USA > Massachusetts > Suffolk County > Boston > Metropolitan Boston; a modern history; Volume II > Part 7
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The first record of the consolidation movement among the trust com- panies, early in 1906, was the taking over of the Mercantile Trust Com- pany by the City Trust Company, which at the same time absorbed the
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OLD STATE HOUSE
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A HISTORY OF BANKING IN BOSTON
Bunker Hill National Bank. The City Trust Company sold the Bunker Hill bank to the American Trust Company in 1910, and was itself ab- sorbed by the Old Colony Trust Company.
In that same first year the Adams Trust Company was taken over by the American Loan and Trust Company, which in the following year shortened its name to the American Trust. Company. The Washington Trust Company, then only two years old, was placed in liquidation in the same year and was finally taken over by the Beacon Trust Company. Its corporation was not dissolved until 1912.
No changes marked the years 1907 and 1908, but in 1909 the Mechan- ics Trust Company, which had been a National bank and had changed over to the trust company field in 1905, was absorbed by the Federal Trust Company. In the same year the Faneuil Hall National Bank, orig- inally established as a State bank in 1851, was absorbed by the Beacon Trust Company.
The Old Colony Trust Company joined in the consolidation move- ment in 1910, when it absorbed the Copley Trust Company, a small in- stitution which had been incorporated in 1901, and the City Trust Com- pany, which had been incorporated in the year previous. The latter company already represented the merging of several financial institu- tions, and had deposits of about $28,000,000. It had taken over the Mer- cantile Trust Company in 1906, which, in turn, had absorbed the Massa- chusetts Trust Company (No. I) which originally was the Massachusetts Loan and Trust Company. In the same year the City Trust Company had absorbed the Bunker Hill National Bank, which in turn had absorbed the Monument National Bank in 1905.
In I911 there were no changes in the trust company field, but in 1912 the National Market Bank of Brighton surrendered its charter and became incorporated as the Market Trust Company of Brighton-to be absorbed just ten years later by the International Trust Company.
Two more National banks entered the State field in 1913, when the Hamilton Trust Company was organized to take over the business of the New England National Bank, which was originally founded as a State bank in 1813, just a century before, and the South End National Bank, which was first incorporated in 1890. The Hamilton Trust Company did not survive for long, however, as it was absorbed in 1914 by the Com- monwealth Trust Company.
The Bay State Trust Company, which had been in business since 1887, was absorbed by the Old Colony Trust Company in 1914, and the Lincoln Trust Company, then five years old, was absorbed in the same year by the International Trust Company. In 1915 the First Ward Na- tional Bank, organized in 1873, became a trust company and changed its
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METROPOLITAN BOSTON
name to the Metropolitan Trust Company. The Paul Revere Trust Com- pany, which started in business in 1910, was merged with the State Street Trust Company in 1916.
There were no changes during the war years of 1917 and 1918, but in 1919 the Puritan Trust Company was absorbed by the Tremont Trust Company. This institution had been incorporated in 1892 as the Rox- bury Trust Company. In 1893 it changed its name to the Granite Trust Company, and in the following year it became the Puritan Trust Com- pany. After it had been absorbed by the Tremont Trust Company in 1919, its charter was sold and the name changed to the Roosevelt Trust Company, which intended to transfer the scene of operations to Worces- ter. The General Court stepped in, however, and rendered the charter inactive in 1922 and the company never engaged in business.
The year 1920 saw the crash of several Boston trust companies, which will be treated briefly under trust company failures. The Hanover, Prudential, Fidelity, and Cosmopolitan trust companies went to the wall as the result largely of gross mismanagement. In the case of the Fidel- ity. the depositors suffered no loss, as in the following year it was ab- sorbed by the Liberty Trust Company, but the directors and stockholders lost in excess of $4,000,000.
A fifth failure came early in 1921, when the Tremont Trust Company was closed by the Bank Commissioner. The same year witnessed sev- eral changes in the trust company field. The Dorchester Trust Company incorporated in 1907, the Hyde Park Trust Company, 1916, and the Old South Trust Company, 1914, were all taken over by the International Trust Company. The Equitable Trust Company, in 1921 also, was merged with the Beacon Trust Company.
