P R O P E R T Y O F .<O
//
%ff
Aſſiſſiº,
1 & 1 7
A R T E S S C ; E N T | A V E R T A S




THE
MERCHANT'S MANUAL,
COMPRISING
T H E PR IN C I P L E S OF
TRADE, COMMERCE AND BANKING;
WITH
MERCHANTs’ Accounts; INLAND AND FOREIGN BILLS ; PAR
OF Exchange ; EQUATION OF PAYMENTs, &c.
BY B. F. F O S T E R.
B O S T O N :
PUBLISHED BY PERKINs & M A R v IN.
PHILADELPHIA : HENRY PERKINS.
1 83 8.
Entered according to Act of Congress in the year 1838,
By PERKINs & MARVIN,
In the Clerk’s Office of the District Court of the District of
Massachusetts.
P. R. E. F. A C E .
To give a just idea of the nature and lead-
ing principles of trade, commerce and banking,
* with the practical details of the counting-
house, has been the principal object in view
º, in the compilation of this volume.
º
While few departments of industry have
been followed to so great an extent as com-
merce, hardly any other has been less an
object of study in regard to its general prin-
ciples. In law, physic, and divinity there are
abundance of works for the guidance of those
who are to devote themselves to such profes-
sions; but the case is quite different in respect
to commercial pursuits. There are few, if any
books designed for the specific purpose of in-
structing the young merchant in the practical
iv P. R. E. F. A C E •
management of his business. Indeed to no
class of the community are written precepts
considered to be so little applicable—in none
is the requisite information thought to depend
so exclusively on practice and experience.
“It cannot,” says M*Culloch, “require any
elaborate argument to convince those who are
engaged in the practical details of commerce,
that a knowledge of the principles of com-
mercial intercourse must be highly advanta-
geous. Some businesses may be, and in fact
generally are, conducted empirically, and ac-
cording to a system of routine. But a mer-
chant ought to be familiar with principles, as
well as details. It is his business to distribute
the various products of the world, according to
the effective demand, or to convey them from
where they are abundant and cheap, to where
they are scarce and dear. To execute this
business well, he ought to be acquainted, not
only with the various productions of the dif-
ferent commercial countries of the world; but
he ought also to be acquainted with the cir-
cumstances under which they are produced.
P. R. E. F. A C E • V
He should be able readily to discriminate
between those circumstances which exert only
a temporary, and those which exert a perma-
ment influence on price, and he should be inti-
mately acquainted with the laws which govern
the value of money and the theory of ex-
change. The merchant who is destitute of
this knowledge, is always liable to confound
the effects occasioned by secondary and ac-
cidental causes, with those that are the result
of general and fixed principles; and is con-
sequently liable to losses, from which, had he
been better informed, he might have been
entirely exempted. This want of informa-
tion, is the great cause of the many unsuc-
cessful speculations and adventures that are
every now and then occurring.”
C O N T E N T S .
CHAPTER. I.
Origin and advantages of commerce—Principles of trade and com-
merce—Monopolies and restrictions—Mercantile profits, commonly
exaggerated—Speculations in trade, injurious tendency of Quali-
ties essential to a man of business, .
CHAPTER II.
Mercantile classes—Wholesale and retail dealers—Bill or exchange
brokers—Stock brokers—Ship and insurance brokers—Produce
brokers—Factors—Factorage and commission—Supercargoes,
CHAPTER III.
Origin and mature of credit—Abuses of the credit system, .
CHAPTER IV.
General principles affecting prices—Influence of speculation on prices,
CHAPTER V.
Commercial revulsions and panics—Revulsion in England 1793, 1814,
1825, 1837, . . . . . . . . . . . . . .
CHAPTER VI.
Marine insurance—Lloyd's coffee house—Manner of effecting in-
surances—Information at Lloyd's, . . . . . .
CHAPTER VII.
Origin and nature of bills of exchange—Par of exchange on foreign
countries—Improper mode of quotation—Nominal and true par—
Advantages of bills—Classes of bills—Cautions respecting bills
&c., . . . . . . . . . . . . . . . . .
13
43
49
62
73
79
viii CONTENTS.
CHAPTER VIII.
Forms and requisites of inland and foreign bills—Promissory notes—
Days of grace—Protests—Case of need—Exercises in bills,
CHAPTER IX.
Origin of banks—General principles of banking—Bank of England—
English private banks—Banks in Scotland and Ireland—Bank of
France, . . . . . . . . . . . . . . .
CHAPTER X.
Merchants’ accounts—Bills of parcels—Exercises in bills of parcels—
Remarks on the book trade—Invoices—Account-sales—Receipts
-Accounts-current, . . . . . . . . . . . .
CHAPTER XI.
Principles of commercial book-keeping, . . . . . . .
CHAPTER XII.
Equation or average times of payment, . . . . . . . .
CHAPTER XIII.
Remarks on mercantile letter writing, . . . . . . . . .
CHAPTER XIV.
Commercial correspondence, . . . . . . . . . . .
EXPLANATIONS OF CoMMERCIAL TERMS AND ExPREssions, .
92
104.
124
151
173
188
240
T H E
M E R C H A N T'S M A N U A L.
C H A P T E R I.
ORIGIN AND AdvantAGES OF COMMERCE – PRINCIPLEs of
TRADE — Monopoll Es AND RESTRICTIONs — MERCAN-
TILE PROFITs — SPECULATIONS — QUALITIES of A MAN
of BUSINEss.
CoMMERCE, in its more general sense, is simply the
exchange of commodities of any kind, for money or
other commodities. .
Its origin is coeval with the first dawn of civilization.
The moment individuals ceased to supply themselves
directly with the various articles they made use of,
that moment must a commercial intercourse have
commenced among them ; for it is only by exchanging
that portion of the produce raised by ourselves which
exceeds our own consumption, for portions of the
surplus raised by others, that different individuals can
apply themselves, in preference, to different pursuits.
The influence of commerce upon national wealth,
is indirect. Merchants make no change in the articles
they buy and sell : they merely exchange one sort of
2
14 ADVANTAGES OF COMMERCE.
merchandize for another. The advantage consists in
enabling those who produce the commodities to carry
on their business without interruption. The inter-
vention of merchants and retail dealers gives a con-
tinuous motion to the plough and the loom. They
collect and distribute all sorts of commodities. They
buy of the farmers and manufacturers the things they
have to sell, and by bringing together every variety of
articles, individuals are able, without difficulty or loss
of time, to supply themselves with whatever they
want. Were the mercantile classes annihilated, that
division of labor to which agriculture and manufactures
are mainly indebted for their progress, would be des-
troyed. The moment an individual had produced a
quantity of wheat, of cloth, or of shoes, he would be
obliged to abandon his peculiar occupation, and en-
deavor, first to dispose of his produce, and next to
find persons possessed of, and willing to part with the
different articles required for his consumption. Under
such circumstances it would be impossible for a man
to confine himself to one employment ; and every
family would be obliged to undertake the manufacture
of most things required for its support. All the ad-
vantages of coöperation and combination would be
lost; society would be thrown back into a state of
barbarism, and would not possess a tenth part of the
accommodations and comforts that are now enjoyed.
This is not all. Besides enabling individuals to
confine themselves, in preference, to such employments
as suit their tastes or capacities, and to prosecute
them without interruption, commerce gives birth to a
territorial division of labor. Different countries, and
ADVANTAGES OF COMMERCE. 15
different parts of the same country, differ in situation,
soil and climate : some are fitted for producing corn
and wool, but are without wine and silk; some have
rich mines, while their lands are poor; some are
covered with forests, while others can hardly boast of
a solitary tree : nor is there, in point of fact, a single
country, however rich, that would not, if confined to
its own resources, be destitute of many articles indis-
pensable to a comfortable existence. But, by the aid
of commerce, what is deficient in one district is bal-
anced by what is superfluous in another ; and an
industrious nation enjoys whatever is useful, rare or
valuable in all the countries and climates of the world.
As soon as a commercial intercourse is established,
each community endeavors to avail itself of its peculiar
means of production. Capital and industry are di-
rected to those employments in which the physical
circumstances of each country, or the genius of its
inhabitants especially fit them to excel; while by
exchanging such portions of the produce as exceed
their own wants, for the articles raised by others, each
is supplied with all that is elsewhere obtainable.
A ready exchange of commodities, enables every
individual to avail himself of his peculiar advantages;
—to work on the materials which nature has fur-
nished him; to humor his genius or disposition, and
betake himself to the task in which he is best qualified
to succeed. The inhabitant of the mountain may
confine himself to the culture of his woods and the
manufacture of his timber ; the owner of pasture-lands
to the care of his herds; the owner of clay-pits to
the manufacture of his pottery ; and the husbandman
16 ADVANTAGES OF COMMERCE.
to the culture of his fields, or the rearing of his cattle.
And with the aid of commerce, any one commodity,
however small a part it may form in the accommo-
dations of human life, may find a market in which it
can be exchanged for what will procure other accom-
modations. Thus, the owner of the clay-pit, or the
industrious potter, without producing any one article
immediately fit to supply his own necessities, may
obtain all that he wants; and commerce, by which
commodities are merely exchanged, and nothing pro-
duced, is, nevertheless, in its effects, very productive ;
because it affords facilities and encouragement to every
artist in multiplying the productions of his own art.
Those who consider the influence of commerce in
making man acquainted with an infinity of useful and
desirable products of which he must have otherwise
been ignorant—in diverting the industry of every
country into the most profitable channels—in improving
every process carried on at home, by opening the
markets of the world to its produce—and in exciting
the desires, and stimulating the industry and invention
of all classes, will not hesitate to admit that it has
principally contributed to advance society to the high
state of improvement which it has attained.
What a picture does modern commerce present of
the boundless desires of man, and of the advancement
he makes in intellect, knowledge and power, when
stimulated by these desires Things familiar to use
cease to attract our surprise and investigation ; other-
wise we should be struck with the fact, that the
poorest laborer's breakfast-table is supplied from
countries lying in the remotest parts of the world; of
PRINCIPLES OF TRADE. 17
which Greece and Rome in the plenitude of their
power and knowledge were totally ignorant. But the
benefits which mankind derive from commerce are not
confined to the acquisition of a greater share of the
comforts, luxuries, or even the necessaries of life.
Commerce has repaid the benefits it has received from
geography ; it has opened new sources of industry ;
it has contributed to preserve the health of the human
race, by the introduction of the most valuable drugs
employed in medicine. It has removed ignorance
and national prejudices, and tended most materially,
to the diffusion of political and religious knowledge.
The natural philosopher knows that whatever affects
in the smallest degree, the remotest body in the uni-
verse, acts, though to us in an imperceptible manner,
on every other body. So commerce acts ; but its
action is not momentary ; its impulses, once begun,
continue with augmented force ; and it appears to us
no absurd or extravagant expectation, that through its
means, either directly, or by enlarging the views and
desires of man, civilization, knowledge, freedom and
happiness will ultimately be spread over the whole
globe.
PRINCIPLEs of TRADE AND CoMMERCE.
By the principles of commerce, we understand
conclusions of two kinds ;-those deduced from the
practice of merchants, and applicable to the man-
agement of trade generally ; and those of a more
comprehensive character, which are entitled to the
attention of all legislators. Most of those conclusions
2 *
18 PRINCIPLES OF TRADE.
seem so plain as to admit of little question ; but
several of them have been the result of long, and in
some cases, dearly bought experience. As a specimen
of mercantile axioms, we give the following:
1. Short credits and quick returns, however small
the profit, are eventually better than long credits and
large profits.
2. The greatest gain arises from commercial in-
tercourse with populous and long settled countries;
because the inhabitants are, in general, possessed of
capital and are punctual in their payments.
3. Recently settled countries are always bare of
capital ; and commercial transactions with those coun-
tries, however profitable in the outset, often become
otherwise from delays or want of punctuality in pay-
ment, and ultimate insolvency.
4. Commerce should be left as much as possible to
its natural course, the interference of legislation being
always hurtful. Governments ought merely to remove
obstacles and grant facilities. Privileges and monop-
olies, if necessary in an early age, when individual
capital was too scanty for extensive undertakings,
should be withdrawn as soon as such capital becomes
sufficient.
In regard to the elementary principles of trade, it
must be acknowledged—
1. That all trade consists in supplying the demands
of society for commodities.
PRINCIPLES OF TRADE. 19
2. That the market price of any article depends
upon the proportion which the supply of it bears to
the demand.
3. That the only way of making a safe speculation
in trade, is by first acquiring a correct knowledge of
the proportion between the supply and demand.
As trade, therefore, may be considered wholly to
consist in the transactions which arise from the demand
for commodities on the one hand, and the supply on
the other, it will at all times be in one of the following
conditions.
1. It will be in a natural state, when the supply and
demand are nearly equal to each other ; and occasion
such a rate of prices as will just repay the cost of
production, together with the usual average profit on
the capital employed.
2. It will be in a depressed state, when the supply
exceeds the demand ; and consequently when the
prices of commodities are so low as to afford no profit
to those who produce them ; and in a still more de-
pressed state, when the prices will not repay the cost
of production.
3. It will be in a flourishing state, when the supply
falls short of the demand ; and when, consequently,
the prices of commodities are so high as to yield a
profit much greater than the usual average rate.
As the means of supplying commodities is con-
20 PRINCIPLES OF TRADE.
tinually changing, and as the demand for them is
influenced by a great variety of circumstances, such
as fashion, legislative regulations, political events, &c.;
the ratio that the one bears to the other must be
for ever varying. And as the market price for com-
modities, and the success of all speculations, depend
upon this ratio, it is expressly the business of persons
in trade, to watch its movements and make their cal-
culations accordingly.
It is owing to the habit of not keeping these
principles constantly in view, that almost all the
erroneous and ruinous mercantile speculations which
have happened, are to be attributed. It may be
laid down as a general rule, that when trade is in
either a very depressed or a very prosperous state,
every thing is contributing to produce a change, and
to bring it back to its ordinary or natural condition.
Thus, when trade is in a depressed state, the man-
ufacturing and importing of goods are lessened, and
the capital employed in these transactions is with-
drawn. The supply is reduced ; in a short time
it ceases to exceed the demand, and prices rise.
When trade, on the other hand, is in a very pros-
perous state, new capital is embarked in importing
and manufacturing goods, and every effort is employed
to render the labor of the workman as productive as
possible. The supply is increased ; in a short time
it equals the demand, and prices fall.
It is therefore when trade is unusually prosperous,
that the temptation to increase productions to an
excess is so strong, that there exist the greatest
danger of rash speculations, and of its becoming
PRINCIPLES OF TRADE. 21
exceedingly depressed. It depends wholly on the
judgment of those engaged in business, whether it
takes a natural course, or whether it goes forward
to a state of ruinous over-trading. If the merchants,
bankers and manufacturers comprehend and act on the
principle that trade is at all times regulated by the
ratio of the supply of commodities to the demand ;
and if they take due pains to ascertain what this
ratio is, and make it the basis of their calculations,
they will act, when trade has been for some time
very prosperous, with peculiar caution, and look for-
ward to a fall of prices. But if they wholly omit to
take into consideration what has been going forward
in regard to the increase of productions—if they
imagine that because prices have been and still are
very high, they will continue so permanently and
yield great profits; and extend their transactions ac-
cordingly—they will soon glut the market; make it
impracticable to effect sales, and involve themselves
in distress.
For the last thirty years our merchants and man-
ufacturers have uniformly adopted the latter course;
they have displayed a negligence of inquiry into the
causes of high prices, and acted with great impru-
dence in always calculating upon trade continuing in
a prosperous condition merely in consequence of prices
being high at the moment.
As one step towards avoiding a recurrence of these
evils, it seems indispensable that merchants and
manufacturers should make it a rule to consider a
long-continued, prosperous state of trade, as a certain
indication that the period is not distant, when an
22 MONOPOLIES AND RESTRICTIONS.
altered ratio of supply to demand will lower prices;
and thus render it unsafe to extend their dealings.
No person if he seriously makes the attempt, can
have any great difficulty in forming a tolerably correct
opinion upon this subject. By examining price-
currents, and lists showing the importations and ex-
portations; and by making diligent inquiries respecting
the stock of goods on hand, and the measures in
progress for increasing productions, persons conversant
with business will acquire abundance of facts for
forming a correct conclusion in respect to the probable
state of prices.
