THE ORGANIZATION OF A BANK.

The organizer of a new bank is usually actuated by one of two motives. He may be a man of former banking experience, who desires to secure for himself an official position in the new organization, and though perhaps not possessed of considerable means himself, may be well known in the community in which he lives. If he is a man of good character, natural executive ability, and of good address, he succeeds in gaining the confidence of a few leading business men, and thereby secures their influence and co-operation.

He does not, as a rule, receive any remuneration for services rendered preliminary to the organization of the bank, but there may be an understanding with those whom he has persuaded to join with him that he shall become the president, the cashier, or some other officer, as a reward for his services.

Another motive influencing those instrumental in starting a new bank is that prompted by public spirit. A few enterprising citizens believing that banking facilities would develop and increase the resources of the community, or where banks already exist,

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that the interest of the community would be better conserved with increased facilities, endeavor to enlist other citizens in the new project. No self-interest is back of such a movement. Those engaged in the project may have no one in view for the executive offices, or any idea of becoming in any way connected with the institution themselves, except as stockholders or directors. Uppermost in their minds is the general welfare of the community in which they live.

The talk of a new bank in town soon awakens general interest, and those who are back of the movement usually take the initiative and proceed to ascertain whether or not sufficient stock will be taken in the proposed undertaking. The amount of the capital stock is usually determined in the start before subscriptions are solicited. The various state laws and the National Bank Act prescribe a maximum and minimum limit to the capital, which is according to the size of the place in which the bank is located.

The capital required in the organization of national banks is as follows:

In towns in which the population does not exceed

3,000...... Not less than $ 25,000.00

6,000..... 50,000.....

661 66

Over 50,000..... “

66

66

66

200,000.00

FIRST STEP IN ORGANIZATION-TAKING SUBSCRIPTIONS TO STOCK.

A paper is now prepared upon which the subscribers to the stock will write their names, with the number of shares which they pledge themselves to take opposite.

Such a paper is usually worded as follows:

SUBSCRIPTIONS TO THE CAPITAL STOCK OF

THE

....... NATIONAL BANK OF

We, the undersigned, do hereby severally subscribe for the number of shares of the capital stock of "The National Bank of ," set opposite our respective names.

The capital stock of the bank is to be $. composed of ............shares of $100 each:

NAME.

No. of

RESIDENCE.

shares.

This subscription paper is not binding upon the signers until the organization of the bank

is complete. Prior to that time the subscribers are at liberty to withdraw their subscriptions.

If, however, after the organization of the bank any shareholder is unable to pay, or for any reason refuses to pay the first installment, the directors may sell the stock at public auction to the highest bidder, first giving three weeks' notice in a newspaper published in the city or town in which the bank is located.

In securing subscriptions to the capital stock it is usually advisable to distribute the stock as widely as possible, and yet not indiscriminately. The character and standing of shareholders should be taken into consideration, and extreme care should be exercised to place the stock in the hands of substantial and responsible citizens.

Preference should be shown for men of prominence and eminently successful in their own business. Their wealth and personal success will inspire confidence and give prestige to the institution. Next of importance are those who are influential in their respective localities. Their co-operation should be earnestly solicited, for thereby the bank's field of operation may be greatly extended. There is another class, who although not men of wealth, are good substantial citizens, and if induced to subscribe for a few shares, will take an active interest in its success. They

have considerable influence among a large class of small depositors and talk "their bank" at every opportunity.

The wide and judicious distribution of the stock of the bank thus enlarges its influence and helps to make it an institution of local pride and importance. Such distribution may also be the means of shutting off future competition.

As soon as the entire capital stock of the bank is subscribed, before any steps are taken toward effecting an organization, application must be made to the proper state authorities, if it is proposed to organize a state bank, or to the national authorities if a national bank is contemplated.

A brief description of the various steps necessary in the organization of national banks will suffice in giving a general idea as to the usual proceedings followed in the organization of other commercial banks, as both national and state laws are constructed upon the same general principles, though they may differ as to a few minor details.

As all papers in connection with the organization of national banks must conform to certain prescribed forms, before making formal application to the Comptroller of the Currency to organize, a letter should be addressed to him, stating the desire to organize a bank and what progress has already been made,