the capital stock, deposits, investments, the amount on hand, the amount loaned, and many other details respecting each bank.

5. In October of each year he must make a detailed report to the governor, showing the name, location, and condition of every bank under his jurisdiction; and give a complete account of the work of his department during the year, including the names and compensations of all persons employed by him, and a statement of all receipts and expenditures.

142. The Insurance Commissioner.1 The principle upon which insurance is based is very simple. It may be stated thus: a large group of persons can collectively assume the sum total of any special kind of risk more easily than any member can assume his share of such risk. For example, when insured property is burned, the loss does not fall upon the owner alone, but upon all the policy holders of the company carrying the insurance. Thus insurance is based upon the principle of coöperation. The principle is applied directly in mutual insurance companies,2 and indirectly in others. Each policy holder pays a certain amount each year, called a premium,3 in return for which the company assumes his individual risk and agrees to pay the face value of his policy in case the event insured against happens.

There are many kinds of insurance. The law of California recognizes fourteen different kinds: fire, life, accident, marine, fidelity,

1 Political Code, §§ 368, 568, 569; Statutes of 1911, pages 1269, 1320.

2 A policy holder in a mutual company is a member of the company. In another kind of company, he simply has a contract with the company whereby the company assumes a specified risk in return for an annual premium which he agrees to pay. 3 In a mutual company, each member may be called upon for additional payments in case all losses cannot be met by the regular premiums.

plate glass, etc. The premium in each case is proportional to the risk assumed. It is possible to determine the amount with accuracy because experts have collected sufficient data from the experiences of human life to enable them to give a definite money value to every risk with which insurance deals.

Almost every man, woman, and child in California is interested either directly or indirectly in some form of insurance. It is therefore exceedingly important that every insurance company which transacts business in the state shall be honestly conducted and shall be able to fulfill all of its just obligations. The state law contains many regulations governing the insurance business, and provides for an insurance commissioner to see that these regulations are enforced. The commissioner is appointed by the governor, with the consent of the senate, to serve for four years. His office is in San Francisco. His salary is $4000 a year. The law authorizes him to appoint a deputy commissioner, an assistant, a statistician, an actuary, and necessary clerks and stenographers. Insurance companies, like banks, must pay for their own inspection, and the commissioner collects certain fees from them for the purpose. If the fees are not sufficient to meet the expenses of his department, which must not exceed $36,700 a year,1 the balance must be made up by an assessment imposed by the commissioner on each company in proportion to the premiums which it receives.

His most important duties are as follows:

1. He must enforce all state laws relative to insurance. No corporation may engage in the insurance business in the state without first receiving a certificate from him.2 1 This does not include the actuary's pay, as he receives fees for his services. ? Provision is made whereby an uncertificated company may write surplus insurance in the state; that is, insurance on any property in excess of what any cer

Every such certificate must be renewed annually. Before issuing a certificate to any company for the first time, he must carefully examine into its condition; and he may at any time thereafter employ experts to examine its books and records. He must investigate the condition of any company on the request of twenty-five interested persons.

2. He must see that every company organized in California has the amount of paid up capital stock required by law, the amount being $200,000 for most kinds of insurance; and must require every "foreign company doing business in the state to deposit bonds or other securities equal in amount to the capital stock required of domestic companies engaged in the same line of insurance.

3. If, at any time, he discovers that any company is insolvent, he must revoke its certificate and report the matter to the attorney-general, who must proceed against the company in the courts in order that its affairs may be adjusted according to the best interests of its creditors.

4. Not later than the first day of March of each year, he must obtain from every company doing business in the state a report, showing in detail the amount of its capital stock, the value of its property and assets, the amount of its liabilities, its total income, the amount of its expenditures, and other details. He must supply blanks for these reports.

5. On or before the first day of August of each year, he must make a detailed report to the governor, showing generally, the condition of the insurance business and interests in this state," and giving an account of all moneys

tificated company is willing to take. Every agent for any such uncertificated company must procure a license from the insurance commissioner. Such an agent is known as a "surplus line broker."

received and paid out by him during the year. We have seen that he must also make a report to the board of equalization each year.

Fraternal insurance carried on by lodges for the mutual benefit of their members, and not for profit, is not subject to the general insurance laws of the state; but the legislature of 1911 passed a special act for the regulation of this kind of insurance. All such societies, in so far as they are involved in the insurance of their members, are now for the first time subject to the control of the insurance commissioner. Each one must annually procure a certificate from him, must present to him an annual report, must submit to an examination of its books and records at any time, and is subject to prosecution by the attorney-general in case the commissioner considers that it is not able to live up to the promises made to its members.

143. The Building and Loan Commissioner.1 - A building and loan association is a corporation organized on the coöperative principle, to enable persons of small means to invest their savings in small amounts, or to purchase homes for themselves on the installment plan. Persons belonging to the association make small periodic payments, usually weekly or monthly. Such an association differs from other kinds of corporations in that its shares of stock - when it issues stock may be purchased on the installment plan; and in that any member may withdraw from the association at any time by surrendering his stock, or other evidence of membership, and receiving all money that he has paid in plus such dividends as may have accumulated upon it. Another difference is that the face value of its stock, unlike that of other corporations, is no fixed amount, but increases and diminishes in amount as members come into or withdraw from the association. It differs from at savings bank in that its funds are accumulated for the

1 Statutes of 1911, page 609 seq.

special purpose of making loans to its members; and in that, instead of paying fixed rates of interest on deposits, as is done by savings banks, it credits each member with his share of the income of the association. The income is derived from membership fees, periodic payments, interest on loans, fines imposed on members for failing to make their payments according to agreement, and from other sources.

Each association has a board of directors who usually serve without pay. They are elected by the stockholders or members. They appoint a treasurer, secretary, and other necessary officers and employees and determine their salaries. They also determine the policy of the association, being guided in all that they do by the by-laws adopted by the stockholders or members.

In the year 1911 the total assets of building and loan associations in California amounted to more than $23,000,000. Since this sum represents the accumulation of small investments, it is exceedingly important to large numbers of people that these associations shall be honestly and efficiently managed. The law therefore imposes many regulations upon them and provides for a building and loan commissioner to see that all such regulations are enforced. The commissioner is appointed by the governor to serve during his pleasure. His salary is $3000 a year. His office is in San Francisco. The law allows him one secretary at a salary of $2100, and $2400 a year for office rent, fuel, stationery, and other incidental expenses. The expenses of his office are paid from fees which he collects from the various associations under his jurisdiction in proportion to their respective assets.

His duties are similar to those of the bank commissioner and the insurance commissioner. That is, he must enforce