Monopolies AND RESTRICTIONs.
The more we study the natural progress of com-
merce, the more we shall be satisfied of the ex-
pediency of leaving all its various agents to their
uncontrolled management. Business then divides
itself into a variety of branches; each of which may
be carried on to a surprising extent; capital does not
remain hoarded up, and goods find their way to market
whenever prices are encouraging, that is, whenever the
consumers are in want of them ; they are withheld
only when the market is glutted, and when to force
sales would be productive of eventual injury to the
buyers themselves.
No where is a bappy medium more important than
in commerce. If you reduce prices for one season
below what is necessary to indemnify the producer,
you discourage production for the next, and expose
yourself to the hazard of a dearth.
MONOPOLIES AND RESTRICTIONS. 23
Monopolies are now generally admitted to be highly
impolitic. The public are aware that a privileged com-
pany cannot make its purchases or transact business
on better terms than private individuals; and that the
chief operation of a monopoly is to put money into the
hands of a few at the expense of the many.
Whether we consider restrictions on commerce with
reference to their influence on the trade in gold and
silver, or the progress of industry at home, or on
national security and independence, they are alike
objectionable. Their effects are in every instance
such as ought to be deprecated. Their tendency is
to diminish, instead of increasing wealth ; to retard,
instead of accelerating the progress of civilization ;
and to impair the means of defence and aggression.
“The very essence of commercial and manufacturing
industry,” says Mr. Poulett Thomson, “is freedom
from legislative interference and legislative protection.
Attempt to assist its course by legislative enactments,
by fostering care, you arrest its progress, you destroy
its vigor. Unbind the shackles in which your unwise
tenderness has confined it, permit it to take, un-
restrained, its own course ; expose it to the wholesome
breezes of competition, you give it new life, you
restore its former vigor. Industry has been well
likened to the hardy Alpine plant ;-self-sown on the
mountain side, exposed to the inclemency of the
seasons, it gathers strength in its struggles for ex-
istence, it shoots forth in vigor and in beauty. Trans-
planted to the rich soil of the parterre, tended by the
fostering hand of the gardener, nursed in the artificial
24 MERCANTILE PROFITS.
atmosphere of the forcing glass, it grows sickly and
enervated ; its shoots are vigorless, its flowers in-
odorous. In one single word lies the soul of industry
—competition. The answer of the statesman to his
sovereign, inquiring what he could do to assist the
industry of his kingdom was, ‘let it take its own way.’
Such is my prayer. Relieve us from the chains in
which your indiscreet tenderness has shackled us—
remove your oppressive protection—give us the fair
field we ask, we demand no more. The talent, the
genius, the enterprise, the capital, the industry of this
great people will do the rest.”
MERCANTILE PROFITs.
Mercantile profits are subject to a variety of unfore-
seen deductions, originating partly in an accumulation
of petty expenses; but more, at least in a business of
long credit, from deficient payments. The latter are
technically called “bad debts,” and they almost always
exceed the anticipated amount, in consequence both
of the sanguine temper of our countrymen, and of the
actual capital” of the buyers being much inferior to
its appearance. It should also be observed that
fluctuations, to a greater or less extent, are inseparable
* In commerce, and as applied to individuals, Capital is under-
stood to mean, the sum of money which a merchant, banker, or
trader, invests in any undertaking, or which he contributes to the
common stock of a partnership. It signifies also the fund of a
trading company or corporation; in which sense the word Stock
is generally added to it. Thus we say the Capital Stock of the
bank, &c. In book-keeping the term Stock is used to represent the
merchant’s capital.
MERCANTILE PROFITS. 25
from the course of commercial affairs. The business
of production or supply proceeds wholly upon an-
ticipation ; it is dependent on the seasons, and on an
endless variety of casualties. The contingencies
which may excite a spirit of speculation and enterprise
on the one hand, and disappoint expectation and
defeat calculation on the other, are, therefore, almost
innumerable.
The greatest profits must be made in those occu-
pations in which most risk is run. For it is only the
expectation of unusual gains which induces any one
to incur that risk ; and the knowledge or fear of un-
certainty, narrows competition in such branches of
commerce. The former circumstance affords a motive
to embark in hazardous undertakings; the latter gives
the power of realizing therein unusual profits.
Thus great fortunes are occasionally made by new
adventures, as by shipments to countries hitherto little
visited by the commercial world. Also speculations
in which years perhaps must elapse before the returns
can be secured, give higher profits than those in
which the returns can be more speedily calculated
upon. And this partly from the greater risk which
accompanies these long-winded transactions; and partly
from the field of competition being still more narrowed
by the comparatively small number of persons pos-
sessing a capital sufficient to enable them to afford
the outlay required, and to wait so long for their
money. Thus, great fortunes are more suddenly
made by merchants engaged in foreign trade, than by
those employed in home trade.
But, because employments in which the risk is
3
26 MERCANTILE PROFITS.
greatest give higher profits to a few, than others in
which there is more certainty, yet it does not follow
that the gains on the whole, are greater in the more
adventurous than in the more safe branches of industry.
For, if a few make fortunes more rapidly, a greater
number fail of securing any thing at all ; lose even
their capital ; and become bankrupts. Indeed, taking
into consideration the natural hopefulness of man, his
tendency to believe himself born under a lucky star,
how much the example of the bad success of others
is thrown away upon him, and how great is the effect
of a few brilliant instances of good fortune ; there
can be little doubt that more persons are enticed to
enter upon these hazardous speculations than the
proportion of prizes to blanks would justify.
It is probable, therefore, that the most hazardous
employments are precisely those in which the least
profit is realized—the losses of some more than coun-
terbalancing the great profits of others.
Secrecy, as to capital and annual profit, is considered
a first rate point amongst mercantile men. To the
latter there can be no objection ; but the concealment
of the amount of capital, and the almost invariable
consequence, its exaggeration, are productive of very
pernicious effects. It is founded on the general vanity
of mankind, and more, perhaps, on an expectation of
advantage from a command of credit. The fact is,
that the clear profits of trade, whether domestic or
foreign, whether mercantile or manufacturing, whether
retail or wholesale, are greatly below what the world
imagines. Many hold a contrary language with regard
to trade in general ; but few do so in reference to
MERCANTILE PROFITS. 27
their own particular business. “Ours,” say they, “is
of limited emolument ; but other branches of com-
merce are very different, inasmuch as they admit of
speculation and of larger profits.” Whoever takes
the trouble to question men in almost any business,
may reckon on receiving a succession of such answers;
answers not suggested by a wish to deceive or to
conceal the gains of the individual, but originating in
the general disposition to take the ignotum pro mag-
nifico.” We dwell on this point from a desire to
correct, as far as our influence may extend, the pre-
valence of existing errors, and prepare the reader for
the adoption of that patient, economical and pains-
taking course, which was the basis of the prosperity
of our ancestors ; and which alone can extricate us
from our recent embarrassments. During the last few
years, such language would not have been listened to.
Our minds were kept in a ferment by incessant fluc-
tuations; property, whether in lands, houses, or mer-
chandize, owing to a variety of causes, had obtained
an unexampled value ; the majority of the possessors
considered themselves as men of fortune, and never
doubted that the general rise of prices was an evidence
of augmented national wealth. Now when we know
to our cost how far we were from enjoying national
prosperity, we are more disposed to give attention to
the monitor who recals the almost antiquated maxims
of industry and economy, and who tells us that,
although we surpass our neighbors over sea, in activity
and combination, we have much to learn from them
* “The unknown for the magnificent.” We are apt to annex
the idea of greatness to that which is remote, -
28 MERCANTILE PROFITS.
in point of caution, prudence, and of moderation in
expenditure.
Mankind have naturally a strong disposition to con-
template the past, or the distant, through a magnifying
medium, and to believe whatever the confident asser-
tions of others, or the love of wonder in ourselves,
suggests with regard to reported wealth. Hence the
allegations so confidently brought forward as to the
riches of ancient cities, and the motion generally enter-
tained with respect to the rapidity of fortune-making
in foreign countries. India was long proverbial in this
respect; and it requires much more than the usual
Stock of information to discover that, if we make allow-
ance for deaths and disappointments from various
causes, the proportion of those who succeed in that
country is not greater than at home; and that a fortune,
when it does happen to be made, is the result of a habit
of saving, favored by exemption from the expenses of
a family; of rare political contingencies; or, finally,
of unusual opportunities consequent on the mortality
of competitors. In point of trade, few countries are
more limited than India. In support of these assertions
we appeal not to the young beginner, entering with
sanguine hopes on his career, nor even to him who is
advanced half-way in the eager pursuit; but to all
who have passed a number of years in that country,
and who possess sufficient reflection to make a delib-
erate comparison of the advantages and disadvantages
existing between one country and another. Particular
instances may be given of the acquisition of large for-
tunes in India; but these have been rare, and the
result of peculiar circumstances.
MERCANTILE SPECULATIONS. 29
These observations must not be understood as
intended to depreciate the value of commerce, or to
dampen in the young beginner the hopes of eventual
success. They show indeed that the ratio of profit
is generally small, but they afford the consolatory
assurance that mercantile concerns may be carried to
a great extent, and that the amount of gain may, in
process of time, be rendered very considerable.
MERCANTILE SPECULATIONS.
This analysis of the profits of trade leads us to say
a few words on a topic which seems to be very gen-
erally misunderstood; we mean, the profits of “specu-
lation.” Among mercantile men this expression is
applied to incurring extensive risks in the hope of
extensive gains; in short, to whatever is foreign to the
proper business of the individual, or beyond the control
of common rules. It is to such undertakings that
vulgar credulity ascribes extraordinary profits; and
even well informed men are apt to give way to the
assertions so confidently made, of vast occasional gains
by speculation. Adam Smith himself, after remarking
(Wealth of Nations, Book I. Chap. 10.) that to make
a fortune in a regular line of business commonly requires
a long life of industry, frugality, and attention; adds,
that there are many examples of fortunes realized by
speculators in the course of a few years. Now, the
men who embark in mercantile speculations are for the
most part very loose accountants; their estimate of
profits applies to the gross, rarely to the net return :
besides they are almost always adventurers; and ad-
3 *
30 MERCANTILE SPECULATIONS.
venturers are seldom noted for their observance of
truth. Speculators generally trade upon Credit, and
are in need of all the support which flattering rep-
resentations, and rumors of sudden profit, can give
them. All these reasons seem to justify a deliberate
inquirer in doing, what indeed is seldom done ; we
mean, in withholding his belief from such confident
allegations, so long as they are not supported by col-
lateral evidence.
Our opinion is, that instead of the large profits
commonly ascribed to what is termed speculation, the
individuals concerned experience little else than disap-
pointments, and maintain a perpetual struggle to keep
up a fair appearance to the world. This opinion is
founded partly on a knowledge of the actual career
and circumstances of speculators, but more on the well
known fact, that almost every kind of business is in the
hands of established merchants and tradesmen who, of
course, are too vigilant to overlook any opportunity
of emolument, and who have much better means of
information than temporary interlopers. Still, should
there remain doubts as to the accuracy of this opinion,
the question may be decided by reference to the
account-books of any given number of celebrated spec-
ulators; their affairs end, almost always, in bankruptcy;
and we are much mistaken if an inspection of their
books would show, in one case out of ten, that the
parties had succeeded in realizing their boasted profits.
“This rage for speculating, this spirit of gambling
in trade,” says an eloquent writer, “proceeds on princi-
ples entirely different from the maxims of a regular and
pains-taking business. It is not looking to diligence
MERCANTILE SPECULATIONS. 31
and fidelity for a fair reward, but to change and chance
for a fortunate turn. It is drawing away men's minds
from the healthful processes of sober industry and
attention to business, and leading them to wait in
feverish excitement as at the wheel of a lottery.
The proper basis of success—vigilant care and labor—
is forsaken for a system of baseless credit. Upon this
system men proceed, straining their means and stretch-
ing their responsibilities, till, in calm times, they can
scarcely hold on upon their position ; and when a
sudden jar shakes the commercial world, or a sudden
blast sweeps over it, many fall, like untimely fruit,
from the towering tree of ſancied prosperity.”
It would be endless to attempt an enumeration of
the various ways in which the rage for speculation has
brought misfortune and ruin on merchants and manu-
facturers. The opening of trade to a new country,
such as Buenos Ayres, Brazil, or Carraccas, led the
British merchants to export, not only a prodigious
overstock of merchandize fitted for the country, but of
many articles totally unsuited to the climate and habits
of the people. Again, in 1814, when the war between
England and France was drawing to a close, goods
both colonial and manufactured were poured into the
continent of Europe as if the compass of the market
was unbounded, and as if the calamities of war had
produced no decrease of disposable capital. In 1825,
mercantile speculations were most unfortunate, and vast
sums were lavished in adventures which never had a
fair prospect of success, and owed their origin to the
Sanguine imagination of one projector, and the credulity
of another.
32 MERCANTILE SPECULATIONS.
The liberality with which the banking establishments,
of England and this country, lavished “accommoda-
tions” upon merchants, manufacturers and speculators,
during the years 1835 and '36, inflated the currency to
such a degree that commodities of all kinds rose to
the most extravagant prices. The universal confidence
which prevailed, infused the greatest vigor into every
department of trade and commerce. The country was
flooded with foreign merchandize. In the year 1836
the imports into the United States exceeded the exports
more than sixty-one millions of dollars, and the enor-
mous system of over-trading in which both banks and
individuals were embarked, led to the most disastrous
results. The spirit of speculation and adventure per-
vaded the entire community. The gambling propen-
sities of human nature were constantly solicited into
action ; and crowds of individuals of every description,
—the credulous and the suspicious—the crafty and
the bold—the raw and the experienced—the intelli-
gent and the ignorant—politicians, lawyers, physicians
and divines, hastened to venture some portion of their
property in schemes of which scarcely any thing was
known except the name. All classes seemed ready to
abandon the old beaten track of industry and frugality,
for the delusive purpose of getting rich suddenly,
without the trouble of going through the toilsome and
pains-taking process by which our ancestors were
accustomed to add guinea to guinea and acre to acre.
Rail-roads were projected in every direction; new
towns were built in the wilderness, and town plots
every where exposed for sale. Planters augmented
the number of their acres and slaves, by purchasing on
MERCANTILE SPECULATIONS. 33
credit. An air of prosperity seemed to spread itself
over the whole country. Every body appeared to
grow rich. Merchants extended their purchases of
goods at New York, Philadelphia and other Atlantic
cities, on the usual credits, and in many cases took the
proceeds arising from the sales to speculate in lands.
Extravagance in expenditure, diminished industry, a
reckless abuse of credit, drawing and re-drawing at an
immense sacrifice, and an undue conversion of floating
capital into fixed capital, were the concomitant effects
of this wild system. Shadows were mistaken for
substance and appearances for realities. Suddenly,
however, the bubble burst—unlimited confidence gave
place to universal distrust—a reaction took place, and
thousands found themselves involved in bankruptcy,
misery and ruin.
It cannot be denied that hitherto our banking insti-
tutions, and trading concerns, have been very much
mismanaged ; and that a vast amount of property has
been wasted by the reckless speculations of the inex-
perienced and over-sanguine.
Those who really expect to succeed in trade, must
be content to submit, not only to a great deal of labor
and anxiety, but of self-denial in resisting the tempta-
tions of projects out of their own line of business.
What a beneficial result would be produced, were
young merchants to adopt it as a rule not to listen to
the ardent suggestions of persons of their own time of
life, but to recur, on every question of importance, to
the advice of their seniors; of men who have had to
make their own way in the world, and who, perhaps
without possessing the advantages of education, or the
34 QUALITIES OF
talent of moulding their reasoning into the form of
general principles, will still be found safe counsellors
in the practical parts of business. If the result of their
admonitions be to abridge some of the pleasing illusions
of the mercantile beginner, is it not better that the true
nature of his prospects should be made known to him
in the early part of life A deduction from anticipa-
ted enjoyment is a trifling sacrifice in comparison to
the distress produced by failure in more advanced years,
when the individual is less able to contend with diffi-
culties, and has probably to provide for a family. Let
any one extensively acquainted with mercantile men
call to recollection the situation of the majority of his
personal friends during the last twenty years, and say
whether any degree of self-denial would not be pre-
ferable to that succession of disappointments, anxieties
and losses which have baffled the exertions and broken
the spirits of so many meritorious persons.
