§ 6. Banks are allowed to issue their own bills as money. A bank bill or note is a promise to pay the bearer a certain sum on demand, and is signed by the president and cashier. These bills pass as money, because persons holding them may get the gold or silver for them by demanding it of the cashier.

§ 7. A material part of the business of the bank is to lend money. If a man wants to borrow money at a bank, he makes a note for the amount wanted, which is signed by himself and one or two others as sureties. For this note the cashier pays the bank's own bills, deducting from the amount the interest for the time the note is to run.

§ 8. Another kind of business done by banks is, to assist merchants and others in transmitting money to distant places. An operation of this kind is performed thus: A, in Boston, wishing to send $1,000 to B, in Philadelphia, puts the money into a bank in Boston, and takes for it an order, or draft, on a bank in Philadelphia, for that amount, to be paid to B. The draft is sent by mail to B, who calls at the bank, and receives his money; and the bank charges the amount to the Boston bank.

§ 9. But it may be asked, how the bank in Philadelphia gets the money from the bank in Boston. Let it be remembered, that there are business men in Philadelphia who have occasion to make remittances to Boston, and who pay their money into the Philadelphia bank, and take drafts on the bank at Boston. The banks at both places are constantly receiving money and drawing upon each other. Thus the transmission of millions of dollars may be performed every year through the banks, without the risk and labor of carrying the money from place to place, and without any expense other than that charged by the banks for transacting the

business.

§ 10. It has just been said that banks issue their own notes as money, which they promise to pay on demand. Paying their bills on demand of payment, is called redeeming their bills. When banks issue more bills than they can redeem, they are said to have failed, or to be broken. In such case the bill holders suffer loss, unless some provision has been made by law for their security. In some states

the stockholders in a bank are made individually responsible for its debts.

§ 11. In the state of New York different means have been provided for redeeming the bills of banks that fail. In 1830, a law was made imposing a yearly tax of one half of one per cent., that is, a half cent on every dollar, or a half dollar on every hundred dollars of their capital stock, until three per cent. should be paid. The money thus raised is a fund, called safety fund, from which bills of broken banks are redeemed. When this fund is exhausted, the taxing must be renewed.

§ 12. A new banking law was enacted in 1838, by which banks thereafter to be established, are to put into the hands of the comptroller securities for redeeming their bills, to the full amount of their capital. At least one half of these securities must consist of stocks of that or some other state, and the remainder, of mortgages on real estate. When a bank fails, the comptroller sells the lands and state stocks which he has in pledge, if necessary, to redeem the bills. Under this law, persons may form a banking association. without applying for a special law of incorporation. By the constitution of 1846, the individual property of the stockholders is liable to the amount of their respective shares. Laws similar to these have been enacted in other states.

§ 13. There is another kind of moneyed corporations, called insurance companies. They are formed in the same manner as banks. For a small sum paid them, say 50, 75, or 100 cents on every 100 dollars of the estimated worth of a building, they agree to pay for it if it should be destroyed by fire. They also insure ships and other vessels. Sometimes the lives of men are thus insured; the company agreeing to pay a certain sum, or a yearly allowance, for the benefit of a man's family in case of his death.

If

§ 14. But it may be asked, From what source do the stockholders of an insurance company derive their profits? Suppose they have 500 houses insured, the average value of which is $1,000 each; the amount of risk is $500,000. the rate of insurance is one dollar a year for every $100 insured, the company receives $5,000. If no buildings should be burned within the year, this sum would be gained. If

one building should be consumed, the gain would be $1,000 less. If five buildings, there would be no gain, but an actual loss to the amount of the necessary expenses of the concern, to be paid out of the capital stock of the company.

§ 15. But from the average annual losses by fire during a number of years, a company is enabled so to rate the insurance, as to give the stockholders a fair profit on their capital, to be divided among them. The money paid by a person for insurance, is called premium; that which is divided as profits, is called dividend.

