Trust Investments: Their Extent and Some Related Economic Problems

Abstract

A problem confronting all individuals who have accumulated funds is that of management. Sound initial selection and careful supervision are essential in order to conserve the principal and gain a satisfactory return. The traditional idea of permanent investment has resulted for decades in losses of considerable portions of accumulated funds. We live in a dynamic economic world and values may rapidly change. The question of management is not only one of how to do it but also one of who should do it. At one time or another thousands of individuals who have funds place them in trust with trust institutions for supervision. While there is a paucity of data on the aggregate amount of individual trust property being administered by trust institutions,1 there is evidence that the volume totals many billions of dollars. It constitutes a vital part of the fund of the nation. The use to which they put it is of major economic significance. The direction they give the huge amount of capital under their supervision will affect the opportunity and progress of enterprises. It is impossible to obtain more than fragmentary data on personal trust business of trust institutions. With the exception of some data published in, a few states, the volume of trust business carried by trust companies and state commercial banks is not reported. Rather adequate information is published relative to personal trust business of national banks. There is also a paucity of statistics on the of trust property. These data are reported for a few states. To get an idea how trust institutions invest trust property we have to use the general statistics of national banks, Massachusetts trust institutions, or mere samples of individual institutions. Specific data on the investments of individual trusts are reported to probate courts in some states. The information, however, is hard to obtain and frequently is in such a form as to make it very difficult to assemble or use. This survey of trust investments is primarily devoted to institutional holdings. This limitation is a matter of expediency because there are far more data on invest* A.B., 1922, West Virginia University; A.M., I926, Ph.D., 1934, Columbia University. Assistant Professor of Finance, The Ohio State University. Author of The Investment Policy of Trust Institutions (Business Publications, Inc., Chicago, 1934). 'Trust institution means any incorporated institution-trust company, national bank, or other corporation-empowered to accept and execute trusts.