Officers elected for ensuing year: President: Frank W. Blair, President Union Trust Company, Detroit, Mich.

Vice-President: John W. Platten, President United States Mortgage and Trust Company, New York City.

Chairman Executive Committee: Lynn H. Dinkins, President Interstate Trust and Banking Company, New Orleans, La.

Secretary: Leroy A. Mershon, 5 Nassau street, New York.

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Trust companies believe in the kind of virile patriotism which expresses itself in deeds rather than in words. That was the impression conveyed by the proceedings of the first national gathering of trust company representatives since this nation, entered arena of war, held under the auspices of the Trust Company Section, American Bankers' Association. It was an assembly of earnest men-men who are charged with the grave responsibilities of protecting and administering a big part of the wealth of this country as bankers, as trustees, executors, administrators and in a great variety of other fiduciary capacities. Fully cognizant of the heavy burdens which must weigh upon trust companies, large and small, in connection with prodiguous war expenditures, taxation, adjustment of values and radical re-alignment of all our economic forces, the spirit which dominated the twenty-second annual meeting of the Trust Company Section was one of confidence, quiet resolve and determination to "see it through to the end."

Because of their intimate relations with customers, the multiplicity of services rendered through different departments and the enormous volume of banking and fiduciary wealth confided to their care, it is obvious that the task of the trust companies, at this time, is peculiarly arduous. Confronted with such unprecedented problems, with changes which apply the severest test to their wisdom and courage, the delegates at the Atlantic City

meeting nevertheless renewed the pledge to render every possible assistance to the Government.

The most important topic before the Section was that of clearly defining the relations of trust companies to the Federal Reserve system. The masterful address by Mr. Breckinridge Jones of St. Louis, setting forth the advantages of membership, the statutory assurance of their charter rights and functions, was a convincing and powerful presentation of the subject. Mr. Blair, of Detroit, also justified the position that where trust companies do not assume banking functions or demand liabilities they are not called upon, to join either as a matter of public duty or as a matter of serving the interests of their own institutions or their clients. Another live subject of discussion was the problem of war-time readjustments in the clerical forces.

The past year, judging from the reports of officers, standing and special committees and of the Secretary was doubtless one of the most constructive in the history of the Trust Company Section. Discussion bearing on the Supreme Court decision upholding the grant of trust powers to National banks, reflected a general desire to pledge the Section to use its best efforts to surround the conduct of trust business by National banks with safeguards that apply to trust companies.

The first session was held in the Marlborough-Blenheim Hotel, September 25th, with President Uzal H. McCarter in the chair. Invocation was pronounced by Rev. Dr. Henry Merle Mellen, pastor of the First Presbyterian Church of Atlantic City. The welcome was given by Mr. William Chambers, president of the New Jersey Bankers' Association, to which President McCarter responded in fitting words. The president voiced his pleasure in presiding at the meeting of the organization to which he extended greetings of welcome just ten years ago in the same city. Following are the proceedings in detail:

The entrance of the United States into the world-wide maelstrom of war and the consequent uncertainties which have arisen in the financial as well as the physical life of the country, have duly impressed themselves upon the banking fraternity of the country to the end that the bankers find themselves without a chart or compass with which to guide their several institutions. There is no trustworthy standard or precedent upon which they may rely to assist them in their daily business management, with the result that generally speaking they have adopted a "hand to mouth" policy, and the endeavor has been and continues to be to meet in the best possible manner the conditions which may each day present themselves. The great ease of money during the crisis of the current year has been of incalculable comfort to the bankers. It has largely tended to allay any apprehensions which our naturally anxious customers might have otherwise experienced. Added to this there has been and still exists the confidence of the public in the operations of the newly created Federal Reserve Act and the provisions therein contained, through which an almost unlimited increase of credit can be obtained by member institutions, so as to permit them to meet any emergency which may arise.

While, therefore, the year has been one of anxiety on the part of the banker and the uncertainties of the hour have largely caused a curtailment, if indeed not an entire abandonment of his usual summer holiday, the year has thus far passed by without any untoward financial happenings and the situation seems to be well in hand.

Exercise of Trust Functions

Much of interest to trust companies has transpired during the year, the most far-reaching of which was undoubtedly the decision rendered by the Supreme Court of the United States in connection with the test of the constitutionality of that part of the Federal Reserve Act by which Congress sought to convey fiduciary powers upon member National banks, which test was conducted by a committee rep

resenting the trust companies of the country. The contention of the trust companies was ably argued before the court by eminent counsel, whose arguments carried weight and conviction everywhere except with the court, whom it was hoped would be impressed thereby, with the result that the court by a divided report sustained the constitutionality of the act and as such it is, and must be, accepted by us all as the law of the land. The contest being raised by reason of the doubt which had arisen in some of the best minds in the country it was deemed to be only the act of prudence to have that doubt finally and definitely determined before a great injury could be done to corporate trust management. The question having been thus finally settled all opposition on the part of the trust companies to their sister institutions performing this most sensitive class of business has disappeared, though they trust and hope that the regulations of the Federal Reserve Board, under which the National banks will act, will be of an equally conservative and stringent character as pervades the laws of the older and more conservative States of the East, where the great bulk of trust business is performed by trust companies.

