The trust companies owe their recent rapid growth to several factors. Probably the greatest is the tremendous increase in private and corporate wealth in the last generation. The need for some institutions to care for these large private estates and assist corporate financing promoted the trust company. The trust company has been highly useful in assembling funds for corporate investment, and, in conjunction with investment houses, in directing our industrial development. Its wide range of powers has also attracted customers, for it is able to serve practically every financial need of the private person or corporation; the customer is thus relieved from dealing with different parties and dividing his account. The trust companies have found it possible to pay better rates of interest on deposit balances than have the commercial banks, and this has been a powerful magnet for accounts. As they have been subject to less state legislation, regulation, and taxation, they have had fewer expenses and greater freedom in profit-making.

Another contributory cause of the rapid growth of trust companies was their freedom at one time from regulation as to the minimum reserve kept. They carried practically their whole reserve on deposit with other banks. The accompanying table1 shows that the reserve ranged from 15 to 27 per cent, but that the cash actually kept on hand by the trust companies ran as low as 2 per cent against total deposits, at the time of their most rapid development. After the panic of 1907 the ratio of till money to deposits was raised, both by law and voluntarily from proved business expediency.

1 Herrick, Trust Companies. New York, Bankers Publishing Company, 1915, p. 26.

Relative Growth of Banks and Trust Companies in the United States* (Resources In Millions)

Loan and Trust Companies

State Banks

Mutual Savings Banks

Joint-Stock Banks

National Banks

Private Banks

Date

Number

Resources

Number

Resources

Number

Resources

Number

Resources

Number

Resources

Number

Resources

I875

35

$ 122

551

$ 272

674

$ 896

.......

.......

2,076

$ 1,913

.......

.......

1880

30

126

620

354

629

881

.......

.......

2,076

2,035

.......

.......

1885

40

248

975

553

646

1,203

......

......

2,689

2,421

.......

.......

1890

149

503

2,101

870

637

1,486

284

$ 255

3.484

3,061

1,344

$164

1895

242

807

3,774

1,147

664

1,756

353

297

3,715

3.470

1,070

130

1900

290

1,330

4,369

1,759

652

2.336

350

288

3,732

4.944

989

126

1905

683

2,865

7,794

3,190

668

2,967

569

400

5,668

7.327

1,028

165

1910

1,091

4,216

12,166

3,964

638

3.652

1,121

829

7,145

9,896

934

160

1915

1,664

5,873

14,598

4,399

630

4,319

1,529

1,238

7.605

11,795

1,036

177

1919

1,377

7,959

17,225

11,701

622

5,171

1,097

1,281

7.785

21,834

1,017

266

* Reporting to the Comptroller of the Currency at his call, about June 30. These figures for other than national banks, particularly in the earlier years, are not exact, for the Comptroller had to depend upon voluntary reports and such unofficial sources as he might find.

Counted in with the state banks. Not reported.

Reserves And Cash Actually Kept On Hand By Trust Companies

Year

Reserve

Till Money

Year

Reserve

Till Money

1890

15.7%

5.9%

1902

17.2%

2.2%

1891

15.8

4.6

1903

17.7

3.0

1892

18.7

5.4

1904

24.9

3.6

1893

15.4

4.5

1905

18.2

3.1

1894

26.1

7.2

1906

17.0

3.7

1895

23.2

6.5

1907

16.6

4.9

1896

18.3

4.9

1908

25.4

6.1

1897

20.5

5.1

1909

27.4

8.8

1898

17.8

3.4

1910

23.1

8.8

1899

18.5

2.9

1911

25.2

8.0

1900

21.3

2.9

1912

23.6

8.4

1901

17.0

2.0

1913

23.0

8.6