The Equitable Trust Company had a stormy career. It was granted a charter by the State in 1888, as the Union Loan and Trust Company, but did not begin business until 1895. It was in difficulty from its incep- tion, being controlled by a group of men who had wrecked the Suffolk Trust Company in 1891, with only thirty-eight percent ever being paid in dividends to the depositors. It was closed in 1896 and a receiver ap- pointed. The capital was transferred to new owners, who made up the impairment, and the institution was allowed to reopen two years later. It changed its name to the Union Trust Company in 1900, but in 1904 it failed. The depositors suffered no loss, however. In 1916, under the old charter of the Union Trust Company, the Equitable Trust Company came into being, merging five years later with the Beacon Trust Company.
The Metropolitan Trust Company, which had been a National bank under the name of the First Ward National Bank up to 1915, absorbed the Back Bay and Oceanic National banks in 1922, and was itself taken over by the Federal Trust Company in 1922, the same year. The Hay-
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A HISTORY OF BANKING IN BOSTON
market National Bank, which like the Back Bay and Oceanic institutions had been in business only a short time, was absorbed by the Massachu- setts Trust Company (No. 2) in 1922, and the Market Trust Company of Brighton was taken over by the International Trust Company about the same time.
The year 1923 marked a swing of trust companies into the National bank field. The International Trust Company, with its numerous branches from previous mergers, went to the First National Bank. The Commonwealth Trust Company became a part of the Atlantic National Bank. The Federal Trust Company became a National bank, retaining its name, however, and shortly afterward absorbed the South Boston Trust Company, which was incorporated in 1891.
In 1924 the First State Bank was absorbed by the Pilgrim Trust Com- pany, which was itself absorbed by the Old Colony Trust Company in 1925. This latter year marked the merger of the National Union Bank, which was originally chartered as a State bank in 1792 and was the sec- ond oldest bank in the history of the State, with the State Street Trust Company, a progressive institution which was incorporated in 1891. The last consolidation up to the time of the writing of this record, was in 1926, when the Massachusetts Trust Company (No. 2), which was incorpo- rated in 1914, left the State field to merge with the Atlantic National Bank.
As this history is being compiled, petitions are pending for charters for two new institutions, which give promise of becoming large and powerful trust companies. They are the Peabody Trust Company, the stock of which is controlled by the Kidder Peabody Company, and the Lee Higginson Trust Company, controlled by the Lee Higginson Com- pany, two of the most important investment banking houses in Boston. The new institutions will afford banking facilities for the clients of these two houses, and are expected to build up large trust departments. Further mention will be made of them under a heading of Investment Banking Houses.
A skeletonized history of Boston's trust companies, showing the year of incorporation, date of commencement of business and the disposition of each institution, is as follows :
Incorporated. Name.
Disposition.
1902-Adams Trust Co.
Opened, October 21, 1902.
Absorbed by American Trust Co., 1906.
1920-Allston Trust Co.
Never opened. Charter expired by limitation.
*1881-American Trust Co.
ยท Opened August 29, 1881.
Name changed from American Loan and Trust Co., 1907. Absorbed Adams Trust Co., 1906
Purchased Former Bunker Hill National Bank from City Trust Co., 1910. Existing Trust Company.
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METROPOLITAN BOSTON
Disposition.
Incorporated. Name. 1887-Bay State Trust Co .Opened November 23, 1887. Absorbed by Old Colony Trust Co., 1914.
*1919-Bank of Commerce & Trust Co .. Opened as Hub Trust Co., June 19, 1919. Name Changed, 1923. Existing Trust Company.
*1892-Beacon Trust Co.
. Opened May 4, 1893. Absorbed Washington Trust Co., 1906. Absorbed Faneuil Hall National Bank, 1909. Absorbed Equitable Trust Co., 1921. Existing Trust Company.
