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HE term "trust company" has not in the past been one whose meaning was clearly defined; nor is it at the present day so used as to admit of a definition that is both brief and accurate. This doubtless results, in part, from the fact that the trust company is an institution whose characteristics have gradually developed in accordance with the needs of the time and of the community; and in part because concerns doing widely different kinds of business have found it of advantage to adopt the name "trust company," and to incorporate under the laws governing such companies. Even salary-loan concerns and pawnbrokers have made use of the name, and numerous abuses have led several of the States to pass laws prohibiting the use of the word "trust" in titles, except by direct authority.1


Among the fifteen or sixteen hundred trust companies now (1908) existing in the United States, a careful analysis of the business actually done would show that the term is applied to corporations whose functions vary greatly. Some are simply banks of deposit and discount; many are savings banks; some are safe-deposit companies; some are title-insurance or fidelity-insurance companies; some serve chiefly as fiscal agents for corporations, and as registrars, transfer agents, intermediaries in reorganizations, promoters, etc.; some devote themselves to the care of estates and to services as executors, administrators, guardians, trustees, etc. Most companies combine two or more of these classes of functions, while a few undertake nearly all of them. In early years the life insurance and trust businesses were intimately associated.

Thus it is evident that in tracing the development of trust companies we shall find ourselves treating of institutions which, under the same general name, have performed functions of various kinds. Statistics of any sort regarding trust companies are difficult to obtain, and none can be had which distinguish between the different classes of companies using that name. There is no available information showing how many of the trust companies are doing a trust business properly so-called, as distinguished from ordinary savings or commercial banking. It is also to be observed that some of the functions which are coming to be recognized as distinctively those of the trust company have always been carried on to some extent by banks.

1 This was done in New York in 1900.

What has been said refers to the use of the term by those who are to some degree, at least, conversant with its true or usual meaning. The general public is still curiously ignorant of the signification of the name; and, incredible as it may seem, many intelligent people even confuse the trust company with the "trust."

A ludicrous instance of this was reported at the meeting of the American Bankers' Association in 1897. "In response to a request addressed to the Secretary of State for each State, for a certified copy of the laws relating to trust companies, about half a dozen secretaries transmitted copies of the laws regulating, restricting or prohibiting pools, trusts, unlawful combinations and conspiracies in restraint of trade. The copies of these laws were returned with an explanation that it was the statutes relating to trust companies which act as trustee, executor, etc., which were desired. In one case, the Attorney-General, to whom the letter was referred, replied that he regretted misreading the first letter on the subject, but after a thorough search he was convinced that there were no statutes of his State relating to trust companies, and that, as far as he could learn, there were no trust companies doing business in his State, except the Standard Oil Co."2

Education on the subject has evidently been going on, for the writer has had no trouble in getting satisfactory replies from officials of all the States.

In the following pages the writer has aimed to keep in mind, whenever possible, the distinction between the trust company proper and the ordinary bank doing business under the name "trust company;" but the reader is reminded that, in the statistics particularly, it is not possible to follow out the distinction. The reader will also observe that in our day the trust company has, in most States, so far entered into the field of the ordinary bank, that a proper definition would assign to it both banking and trust functions.

Both the name trust company and the idea of its typical functions have been known since early in the nineteenth century. It was not supposed, however, that these functions were of sufficient importance to establish a distinct class of companies for their performance, nor did the trust company as an institution attract general attention until well along in the last quarter of the century.


The earliest instance of a company chartered with power to perform trust business was that of the Farmers' Fire Insurance and Loan Company, which was incorporated by the Legislature of New York, February 28, 1822. The act states that certain persons "Associated as a

2 Paper by Ralph Stone on "Statutes of the Several States Relating to Trust Companies." Proceedings American Bankers' Association, 1897, p. 158.

3 For the facts stated regarding the early history of this company, see Cator; "Trust Companies in the United States," pp. 67-72; and Proc. Amer. Bankers'

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