In any of these capacities the trust company may, and often does, act in conjunction with individuals appointed to share the responsibility with it.

In probate business of all kinds the company is accountable to the court for the faithful performance of its duties, and must render complete statements, which become part of the public records. The fees charged do not exceed those of individuals acting in similar capacities, and often are much less. The laws of the several States specify the fees allowed to executors, administrators, etc.

It is common practice for a trust company to tender the services of its officers for the drawing of wills, and to act as custodian of wills until the death of the testator, when it files the will with the proper court; all these services being performed without charge in cases where the company is appointed executor.

Testamentary trusts may be created for any lawful purpose. In acting as trustee under appointment by will, the duties of trust companies do not differ materially from their duties when acting in the same capacity under appointment by private agreement. In any probate capacity it may be necessary to make advances of money in order to save the estate, and this the trust company will do if the circumstances justify it.

Trust companies are generally legal depositaries for others acting. as executors, administrators, guardians, etc., and for court funds.

The officer making such deposits with a trust company is, in most States, relieved from any responsibility in case of the loss of the funds through the failure of the trust company. He usually cannot escape this responsibility in case the funds are in his own keeping or deposited with an ordinary bank.

By the appointment of a trust company as agent or trustee during one's life, and its selection as executor and trustee under will, the trustee work of a family may be kept in the same hands from generation to generation.

INVESTMENT BUSINESS.

In the performance of its other trust work of various kinds, the trust company is often called upon to invest or reinvest trust funds in securities that are safe and that yield as great returns as are consistent with safety. In addition to such demands, and to its needs for the investment of its own funds, many companies find so great a field for dealings in high-grade securities as to justify the establishment of a bond or investment department to handle such business. The operations of this department, aside from its use for the customers of the other departments, do not as a rule differ greatly from those of a first-class bond house that deals exclusively in high-grade securities.

The business of this department touches that of the trust department at many points. Trust funds must be invested as soon as possible after

being received. Reinvestments must be made from time to time, for mortgages become due and are paid, bonds mature or are called in for redemption, and the funds thus set free must not be allowed to remain as mere deposits too long, although interest at regular savings rates is allowed on such funds during the interim. The large trust company has

excellent facilities for this service. The amount of securities that it must purchase for various interests is so great that it can buy on the best terms, and its opportunities for accurate and immediate knowledge of the securities market are of the best. Often one of its trust estates needs to dispose of securities at the same time that another needs to buy. A large mortgage is often divided among several estates.

Special forms of investment are provided by some companies, the most common form being in the way of bonds secured by real estate mortgages. The company loans on mortgages, sometimes exclusively on property located in its own city, sometimes on property in several carefully-selected cities. The amount loaned varies from forty to sixty per cent. of the appraised value of the property. The protection of title insurance and fire insurance policies is added. The company then issues a series of bonds secured by these mortgages, deposits the latter in trust with some other company, and replaces each mortgage as it matures or is paid by another mortgage for like amount, keeping the total of live mortgages always equal to or greater than the total of the series of bonds. The bonds usually bear four per cent. interest.

Instead of issuing bonds, some companies simply sell the mortgages, giving the purchaser the benefit of the company's experience and judgment in the selection of the mortgages, but assuming no responsibility for the payment of same. Such companies sometimes have allied institutions which will guarantee the payment of the mortgages for a small fee.

Some companies handle investments, for customers under investment deposit agreements. The aggregate of the deposits received for such purpose is invested in securities selected by the company's trust committee, and these are held in trust for the depositors, each owning an interest in same determined by the ratio that his deposit bears to the total sum so invested. The income is collected by the company, and the net amount after deducting its fees is remitted pro rata to the depositors at stated intervals.

Customers may purchase securities outright, as they would of any dealer. Or they may appoint the company agent for the investment of moneys, and for the care of securities and the collection of income on same. Savings depositors whose savings have accumulated to a sufficient amount frequently take advantage of the opportunity thus afforded to increase the earnings on their money.

Investments may stand in the name of the company as trustee, thus securing a privacy to their investments which many customers consider an advantage.

REAL-ESTATE BUSINESS.

Reference has already been made to the services that trust companies render in the care of real estate committed to their charge by private agreement or by will or by appointment of court. The equipment which the company has to maintain in order to do such work satisfactorily often places it in an advantageous position for undertaking a general real-estate agency business. It engages in the purchase and sale and renting of real estate, improved or unimproved, on commission. Like the other departments of its work, this business is frequently of great use to its trust department. Many trust estates have rentable property for which the company must find tenants. Sometimes trust agreements provide that a portion of the funds of the trust must be invested in real

estate.

The company is often of assistance to prospective buyers who wish to borrow money in order to complete a purchase of real estate. Its experience and reliability cause it to be called upon to act as appraiser of real property.

INSOLVENCY BUSINESS.

Under the head of insolvency business are included the duties of assignee, trustee in bankruptcy and receiver. Trust companies are, in many States, authorized to act in these capacities.