QUALITIES OF A MAN of BUSINEss.
In the mercantile, as in other lines of business, the
means of success are few and simple, requiring, indeed,
long continued perseverance; but less complicated
than the youthful mind is apt to imagine. Analyze
the true qualities of a merchant or manufacturer, and
you will find that they reduce themselves to fairness,
vigilance, and steadiness ;—FAIRNEss, exemplified in
declaring his terms at once, and in never deviating
jrom an engagement; VIGILANCE, in superintending
his assistants, his clerks and his workmen ; and STEAD-
INESs in following up his proper line of business, year
A MAN OF BUSINESS. 35.
after year, without turning to the right or the left in
the pursuit of speculative advantages. These, plain
and simple as they are, form the true virtues of
mercantile life. The man who is known to possess
them will be at no loss for connections in trade, and
may safely leave to others the task of seeking a
reputation for hospitality by the extravagance of their
living; of activity by the frequency of their solicita-
tions, or of liberality by an unusual prolongation of
credit.
C H A P T E R II.
MERCANTILE CLASSEs — BROKERS AND FACTORS.
THE mercantile community is divided into two
leading classes—wholesale and retail dealers. This,
like the division in other employments, has grown out
of a sense of its utility. The wholesale merchants
buy at first hand of the producers or manufacturers;
but instead of disposing of the goods to the consumers,
they generally sell them to the retailers, by whom
they are distributed to the public. The interests of
all parties are consulted by this division. Had the
wholesale dealers attempted also to retail their goods,
they could not have given that undivided attention to
any part of their business so necessary to insure its
SUCCESS,
There can be no doubt that the separation in
question has been highly advantageous. The classes
of merchants, like those of artificers, are mutually
serviceable to each other and to the public. Without
this subdivision, commerce would have been impeded
in its operations ; particular branches of it would have
been comparatively neglected ; nor would any branch
have been carried on with the same economy and
BROKERS. 37
attention with which all are now conducted. It is for
the interest of each dealer, as of each workman, to
confine himself to some one business. By this means
each trade is better understood, and carried on in the
cheapest possible manner. It is obvious that the
retailing of commodities is indispensable. It is not
enough that a cargo of tea should be imported from
China, or a cargo of sugar from Jamaica. Most
persons have some demand for these articles; but
there is not in any community a single private indi-
vidual or family requiring so large a supply for his
own consumption. It is clear, therefore, that com-
modities must be retailed ; that is, they must be sold
in such quantities and at such times as may be most
suitable for all classes of consumers. The truth is,
that the one class of dealers is in no respect more or
less advantageous than the other. If commodities
were not retailed, the wholesale trade would have to
be abandoned ; while on the other hand, retailing
could not be carried on without the assistance of the
wholesale dealers.
Besides the two great classes of wholesale and
retail merchants, there are various subordinate classes,
such as brokers, factors, agents, &c., employed in
carrying on the business of commerce. We subjoin
a few details respecting those that are most important.
BROKERS.
BRoKERs, are persons employed as middle-men, to
transact business or negotiate bargains between dif-
ferent merchants or individuals. They are divided
4.
38 BROKERS.
into different classes, as Bill or Exchange Brokers,
Stock Brokers, Ship and Insurance Brokers, and
Produce Brokers.
The Brokers who negotiate sales of produce be-
tween different merchants, usually confine themselves
to some one department or line of business; and by
attending to it exclusively, they acquire a more in-
timate knowledge of its various details, and of the
credit of those engaged in it, than could be looked for
on the part of a general merchant. They are con-
sequently able, for the most part, to buy and sell on
better terms than those less familiar with the business.
It is to these circumstances that the extensive em-
ployment of brokers in all large commercial cities is
to be ascribed.
Bill Brokers, propose and conclude bargains be-
tween merchants and others in matters relating to
foreign and domestic bills. They make it their
business to know the state of the exchange, and the
circumstances likely to elevate or depress it. They
sell bills for those drawing on foreign countries, and
buy bills for persons remitting ; * and from their
knowledge of the mutual wants of the one class as
compared with those of the other, a few of the prin-
cipal brokers are able to fix the rate of exchange at a
fair average, which it would not be possible to do if
the merchants directly transacted this business with
each other.
* To order a sum of money to be paid, by virtue of a Bill of
Exchange, is termed drawing ; and to order a sum of money to be
received, by sending such Bill of Exchange to another person, is
termed remitting. -
BROKERS. 39
“Those,” says Beawes, “who exercise the function
of Bill Brokers, ought to be men of honor, and ca-
pable of business; and the more so, as both the credit
and fortune of their employers are, in some measure,
in their hands; and therefore, they should avoid
babbling, and be prudent in their office, which consists
in one sole point, that is, to hear all and say nothing ;
so that they never ought to speak of the negotiations
transacted by means of their intervention, or relate
any ill report which they may have heard against a
drawer, nor offer his bills to those who have spread
it.”
Stock and Exchange Brokers, are employed to buy
and sell stock in the public funds, or in the funds of
joint stock companies.*
Ship and Insurance Brokers, are chiefly employed
in the buying and selling of ships, in procuring cargoes
or freight, and adjusting the terms of charter-parties,
settling with the master for his salary, disburse-
ments, &c.
* “The business of speculating in the stocks is founded on the
variation of the price, which it probably tends in some measure to
support. It consists in buying or selling stock according to the
views entertained of the probability of the value rising or falling.
“This business is partly conducted by persons who have property
in the funds. But a practice also prevails among those who have
no such property, of contracting for the sale of stock on a future
day at a price agreed on. For example, A. may agree to sell B.
2610,000 of 3 per cent. stock, to be transferred in twenty days, for
£6,000. A. has, in fact, no such stock : but if the price on the day
appointed for the transfer be only 58, he may purchase as much as
will enable him to fulfil his bargain for £5,800, and thus gain £200
40 FACTORS.
Custom-house Brokers, are persons employed to
enter and clear ships, goods, and baggage, at the
custom-house.
FACTORs.
Factors and Brokers are, in some respects, nearly
identical ; but in others they are radically different.
The former is a person to whom goods are sent or
consigned for sale and returns; and he has not only
possession, but, in consequence of its being usual to
advance money upon them, has also a special property
in them. When, therefore, he sells in his own name,
it is within the scope of his authority; but the case of
a broker is different :—he has not the possession of
the goods, and so the vender cannot be deceived by
the circumstance ; and, besides, the employing a
person to sell goods as a broker, does not authorize
him to sell in his own name, and, in the event of his
doing so, his principal is not bound.
The duty of an agent or factor is to procure the
best intelligence of the state of trade at the place
by the transaction : on the other hand, if the price of that stock
should rise to 62, he will lose £200. The business is generally
settled without any actual purchase of stock, or transfer ; A. paying
to B. or receiving from him the difference between the price of
stock on the day of settlement, and the price agreed on.
“This practice, which amounts to nothing else than a wager
concerning the price of stock, is carried on to a great extent: and
as neither party can be compelled by law to implement these
bargains, their sense of honor, and the disgrace attending a breach
of contract, are the principles by which the business is supported.
In the language of the stock exchange, the buyer is called a Bull,
and the seller a Bear, and the person who refuses to pay his loss is
called a Lame Duck.”
FACTORS. 41
where he resides—of the quantity and quality of goods
in the market—their present prices and the proba-
bility of their rising or falling;-to pay strict attention
to the orders of his employers—to consult their in-
terests in all matters referred to his discretion—to
execute their business with all the dispatch which
circumstances will admit—to be punctual in his cor-
respondence, and distinct and correct in his accounts.
Factorage or Commission, the allowance given to
factors by the merchants, manufacturers, &c., who
employ them :—it is a certain per centage on the
goods they purchase or sell on account of their prin-
cipals; and varies in different countries, and as it
refers to different articles. It is customary for a
factor to act under what is called a del credere com-
mission, that is, if he guarantee the price of the goods
sold on account of his employer, he receives an ad-
ditional per centage, generally averaging from 13 to
2 per cent, to indemnify him for this additional re-
sponsibility. In cases of this sort the ſactor stands
in the vendee's place, and must answer to the principal
for the value of the goods sold. But where the factor
undertakes no responsibility, and intimates that he acts
only on account of another, it is clearly established
that he is not liable in the event of the purchaser's
failing. Factorage or commission is also frequently
charged at a certain rate per cask or package, measure
or weight, especially when the factor is only em-
ployed to receive or deliver : this commission is
usually fixed by special agreement between the mer-
chant and factor.
4 %
42 SUPERCARGOES.
Supercargoes are persons employed by merchants
to take care of the cargoes they export to foreign
countries, to sell them there to the best advantage,
and to purchase a return cargo. The Supercargoes
generally go out and return with the ships on board
of which the goods were embarked, and therein differ
from factors. In commerce, any speculation in goods
sent to a foreign market, under the care of a supercargo,
with general instructions for him to dispose of them to
the best advantage, is called an adventure. Bill of
adventure, is an acknowledgement that certain goods
which have been shipped in one merchant’s name
belong to another, with an obligation to account to the
real owner for his share of the adventure.
C H A P T E R I I I.
ORIGIN AND NATURE OF CREDIT – ABUSEs of CREDIT.
IN the earlier stages of society, credit is in a great
measure unknown. This arises partly from the want
of capital, and partly from governments not being
sufficiently careful to enforce that punctual attention
to engagements, so indispensable to the existence of
credit. But as society advances, capital is gradually
accumulated, and the observance of contracts is en-
forced by law. Credit then begins. Those who
have more capital than they can employ, or who are
desirous of retiring from business, are disposed to lend,
or to transfer a part of their capital to others on
condition of obtaining a certain premium or interest
for its use ; and what they consider sufficient security
for its repayment. There are always individuals
disposed to borrow, (among merchants principally,)
in order to extend their business. These different
classes mutually accommodate each other. Those
desirous of being relieved from the fatigues of business,
find it very convenient to lend their capital to others;
while such as are anxious to enlarge their business,
obtain the means of prosecuting it to a greater extent.
44 ORIGIN AND NATURE OF CREDIT.
It is plain that to whatever extent the power of
the borrower may be increased, that of the lender is
diminished. The same portion of capital cannot be
employed by two individuals at the same time. If
A. transfer his capital to B., he necessarily, by so
doing, deprives himself of a power of production
which B. acquires. It is most probable, indeed, that
this capital will be more productively employed in the
hands of B., than of A. ; for the fact of A. having lent
it, shows that he either had no means of employing it
advantageously, or was disinclined to take the trouble;
while the fact of B. having borrowed it, shows that he
conceives he can advantageously employ it; or that
he can invest it so as to make it yield an interest to
the lender and a profit to himself. It is obvious,
however, that except in so far as credit contributes
in the way now mentioned to bring capital into the
possession of those who will employ it most beneficially,
it conduces nothing to the increase of wealth.
The most common mode of making a loan is by
selling commodities on credit, or on condition that
they shall be paid for at some future period. The
price is increased in proportion to the length of credit
given ; and if any doubt be entertained as to the
punctuality or solvency of the buyer, a further sum
is added to the price, to cover the risk the seller or
vender runs of not receiving payment.
When merchandize is sold in this way, it is usual
for the buyer to give his bill to the seller for the
amount, payable when the term of credit is expired;
and it is in the effects consequent to the negotiation
of such bills that much of that magical influence which
ORIGIN AND NATURE OF CREDIT. 45
has sometimes been ascribed to credit, is believed to
consist. Suppose, to illustrate this, that a paper
maker, A., sells to a printer, B., a quantity of paper,
and that he gets his promissory note for the sum,
payable six months after date : B. could not have
entered into the transaction had he been obliged to pay
ready money; but A., notwithstanding he has occasion
for the money, is enabled, by the facility of negotia-
ting, or discounting bills, to give the requisite credit,
without disabling himself from prosecuting his business.
In a case like this, both parties are said to be
supported by credit; and it is contended that half
the business of the country is carried on by its means.
All, however, that such statements amount to is, that
a large portion of those engaged in business do not
employ their own capital but that of others. In the
case in question, the printer employs the capital of
the paper-maker, and the latter employs that of the
banker or broker who discounted the bill. This
person had most likely spare cash which he might not
know how to invest profitably ; but the paper-maker,
into whose hands it has now come, will immediately
apply it to the purchase of materials, or the payment
of the wages of workmen employed in his establish-
ment. It is next to certain, therefore, that the
transaction will be advantageous. But still it is
essential to bear in mind that it will be so, not because
credit is itself a means of production, or because it can
give birth to capital not already in existence; but
because, through its agency, capital finds its way into
those channels in which it has the best chance of
being actively employed.
46 ABUSES OF CREDIT.
The real advantage derived from the use of bills
and bank notes, as money, consists in their substituting
So cheap a medium of exchange as paper, in the place
of one so expensive as gold, and, in the facilities which
they give to the transacting of commercial affairs. If
a banker lend A. a note for $100, or $1,000, the
latter will be able to obtain an equivalent portion of
the land or produce of the country in exchange for it;
but that land or produce was already in existence.
The issue of the note did not give it birth. It was
previously in some one’s possession, and it will depend
wholly on A.’s employing it more or less advanta-
geously than it was previously employed, whether
the transaction will, in a public point of view, be
profitable or not.
On analysing any case of this kind, we shall
invariably find that all that the highest degree of
credit or confidence can do, is merely to change the
distribution of capital—to transfer it from one class
to another. These transfers are occasionally, too,
productive of injurious results, by bringing capital into
the hands of spendthrifts. This, however, is not a
very common effect, except in the case of credit
given by retail tradesmen ; and there can be no doubt
that the vast majority of regular loans are decidedly
beneficial.
ABUSEs of CREDIT.
The previous observations refer to the credit given
to individuals who mean to employ the capital they
borrow in industrious undertakings, rather than to that
ABUSES OF CREDIT. 47
given to individuals who employ the advances made
to them in supporting themselves and their families.
In neither case is credit of advantage, unless it be
granted with due discrimination, and with reference
to the character, condition and prospects of those
receiving it. These considerations have been in a
great measure lost sight of, in the granting of credit
by tradesmen of all descriptions. Owing to the
competition of such persons, their extreme eagerness
to secure customers, and the general indolence of
opulent persons, which disinclines them to satisfy
every small debt when it is contracted, the system
of selling upon credit has become almost universal.
Few among us think of paying ready money for any
thing ; seven-tenths of the community are in the habit
of anticipating their incomes; and there is hardly a
man so bankrupt in character and fortune as to be
unable to find grocers, bakers, butchers, tailors, &c.
ready to furnish him with articles upon credit. Instead
of being confined to its natural and proper sphere, of
filling up the interval necessarily existing between the
beginning of legitimate enterprise and the realization
of its returns, the ‘credit system’ has gradually
extended to all the minor concerns of life, so as
even to include the daily consumption of personal
necessaries. The most minute retail, as well as the
most enormous wholesale business, is based, to a
great extent, on credit principles. From the largest
importer or manufacturer, down to the pettiest trades-
man and his humblest customer, all equally, in their
respective degrees, buy and sell, produce and consume,
eat, drink, and wear, on credit — that is to say, on
anticipation.
48 ABUSES OF CREDIT.
We look upon this facility of obtaining credit as a
very great evil. It is not, in one case out of five, of
any real advantage to the parties concerned; while it
is productive of very pernicious results. It tempts
many, and sometimes the most considerate, to live
beyond their means, and thus becomes the fruitful
source of bankruptcy, ruin and bad faith. Many
tradesmen consider themselves as fortunate if they
recover from two-thirds, to three-fourths of the debts
standing unpaid in their books at the distance of
several years.
Whoever sells on trust charges an additional price,
equivalent to the interest for the time to which
payment is deferred. In some cases the increase of
price is more than the amount of interest; as with
fashionable tailors, shoemakers, &c., who are forced
to charge insurance on each item, and thus make the
honest pay the losses occasioned by the dishonest.
Their business would not otherwise yield the common
profits of capital and the common wages of labor.
We do not mean to say, or insinuate, that credit may
not frequently be given to the laboring classes with the
best effects: but it is of its abuse that we complain—
of its being indiscriminately granted to every one ; to
those whom it encourages to continue in a course of
idleness and profligacy, as well as to those industrious
and deserving persons to whom it may occasionally
be of the greatest service.
C H A PTE R IV.
GENERAL PRINCIPLES AFFECTING PRICEs – INFLUENCE of
SPECULATION ON PRICEs.
