g, sometimes called _free banking_, has more
recently been adopted in some states. It is so called, because the
business of banking is thrown open to all by a _general law_. Any
person, or any number of persons, may, by complying with the provisions
of this general law, establish a bank without a special law for this
purpose. Hence it is also called the _general banking_ system.

Sec.10. Persons, before commencing business under this law, must put into
the hands of the proper state officers ample securities for the
redemption of their bills; and they may not issue bills to a greater
amount than the amount of their securities. These securities must
consist of approved state stocks, or United States stocks, or partly of
public stocks, and partly of real estate. When a bank fails, the lands
and stocks held in pledge by the state are sold, and the avails are
applied to the redemption of the bills. This system of banking seems to
be growing into public favor.

Sec.11. _Insurance companies_ also are authorized by law. Their business is
to insure persons against loss by fire. The corporators, on being paid a
small sum, consisting generally of a certain percentage on the amount
for which the property is insured, promise to pay such amount if the
property shall be destroyed by fire. There are companies also for
insuring vessels at sea; and _life_ insurance companies, that agree to
pay, in case of the death of the person insured, a certain sum for the
benefit of his family, or of some other person named in the policy. The
word _policy_ as here used, means the writing containing the terms or
conditions on which the company agrees to indemnify the person insured
in case of loss. The money paid to obtain insurance, is called
_premium_.

Sec.12. The profits of the stockholders consist of the excess of money
received for premiums over the amount paid out for losses. Thus, if a
company has issued 2,000 policies, each covering property of an average
amount of $1,000, the amount of risk is $2,000,000; and if the rate of
insurance is one per cent., the amount received in premiums is $20,000.
Hence, if none of the 2,000 buildings is burned within the time the
insurance is to run, the $20,000 are gained. If ten of them should be
burned, there would still be a gain of $10,000. If twenty should be
destroyed, there would be no gain, but an actual loss to the amount of
the expenses of the concern.

Sec.13. But from the average number and am