The enactment of the last National Bankruptcy Law in 1898 largely suspended the operation of the State insolvency laws, with the result that assignments have become less frequent than formerly. The duties of an assignee and of a trustee in bankruptcy are similar, and consist in securing a just distribution of the assets of an insolvent person, firm or corporation among the creditors. For this purpose the trust company assuming such duties takes charge of the property of whatever kind, if necessary converts it into cash, pays preferred claims, and distributes the remainder pro rata among the creditors, acting all the time under the direction and authority of the court having jurisdiction in the case.

The duties of a receiver may be of quite a different character. A receiver is a person or corporation appointed by a court of equity to take charge of property in dispute. Such appointment does not necessarily imply insolvency. It may be made necessary on account of dissatisfaction on the part of stockholders with the management of the company, on account of any dispute which the partners of a firm or the stockholders of a corporation cannot settle between them, on account of a serious tangle or temporary embarrassment in the affairs of the concern, as well as on account of actual insolvency. It frequently happens that the affairs of concerns become temporarily embarrassed, or that there is such friction between the managers that it becomes necessary to have a receiver to adjust matters. For such duties, as well as for those of assignee or trustee, the trust company is specially fitted, and this

class of work has been the field of some of the most successful operations of these companies. The duties require experience, good credit and large financial responsibility. Acting under the authority of the court the receiver is often required for the time being to carry on a mercantile, manufacturing or transportation business. The receivership may be cancelled if the enterprise is put upon a satisfactory basis, and the property be handed over again to its owners. Or it may be neccessary to effect a sale of the property, settle the debts, and pay the balance to the owners. Sometimes, when the circumstances warrant, large advances of money are made, thereby tiding the concern over its difficulties and reestablishing it as a profitable enterprise, or saving the assets for creditors or stockholders. Often the circumstances make advisable a readjustment of corporate indebtedness, and the trust company is peculiarly adapted to the work of formulating plans, recalling outstanding stocks or bonds and issuing new securities.

SUNDRY BUSINESS AS TRUSTEE OR AGENT FOR CORPORATIONS.

It is not too much to say that the affairs of the great corporations of the present day, as well as those of the smaller ones under existing conditions, could be carried on only with the greatest difficulty, if at all, without the aid of some such financial concerns as the trust companies.

Probably the most common function of this kind is that of acting as trustee under a trust deed or mortgage securing an issue of bonds.63 In signing the trustee's certificate on the bonds, the company certifies to the regularity of the issue, and to the genuineness of the document When necessary it sees to the refiling of the instrument, although the mortgage often specifically relieves the trustee of this responsibility. It does not guarantee the value or the payment of the bond, although the public often seems to think that it does. As a matter of fact, while the form of certification varies somewhat, it never covers more than the regularity of the issue and the genuineness of the document. Most trust companies do, however, make it a point not to authenticate bonds without having reason to believe that the undertaking represented is presumably safe. Unquestionably the best companies do, and ought to, exercise the greatest care in this matter.

In its capacity of trustee under a trust deed, the trust company is charged with the duty of acting as agent and protector of the bondholders. In case of default of the company issuing the bonds, it usually has the duty of foreclosing on the property in the interests of the holders of the securities, and of exercising numerous incidental duties connected therewith.

It is often charged with the custody and management of a sinking fund, either in connection with its duties as trustee under a trust deed, or as a separate undertaking.

63 See Chapter XVI.

It acts as fiscal or financial agent for corporations of all kindsStates, municipalities, railroads, industrial concerns. It pays bonds, coupons, interest. It may take entire charge of the disbursement of dividends and interest, attending to the publication and mailing of notices, etc.

For syndicate managers, voting trusts, etc., it issues and collects calls for installment payments, and computes and distributes to the proper parties the amounts of their participations in the profits or proceeds.

It acts as depositary of cash and securities, under varying conditions. Underwriting syndicates appoint it depositary and trustee.

It is made agent to receive subscriptions to stocks and bonds, and to deliver the same when issued.

It may receive and execute for corporations any of the trusts that have already been mentioned as undertaken for individuals under private agreement.

BUSINESS AS TRANSFER AGENT AND REGISTRAR.*

Trust companies are very generally used as transfer agent for stocks, and as registrar for stocks and bonds. In the older financial communities the value of such services has come to be so generally recognized that securities not registered by a responsible agent are looked upon with suspicion. The historical reason usually given for the adoption of the custom of having a registrar not connected with the concern issuing the stock, was the discovery some years ago in New York that a prominent railroad president had fraudulently overissued the stock of his company many hundreds of shares. The employment of a responsible registrar makes such a fraud impossible, for the essential function of the registrar is to see that not more than the authorized amount of stock is issued.

The transfer agent assumes the entire work of transferring the stock of a corporation-a duty requiring thorough knowledge of the laws governing such matters, and great care and accuracy in the performance of the details. The cancellation of a single certificate of stock and the issuance of a new certificate often involve the change in ownership of thousands of dollars' worth of property; yet it may be done by a few strokes of the pen.

It is often desirable to register bonds, either as to principal or as to interest, or both. Usually the trust company that acts as trustee under the bond issue also acts as registrar of the bonds. In some communities the same company is often appointed both transfer agent and registrar of the same stock. This is illogical, since the function of the registrar is to operate as a check upon any error or irregularity on the part of the transfer agent.

See Chapter XVI.