Organization. - Trust companies are in reality banking institutions organized under and subject to the laws of the different states.

The Business of Trust Companies ranks among the important activities of commerce. Since trust companies are state institutions, their management and scope vary in the different states. In general the business of trust companies may be stated as follows:

1. They receive money on deposit, subject to checks, the same as national banks.

2. They allow interest on special deposits, usually on amounts above a specified sum.

3. They make loans in the same careful, conservative way that is so characteristic of national banks.

4. Where they have superseded state banks they undertake the collection of commercial paper.

5. They are usually connected with the clearing house, either directly or through some convenient national bank.

6. They receive on deposit money, government securities, stocks, bonds, coin, jewelry, valuable papers and documents, evidences of debt, etc., upon such terms and conditions as may be agreed upon.

7. They collect and disburse the interest or income, if any, upon property received on deposit and at maturity collect and disburse the principal of such property as produces interest or income.

8. They act as trustees for widows and children.

9. They act as agents in transferring stocks and bonds.

10. They act as agents for the care and management of invested property.

11. They may be appointed by probate courts as receivers, executors, administrators, etc.

12. They are usually authorized to receive and hold moneys and property in trust and on deposit from courts of law and equity, executors, assignees, guardians, and trustees upon such terms and agreements as may be decided upon.

Note. - In Massachusetts and some of the other states trust companies are required to maintain a reserve fund similar to the reserve fund of national banks, and to annually set aside 10% of their net earnings as a surplus or guaranty fund until such fund amounts to 25% of their capital stock. The liability of the stockholders is also the same as that of the stockholders of a national bank.