ABSTRACT
The Act of 1887 provided a "free banking" environment for trust companies in New York State. Between 1875 and 1900, the assets of trust companies in New York City grew at a compound annual rate of 9.6", compared with 4.1" for national banks and 5.4" for state banks located in the City. The first concentrated activity in the trust company movement came in the decade following the end of the Civil War. Trust companies grew more rapidly than commercial banks, showed better profits, attracted more capital and a more energetic class of entrepreneurs because their regulatory constraints were more lenient. The trust companies enjoyed a comparative advantage on both the asset and liability sides of the balance sheet. The trust companies also enjoyed advantages over the commercial banks in deposits and capital. In the 1890's, developments took place which would eventually guide the trust company movement into the mainstream of the commercial banking system.
