Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-10-29
ORGANIZING A BANK
Method Of Procedure That
Must Be Followed.
SAFEGUARDS ADOPTED
I1JCORPoRAToRS SHOULD ALL BE
MEN OF CHARACTER.
Lowest Amount of Capital Stock Re-
quired $25, 900 - Necessary Steps
Precedent to the Issue of Notes.

-
| Written for The Evening Star.
| The organization of national bank that
| most important institution in every COM
munity, is not so difficult a matter as might
| appear, despite the limitations and restric-
| tons imposed by the national banking laws
| of the United States.
| The first and most important requirement
| is that the incorporates shall be of
standing and character in their cities and
| towns. 1t is not necessary that they shall
| be millionaire men of wealth. An in
corporator of a national bank may not be
| worth over few hundred dollars in ready
cash, but the government will not be a
party to a possible fraud and robbery by
formally recognizing the first steps for
starting bank if the men interested are
not of the highest type. SO that the concern
will begin with the confidence of the peo-
pie and the government So strict is the
controller of the currency in wanting to
know the status Of men promoting a
bank that in the preliminary application he
requires that there shall be a satisfactory
ste tenent as to the business and financial
standing of the applicants, besides an in
dorsement by d United States senator, rep
resentative, jucse of couft or other prom
inent public official in relation to the char
acter and financial responsibility of the
men.
Application to the Controller.
The preliminary proceeding is for not less
than five persons to applylto the controller.
They must set out the proposed name for
the institution, the location and the cap
ital, besides, as stated, satisfactory evil
dence of the character and business stand
ing of the men. If the fficorpora tors COM
municate with the controller as is gener-
ally DONE he will forward blank applica-
tons and instructions, so that the proceed
ing will be Simplified.
AS to the capital stock. the national bank
laws fix $4,000 as the minimum at which a
bank may begin business. This is in COM
munitses where the population does not ex-
coed 5000 The minimum capital is $4,000
in places where the population does not ex-
coed 5000; s10o,090 in places of not over
$4,000, and 100000 in cities of over $4,000
people. s-
Prior to the act approved March Il, 1900;
defining and fixing gold aAathe standard Of
value in the United States the minimum
capital $4,000, and that in cities
of less than 5000. BY permitting smaller
banks in smaller places there was imlne-
diately a large increase in the number OF
national banks. Since that date there have
been organized 1893 banks with capital
stocks of $4,000 and less, a large percent
age being in places of 5000 population and
less, and capital stocks of $25,CO0 each.
Little towns and villages often boast ma
tiona banks, and the best part of all is
that they are thriving and prosperous, con-
tributing with the multitude of other bust
ness concerns that aid in. making this the
greatest commercial country on earth.
Consent of the Controller.
Just as soon as the CONTROLLER Is satisfied
with the preliminary papers that sub
mitted and finds that the title asked for
may be sanctioned, he gives his formal con-
10 nj selection
title is important, as it must be unlike that
of any other bank in the same town or
vicinity About the most vital step after
this is the execution of the articles and
certificate of Incorporation The articles
must set forth the objects and purposes OF
the bank, giving its title, location of bank
ing house office, the number of share
holders who shall be directors, the amount
of the capital stock, the powers of the
board of directors and the fact that the as
ISOLATION shall continue for period or
twenty years, that being the limit of life
of national bank unless 1t is sooner placed
in voluntary liquidation or asks for re-
newal of it's charter at the expiration OF
that period.
1t is not necessary that the articles OF
incorporation shall name the number OF
the first board of directors and the time
for their first election. When the STOCK
holders are agreed as to the persons who
are to constitute the directors the names
may be given in the article. 1t is also not
necessary to provide for given number
of directors during the existence OF the
bank What is termed a sliding scale, in
stead of a fixed number Is permitted, ana
often considered best. This provides Tor
minimum and maximum number or ol-
rectors, and allows a banks chief stock
holders considerable latitude in adding good
men to it's board or freezing out those who
are not in accord with the policy OF the
majority of the institution.
Articles Of Incorporation.
Not less than five persons are required
to sign the articles of Incorporation and
none but natural personsi can do SO. Ihat
is. every stockholder must be an individual
who can legally hold and control property,
and not corporations, firms or associations.
Another feature is that the capital stock
must be paid in cash. No promissory notes
or other evidence of debt can be taken In
subscriptions for capital stock Naturally,
the incorporators. before proceeding with
the first steps have solicited subscriptions
and know just who will take all the stock
that has been agreed upon.
About the same time as the adoption of
the articles of incorporation must be ex-
ecuted the certificate of organization. rms
gives the title, location, capital stock and
the name, residence and number of shares
of each stakeholder A notary public or
proper officer certifies in the usual way to
its accuracy. Each stakeholder must like
wise give his signature In the certihcate.
Because of the difference in the laws of
the several states as to the rights q mar
ried women and as to the effects OF cove
nants and agreements made by them, or
gainzation papers bearing the signatures
of women must be accompanied by evidence
that under the laws Of the state they have
the power to be parties TO the organization
This provision frequently delays the or
ganiZation of a bank, as the controller is
careful in insisting on compliance with the
requirements Articles of association or