no time of payment is mentioned in the note, or if it is payable on demand, no grace is given. To bind the endorser of a note payable to order, payment must be demanded of the maker on the last day of grace, and refused, and the endorser notified the same day, or the day after, by the holder, or by a person sent for that purpose, that the note is not paid. If the parties do not reside in the same town, notice may be sent by the first mail after the last day of grace.

8. Sometimes the seller of a note warrants it. If in his endorsement he guaranties "the payment of the note," he is liable the same as an original promisor. If he warrants it "good," or "collectable," the holder must show that it could not be collected of the maker when due, or the guarantor is not liable.

9. Sometimes notes, so called, are made payable in grain, lumber, or some other property, instead of money. But these are not considered in law as notes, and are not negotiable, though written payable to bearer. Such obligations, however, are often sold and transferred; but if sued, it must be done in the name of the payee, in which case the promisor may offset demands, if he has any, against the payee. If such obligations are not paid when they become due, they are then payable in money.

10. A bill of exchange is an order drawn by one person on another, requesting him to pay money to a third person. The following is a form:

"COLUMBUS, December 10, 1845. "Ten days after sight, pay James Johnson, or order, five hundred dollars, value received. PETER PRICE.

"To THOMAS THOMPSON,

66 Merchant, New York." 11. It will be seen that this is, order used in common business. chants in commercial cities on

in effect, the same as an But when drawn by merpersons in distant places,

made and held responsible? How and when must he be notified of non-payment? 8. What is the difference between guarantying the payment of a note and warranting it good? 9. What is here said of obligations for property? How sued, &c.? 10. What is a bill of exchange? 11. What is it like? 12. State the nature and effect of a bill of ex

orders of this kind are called bills of exchange. They are often very convenient to persons in mercantile business.

12. The nature and operation of a bill of exchange are thus illustrated:-A in New York has $500 due him from B in Cincinnati. A draws an order on B for that sum, and C, who is going to Cincinnati, pays A the money, and takes the order and receives his money again of B. If B has not the money when the bill is presented,-or if it is made payable at some future day, and he agrees to pay it, he is said to accept the bill; and as evidence of the fact, he writes his acceptance upon it

13. When a person accepts a bill he becomes the debtor, but the drawer remains liable to pay if the acceptor fails to do so. But payment must be demanded of the acceptor on the last day of grace, and otice given to the drawer, as in the case of an endorsed note.

14. Interest is an allowance for the use of money, or for the forbearance of a debt Thus, a person lends to another $100 for one year, and receives for the use of it $6, which is called the interest. I romissory notes are generally made payable with interest.

15. The rate of interest is fixed by law, but it is not the same in all the states. In the state of Ohio it is six per cent.; that is, six dollars on every hundred for a year, and in that proportion for a longer or shorter period. A less rate may be taken, by agreement; but when no special agreement is made, six per cent. nay in all cases be charged. A higher rate of interest than that fixed by law, is called usury. a person has paid usurious interest, he may sue for and recover the amour t paid above the lawful interest.

If

change. How is it accepted? 13. Who is then debtor? When must payment be deinan ed? 14. What is interest? What is the lawful rate of interest in this state?

Give an example. 15

What is usury?

CHAPTER XXXIV.

Moneyed Corporations.-Banks; Insurance Companies.

1. We are informed that the first banks were only places where money was laid up or deposited for safe-keeping. But banks at the present day are not used for depositing. alone. No banks in this country can be established, but by authority of law. The formation, nature, and uses of a bank, are shown by the following example:

2. If the inhabitants of a place want a bank, they petition the legislature to incorporate a banking association. The act of incorporation prescribes the manner in which the company shall be formed, how its business shall be done, and the amount of capital or stock to be employed. The capital is raised in this way: The sum intended to constitute the capital of the bank, is divided into shares of $100 each: so that if the whole stock is to be $100,000, there are 1000 shares. These shares are sold, to one person ten, to another twenty, and to another, perhaps fifty, and so on till all are sold, and the whole capital is paid in.

3. Now a person buying any number of shares, takes a certificate, stating that he is the owner of such number of shares; and such certificate may be sold to another person.

4. The stockholders choose of their number, usually, thirteen directors, who choose one of themselves to be president; hence the name of a banking association generally is, "The President, Directors, and Company of the Bank of The president and directors choose a cashier

and clerks.

5. A part of the business of banks is still that for which they were originally intended, viz., depositing money. Merchants and other business men near a bank, deposite their money, and then draw it out as they have use for it, by sending their order to the cashier. This order is called a check.

1. What is said of the first banks? 2. State how a bank is authorized, and how the capital is raised. 4. Who are the stockholders ? What officers are chosen, and how? 5. How are deposites drawn out of

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 a 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, in 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 how does the bank in Philadelphia get its money again? It must be remembered, that as there are many merchants in each city constantly trading with those in the other, large sums must be constantly sent from one place to the other, through the banks. The bank in each city, therefore, keeps account with that in the other; and as about an equal amount passes from each to each, many thousand dollars may be charged by each to the other, and on settlement but a small balance may be due from either.

10. It has just been said that banks pay out their own notes as money, which they promise to pay on demand. Paying specie for their bills is called redeeming them. But banks sometimes issue more bills than they are able to redeem. In that case they are said to fail or to break; and the holders of bills suffer loss; because the individual property

a bank? 6. What is the nature of a bank bill? 7. How is money borrowed from a bank? 8. Describe the manner of transmitting money to distant places through banks. 9. How are banks saved the trouble of collecting from each other after each operation? 10. What is redeem

of the stockholders cannot be taken to pay the debts of the bank, except in a few states.

11. A law has recently been enacted in the state of New York, and a similar one by the legislature of this state last year, (1845,) in pursuance of which, banks may be established by individuals or companies, without applying to the legislature for a special law for every bank. These laws require, that security shall be given, by which bill-holders may be protected against losses by the failure of banks.

12. 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.

13. 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. If 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.

14. 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.

ing bills? 11. What laws have been lately enacted in New York and Ohio, in relation to banking? 12. What is the nature of an insurance company? What besides buildings do they insure? 13. Illustrate, by example, the operation of an insurance company. 14. From what may