§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. §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_. §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. §13. But from the average number and amount of losses annually for many years, companies are enabled so to fix the rates of insurance as to give the stockholders a fair profit on their capital. The rates are not the same on all kinds of property; a higher per centage is charged on that which is deemed hazardous, or more exposed to fire, than on that which is less exposed. The profits on the business of the company, or the _dividends_, as they are called, are annually or semi-annually divided among the stockholders, in proportion to the amount of their respective shares.