During the past twenty-five years there has developed in the United States a class of financial institutions called Trust Companies, combining the functions of a bank with those of a fiduciary agent. They receive deposits and make loans, but of a different character from those of ordinary banks. It is the policy of conservative banking to make only short time loans, and upon collaterals or upon mercantile paper - such as is given for goods sold. Every commercial bank aims to avoid getting its funds locked up in fixed property such as real estate, upon which it would be difficult to realize in case of a financial stringency. On the other hand, trust companies aim to make long time loans on real estate or other sound security. Their money consists largely of trust funds belonging to estates, for which they act as administrators, executors or assignees, and from the nature of these deposits they are privileged to loan them out on long terms. Trust companies act as conservators of those who are not competent to manage their own estates, guardians of minor children whose estate they may hold until the heirs reach majority, when it is divided; assignee and receiver in cases of insolvent firms or corporations, etc. They also act as trustee in corporation mortgages, and registrar and transfer agent in case of bond issues by railroads and other large corporations. They do a general financial business for bankers and others, collect rents and interest, make investments, hold titles, pay annuities and execute wills and other trusts. With the growth of capital and complications of investments, trust companies have become important agents in our financial and commercial system, and are now almost a necessity in floating bond issues and promoting large enterprises. They are state institutions, being organized under statutes or special charters from the legislatures of the states in which they are located.

Suppose some large enterprise is to be carried through, such as the building of a railroad, requiring a large capital, much in excess of that which the managers or promoters of the enterprise would be able to furnish of their own. Many other people are able and willing to furnish funds for the enterprise, but at once the query arises, How do they know that their investment will be a safe one? How do they know that the company has been properly organized; that the title to the property is clear and perfect, and that there has been no over issue of bonds? Each prospective investor could insist upon investigating the affairs of the company and having all of these and many other similar queries answered to his satisfaction before parting with his money, thus making the financing of the enterprise almost impossible. Just here the trust company is very serviceable. By assuming the registration and issue of the bonds, the character of the securities, so far as genuineness, title, etc., are concerned, is established. The trust company takes title to the property under the mortgage, issues the bonds, pays the interest, and in fact transacts the whole business, turning over the proceeds from the sale of the bonds as the money is paid in. Purchasers of bonds rely upon the trust company to see that there has not been an over issue of the bonds.

Another important service rendered by trust companies is in issuing stock for large corporations, and in case of sale, making transfers of same. When the stock is listed on the stock exchange this is an assurance to buyers that the stock is genuine, and there has not been an over issue. Then again, it enables purchasers to have the stock properly transferred without the necessity of sending the certificates to the headquarters of the company, which may be a considerable distance away. For instance, a corporation in Omaha desiring to have its shares listed on the Chicago Stock Exchange may make an arrangement with a trust company in Chicago to attend to the registration and transfer of its stock, as a convenience to buyers, and it is not then necessary for a buyer to send his certificates to Omaha to be transferred. That can be done by the trust company here.