Distinguishing Features. - Some of the distinguishing features of a national bank may be stated as follows:

1. It is organized under the National Bank Act.

Note. - Authentic information with reference to the organization of national banks may be obtained upon application to the Comptroller of Currency, Washington, D.C., for a copy of each of the following pamphlets: " National Bank Act" and "Instructions Relative to the Organization and Management of National Banks." These pamphlets contain valuable suggestions for all interested in the business of banking. The Comptroller has also published a valuable book entitled "National Bank Act as Amended."

2. It is always an incorporated institution.

3. It has general authority to issue circulating notes as well as to conduct an ordinary banking business.

4. It is under the direction of the Comptroller of Currency.

5. Its general methods of conducting business are consistent with those of every other national bank in the United States.

6. Its stockholders are liable for twice the amount of their subscription; that is, in case a bank fails and is in need of funds to meet its liabilities, a stockholder who owns $5000 worth of stock is liable to the Comptroller to the amount of $5000 in cash in addition to the loss of his stock.

7. A definite proportion of its stock must be invested in United States bonds.

8. It must have at all times on hand an available lawful money reserve. This amount ranges from 15% to 25% of its deposits, depending upon the city in which the bank is located.

9. It must form a surplus fund. Before making a dividend it must carry to its surplus fund one-tenth of its net profits since the last preceding dividend, until the fund shall amount to at least 20% of the capital stock, thereby establishing a reserve fund from which losses may be met.

Organization of a National Bank. - The successive steps required to organize a national bank, together with the prescribed forms of articles of association and by-laws, are given in the pamphlets referred to on page 2.

A summary of the necessary steps may be given as follows:

1. There must be at least five persons. Corporations, etc., cannot become organizers of a national bank.

2. No national bank can be organized with a capital smaller than $25,000. The minimum capital stock with which a national bank may organize varies with the size of the town or city; as: a. Minimum capital for banks organized in towns with a population of not over 3000, $25,000.

b. For towns with a population of not more than 6000, $50,000.

c. For towns or cities with a population of more than 6000 and less than 50,000, $100,000.

d. For towns or cities with a population of 50,000 or more, $200,000.

3. A paper is prepared, which it is expected people will sign, stating the amount of capital it is desired to raise and the number and value of the shares. This paper is circulated until the requisite amount is subscribed.

4. A name must be selected. This may be any name that does not conflict with one already in use in that particular town or city.

5. Written application is made to the Comptroller of Currency at Washington, giving: a. The name and location of the proposed bank.

b. The amount of the capital stock.

c. The names of at least five persons who are to be stockholders.

6. If the application receives the Comptroller's approval, the subscribers unite in Articles of Association.

7. Having executed the articles of association, the stockholders then execute a paper entitled Organization Certificate. This certificate definitely specifies: a. The name and location of the association.

b. The capital stock.

c. The names and residences of the stockholders and the number of shares held by each.

d. A general statement as to why the certificate is made.

8. The Organization Certificate is then signed, acknowledged, and filed with the Comptroller.

9. The stockholders meet and elect directors. To be eligible as a director a stockholder must a. Be a citizen of the United States.

b. Own at least 10 shares of the capital stock of the bank if the capital exceeds $25,000; if it does not, he must own at least 5 shares.

c. Three-fourths of the directors must have resided in the state in which the association is located for a year or more preceding their election; they must also continue to reside there while they remain in office.

10. The directors then proceed to elect a president, a vice president, a cashier, etc., and call in at least 50% of the capital stock.

Note. - Fifty per cent of the capital stock of a bank must be paid in before the Comptroller will give it authority to commence business, and the remainder must be paid in in five equal monthly installments. Thus the entire capital stock must be paid in within six months from the time the bank is authorized to commence business. In many cases a surplus fund is created by the payment of an additional sum, this surplus fund serving to enhance the bank's credit and stability.

11. Another certificate is then made and sworn to by a majority of the directors. This paper certifies the following: a. The amount of paid-in capital.

b. The name, residence, and number of shares of each stockholder.

c. That the bank has complied with the various requirements of the National Bank Act.

12. A portion of the capital stock must then be invested in United States bonds and deposited with the Treasurer of the United States. This amount varies ; as: a. It cannot be less than one-fourth of the capital stock if the capital stock is $150,000 or less.

b. If the capital stock is more than $150,000, $50,000 in bonds must be deposited.

13. After the Comptroller has given authority for the bank to do business, a code of by-laws is adopted for the government of the bank.

14. If the Comptroller is assured that all the requirements of the law have been executed, he will give to the bank a certificate stating that it is authorized to commence business. This certificate must be published in the town or the city in which the bank is located, for sixty days or more after it is issued.

Circulating Notes of a National Bank. - Whether a bank avails itself or not of the privilege of taking out circulating notes, the law requires the above-mentioned deposit of United States bonds. Having complied with the law in depositing bonds, a national bank is entitled to receive its circulating notes, equal in value to the par value of the bonds deposited, unless the bonds should be below par, in which case it may receive circulating notes for only the market value of the bonds.

A national bank is not required to take out circulating notes ; but having invested a part of its capital in the above manner, it is usually desirous of utilizing its credit by getting as many notes as the law permits. The profits on these circulating notes consist of the interest at the current rate on the amount invested, plus about 1% or 2% on the capital employed.

Tax on Circulation. - A national bank is required to pay to the Treasurer of the United States a tax of ¼% each half year upon the average amount of notes in circulation, secured by 2% gold bonds, or Panama Canal bonds. Circulating notes secured by all other classes of bonds are subject to a semiannual tax of ½%.

Interest on United States Bonds. - The Comptroller authorizes the payment of interest on the bonds deposited to the bank depositing them. From this income to the bank no deduction is made for taxation, since United States bonds are exempt from taxation.

Redemption Fund with the United States Treasurer. - National banks are required to keep at all times on deposit with the Treasurer of the United States 5% of their circulation. This fund is to be held and used by the Treasurer for the redemption of worn, mutilated, or defaced national bank notes that may be received from time to time and redeemed in sums of $1000 or any multiple thereof.