performance of these common services,
however, they are rarely regulated by the same laws or subjected to
the same kind or degree of public supervision. The competition between
them, therefore, is not always on a fair basis and the temptation to
violate restraining laws and administrative regulations is strong. The
supervising officers recognize the situation as a rule and go to the
extreme limit of leniency in administering laws and regulations which
operate to the manifest disadvantage of the institutions over which
they have jurisdiction, but even then it is often impossible to render
the basis of competition fair and equitable.

This condition of affairs has resulted in the devising of ways and
means of circumventing obnoxious laws and in some cases in practices
which are pernicious in themselves. As examples may be mentioned the
widespread practice of national banks, which are prohibited by law
from making loans on real estate security, of making loans to
customers who can offer no other collateral, on the security of their
personal notes only, or of making loans secured by real estate by a
three cornered operation utilizing a director or officer or some other
third party as intermediary. All three classes of institutions
compete in soliciting the savings deposits of the community, with the
result that the trust companies and savings banks, which often have
the advantage here, sometimes force upon their state and national bank
competitors a higher rate of interest on such deposits than they ought
to pay. The differing regulations in some places in force regarding
the amount that may be loaned to a single individual or firm has also
resulted in some cases in devious and uncommendable practices.

For the remedy of these conditions the first desideratum is the
careful differentiation of the various functions performed by all
these institutions, and the devising of appropriate legal and
administrative regulations for each one. These regulations should then
be incorporated into the legislation and the administrative practices
of the federal government and of each state, and any institution which
performs any of these functions should be obliged to submit to the
regulations pertaining thereto. The difficulties in the way of
securing such a differentiation of functions and such community of
action between the federal government and our states are too obvious
to require statement, but they should not prevent the formulati