general regulation of the business of the association and the management and administration of its affairs.

Seventh. This association shall continue for the period of twenty years from the date of the execution of its organization certificate, unless sooner placed in voluntary liquidation by the act of its shareholders owning at least two-thirds of its stock, or otherwise dissolved by authority of law.

Eighth. These articles of association may be changed or amended at any time, by shareholders owning a majority of the stock of the association, in any manner not inconsistent with law; and the board of directors, or any three shareholders, may call a meeting of the shareholders for this or any other purpose, not inconsistent with law, by publishing notice thereof for thirty days in a newspaper published in the town, city or county where the bank is located, or by notifying the shareholders in writing thirty days before the time fixed for the meeting.

In witness whereof, we have hereunto set our hands, this nineteen hundred and

day of

I certify that the articles of association of the

are executed

in duplicate, and that one of the instruments so executed is the foregoing; and that the other, in all respects like the foregoing, is on file with said bank.

At least five persons are required to sign these articles.

In regard to article third, the first board of directors may be appointed by the stockholders instead of elected. It may also be thought advisable, instead of specifying the number that shall constitute the board, to state the minimum and maximum number that may serve, in which case this article will read as follows:

"The board of directors shall consist of not less than -nor more than shareholders, and the following persons (here insert their names) are hereby appointed directors of this association, to hold their offices as such until the regular annual election takes place, pursuant to the fourth article of these articles of association, and until their successors are chosen and qualified. The number of directors elected at each annual meeting shall constitute the board for the year, all vacancies to be filled in accordance with the provisions of section 5148."

FORM OF ORGANIZATION CERTIFICATE.

We, the undersigned, whose names are specified in article fourth of this certificate, having associated ourselves for the purpose of organizing an association for carrying on the business of banking, under the laws of the United States, do make and execute the following organization certificate:

Third. The capital stock of this association shall be

-), and the same shall be divided into

dollars each.

dollars shares of one hundred

Fourth. The name and residence of each of the shareholders of this association, with the number of shares held by each, are as follows:

NAME.

Residence.

No. of Shares.

Fifth. This certificate is made in order that we may avail ourselves of the advantages of the aforesaid laws of the United States.

In witness whereof we have hereunto set our hands this

day of

On this, the

County of
day of

-, personally came

A.D. 190, before me, a of to me well known, who severally acknowledged that they executed the foregoing certificate for the purposes therein mentioned.

Witness my hand and seal of office the day and year aforesaid.

[Seal of Notary or Court.]

The two documents above mentioned must now be filled out and signed in duplicate, according to the instructions sent by the Comptroller of the Currency, one copy to be retained in the bank and the other to be sent to the Comptroller, care being taken that the same men sign both documents.

All these preliminary meetings mentioned should be carried on in a business-like manner, a chairman and secretary being selected, and careful minutes kept, which should be entered in a minute book, and become part of the records of the bank after the organization is perfected.

The name, etc., of each shareholder, but not necessarily his signature, is required in the fourth subdivision.

CHOOSING THE DIRECTORS.

The next important matter to be considered is the election of a board of directors by the shareholders, unless they have been designated in the articles of association.

The National Banking Law requires that every bank shall have at least five directors, and that every director shall be a citizen of the United States, and that three-fourths of them at least must be

:

residents of the State, Territory or District in which the bank is located during their continuance in office, and must have been so for a year or more immediately preceding their election.

Each director must also during his whole continuance in office be a bona fide owner of not less than ten shares of the capital stock of the bank, which shares must not be hypothecated or in any way pledged as security for any loan or debt.

OBLIGATIONS AND DUTIES OF DIRECTORS.

There are few more responsible positions than that of a bank director. To be able to carefully direct the affairs of a bank holding in its vault the funds of so many people is no light task, yet how few really seem to recognize it, and are willing to take the oath prescribed, and in reality give little attention to their duties.

No man who is so situated that he cannot give the necessary attention to the duties should accept the position. Upon the directors devolves the responsibility of loaning the money, and they should remember that these funds are not theirs but are held in trust, and they are bound to return them when called for.

The people will measure the standing of a bank very much by the men known to have the direction of its affairs; for that reason only the very best men, and those of the most careful business methods, should be selected, and it is wise to have representative men from various lines of business.

No man is obliged to be a director, but having assumed such a position he is under absolute obligations to perform the duties to the best of his ability.

In all matters relating to the policy and administration of the bank the board of directors should act as a unit, as a harmonious body. In one of the most successful banks of the United States it is the rule with the board of directors that if any proposition or motion brought before the board is seriously opposed by any member, the matter is dropped. This preserves a spirit of unanimity, which is essential.

