It is evident that organizing a national bank in some respects differs from starting an ordinary business corporation. The bank's capital stock has particular characteristics not ordinarily possessed by other corporations. The business incorporation laws of the states usually leave the amount of stock authorized in the charter to the judgment of the organizers. In banking it is highly desirable to determine a minimum limit, so that new banks shall begin with funds adequate to meet initial expenses. This minimum could be made uniform for all banks, but it is a better plan to adjust the amount according to the volume of business which may be anticipated. The sum cannot be predicted with any degree of accuracy, and therefore the minimum capital required by law is graded according to the population of the city in which the bank has its site. On the theory that there is a relation between the volume of business and the size of the locality the requirements under the National Bank Act are as follows:

These regulations were enacted in 1900 and have remained unchanged, although the general price level has practically doubled within this period. The above requirements, therefore, are inadequate to meet the existing needs of business, but Congress has been reluctant to advance them. The active demand for credit since 1914 has compelled banks to increase their capital far above the legal requirements, and, in fact, the problem in banking is one of undercapitalization.

In the case of a business corporation, the subscribed capital may be far in excess of the amount actually paid in, for the law usually gives the directors full discretion in demanding payment from the subscribers. No such choice is allowed to the directors of national banks, for at least 50 per cent of the stock must be actually paid in before beginning operation, while the remainder may be contributed within five months in installments of 10 per cent each. Furthermore, payment must be effected in cash, for promissory notes or securities are not acceptable. These regulations governing the authorized, subscribed, and paid-in capital stock of banks have eliminated the evils of stock watering so common in the general field of business corporations.

Another feature peculiar to bank stock is its uniform quality. Banks issue only common stock, while the ordinary business corporations, in addition, may offer to investors preferred stock and also bonds of various kinds. No such priority is recognized among bank stockholders, who are all placed on an equal footing. There is a growing tendency in modern corporate practice to place on the market stocks with no fixed par value, but this movement has not affected the business of banking, for in this field it is still customary to issue stock at a par value of one hundred dollars. As a result of all these safeguards, bank stock proves generally attractive to investors. The earnings of banks have been large and market quotations for the stock of leading banks have risen far above the par value.