*1867-Boston Safe Deposit & Trust Co.Opened June 1, 1875.
Name changed from Boston Safe Deposit Co., 1874. Existing Trust Company. Opened February 6, 19II. Existing Trust Company.
*1910-Charlestown Trust Co.
1900-City Trust Co.
. Opened February 10, 1902
Absorbed Bunker Hill National Bank, 1906.
Absorbed Mercantile Trust Co., 1906.
Sold Bunker Hill Branch to American Trust Co., 1910. Absorbed by Old Colony Trust Co., 1910. Opened March 25, 1895.
*1892-Columbia Trust Co
1887-Commonwealth Trust Co.
1919-Continental Trust Co ..
1901-Copley Square Trust Co.
. Opened as Copley Trust Co., January 29, 1903. Absorbed by Old Colony Trust Co., 1910.
1912-Cosmopolitan Trust Co
. Opened April 3, 1912. Failed September 25, 1920.
1907-Dorchester Trust Co
. Opened December 2, 1907. Absorbed by International Trust Co., 1921.
1888-Equitable Trust Co.
Opened November 6, 1916.
Formerly existed as Union Loan and Trust Co., then as Union Trust Co.
*1907-Exchange Trust Co.
Absorbed by Beacon Trust Co., 1921. . Opened October 1, 1907. Existing Trust Company.
1899-Federal Trust Co.
. Opened May 9, 1899. Absorbed Mechanics Trust Co., 1909. Absorbed Metropolitan Trust Co., 1922. Converted into National Bank, 1923.
1913-Fidelity Trust Co.
Opened May 15, 1913. Failed September 28, 1920. Absorbed by Liberty Trust Co., 1921.
1916-First State Bank
. Opened August 3, 1917. Absorbed by Pilgrim Trust Co., 1924.
1913-Hamilton Trust Co.
Opened January 1, 1914. Organized to take over South End National and New England National banks.
1914-Hanover Trust Co.
1922-Haymarket Trust Co.
Absorbed by Commonwealth Trust Co., 1914. Opened May 1, 1916. Failed August II, 1920. .Opened March 1, 1922. Converted from Haymarket National Bank and merged with Massachusetts Trust Co. (No. 2) March II, 1922.
1919-Hub Trust Co.
. Opened June 19, 1919. Name changed to Bank of Commerce and Trust Co., 1923.
Existing Trust Company. Opened April 28, 1904. Name changed from Manufacturers' Trust Co. Merged with Atlantic National Bank, 1923. Never opened. Charter lapsed.
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A HISTORY OF BANKING IN BOSTON
Incorporated. Name.
Disposition.
1916-Hyde Park Trust Co. . Opened March 9, 1916. Absorbed by International Trust Co., 1921.
*1918-Industrial Bank and Trust Co ... Opened January 2, 1919, as Roxbury Trust Co. (No. 2). Name changed, 1927. Existing Trust Company.
1879-International Trust Co.
Opened December 30, 1879. Absorbed Lincoln Trust Co., 1914.
Absorbed Dorchester Trust Co., 1921.
Absorbed Old South Trust Co., 1921.
Absorbed Hyde Park Trust Co., 1921.
Absorbed Market Trust Co. of Brighton, 1922.
Absorbed by First National Bank, 1923.
*1916 Jamaica Plain Trust Co.
Original charter granted, 1893, but allowed to lapse, 1895. Opened May 1, 1916. Existing Trust Company.
1890-Lawyers' Loan and Trust Co.
Never opened.
Charter lapsed, 1895.
. Opened September 10, 1907.
Absorbed Business of Fidelity Trust Co., 1921.
Existing Trust Company.
1909-Lincoln Trust Co.
Opened October 18, 1909. Absorbed by International Trust Co., 1914.
1912-Market Trust Co. of Brighton ... Was National Market Bank of Brighton. Opened as Trust Company January 1, 1913. Absorbed by International Trust Co., 1922.
1870-Massachusetts Trust Co. (No. 1). Organized June 3, 1870, as Northampton Loan and Trust Co.
