A National bank is, as the name implies, chartered and incorporated by the Government, with special privileges and restrictions.
The Government in the organizing of National banks had in mind the protection of the public without unduly limiting the profit of the stockholders.
The sum the stockholders must contribute to the establishment of a National bank varies according to the population and the business importance of the place in which the bank is to be located.
The capital must exist in a prescribed form.
Certain forms of investment are prohibited, as for instance the ownership of real estate, except under certain restrictions.
This is done that the National bank may be able to convert its securities into cash in the shortest order.
In consideration of a prescribed amount of United States bonds, deposited with the Treasury in Washington, the Government issues to the National bank a prescribed sum in printed bank notes of varying denominations.
If the bank should close for any reason, the bank notes or their equivalent must be returned, when the bonds deposited as security are released.
Every bank must have a board of directors, a president and a cashier. Receiving and paying tellers, with bookkeepers, and many clerks are necessary to carry on the business of a large bank.
In addition, the National banks are under the supervision of regularly appointed Government inspectors.