Citation
Code of fair competition for bankers as approved on October 3, 1933

Material Information

Title:
Code of fair competition for bankers as approved on October 3, 1933
Portion of title:
Bankers
Creator:
United States -- National Recovery Administration
Place of Publication:
Washington, D.C
Publisher:
U. S. Govt. print. off.
Publication Date:
Language:
English
Physical Description:
iv, 10 p. : ; 23 cm.

Subjects

Subjects / Keywords:
Banks and banking -- United States ( lcsh )
Genre:
federal government publication ( marcgt )
non-fiction ( marcgt )

Notes

General Note:
Cover title.
General Note:
At head of title: National recovery administration.
General Note:
"Registry No. 1707-02."
Statement of Responsibility:
by President Roosevelt.

Record Information

Source Institution:
University of Florida
Rights Management:
This item is a work of the U.S. federal government and not subject to copyright pursuant to 17 U.S.C. §105.
Resource Identifier:
004930868 ( ALEPH )
82178770 ( OCLC )
33026646 ( LCCN )
Classification:
HD3616.U452 B3 ( lcc )

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thile Buperimnda~landnt f Dcamntts, Washngton D.C. I PriceS e~nts


~XSATIOA IRECOVERY ADMINISTRAITION


CODE OF FAIR COMPETITION





BANKERS

". AS APPROVED ON OCTOBER 8, 1933


:..nlPRESIDENT ROOSEVELT








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OzE~ecutive Order

2. Letter of Transmittal

3. Text of Code

4. Schedule A


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UNITED STATES
GOVERNMENTAL PRINTING OFFICE
WASIHINGTON : 1533


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This publication is for sale by the Superintendent of Documents, Government
Printing Office, Washington, D.O., and by district offices of the Bureau of
Foreign and Domestic Commerce.

DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE

Atlanta, Ga.: 504 Post Offce Building.
Birmingham, Ala.: 257 Federal Building.
Bostonp, M1ass.: 1801 Customhouse.
Buffurlo, N.Y.: Chamber of Commerce Building.
Charleston, 8.C.: Chamber of Commerce Building.
Chicago, Ill.: Suite 1706, 201 North Wells Street.
C~lelelandl, Ohio: Chamber of Commerce.
Dutlas, Tex.: Chamber of Commerce Building.
Detroit, Mich.: 2213 First National Bank Building.
Houston, Tex.: Chamber of Commerce Building.
Indianapolis, Ind.: Chamber of Commerce Building.
Jacksonville, Fla.: Chamber of Commerce Building.
Kansas City, M~o.: 1028 Baltimore Avenue.
Los Angeles, Calif.: 1163 South Broadway.
Louisville, Ky.: Room 405, 421 West Mdarket- street.
Mlemphis, Tenn.: 266 South Water Street.
Mlinneapolis, Mlinn.: 213 Federal Building.
New Orleans, La.: Room 225-A, Customhouse~'
New York, N.Y.: 734I Customhouse.
Nolrfollk, Va.: 406 Eaist Plumle Street.
Philadelphin, Pa.: Room 812, 20 South Fifteenth Street.
Pittsburgh, Pa.: Chamber of Commerce Building.
Portland, Oreg.: 215 New Post Offle Building.
St. Louis. Mio.: 506 Olive Street.
San Francisco, Calif.: 310 Custombouse.
Battle, Wash.: 1406 Vance Building.



















EXECUTIVE ORDER

CODE OF FAIRE COMPETITION FOR BA~NKERS

An application having been duly made, pursuant to and in full
compliance with the provisions of Title I: of the National Industrial
Recovery Act, approved June 16, 1933, for my approval of a Bank-
ers' Code of Iiair Competition, and hearings having been held there-
on and the Administrator having rendered his report containing an
analysis of the said Code of F'air Competition, together with his
recommendations and findings with respect thereto, and the Adminis-
trator having found that the said Code of Fair Competition c~om-
plies in all respects with the pertinent provisions of Title I of said
Act and that the requirements of clauses (1) and (2) of subsection
(a) of Section 3 of said Act have been met:
Now, therefore, I, Franklin D. Roosevelt, President of the United
States, pursuant to the authority vested m me by Title I of the
National Industrial Recovery Act, approved June 16, 1933, and
otherwise to adopt and approve the report, recommendations, and
findingfs of the Administrator, and do order that the said Code of
Fair Competition be, and is hereby, approved.
FaxauxLI D. RoosiiVELT,
President.
Approval recommended:
HoonH S. JoHNson,
A administrator.
THE BVrra HOUsE,
October 3, 1933P.












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HuanH S. JoHNwon,
Ad~mini5strato


OcTOBER 2, 1933.
THE PRESIDENT,
Th~e Wlhite House.
MrY DE~AR l'1R. PRESIDENT: I have thle honor to submit and recom-
mend for your approval t~he Bankers' Code of Fair Competition.
This Code was proposed by the American Bank~ers' Association,
founded in 1875. The association represents slightly more t~han 70
percent of the total number of banks and more than 94 percent of
the banking resources of t~he country. Membership requirements
therein impose no undue restrictions.
The Bankiers' Code of Fair Competition has the approval of the
association, the several AQdvisor~y Boards of the National Recovery
Administration, and- thle cooperation of officials of the Federal R~e-
serve Board, the Treasury Department, and the Comptroller of the
Currency's offce.
No objector from nonmembers of t~he association appeared at the
hearing, nor did any such nonmember file any objection to the. code.
However, r-epresentation on the code committee Is provided. in the
code for such nonmlember banks.
A complete report is being transmitted herewith. Important fear
tures may: be summarized as follows:
(A) Reempyloymnert amdT 2lages.-Unquestionably, there has been a
decided increase in both number of employees and their wages since
the signing of the modification of the President's Reemployment
Agreement, except mn small country towns. BIank staffs have been
held together as far as possible. Labor advisors stated that banks
pay emplloyees higher wages than are paid by industry generally.
Neverthleless, with thle desire to support the President's R~coveryT
Progralm and to meet reasonably the request of labor, the ban~kers
agreed to revisions of the code, principally to reduce the time of
apprenticeship from 12 to 6 months and to confine this group of
elinployees to approximately 5 percent of entire personnel, as against
the prevailing 10 percent in leading centers. These concessions and
the shortening of hours, both contained in the code, will bring about
additional employment and higher wages.
(B) Farir trade pracctices.--(1) Uniform maximum banking hours
are p~roided for similar institutions in any given area. (2) Payment
of interest on deponsits br all bankse is brought under the Bankin~GAct
of 1933 and the rules and regulations of the Federal Reserve Bodat-d.
This provrision shouldl elimlinate competitive bidding for deposits
andl thus enable the banks to invest more conservatively than mn the
past. (3) Service charges: These charges form a highly complicated
phase of banking. I believe the Code Committee will be empowered
more fully to handle these problems anld to unify the practices there-
under than any other agency heretofore established. (4) Trust serv-
ices: In effect this provision is designed as an ethical standard for
trust institutions.
I find that the code complies with the pertinent provisions of .
clauses (1) and (2), subsection (a) of section 3 of the National
Industrial etcovery Act.