Name changed to Massachusetts Loan and Trust Co., 1875.
Name changed to Massachusetts Trust Co., 1902. Absorbed by Mercantile Trust Co., 1904.
1914-Massachusetts Trust Co. (No.2). Opened February 10, 1914.
Absorbed Haymarket National Bank, 1922. Merged with Atlantic National Bank, 1926.
1891-Mattapan Deposit and Trust Co. . Opened May 16, 1892.
1905-Mechanics Trust Co.
1888-Mercantile Trust Co.
. Opened as Mercantile Loan and Trust Co. Name changed, 1897.
Absorbed Massachusetts Trust Co. (No. I), 1904. Absorbed by City Trust Co., 1906.
1915-Metropolitan Trust Co.
Opened September 13, 1915.
Was previously First Ward National Bank.
Absorbed Back Bay National Bank, 1922.
Absorbed Oceanic National Bank, 1922.
Absorbed by Federal Trust Co., 1922.
*1869-New England Trust Co.
. Opened February 20, 1871. Existing Trust Company. Opened June 13, 1890.
Absorbed City Trust Co., 1910.
Absorbed Copley Trust Co., 1910.
Absorbed Bay State Trust Co., 1914.
Absorbed Pilgrim Trust Co., 1925.
Existing Trust Company.
1914-Old South Trust Co.
Opened August 1, 1914.
Closed by Bank Commissioner, 1919. Reopened, 1920. Absorbed by International Trust Co., 1921.
*1890-Old Colony Trust Co
Name changed to South Boston Trust Co., 1917.
Converted from Mechanics National Bank.
Opened as Trust Company, July 31, 1905.
Absorbed by Federal Trust Co., 1909.
*1907-Liberty Trust Co
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METROPOLITAN BOSTON
Incorporated. Name.
Disposition.
1910-Paul Revere Trust Co
. Opened May 2, 1910.
Absorbed by State Street Trust Co., 1916.
1924-Pilgrim Trust Co.
. Opened December 19, 1924.
Absorbed First State Bank, 1924.
Absorbed by Old Colony Trust Co., 1925.
1915-Prudential Trust Co
. Opened June 1, 1915.
Failed September 10, 1920.
Opened as Roxbury Trust Co. (No. I).
Name changed to Granite Trust Co., 1893. Name changed to Puritan Trust Co., 1894.
Absorbed by Tremont Trust Co., 1919.
Charter sold, name changed to Roosevelt Trust Co., 1921.
1921-Roosevelt Trust Co.
Charter made inactive by General Court, 1922. . Under old charter of Puritan Trust Co. Never opened.
Charter made inactive by General Court, 1922.
1892-Roxbury Trust Co. (No. 1).
Name changed to Puritan Trust Co., 1894.
1918-Roxbury Trust Co. (No. 2)
. Opened January 2, 1919.
Name changed to Industrial Bank and Trust Co., 1927.
1891-South Boston Trust Co
Opened as Mattapan Deposit and Trust Co., May 16, 1892.
Name changed, 1917.
Absorbed by Federal National Bank, 1923.
*1891-State Street Trust Co.
Opened July 1, 1891, as State Street Safe De- posit and Trust Co.
Name changed 1897.
Absorbed Paul Revere Trust Co., 1916.
Absorbed National Union Bank, 1925.
Existing Trust Company.
1889-Suffolk Trust Co.
1914-Tremont Trust Co.
Opened September 17, 1914.
Absorbed Puritan Trust Co., 1919. Failed February 17, 1921.
1888-Union Loan and Trust Co.
. Opened March 25, 1895.
Closed and Receiver appointed, 1896.
Name changed to Union Trust Co., 1897.
Reopened, 1899.
Failed, 1904. Name changed to Equitable Trust Co., 1916. . Opened March 4, 1895.
*1887-United States Trust Co.
Originally chartered as Commonwealth Safe Deposit and Trust Co. Name changed to United States Safe Deposit and Trust Co., 1888.
