The persons whom the capper represented—­they called themselves an “insurance company”—­stood ready to accept the bet, a fact which seems to have generated no suspicion in the mind of the house-owner.  Theoretically, of course, if the house did burn payment of the wager would partly or wholly recoup the winner of the bet for the loss of his house, but in fact the result of the transaction was commonly very different.  For the privilege of betting that his property would be destroyed by fire the owner had to pay to the gentleman betting that it would not be, a certain percentage of its value every year, called a “premium.”  The amount of this was determined by the company, which employed statisticians and actuaries to fix it at such a sum that, according to the law of probabilities, long before the house was “due to burn,” the company would have received more than the value of it in premiums.  In other words, the owner of the house would himself supply the money to pay his bet, and a good deal more.

But how, it may be asked, could the company’s actuary know that the man’s house would last until he had paid in more than its insured value in premiums—­more, that is to say, than the company would have to pay back?  He could not, but from his statistics he could know how many houses in ten thousand of that kind burned in their first year, how many in their second, their third, and so on.  That was all that he needed to know, the house-owners knowing nothing about it.  He fixed his rates according to the facts, and the occasional loss of a bet in an individual instance did not affect the certainty of a general winning.  Like other professional gamblers, the company expected to lose sometimes, yet knew that in the long run it must win; which meant that in any special case it would probably win.  With a thousand gambling games open to him in which the chances were equal, the infatuated dupe chose to “sit into” one where they were against him!  Deceived by the cappers’ fairy tales, dazed by the complex and incomprehensible “calculations” put forth for his undoing, and having ever in the ear of his imagination the crackle and roar of the impoverishing flames, he grasped at the hope of beating—­in an unwelcome way, it is true—­“the man that kept the table.”  He must have known for a certainty that if the company could afford to insure him he could not afford to let it.  He must have known that the whole body of the insured paid to the insurers more than the insurers paid to them; otherwise the business could not have been conducted.  This they cheerfully admitted; indeed, they proudly affirmed it.  In fact, insurance companies were the only professional gamblers that had the incredible hardihood to parade their enormous winnings as an inducement to play against their game.  These winnings ("assets,” they called them) proved their ability, they said, to pay when they lost; and that was indubitably true.  What they did not prove, unfortunately, was the will to pay, which from the imperfect court records of the period that have come down to us, appears frequently to have been lacking.  Gakler relates that in the instance of the city of San Francisco (somewhat doubtfully identified by Macronus as the modern fishing-village of Gharoo) the disinclination of the insurance companies to pay their bets had the most momentous consequences.