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CODE OF FAIR COMPETITION FOR BANKERS



To effectuate the policy of Title I of the National Industrial Re-
.oveery Act during the period of emergency, the following provisions
are established as a Code of Fair Competition for Banks:

A5RECLE I--DEFINIMONSJ

The term "L bank as used herein shall include all national banks,
State banks, savings banks (ezeept mutual savings banks), trust com-
panies, and private bank-ers accepting deposits, In the United States

TLO e~terms "r employee or banki~n employee as used herein
shall mean any person employed by a bank in any capacity in con-
nection with its banking functions and operations.
The term United States proper as used herein shall mean the
forty-eight (48) States of the United States and the District of
Columbia.
The term "Administrator as used herein shall mean the Na-
tional Recovery Administrator.
Population for the purposes of this code shall be determined by
reference to the 1930 Federal Census.

AnacLs ~II-EFFEcTIva DBrs

The effective date of this Code, except as specifically provided for
hereinafter, shall be the second Mlonday after its approval by the
President of the United States.

AnnerE ~III-GENERAL LBnon PnonlsIONs

Employers shall comply with the following provisions of Section
1 (a of Title I of the NVational Industrial Recovery Act:Irancl
lectively through representatives of their own choosing and shall be
free from the interference, restraint, or coercion of employers of
labor, or their agents, in the designation of such representatives or
in self-organization or in other concerted activities for the purpose
of collective bargaining or other mutual aid or protection.
(2) No employee and no one seeking employment shall be re-
qinred as a, condition of employment to join any company union
or to refrain from joining, organizing, or assisting a labor organi-
sation of his o~wn choosing.
(3) Employers shall comply with the maximum hours of labor,
minimum rates of pay, and other conditions of employment, ap-
proved or prescribed by the President.
(1)








ARTICLE rV-CHILD LABOR

On and after the effective -date of this Code no person under
sixteen (16) years of age shall be employed by any bank; provided,
however, that where a State law prescribes a higher minimum age
no person below the age specified by such State law shafll be em-
ployed within such State.
ARTICLE V--Houns or EurMYLoENra

(1) On and after the effective date of this Code no banking em-L
ployee shall work or be permitted to viork more than forty (40~)
hours per week: averaged over a period of thirteen (13) consecutive
weeks.
(2) The maximum hours of employment prescribed in the fore-
going paragraph shall be subject to the following exceptions:
(a) In districts or sections of the country where the seasonal
nature of commerce, agriculture, or industry making necessary the
moving of some product within a limited period imposes' upon
banking facilities an unusual demand, employees of banks subject
to such peak demand may work forty-eight (48) hours per week
for a period not to exceed sixteen (16) consecutive weeks in any
calendar year. Any such increase in hours of employment shall
be reported monthly to the Banking Code Committee provided for
in Article VII hereinafter.
(b) All banking employees required to perform extra work~ or
observe later hours in connection with periodic examination by Fed-
eral or State banking authorities, over which the bank has no control
either as to the time of occurrence or as to the duration, shall be
exempt during such periods from the limitations upon hours of
employment prescribed the foregoing paragraphs.
(c) Employees in banking institutions employing not more thlan
two (2) persons in addition to executive officers, in towns of less
than 2,500 population, not part of a larger trade area, and employees
in a managerial or executive capacity or in any other capacity of
distinction or sole responsibility. (regardless of the location of the
bank), who receive more than thirty-five (35) dollars per week, shall
be exempt from the limitations upon hours of employment pre-
scribed in the foregomng paragraphs.
(d) These provisions for working hours shall not apply to night
watchmen employed to safeguard t~he assets of the bank, who can-
not with safety be shifted or changed during the night period.
AnrLRTE VI TWAGE8

51) On and after the effective date of this Code no employee in
cities of over 500,000 population, or in the immediate trade area of
siuch cities, shall be paid less than at the rate of $15 per week;
no employee in cities between 250,000 and 500,000 population, or in ::
the immediate trade area of such cities, shall be paid less than at the
rate of $14.50 per week; no employee in cities between 2,500 and
250,000 population, or in the immediate trade area of such cities, -
shall be pai d less than at the rate of $14 per week. In towns of leass









t~~Shaws~ ho" wPulation the wges of: all classes of employees shall be
plasiseded byj not; less than twenty (0)~ percent, provided that this
At Ct eur an increase in wages to more than the rate of $19e

!.S: It is provided, however, that employees without previous
ii~iank~ng experience or training employed as apprentices may be paid
duri'~ng a contiuous period of not more than six (6) months at the
rs~at~e of eighty (80) percent of the minimum wages prescribed in
the foregoling paragraph. No bank shall include within the catel
~ty o~f apprentices more than one such employee for every twenty
employees or fraction thereof.
}:.:::, 'tiC)Employers shall not reduce the compensation for employ-
m~ert; now m excess of the minimum wages provided for herein, not-
withstnding that the hours worked in such employment may be
haireby reduced.
ALRrCLE ~VII--ADMI1NISTRBTION

i'(1) To etectuate further the policies of the National Industrial
fieovery9 Act, a Banking Code committeee is hereby set up to act
as a planningr and fair-practice agency and to cooperate with the
Administrator in the administration and enforcement of this Code.
This Committee shall consist of fifteen representatives of the Amer-
ican Bankers Association, who shall be truly representative of the
.membership of the Association, a representative selected by fifty-
one (51) percent (measured by total resources) of thle nonmembers
of the. American Bankers Association, and a representative or rep-
resrentatives, without vote, appointed by the President of the United
Sta~tes.
(2.j) The Banking Code Committee may from time to time present
to the Administrator recommendations, based upon conditions in
the banking business, which will tend to eff~ectuate the operation of
the. provisions of this Code and the policy of the National Industrial
Recovery Act. Such recommendations shall, upon approval of the
Administrator, after such public notice and hearing as he may pre-
~acribe, become operative as part of this Code.
(3) Thea Bannking Code Committee may, subject to the approval of
the Administrator, require from all banks such~ reports as are neces-
iaary to effectuate the purposes of this Code, and shall upon its own
initiative or upon complaint of any person affected make investiga-
tion as to the functioning and observance of any provision of the Code
and report the results of such investigation to the Administrator.
(4); The Banking Code Committee shall, subject to the approval
of the ABdministrator, supervise the setting up of Regional Commit-
tees according to the following plans:
(e.) Where banks are now organized through State banking asso.
diatilons, city clearing-house associations, county groups, or other-
wise,~E such organizations shall, with the approval of the Banking
~~CoeCmm~ittee, appoint a committee for the purpose of assisting
"the Admninistrator and the Banking Code Committee in the ad-
usiisr~ation- and- enforcement of this Code within such local region.
(b) Banks in regions or districts not now organized shall, within
Ei thirty (30) days after the effective date of this Code, send duly









