Great care should be exercised in selecting the stockholders of a bank for they are the source of all ultimate authority. The national bank act provides that stockholders must be "natural persons," that is, individuals who can legally hold property in their individual right, not corporations or firms. Stockholders receive from the banks certificates of stock, signed by the president and cashier certifying to the number of shares of stock to which they are entitled. The par value of national bank shares is $100. Every bank keeps a stock book containing blank certificates with stubs attached. When a certificate is issued to a stockholder, it is numbered, and the same number is put on the stub, together with the date of issue, the number of shares and the name of the holder. In this way the stub is a copy of the essential parts of the certificate. Stock certificates are usually transferable only on the books of the bank upon surrender of the certificates. Transfers must be made in person or by authenticated power of attorney. When transfers are made a new certificate is issued to the new holder, and the surrendered certificate is cancelled and pasted in the stock book opposite its stub. If a stockholder transfers only a part of his shares, the old certificate is surrendered and two new ones are issued, one to the new holder for the number of his shares, and another to the old owner for the number of shares still retained. Most banks keep a stock ledger containing a record of stockholders' accounts and each transaction in the stock.

Stockholders of national banks, and of some state banks, are liable in case of failure of the bank for an amount equal to their holdings. Suppose, for example, that through bad management or fraud a bank having a capital of $2,000,000 and deposits of $5,000,000 fails; in such a case the stockholders not only lose their investment, but they are liable for $2,000,000 more which will be used to pay the depositors as far as it will go. In the past there has been much evasion of this liability and efforts have been made to fix more firmly the liability of stockholders for the debts of failed banks. This has at last been brought about by the Federal Reserve Act, a section of which provides as follows: "The stockholders of every national banking association shall be held individually responsible for all contracts, debts and engagements of such association, each to the amount of his stock therein, at the par value thereof in addition to the amount invested in such stock. The stockholders in any national banking association who shall have transferred their shares or registered the transfer thereof within sixty days next before the date of the failure of such association to meet its obligations, or with knowledge of such impending failure, shall be liable to the same extent as if they had made no such transfer, to the extent that the subsequent transferee fails to meet such liability."