By the price of a commodity is meant its value
estimated in money, or, simply the quantity of money
for which it will exchange. The price of a commodity
rises when it fetches more, and falls when it fetches
less money.
Every thing which can be sold or exchanged has
value. The real value of any article, in a commercial
point of view, depends upon the quantity of vendible
commodities for which it may be exchanged.
Every one who comes into the market either to
buy or to sell any particular thing, finds himself a
competitor of many others: the venders each striving
to sell at the highest market-rate, the purchasers to
buy at the lowest. The concert and competition of
efforts and interests thus excited give prices a tendency
to the mean cost; and the profits of the great mass of
business done in the world do not now so much result
from choosing a favorable time to sell or buy, as from
the skill, activity, and economy, put forth in mercantile
transactions, and by which one is enabled to purchase
5
50 GENERAL PRINCIPLES
or produce at the lowest rate, and sell at the highest,
or to transact a great amount of business, and thus
make a great income in the whole out of small profits
on each particular transaction. Nothing is more
common than to see some making a fortune, and
others losing one, in the same kind of business, while
there is no material change in the sort of production
or the market value of the article traded in. In such
a state of the trade in any article, the mean market
value will be influenced very materially by the average
cost of production and transportation, including rents
and profits on stock.
Whatever affects the cost of production, tends to
alter the price or market value of an article. Every
useful invention reduces the amount of labor requisite
to the production of one or more articles, and accord-
ingly tends to reduce the market value of these.
Acquisition of skill in the artisan has the same effect.
Every reduction of the quantity of labor requisite in
the production of articles, tends to reduce their price.
Any improvement in transportation has a similar effect.
An increased market, and brisker circulation of produce,
reduce the market value of goods. A good system of
banking, whereby exchanges are facilitated, and the
expense of a circulating medium lessened to the com-
munity, tends to reduce prices. It may be generally
affirmed that, in the progress of society, all things
except raw produce and labor have a tendency to fall
in price. -
Taxes, by increasing the cost of the articles taxed,
must either increase their market value, or diminish
the wages of the labor, or the profits of the capital,
AFFECTING PRICES. 51
employed in their production. War increases the
risks and expense of transportation, and thus enhances
the price of imports, and diminishes that of ordinary
exports. An increased consumption of articles will,
for a time at least, raise the price of them.
Though price, where not affected by excess of
demand or supply, hovers about the point of average
cost of production, it does not become fixed at that
point. This point is, in fact, not fixed itself, but
varies in most at least, if not in all articles, either
slowly and gradually, or suddenly and irregularly.
The market, like the ocean, is always tending to a
level at which it never rests. Improvement in skill or
machinery, discoveries of new processes of production,
a succession of favorable seasons, the introduction of
better animals and more useful plants, the bringing
the manufacture or production nearer to the place of
consumption, or the diminution of the expense of
transportation, all operate by insensible degrees in
reducing the cost of a thousand kinds of commodities
in all markets; while a succession of unfavorable
seasons, the exhaustion of the sources of supply, as
of an iron or coal-mine, wars, piracies, revolutions,
and all the physical, political and moral disturbances
which force men upon new channels of supply and
new expedients in production, have sometimes a
sudden and direct, at others a slow and remote
influence, on the cost of commodities. The market
price is then more or less indefinite according to the
kind of article; being the mean of the different prices
at which the same sort of commodities are sold at
the same time and place. This mean price tends to
52 GENERAL PRINCIPLES
adapt itself to the average cost, which is however
indefinite, and subject to variation from the causes
above enumerated.
When a diminution in the cost of production does
not immediately become known, and is only perceived
by some of the producers, it has not an instantaneous
effect on the market value, and, if the cause be only
temporary, it may never have any effect. Those who
first offer the product of diminished cost, will hold it at
the market value, and if the market is not overstocked,
and the demand continues, the article will maintain its
former price for a length of time, until a reduction of
demand, or an increase of supply, causes a glut of the
market. The chances of prolonging the enjoyment
of this advantage depend upon the notoriety of the
business, and the kind of production to which it relates.
The exclusive possession of any branch of foreign
trade cannot be of long duration without the grant of
a monopoly, since others will soon rush to the same
market, and the very circumstance of its being so
profitable will be the cause of its being the sooner
and more completely overdone. In a market not
oversupplied, the effect of an increased expense of
production is much sooner perceived than that of a
reduction in cost; for being necessarily known to all
the producers who supply the market, it immediately
becomes the ground of estimating the value of the
produce, and very probably raises the value of the
whole stock already in the market; but then again,
an increase of price most frequently diminishes con-
sumption, and thereby renders the supply too great
for the demand.
AFFECTING PRICES. 53
A change in the value of some things has a wide
influence upon the prices of some articles, and none
upon that of others. A high or low price of tea, can
render very few articles dearer or cheaper; the value
of brass, tin, iron, silver, or gold, affects that of many
manufactures in which they are used. The cost of
almost every article is made up of rent paid for the
land producing the raw material, profit for the use of
stock, and wages of labor : any change, therefore, in
the general rate of rents, wages, or profits, will affect
the cost of almost all articles. In regard to some
articles, an increase of the cost cannot be so soon
perceived, as when the production occupies a long
period and involves many processes of industry; and
if it be perceived, it has no immediate influence in
discouraging production where the market price is
very indefinite or fluctuating. Provisions, and most
raw materials, are liable to great variation of price ;
and, accordingly, though the price of corn, cotton, or
hemp, should for two or three years hardly reimburse
the cultivator, yet he would be the less discouraged,
since the price is very liable to change, and besides it
is always difficult, sometimes impossible, for him to
employ his capital in any other way. Those who
have invested a great amount of capital in a branch
of manufacturing, or of agricultural industry, will carry
it on even at the risk of a loss, rather than incur what
might prove a greater loss in abandoning it or trans-
ferring their capital to some other business. Large
capitalists can carry on in this way, until they have
driven the smaller capitalists out of the market, and
5 *
54 GENERAL PRINCIPLES
so reduced the supply of the market as to raise it to
their own prices.
Most articles are offered for sale in markets where
they bear upon the whole a pretty regular and definite
price-current. The market price may be changed by
a conspiracy or combination on the part either of the
venders or the buyers; but such combinations are
rarely entered into, and the price is usually left to
regulate itself according to the proportion which the
supply bears to the demand. When the production
of an article begins to exceed the quantity needed
for consumption, the holders show more and more
solicitude to sell, and begin to offer purchasers the
additional inducement of a reduced price. The pur-
chasers again become more and more fastidious about
making purchases, expecting still further reduction in
price. The usual outlets being thus contracted, the
mass that presses the market accumulates, and the
holders becoming more straitened and solicitous to
sell, vie with each other in tempting purchasers with
favorable offers, and conspire in a general competition
to depress the market value. At length, after this
ruinous system has continued for a time, the stocks
get exhausted—the venders raise their prices—and
the purchasers, finding it difficult to purchase at the
current rates, conspire against each other to effect
purchases and thus accelerate the rise of prices. It
may be here observed that a surplus or deficiency of
supply will raise or depress prices in an excessive
ratio. Thus a deficiency of one-tenth on the supply
of so necessary an article as corn, would enhance the
AFFECTING PRICES. 55
price probably three-tenths; while a deficiency of
five-tenths would raise the price forty-five-tenths.
Purchasing on speculation, or with an expectation
of a rise in the price, tends to accelerate the rise of
prices that are rising, and to avert the fall of those
that are declining. When the price has very much
declined, those who suppose it to be verging to its
lowest point, and about to seek again its natural level,
employ their funds and credit in purchasing to take
advantage of the change. This stimulates other
purchasers, checks the solicitude of holders to sell,
and removes a quantity of the article from the market
for a time. It is then the tendency of the transaction
itself to hasten the anticipated event, and speculations
may have the effect of limiting the vibrations of price
within narrower extremes, and so far may be useful to
the community; but, when they make the variation
of prices more irregular, and force them to wider
extremes, they are highly injurious. If, for instance,
the price has descended almost to the point at which
demand would prevail over supply, when a large
quantity of the article previously reserved in specu-
lation is suddenly forced into the market, it may give
an impulse that will depress the price lower than it
would have descended had the quantity never been
withdrawn from demand. So, on the contrary, if, just
before the rise of price would naturally have been
arrested by new supplies, a large quantity is withdrawn
from the market by speculation, the price will be
thereby raised to an artificially higher rate. Specu-
lations for increasing the productive power and
augmenting the general resources of the community,
56 GENERAL PRINCIPLES.
such as the cutting of a canal, or building a bridge,
must always be beneficial to it, though the parties
directly concerned lose upon their speculations; but
speculations upon property already in the market,
causing a rise which is necessarily followed by a
depression of prices, is injurious to the community.
It resembles gambling in all its consequences, moral
and mercantile.
All sudden reduction of prices brings with it a train
of distresses not limited to the amount of loss in the
reduction of the price; the distress spreads itself
among all those concerned in the production of the
article, and upsets the equilibrium of industry in a
community. The effects of a declaration of war in
disturbing the productive processes of a country are
well known; the effects of peace are equally disastrous
for a time. These evils are so distressing, that some
persons think that perpetual war is preferable, in a
commercial point of view, to frequent alternatives of
peace and war. A rise in the price of articles is, on
the contrary, beneficial and promotive of general
prosperity. The holders gain by the rise ; the pro-
ducers are quickened into more strenuous industry;
additional capital finds investment, and additional
laborers, employment. The reduction of prices con-
sequent upon any improvements in production or
transportation is attended with no distress, since they
are not commonly introduced so suddenly as to displace
a great number of laborers. On the contrary a deteri-
oration in the means of production is finally injurious
to all.
Adam Smith says the higher price of labor is the
INFLUENCE OF SPECULATION ON PRICES. 57
main cause of the higher money-prices in one country
than in another; but it does not follow that commodi-
ties are necessarily higher, because the money-price
of labor is higher, in one country than in another, for
perhaps the laborers are more skilful, or profits and
interest are lower, in the one country than in the
other. A high money-price of labor has no necessary
connexion with its value. Suppose rents and wages
to be all reduced 50 per cent. and all commodities to
be reduced in proportion, the exchangeable value of
labor would still be the same that it now is, and the
condition of the laborer would be as good. Wages
may be as high to all practical purposes in a country
where money-prices are low, as where they are high.
It is universally agreed that a general high rate of
wages, whether in the money-price or exchangeable
value, is an advantage to a nation in its foreign com-
mercial competition.
INFLUENCE of SPECULATION on PRICEs.
It wery rarely happens that either the actual supply
of any species of produce in extensive demand, or the
intensity of that demand, can be exactly measured.
Every transaction, in which an individual buys a
commodity in order to sell it again, is in one sense a
speculation. The buyer anticipates that the demand
for the article he has purchased will be such, at some
future period, either more or less distant, that he will
be able to dispose of it at a profit; and the success of
the transaction depends, it is evident, on the skill with
which he has estimated the circumstances that must
58 INFLUENCE OF SPECULATION ON PRICEs.
determine the future price of the commodity. It
follows, therefore, that in all highly commercial
countries, where merchants are possessed of large
capitals, and where they are left to be guided in the
use of them by their own discretion and foresight, the
prices of commodities will frequently be very much
influenced, not merely by the actual occurrence of
changes in the accustomed relation of supply and
demand, but by the anticipation of such changes.
It is the merchant’s business to acquaint himself with
every circumstance affecting the particular description
of commodities in which he deals. He should en-
deavor to obtain the earliest and most authentic in-
formation with respect to every thing that may affect
their supply or demand, or the cost of their produc-
tion ; and if he learned that the supply of an article
had failed, or that the demand for it had increased,
he would be disposed to purchase in anticipation of
profiting by the rise of price, which would be a con-
sequence of the increased demand; or, if he were a
holder of the article, he would not sell it unless at an
advanced price. On the contrary, if the merchant
ascertains that the article is now produced with greater
facility, or that there is likely to be a falling off in the
demand for it, caused by a change of fashion, or the
shutting up of some of the markets to which it had
previously been admitted; he would decline to pur-
chase, except at a reduced price, or, supposing him to
be a holder, endeavor to sell by offering it at a lower
rate. - -
In consequence of these operations, the prices of com-
modities are brought comparatively near to equality.
INFLUENCE OF SPECULATION ON PRICES. 59
All abrupt transitions, from scarcity to abundance,
and from abundance to scarcity, are avoided. An
excess in one case is made to balance a deficiency
in another, and the supply is distributed with a degree
of steadiness and regularity that could hardly have
been deemed attainable.
The risk to which merchants are exposed when they
either sell any commodity at a reduced price in antici-
pation of a fall, or buy at an advanced price in antici-
pation of a future rise, is a consequence of the extreme
difficulty of ascertaining the true state of the fact with
respect to the grounds on which an abundant, or a
deficient supply, or an increasing or decreasing demand,
may be expected. Rules can here be of no service;
every thing depends upon the talent, tact, and knowl-
edge of the party. The questions to be solved are all
practical ones, varying in every case from each other;
the skill of the merchant being evinced by the mode
in which he conducts his business under such circum-
stances, or by his sagacity in discovering coming
events and appreciating their character, and the extent
of their influence. Priority, but, above all, accuracy
of intelligence, is, in such cases, of the utmost conse-
quence. Without well authenticated data to go upon,
every step taken may only lead to error. The
instances, indeed, in which speculations and adven-
tures, apparently contrived with the greatest judgment,
have ended in bankruptcy and ruin, from a deficiency
in this essential requisite, are so very numerous that
every one must be acquainted with them. Hence the
importance of a merchant’s selecting acute and cautious
correspondents; and hence also the necessity of ma-
60 INFLUENCE OF SPECULATION ON PRICES.
turely weighing their reports, and of endeavoring, by
the aid of information gleaned from every accessible
source, to ascertain how far they may be depended
upon.
When a few leading merchants purchase in antici-
pation of an advance, or sell in anticipation of a fall,
the speculation is often pushed beyond all reasonable
limits, by the operations of those who are influenced
by imitation only, and who have never, perhaps,
reflected for a moment on the grounds on which a
variation of price is anticipated. In speculation, as in
most other things, one individual derives confidence
from another. Such a one purchases or sells, not
because he has any accurate information as to the
state of the demand and supply, but because some
one else has done so before him. The original
impulse is thus rapidly extended; and even those
who are satisfied that a speculation is unsafe, and that
there will be a recoil, not unfrequently adventure, in
expectation that they will be able to withdraw before
the recoil has begun.
It may, we believe, speaking generally, be laid
down as a sound, practical rule, to avoid having any
thing to do with a speculation in which many have
already engaged. The competition of speculators
seldom fail speedily to render an adventure, that
might have been originally safe, extremely hazardous.
If a commodity happen to be at an unusually reduced
price in any particular market, it will rise the moment
that different buyers appear; and supposing, on the
other hand, that it is fetching an unusually high price,
it will fall, perhaps far below the cost of production,
INFLUENCE OF SPECULATION ON PRICES. 61
as soon as supplies begin to be poured in by different
merchants. Whatever, therefore, may be the success
of those who originate a speculation, those who enter
into it at an advanced period are almost sure to lose.
To have been preceded by others ought not, in such
matters, to inspire confidence; on the contrary, it
ought, unless there be something special in the case,
to induce every considerate person to decline inter-
fering with it.
C H A P T E R V.
CoMMERCIAL REVULSIONS AND PANICs.
By a commercial revulsion, is usually meant a sudden
decline in prices, and the prevalence of distress in
one or more branches of trade that were previously
flourishing.