qualified representatives to a joint meeting' called for the purpose mt
organizing under the sulpervlsionn of the Banking Code Comifttee
a Regional Clearing House Association or such other comm~ritteie
along the lines of procedure set forth in the Manual of O~g~anies
t~ion and Management of Regional Clearing House Associatiskic~;om-
pile bythe Amlerican Bankers Association. r,
pie (c) Where such action hereinbefore stipulated shall not Miiar
been taken within thirty (30) days after the effective date o~f this
Code, the Banking Cod~e Committee may set up through the ~Stat
banking association or associations a Regional Commrittee or
Com mi ttees.
(5) The Committees provided for in the preceding paragiraphsl
shall assist the Adm~inistrator and the Banking Code Commit~teea in
the administration and enforcement of this Code within local araea
and shall, subject to the approval of the Administrator and .of .the
Banking Code Committee, adopt local rules and regulations govern-
ing competitive practices within local areas.
(6) The Admmnistrator may from time to time, after consultation
with the Banking Code Committee, issue such a ministrative in-ter-
pretations of the various provisions of this Code as are necessary to
effect~uate its purpose within the provisions of the National Indue-
trial Recovery Act of 1933, and such interpretations shall become
operative as a part of this Code.
ARTICr; VIII-FAmR TRADE PRACTIces

To effectuate the purposes of the National Industrial Recoveryl
Act all banks shall comply with the following rules governing fair
competition in banking practices, which shall become effective sixty
(60) days after the approval of this Code by the President o~f the
United States:
(1) Houlrs of barnkEing.--Within cities, trade areas, counties, or
such other area as is covered by the regional clearing house, or ~other
organized group, banking institutions of the same kind or character
shall, subject to the approval of the Administrator, establish uniform
maximum hours of banking operations, but any bank in such a group
may observe shorter hours than the maximum established. (Banksw
having both commercial. and savings accounts are to be construed
as of the same character.) By hours of banking operations is meant
the period during which the doors of the banking institution are
open for the purpose of serving the public. It is not intended or
required that all banks within a given area shall maintain uniform
banking hours, but it is the express intention of this gproision that~Ri
allbalang institutions of like kind and character salmiti
uniform maximum hours each with the other. The uniform hours
so adopted shall not be less than those in effect in the majority of
the banks within any given district prior to June 1, 1933, and if the~
hours of any bank are so reduced to conform with the majority,
or if any bank observes shorter hours than the majority, then no
such bank shall by reason of this fact reduce the number of its em-
ployees below the number employed at the time such reduction in
hours is made.









42l) Jat-~ubest--ujt to the rules and regulations of the Federal
pt~easeoP Bjoard with -respect -to maximum rates of interest to be
alths~~zin time a~nd.sav~ings Ideposits and the method of calculation
obeef, as prescribed in the Banking Act of 1983, all ~banks within
up~bts or distrios hereinbefore referred to (except investment
'Ytkng houses accepting deposits, which houses are sulbjectt to the
CI;...'~.~''IEod~e of Fair C~ompetition for Investment Bankers) shall maintain
;:~iIi:jthe same :maimumn rates of interest and the same method of calcu-
lation therPeof upon deposits of ik~e character, but this shall not be
construed to require any bank to pay sulch maximum rates if it does
not so desi~re. The Banking Act of 1983 (Section 11-B) provides
thatt no bank which is a member of the Federal Reserve System
may interest on demand deposits; the rules and regulations
viby clearing-house associations or other groups shall contain
a stipulation that no interest is to be paid by any bank exceptt in-
vestment banking houses accepting deposits, which houses are sub-
feet to the Code of Fair Competition for Investment Bankers)
within such group, whether member or nonmember of the Federal
Reserve System, on demand deposits, provided that nothing in
these rules and regulations shall be in contravention of the permis-
sive provisions of Section 11-B of the Bankring Act of 1933.
(3) Service charges.--Each clearing house, county association
county group, or State bank association shall, subject to the approval
of the Administrator, adopt rules fixing uniform service charges
to be charged by banks within such~ district or group in accordance
with the practice now in effect whereby services rendered by banks
shall be compensated for either by adequate balances carried or by
a scale of charges. The Federal Reserve Act prohibits member
banks from making any exchange charge for remi~tting to the Fed-
eral Reserve Bank of their district for cash items, and since the
Federal Reserve System provides a par clearance plan, exchange
charges as such shall be left to the determination of each individual
bank.
(4) Trust service.--Trust departments shall be operated in ac-
cordance with the provisions of the Statement of Principles of Trust
Institutions, adopted by the Trust Division of, and approved by, the
Executive Council of the American Bankers Associat~ion on April 6,
1933. A statement of these principles is appended as Schedule AL
and made a part of this Code.
ARTICLE I GENERAL PROVISIONs

(1) Membership in the American Bankers Association shall be
open to aUl banks included within the provisions of this Code, and
said Bssociation shall impose no inequitable restrictions upon admis-
sion to membership therein.
(e2) It is expressly provided that no provision of this Code shall
interpreted or apphied so as to convict mn any way with any Federal
or State banking law or any rule or order which has been or may
be issued by the Federal Reserve Board, the Comptroller of the
Currency, or by any State banking authority.
(3) This Code and all the provisions thereof are expressly made
subject to the right of the President, in accordance with the pro-





6' li


visions of Section 10 (b) of TJitle I: of the National Industrial Re-
covery ASct, from time to time to cancel or modify any order, ap-
proval, license, rule, or regulation issued under Title I of said Act,
and specifically to the right of t.he President to cancel or modify
his approval of this Code or any conditions imposed by him upon his
ap royal thereof. i
(4) Such other provisions of this Code as are not required to be
inc uded therein by the National Industrial Recovery Act may, with
the approval of the President, be modified or eliminated as changesJ
in the circumstances or experience may indicate.
(5i) The provisions of this Code shall expire on the expiration date
of iTitle I[ o'f the Act or on the earliest date prior thereto on which
the President shall by proclamation, or the Congress shall by joint
resolution, declare that the emergency recognized by Section I of
the National Industrial Recovery Act has ended.















