GOVERNMENT CONTROL OF BANKS 449 



which the writer has enumerated, but which also have the pow- 

 er, if the management is so inclined, to do a general com- 

 mercial banking business with little or no cash reserve, and 

 even to underwrite an issue of bonds and securities several 

 times in value the combined capital, surplus and deposits of the 

 so called trust company, as happened in a recent notable case. 

 In another instance trust companies organized under the laws 

 of certain eastern states engaged in the organization of nation- 

 al and other banks in the western states and attempted to pay 

 up the capital with certificates of deposit in the so called trust 

 company. It is true most of the older trust companies have 

 been splendidly managed in every respect, their officers and 

 directors are men of the highest character who can safely be 

 trusted with any business, whether it is in the nature of a trust, 

 commercial banking, promotion, or underwriting. It is not 

 such concerns as this which need control and regulation. 

 Their business will be well and properly done in any event, and 

 probably will come well within the terms of any law intended 

 to control this class of business. Such concerns as this have 

 nothing to fear from regulation, nor should they oppose the 

 attempts to place reasonable safeguards upon the business for 

 the protection, not only of their depositors and creditors, but 

 of the entire country. If there is any reason why a national 

 bank should maintain reserves against commercial deposits, 

 the same reason will apply to commercial accounts in any other 

 bank, whether called a trust company or not. A trust com- 

 pany with a large business in its trust department, if it also has 

 a banking or savings department, owes it to its customers and 

 to the public to see that the banking department is not so con- 

 ducted as to endanger its trusts in the slightest degree. The 

 very existence of those trust obligations should make its bank- 

 ing department ultraconservative and careful, as so many of 

 them are. The trust company whose chief business is in its 

 banking and savings department and is carefully and con- 

 servatively managed, is more interested than anyone else 

 to prevent reckless and incompetent, or dishonest, men from 

 securing similar charters which will permit them to run com- 

 peting banks, without proper reserves or other safeguards pre- 

 scribed by experience. Frederick D. Kilburn, superintendent 



Vol. 8-29 