Every exertion of industry involves a certain degree
of speculation. The individual who buys raw cotton,
or raw silk, with the intention of manufacturing it into
articles of dress or furniture, supposes that the articles,
when manufactured, will sell for a price sufficient to
indemnify him for his expenses, and to leave him the
customary profits on his capital. There is, however,
some risk in an adventure of this sort. Were the
fashion to change while the articles are in prepar-
ation, it might be impossible to dispose of them except
at a loss; or were new facilities given to the commerce
with countries whence similar articles may be procured,
or any discovery made which facilitated their produc-
tion, the price would fall, and the speculation turn
out an unprofitable one. But how singular soever the
statement may at first appear, it will be found that
miscalculation on the part of producers and dealers,
COMMERCIAL REVULSIONS. 63
and gluts in the market, are more frequently caused
by an increase, than by a decline in the demand for
commodities. Suppose, for example, that owing to
any imaginable cause, the demand for hardware was
suddenly increased, an immediate rise of price would
inevitably be the consequence, and the manufacturers
would obtain comparatively high profits. But among
a free and enterprising people, the rates of profit
cannot—unless monopolies and exclusive privileges
interfere to prevent competition—continue, for any
considerable period, either higher or lower in one de-
partment of trade than in another. As soon, therefore,
as this rise of price had taken place, the manufacturers
and dealers in hardware would endeavor to extend
their business by borrowing fresh capital, while a
number of those engaged in other businesses would
withdraw from them and enter into it. This transfer-
ence of capital, however, will not stop at the point
which would suffice to furnish the additional supply of
hardware at the old prices, but be carried so much
farther as to produce a glut in the market, and a
consequent fall of prices.
A variety of causes conspire to effect this. The
advantages which any class of producers derive from
an increased demand for their commodities, are uni-
formly exaggerated, as well by that portion of
themselves who are anxious, in order to improve
their credit, to magnify their gains, as by those
engaged in other employments. The adventurous
and sanguine, crowd into a business which they readily
believe presents the shortest road to wealth and con-
sideration; at the same time, many who have capital
64 COMMERCIAL REVULSIONS.
lent to others and are waiting till a favorable opportu-
nity for investing it in some industrious undertaking
occurs, are tempted to follow a similar course. The
causes which have induced one to enter into a depart-
ment of trade, which is yielding comparatively high
profits, are probably impelling thousands. Confident
of success, the adventurer leaves an employment to
which he is accustomed, and from which he derives
a fair profit, to enter, as a competitor, on a new and
untried arena; while those already engaged in the
advantageous business, stretch their credit to the
utmost, that they may acquire the means of increasing
the supply of the articles in unusual demand. In such
cases, that which every unprejudiced observer would
anticipate, almost invariably happens. In consequence
of a supply being created beyond the demand, a
reaction ensues; and a fall of prices must unavoidably
follow. The recent adventurer discovers that his
anticipated fortune only existed in his imagination ;
and finds, too late, that it is impossible for him to
return, to the former secure business which he
abandoned in his haste to be rich, without an immense
sacrifice.
Those who investigate the history of eommerce,
will find that a period of peculiar prosperity, in any
one branch, is the almost uniform harbinger of mischief.
The West India trade may be referred to as affording
the most convincing proof of the truth of this principle.
The devastation of St. Domingo by the negro insur-
rection which broke out in 1792, by first diminishing,
and in a very few years entirely annihilating, the supply
of 115,000 hlids. of sugar, which France and the
COMMERCIAL REVULSIONS. 65
continent had previously drawn from that island,
occasioned an extraordinary rise of prices, and gave
a proportional encouragement to its cultivation in other
parts. Jamaica, which at an average of the six years
preceding 1799, had exported only 83,000 hbds.,
exported in 1801 and 1802 upwards of 286,000, or
143,000 hbds. a year ! But the duration of this
prosperity was as brief as it was signal. The rise
of price which had produced such effects in the
British islands, occasioned a similar, though less rapid,
extension of cultivation in the colonies of the continen-
tal powers. The increased quantity of produce that
was, in consequence, obtained from Cuba, Porto Rico,
Martinique, Guadaloupe, Brazil, &c., became, in a few
years, not only sufficient to fill up the vacuum caused
by the destruction of the St. Domingo trade, but
actually to overload the market. The great foreign
demand for sugar which had been experienced, grad-
ually diminished until 1805, or 1806, when it almost
entirely ceased; and the whole extra quantity raised
being thrown upon the English market, its price, which
was 66s. a cwt. in 1798, fell in 1806, to 34s.—a
price not only insufficient to yield any profit to the
planters, but even to repay their actual outlay in its
production.
The history of every branch of trade and industry
furnishes many proofs of the constant operation of this
principle of competition. The greater and more
signal the prosperity of any department of commerce,
the greater, invariably, is the subsequent recoil. Such
an increased demand for any commodity as would raise
its price 10 per cent. above the common level, would
6 *
66 COMMERCIAL REVULSIONS.
certainly cause it to be produced in excess, and
occasion a revulsion. But were the price to rise 30
or 40 per cent. the temptation to employ additional
capital in its production would be so very great, that
the revulsion would both take place sooner, and be
incomparably more severe.
Commercial revulsions are ascribable to a variety
of causes besides that above alluded to. The spirit
of adventure directed to any particular branch of trade
has sometimes created a partial revulsion. This was
the case in 1825 in the cotton speculation; but then
there was no general rise of prices, nor was any portion
of the community affected or injured except those who
were connected with the dealers in cotton.
In all commercial countries, an increase of prices,
when it appears to be not merely a single, unconnected
start, but part of a progressive movement, rouses a
spirit of speculation. A multitude of purchases are
made, not in the regular course of trade, but with the
view of profiting by a further rise. The demand is
thus artificially enhanced; prices are swelled, and
credit is extraordinarily extended. But this process,
in its very nature, must come to a close, An excess
of commodities beyond the real demand, must force
back their prices;–the game of the speculators is
then at an end, others are dragged along with them
into ruin, and capital and industry again subside into
idleness and inaction. The preternatural energy is
followed by a collapse. This effect, which may
proceed from many other causes, is a common result
of a forced augmentation of paper money. All the
great commercial revulsions which have occurred since
COMMERCIAL REVULSIONS. 67
the year 1790, were caused, in a great degree, by the
gradual expansion and sudden contraction of paper
currency. -
The elements of such disasters exist only in banks,
and without banks it is both morally and physically
impossible to create them. “ The power delegated
to these corporations over the currency, by the exer-
cise of which the circulating medium can at one time
be expanded beyond the wants of the community, and
at another time contracted within those wants, is felt
in the rise and depreciation of the value of all property,
and affects the whole community. It unsettles the
calculations upon which contracts have been based,
and visits the man of prudence, judgment, and
experience, as well as the adventurer in business, with
bitter disappointment.”—JV. Y. Bank Commissioner's
Report, 1833.
“We have had,” says a late writer, “and we may
depend upon it we shall continue to have, if the
present system of banking be maintained, a constant
alternation of glut and deficiency in the circulating
medium.* At one time money is sure to be in excess,
confidence blind and indiscriminating, and prices high ;
at another time money is sure to be deficient, distrust
universal, and prices low. It is not easy to exaggerate
the evils inseparable from such alternations; they go far
* “On the 1st January, 1830, the aggregate capital of the banks
in the United States was $145,192,268; their deposites $55,559,928,
—in all $200,752,196 : their loans and discounts at the same period
were $200,451,214; nearly equalling the joint amount of capital and
deposites.
On the 1st January, 1838, their aggregate capital was $290,772,091;
their deposites $127,397,185,-in all $418,169,276. Their loans and
68 COMMERCIAL REVULSIONS.
to convert industrious undertakings into mere gambling
speculations; and render it impossible, even for the
most prudent individuals engaged in business, to form,
at any time, any distinct notion of what may be their
state twelve months hence. The history of commerce
from 1790 down to the present day, teems with
examples of what has now been stated.
The first great reduction of bank paper in England,
arising from a contraction of the currency, consequent
upon its previous over-issue, took place in 1793; and
the circumstances attending this crisis are so remark-
able, that they deserve to be carefully investigated.
Previously to 1759 the bank of England had not issued
any notes for less than £20 ; but having then com-
menced the issue of £10 notes, its paper was gradually
introduced into a wider circle. The distress that grew
out of the American war proved exceedingly unfavor-
able to the formation of country banks; but no sooner
had peace been concluded, than every thing began to
assume a new face. The agriculture, commerce, and
manufactures of the country immediately began to
advance with a rapidity unknown at any former period.
The extended transactions of the country required fresh
facilities for carrying them on ; and, in consequence, a
bank was erected in every market town, and almost in
every village. The prudence, capital, and connections
discounts at the same period were $525,115,702,-exceeding the
joint amount of capital and deposites by not less than $106,946,426.
The excess of loans, by the Bank of the United States alone, above
the aggregate of its capital and deposites, was, in the autumn of
1834, only two or three millions; but within the course of the
first half year of 1835, it had swollen to the enormous amount of
TWENTY MILLIONS.
COMMERCIAL REVULSIONS. 69
of the individuals who set up these establishments were
but little attended to. The great object of a large
class of traders was to obtain discounts; and the
bankers were equally anxious to accommodate them.
All sorts of paper money were thus forced into
circulation, and enjoyed nearly the same degree of
esteem. The bankers, and those with whom they
dealt, had the fullest reliance on each other. No one
seemed to suspect that there was any thing hollow or
unsound in the system. Credit of every kind was
Strained to the utmost ; and the available funds of
the bankers were reduced far below the level which
the magnitude of their transactions required to render
them secure.
The catastrophe which followed might have been
easily foreseen. The currency became redundant;
exchanges took an unfavorable turn in the early part
of 1792; and the Bank of England, having been in
consequence obliged to contract her issues, a most
violent revulsion took place in 1792 and 1793. At
this time, says Mr. McPherson, the concerns of both
merchants and manufacturers were much more widely
extended than at any former period; a natural effect
of increasing prosperity, and sometimes, a cause of
ensuing calamity. The bankruptcies in 1793 amounted
to 1,956. Many houses of the most extensive dealings
and the most established credit failed; and involved
vast numbers of their correspondents and connections
in all parts of the country. Houses of great respect-
ability and undoubted solidity, possessing ample funds,
which actually did, in a short time, enable them to
pay every shilling of their debts, were obliged to stop
70 COMMERCIAL REVULSIONS.
payment. Many, whom the temporary assistance of
even a moderate sum of money would have enabled
to surmount their difficulties, could not obtain any
accommodation ; for in the general distress and
dismay, every one looked upon his neighbor with
caution if not with suspicion. It was impossible to
raise money upon the security of machinery, or shares
of canals; for the value of such property seemed to
be annihilated in the gloomy apprehensions of the
sinking state of the country, its commerce and manu-
factures; and those who had money, not knowing
where they could place it with safety, kept it unem-
ployed and locked up in their coffers. Amidst the
general calamity, the country banks, whose eagerness
to push their notes into circulation had laid the
foundation of their own misfortunes, were among the
greatest sufferers. Of these banks above one hundred
failed.
The crisis of 1793 forms a remarkable epoch; it
was the first of a series, which were repeated in 1797,
1811, 1816, 1818, 1825, 1830, and lastly in 1837.
The prices of agricultural products, which had been
greatly depressed in 1820, 21, and '22, rallied in
1823, and the banks, true to their invariable practice
on such occasions, immediately began to enlarge their
issues. Confidence was soon carried to the greatest
height. It seemed that no scheme could be too
hazardous ; much less, wild or extravagant. The
infatuation was such, that even the most considerate
persons did not scruple to embark in the most visionary
and absurd projects; while the extreme facility with
which money was procured upon bills at very long.
COMMERCIAL REVULSIONS. 71.
dates, afforded the means of carrying on every sort of
undertaking. The most worthless paper was readily
negotiated. And such was the success of the efforts
of the country bankers to get their bills into circula-
tion, that the amount afloat in 1825 is estimated to
have been nearly 50 per cent greater than in 1823
The result is well known. The currency was
depreciated ; exchanges began to decline in 1824,
and the heavy and continued drain for bullion in the
autumn of 1825, compelled the Bank of England to
lessen its issues. This was the signal for a repetition
of the revulsion of 1793; but on a much larger scale,
and with more destructive consequences.” To the
great facility which only a few months before had been
experienced by speculators, projectors, and adventur-
ers, in raising whatever sums they might require at the
shortest notice on securities of goods, on mortgages,
on bills, or on mere personal credit, the most signal
contrast was exhibited of an utter inability to obtain
money upon any, but the best and most convertible
securities. Goods became unsaleable, beyond the
immediate and urgent wants of the consumers; so
that the stocks which are usually held in anticipation
of demand were wholly unavailable to meet the
pecuniary engagements of the holders. Thus many
merchants, having accepted bills for only half the
invoice amount of wool, cotton, &c., consigned to
them, were unable to realize even that half by sales, or
by advances on the security of the bill of lading; and
* The whole number of bankruptcies in England during the
years 1825 and 1826 was 2,192, among which were 41 banking
establishments.
72 COMMERCIAL REVULSIONS.
not only no advances could be obtained by way of
loan on the security of goods, but advances already
made were peremptorily called in.
It would be an endless task to trace all the steps by
which disappointment, loss, and insolvency, followed
the brilliant hopes, the reputed gains, and the unlimited
credit, which characterized the early part of 1825.
The features and consequences of the several revul-
sions in England, are all similar to each other, and
identical with ours; differing only in degrees of
intensity. The bankruptcy and ruin of thousands,
the loss of a vast amount of capital, the development
of the selfish and sordid passions, the multiplication of
fraud and crime, and the dissolution of the moral and
social elements of Society, are prominent traits in each.
The inflation of the currency in the United States
previous to the revulsion of 1836 and 1837, and the
consequent rise of prices, rage for speculation, and
over-trading of every description, were probably as
excessive as was ever experienced in England.
C H A P T E R W I.
MARINE INSURANCE – LLoyd's CoFFEE Hous E.
MARINE INSURANCEs, are contracts to indemnify the
owners of goods and vessels, from any loss or damage
they may meet with at sea; and to indemnify the
proprietors of freight, from any loss of hire they may
sustain by the partial or total destruction of the cargo.
Policies, are written documents containing the par-
ticulars and terms of the contract.
Underwriters, are the persons who undertake to
indemnify the parties in case of loss or damage; they
are so called from writing their names, the amount of
their risk, &c., underneath the terms of the policy.
Premiums, are the sums of money the underwriters
receive, or are said to receive, in consideration of the
risk they take upon themselves.
Commerce has been indebted for its best encour-
agement to the system of insurance against the perils
of the ocean. A dead weight must have remained
for ever upon its energies, had not some means of
dividing individual risks been adopted. As a conse-
quence of the advantages secured by marine insurances,
trade now flows forth to every part of the known
7
74 MARINE INSURANCE.
world in a mighty stream, instead of being concentrated,
as it otherwise assuredly would have been, into narrow
channels.
Marine insurance companies are found only in large
cities or seaports. The most extraordinary establish-
ment for this purpose is in London, known as Lloyd's
Coffee House.
In this focus of commercial enterprize, a mass of
information from all parts of the globe is daily con-
centrated, which only ceases to appear stupendous,
when compared with the prodigious quantity of actual
business transacted there hourly, of which it is the
consequence.
There is scarcely a seaport of any importance
throughout the globe, in which the CoMMITTEE or
LLoyd’s have not an agent, whose duty it is to give
intelligence from time to time of all departures and
arrivals of vessels; ships spoken at sea, or passing the
port; wrecks, accidents, the state of the weather,
prevailing winds, &c.; likewise to survey all ships
launched; and, in case of damage to goods insured,
to examine them as soon as discharged, and make
affidavit as to their condition, the extent of damage,
and generally to watch over the interests of the
underwriters. -
By means of the advantages offered at this and
similar institutions, the risk which you would incur in
making a shipment of property beyond the seas, is
transferred from your own shoulders to those of other
persons, who, for a comparatively small remuneration,
consent to take it upon themselves.
The manner of conducting business at Lloyd's is
LLOYD'S COFFEE HOUSE. 75
this. A merchant, having occasion to effect an
insurance upon a shipment of merchandise, from
London to New York, gives his broker written orders
to do so, at the lowest possible premium, specifying
the name of the vessel and captain, the number and
value of the different packages forming the shipment,
and every particular necessary for the information of
the underwriters.
For this purpose some such letter as the following
is generally given to the broker : *
LoNDoN, 15th July, 1838.
Mr. Edward James,
Sir, Please to effect insurance for my account
upon fifty bales of printed cottons, shipped by the
William, Captain King, from this port to New York;
valuation as follows:—
Nos. 1 to 10. 10 packages, each £150 . . $1,500
11 to 40. 30 f / f / 100 . . 3,000
41 to 45. 5 f f I f 95 . . . 475
46. l f f " . . . . . 93
47. I f / f / tº gº is º 86
48. I # / ". . . . . . 84
49. l * / f / tº gº e ºs 82
50. I f / tº . . . . . 80
£5,400
Your obedient servant,
A. B.
* Nearly the whole of the business transacted at Lloyd's, is done
through the medium of insurance brokers, who are persons of the
first mercantile consideration.
