It is conceivable that one kind of bank could meet the banking needs of all the people, and in fact such a condition is approximated in a little one-bank town where the institution may be either a state or national bank, a savings banl: or a trust company. Sometimes it is a private bank. Generally speaking, however, the so-called commercial bank is the variety to be found where there is but a single bank. Similarly, in larger cities, we find trust companies which, when the state laws do not contravene, perform practically every financial service except that of note issue.

Banks are generally classified as follows: Commercial banks (either national or state), trust companies, savings banks and private banks. The building and loan association is, in principle, a banking organization and some forms of life insurance are closely allied to banking. Each has its particular specialty or function which characterizes it. The fact that there are these different groups, instead of one general kind of bank, is due partly to natural development and partly to design. Since all banking in principle is identical and governed by the same economic laws, it is not surprising to note the tendency in legislation to bring them all closer together. For example, the Federal Reserve Act provides that trust companies may take out national charters under certain conditions, while at the same time, national banks, when not in contravention with state laws may act in a "fiduciary capacity," that is, perform functions usually limited to trust companies. The right of both commercial banks and trust companies to accept savings deposits is universally conceded. They frequently conduct bond departments, thus encroaching upon what was formerly the especial field of the private banker who is usually an "investment banker." The private banker, in turn, very frequently does a large commercial business and many states are revising their banking laws, which will bring him under the direct supervision of the banking department. The conclusion, therefore, is that although the specialist is more in demand than ever, every banker should be trained along broad lines.

The close relation between banks of different kinds will be demonstrated more clearly by referring to the organization charts and the statements of condition shown on pages 22 and 23. The difference between banks is precisely the difference between the classes of people whom they serve. The savings bank is usually the bank of the small depositor, the wage earner and the thrifty of all classes; the trust company gives its services more especially to those who have fixed incomes from investments; land owners and corporations. The commercial bank, as the name signifies, does business with manufacturers, tradesmen, merchants and others who "turn" their money at seasonal intervals. Thus we have the "Dime Savings Bank," "Home," "First Penny," "Dollar Savings Bank" and similar suggestive titles. Among trust companies common names are "Fidelity," "Guarantee," "Provident" and "Security." When the National Bank Act was first passed it attempted to restrict the titles of the banks to "First," "Second," "Third," etc., but the commercial state banks refused to accept the new charters with this provision, so the act was amended. Hence we have the "Merchants," "Tradesmens," or "Commercial" national banks, while in the agricultural districts, where the farmer is the business man, the "Farmers Bank" is common.

The commercial banks may be said to be the most important since they come into close contact with the industrial world. Upon them falls the function of note issue as well as the other two, deposit and discount. This is due to natural causes, since the greater the trade and commerce, the greater will be the need for money or a medium of exchange. Bank notes give the needed elasticity to currency issues. If our crops were always the same each season, if the population remained fixed in numbers, if each citizen on a given day of each week, year in and year out, purchased the same article of food, furniture or clothing, then our money supply would not need to possess the power to expand or contract. But conditions are fortunately otherwise. Until the Federal Reserve Act became law the issue of notes was a prerogative of the national banks. Ultimately this function will be taken over by the Federal reserve banks. The process of note issue is quite simple: the issuing bank circulates its notes - promises to pay on demand - as money. In order that there shall be confidence in the notes, the bank must be solvent and the notes must be redeemed without question. There must be proper supervision and control, else there is danger of inflation or too extensive an issue. Bank laws in every country are constructed to guard against improper issues since banking systems have proved successful or failures in accordance with the soundness of note issues.

Banking history and business experience have taught the lesson that there are times when there must be a bank of banks. The great central banks of Europe perform this service abroad, and in our own country the Federal reserve banks act as the fly-wheel and governor of our financial machinery. Banks need to borrow just as do individuals, and they can concentrate their surplus or reserve in the reserve banks just as people accumulate their savings in ordinary banks.