provide a uniform and secure currency for the people, and to facilitate the operations of the United States Treasury." They are private associations authorized by congress for the joint purposes of convenience and profit to the holders of the United States bonds, and of furnishing the public with a convenient and uniform circulating medium. They were intended to be to the nation what a well-regulated system of state banks was to the states, respectively." The status of the United States government toward national banks is as trustee for the holders of bills (circulating notes), giving the public the benefit of its protecting power. The government employs the banks as depositories of the public funds, but it has no share of the profits or losses of their business. STATE BANKS 7. These institutions perform the same functions as national banks except that of issuing notes. Since the authorization by congress of national banks, state banks have decreased in number. Where they still exist and do business, they are subject to the state banking laws. Formerly, they were banks of issue and circulation, but, by a taxation of ten per cent. placed by congress upon the notes issued by state banks, the retirement of the circulating notes of such banks was speedily accomplished." SAVINGS BANKS 8. Savings banks are depositories for the care and investment of money for the benefit of the persons who entrust their funds for safe keeping and profit, the banks returning the sums deposited, with the profits in interest from the investments, according to the rules fixed by the officers. Where such banks are incorporated their charters set forth the privileges to be enjoyed. They are not banks of issue, and only secure discount privileges when expressly conferred upon them by statute." 12 121 U. S. 138, 154 (1886). 1356 Me. 274 (1868). 14 18 Stat. at L., p. 311. 15 12 Blatchf. (U. S.) 209 (1874). Whether such an institution be a savings bank depends on its organization, not on its designation. So, where a corporation is organized to do a general savings and commercial banking business, including the buying and selling of property, discounting bills and notes, buying and selling exchange, receiving money on deposit, with or without agreement to pay dividends or interest thereon, to do, in fact, any and all acts incident or necessary to the transaction of any and all matters pertaining to an ordinary commercial bank, it is not a savings bank." PRIVATE BANKS 9. At common law, banking was a privilege open to all. The evils of unrestrained banking in its branch of issuing notes caused the privilege to be curtailed by legislation." In some of the United States, private banking is prohibited and the right to do banking business is restricted to associations authorized by statute. In other states, private banking is not prohibited and many private banks and bankers are engaged in the business of banking as fully as incorporated institutions. Where private banking is not unlawful, an individual may engage in the business and a number of individuals may unite to form a partnership or a joint-stock company for banking purposes. TRUST COMPANIES 10. A loan and trust company, in the United States, or a trust company, as it is commonly known, is an incorporated banking institution empowered by its charter to accept and execute trusts, as provided by law, to receive deposits of money and other personal property and to issue. obligations therefor, and to lend money on real estate and personal securities." The business of such companies consists largely in the administration of trusts of various kinds, 1664 Cal. 117 (1883). 18 Stand. Dict. 17 Zane B. & B., p. 34, citing 13 Pet. (U. S.) 519, 596 (1839); 2 S. & R. (Pa.) 368 (1816). and particularly those arising under corporate mortgages. It is a common practice for them to become surety on bonds in legal proceedings and in other ways; they usually transact a safe-deposit business also." INCORPORATION OF BANKS STATUTORY REGULATION 11. Like other corporations, banks are subject to the statute law in matters of incorporation and organization, and substantial compliance with requirements of the statute is necessary to render the incorporation of a bank lawful." A bank may be formed under a special charter, where such legislation is not prohibited, or under a general law. FORMATION OF NATIONAL BANKS 12. National banks are organized under the authority of the national bank act. Formation is effected as follows: Any number of natural persons, not less than five, enter into articles of association, to be signed by them and filed in the office of the comptroller of the currency. The articles specify the object for which the association is formed, with other provisions not inconsistent with the provisions of the act, which the association elects to adopt for the regulation of its business."1 With these articles an organization certificate is required to be filed which shall state: (a) The name assumed by the association, to be approved by the comptroller; (b) the place where the bank's operations are to be carried on, designating the city or town, and the state, territory, or district; (c) the amount of capital stock and the number of shares into which the same is divided; (d) the names and places of residence of the shareholders, and the number of shares held by each; and, (e) the fact that the certificate is made to enable such persons to avail themselves of the advantages = 19 Bouv. Law Dict. 20 52 Cal. 331 (1877). 21 U. S. R. S., Sec. 5,133 which attach to associations organized under the authority of the national bank act.22 This certificate must be acknowledged before a judge of a court of record, or notary public, authenticated by the seal of the court, or notary, and transmitted to the comptroller of the currency, who shall record and carefully preserve the same in his office." 13. A New Lease. - A national bank thus organized and empowered may, at any time within two years next previous to the date of the expiration of its corporate existence, having the comptroller's approval, extend its period of succession for another term of twenty years from the expiration of its first term." This is done by amending the articles of association, which amendment shall be authorized by the consent, in writing, of the shareholders owning not less than two-thirds of the capital stock, such consent being certified by the president or cashier under the bank's seal to the comptroller, accompanied by an application made by either of such officers for the approval of the amended articles by the comptroller. Such amended articles shall not be valid until the comptroller certifies that the association has complied with the necessary legal provisions, and is authorized to have succession for the extended period." The effect of such extension is that the identity of the old organization is not affected, but it obtains a new lease of life. 14. Conversion of State Into National Banks. Congress, by its national-bank legislation, aimed not only to provide for the organization of new banks, but also to absorb old institutions organized under special acts or the general laws of a state, thus establishing a general banking system for the whole country. It, therefore, prescribed a way for the conversion of such banks into national banks, by permitting the articles of association and the organization certificate to be executed by a majority of the directors of the old institution, the certificate declaring that owners of two-thirds of the capital stock have authorized the directors 22 U. S. R. S., Sec. 5,134. 23 Ibid., Sec. 5,135. 24 22 Stat. at L., p. 162, Sec. 1. to make such certificate, and to convert the bank into a national one. A majority of directors are empowered to execute all papers and to do all necessary acts to complete the conversion and reorganization. The shares of the bank continue to be the same in amount, and old directors serve until others are chosen in accordance with the national-bank law." Any converted state bank may retain its former name, but the capital stock must not be less than the amount prescribed for national banks; any converted bank having branches is permitted to retain and operate them." FORMATION OF STATE BANKS 15. The procedure by which a state bank is incorporated in New York may be taken as illustrative of the manner of incorporating similar institutions under the general laws. of the respective states. Five or more persons may form a state bank by making, acknowledging, and filing in the office of the clerk of the county where the bank is to be established, and in the office of the superintendent of banks, a certificate, in duplicate, stating: (1) The name by which the bank is to be known; (2) the particular city, town, or village where its operations are to be carried on; (3) the amount of its capital stock, which shall not be less than twenty-five thousand dollars in any village whose population does not exceed two thousand, and not less than fifty thousand dollars in any city, village, or town whose population exceeds two thousand but does not exceed thirty thousand, and not less than one hundred thousand dollars elsewhere; and the number of shares into which such capital stock shall be divided; (4) the names and places of residence of the stockholders and the number of shares held by each; (5) the date at which the corporation is to commence and terminate; (6) the number of directors of the bank, which shall not be less than five, and the names of the stockholders who shall be directors for the first year of its incorporation." = 26 U. S. R. S., Sec. 5,154. 27 Ibid., Sec. 5,155. 28 Gen. Laws of N. Y. (1900), Vol. 3, c. 37. Sec. 40. |