PREFACE

Economic literature is amply supplied with works in the field of banking and currency, but for some reason little has been done by the economist to describe the services of the trust department of the modern bank or trust company, and to interpret them in the light of general economic principles.

The task of recounting the contemporary developments in this particular branch of financial service has been left largely to a few industrious trust company officials whose time and energy necessarily must be devoted principally to active performance in the institution they are describing and who have little opportunity to view broadly from the aspect of economic history and economic principles those activities with which they have such intimate daily contact. Thus there has been related, by those best suited to the task, the details concerning the operation of a trust department of the modern bank or trust company. Outstanding among such contributions in the order of their appearance are:

Clay Herrick's Trust Companies, Their Organization, Growth and Management which appeared in a series of articles in the New York Bankers' Magazine, Vols. 68–75 (Jan., 1904-Dec., 1907); and was published in book form by the Bankers' Publishing Company in 1909.

William McChesney Martin's Modern Banking and Trust Company Methods which appeared in a series of articles in the Banking Law Journal, Volumes 28-35, 1912-18. This contains excellent descriptions of trust services performed and has also valuable historical material relating to trust companies.

Clay Herrick's Trust Departments in Banks and Trust Companies, McGraw-Hill Book Company, 1925, which largely supersedes his earlier work and presents in detail, well illustrated by forms and description of procedure, the practical operation of the trust department.

A valuable treatise in two volumes has been written upon the legal phases of the subject. This is Wills, Estates and Trusts, by Conyngton, Knapp and Sturgis. Another such

work is Sear's Trust Company Law. The banking services of trust companies have been treated in The Modern Trust Company by Kirkbride, Sterrett & Willis. The publications of the National Monetary Commission of 1910 contain a monograph on State Banks and Trust Companies by George E. Barnett, in which the principal theme is state and federal supervision of banking.

The only serious effort to relate the history of trust companies in the United States is that contained in Edward Ten Broeck Perine's fascinating book on The Story of the Trust Companies (1916), although some historical material is contained in a number of the books already mentioned. Valuable historical references and suggestions are found in Ernest Heaton's The Trust Company Idea and its Development (1904) and in W. A. Preston's Etude sur les Trusts et Trustees (1904). But the best piece of interpretative historical material on the subject is contained in a monograph written by George Cator and published in 1902 in the Johns Hopkins' University Studies.

Recently there have appeared several books in the field covering special phases of trust company services. These have been written by outstanding authorities among trust company officials. The most recent, and perhaps the best, are:

Gilbert T. Stephenson's Living Trusts which is not only an excellent exposition of practical and legal procedure in relation to the personal trust business, but is richly supplied with suggestions as to the social significance of such services.

R. G. Page and P. G. Gates, in The Work of Corporate Trust Departments describe, only as those actually "in the game" could, the details of operations of a corporate fiduciary in corporate trust and agency business.

Very largely as a result of the activities of the Trust Company Division of the American Bankers Association, which was organized in 1896, attention has been focused upon the subject so that the financial journals since that time contain numerous articles on subjects relating to corporate fiduciaries. In 1904 the Trust Companies Magazine began publication. This is the "trade journal" of the trust institution and publishes articles dealing principally with trust company matters,

inspired in many cases by the discussions at the conferences of the Trust Company Division of the American Bankers Association and during the past eight years by the proceedings of the Mid-winter Trust Conferences held in New York City each year, as well as other trust company regional conferences held at various intervals throughout the country. The magazine is also to be credited with much pioneer editorial work in the field. These articles constitute a mass of raw material, particularly relating to procedure and practical operation of services, upon which to base the preparation of a formal treatise of the subject.

Thoroughly digested historical material is conspicuous by its absence, although many suggestive historical articles are to be found. For the most part the historical data used in the book here presented were obtained from primary sources which apparently had not yet been examined by the chroniclers of trust company development.

The objects of this book are threefold, and the book is divided into three parts, as follows:

Part I.-This part contains a description of the fiduciary functions of the trust department of a modern trust company or bank, and considers the economic, social, and political aspects of such services.

Part II.-The second part is a history of corporate fiduciaries in the United States, preceded by a brief introductory statement of the history of trusteeship from earliest times.

Part III.-The third part contains a few chapters on the current problems of trust company operation and development, largely based upon the returns from a questionnaire sent out in 1925 to trust departments of banks and trust companies.

The attempt is made to apply economic principles to the interpretation of the functions performed by the trust company, and to analyze the development of the trust company in the light of the general economic history of the United States. The economic terminology used in the book follows that of F. A. Fetter's Economic Principles (1915); for example, capital refers to so many dollars' worth of property, including land.

The bibliography is intended to be an important feature of the book, and is presented in two parts: the first part is a gen

eral bibliography of references and is arranged alphabetically by authors as is customary. The second part is a bibliography of periodical literature and is arranged by subjects, with the items under each subject put in chronological order. Thus where historical statements of fact are made they can be traced readily by referring to the bibliography of periodical literature under the subject discussed. Simply by reading the bibliography under a given subject a brief history of that subject may be visualized.

In the construction of the trust company questionnaire used for Part III, which is summarized in Chapter XV (infra, pp. 385-90), the author owes a debt of gratitude to many trust company officials of New York City, to Mr. Dempsey of Cowan, Dempsey & Dengler, and others; but particularly to the Trust Company Division of the American Bankers Association. For the necessary financing of the questionnaire investigation, the writer is indebted to the firm of Cowan, Dempsey & Dengler and to the Guardian Trust Company of Detroit, Michigan.

It would require a good-sized book to relate all of the acknowledgments due. Thus it would have been impossible to construct the third part of the book without the generous and courteous coöperation of all of the trust companies who replied to the questionnaires; more than that, a number of the older trust companies were asked to go much further than the questionnaire required, in the search for data from their old records. This was cheerfully done, no doubt at considerable expense; and for all of this the writer is indebted in the preparation of the book. Such favors were particularly graciously performed by the officials of the Girard Trust Company of Philadelphia, the Farmers' Loan & Trust Company of New York City, the Pennsylvania Company for the Insurance of Lives and Granting Annuities of Philadelphia, the Bank of New York & Trust Company, the Central Union Trust Company of New York City, and the Massachusetts Hospital Life Insurance Company of Boston. The officials of the Guaranty Trust Company of New York permitted the writer to spend several weeks at the institution, going through the various departments and studying department and division operation in the performance of fiduciary services of the institution.

To those whose generosity was so great and whose scientific spirit was so active as to lead them to read the entire manuscript and at the same time make valuable criticisms, the writer is deeply grateful. These men are Gilbert T. Stephenson of the Wachovia Bank & Trust Company and author of Living Trusts, Professor Frank H. Dixon and Professor Frank A. Fetter of Princeton University, and Professor R. C. McCrea of Columbia University. Professor E. S. Corwin of Princeton University very kindly read and criticized Chapter X on The History of Trusteeship, and others are contributors of valuable aid and advice in the building up of various parts of the text. Gratitude is likewise due to numerous librarians in State Libraries, The Library of Congress, and Historical Societies, particularly in the older states, for the many inquiries which they have patiently answered and for references which they have given. Without the facilities presented by the New York City Library and the Princeton University Library, the task would have been impossible to perform.

PRINCETON,

January, 1928.

J. G. S.