7. First Meeting for organizing under a Special Charter. — Having made sure of receiving the requisite amount of capital to establish their bank, when it shall be needed, the subscribers are now ready to proceed to organize.

If they have procured a special charter, a meeting of the subscribers is called to accept it and elect directors. The charter itself usually prescribes when and how the meeting shall be called. As the way is thus prepared in the organic act, the subscribers have simply to walk therein and call and conduct their meeting as this prescribes.

8. Mode of organizing under the National Law.-a. Application to the Controller. If the proposed bank is to be organized under the national law, some one who is interested in the affair makes a written application to the Controller of the Currency at Washington, giving the name of the proposed bank, where it is to be located, the amount of the capital, and the names of at least five persons who are to be stockholders. This application should be indorsed by the representative in Congress from the district in which the bank is to be established. It is well to accompany the application with letters from persons of prominence who will vouch for the character and responsibility of those concerned in the enterprise. In other words, the application should be so strengthened as to secure the Controller's favorable consideration.

b. The Controller's Action. The Controller then inquires into the need of a bank in the place mentioned. How far he can go in denying such an application is perhaps not clearly understood. In a place, for example, having numerous banks, to an application by persons of no especial prominence or fitness, the Controller doubtless would be slow in granting a favorable answer..

c. Articles of Association. If the application for organ

izing the bank receives the Controller's approval, the subscribers should next agree to articles of association. The form of these is furnished by the Controller, and they embrace the following particulars: first, the name and title of the bank; second, its place of business; third, the number of shareholders composing the board of directors, and where and when the first meeting shall be held to elect them; fourth, the time and place of holding the annual shareholders' meeting; fifth, the amount of the capital stock and its division into shares, and the rights of shareholders to subscribe for any additional amount; sixth, the mode of organizing the board of directors and their powers; seventh, the period of the bank's life; eighth, how the articles may be amended or changed.

d. Organization Certificate. Having executed the articles of association, the stockholders must next execute an organization certificate, containing the name and location of the association, the amount of capital stock and the number of shares, and the names and residences of the shareholders, which must be signed by each subscriber.

e. Election of Directors. After executing the organization certificate, if the directors are not designated in the articles of association, the shareholders should call a meeting and elect them. This may be done at any time before the association is authorized by the Controller to begin business, and afterward at an annual meeting. Three fourths of the directors must be residents of the state where the bank is located.

f. No Business can be done until Organization is completed. Until the articles of association of a national bank and also the certificate of organization are filed with the Controller, the concern is not fully organized, and can not lease an office, or do any other business except

what pertains strictly to its organization. The correspondence, therefore, between a person who becomes the president of a bank as soon as it is organized and another person, can not be used to prove an agreement between them that is binding on the bank. It is true that various things are done during the process of organization, obligations of some kind are incurred, the fulfillment of which must rest on other than strictly legal grounds. Until a bank is organized it has no legal existence, and consequently it can neither make contracts nor ratify those made by any of its members.

g. Election of President and Other Officers. After the election of directors they should elect a president, vice president, cashier, and such other officers as may be required. If the bank is a national one, they must ask shareholders to pay at least fifty per cent of the capital subscribed by them before its doors can be opened to the public. Generally, the shareholders pay the entire amount in the beginning. In some cases, however, this can not be conveniently done, and the national bank law provides that the balance may be paid in ten per cent monthly install

ments.

Every national

h. How the Capital must be invested. bank must invest from the outset a portion of its capital in United States bonds. Those having more than $150,000 must invest at least $50,000 in United States bonds, those having less than $150,000 must invest twenty-five per cent of it in that manner.

i. Controller authorizes the Bank to begin Business. When fifty per cent or more of the capital has been paid into the bank, and a portion has been invested in United States bonds as above described, and the Controller has assured himself that all the other requirements of the law

have been executed, he gives to the association a certificate stating that the law has been fulfilled, and that it "is authorized to commence business." This must be published in the city or county where the bank is located for sixty days or more after it has been issued.

9. Mode of organizing State Banks. The requirements of the states for organizing state banks greatly differ, and it would take too much space to describe all that must be done to perfect the organization of a state bank. In general, it may be said that the requirements are easier, though of late years there has been a marked improvement in the way of organizing them on a sounder basis than formerly. Doubtless the requirements of the national banking system have had the effect of toning up the states to improve their systems.

10. Adoption of By-laws. Lastly may be mentioned the preparation and adoption of a code of by-laws for the government of the bank. These are very essential and form a kind of supplemental charter or guide. They are adopted by the shareholders, and contain among other things an article providing how they can be amended. The others relate to the mode of holding annual and special meetings, the election of president and other officers, the bonds they must give before entering upon their duties, the regulation of the transfer of stock, loans, examination of the bank, and other matters. A set of by-laws is usually prepared from a comparison of several codes that have been in operation in other banks. The Controller always furnishes a set to a national bank that is organizing.

V. SHAREHOLDERS

1. How Shareholders must pay for their Stock. Shareholders, especially of national banks, must pay money for their stock. They can, however, give a check on another bank, for this is deemed equivalent to money. The law guards very strictly against the loose practice that once prevailed of giving notes for stock, which, after the completion of the organization, were discounted by the bank and then returned to it in payment for its stock. By this process a bank was organized without any real capital. Such banks were bogus affairs, yet thousands of them were organized prior to establishing the national banking system.

2. On Payment they receive Certificates. — On paying for their stock the shareholders receive certificates, which are titles to the bank's property, in other words, titles to the capital they have contributed. When they pay in installments, they receive receipts for the amount paid, and their certificates after paying the last installment. The par value of a share in many corporations is $100, and this sum is fixed by the national law for all national bank shares except those issued by national banks which were once state banking institutions.

3. How Certificates are prepared. The certificates may be either engraved or printed. An engraved certificate is more costly, but it is not so easily counterfeited, and for that reason is more desirable.

4. How signed and issued. Before they are issued they