§5. A material part of the business of banks is to assist merchants and others in transmitting money to distant places. Thus: A, in New York, wishing to send $1,000 to B, in Philadelphia, puts the money into a bank in New York, takes for it an order, called _draft_, on a bank in Philadelphia, for that amount, to be paid to B. The draft is sent by mail to B, who presents his draft at the bank, and receives the money; and the bank charges the amount to the New York bank. §6. But persons unacquainted with commercial business, especially young persons, may not know how the bank in Philadelphia is to be repaid. In the course of trade between the two cities, business men are constantly remitting money both ways through the banks, which thus receive the money and draw upon each other. Thus millions of dollars may be annually transmitted between the two cities, without any expense except the small charge of the banks for doing the business, and without the risk of loss by accident or robbery which attends the conveyance of money in person. §7. Banks also lend money. The borrower gives a note for the sum wanted, signed by himself, and indorsed by one or more others as sureties. The cashier pays the money for the note, retaining out of it the interest on the sum lent, instead of waiting for it until the note becomes due. This is called _discounting_ a note. §8. The bills of banks pass as money. A bank bill or note is a promise of the bank to pay the bearer a certain sum on demand, signed by the president and cashier. It passes as money, because the bank is bound to pay it in specie if it is demanded. Paying notes thus is _redeeming_ them. When a bank is unable to redeem all its bills, it is said to have failed, or to be broken; and the bill holders suffer loss, unless some security has been provided. This has been done in some states by making the stockholders individually liable for the redemption of the bills; that is, the property owned by them as individuals may be taken and sold on execution for that purpose. Such security, however, has never been generally provided. §9. But a system of banking, 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.