company under the name of the Farmers' Fire Insurance and Loan Company, as well for the purpose of accommodating the citizens of the State residing in the country with loans on the security of their property (which cannot now be obtained without great difficulty) as to insure their buildings and effects, and those of other persons, by loss from fire, and also for such other useful purposes as are hereafter specified, have prayed the Legislature for a charter of incorporation, to be located in the City of New York, which it is reasonable to grant." The company had an authorized capital of $1,500,000, but was permitted to begin with $500,000. It was empowered to loan upon farms, houses, factories or real estate; but mortgaged property taken on foreclosure could not be held longer than five years, on penalty of being forfeited to the people of the State. The company was authorized to grant annuities; to insure all kinds of property against loss or damage by fire; to purchase and hold any stock or foreign debt, or the stock of any corporation. It was especially provided that nothing in the act should be so construed as to authorize the said corporation to receive any deposit or deposits, or to discount any promissory note, bond, due-bill, draft or bill of exchange, "nor shall it be so construed as to allow any banking privileges or business whatever."

Two months later-April 17, 1822-the same Legislature passed another act providing "That the said corporation shall also have authority to receive and take by deed or devise any effects and property, both real and personal, which may be left or conveyed to them in trust; and to assume, perform and execute any trust which has been or which may be created or declared by any deed or devise as aforesaid; and the said corporation are authorized to receive, take, possess, and stand seized of, and to execute any and all such trust or trusts in their corporate capacity and name, in the same manner and to the same extent as trustee or trustees might or could lawfully do, and no further."

There appears no reason to question the statement of the company that this was the earliest bestowal of such powers upon any corporation in the United States. It will be noticed that the powers granted are quite as broad as those now usually given to cover trustee work, though the language is more concise and less explicit than that contained in most modern charters. That the growth of this part of the company's business was rapid is shown by the fact that the insurance business, which was looked upon at first as its chief field of operations, soon began to be neglected in favor of the trust business. This line of work, once established, grew steadily, and it was finally found advisable to give up the insurance business altogether. In 1836 the name was changed to the Farmers' Loan and Trust Company.

Eight years later-in 1830--another company was established in

Assn., 1899, pp. 252-3, paper by Francis S. Bangs. That the company performed trust functions almost from the beginning is also attested by a letter from the Secretary of the company.

New York city with practically the same powers. This was the New York Life Insurance and Trust Company, whose capital was one million dollars, and which was empowered to write insurance on lives, and to execute trusts of every description. For many years after its incorporation life insurance was the most important branch of its business, and in 1903 it still made a feature of annuities. This company "has never had accounts such as are carried by commercial or savings banks, its deposits in trust being largely moneys of executors, trustees, associations, etc." It declines all corporation business, and administers only private

trusts.

It was not long before the trust business took root and vigorously developed in New York's old rival, Philadelphia. Strangely enough, however, the suggestion of taking up the new line of business came not from New York, but from the far East. This fact would seem to establish that, however successful the experiment may have seemed to the Farmers' Fire Insurance and Loan Company, it attracted comparatively little attention among other concerns in New York, and almost none ninety miles away, in Philadelphia.

Gathered in the Merchants' Coffee House in Philadelphia-which took the place of the business men's club of our day-as early as December, 1809, a group of prominent philanthropists and financiers of the Quaker City had determined upon the incorporation of a company for the insurance of lives and the granting of annuities. Three years later, on March 10, 1812, the Governor approved the charter, which had been granted by the Legislature only after much opposition, and later in the same month the company began business with an authorized capital of $500,000. It prospered sufficiently to declare its first dividend of four per cent. on the capital paid in, on July 3, 1815. Its business during these early years, and up to 1836, was correctly described by the title of the company-a title which it still retains-the Pennsylvania Company for Insurance on Lives and Granting Annuities. In 1829 the attention of the officers of the company was attracted to a new line of business. "The great success of what in India at this time were called agency houses was irresistibly drawing the attention of financiers toward them. These were concerns organized to transact business for trustees or individuals, to receive moneys on deposit and to administer estates, and the advancement of the Pennsylvania Company in its chosen work induced its officers to desire an expansion in this new direction.” On February 4, 1830, the directors appointed a committee to report on the advisability of entering on "the receipt of money from persons, and, in consideration thereof, carrying out or executing such trusts as the persons giving the money should designate." The committee reported in favor of the project, the attorneys to whom was referred the legality of the undertaking gave their

