is sharp, the national banks keenly feel their disadvantage. They feel this still more keenly because they know that they are in truth keeping a reserve not simply for themselves, but for their competitors. What is meant by this assertion? An explanation is needful.

When a run is made on a trust company or state bank for money, the national banks come to the rescue and supply the funds. The reader may wonder why the national banks do this. Naturally he would think that if the state banks and trust companies are so short-sighted and keep an inadequate reserve, they ought to suffer when unusual demands are made on them which they can not meet. But they understand their situation. They know that the national banks will not suffer them to perish through fear that confidence in themselves may become impaired and result in a run on one or more of their own number. No one can tell how far the confidence of a community may be disturbed by such an event. This is one of the peculiarities of the banking business; the fate of every bank is to some extent bound up with the fate of every other. A bank may dislike another and its ways of doing business; it may wish that it would disappear from the banking world in a peaceful, noiseless manner, but not as a falling, flaming star. Such a disastrous end reacts on every other bank, and no one can tell how far the reaction may go, or where it will cease.

When, therefore, a trust company or state bank is pressed in an unexpected manner for funds, the national banks come to its relief. This they have done again and again, not indeed with a pleasing grace, but as a measure of self-protection.

The president of a state bank in New York City not many years ago kept its entire resources loaned out, as

he was not legally required to keep a fixed reserve. There was a run on his bank, and he applied to the clearing house for relief. The members agreed to lend his bank money and it was saved. Within a few years the same thing again happened. Again the clearing house banks advanced all the money needed to save the bank. After the second experience the clearing house committee notified its directors of their unfit president, who was taking advantage of them to make excessive loans, and to whom, should there be another run on the bank, no more aid would be furnished. With this loud and solemn notice, the directors wisely concluded to retire their president and elect another who would not be so intent on making money for his bank by lending everything, trusting to other banks for aid in the event of a sudden call from depositors for their money.

To this illustration another may be set on the opposite side. A few years ago, during a prolonged monetary stringency in New York, the president of one of the large trust companies determined not to be dependent on the national banks should there be a large call for deposits from his customers, so he borrowed several millions of gold in Europe, keeping it and paying interest thereon until the stringency passed away. Such conduct was as far-sighted as it was honorable to the banks with which he was associated.

Various attempts have been made by the state legislatures from time to time to require the state banks and trust companies to keep reserves, and by some of them the requirement has been adopted.

6. Business as Trustees. These are the chief differences between trust companies and discount banks as banking associations. Let us now describe their work

as the executors of confidences or trusts.

What do we

mean by the term? Places where bonds and stocks are kept? This is the slightest use of the term. We mean that they undertake to act as agents or representatives for others in doing a great variety of work. In conducting this work a trust company is strictly an agent and is governed largely by the principles of agency.

An individual dies and a court, existing for that purpose, appoints a person to administer on his estate. He may be appointed at the request of the heirs, or the creditors, or both. He qualifies by giving a bond signed by himself as principal and one or more sureties for the faithful discharge of his duties. He then takes charge of the estate, and first of all, with the assistance of others, makes an inventory of the estate. This is a description and valuation of all the property intrusted to his management. After this is done his duties in general consist in finding out what claims are due, paying them, and of dividing the remainder of the estate in the manner prescribed by law. This work is strictly that of a trust, and trust companies are authorized to execute such undertakings. What advantage, if any, do they possess over individual administrators?

a. Their Responsibility. They are responsible. It is true that an administrator gives bonds for doing this work faithfully, but every now and then he collects and squanders an estate in speculation; in short, he seeks to use the funds in his possession for his individual advantage. He has said to himself, "Here is my opportunity. I can lend this money or use it in speculations and make something for myself, and the estate will not be worse off." There is much less danger of a trust company doing this. Besides, it possesses a large capital, which is much better

than the bond of any individual. It offers the highest security that has yet been devised.

b. Their Efficiency. Trust companies are often more efficient. Why should they not be? They have skilled men to attend to all the different parts of the work. They have counsel who devote themselves especially to the questions connected with the business. Thus the largest experience and efficiency are offered by the trust companies, especially the older ones, to those who choose to avail themselves of their facilities and powers. The large amount of business they have enables them to do it far more cheaply and effectively than an individual. Many of the trust companies have special arrangements with builders, plumbers, and repairers whereby their work is done at a lower rate by reason of the magnitude of the business given to them.

c. Their Economy. Their prices are reasonable. They charge a commission on the amount of an estate with carefully graded charges, so that the aggregate expense of administering an estate by a trust company is usually less than an individual charge. Too often the personal administrator thinks it is his only chance, and improves it to the utmost. It is true that the court is above him and can reduce his charges, remove him if he becomes negligent or proves to be incompetent, but too often the supervisory power of the court is disappointing. The court in many cases does not know, no one informs the judge; the administrator is emphatically performing a trust; the estate has been committed to his care and management, and he alone knows anything about its condition. A trust of this kind therefore is peculiarly liable to be abused, and especially in the compensation paid for administering it. A trust company is in the

field permanently, and strives to widen its sphere by commending itself to the public generally by the honesty, efficiency, and economy of its work. Its superiority is becoming so manifest over the individual method that trust company business is rapidly increasing.

7. Executor of Estates. A trust company acts as an executor of estates. This trust is nearly the same as that already mentioned. The chief difference is, the company is appointed by the executor himself, and the mode of administering his estate is regulated to some extent by the will under which it acts.

8. Guardian for Wards. - Another trust is that of acting as guardian for wards. A conclusive reason for appointing a trust company in many cases is its responsibility. Too often have guardians abused their trusts and wrecked the fortunes of their wards on the rocks of some speculative venture. Though laws in every state probably prescribe how the wealth of a ward shall be invested, again and again have guardians disregarded their plain duty. In the light of this experience, trust companies are called more and more to act in the capacity of guardians.

9. Special Trustee. - Another trust often performed by a trust company is that of a trustee in a narrower sense. An executor bequeaths $100,000 to John Smith, which is to be kept by a trustee who is to pay over the income annually or at other times to the beneficiary. Trust companies often serve as trustees in this capacity. Again, a company is to be reorganized, and during the process of reorganization its stocks and bonds are to be surrendered preparatory to issuing new ones. A trust company is designated as the trustee to keep the securities during this intermediate stage of reorganization. Again, a company issues notes or other obligations on the deposit of