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 lor 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 pre scribed 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 squan-ders 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 betteri 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.