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 receipt:, 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 no1 so easily counterfeited, and for that reason is more desirable.

4. How Signed And Issued

Before they are issued they must be signed by the president and cashier. If a cashier should sign one in blank which should pass out of the bank and be filled up and circulated, the bank would be liable to a subsequent holder who should receive it innocently. The bank would be holden like the blank indorser of a note. The signature is the test of genuineness; if this is correct, the bank can not dispute the other matters it may contain.

5. Stock Book

Every bank keeps a stock book containing blank certificates with stubs attached thereto. When a certificate is filled out to a shareholder, it is numbered and a similar number is put on the stub, also the name of the holder of the certificate, the number of shares he owns, and the date. In other words, the stub is a copy of the essential parts of the certificate.

6. Transferring Stock

After the shares have been issued they are often transferred. Shareholders die, or sell their stock or pledge it, and banks are constantly required to issue new certificates. The cashier is the proper officer to attend to this business, and when doing so acts for the bank, and not for the shareholder requesting the transfer. In making a transfer the old certificate is surrendered, the names of the president and cashier are partly cut out, and an entry is made across its face something like this, "Stock transferred and certificate canceled," to which is added the date of the transfer and the number of the new certificate issued in place of it to the new owner. The surrendered certificate is then pasted in the stock book opposite the stub and corresponding to its number, and a new certificate is issued, to which a higher number is given than to any other. Thus, suppose fifty-seven certificates were issued to the original subscribers, and one of the subscribers, not long afterward, sells his shares; the certificate issued to the new purchaser would be numbered fifty-eight.

If he should sell only a portion of his shares, the process would be a little different. The old certificate would be surrendered and two new ones would be issued, one to the new purchaser for the number of his shares, and another to the former owner for the remainder of shares still held by him.