The term "private banker" has come to represent two categories in the United States. In Wall Street it technically refers to a small group of great banking houses, such as J. P. Morgan and Company, J. and W. Seligman and Company, Kuhn, Loeb and Company, August Belmont and Company, Brown Brothers and Company, and a few others. These houses do an international as well as a national business. They have branches in the leading foreign financial capitals, or have as their representatives the most powerful banking houses in those places; and in turn they are the representatives of the great foreign houses like the Rothschilds, and also of foreign governments and big corporations. In the other financial centers of the United States they own branches or are closely allied, by partnership, stock ownership, or community of interest, with the strongest banking houses.

The private bankers transact a general banking business much the same as the incorporated banks do, but free from many of their limitations. They make call and time loans, buy and sell mercantile paper, and engage extensively in all foreign exchange operations. They act as fiscal agents for corporations and associations. They are dealers in investment securities. They often conduct important operations in the stock market. They underwrite new issues of stocks and bonds for railroad and other corporations. They undertake the reorganization of insolvent or embarrassed railroads. Of recent years they have been especially prominent in the promotion of immense industrial companies. They are at once bankers, brokers, dealers in foreign exchange, promoters, organizers, and underwriters. . . . The deposits and corporate connections of two or three of these private banking houses make them rank with the most powerful banking institutions in the world.

Their field of operations is, indeed, as wide as the world. Their business in London and Paris and Berlin is almost as much as it is in New York. . . . The private bankers are intimately connected with and influential in the railroad and the big industrial corporations which engage in the principal branches of trade.3

3 Pratt, Sereno S., The Work Of Wall Street, 1914, Pp. 340-341.

On a few occasions these banking houses have come to the support of the national Treasury, as for instance, the Morgan-Belmont Syndicate in 1894-1895; they also have been active in relief in times of panic.

The term "private banker" also applies to smaller houses scattered throughout the United States which do a more or less diversified banking and financial business. The Comptroller of the Currency estimates that there are approximately 3,500 private banks in the United States, and of these he was able in 1919 to gather statistics of only 1,017. Originally none of the private banks were under the supervision of the state; more recently many of the states have subjected them to some supervision; and some states have forbidden the establishment of any new houses of the kind except as they submit to state supervision. As many of them are outside the supervision of the state, the Comptroller of the Currency must depend upon voluntary reports from them. The result is that data upon them arep> very incomplete.

Most of these houses are proprietor or partnership organizations, and are therefore not corporate creatures of the state and are outside the corporate law. Hence they enjoy a wider latitude in their operations and are subject to less interference from the state. They determine their own reserve requirements and their own limitations on loans; they depend upon the confidence of the financial world in their abilities, skill, and judgment, and not upon the regulation of the state. Some states, in order to protect the state banks and trust companies and to protect the public against bad banking, have set nearly as severe restraints upon private bankers as upon others.