Character Of Business

State banks, like national banking institutions, conducted a general commercial banking business. The trust company differed from the ordinary State bank, in that it was granted the privilege of exercising trust powers, and acted as administrator, executor and guardian. State banks, including trust companies, were supervised by a designated State officer, usually the State Superintendent of Banks.

Legislation; State Banks. - As may be expected, no unity of organization or of administration existed. As to capital and surplus, the various States had each their own requirements. Reserve requirements were common in State bank laws, ranging from fourteen to fifteen per cent, for time deposits, and from fifteen to twenty per cent, for demand deposits.

Supervision Of State Banks

The State banks were required, moreover, to furnish reports of their operations at least a few times a year, to the proper State banking officers. Examiners were maintained to go into the affairs of banks at regular intervals, and, in special cases, if necessary. This procedure applied to State banks, trust companies, savings banks, and savings and loan societies.

Character Of Foreign Business Conducted By State Banks

Prior to the introduction of the Federal Reserve System, these State institutions, by reason of the fact that no such stringent legislation was imposed upon their entering foreign fields or engaging more widely in foreign financing, were much in advance of the national banks.

Their domestic business was of the order of the national banks, discounts, loans and collections comprising the bulk of the business dealings of these institutions. They, too, had built up a reputation within their communities and were by no means anxious to have it done away with, without assurances that the new system would bring them greater benefits.