stock is transferred, the certificates thereof shall be returned to the bank and canceled, and new certificates issued. EXPENSES. SEC. 20. All the current expenses of the bank shall be paid by the Cashier, who shall, every six months, or oftener, if required to do so, make to the board a detailed statement thereof. CONTRACTS. SEC. 21. All contracts, checks, drafts, etc., and all receipts for circulating notes received from the Comptroller of the Currency, shall be signed by the President or Cashier. EXAMINATIONS. SEC. 22. There shall be appointed by the board of directors a committee of members, whose duty it shall be to exercise a supervision of the business of the bank, and to examine every three months the affairs of this bank, count its cash, and compare its assets and liabilities with the accounts of the general ledger, ascertain whether the accounts are correctly kept and if the condition of the bank corresponds therewith, and whether the bank is in a sound and solvent condition; and to recommend to the board such changes in the manner of doing business, etc., as shall seem to be desirable; the result of which examination shall be reported to the board at the next regular meeting thereafter. SEC. 23. The board of directors shall have power to change the form of the books and accounts when deemed expedient, and define the manner in which the affairs of the bank shall be conducted. QUORUMS. SEC. 24. A majority of the directors, including the President or Vice-President, shall be a quorum to do business. SEC. 25. These by-laws may be changed or amended by the vote of twothirds of the directors. Reference is made in these by-laws to the bonding only of the President, Cashier, and teller. It is customary, however, to bond all the employees of a bank. The proper by-laws covering this can be easily added. PAYMENTS ON CAPITAL STOCK. The first payment on the capital stock (fifty per cent.) is now due and should be called. Regarding the payments on account of the capital stock, a reference to section 5140 of the National Banking Law shows by the use of the words "paid in," that it was evidently the intention of the framers of the law that the capital stock should be paid in money; as notes are not money, but only an agreement to pay, it is evident that the spirit and intent of the law will be violated if they are accepted in payment for the stock. Instances have occurred where subscribers have given checks upon the bank, before it was open for business, in payment of their assessment. Having nothing to their credit, the bank opened with overdrafts for these amounts, which were later covered by the proceeds of discounted notes. Other instances have occurred where the notes were presented for discount at the time the checks were given, thus avoiding the appearance of an overdraft. Both of these methods are pure evasions of the law. In fact, if, in either case, a proper examination of the bank had been made when ready for business, it would not have been permitted to proceed. If a subscriber desires to have his note discounted at some other bank, and then give his check against that for his assessment, there can be no objection; but it is the intent of the law that the capital stock be paid for in money as a necessary working fund at the start. Upon the final payment of the fifty per cent. assessment it is necessary that a certificate certifying to this fact be sent to the Comptroller of the Currency. The following is the prescribed form: CERTIFICATE OF OFFICERS AND DIRECTORS. The undersigned, directors of the organized under the sections of the Revised Statutes of the United States, approved June 22, 1874, which authorize the organization of National banking associations, and of subsequent acts in addition to and amendatory thereof, do hereby certify that dollars have been paid into said bank, on account of its capital stock, as permanent capital; that the residence of each director and the amount of stock which each director is the bona fide owner, are as follows: NAME OF DIRECTOR. Place of residence. Shares of stock. And that this bank has in good faith complied with all the provisions of said act required to be complied with before receiving authority to commence the business of banking. foregoing certificate and the matters and things therein set forth are true to the best of their knowledge and belief. Subscribed and sworn to before me, this day of 190-. The oath of the President or Cashier and of a majority of the directors of an association is sufficient for this purpose. FINAL PAYMENT OF CAPITAL. The five remaining installments upon the capital stock (ten per cent. each) must also be paid in money, and must be certified under seal of the bank to the Comptroller, one at the end of each succeeding month from the date of the issuance of his certificate of authority to commence business. The form for these certificates is as follows: CERTIFICATE OF PAYMENT OF CAPITAL STOCK. The Bank, To the Comptroller of the Currency, Washington, D. C. installment amounting to dollars the -), has been paid in on account of the capital stock of the payments to date being as follows: The second and subsequent payments need not be restricted to ten per cent. each, and the capital stock of a National bank may, if desired, be paid in whole or in part in advance of the time required by law. In case of the failure to pay any installment due on the capital stock by a subscriber, the board of directors may sell such stock at public auction to the highest bidder, the price to be not less than the amount due, after giving three weeks' notice in a newspaper of that town or county. If not so sold, it may be sold as the directors may order, otherwise it simply reduces the capital stock by that amount, which of course must be restored (see section 5141). No certificate of stock should ever be issued until the stockholder has fully paid for his shares. DEPOSIT OF Bonds. At this point the organization of the bank is complete. The association can be authorized to commence the business of banking upon the deposit of United States registered bonds with the Treasurer of the United States, as required by law. Banks with a capital of one hundred and fifty thousand dollars or less are required to deposit bonds equal to one-fourth their capital, and a deposit of at least $50,000 must be made by any bank with a capital in excess of $150,000. It is entirely optional with the directors if they desire to issue circulating notes, but whether they do or not the law requires the deposit of bonds. These bonds should be sent to the Comptroller of the Currency, requesting him to have them transferred, and to sign the memorandum required by section 5162, and to deposit them with the Treasurer. Registered bonds should be assigned to the Treasurer of the United States (in the manner prescribed by the printed note on the back of the bonds) in trust for the association for the redemption of whose notes they are pledged, in order that they may be transferred upon the books of the Register of the Treasury, and new bonds issued to the Treasurer in trust for the bank. Care should be exercised that the corporate name of the bank is correctly stated in the assignment, the word "the" often making serious inconvenience if omitted or added erroneously. Authority of the board of directors must always accompany the request for a transfer of bonds. Coupon bonds can be exchanged for registered bonds by sending them to the Comptroller, and requesting the same. CIRCULATING NOTES. If the bank should desire to issue circulation it can do so to the extent of the par value of the bonds deposited, providing the sum does not exceed the amount of the capital stock. In estimating the profits to be derived from the issue of circula- the Comptroller of the Currency for 1901, will be found worthy of It will be seen that at the prices of United States bonds on Octo- ber 31, 1901, the circulating notes of a National bank yielded in no case as much as one per cent. per annum, the average yield being less than one-half of one per cent. The profit varies with the price of Government bonds, being greatest when the price of bonds is low- est, and vice versa. Owing to the premium on the bonds, the profit is smaller in localities where interest rates are highest, and the profit increases as interest rates fall. The above tables are based upon the assumption that all the notes issued are constantly kept loaned out-something that is hardly Certain taxes are imposed semi-annually upon the average amount of notes in circulation, and the rate depends upon the class of bonds deposited. If the two per cent. bonds issued under section 13 of the act of March 14, 1900, are the ones used, the tax is one-fourth of one per cent. semi-annually. For all other bonds used the tax is one- half of one per cent. semi-annually, or one per cent. a year. |