§ 16. There is another kind of insurance companies, which are becoming very general, called mutual insurance companies. They are so called, because the members unite in insuring each other. Every person having his property insured by such a company, is a member of it. He has his buildings and the property in them valued; and he pays a fixed sum per cent. on such valuation. A fund is thus raised, out of which any member suffering loss by fire is paid the value of the property lost. Whenever the fund is exhausted, a tax is assessed upon the members in proportion to the value of each one's property insured, in order to replenish the fund.

EXERCISES.

§ 1. What kind of banks are the first said to have been? 2. By what authority are banks established? How is

the capital stock obtained?

§ 3. What is the nature of a certificate of stock? § 4. How are the president and directors chosen? 5. What is the nature of a bank check?

6. What office do bank bills perform? Describe a bank bill or note.

§ 7. How is money borrowed from a bank?

8. Describe the manner of transmitting money to distant places through banks.

§ 9. How is the transmission of money from bank to bank avoided?

§ 10. What is meant by redeeming bills?

11. Describe the bank safety fund of New York.

§ 12. What are the principal provisions of the general banking law of New York? Is there a law in this state similar to either of these?

§ 13. What is the nature of an insurance company?

14. Illustrate, by example, how insurance companies are sustained?

§15. What are premiums and dividends ?

16. Give a general description of a mutual insurance company and its operations.

CHAPTER XXXIX.

Of the Domestic Relations.—Of Marriage, and the Relation of Husband and Wife; Parent and Child; Guardian and Ward.

§ 1. THE marriage relation is a most important one. By improper marriages many persons are rendered unhappy for life; and sometimes the peace of whole families is destroyed. Some law, therefore, is necessary to prevent such marriages, as far as possible, by declaring who shall be deemed capable of contracting marriage, and what persons may become united in that relation.

§ 2. To make a marriage contract binding, several things are necessary: (1.) Persons must have sufficient understanding to transact the common business of life: hence lunatics and idiots cannot bind themselves in marriage. (2.) The parties must not be nearly related to each other. The laws of the states generally declare at what degrees of relationship persons are forbidden to marry. (3.) Persons must be of sufficient age. In states where the age of consent, (as it is called,) is not fixed by statute, the common law must govern, which allows males to contract marriage at the age of fourteen years, and females at the age of twelve. (4.) Persons must act freely. If the consent of either party has been obtained by force or by fraud, the marriage may be declared void.

§ 3. A person having a wife or husband living, can not

lawfully contract a second marriage, except when the former wife or husband has been sentenced to imprisonment for life; or has been absent for five years together, and the party remarrying not knowing that the absent party was living within that time; or when the former marriage has been lawfully annulled or dissolved. But if a marriage has been dissolved for the cause of adultery, the guilty party may not re-marry. Marriages forbidden by the preceding provisions are void, and may be so declared by a competent court.

§ 4. The manner in which marriages are to be solemnized, and by whom, and the manner in which marriage licenses are obtained, or notices of marriage published, (which are required in some states,) are prescribed by the laws of the states in which such regulations exist. Marriages may be solemnized by ministers of the gospel, judges, justices of the peace, besides some other officers. But a simple consent of the parties, declared before witnesses, renders a marriage lawful.

§ 5. By marriage the husband and wife become, in law, one person. The husband acquires a right to the property of the wife which she had before marriage. He has a right to the use of her property in lands, or real estate, during his life time, and is entitled to the rents and profits thereof; but he cannot dispose of the property unless she joins with him in the deed. But her chattels real, which are leases of land for years, and all her other personal estate, including debts due her by bond, note or otherwise, when collected by him, become his; and he may dispose of them as he pleases.

§ 6. As the husband acquires, by marriage, an interest in his wife's property, he is obliged to pay her debts contracted before marriage: but if they are not recovered of the husband during the time he is united to her in marriage, he is no longer answerable for her debts.

§ 7. It is the duty of the husband to maintain his wife; and he is bound to pay debts which she may contract for necessaries, but for nothing more. And it seems to be the law, that even if he forbids all persons to trust her, she can bind him for necessaries, if they have become separate through fault on his part. If they part by consent, and he