4 Letter from the President of the company.

5 "Sketch of the Pennsylvania Co. for Insurance on Lives and Granting Annuities," p. 32.

approval, and in January, 1831, the officers were empowered to go ahead with the performance of the new line of work. But for some unexplained reason the work was not taken up, and the efforts of those who wished to push the matter were not successful until February 25, 1836, when the Legislature granted and the Governor approved a supplement to the charter, authorizing the company to enter into the business of executing

trasts.

The powers granted were: To accept and execute trusts of every description; to be appointed trustee, assignee, guardian, committee or receiver; to receive moneys or other property, real or personal, in trust or on deposit, to accumulate the interest thereon, or to allow and pay the

same.

As trustee, assignee, etc., the company was not required to give bond, the company's capital and assets being taken as the security required by law. The charter contained a provision that any court which appointed the company to any trust position might appoint a suitable person to investigate the affairs and management of the company; said person to report "The manner in which its investments are made, his opinion of the ability and integrity with which the affairs of the company are conducted; of the prudence and safety of its investments and the security aforded to those by whom its engagements are held; the expense of every investigation so made shall be defrayed by the said company." The provision was also made that the company should pay a reasonable rate of interest upon any sums not less than one hundred dollars collected in its capacity as trustee, assignee, guardian, committee or receiver, and that it should accumulate the surplus income of any minor's estate by adding interest annually on the whole as a new principal. The power to act as executor and administrator was not given until seventeen years later --in 1853.

Upon the new field of business thus opened to it, the company entered with vigor, the six years of delay in obtaining the necessary authority seeming to have prepared the way for a rapid accumulation of trust business. "In the course of a few years the trust transactions became one of the most profitable as well as most important features of the institution, and this feature forms to-day its chief business. The rise of the trust department followed the gradual decline of the life-insurance branch. The practical relinquishment of this business became an advisable policy of the company when the field was occupied by the numerous organizations which, in order to meet rising and acute competition, adopted methods that could not commend themselves to a corporation. having charge of so large a number of trust estates.”

During the next month of the same year (March 17, 1836), a charter granting the same trust powers was given to the Girard Life Insurance, Annuity and Trust Company. This company also began at once the

6 "Sketch of the Pennsylvania Co. for Insurance on Lives and Granting Annuities," pp. 37-38.

accumulation of trust business, which increased at a satisfactory rate;" although it seems not to have made this business its main feature at first, as did the Pennsylvania Company from this time on.

The year 1836, then, saw in active pursuance of the trust business in the United States four companies, two in New York city and two in Philadelphia. During the years that immediately followed and down to the present time, their business in the trust department, as well as in other lines, has steadily grown, and they are among the leading companies of to-day. The Pennsylvania Company had, in 1863, accumulated a surplus of profits equal to its original capital of $500,000, and thereupon increased its capital to $1,000,000, distributing a stock dividend of 100 per cent. to its shareholders. In 1869 its business was divided into departments the trust department, the department of insurance on lives and granting annuities, and the banking department. But no life insurance policies have been written since 1872, nor any annuities or endowments ince 1873. The safe-deposit department was added in 1872, in which year also the capital was increased to $2,000,000. In 1895 the company controlled one hundred and thirty-six millions of securities held in trust, taken at their par value, and received during the year more than a million dollars for rentals. On May 28, 1907, it reported a capital of $2,000,000, surplus and profits $3,721,404, deposits $17,355,322. The amount of funds held in trust, invested and uninvested, was $138,811,425, besides which it held other trusts representing large amounts, not readily expressible in exact figures.