;W~"': STATEltlENT OF PRINCIPLES OF TRUST INSTITUTIONS I
TRUsT DIVISION laMeRICAN BANKES AsSSOCIATION, less

I::; FOREWTORD

uThis stat~emet of principles has been formulated in order that
thei fundame~ntal principles of institutions engaged in trust business
may ~be restated and thereby:become better understood and rec~og-
nised, by the public as well as by trust institutions themselves, and
in ode that at may serve as a guide for trust institutions.
; In the conduct of their business trusts institutions are governed
by the cardinal principle that is common to all fiduciary relation-
shiis-namly, fidelity. Policies predicated upon this principle have
fopr their objective its expression in terms of safety, good manage-
ment, and personal service. Practices developed under these policies
are. designed to promote efficiency in administration and operation.
The fact that the services performed by trust institutions have
become an integral part of the social and economic structure of the
United States makes the principles of such institutions a matter of
Ipublic interest.
R. Af~. Snt~s,
President Trust Di~vision,
Amnericarn Ban~kelrs' Association.


ARTCLE 1. 8)e~uidoS Of 26774

SmarroN 1. Trust inbStitultione.-Trust institutions are corporations
engaged in trust business under authority of law. They embrace not
~only trust companies that are engaged m trust business exclusively
but also trust departments of other corporations.
Sac. 2. Trust buei~ness.--Trust business is the business of settling;
estates, administering trusts, and performing agencies in all appro-
priate ~cases for individuals; partnerships; associations; business cor-
porations; public, educational, social, recreational, and charitable
institutions; and units of government. It is advisable that a trust
institution should limit the functions of its trust department to such
services.
Aneanc II. Acceptance of Trust Business
;A trust institution is under no obligation, either moral or legal, to
accept alli business that is offered.
.-Snorox 1. Persona~l trust bucsiness.--With respect to the accept-
sie of personal trust business, the two determining factors are








these: Is trust service needed, and can the service be rendered prop-
erly 8 In personal trusts and agencies the relationship is private and
the trust Institution is responsible to those only who have or may
have a financial interest in the account.
SEC. 2. Corporate trust bu~siness.--In considering the acceptance
of a corporate trust or agency the trust institution should be satis-
fled that the company concerned is in goodl standing and that the
enterprise is of a proper nature.

ArrCLE III.-A~dm~inist~ration of Trust B usine~s

-Smacrr~oN 1. Personal trusts.--In the administration of its personal
trust business a trust institution should strive at all times to render
unexceptionable business and financial service, but it should also be
careful to render equally good personal service to beneficiaries. The
first duty of a trust institution Is to carry out the wishes of the crea-
tor of a trust as expressed in the trust instrument. Sympathetic,
tactful, personal relationships with immediate beneficiaries are essen-
tial to t~he performance of this duty, keeping in mind also the inter-
ests of ultimate beneficiaries. It should be the- policy of trust insti-
tutions that all personal trusts should be under the direct supervision
of, and that beneficiaries should be brought into direct contact with,
the administrative or senior officers of the trust department.
SEo. 2. Confiden~tial relationsh ips.--Personal trust service is of a
confidential nature and the confidences reposed in a trust department
by a customer should never be revealed except when required by law.
SEOI. 3. Fucndam~ertal duties of trustees.-I~t is the duty of a trus-
tee to administer a trust solely in the interest of the beneficiaries
without permitting the intrusion of interests of the trustee or third
parties that may in any way conflict with the interests of the trust;
tion k~eep and render accurate accounts with respect to the administra-
toofthe trust; to acquaint the beneficiaries with all material facts
in connection with the trust; and, in administering the trust, to
exercise the care a prudent man familiar with such matters would
exercise as trustee of the property of others, adhering to the rule
that the trustee is primarily a conserver.
'SEc. 4. Corporatfe trust b~usiness.--In th~e administration of cor-
porate trusts and agencies the trust institution should render the
same fine quality of service as it renders in the administration of
personal trusts and agencies. Promptness, accuracy, and protection
are fundamental requirements of efficient corporate trust service.
The terms of the trust instrument should be carried out with scrupu-
lous care and with particular attention to the duties imposed therein
upon the trustee for the protection of the security holder.
AirricE IV. Operation of trust departments

SEaoPIN 1. Sepaation of trust properties.-T'lhe properties of each
trust should be kept separate from those of all other trusts and
separate also from the properties of the trusts institution itself.
SEC. 2. In.vs7n88nt?8. Of tlfM88 u1M/.--Til inVeStment fntURonO Of a
trustee is care and management of property, not mere safekeeping at
one extreme or speculation at the other. A trust institution should








spJ~t.Ai t :trust. investments all the care and skill that it has or
."lan ines~onably acquire The responsibility for the investment of
~ii'I:l st; fC:: unds should not be reposed in an individual officer or employee
a trust department. AH1 investments should be made, retained, or
soI,~i!:;~ld only upon the authority of an investment committee composed
efea.ii~i.,~ pable and experienced offxcers or directors of the institution.
Whe;F~~ n ithei trust instrument definitely states the investment powers
ht thenLr~ustee, the terms of ;the instrument must be followed faith-
fidljeo~ If it should become unlawful or impossible or against public
pohcy to follow literally the terms of the trust instrument, the
trusteee should promptly seek the guidance of the court about vary-
ingq or iterpreting the terms of the instrument and should not act on
its own responsibility in this respect except in the face of an emer-
gency, when the guidance of the court beforehand could not be
obtiamied. If the trust instrundent is silent about trust investments
or~ if it expressly leaves the selection and retention of trust invest-
mnents to the judgment and discretion of the trustee, the latter should
be governed by considerations of the: safety of principal and de-
t~pendability of income and not by hope or expectation of unusual
gain through speculation. However, a trustee should not be con-
tenit w~ith safety of principal alone to the disregard of the reason-
tole income requirements of the beneficiaries.
*It is a fundamental principle that a trustee should not have any
personal financial interest, direct or indirect, in the trust investments,
bought for or sold to the trusts of which it is trustee, and that it
cshou~ld not purchase for itself any securities or other property fromt
ai ny .of its trusts. Accordingly, it follows that a trust institution
tshrould. not buy for or sell to Its estates or trusts any securities or
other property in which it, or its affiliate, has any personal financial
Tii terest,' and should not purchase for itself, or its affliate, any securi-
s- ties or other property from its estates or trusts.


