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1. Add water and beans to Dutch oven or stockpot. Bring to a gentle boil over medium high heat.
2. Boil 2 minutes, remove from heat, cover stockpot and let stand 60 minutes.
3. Stir in smoked ham, ham bone, finely chopped onion, salt, bay leaf, and pepper.
4. Simmer soup on low for 60-70 minutes. Do not boil.
5. Add additional water, if necessary while simmering.
6. Remove ham bone and trim meat from bone. Cut meat into bite size pieces, and return to soup. Discard ham bone.
7. Remove bay leaf and discard.
8. Serve hot.
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