heavy line representing the capital, and the dotted line the sum of surplus and undivided profits. During 1899 the latter became greater than the capital, and has increased in greater ratio since then.

The average resources of the companies appear to have been greatest during the years 1881 to 1887. The writer has been unable to find any special reason for this. It might have been due to reports being received mainly from the larger institutions. During the greater part of the time the resources have averaged from three to three and a half millions. From 1899 to 1905, inclusive, the averages exceeded four millions.

STATISTICS OF TRUST COMPANIES IN THE VARIOUS STATES.

The following table gives the numbers and aggregate resources of trust companies in the various States and Territories about June 30, 1907, the figures having been compiled from "Trust Companies of the United States," whose statistics are the most complete of any published, so far as the writer knows. The list probably includes nearly all companies in existence in the United States at the date mentioned. The reader is reminded, however, that the list intends to include all institutions bearing the name of trust companies, and that many of them do a State banking business only, performing no trust functions:

It will be seen that in the number of companies Pennsylvania is far in the lead; and as a matter of fact, that State developed the trust company movement earlier and more generally than any other. In the total

resources of her companies, however, New York, which is second in the number of companies, is far ahead of any other State. The eighty-eight companies in New York report resources of $1,443,494,569.64—an average of $16,403,347 per company. The two hundred and seventytwo Pennsylvania companies show total resources of $703,960,646.67,en average of $2,588,091 per company. The big average for New York companies is, of course, due to the great companies of New York city, the largest of which at this date,-The Farmers' Loan and Trust Company, which is also the oldest trust company in the country, had resources of over ninety million dollars.

TRUST COMPANIES IN THE LARGER CITIES.

The following table gives the numbers and aggregate resources of the trust companies in the cities of the United States having a population of over 50,000, according to the census of 1900. The figures are compiled from the same source as those in the last table, and are of the date June 30, 1907:

There are eight cities in the above list, in each of which the aggregate resources of the trust companies exceed one hundred million dollars. These are, in the order of such resources, as follows:

The total resources of the trust companies in these eight cities is $2,752,373,320, or a little over 64 per cent. of the total resources of all trust companies in the country.

COMPARISON BY GROUPS OF STATES.

An idea of the general distribution of the trust company business throughout the country may be obtained by segregating the statistics by groups of States, as shown in the following table:

*

Aggregate

Resources.

575

$2,784,291,691

159

171,441,148

327

934,861,561

286

205,329,658

133

189,858,016

1480

$4,285,782,075

RECAPITULATION.

We have seen that the trust company first came into existence in the United States in 1822, with a single company, which had no competitors for eight years, and only three after fourteen years. These early companies combined the trust business with the insurance business. It was many years later before the formation of trust companies as institutions apart from insurance companies began. After the Civil War a number of companies were organized, and the total number in 1875 was not far from fifty. During the later eighties a very distinct movement for the formation of trust companies began, which was lessened in degree during the early nineties, began again with phenomenal energy about 1897, and has continued in an increasing degree since that year.

*As used in the table, the North Atlantic States comprise Maine. New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey and Pennsylvania; the South Atlantic States, Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida; the North Central States, Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and Kansas; the South Central States, Kentucky, Tennessee, Alabama, Mississippi, Louisiana, Texas, Indian Territory, Oklahoma and Arkansas; the Western States, Montana, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada, Idaho, Washington, Oregon, California and Hawaii.

During its career the trust company has undergone a radical evolution in the character of its business. To its original functions of trustee, agent, guardian, etc., have been added not only more extensive trust functions, such as executor, administrator, fiscal agent, etc., but other duties not contemplated by its originators. Most prominent among these has been the business of banking, which trust companies in many States now undertake to the same extent as do the State banks and Savings banks. The growth of corporate undertakings has brought to the trust company many added duties as representatives of such corporations in various capacities. Since the Civil War many companies have added safe-deposit departments. In some States other lines of work have been

added, including fidelity and title insurance.

The conspicuous thing about the development of the trust company is that it has been able, largely through lack of legislative restrictions and because of the general breadth of its powers, to adapt itself to the particular needs of the time and community. When a new field has opened, it has been ready and able to step into that field.

CAUSES OF THE GROWTH OF TRUST COMPANIES.

Regarding the causes of growth of trust companies, the easiest thing to say is also probably the truest-that they are found in the tendencies of our age and nation. The trust company marks not a revolution, but an evolution in our methods of handling financial matters, and we cannot understand its development without taking into account the great changes which our civilization is undergoing. There is, to begin with, the accumulation of individual wealth-the increase in the number of persons and families having large interests to care for. This is not peculiar to the United States, but the general conditions which the holder of wealth has to meet here are quite different from those of the older countries of Europe, and make it of advantage to find other means than those used in Europe for the care and investment of great estates. A still more important influence has been the tremendous increase in corporate wealth, both in number of corporations and in the amounts under their control. Here are phenomena that are peculiar to the United States, and peculiar to this age. Nothing like the huge corporations formed in recent years in the United States has ever been known before since history began. To care for these institutions some special agency was needed. The trust company proved equal to the emergency. Says one writer: "Without their (the trust companies') agency some of the transactions in modern corporate business would be both cumbersome and difficult. For the success of schemes of reorganization of railroad interests and the financing of vast industrial consolidations, their intervention has grown to be at least an invaluable convenience, if not altogether a necessity."

60 Bankers Magazine, Vol. LX, p. 272.

9960

Coincident with this tendency to great consolidations-whether as result or as cause will not be discussed here-is the growing recognition among all classes of people of the value of associated effort. Here again the trust company finds itself in harmony with the times. It is an intermediary between great enterprises and the group of individuals who constitute its customers. It takes the amounts, large or small, contributed by the latter, in trust; and the result is a large amount which it can invest in any corporate undertaking to the mutual advantage of all concerned. The political economist will not fail to see here an important service to the community. Surplus funds, useless in small amounts, are gathered together and made to do service in enterprises that benefit the whole people. At the same time, the profits go to those who furnish the capital. The trust company is emphatically an institution of the people. As one writer has pointed out, it enables us to reap most of the advantages claimed for community of ownership, without the dangers that would come with the systems proposed by dogmatists.

61

ADVANTAGES OF THE TRUST COMPANY FORM OF ORGANIZATION.

Turning to the specific causes of growth of trust companies as compared with other financial institutions, various writers have pointed out the advantages which the trust company has over its competitors.62 As compared with National banks, and with some State banks, it usually escapes with less taxation. It attracts deposits by paying interest on them. A third cause, and in the writer's opinion by far the most important one in most communities, lies in the wide range of powers which the trust company may exercise. In most States it may do all of the things that an ordinary bank may do, except issue notes; and it performs numerous duties that other banks may not undertake. These wide powers attract customers. It is a distinct convenience to most people to have all of their financial business attended to under one roof. The trust company will not only care for their banking business, but will also receive their valuables for safe-keeping, care for their property, manage their estates temporarily or permanently, make investments for them, give financial and legal advice, aid in the preparation of wills and execute the same after the decease of the customer.

61 Article on "The Trust Company," by Charles W. Stevenson, in "The Bankers' Monthly," Sept., 1903, p. 191. Articles by the same writer in "The Bankers' Monthly" for July, August and October, 1903, treat this phase of the subject at some length.

62 See Bankers Magazine, Vol. XLIII., p. 722, and Vol. LVIII., p. 505.