76 MARINE INSURANCE.
Upon the receipt of this order, a policy will be
prepared, in which the name of the vessel and voyage
will be entered, together with the particulars of the
shipment. This being done, the broker will take it to
Lloyd’s ; and, submitting the risk to the underwriters,
will endeavor to persuade them to insure the amount
at as low a rate of premium as he can. Underwriters
seldom run a hazard to any large amount upon one
ship. Their object is to disseminate their risks upon
as many vessels as they can, thus rendering the chances
of loss distant and few. For this reason the broker
will obtain very few signatures upon the policy to the
extent of £500 each,-the general average being near
£200. In this way he will get twenty-seven different
underwriters to put their names down for £200 each,
which, in all, will be £5,400, the amount he has to
insure. If the premium for this insurance be twenty-
jive shillings per cent, and the policy stamp an addi-
tional five shillings, together, thirty shillings—or one
and a half per cent—I shall have to pay the under-
writers eighty-one pounds, for insuring me against loss
Ol' damage; which sum will be placed as a charge
upon the goods, in the invoice. Should the goods be
entirely or partially lost, I can recover the whole of
my £5,400, or a proportion thereof, as the case may
be. But should they be damaged by sea water, I can
recover from them only so much as will compensate
me for the loss sustained ; which each underwriter
pays in proportion to the amount he has underwritten
on the policy.
As insurance companies are scarce in England,
except in very large towns and cities, orders for
LLOYD'S COFFEE HOUSE. 77
insurances are continually transmitted to London, for
execution. Indeed, in such high estimation are the
underwriters of Lloyd's held, that numerous orders
are received by every post, for insurances to be
effected on foreign vessels with only alien property on
board; and so little difficulty is encountered in trans-
acting business of this sort, that it is more than probable
a larger stock of information about ships of foreign
build is to be found at Lloyd's, than at the very port
where they were launched; information which secures
an almost instantaneous insurance of any goods shipped
on board such vessels, provided they bear a good
character. This knowledge is secured by agents being
appointed by the committee of Lloyd's in almost every
continental port, as well as in the British dominions
and the United States, whose business it is to survey
every ship at the time of her being first set afloat, and
subsequently to report the result of such survey to the
committee; continuing from time to time to transmit
all necessary information about her, which may become
useful to the underwriters. These latter are furnished
with books of a very peculiar arrangement, in which
the name, tonnage, captain's name, port of building,
and character, are regularly entered ; so that the
moment an insurance upon any foreign ship is offered
at Lloyd's, the underwriters possess beforehand all the
information respecting her, which is necessary to be
known. The rate of premium is regulated by the
character of the vessel. It is much easier to effect
an insurance upon a ship of the first class, at a given
premium, than it would be upon one of the fourth
or fifth class at nearly double the rate.
7 *
78 MARINE INSURANCE.
Besides this duty, the agents have others not less
important. In case of any damage having been sus-
tained upon goods insured at Lloyd's, it is necessary
that your correspondents at the port of discharge cause
them to be examined by its agents, upon whose report
alone, the underwriters will consent to pay the amount
of damage claimed. Were not this plan adopted, a
door would be opened to a species of fraud, similar to
that of insuring houses and property against fire for
more than their value, which are afterwards wilfully
consumed for the purpose of recovering the artificial
amount. Besides this, the agents transmit by every
post a full account of all wrecks, losses at sea, damages
in consequence of storms or other reasons, arrival and
departure of all vessels at their port of residence,
together with ever species of local information that
may in any way tend to interest the underwriters
generally. By such means, the books of Lloyd’s are
filled every morning with a mass of highly important
information, which cannot be obtained by any other
collective body or chartered company ; even govern-
ment itself, has frequently been indebted to Lloyd's
in time of war, for dispatches anterior to its own.
When goods are insured by you as shipped on
account of foreign correspondents, an additional com-
mission for your trouble is usually charged. When
you insure goods consigned to you for sale by a foreign
house, you charge the expense of insurance in your
account of sales.
C H A P T E R W II.
ORIGIN AND NATURE of BILLs of Exchange—PAR of
ExcHANGE–ADVANTAGES OF BILLS.–CLAssEs of BILLS.
BILLs of Exch ANGE are said to have been invented
by the Jews, or the Lombards, for the purpose of with-
drawing their property from the countries from which
they were expelled. The drawer and the acceptor
were two persons, residing at distant places, and the
bill was probably nothing more than a written order
delivered to a third person, who was going to visit the
place where the debtor resided, and who would return
with the money to the drawer. It might happen,
however, that this person was not to return ; in this
case he would advance, to the creditor, the amount of
the order, and receive the money from the debtor
when he arrived at his journey’s end. But this third
person might be going only part of the way to the
place where the debtor resided, and might fall in with
some one going the other part; whom he would
request to advance the money, in exchange for the
order, and it would then be transferred. It would thus
be discovered that as a creditor might give an order
upon his debtor to a third person, this third person
80 BILLS OF EXCHANGE.
might transfer the order to a fourth, the fourth to a
fifth, and so on. To effect these transactions it would
be necessary that each person receiving the order or
bill, had confidence in the drawer, or some of the
endorsers, and also that each person receiving it should
have a compensation for the trouble it occasioned him.
If the order were not payable on demand, but at Some
months after date, the compensation would be increased
by the interest for the time it had to run before it was
payable. - -
Such at present is the case. The drawer of a bill
sells it on the Exchange ; and foreign bills are never
said to be discounted, but to be sold. The buyer
owes money in another country—say London—and
wants a bill to remit thither to pay his debt. The
seller has exported goods to London, and draws a bill
on his correspondent for the net proceeds.
The necessity of bills of exchange in the payment
of debts between individuals of different countries,
arises from the circumstance that the exporter and
importer are not one and the same person. If a
merchant of Bordeaux shipped a quantity of wine to
his correspondent at London, and directed him to
invest the proceeds in British manufactures and ship
them to Bordeaux, the transaction would be closed
the moment the order was complied with ; but mer-
cantile accounts are not thus balanced. The following
illustration will give the reader a general idea of the
utility of bills in balancing accounts between distant
places, without the transmission of money.
Suppose that A. of New York, ships a lot of cotton
BILLS OF EXCHANGE. 81
to his correspondent, B. of Liverpool, who sells it for
f 100; and that C. of Liverpool, sends to his agent,
D. of New York, a lot of hardware, who sells it for a
sum of money equal to £100. In this case, were it
not for the intervention of a bill, B. would transmit
#100 to A. ; whilst D. would transmit a like amount
to C. : but, by this simple contrivance, the risk and
expense attending the transportation of specie are
avoided. A., the shipper of the cotton, writes an
order to B., requesting him to pay the proceeds to the
holder of the order. D., the seller of the hardware,
being desirous of remitting money, or its equivalent, to
C., purchases this order, handing over C.'s money to
A.;—thus A. is paid for his cotton sold at Liverpool,
with the proceeds of C.’s hardware; and C. is paid
for his hardware sold at New York, with the proceeds
of A.’s cotton. The instrument, order, or writing
which we have characterized rather than described,
is called a Bill of Exchange.
When two nations exchange productions to exactly
the same amount, the buyers of bills are as numerous
as the sellers. The demand and supply will be equal,
and exchange at par. But it rarely or never happens
that the exports and imports between two countries
are precisely the same ; and as gold or silver is the
medium of traffic, the balance or difference between
the imports and the exports must be remitted in that
metal. Now the expense in freight, brokerage, in-
Surance, &c. of sending gold or silver from one
country to another is considerable. If then I owe
money to a merchant in London or Paris, I should be
willing to give more than the amount of the debt,
82 EXCHANGE ON FOREIGN COUNTRIES.
rather than submit to the expense and trouble of
remitting specie. It is evident that the demand for
bills will be greater in that nation wich is in debt
to another, than the supply. Dropping then all
puzzling considerations respecting the true par of ex-
change, we may observe that bills are nothing more
than a substitute for the transmission of specie from
one country to another, and that their price, or the
rate of exchange, varies with the price of this purchase
and transmission. The seller of a bill, of course, will
desire as high a price as he can get; and the only
check upon his demands is the circumstance that gold
may, at the given time, be bought and sent for less
than he charges for his bill.
The price of bills in the market is usually called
the rate of exchange; and when the balance of trade
is against a country, and, consequently, the price of
foreign bills rises beyond their real value or par, then
the course of exchange is said to be against that
country : thus if in New York I can sell a bill on
London for more than the amount for which it is
drawn, then the course of exchange is said to be
against the United States and in favor of England;
but if I am obliged to sell my bill for less than the
amount, then the exchange is against England and in
favor of the United States,
ExchANGE ON FoEEIGN Count RIEs.
The manner in which the rates of exchange on
foreign countries are generally quoted, although under-
stood by merchants, is far from being intelligible to
EXCHANGE ON FOREIGN COUNTRIES. 83
others. The mode of quotation is not systematic ;
there being three different ways in which the rates are
expressed. Thus we quote exchange on London at
so much above, or so much below par; as the case
may be. On France we quote the number of francs
and centimes which can be purchased for a dollar.
On Holland we quote the number of cents that must
be given for a guilder; on Hamburgh, the number of
cents that must be given for a marc banco; and on
Bremen, the number of cents that must be given for a
rix dollar. It is remarkable, however, that in neither
case is any definite idea conveyed of the relation which
the current exchange bears to the true par, so that as
indicators of the balance of trade, or of the state of the
currency, these quotations can only be useful in con-
nection with other information which is not readily
accessible to the great mass of readers.
The par of exchange between foreign countries is
that sum in the currency of each, which is equivalent
to a given weight of pure gold, or silver; so that
when a person can purchase with an ounce of gold, or
an ounce of silver, a bill on a foreign country, which
will there command an ounce of gold, or an ounce of
silver, of the same purity, exchange is at par.
Prior to the passage of the gold bill, in 1834, the
real par of exchange on England was, as near as may
be estimated, 8 per cent nominal premium, arising
from the fact that the value of the silver dollar—which
by our laws was fixed at 4s. 6d. Sterling—was for
many years not more than about 4s. 2d. Sterling;
being at the rate of 4s. 10d. per ounce.
By the gold bill, the intrinsic par became about 93
84 EXCHANGE ON FOREIGN COUNTRIES.
per cent nominal premium. This is proved as follows.
The English Sovereign, or Pound Sterling, contains
1133; a grains, and the American Eagle, of the present
coinage, 232 grains of pure gold. So that, if 232
grains of gold are equal to $10,—113-4; grains are
equal to $4 874, as will appear from the following
Statement :—
1 Sovereign is equal to . . 113g), a grs. pure gold.
232 grs. pure gold are equal to 1 Eagle.
1 Eagle is equal to . . . 10 Dollars.
Result, $4 874.
The intrinsic value of the Sovereign, or Pound
Sterling, in the United States, is $4 87%, which, by
computing the Dollar at the fixed exchange of 4s. 6d.,
resolves itself into a nominal premium of 9%; per cent.
The present mode of expressing the exchange between
the United States and London is, therefore, improper;
as it denotes a considerable premium for bills on
England, when, in fact, they are at a discount.
To obviate this anomaly, and to produce a plain,
matural state of things, the true and simple method
would be to quote the course of exchange at so many
dollars and cents per pound sterling.
The currency of France is silver. It appears that
the Five Franc piece is equivalent to 93*, cents;
which would give 5 francs and 36 fºr centimes, as the
par value of the Dollar.
The Guilder of Holland is a silver coin, equivalent
to 148# grains of pure silver, and a very small fraction
The Dollar of the United States, contains 371+ grains
ADVANTAGES OF BILLS. 85
of pure silver, and, consequently, the marc banco is
equal to 40 cents, and a very small fraction, which is
the true par.
The marc banco of Hamburg, or bank money, in
which bills of exchange and all commercial engage-
ments are paid, is not a coin, but a denomination,
representing 100 grains of pure silver, and conse-
quently is equal to 35 cents and a small fraction,
which is the true par, although it is rated at our
custom-house at only 33% cents.
The rix dollar of Bremen is not a coin, but a
denomination representing as much gold as is con-
tained in 39% pence sterling, and, consequently,
taking the pound sterling at $4 874, it is equal to 80
cents and a very small fraction, which is the par.
The par of exchange on foreign countries is,
therefore, as follows—omitting very small fractions:—
On London, $4 874 for a pound sterling, or
Sovereign.
On France, 5 francs and 36% centimes for a dollar.
On Holland, 40 cents for a guilder.
On Bremen, 80 cents for a rix dollar.
ADVANTAGES of BILLs.
Besides their utility as a means of transferring
money from one place to another, bills have the
following advantages:—
1. Bills are a means of transferring debts from one
person to another. If I owe a man $500, and another
8
86 ADVANTAGES OF BILLS.
man owes me $500, I may draw a bill for that amount
on my debtor and give it to my creditor. I have thus
transferred the amount from my debtor to my creditor,
and my own debt is liquidated. My debtor, instead of
paying me the money, will pay it to the holder of the
bill. My creditor will now look for payment to my
debtor, and consider me simply as a guarantee for the
payment. If he wishes to make use of the bill, he will
again transfer it to another party, placing his own
name on it, as an additional guarantee. The bill may
thus pass through a variety of hands, and liquidate
a great number of debts, before it becomes due.
When due, it will be paid by the acceptor, and all
these intermediate transactions will be closed.
2. Bills fix the period for the payment of debts,
and, in case of litigation, afford an easy proof of the
debt. A person will have little scruple in putting off
a tradesman to whorn he owes money, and the creditor
dares not be too urgent lest the debtor should no longer
deal with him ; hence the time of payment cannot be
calculated upon with certainty. But if the customer
has given a bill for the amount he owes, that bill may
circulate into the hands of other persons, who will be
more peremptory in demanding payment, and whose
application cannot be disregarded with impunity.
Besides, if a man dishonor his acceptance, his char-
acter is stamped at once in the commercial world as
being either very poor, very negligent, or very un-
principled; and at no future time will he be able to
raise money upon the credit of his name. Hence
persons who are tardy in paying a book debt, are very
punctual in paying an acceptance. In case too, a
ADVANTAGES OF BILLS. 87
tradesman is under the necessity of bringing an action
at law against his customer, he must prove the actual
delivery of every article in his account. This is often
difficult to do; but if a bill has been accepted for the
amount, it is only necessary to prove that the accept-
ance is in the defendant’s hand-writing.
3. Bills enable a tradesman to carry on a more
extensive business with the same amount of capital.
If, by the custom of trade, a dealer gives three months’
credit, he can, during that period, make no use of that
portion of his capital which is invested in the com-
modities his customers have purchased; but if they
accept his bills, at three months’ date, he can, if in
good credit, get those bills discounted, and employ this
money in the farther extension of his business. He
will thus obtain nearly the same advantages as though
he sold for ready money. Should he, instead of
having these bills discounted, pay them to the manu-
facturer or wholesale dealer of whom he makes his
purchases, it will amount to nearly the same thing.
His whole capital is thus kept in motion, and is not
diminished by any amount of out-standing debts. To
give credit without drawing bills, requires a large
capital. To give no credit, would restrict business.
By means of bills, the merchant is enabled to give
credit, and to extend his business, without any addition
to his capital.
4. Bills afford an easy way of giving a guarantee.
A person may wish to borrow money of me, and I
may be unwilling to lend it unless he procure a more
wealthy person to guarantee the re-payment at a given
time, If he have a friend that will do this, the most
88 CLASSES OF BILLS.
easy way of effecting the guarantee is by means of a
bill, drawn by the borrower upon his friend. This, in
point of security, is the same thing as a letter of
guarantee ; but it also has this additional advantage,
that if I should want the money before the time fixed
for its re-payment, I can get this bill discounted. Bills
of this description are called accommodation bills,
or “kites.” When employed only as a means of
affording occasional assistance to a friend, or for raising
a sum of money for a short time, to meet an unex-
pected demand, they are not very objectionable.
But when systematically pursued for the purpose of
raising a fictitious capital whereon to trade, they
uniformly indicate the folly, and effect the ruin, of all
the parties concerned.
CLASSEs of BILLs.
The bills presented to a bank for discount may
be divided into the following classes:—
1. Bills drawn by producers or manufacturers, upon
wholesale dealers.
