As trust companies entered the field of commercial banking, they came into direct competition with national banks. These institutions began to appreciate the advantages of conducting a fiduciary business which yielded profits and at the same time attracted customers to the other departments of the bank. Trust powers were not directly granted by federal law, but a national bank was able to overcome this omission by purchasing a majority interest in the stock of a trust company incorporated under state law. This tendency to combine commercial banking and fiduciary business was given official sanction by the Federal Reserve Act, which in Section 11-K authorizes the Federal Reserve Board to confer certain trust powers upon national banks applying for them. This counter invasion by the national banks into the province of the trust, companies stirred vigorous opposition. The question arose as to whether the Federal Reserve Board could grant national banks fiduciary powers if these were conferred by state law upon trust companies only. After consideration by state judiciaries, the Supreme Court of the United States declared that Congress was fully within its rights in granting trust powers to national banks. However, this decision recognized a state's prerogative to impose upon national banks exercising trust powers the same regulations which governed local corporations engaged in this business. Congress accepted this view and incorporated it in an amendment to the Federal Reserve Act.

It has been observed several times that there is now little difference in the business of a large trust company and that of a national bank. They both engage in commercial banking, receive savings deposits, operate a bond department or conduct a separate investment company, and exercise trust functions. The nature of commercial, savings, and investment banking has been already considered, and fiduciary business alone remains to be studied. This analysis will not consider specifically the operation of either a trust company or the fiduciary department of a national bank, but rather will examine the administration of each of the more important trusts, whether executed by state or federal institution.