The legal medium of exchange of a country is called its currency, that which passes current, or circulates as money, such as coin and bills. Bullion is uncoined gold or silver. More than ninety per cent of the cash circulation of the country is represented by checks, etc., and not by actual money.

Organization of Banks. The national banks are organized under national laws while state banks, savings banks, etc., are organized under the laws of the State in which they are located.

Any person who has money and credit can start a private bank. Some of the largest banking institutions of the world are owned by private individuals, and are not subject to law any more than is any other kind of business concern.

The act of Congress of 1864 fixes the corporate life of a national banking association at twenty years. Under date of July 12, 1882, an act was passed authorizing extensions for an additional period of twenty years, and second extensions were authorized by the act of April 12, 1902. From 1882 to October 31, 1909, first extensions of charters were granted to 2,795 banks and under the act of 1902 to 969 banks.

Section 5133 of the Revised Statutes, formerly section 5 of the act of June 3, 1864, provides for the organization of national banking associations by any number of natural persons not less than five. The law confers authority upon the Comptroller of the Currency to approve the corporate title of an association and also to withhold his certificate authorizing an association to begin business when, as the result of special examination or otherwise, it is ascertained that the association has been organized for purposes other than those contemplated by the act. It is further provided that no banks shall be organized with capital less than $100,000 unless sanctioned by the Secretary of the Treasury. This was reduced to $25,000 in certain cases, in 1900.

To avoid formation of associations for ulterior purposes or by those lackiug the qualifications necessary to successful conduct of the banking business, or in a place the population and business of which are insufficient to warrant the establishment of a national bank, the Comptroller, upon receipt of an application to organize, causes a special investigation to be made, the results of which determine the favorable or unfavorable action.

The expansion of the national banking system along normal, safe, and conservative lines is unquestionably desirable, but the Comptroller of the Currency takes the view that the organization of a bank is not warranted in a community where there is no reason for its existence; that is, where sufficient business would not naturally come to warrant success, or where the board of directors will not be composed of men of business ability equal to the best to be found in the community, or where the organization is attempted by promoters who, by public and private means, create a false impression that a bank is needed and that success is assured by merely obtaining subscriptions to the capital stock. Comparatively few applications for authority to organize national banks are rejected, however.

From the date of the establishment of the national banking system in 1864 to October 31, 1909, charters were granted to 9,572 national banking associations, of which 2,063 have been placed in voluntary liquidation and 484 failed. The number of banks in operation at the close of the year 1909 was 7,025. Included in the 9,572 associations chartered are 1,503 banks,with original capital of $320,755,928, which were conversions of state banks.

Since March 14, 1900, the date of the act of Congress authorizing the organization of banks with capital of $25,000, charters have been granted to 4,308 associations, with capital of $261,083,300, a number greater by 691 than the number of banks in existence on the date of the passage of the act in question. The number of banks organized during this period (1900 to 1909) includes 2,768, with capital of $72,105,500, which were organized under the act of March 14, 1900, and 1,540, with capital of $188,977,800, organized under the act of 1864 with individual capital of $50,000 or over.