L.. SmaroN 1. A trust institution is entitled to reasonable compensa-
fictib for its services. Compensation should be determined on the
basis of the cost of the service rendered and the responsibilities as-
mimed. Minimum fees in any community for trust services should be
Uniform and applied uniformly and impartially to all customers

t ir.'ARTICLE VI~. Promotional E~fort

SEcTION i. Bduertisin~g.--A trust institution has the same right as
any other business enterprise to advertise its trust services in ap-
propriate ways. Its advertisements should be dignified and not
overstate or overemphasize the qualifications of the trust institu-
.I tions. There should be no implication that legal services will be
rendered. There should be no reflection, expressed or implied, upon
other trust institutions or individuals, and the advertisements of all
trust institutions should be mutually helpful.

representatives of trust departments is based upon the same principle








as that of advertising. Trust business is so individual and distine-
tive that the customer cannot always obtain from printed matter all
he wishes to know about the protection and management thei trust
institution will give his estate and the services it will render his
benefici aries.
SEC. 3. New trust department.-A~ corporation should not enter
the trust field except with a full appreciation of the responsibilities
involved. A new trust department should be established only it
there is enough potential trust business within the trade area of the
institution to justify the proper personnel and equipment.
SEc. 4. Entering corporate trust jield.--Since the need for trust
and agency services to corporations, outside of the centers of popula-
tion, is much more limited than is that of trust and agency services
to individuals, a trust institution should hzesitalte to enter the cor-
porate trust or agency held unless an actual demand for such services
is evident, a~nd the institution is specially equipped to render such
service.
ARrlCLE VII. Relationships

SECTION 1. ~TV th pucblic.-Although a trust department is a dis-
tinctly private institution in its relations with customers, it is
affected with a public interest in its relations with the community.
In its relations wit~h the public a trust institution should be ready
and willing to give full inflormation about its own financial responsl-
bility its staff and equipment, and the safeguards thrown around
trust business.
SEc. 2. WVith7 bar.--Attorneys at law constitute a professional
group that perform essential functions in relation to trust business,
and have a community of interest with trust institutions in the comz
mon end of service to the public. The maintenance of harmonious
relations between trust institutions and members of the bar is in
the best interests of both, a~nd of the public as well. It is a funda-
mental principle of this relationship that trust institutions should
not engage in the practice of law.
SEc. 3. WiTth life ulnder~writers.-Life underwriters also constitute
a group having a community of interest with trust institutions in
the common purpose of public service. Cooperation between trust
institutions and life underwriters is productive of the best mutual
service to the public. It is a principle of this cooperation that trust
institutions should not engage In the business of selling life insurance.

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PAGE 1

-Registry No. 1707-02 NATIONAL RECOVERY ADMINISTRATION CODE OF FAIR COMPETITION . FOR BANKERS AS APPROVED ON OCTOBER 3, 1933 BY PRESIDENT ROOSEVELT n ---u ,..---A\\ • ,oerr"' \.~. 0~ . Executive Order ~-2. Letter of Transmittal 3. Tex t of Code 4. Schedule A UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1933 I I For sale by lhe Superintendent of Documents, Washintton, D.C. --- • Price 5 cents

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This publication is for sale by the Superintendent of Documents, Government Printing Office, Washington, D.C., and by district offices of the Bureau of Foreign and Domestic Commerce. DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE Atlanta, Ga. : 504 Post Office Building. Birmingham, Ala. : 257 Federal Building. B osto n, Mass. : 1801 Customhouse. Buffalo, N .Y.: Chamber of Commerce Building. Charleston, S.C.: Chamber of C ommerce Building. Chicago, Ill.: Suite 1706, 201 North Wells Street. Cleveland, Ohio : Chamber of Commerc e . Dallas, Tex. : Chamber of Commerce Building. Detroit, Uich.: 2213 First National Bank Building. Hou ton, Tex. : Chamber of Commerce Building. Indianapolis, Ind. : Chamber of Commerce Building. Jacksonville, Fla.: Chamber of Commerce Building. Kansas City, Mo.: 1028 Baltimore Avenue. Los Angeles, Calif.: 1163 South Broadway. Louisville, Ky.: Room 405 , 421 West Market Street. Memphis, Tenn.: 266 South Water Street. Minneapolis, Minn. : 213 Federal Building. New Orleans, La.: Room 225-A, Customl10use. New York, N.Y.: 734 Customhouse. Norfolk, Va.: 4.06 Ea~ t Plume Street. Philadelphia, Pa.: R o om 812, 20 South Fifteenth Street. Pittsburgh, Pa.: Chamber of Commerce Building. Portland, Oreg. : 215 N e w Post Office Building. St. Louis, Mo.: 506 Olive Street. San Francisco, Calif. : 310 Customhouse. Seattle, Wash.: 1406 Vance Building. (II)

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EXECUTIVE ORDER CODE OF FAIR COMPETITION FOR BANKERS An application having been duly made, pursuant to and in full compliance with the provisions of Title I of the National Industrial Recovery Act, approved June 16, 1933, for my approval of a Bankers' Code of Fair Competition, and hearings having been held there on and the Administrator having rendered his report containing an analysis of the said Code of Fair Competition, together with his recommendations and findings with respect thereto, and the Administrator having found that the said Code of Fair Competition com plies in all respects with the pertinent provisions of Title I of said Act and that the requirements of clauses (1) and (2) of subsection (a) of Section 3 of said Act have been met: Now, therefore, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by Title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise to adopt and a pp rove the report, recommendations, and findings of the Administrator, and do order that the said Code of Fair Competition be, and is hereby, approved. Approval recommended: HUGH s. JOHNSON' Administrator. THE vVHITE HousE, October 3, 1933. (ill) 14904-138-196-33 FRANKLIN D. ROOSEVELT, President.

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OCTOBER 2, 1933. THE PRESIDENT, The 1V hite House. l\1Y DEAR MR. PRESIDENT: I have the honor to submit and recommend for your approval the Bankers' Code of Fair Competition. This Code was proposed by the American Banker ' Association, :founded in 1875. The association represents slightly more than 70 percent of the total number of banks and more than 94 percent of the banking re s ources o:f the country. 1\1embership requirements therein impo s e no undue restrictions. The Bankers' Code of Fair Competition has the approval of the association, the several Advisory Boards of the National Recovery Administration, and the cooperation of officials of the Federal Re serve Bnard, the Treasury Department, and the Comptroller of the Currency's office. . No objector from nonmembers of the association appeared at the hearing, nor did any such nonmember file any objection to the code. However, representation on the code committee is provided in the code for such nonmember banks. A complete report is being transmitted herewith. Important features may be summarized as follows: (A) R e employment a;nd wages.-Unquestionably, there has been a decided increase in both number of employees and their wages since the signing of the modification of the President's Reemployment Agreement, except in small country towns. Bank staffs have been held together as far as possible. Labor advisors stated that banks pay employees higher wages than are paid by industry generally. Nevertheless, with the desire to support the President's Recovery Program and to meet reasonably the request of labor, the bankers agreed to revisions of the code, principally to reduce the time of apprenticeship from 12 to 6 months and to confine this group of employees to approximately 5 percent of entire personnel, as against the prevailing 10 percent in leading centers. These concessions and the shortening of hours, both contained in the code, will bring about additional employment and higher wages. ( B) F a.ir t r ade pr a c tic es.-( 1) Uniform maxim um banking hours are provided for similar institutions in any given area. (2) Payment of interest on depo sits by all banks is brought under the Banking Act of 1933 and the rules and regulations of the Federal Re erve Board. This provision should eliminate competitive bidding for deposits and thus enable the banks to invest more conservatively than in the past. (3) Service charges: These charges form a highly complicated phase of banking. I believe the Code Committee will be empowered more fully to handle these problems and to unify the prac tices thereunder than any oth e r agency heretofore established. ( 4) Trus t serv ices: In e:ff ect this provision is designed as an ethical standard for trust institutions. I find that the code complies with the pertinent provisions of clauses (1) and (2), subsection (a) o:f section 3 of the National Industrial Recovery Act. Respectfully, (IV) HUGH s. JOHNSON' Ad/mini,strator.