Name changed to United States Trust Co., 1895. Existing Trust Company.
. Opened October 1, 1904.
1904-Washington Trust Co.
Liquidated, 1906, and absorbed by Beacon Trust Co.
*Asterisk denotes existing trust companies.
During the first twenty years of their existence in Massachusetts trust company failures were unknown, but on September 3, 1891, the Suffolk Trust Company was placed in the hands of a receiver. As this was the first failure of this type of institution in Massachusetts, a com- plete record of the case as reported by the Savings Bank Commissioners
1892-Puritan Trust Co.
.Opened as Suffolk Trust and Investment Co.
Failed September 3, 1891.
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A HISTORY OF BANKING IN BOSTON
is here presented, showing the causes of the difficulties and marking the first of the attempts to secure legislation which would more adequately protect the funds entrusted to the keeping of trust companies. The report stated :
"This is the first instance of the insolvency of a trust company in this Commonwealth. These institutions have, under their excellent manage- ment, been very prosperous except in this instance. They sustain a high position in the financial community, both locally and outside the limits of this Commonwealth, and it is very much to be regretted that an inter- ruption of the record made by them now appears. The Suffolk Trust Company, originally incorporated as the Suffolk Trust and Investment Company, was started for the purpose of negotiating and guaranteeing mortgage loans on farms at the West, and had sold and guaranteed such loans to the amount of about $575,000. Chapter 342 of the Acts of 1889 prohibited safe deposit and trust companies from transacting such busi- ness, and this company therefore discontinued that branch and engaged in commercial banking, as it has proved, with disastrous results.
"A change in the management of the company was made about Janu- ary 1, 1890, and it enlarged its banking department, increasing its de- posits and consequently its loans. The officers of the company claimed that all these loans were good, but they attracted the attention of this board, and, in its opinion, many of them seemed insecure ; also scrutiny was given to them, and the company was carefully watched and exam- ined. It was noticed that the condition of the company was continually growing worse. We desired to close up its affairs, but found, upon in- vestigation, that we had not sufficient authority so to do. Notwithstand- ing its capital was impaired, it was not in such a condition that it could be legally considered insolvent. We had many and frequent interviews with its president and management, and urged a restoration of its capital stock (we not having power to levy an assessment for that purpose), which they finally agreed should be done.
"Pending negotiations and during the time allotted, we discovered that its managing officers were selling their stock and resigning their several positions as officers and directors in direct violation of a supposed understanding. We immediately made another thorough examination of the affairs of the company, and though upon the face of the accounts the company appeared to be solvent, the board still adhered to its opinion as to the insecurity of the loans, and, 'believing its further proceeding to be hazardous to the public and those having funds in its custody,' decided to apply to the Supreme Judicial Court to issue an injunction restraining the corporation from further proceeding with its business, and for the appointment of a receiver ; and on conference with the new management,
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METROPOLITAN BOSTON
they acceded to the decision. The closing of the Suffolk Trust Company was the result of the loss arising from insecure loans, made through its banking department. The loans are proving to be even worse than an- ticipated by this board, and complications necessarily arising from. the connection of its mortgage business with its banking department will, without question, seriously delay the final settlement of the company's affairs.
"It is the opinion of this board that authority should be given it to levy an assessment upon the stockholders of a trust company whenever, in its judgment, the capital stock is impaired, and should be restored ; in this way insolvency might be averted. Insolvency cannot be determined in an instant; its approach is slow, making little show of progress till unexpectedly it has full control; then the end comes and a financial dis- aster is the result. This is particularly true of an institution carrying on an extensive business with a small capital, as was the case with this company, which, having a capital of $100,000 only, had guaranteed mort- gages amounting to $575,000, placed on farms at the West. While these guaranteed mortgages did not precipitate the final result, they were a factor, however, to the extent of advances made on coupons due, tax titles and equities purchased, all of which are secured by whatever value there is in the property held under the mortgages."