2. Bills drawn by wholesale dealers upon retail
dealers.
3. Bills drawn by retail dealers upon consumers.
4. Bills drawn against rents, salaries, &c.
5. Accommodation bills, or “ kites.”
The first two classes are the best, and are legitimate
bills for bankers to discount.
The third class ought not to be much encouraged.
They are for comparatively small amounts, and are
CLASSES OF BILLS. 89
drawn by shop-keepers and tradesmen upon their
customers. To discount these bills freely, would
encourage extravagance in the acceptors; and ulti-
mately prove injurious to the drawers. When a man
accepts bills to his butcher, baker, tailor, upholster,
&c., he may fairly be suspected of living beyond his
income. Solvent and regular people pay their trades-
men's accounts with ready money.
The fourth class, though sometimes proper, ought
not to be too much encouraged. Persons out of trade
have no business with bills.
The last class of bills should almost always be
rejected, when offered for discount.
Not only the parties and the amounts of bills are
matters of serious consideration to a banker; but also
the time they have to run before they fall due.
Before concluding these remarks, it may not be
improper to introduce one or two cautions with regard
to acceptances, accommodation paper, &c.
1. A man should not put his name as acceptor to a
bill, without well considering whether he has the means
of paying it when due, as otherwise he may be liable
not only to the costs of the action against himself, but
also to the costs of the actions against the other parties
to the bill. The shrewd merchant or tradesman is
generally anxious to get the acceptance of his debtor
at a short date, well knowing that it not only fixes the
8 *
90 CAUTIONS RESPECTING BILLS.
amount of the debt, but is more speedily recoverable
by legal procedure than a book debt.
2. The drawer should be well satisfied that his bills
will be accepted, and duly honored, before he draws;
to this end it is requisite that he be assured of having
effects in the hands of the person drawn upon; and
also that the drawee be a man of punctuality and
integrity, who will not dishonor his paper, but pay it
regularly as it becomes due ; for the dishonor of a
bill may be ruin to the credit of the drawer, with all
those, at least, through whose hands it may pass.
3. The acceptor should insist upon his correspond-
ent’s advising of each bill so soon as drawn, specifying
the number, date, sum, time, and to whom payable ;
for if he should accept or pay a forged draft, the loss
will fall on himself.
4. Merchants who wish to support their credit and
respectability, should be cautious in resorting to the
destructive system of cross-accommodation acceptances:
it seldom ends well, and usually excites suspicion as
to the integrity of the parties; it being an expedient
often adopted by swindlers to defraud the public.
Independently of the expense in discounts and interest,
the danger attending such accommodation bills is
sufficient to deter any prudent man from the practice.
Suppose, for instance, A. and B. mutually accommo-
date each other to the amount of $5,000, the accept-
ances being in the hands of third persons: both A.
and B. are liable to such third persons to the extent
CAUTIONS RESPECTING BILLS. 91
of $10,000 each; and should A., by any unforeseen
occurrence, be rendered unable to meet his accep-
tances, the holders of the whole, will resort to B.
for payment; and it may so happen, that although B.
could have provided for his own share of the paper,
yet he may be unable to provide for the whole, and
may thus become insolvent, or subject himself to the
trouble and expense of litigation.
5. It is of great importance to brokers and others
taking bills and notes, that they should have some
knowledge of the parties from whom they receive
them ; otherwise, if the instrument turn out to have
been lost, or fraudulently obtained, they may, without
equivalent, be deprived of their security on an action
by the owner to recover possession,
C H A P T E R V III.
INLAND AND For EIGN BILLs — ForMS AND REQUISITES.
BILLs may be divided into two classes—Inland, or
Domestic, and Foreign. Inland bills are those which
have their beginning and end in the same country.
Foreign bills are those which are created abroad and
paid here ; or vice versa, created here, and paid
abroad. Again domestic or inland bills are of two
sorts ;-the first, properly called a bill, is drawn by
one party, in the form of an order, and addressed to
another;-the second, which is denominated a note of
hand, or promissory note, is made at once by the
individual who is to pay it, without being drawn upon
any other person.

NEw York, JANUARY 15, 1838.
$ 358 25.
Thirty days after date, pay to our order three hundred
and fifty-eight dollars and twenty-five cents, value received.
JAMES BRowN & Son.
To JMessrs. Wright & Co. :
PHILADELPHIA.
FORMS AND REQUISITES. 93
The foregoing is the form of what is generally
termed an inland bill, or draft, which is expressed in
the form of an order, signed by one party and ad-
dressed to another ; requiring the latter to pay a
specified sum to the former, or to the order of a third
person.
.A promissory note is a bill expressed in the form of
a promise, from one party to another, to pay a speci-
fied sum at some future period, thus ;-

NEw York, JANUARY 15, 1838.
$ 560 50.
One month after date, we promise to pay James
Brown & Son, or order, five hundred and sixty dollars and
Jifty cents, value received.
WILLIAM WRIGHT & Co.
When two or more persons grant their note of hand,
attention should be paid to their promising “jointly
and severally ; ” in which case the holder may de-
mand payment of either ; but if they promise only
jointly, and not jointly and severally, he can only
demand payment of them jointly. The following is
the form of a joint promissory note :

r—
NEw York, MARCH 1, 1838.
$275 54. -
Three months after date, we jointly and severally
promise to pay to the order of James Stewart, two hundred
and seventy-five dollars and fifty-four cents, value received.
John MILLER, JR.
WILLIAM YouNg.
94 REQUISITES OF BILLS.
In each of these forms, the words value received,
are necessary ; and, to render them negotiable, they
must be made payable to the order of the person in
whose favor they were drawn ; for, without these
words, no power is transferred to any subsequent
holder to recover the amount. But, when the words
“ or order ’’ are inserted, the instrument becomes
immediately a current security, by the person, in
whose favor it is drawn or made payable, endorsing
upon the back of it his name only, which the law
holds to be as good a transfer of the property as if he
had actually written, pay to so and so upon it. The
holder of a bill thus regularly endorsed, is entitled to
obtain the amount, when it is due, from the person on
whom it is drawn, provided that person has previously
accepted it ; or from any of the preceding endorsers,
should the drawee be unable or unwilling to pay it.
The difference between a draft or bill of exchange,
and a promissory note, is this ; a bill requires the
acceptance of the drawee before it becomes of any
value. A promissory note, on the contrary, is bind-
ing the moment it is delivered ; no acceptance, from
the very form of the security, being at all necessary.
The acceptance is usually written across the bill, in
the centre. Some merchants write “accepted ” for
so much, payable at such a bank, but many use only
the word “accepted,” which, in addition to the signa-
ture, is all the law requires. Promissory notes are
endorsed by writing the name on the back, across the
the note as before.
FOREIGN BILLS. 95
A Foreign BILL is a written order, from a party
in one country addressed to another party in a dif-
ferent country, to pay a certain sum at a specified
time. When the party to whom such an order is
addressed has accepted the bill, it becomes an engage-
ment to pay, which is as binding as any obligation in
law. t
A SET OF Exch ANGE is three copies of the same
bill, all of the same tenor and date, excepting the
words, “first,” “second,” and “third,” by which they
are distinguished from each other.
In mercantile phraseology the person who draws a
bill is termed the drawer ; the person in whose favor
it is drawn, the remitter ; the person on whom it is
drawn, the drawee ; and, after he has accepted it, the
acceptor. Those persons into whose hands the bill
may have passed, previously to its being paid, are
termed endorsers ; and the person in whose possession
the bill is at any given period, is termed the holder.
In a regular bill the four following particulars are
requisite—
1st. The sum, place, and date.
2d. The time of payment. -
3d. The person to whose order it is payable.
4th. The address and superscription.
96. FOREIGN BILLS.
The general form in which foreign bills are drawn
is as follows:—
NEw York, MARCH 15, 1838.
£5,000 stg.
Three months after date, pay this our first of ea:-
change (second and third not paid) to the order of Brown,
Brothers & Co., five thousand pounds sterling, value
received, as advised.
- - Edward CoILINs & Co.
To Smith, Payne & Co. ;
LONDON.
NEw York, MARCH 15, 1838.
£5,000 stg.
Three months after date, pay this our second of
exchange (first and third not paid) to the order of Brown,
Brothers & Co., five thousand pounds sterling, value re-
ceived, as advised.
EDw ARD Col.I.INs & Co.
To Smith, Payne & Co. ;
LoNDON.

NEw York, Manch 15, 1838.
£5,000 stg.
Three months after date, pay this our third of
exchange (first and second not paid) to the order of Brown,
Brothers & Co., five thousand pounds sterling, value
received, as advised.
EDWARD Col.1.INs & Co.
To Smith, Payne & Co. ;
LoNDON.
INLAND AND FOREIGN BILLS. 97
When a bill is drawn, the drawee is generally
advised of the fact, previously, by a letter from the
drawer, in which case the words “as advised,” or
“ per advice,” are inserted in the bill ; but if no advice
has been given, then the words “without further
advice,” are used. -
The term of a bill, is the time, at the end of which
it is to be paid. It is sometimes a specified time after
date, and sometimes a specified time after sight, that
is, after acceptance.
The time when a bill falls due is generally marked,
in red ink, on the bill, thus “ 7–10 March,” which
means that the term of the bill expires on the 7th of
March, to which three days, allowed for grace, must
be added. Others allow the fractional form by saying
“ due 10th March.”
When the term of a bill is expressed in months,
calendar months are always understood :—thus if a
bill be dated January 1st, payable one month after
date, the term expires on the 1st of February.
Days of grace, are a certain number of days granted,
after the term of payment expressed in the bill has
expired. In England and the United States three
days are allowed ; and payment cannot be demanded
till the last of these three days.
To discount a bill, means to procure cash for it
before it becomes due ; thus, a bill is said to be dis-
counted, when it is endorsed to any person who pays
the proceeds, that is, the net sum, deducting the
discount.
A protest, is a legal document, executed by a notary
public, declaring that a bill was duly presented, for
9
98 INLAND AND FOREIGN BILLS.
acceptance, or for payment, at the proper time and
place, and that acceptance or payment was refused,
and for what reasons; the duty of the holder thus
performed, secures his right of recourse against the
drawer, and endorsers, jointly and severally, for pay-
ment of the bill, interest, and damages.
The holder of a promissory note, when he passes it
away, endorses it, by writing his name on the back,
as before observed ; and every endorser is liable for
the amount. The person to whose order a bill or
note is made payable, must be the first endorser.
This transfer may be continued through any number
of persons, and, in the event of being dishonored, the
bill generally retreats in the same way it advanced ;
at least, it should do so by courtesy. The holder or
last endorser, demands principal and costs of the one
who immediately preceded him, and so on to another,
till it reaches the drawer, who is finally accountable.*
As the transmission of bills to distant places was at
all times a hazardous thing, merchants were obliged
to invent some means of protecting themselves from
losses which frequently occurred in consequence. For
this purpose they adopted the plan of making copies
or duplicates of their bills, some of which were sent at
one time, some at another ; thus distributing over
different periods the chances of security. If but one
arrived, that was sufficient ; and if the whole of them
ultimately reached their destination, they did but
* For more particular information respecting the law, usage, and
customs of Bills of Exchange and Promissory Notes, the reader is
referred to “Fost ER’s Count ING-Hous E Assist ANT,” published by
Perkins & Marvin, 1837.
INLAND AND FOREIGN BILLS. 99
represent one sum (for the first, second and third,
constitute one bill) and were treated as such. In
order, however, to guard against the danger of the
duplicate being taken for the original bill itself, which
might lead to the payment of one sum twice over, the
words “first,” “second,” “third of exchange,” and so
on, were used to indicate their true relation to each
other. It is absolutely necessary, however, that they
should be precisely similar to each other in every
respect. •
By this system, many other important advantages
are secured. A large trade in bills necessarily involves
the continual transmission of drafts, thousands of miles
from the place in which they are actually payable.
The general term which bills have to run not exceed-
ing three months, will not permit of their being first
sent for acceptance, and then returned to be negotiated.
Hence the plan of forwarding the first of a bill to
some person in the place on which it is drawn, for the
purpose of procuring acceptance ; which, not being
endorsed to that correspondent, is of no use to him, as
be could not in such a case receive the money for it
even if accepted and due, but is solely retained by
him for your convenience to be given up according to
your orders; which are invariably to be found upon
the second or third, in these words, – The first
The holder of a second
accepted with Messrs.
or third of exchange, which contains this reference on
it, is furnished with sufficient authority to demand the
first from the parties who hold it.
Thus, if I had occasion to buy and remit to London
a bill upon Paris, I should send the first to my cor-
I00 INLAND AND FOREIGN BILLS.
respondent in Paris, to procure thereto the accepta-
tion of the party on whom it was drawn, and remit
the second and third (properly endorsed) to the house
in London, with an indication at the bottom of each,
that the first would be found accepted with Messrs.
On the arrival of the second (or third) in
Paris, where it must ultimately come for payment, the
first is obtained by means of this indication, and being
attached to the second, the acceptance on the one,
and the endorsement on the other, constitute it a
perfect document, legally entitled to liquidation.
There are many other reasons for this process with
regard to foreign bills, besides those above men-
tioned. When a bill is purchased for remittance, it
is paid for at once, so that were the sellers to fail
before it became due, and the bill were not accepted,
the amount would be lost. But by dispatching the
first directly for acceptance, you obtain the security of
the parties on whom it is drawn, (provided it be
accepted,) and consequently if they are solvent, you
are safe ; for they would be compelled to pay it, not-
withstanding the drawers might in the mean time fail,
in their debt.
As bills very frequently pass into numerous hands,
and become successively the property of persons
residing in places far apart from each other, merchants
have adopted the plan of directing them for acceptance
and payment to parties who are not in any way con-
nected with the bills, by merely writing at the bottom
—In case of need with JMessrs. B By this
means, were the drawees not to pay the bill, the
holder would immediately make application to the
INLAND AND FOREIGN BILLS. 101
house mentioned in the “case of need,” who would
pay it for the honor of their correspondents. Foreign
bills have frequently six or seven of these indications;
and the object of having them paid for honor, is to
prevent the necessity of their travelling back again
through all the previous holders’ hands, an occurrence
invariably attended with loss, inconvenience, and
expense. Under these circumstances, a protest, with
what is called an act of honor subjoined, is the evi-
dence legally and commercially required to sub-
stantiate the fact. Thus, if you had purchased a bill
on London, and knowing nothing of the parties on
whom it was drawn, had put a “case of need” to it,
to your own correspondents in that place, those
parties, in the event of paying the bill for your honor,
would transmit you the document itself, accompanied
by a protest with an act of honor, which would enable
you to reclaim the amount with damages from the
sellers, without having sustained the inconvenience of
non-payment to the parties to whom you had made
the remittance. These remarks apply equally to bills
drawn abroad, payable in the United States.
The law requires that a bill should be presented or
left at the office, house, or place of business, of the
drawee, for acceptance ; and if he refuse to accept, it
must be immediately placed in the hands of a notary,
and protested for non-acceptance. When the bill
becomes due, it is presented for payment by the
holder; if payment be refused, recourse is again had
to the notary, who, having presented it himself as
before, draws up a legal document called a protest,
with which the holder can commence proceedings
9 %
I02 EXERCISES IN BILLS.
against the drawer, and all or any of the previous
endorsers. -
If a bill be not presented for payment the day
on which it falls due, the drawer and all the endorsers
are exonerated by law, and the holder has no claim
but on the acceptor, if the bill be accepted ; or, in
the case of a promissory note, the party by whom the
note was issued.
Bills falling due on a Sunday, or any holiday, are
payable the day before.
ExERCISES IN BILLs.
The forms of the following Bills, Drafts, and
Notes, are to be written out by the student; and the
time when they fall due stated on the bills.
1. Rufus Thompson sells to Henry Smith goods to
the amount of $500, for which the former draws on
the latter, at thirty days from the 15th June, payable
to his own order, and which Smith accepts. (See
form, page 93.)
2. James Campbell owes Benjamin Harrison two
hundred dollars and forty-three cents, for which he
gives him his promissory note, payable sixty days
after date, June 30th, 1838. (See form, page 93.)
3. Henry Compton, New York, draws on Robert
Wallace, Philadelphia, for $389 27, payable to the
EXERCISES IN BILLS. I03
order of Peter Hill ten days after date, and dated
July 3, 1838, which Wallace accepts.