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CODE OF FAIR COMPETITION FOR BANKERS PREAMBLE To effectuate the policy of Title I of the National Industrial Recovery .Act during the period of emerg e ncy, the following provisions are established as a Code of Fair Competition for Banks: ARTICLE I-DEFINITIONS The term" bank" as used herein shall include all national banks, State banks, savings banks (except mutual savine;s banks), trust com• panies, and private bankers accepting deposit s , 1n the United States proper. The terms "employee" or "banking employee" as used herein shall mean any person employed by a bank in any capacity in con nection with its banking functions and operations. The term "United Stat es proper" as u se d herein shall mean the forty-eight ( 48) States of the United States and the District of Columbia. The term ".Administrator" as used herein shall mean the National Recovery .Administrator. Population for the purpos es of this code shall be determined by l'eference to the 1930 Federal Census. ARTICLE II-EFFECTIVE DATE The effective date of this Code except as specifically provided for hereinafter, shall be the second 1\1onday after its approval hy the President of the United States. ARTICLE III-GENERAL LABOR PROVISIONS Employers shall comply with the following provisions of Sect i on 7 (a) of Title I of the National Industrial Rec overy Act: (1) Employe es shall have the right to organize and bargain col lectively through representatives of their own choo sing and s h a ll be free from the interference, r e s traint, or c o e rcion o f e mplo y ers of labor, or their a gents , in the de signation of su c h representatives or in self-organization or in other con certed a c tivi t i es for the purpose of collective bargaining or other mutual aid or protection. (2) No employee and no one seeking e m p lo y men t shall be required as a condition of employment to join any c o m p any union or to refrain from joining, organizin g, or assi sting a l abor o r g a ni zation of his own c hoo sing . (3) Employers shall com p l y with the maximu m h ours of l a bor, minimum rates of pay, and o t h e r con ditions of employm ent, approved or pres cribed by the President. (1)

PAGE 6

2 ARTICLE IV-CHILD LABOR On and after the effective date of this Code no person under sixteen (16) years of age shall be emploY.ed by any bank; provided, however, that where a State law prescribes a higher minimum age no person below the age specified by such State law shall be employed within such State. ARTICLE V-HouRs OF El\IPLOTIIENT (1) On and after the effective date of this Code no banking em ployee shall work or be permitted to work more than forty ( 40) hours per week averaged o,er a period of thirteen (13) consecutive weeks. (2) The maximum hours of employment prescribed in the foregoing paragraph shall be subject to the following exceptions: (a) In districts or sections of the country where the seasonal nature of commerce, agriculture, or industry making necessary the moving of some product within a limited period imposes upon banking facilities an unusual demand, employees of banks subject to such peak demand may work forty-eight (48) hours per week for a period not to exceed sixteen (16) consecutive weeks in any calendar year. Any such increase in hours of employment shall be reported monthly to the Banking Code Committee provided for in Article VII hereinafter. (b) All banking employees required to perform extra work or observe later hours in connection with periodic examination by Federal or State banking authorities, over which the bank has no control either as to the time of occurrence or as to the duration, shall be exempt during such periods from the limitations upon hours of employment prescribed in the foregoing paragraphs. ( c) Employees in banking institutions employing not more than two (2) persons in addition to executive officers, in towns of less than 2,500 population, not :part of a larger trade area, and employees in a managerial or executive capacity or in any other capacity of distinction or sole responsibility (regardless of the location of the bank), who receive more than thirty-five (35) dollars per week, shall be exempt from the limitations upon hours of employment prescribed in the foregoing paragraphs. ( d) These provisions for working hours shall not apply to night watchmen employed to safeguard the assets of the bank, who cannot with safety be shifted or changed during the night period. ARTICLE VI-WAGES (1) On and after the effective date of this Code no employee in cities of over 500,000 population, or in the immediate trade area of such cities, shall be paid less than at the rate of $15 per week; no employee in cities between 250 000 and 500 000 population, or in the immetiiate trade area of such cities shall be paid less than at the rate of $14.50 per week no emplo} ee in cities between 2 500 and 250,000 po:pulation, or in the immediate trade area of such cities, shall be paid less than at the rate of $14 per week. In towns of less

PAGE 7

3 than 2,500 population the wages of all classes of empl_oyees shall ~e increased by not less than twenty (20) percent, provided that this shall not require an increase in wages to more than the rate of $12 per week. (2) It is provided, however, that employees without previous banking experience or training employed as apprentices may be paid during a continuous period of not more than six ( 6) months at the rate of eighty (80) percent of the minimum wages pre,scribed in the foregoing paragraph. No bank shall include within the category of apprentices more than one such employee for every twenty, (20) employees or fraction thereof. (3) Em~loyers shall not reduce the compensatjon for employment now m excess of the minimum wages provided :for herein, notwithstanding )'that the hours worked in such employment may be hereby reduced. ARTICLE VII-ADMINISTRATION ( 1) To effectuate further the policies of the National Industrial Recovery Act, a Banking Code Committee is hereby set up to act as a planning and fair-practice agency and to cooperate with the Administrator in the administration and enforcement o:f this Code. This Committee shall consist of fifteen representatives of the American Bankers Association, who shall be truly representative of the membership of the Association, a representative selected by fiftyone (51) percent (measured by total resources) of the nonmembers of the American Bankers Association, and a representative or representatives, without vote, appointed by the President of the United States. (2) The Banking Code Committee may from time to time present to the Administrator recommendations, based upon conditions in the banking business, which will tend to effectuate the operation of the provisions of this Code and the policy of the National Industrial Recovery Act. Such recommendations shall, upon approval of the Administrator, after such public notice and hearing as he may prescribe, become operative as part of this Code. (3) The Banking Code Committee may, subject to the approval of the Administrator, require from all banlrs such reports as are necessary to effectuate the purposes of this Code, and shall upon its own initiative or upon complaint of any person affected make investigation as to the functioning and observance of any provision of the Code and report the results of such investjgation to the Administrator. ( 4) The Banking Code Committee shall, subject to the approval of the Administrator, supervise the setting up of Regional Committees according to the following plans : (a) Where banks are now organized through State banking asso ciations, city clearing-house associations, county groups, or otherwise, such organizations shall, with the approval of the Banking Code Committee, appoint a committee for the pur~ose of assisting the Administrator and the Banking Code Committee in the administration and enforcement of this Code within such local region. (b) Banks in regions or districts not now organized shall, within thirty (30) days after the effectiYe date of this Code, send duly !