The directors of a bank should be broad-minded men; the small, petty spirit will only prove a bar to success. Let me give an instance. A National bank was organized in one of our principal cities. At one of the meetings for organization the question of a name came up. Various branches of trade were well represented. One branch, the produce, became so aggressive in their determination to have it named after their particular branch, going so far as to state that the bank was especially for their particular line of business and no other was wanted, that they succeeded in driving off many of their best stock subscribers. Naturally, this bank lived

only a few years. The management was contentious and petty from the start, and the bank died a natural death, went into liquidation.

The duties of directors of National banks are very specifically described in the National Banking Laws, together with the penalties for the neglect of such duties.

These have been compiled by the Comptroller's office and issued in the form of a circular, and their importance is such that I embody them in full in this chapter.

SECTIONS OF THE REVISED STATUTES (NATIONAL BANK ACT) WHICH DEFINE CERTAIN DUTIES OF DIRECTORS OF NATIONAL BANKS AND PRESCRIBE PENALTIES FOR NEGLECT THEREOF.

NUMBER AND ELECTION OF DIRECTORS.-TERM OF OFFICE.

27. (SEC. 5145.) The affairs of each association shall be managed by not less than five directors, who shall be elected by the shareholders at a meeting to be held at any time before the association is authorized by the Comptroller of the Currency to commence the business of banking; and afterward at meetings to be held on such day in January of each year as is specified therefor in the articles of association. The directors shall hold office for one year, and until their successors are elected and have qualified.

QUALIFICATIONS OF DIRECTORS.

28. (SEC. 5146.) Every director must, during his whole term of service, be a citizen of the United States, and at least three-fourths of the directors must have resided in the State, Territory, or District in which the association is located, for at least one year immediately preceding their election, and must be residents therein during their continuance in office. Every director must own, in his own right, at least ten shares of the capital stock of the association of which he is a director. Any director who ceases to be the owner of ten shares of the stock, or who becomes in any other manner disqualified, shall thereby vacate his place.

OATH REQUIRED FROM DIRECTORS.

29. (SEC. 5147.) Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this Title, and that he is the owner in good faith, and in his own right, of the number of shares of stock required by this Title, subscribed by him, or standing in his name on the books of the association, and that the same is not hypothecated, or in any way pledged, as security for any loan or debt. Such oath, subscribed by the director making it, and certified by the officer before whom it is taken, shall be immediately transmitted to the Comptroller of the Currency, and shall be filed and preserved in his office.

VACANCIES, HOW FILLED.

30. (SEC. 5148.) Any vacancy in the board shall be filled by appointment by the remaining directors, and any director so appointed shall hold his place until the next election.

LIMIT OF LIABILITIES FOR MONEY BORROWED.

78. (SEC. 5200.) The total liabilities to any association, of any person, or of any company, corporation, or firm for money borrowed, including, in the liabilities of a company or firm, the liabilities of the several members thereof, shall at no time exceed one-tenth part of the amount of the capital stock of such association actually paid in. But the discount of bills of exchange drawn in good faith against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not be considered as money borrowed.

DIVIDENDS AND SURPLUS FUND.

77. (SEC. 5199.) The directors of any association may, semi-annually, declare a dividend of so much of the net profits of the association as they shall judge expedient; but each association shall, before the declaration of a dividend, carry one-tenth part of its net profits of the preceding half-year to its surplus fund until the same shall amount to twenty per centum of its capital stock.

WITHDRAWAL OF CAPITAL PROHIBITED.-DIVIDEND NOT TO EXCEED NET PROFITS.-BAD DEBTS DEFINED.

82. (SEC. 5204.) No association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. If losses have at any time been sustained by any such association, equal to or exceeding its undivided profits then on hand, no dividend shall be made; and no dividend shall ever be made by any association, while it continues its banking operations, to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due to any association, on which interest is past due and unpaid for a period of six months, unless the same are well secured, and in process of collection, shall be considered bad debts within the meaning of this section. But nothing in this section shall prevent the reduction of the capital stock of the association under section fifty-one hundred and forty-three.

LIABILITIES AND PENALTIES FOR VIOLATING THE LAW.

118. (SEC. 5239.) If the directors of any National banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this Title, all the rights, privileges, and franchises of the association shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district, or territorial, court of the United States, in a suit brought for that purpose by the Comptroller of the Currency, in his own name, before the association shall be declared dissolved. And in cases of such violation, every director who participated in or assented to the same shall be held liable in his