As was shown by the report, the capital of the Suffolk Trust Company was only $100,000. Its total assets were listed as $316,014.58, and the total deposits were $182,142.53. When the institution was finally liqui- dated, a total of only 38 per cent had been paid to the depositors, so that the actual loss to depositors was $112,928.37. The bank was closed on September 3, 1891, but final liquidation did not take place until Novem- ber 30, 1909, more than eighteen years later.
Following the recommendations of the Board of Savings Bank Com- missioners, the Legislature in 1892 enacted a law providing for the en- forcement of the liability of shareholders by pro rata assessment within three months after notice from the board that the capital stock had be- come impaired by losses or otherwise. Other protective legislation fol- lowed, and Massachusetts became the first State to require trust com- panies to carry a fixed reserve to secure deposits.
Only prompt and determined action by the Savings Bank Commis- sioners averted another trust company disaster by the same group which controlled the Suffolk Trust Company, when, on October 13, 1895, the Union Loan and Trust Company was temporarily enjoined. Concern- ing this situation the board reported :
"This company was incorporated May 29, 1888, but did not organize at that time, its charter having been for sale for several years, and finally
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A HISTORY OF BANKING IN BOSTON
passing into the control of parties who had been connected with the Suf- folk Trust Company at or just before its failure. The company nom- inally commenced business on March 25, 1895, the day preceding that on which the charter would have expired by limitation of time; it did little or no business for a few weeks, pending its establishment in suitable rooms. It at once became evident to this board that the business of the company was not likely to be conducted in the manner required in a well- managed institution, and as a measure of precaution more frequent ex- aminations of its affairs were made than it is customary to make in other companies.
"The examinations developed the fact that the class of paper being taken was very similar to, and in a few cases almost identical with, that formerly taken by the Suffolk Trust Company, and which in part led to the embarrassment of that company. It was also ascertained that the di- rectors took but little part in the management of affairs, which were apparently left almost entirely in the hands of the president.
"The examination made on October 6 last (1895) tended to confirm what had been noticed at previous examinations; the item in the daily statements of condition of 'bills of national banks' was never found to be correct, the bills on hand constituting only a small portion of the amount, the balance being made up of memoranda, overdrafts, promis- sory notes, etc .; the required reserve had been seldom, if ever, kept; and its business was being conducted in a shiftless and irregular manner. It was also found that several notes, of considerable amount each, were of doubtful value ; that the office of treasurer (required by statute) had been vacant since March; that an assistant treasurer had been chosen, but had not given bond, although at the time of his election it was voted he should be required so to do; that from the records the last meeting of directors appeared to have been held in March; and, that contrary to the provisions of statute, security had been given for numerous deposits."
Under such circumstances the board obtained an injunction from the Supreme Judicial Court, and Samuel W. McCall was appointed as re- ceiver. In May, 1898, the disposing of the assets of the Union Loan and Trust Company was completed and the entire capital stock was trans- ferred to new holders, who made up the impairment of its capital. The injunction was then removed and the bank was allowed to reopen, under the new management.
The second permanent closing of a trust company in Boston came on April 4, 1904, when the Union Trust Company was found to be insolvent, after a court hearing. Samuel W. McCall and Charles F. Choate were appointed as receivers. The resources of the company had been reduced by long continued drafts by its depositors, which was the primary reason
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METROPOLITAN BOSTON
of the bank's difficulties. The trust company's capital was $100,000; its total assets, $1,339,017.81, and its total deposits, $1,131,747.21. It was finally liquidated on April 26, 1906, and the depositors received 100 per cent in dividends, so that they suffered no actual loss.
The darkest chapter in the history of Boston's trust companies came shortly after the World War. Joseph C. Allen, appointed by Governor Calvin Coolidge to the office of Commissioner of Banks (which had suc- ceeded some years before the old Board of Savings Bank Commissioners) early in 1920 found a deplorable situation existing in some of the Boston trust companies soon after taking office. Within six months it became necessary for him to close the Hanover, Prudential, Cosmopolitan and Fidelity Trust companies, and five months later, the Tremont Trust Company.
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