PAGE 8

4 qualified representatives to a joint meeting called for the :2urpose of organizing under the supervision of the Banking Code Committee a Regional Clearing House Association or such other committee along the lines of procedure set forth in the Manual of Organization and M:anagement of Regional Clearing House Associations com piled by the American Bankers Association. ( c) Where such action hereinbef ore stipulated shall not have been taken within thirty (30) days after the effective date of this Code, the Banking Code Committee may set up through the State banking association or associations a Regional Committee or Committees. ( 5) The Committees provided for in the preceding paragraphs shall assist the Administrator and the Banking Code Committee in the administration and enforcement of this Code within local areas and shall, subject to the approval of the Administrator and of the Banking Code Committee, adopt local rules and regulations governing competitive practices within local areas. ( 6) The Administrator may from time to tin1e, after consultation with the Banking Code Committee, issue such administrative interpretations of the various provisions of this Code as are necessary to effectuate its purpose within the provisions of the National Industrial Recovery Act of 1933, and such interpretations shall become operative as a part of this Code. ARTICLE VIII-FAIR Th.ADE PRACTICES To effectuate the purposes of the National Industrial Recovery Act all banks shall comply with the following rul"es go-,erning fair competition in banking practices, which shall become effective sixty (60) days after the approval of this Code by the President of the United States : (1) Hours of brcn.kvng.-Within cities, trade areas, counties, or such other area as is covered by the regional clearing house, or other organized group, banking institutions of the same kind or character shall, subject to the approval of the Administrator, establish uniform maximum hours of banking operations, but any bank in such a group may observe shorter hours than the maximum established. (Banks having both commercial and savings accounts are to be construed as of the same character.) By hours of banking operations is meant the period during which the doors of the banking institution are open for the purpose of serving the public. It is not intended or required that all banks within a given area shall maintain uniform banking hours, but it is the express intention of this provision that all banking institutions of like kind and character shall maintain uniform maximum hours each with the other. The uniform hours so adopted shall not be less than those in effect in the majority of the banks within any given district prior to June 1, 1933, and if the hours of any bank are so reduced to conform with the majority, or if any bank observes shorter hours than the majority, then no such bank shall by reason of this fact reduce the number of its em ployees below the number employed at the time such reduction in hours is made.

PAGE 9

5 (2) Interest.-Subject to the rules and regulations of the Federal Reserve Board with respect to maximum rates of interest to be paid on time and savings deposits and the method of calculation thereof, as prescribed in the Banking Act of 1933, all banks within grou_ps or districts hereinbefore referred to ( except investment bankin~ houses accepting deposits, which houses are subject to the Code or Fair Competition for Investment Bankers) shall maintain the same maximum rates of interest and the same method of calculation thereof upon deposits of like character, but this shall not be construed to require any bank to pay such maximum rates if it does not so desire. The Banking Act of 1933 (Section 11-B) provides that no bank which is a member of the Federal Reserve System may pay interest on demand deposits; the rules and regulations provided by clearing-house associations or other groups shall contain a stipulation that no interest is to be paid by any bank ( except investment banking houses accepting deposits, which houses are sub ject to the Code of Fair Competition for Investment Bankers) within such group, whether member or nonmember of the Federal Reserve System, on demand deposits, provided that no thing in these rules and regulations shall be in contravention of the permis sive provisions of Section 11-B of the Banking Act of 1933. (3) Service charges.-Each clearing house, county association county group, or State bank association shall, subject to the approval of the Administrator, adopt rules fixing uniform service charges to be charged by banks within such district or group in accordance with the practice now in effect whereby services rendered by banks shall be compensated for either by adequate balances carried or by a scale of charges. The Federal Reserve Act prohibits m embe r banks from making any exchange charge for r emitting to the Federal Reserve Bank of their district for cash items, and sinc e the Federal Reserve System provides a par clearance plan, exchange charges as such shall be left to the determination of each individual bank. ( 4) Trust service.-Trust departments shall be operated in ac cordance with the provisions of the Statement of Princip les of Trus t Institutions, adopted by the Trust Divisio n of, and approve d by, the Executive Council of the American Bankers Association on April 6, 1933. A statement of the~ e principles is appended as Schedu le A and made a part of this Code. ARTICLE IX-GENERAL PROVI8IONS (1) Membership in the American Bankers Association sha ll be open to all banks included within the provisions of this Code and said Ass ociation shall impo se no inequitable restrictions upon admis sion to membership therein. (2) It is expressly provided that no provision of this Code shall be interpreted ?r applied o as to conflict in any way with any Federal or State banking law or any rule or order which has been or may be issued by the Federal Reserve Board, the Comptroller of the Currency, or by any State banking authority. . (3) This Code and all the provisions thereof are expressly made subject to the right of the President, in accordance with the pro-

PAGE 10

6 visions of Section 10 (b) of Title I of the National Industrial Re covery Act, from time to time to cancel or modify any order, ap proval, license, rule, or regulation issued under Title I of said Act, and specificall[ to the right of the President to cancel or modify his approval o this Code or any conditions imposed by him upon his approval thereof. ( 4) Such other provisions of this Code as are not required to be included therein by the National Industrial Recovery Act may, with the approval of the President, be modified or eliminated as changes in the circumstances or experience may indicate. ( 5) The provisions of this Code shall expire on the expiration date of Title I of the Act or on the earliest date prior thereto on which the President shall by proclamation, or the Congress shall by joint resolution, declare that the emergency recognized by Section I of the National Industrial Recovery Act has ended.

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SCHEDULE A A STATEMENT OF PRINCIPLES OF TRUST INSTITUTIONS TRUST DIVISION AMERICAN BANKERS ASSOCIATION, 19SS FOREWORD This statement of principles has been formulated in order that the fundamental principles of institutions engaged in trust business may be restated and thereby become better understood and recognized by the public as well as by trust institutions themselves, and in order that it may serve as a guide for trust institutions. In the conduct of their business trusts institutions are governed by the cardinal principle that is common to all fiduciary relationships-namely, fidelity. Policies predicated upon this principle have for their objective its expression in terms of safety, good management, and personal service . Practices developed under these policies are designed to promote efficiency in administration and operation. The fact that the services performed by trust institutions have become an integral part of the social and economic structure of the United States makes the principles of such institutions a matter of public interest. R. M. SIMS, President Trust Divisi on, A rnerican B anke1 s' Association. ARTICLE I. Defirdtion of Terms SEarroN 1. Trust institutions.-Trust institutions are corporations engaged in trust business under authority of law. They embrace not only trust companies that are engaged in trust business exclusively but also trust departments of other corporations. SEc. 2. Trust business.-Trust business is the business of settling estates, administering trusts, and performing agencies in all appropriate cases for individuals; partnerships; associations; business corporations; public, educational, social, recreational, and charitable institutions; and units of government. It is advisable that a trust jnsti.tution should limit the functions of its ~rust department to such serv1ces. ARTICLE II. Acceptamce of Trust Business A trust institution is under no obligation, either moral or legal, to accept all business that is offered. SECTION 1. Personal trust business.-With respect to the accept ance of personal trust business, the two determining factors are (7)