During the year an entirely unparalleled financial feat has been accomplished in the successful flotation of the first installment of the Liberty Loan, in which the trust companies of the country played a conspicuous and important part. They co-operated with the Governmental agency having the loan in charge to the fullest possible extent, and it was only by reason of such co-operation on the part of the financial institutions of the country, and their patriotic and unselfish efforts to make the loan successful, that such remarkable results were accomplished, as at the time of the offering of the loan the American public had not fully realized that this country was at war and that its life and honor were at stake.

Patriotic Attitude of Trust Companies The attitude of the trust companies of the country, as well as that of all other institutions, was one of highest patriotism. The selling of

bonds was made the business of the hour and from president to office boy the various organizations throughout the country were animated with only one impulse-to make the loan successful and without expense to the Government, though very recently the several Liberty Loan Committees have been reimbursed for the actual disbursements incurred, which, however, relatively speaking, were very slight, due to the co-operation with the financial institutions of the public press and other media of advertising.

Statistics of unquestioned veracity and accuracy indicate that the apathy of the people to the war and its necessities was particularly prevalent throughout the Middle West, where the least interest in the success of the loan was manifested. The efforts and co-operation on the part of the trust companies to make the loan successful were not less than the Government agencies and the business of selling the Liberty Loan became the business of the country and all other duties were side-tracked during that period. Full justice would not be meted out if the great appreciation of the trust companies was not only cordially but thankfully expressed to the several Federal Reserve banks for their co-operative spirit in the management of the details of the loan. This spirit of co-operation so generously displayed by the Federal Reserve banks throughout the country will undoubtedly do more with non-member institutions, to popularize the system, than could possibly have been done by any other means.

Question of Federal Reserve Membership The Trust Company Section, or its Executive Committee, has never taken any definite position in reference to the Federal Reserve system. Through one of its sub-committees it has endeavored to obtain certain amendments which it believed would be beneficial to any institution desiring to join the system, and in some particulars it was successful while in others it failed. The Section, through its Executive Committee, has constantly taken the position that the final determination as to whether trust companies should join the system was a matter of individual decision, depending upon the character of business being transacted by each company, and that it was not a question to be generally or broadly settled. It has shown a cooperative spirit with the system in that it has recommended to its members that, where the law permitted the act, they should immediately deposit with the Federal Reserve bank of their district the gold reserve now held by each trust company and to receive in exchange therefor Federal Reserve notes to be held as reserve in lieu of gold. It further recommended to its members that where such action was not presently legal that the necessary legislation be ob

tained as quickly as possible. Several trust companies throughout the country have entered the system and several important ones have the matter under advisement, with the probability of early entering the system through patriotic impulse.

To such institutions as may have already joined, as well as to these having the matter under consideration, the Section offers them, one and all, its best wishes and begs to express the hope that the result of their several conclusions will prove fully satisfactory to the future of their business, and to those who finally enter the system we trust that the results obtained thereby will justify the act.

War Finance and Business

As regards the future, the trust companies of the country reconsecrate themselves to the service of the Government, and pledge their every effort to assist it in any manner in which they may be of service. They view the legislation now under consideration by Congress, however, with some hesitancy and even alarm, with particular reference to the attempt to fix prices and increase taxation. While undoubtedly some such legislation is necessary during the critical periods like the present, nevertheless when carried to the extent now proposed it tends to destroy the incentive to production, which in turn affects business and not for its good. Whatever tends to put the brakes upon business cannot help but at the same time have a deterrent effect upon the banking business.

It, therefore, behooves the present day banker to so manage his institution as to be ready and able to meet changing conditions, for the solving of which, as before said, there is no established precedent. He should be prudent and conservative, but in so acting he should continue and furnish credit where credit is needed and where it is deserved. Conservatism does not mean the complete shutting down on business. On the contrary no greater evil could befall the country than that the banker should ruthlessly withdraw all credit and cause a suspension of business. He should endeavor, however, to keep their business well in hand and to advance cautiously and above all things to prepare for a great foreign invasion of business after the close of the war. It is essential, due to the existing war conditions, that the nation should become a nation of thrift and saving, and no more important duty devolves upon the banker at the present time than that he should preach the gospel of thrift to his customers, and the public generally, as only through a widespread adoption and practice of thrift by the people, to a degree hitherto unknown to the American people, can the Government meet the vast financial necessities, caused by the war.