A bank of discount is owned by the shareholders who contribute the capital. It receives commercial and other deposits, usually payable on demand. It discounts commercial paper, makes short loans for commercial purposes, and is managed by a board of directors chosen by the shareholders, who hold annual meetings to receive reports and elect directors.

Savings Banks. Savings banks are organized by trustees and operate usually without a capital stock, having no shareholders. The deposits are received chiefly in small sums, and are payable only after notification by the depositors that they wish to withdraw part or all of their money. In the case of small withdrawals, the notification is usually waived, except in periods of financial stringency or depression. Loans of the deposit funds are made for longer periods as a rule than in the case of banks of discount, and are made to investors, for building purposes, etc. The trustees elect some of their number as directors and these directors manage the business. If a trustee resigns or dies, a successor is elected by the other trustees. The depositors have no voice in the election of officers or in the management of the business.

Trust Companies. Trust companies are a modern development of the banking business. They combine many of the functions of the older banks of discount with the execution of trusts. Deposits are received by them and interest paid. The making of loans forms an important part of the business. The funds are lent in all cases on collateral security, stocks, bonds, etc., and not, as in the case of commercial banks, on the credit of business men and firms.

Trust companies act as administrators and executors of estates, guardians to minors, trustees for beneficiaries of wills, etc. They are often called upon also to act as trustees of bondholders in large operations, such as the building or reorganizing of railroads.

One of their principal functions is the management of real estate, especially where the ownership is vested in estates of deceased individuals or in corporations. They act as fiduciary agents in business operations of a greatly varied character, and in recent years have largely replaced individual trustees in the management of estates, etc., for the very good reasons that they possess capital, responsibility, experience, disinterestedness and conservatism, and besides have fixed charges of a reasonable character for the services they render. They have proved a valuable addition to the modern machinery of business.