PAGE 12

,,, 8 these: Is trust service needed, and can the service be rendered properly 1 In personal trusts and agencies the relationship is private and the trust institution is responsible to those only who have or may have a financial interest in the account. SEC. 2. Corporate trust business.-ln considering the acceptance of a corporate trust or agency the trust institution should be satisfied that the company concerned is in good standing and that the enterprise is of a proper nature. ARTICLE III.-Adminwtration of Trust Business SEOTION 1. Personal trusts.-In the administration of its personal trust business a trust institution should strive at all times to render unexceptionable business and financial service, but it should also be careful to render equally good personal service to beneficiaries. The .first duty of a trust institution is to carry out the wishes of the creator of a trust as expressed in the trust instrument. Sympathetic, tactful, personal relationships with immediate beneficiaries are essential to the performance of this duty, keeping in mind also the interests of ultimate beneficiaries. It should be the, policy of trust institutions that all personal trusts should be under the direct supervision of, and that beneficiaries should be brought into direct contact with, the administrative or senior officers of the trust department. SEc. 2. Confidential relationships.-Personal trust ser--vice is of a confidential nature and the confidences reposed in a trust department by a customer should never be revealed except when required by law. SEo. 3. Fundamental duties of trustees.-It is the duty of a trustee to administer a trust solely in the interest of the beneficiaries without permitting the intrusion of interests of the trustee or third parties that may in any way conflict with the interests of the trust; to keep and render accurate accounts with respect to the administration of the trust; to acquaint the beneficiaries with all material facts in connection with the trust; and, in administering the trust, to exercise the care a prudent man familiar with such matters would exercise as trustee of the property of others, adhering to the rule that the trustee is primarily a conserver. SEo. 4. Corporate trust business.-In the administration of corporate trusts and agencies the trust institution should render the same fine quality of service as it renders in the administration of personal trusts and agencies. Promptness, accuracy, and protection are fundamental requirements of efficient corporate trust service. The terms of the trust instrument should be carried out with scrupulous care and with particular attention to the duties imposed therein upon the trustee for the protection of the security holder. ARTICLE IV. Operation of trust d e partments SEorroN 1. Separation of trust properties.-The properties of eac h trust should be kept separate from those of all other trusts and separate also from the properties of the trusts institution itself. SEc. 2. Investmen t of trust funds.-The investment function of a trustee is care and management of property, not mere safekeeping at one extreme or speculation at the other. A trust institution should

PAGE 13

9 devote to its trust investments all the care and skill that it has or can reasonably acquire. The responsibility for the investment o-f trust funds should not be reposed in an individual officer or employee of a trust departme nt. All investments should be made, retained, or sold only upon the authority of an inve stment committee composed of capable and experienced officers or directors of the institution. When the trust instrument definitely states the investment powers of the trustee, the terms of the instrument must be followed faithfully. If it should become unlawful or impossible or against public policy to follow literally the terms of the trust instrument, the trustee should promptly eek the guidance of the court about varying or interpreting the terms of the instrument and should not act on its own responsibility in this respect exc ept in the face of an e mer gency, when the guidance of the court beforehand could not be obtained. If the trust instrument is silent about trust investments or if it expressly leaves the selection and retention of trust invest ments to the judgment and dis cretion of the trus tee , the latte r should be governed by considerations of the safety of principal and dependability of incorn . e and not by hope or expectation of unusual gain through speculation. However, a trustee should not be content with safety of principal alone to the disregard of the reason able income requirements of the beneficiaries. It is a fundamental principle that a trustee should not have any personal financial interes t, direct or indi rect, in the trust investments, bought for or sold to the trusts of which it is trustee, and that it should not purchase for itself any securities or other property from any of its trusts. Accordingly, it follows that a trust institution should not buy for or sell to its estates or trusts any securities or other property in which it, or its affiliate, has any personal financial interest, and should not purchase for itself, or its affiliate, any securi ties or other property from its estates or trusts. ARTICLE V. Oompensaiion for Trust S ervic e SECTION 1. A trust institution is entitled to reasonable compensation for its services. Comp ensation should be determ .ined on the basis of the cost of the service rendered and the responsibilities as sumed. }.finimum fees in any community for trust services should be uniform an d applied uniformly and impartially to all customers alike. ARTICLE VI. Pr01notional Eff'ort SECTION 1. Adve rtisi ng.-A trust institution has the same right as any other business enterprise to advertise it: tru t ser v ices in appropriate way . Its advertis m ents s hould be dignified and not oven,tate or overempha iz e the qualifications of the trust institution . 'I here hould b e n o implicatio n that legal services will be rendered. There houlcl be no reflection, expres eel or implied, upo n other tru t institutions or indiviclual , and the a cherti ements of all trust institution hould be mutually helpful. SEC. 2. Pe1 sonal r e p ' r e s entation.-The propriety of having personal represen t atives of trust departments is bas e d upon the same principle

PAGE 14

10 as that of advertising. Trust business is so individual and distinc tive that the customer cannot always obtain from printed matter all he wishes to know about the protection and management the trust institution will give his estate and the services it will render his beneficiaries. SEC. 3. New trust department.-A corporation should not enter the trust field except with a :full appreciation of the responsibilities involved. A new trust department should be established only if there is enough potential trust business within the trade area of the institution to justify the proper personnel and equipment. SEc. 4. Entering corporate trust field.-Since the need :for trust and agency services to corporations, outside of the centers of popula tion, is much more limited than is that o:f trust and agency services to individuals, a trust institution should hesitate to enter the corporate trust or agency field unless an actual demand for such services is e~dent, and the institution is specially equipped to render such service. ARTICLE VII. Relationships SECTION 1. With public.-Although a trust department is a distinctly private institution in its relations with its customers, it is affected with a public interest in its relations with the community. In its relations with the public a trust institution should be ready and willing to give :full in:fonnation about its own financial responsi bility, its staff and equipment, and the safeguards thrown around trust business. SEC. 2. With bar.---Attorneys at law constitute a professional group that perform essential functions in relation to trust business, and have a community of interest with trust institutions in the com mon end o:f service to the public. The m . aintenance of harmonious relations between trust institutions and members of the bar is in the best interests of both, and of the public as well. It is a :funda mental principle of this relationship that trust institutions should not engage in the practice of law. SEc. 3. With life underwriters.-Life underwriters also constitute a group having a community of interest with trust institutions in the common purpose of public service. Cooperation between trust institutions and life underwriters is productive of the best mutual service to the public. It is a J?rinciple of this cooperation that trust institutions should not engage 1n the business of selling life insurance. 0

PAGE 16

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