1791-1811, and 1816-1836, the state banks had as
competitors the first and second United States banks, and in 1863
so-called national banks entered the field, and, more recently still,
trust companies. Private banks have also existed from the beginning,
but their number and relative importance have declined in recent
years. At the present time the number of state banks exceeds that of
all other classes of banking institutions combined, but in capital and
resources they are inferior to both national banks and trust
companies.

Since each state has had a free hand in the matter of legislation
concerning the banks chartered under its auspices, uniformity in the
regulations imposed upon and in the kind and degree of supervision
exercised over this class of institutions, is lacking. In most cases,
however, as compared to national banks, the amount of capital required
is smaller; they have greater freedom in the making of loans,
especially upon real estate security; and they are not so carefully
examined and supervised by public officials. The most frequently
imposed legislative requirements are: the accumulation of a surplus
fund from earnings; double liability of stockholders; a minimum cash
reserve to be kept in the vaults, and an additional reserve on deposit
in other banks; the organization of a banking department for the
administration of the laws pertaining to them; regular reports and
examinations; and some limitation on real estate holdings and on the
amount of loans to be made on real estate security. On account of the
relatively low capital requirements imposed upon them, and the
liberality of the laws concerning them in other respects, state banks
have been able to prosper where national banks and trust companies
could not exist, and on this account in many parts of the South and
West they do most of the banking business in small towns and country
districts. They generally perform a wide range of banking functions,
including those of investment and savings as well as of commercial
banks.

_2. National Banks_

Our national banking system owes its existence to financial exigencies
of the federal government experienced during the Civil War. For a
considerable period preceding the outbreak of that struggle the
expenses of the government had exceeded its receipts. The deficit was
greatly increased as soon as the war began, and Congress did not find
it possible immediately to devise adequate new sources of revenue