusted to its care. In order to get a picture of how corporate fiduciaries of the United States are handling this problem, the second question of the questionnaire of 1925 was asked in the following form: Question II-How are trust funds invested? (Kindly fill in the following table by approximate percentage figures or, if this is too burdensome, use fractions, such as 1/3, 1/5, 14 etc.) Note-If your records are so kept that it would be impossible to answer this question by actual calculated percentage figures, kindly fill in approximate or average percentage figures. The question was asked in such a way as to find out, if possible, what proportion of trust funds is invested in government bonds, what proportion in mortgages, etc. The question was, "The proportion or part of total discretionary (legal) trust funds invested in-"; followed by a list of various types of investment. Types of Investment Selected by Corporate Fiduciaries. Many of the trust companies and national banks found it impossible to answer this question in the way requested; but replied by merely checking those in which some trust funds are invested, not attempting to indicate what proportion of the total of trust funds are so invested. For this reason a summary is presented here in Table I, showing the "number of votes" received by each type of security (a) for discretionary trust fund investments, and (b) for legal trust fund investments. TABLE I TYPES OF TRUST FUND INVESTMENTS MADE BY CORPORATE FIDUCIARIES The number of times that specified types of securities or investments are mentioned for trust funds by national banks and trust companies In addition to those mentioned in the table, the following were indicated as trust fund investment by various corporate fiduciaries: |