Before the Civil War, when banks were first organized as corporations, it was generally necessary to obtain a special act of incorporation from the legislature. In time, such special charters gave way before the plan of issuing grants under a general incorporation law which viewed the bank in the light of an ordinary business enterprise. Later a distinction was drawn between banks and other corporations, and a separate banking law was enacted for granting general charters to financial institutions. Since the National Bank Act has served as a model for similar statutes in the various states, only the steps required for federal incorporation will be described.

Banks are organized for a wide variety of reasons. A new community, undergoing rapid industrial expansion, may urgently need banking facilities larger than the existing institutions are able to provide. If the older banks are already discounting all the commercial paper which their resources permit, if their loans are approaching the limit fixed by law, and if this strain is not met by increasing capital stock, then it is time for the public to insist upon a new organization. However, not all banks are founded because of legitimate economic needs. It may happen that a minority group of directors or stockholders becomes dissatisfied with the lending policy of the established bank and seeks better results in a new enterprise. Fortunately for the business of banking, it has not been seriously invaded by the professional promoter who has launched so many unsuccessful ventures in other fields of corporate organization. In a large measure this is due to the careful regulations with which the law has safeguarded the starting of a new bank.

In organizing a national bank a prescribed routine must be closely followed. First, an application is made by five or more natural persons to the Comptroller of the Currency at Washington. This application must be indorsed by three public officials of the district where the prospective bank is to be situated. The object of this regulation is to give some assurance that the new bank is the result of an actual local demand, and not the product of external influences. After the application has been received, an examiner is sent to survey the economic and financial condition of the community. He studies local industries and their prospects for development to determine whether their future needs fully justify the establishing of another bank. The examiner analyzes the operation of the older institutions to judge whether their interest rates are reasonable or general services satisfactory. He also considers whether the organizers possess general character and financial experience necessary to inspire the confidence of prospective stockholders and depositors. If the findings of the examiner are favorable and if the Comptroller has approved the application, the next step in forming the new bank is to circulate a subscription list. It is signed by prospective shareholders, who are required to declare the amount of their subscriptions. The contract serves as an indication of the support which the community is likely to give to the new bank, and also acts as an engagement which binds subscribers to their pledges. The subscription list is no longer considered as a necessary instrument in many states in the forming of industrial corporations, but it is still required by law in the incorporating of banks. Five or more persons sign the "articles of association" and the "organization certificate" containing such details as name of the bank, location, amount of stock, and number of directors. The certificate of organization may be regarded virtually as a charter, since it signifies that the incorporators have complied with the national law and that they are now authorized to open the doors of the new bank for business.