trust companies, however, with
their greater versatility, are increasing in number. The income
of banks is derived from discounts, interest on their own capital,
charges for exchange and collection, dividends, interest and rents on
investments, and profit from their bank notes. The capital with which
a bank starts in business[14] could be loaned with less trouble and
more cheaply without starting a bank, but used as a banking capital it
can be loaned in part while still serving to attract deposits, which
are the main source of the income of banks to-day. Charging smaller
customers for exchange is a source of income to some banks, but in
many cases this service is freely performed for regular customers and
becomes a considerable expense. Banks make few investments in real
estate or other physical property; it is, in fact, their duty to keep
out of ordinary enterprises, but they are forced sometimes to take for
unpaid debts things that have been held as security. Profits on
bank notes have at times been the main, almost the sole, motive for
starting banks; but that is not the case to-day when the right of
issue is so strictly limited.

[Footnote 1: These are classified as follows:

_Number_ --_Per Cent_--
_National charter_: 28.56
National banks 7,404 28.56
_State charter_: 67.52
State banks 14,011 54.05
Loan and trust companies 1,515 5.84
Savings banks 1,978 7.63
_Private_: 3.92
Private banks 1,016 3.92
------ ------ ------
25,924 100.00 100.00
]

[Footnote 2: Opinion favors prohibiting the use of the word bank
to any except regularly incorporated organizations, or at least
subjecting private banks to the same supervision as the chartered
banks.]

[Footnote 3: Not to be confused with a trust in the sense of a
monopolistic enterprise, with which it has no connection except by
mere verbal accident, through the word trust.]

[Footnote 4: See next sec.]

[Footnote 5: The Federal Reserve Act of 1913 has given encouragement
to this practice by reducing to 5 per cent the reserve required to be
kept against time deposits. See ch. 9, sec. 7.]

[Footnote 6: Usually with deduction of interest in advance; a process
called discou