The examination and regulation of trust companies developed later than the examination and regulation of banks. This was due to the late standardization of trust companies and was brought on by the invasion of the field of commercial banking. To the degree that trust companies devote themselves to commercial banking they should be subject to the same restrictions and regulations as the competing commercial banks. The interdependence of all financial institutions upon each other, particularly in times of panic, and the danger arising from reckless competition between trust companies and banks, warrant the state legislatures in providing for as severe supervision over the one kind of institution as over the other. The supervision of the trust companies devolves upon the superintendent of banks. Herrick2 presents data to show that trust companies have a fair record as to failures compared with other financial institutions. The comparison lacks exactness, it is true, for the data are not complete, but it is probably as accurate as can be determined.

Table Showing Comparative Failures of the Various Types of Financial Institutions

Suspensions

Average

Number of

Banks

Percentage of Failures to Average Number of Banks

Total (21 years)

Per Year

National banks...

386

18.4

5,039

•36%

State banks......

676

32.2

7,400

•43

Savings banks... .

178

8.5

1,290

.66

Trust and loan companies.....

106

5.0

1,000

•50

The actual losses to depositors have been small indeed, for many of the suspended companies resumed payments later, and others were able to liquidate their debts at par. There is a common, unchallenged statement that not a dollar of trust funds has ever been lost through a trust company.

2 Op. Cit. P. 23.