The Girard Company, which on June 22, 1899, changed its name to The Girard Trust Company, reported on May 28, 1907, capital $2,500,000, surplus and profits $9.773,805, deposits $29,976,098. It held trust funds, invested and uninvested, amounting to $76,538,089, and the amount of trusts under corporation mortgages and trusts of securities held by the company as depositary and trustee for issues of collateral trust bonds is given as $253,281,525.

The Farmers Loan and Trust Company, of New York, had on January 1, 1880, accumulated deposits of over $6,000,000. This increased to $24,000,000 in 1890, and to $41,500,000 in 1900. The company's statement for August 22, 1907, shows capital $1,000,000, undivided profits $6,469,185, deposits $81,921,575, total resources $90,104,020.

The New York Life Insurance and Trust Company had on August 22, 1907, total resources of $42,240,726: the capital being $1,000,000, surplus and profits $4,022,104, deposits in trust $33,712,743, annuity fund $2,326,150, life insurance fund $381,504. This company, as already stated, has no deposits other than trust deposits.

Of all the trust companies now in existence, these four were the only ones which began business prior to the year 1853. There were, however,

7 Letter from the trust officer of the company.

8 Sketch of the Pennsylvania Company, pp. 45, 49, 51, 52, 136, 144.

9 Cator, p. 75.

a few other companies incorporated in these early years which have long since gone out of business, and which bore the name of trust companies.

19

The Ohio Life Insurance and Trust Company, of Cincinnati, was incorporated February 24, 1834, and began business in January of the following year. It had a trust department and a banking department. Its powers included the issuance of circulating notes, and the leading object of its incorporation seems to have been the supplying of capital for the business of the community. For many years the company did a large business, though, on account of losses, its dividends were not so great as had been hoped. For the first seventeen years they averaged not quite six and one-quarter per cent. per annum. Early in 1852 the trust department had assets of $2,750,000. In addition the banking. department had assets of over $1,345,000. The last years of this company were filled with troubles over the State tax question, the company being called upon for taxes of about $100,000 per year. The failure, which occurred August 24, 1857, and which precipitated the panic of that year, was attributed by the President of the company to "loans to parties unable to respond at this time."11

The passage of the Free Banking Law in New York, in 1838, was followed very soon (in July, 1838) by the incorporation of the North American Trust and Banking Company, of New York city.12 Under the law, the company could discount bills and notes and other evidences of debt, and loan money on any kind of security, real or personal. The company had a brief but strenuous existence. Its capital "in cash, bonds and mortgages was between two and three millions of dollars, and upon this the directors and managers contracted debts and loans to the amount of $18,000,000.”1 In January, 1839, the company purchased $1,200,000 bonds of the State of Indiana, giving its notes in payment. It also bought Ohio State stocks, giving negotiable time certificates of deposit. For many years after the failure of the company the courts were occupied with litigation regarding the legality of these transactions, and the creditors included many anxious investors on the other side of the Atlantic. Another concern that passed like a comet through the financial sky of these days was the Kentucky Trust Company, which failed in 1854, after a very brief career. It had been chartered with an unlimited capital.

The year 1853 was marked by the incorporation of the first company organized in this country to transact exclusively the business of a trust company. This was the United States Trust Company, of New York city, created by an act of the Legislature April 12, 1853. "Its charter was the basis of all special charters of a similar character afterward granted in New York, as well as of the general law for the incorporation of trust

10 Bankers Magazine, July, 1852, Vol. VII, p. 74.

11 Ibid., September, 1857, Vol. XII, p. 240.

12 Ibid., November, 1854, Vol. IX, p. 349.

13 Ibid., November, 1852, Vol. VII, p. 341.