*
4. Smith, Jones & Co. owe Walter Brown
$589 22, for which they grant him their promissory
note payable six months from the 13th of July.
5. James Forrest & Co. Boston, draw on Robert
Holmes, New York, for $3,000, 6th July, at ninety
days, which they accept.
6. Henry Andrews & Co. indorse to Washington
Rich their draft on, and accepted by, Thomas Jones,
12th June, 1838, at thirty days’ sight,” for $329 47.
7. Le Fevre & Co., New Orleans, draw on De-
forest and Son, New York, for $1,575, 30th June,
1838, at sixty days’ date, for cotton which the latter
purchased of them, and which Deforest & Son accept.
8. John Anthon, Henry Town, and Paul Harris,
purchase of Smith, Townsend & Co. the ship Europe,
for which they give three notes, dated July 17, 1838,
as follows, viz. one for $5,000, payable three months
after date ; one for $5,000, payable nine months after
date, and one for $10,000, payable twelve months
after date, for the payment of which they are respon-
sible, jointly and severally. (See form, page 96.)
* If a bill be payable after sight, the date of the acceptance should
appear; thus, “..Accepted June 12th, 1838,” in order to fix the time
of payment.
104 IEXERCISES IN FOREIGN BILLS.
1. I. Barclay buys of Prime, Ward & King, New
York, their bill of exchange on Jones, Lloyd & Co.,
London, for £1,000, payable at sixty days’ sight, to
his order, dated June 4th, 1838.
2. Robert Mason & Son remit to their correspon-
dents at Liverpool, Brown, Brothers & Co's. bill of
exchange for £875 in favor of Foster & Hone, on
Glyn & Co., London, at thirty days’ sight, which
Glyn & Co. accept.
3. Prime, Ward & King, remit their first of ex-
change (second and third of the same tenor and date
unpaid) on Smith, Payne & Co., London, 16th May,
1838, at sixty days’ sight, for $15,000, payable to
Henry Hone, which was accepted June 3d.
4. John Torrance & Co., of Montreal, remit to
their correspondents, at London, their first of ex-
change, on Barclay & Jones, London, for £975,
payable to the order of Glyn & Co. sixty days after
sight, which was duly accepted.
5. Murray & Co., Jamaica, draw on Simpson,
Reed & Co., London, for £2,000 sterling, 15th June,
at sixty days’ sight, in favor of Thomas Williams, and
which, S. R. & Co. accept, 9th August, payable at
their bankers, Levre & Co.
C H A P T E R IX.
ORIGIN of BANKS — GENERAL PRINCIPLEs of BANKING —
BANK OF ENGLAND – ENGLISH PRIVATE BANKs — BANK-
ING IN SCOTLAND AND IRELAND.
BANKERS and banking operations were known to the
ancients. The Jews had their money-changers; the
bankers of Athens were a cunning and a thriving race
of men; and the private bankers of Rome conducted
business in a manner very similar to that of the bankers
of the present day. In modern Europe, banks” were
originally designed to serve merely as places of safe
deposite for money, jewels, plate, and other portable
articles of great value; they were first employed in
Italy for mercantile and financial purposes. The
bank of Venice was established in the year 1171.
Whatever tended to encourage manufactures, naviga-
tion, and commerce, was readily patronized by the
merchant princes of that wonderful republic, and the
bank received a regular constitution from the council
* When calculations with counters became more involved, the
table on which they were performed being necessarily of a very
considerable size, was called the bench or bank ; and hence our term
for an office where money transactions are negotiated.—Prof. Leslie.
I 06 ORIGIN OF BANKS.
of state. It was a bank of deposite merely, not of
issue ; but an arrangement was made by which the
depositors were enabled, whenever it suited their
convenience, to transfer their deposits, or any portion
of them, to a third party, by means of a cheque or
order on the bank. One important feature in the
modern system of banking, by which the receipt and
payment of money is transferred by every trader to
his banker, seems thus to have been recognized at
a very early period. The cloth merchants of Barce-
lona, about the year 1401, added banking to their
commercial pursuits. Amsterdam also followed the
example of Venice, but not till nearly five centuries
later, when the commerce of Europe had passed into
the hands of the Dutch. The bank of Amsterdam,
like that of Venice, was taken under the protection of
the state, and, like its model also, was merely a deposit
bank. A depositor received credit in the books of
the bank for the value of the specie and other articles
intrusted by him to the custody of the directors, and
made his payments by an order of transfer from the
credit side of his account to that of the party to whom
he stood indebted, instead of actually removing the
deposite or effects themselves from the coffers of the
bank. Although no interest was allowed for deposits,
and even a premium or warehouse rent was paid upon
them, yet, as it was always understood that the whole
treasure was kept locked up in the bank’s coffers, and
would be forthcoming at a moment’s notice, the bank
of Amsterdam had the complete confidence of the
public, and its money bore a regular premium or agio,
compared with the ordinary metallic currency. The
PRINCIPLES OF BANKING. 107
bank of Hamburg was established in 1619. It also
is a deposite bank under the guarantee of the city
magistrates; but it allows none but citizens of Ham-
burg to have accounts open in its books. The bank
of Vienna was established in 1703; the banks of
Berlin and Breslaw in 1765.
GENERAL PRINCIPLEs of BANKING.
Banks are established for the purposes of receiving
deposits, making loans, and supplying a circulating
medium. They are either banks of deposit, banks of
issue, or banks exercising both these functions. Banks
of deposit only, that is, banks which merely take in
money and keep it till called for by the depositor, are
now little known; almost all banks lend money as well
as keep it. Neither are there many establishments
purely banks of issue; nearly all banks employ the
money deposited with them, after exchanging their
own bills for the deposits.
One advantage accruing to the community from
banking, is a saving of part of the expense of keeping
up a currency. The community must have a currency
of some sort; and each member gets no direct income
from the portion of it which he has on hand; but if
we can devise a plan whereby each one may lend his
money to some one else, to be used or passed in pay-
ments, one, two, or three days, or weeks, until he has
occasion to use it himself, it is obvious that by such a
plan a smaller amount of currency will serve the wants
of the community, than if every one should keep his
money in his pocket from the time of receiving it
108 PRINCIPLES OF BANKING.
until he pays it away. Let it be supposed then that
every person puts his money into a banker’s hands the
moment he receives it; and that he does not draw it
out again till he is to make a payment, and that then
he draws out just what suffices for his present want.
The banker now finds, that, in the ordinary course of
such alternate deposits and drafts, he has a certain
amount of money pretty constantly on hand.* Upon
ascertaining on what amount he can thus calculate as
remaining in hand, he employs it to his own profit,
by lending it to others who can give him reasonable
security for it, and are willing to pay him a higher
rate of interest than he pays for it himself; or by
investing it in the public funds if he can do so advan-
tageously, or in some other way by which he can
obtain an adequate interest or return for it. Thus a
portion of the currency of the country, or of the
floating capital which would otherwise have remained
dormant, is kept profitably employed through the
operations of the banker, whose true and legitimate
business is to borrow of one class of creditors capital
which he may lend to another class. By a well con-
ducted banking system, issuing redeemable notes of
various amounts, a community may save the use of
two-thirds or three-quarters, of the amount of capital
necessary to supply a metallic currency. In some
few cases, no doubt, from want of adequate capital,
* To illustrate this: Suppose the depositors make their payments
once in sixty days, and deposit their money one day before each
payment; suppose also that the sums deposited and drawn out are
the same ; even under this view of the case the banker will con-
stantly have on hand one-sixtieth part of the whole amount of the
aggregate daily payments.
PRINCIPLES OF BANKING. 109
or want of proper management, money has been lost
to the public by banks; but there can be no denying
that the banking system, well and honestly conducted,
is of great advantage to the community in general.
These establishments, besides effecting an immediate
saving in the way we have pointed out, supply a sort
of public fund for all enterprising and industrious men
who have sufficient credit to avail themselves of it.
They enable men in active business to extend their
operations much beyond the limits of their own capital,
and thus hold out a powerful excitement to all the
enterprise, industry, and talent in the community.
It would be a mistake, however, to suppose that
the capital lent by banks is used only by mere borrow-
ers. Bank stocks afford a very convenient mode of
investment to persons not actually engaged in business;
while others borrow their own funds from them in
such a way as to employ them with the greatest
economy. Suppose twenty men to be engaged in
different branches of business, in which each of them
has occasion sometimes for £5, and sometimes for
# 1,000; it is certainly better economy for them to
subscribe a common stock of which one may use now
a greater now a less portion than another, than that
each should be provided with and always have on
hand, an amount of capital sufficient for any emergency
occurring in his business. In the long run it will be
found that more business, by ten or twenty per cent,
can be effected in this way upon the joint capital, than
if each one should operate with his separate capital.
It is even practicable to allow an individual sometimes
to go a little beyond the actual amount of his capital
10
110 PRINCIPLES OF BANKING.
when necessary, provided he is always found to re-
place the sum overdrawn within a short period.*
Some of the facilities which banks afford for com-
mercial operations are thus stated by Mr. Gilbert in
his Thoughts on Banking. “Let us suppose that a
merchant has only two bills due each day. These
bills may be payable in distant parts of the town, so
that it may take a clerk half a day to present them ;
and in large mercantile establishments it would take
up the whole time of one or two clerks to present the
due bills and the drafts. The salary of these clerks
is therefore saved by keeping an account at a banker's.
Besides the saving of expense, it is also reasonable to
suppose that losses upon bills would sometimes occur
from mistakes, or oversights, from miscalculation as to
the time the bill would become due, from errors in
working it up, from forgetfulness to present it, or from
presenting it at the wrong place. In these cases the
endorsers and drawers are exonerated ; and if the
acceptor do not pay the bill the amount is lost. In a
banking house such mistakes occur sometimes, though
more rarely, but when they do occur the loss falls
upon the banker, and not upon his customer.” The
merchant can also refer to his banker on the subject
of his own credit, as well as obtain information from
him as to the supposed credit of others. He can also
* The beau ideal of banking is to produce the greatest practicable
results with the least expenditure of means; and this economy of
capital forms a particular feature in the banking system of Scotland,
under the operation of which the whole mass of capital in any
district is in a state of constant circulation; no portion, however
minute, need remain for the space of one day stagnant.
BANK OF ENGLAND. I 11
make his remittance to individuals at a distance,
through his banker, without risk and at a very small
expense. .
A paper currency is sometimes called fictitious
capital—an expression implying something imaginary
and delusive. Now, the fact is, a paper currency
circulates on the credit of the party issuing it; and
there is no fiction in it so long as the issuer of the
paper can redeem his notes on demand. The great
difficulty then is to guard against the improvidence or
bad faith of the issuer of paper. With this view it has
been proposed that every banking company should be
obliged to deposit in the hands of government as much
stock as should be equal to the whole, or at the very
least to three-fourths of their issues. Such security
has been already exacted from the Bank of England
in its permanent capital lent to the government, all of
which must be considered as impledged for the security
of the holders of the paper of that company.
BANK OF ENGLAND.
The most extensive banking establishment in Eu-
rope is the Bank of England. It was originally
projected by a Scotsman of the name of Paterson;
and originated in a loan of £1,200,000 made to
government by some London merchants. Previous
to its establishment, the goldsmiths of the metropolis
seem to have transacted the money business of
England. The subscribers to the loan received 8 per
cent interest, besides £4,000 a year for the expenses
of management of the public debt; and were incorpo-
112 BANK OF ENGLAND.
rated into a society, denominated “The Governor and
Company of the Bank of England,” by charter for
eleven years, in 1694. The charter was renewed in
1697, 1708, 1713, 1742, 1764, 1781, 1800, and 1833.
The last act continues the privileges of the bank till
twelve months’ notice aſter the first of August, 1855,
with a proviso that the charter may be withdrawn on
twelve months’ notice after the 1st of August, 1845.
The capital of the Bank of England, in 1708,
amounted to £4,402,343. In 1746, it amounted to
# 10,780,000. In 1782, it was £1 1,642,400. In
1806, 25 per cent was added to the capital from
accumulated profits, making altogether a capital of
£14,553,000, which is permanently lent to govern-
ment at 3 per cent, and may be called the fixed
capital of the bank, it being repayable only when the
charter shall expire and not be renewed. There are
four general meetings of proprietors of bank of England
stock held in the year, viz: in the months of March
or April, July, September, and December. Only
proprietors of £500 and upwards of bank stock can
vote at these meetings ; directors must hold 62,000.
A committee of three directors are in daily attendance
at the bank. On Wednesday a court of ten directors
sits to consider all notes and bills sent in for discount-
ing. On Thursday there is a meeting of the whole
court of twenty-four directors, when all notes of more
than £2,000 are taken under its review. The
directors communicate with the first lord of the
treasury and the chancellor of the exchequer. Until
the printing of the report of the Committee of Secrecy,
however, the proceedings of the bank were involved
BANK OF ENGLAND. I 13
in impenetrable concealment: the proprietors merely
receiving their dividends on the word of the directors.
Since the year 1826, the Bank of England has
established branches in some of the principal towns of
England. They exist at Birmingham, Bristol, Glou-
cester, Hull, Leeds, Liverpool, Newcastle on Tyne,
Norwich, and Swansea. They allow no interest, nor
do they permit any one to overdraw his account.
They supply the neighboring banks with gold when
required, and give such bankers as wish it the use of
Bank of England notes at 3 per cent interest. The
application of parties who desire to open discount
accounts at any of these branch banks, is forwarded
every Saturday to the parent establishment for ap-
proval; and when approved, good bills may be
discounted without further reference to London.
The dividends on any of the public funds, which are
payable at the Bank of England, may be received
through any of its branches by persons who have
opened drawing accounts, after signing powers of
attorney for that purpose : the only charge being the
expense of the power of attorney and the postages.
Purchases and sales of government securities may
likewise be effected by these branches at a charge of
# per cent. Persons having drawing accounts at
them, may order money to be paid at the bank in
London to their credit, and vice versá, without expense.
The branch banks may be called upon to change any
notes issued and dated from themselves; but they do
not change the notes of the bank in London, nor
receive them in payment, unless as a matter of
courtesy. No note issued exceeds £500, and none
10 %
I [4 ENGLISH PRIVATE BANKS.
are for a less amount than £5. The average circula-
tion of these branch-bank notes, during the year 1833,
was £3,199,520; of which nearly one-half was put
in circulation by the Manchester branch. -
ENGLISH PRIVATE BANKs.
Country banks began to be formed soon after the
middle of the last century. In 1797, their number
was computed at 280. In that year, leave was given
them, as well as the Bank of England, to issue small
notes, (hitherto their lowest note had been for £5,)
and they were also, like the Bank of England, relieved
from the necessity of paying their notes in cash. The
consequence was that they rapidly increased in num-
ber; so that in 1814, they exceeded 900. The fall
of prices that took place in the autumn of 1813
produced a terrible destruction of country bank paper;
and before the close of 1816, no fewer than 92 com-
missions of bankruptcy were issued against English
country banks, giving rise to a universality of wretch-
edness and misery which had never been equalled,
except, perhaps, by the breaking up of the Mississippi
scheme in France. With the rise of prices in 1823,
confidence increased, and the country banks began
again to pour forth their paper currency. The
amount of country notes in circulation in 1825 was
supposed to be from 30 to 40 per cent greater than
their amount in 1822. This excessive addition to the
currency, rendered it redundant, and caused a drain
of bullion. This drain again forced the Bank of
England to contract her issues; the currency of the
ENGLISH PRIVATE BANKS. 115
metropolis thus became more valuable than that of the
country, and the currency of the country bankers was
returned upon them. The first failures heightened
the panic ; and, in the short space of five or six weeks,
from sixty to seventy banking establishments stopped
payment.
The country banking system of England is mainly
defective in the want of security provided for the
public. The act of 1826 prohibiting the issue of
small notes has done something to check this evil, but
nothing short of the deposite of securities for their
issues in the hands of government will effectually
protect the public. It was also a most unfortunate
error to restrict the number of partners in private
banks to six : as was sufficiently shown by the fact
that amidst all the failures of English banks, not a
single Scottish bank proved insolvent. The latter had
a sufficient number of partners to subscribe a capital
adequate to any emergency.
These private banks allow from 2 to 3 per cent on
deposits, and charge 5 per cent on overdrawn accounts.
In 1826 an act was passed which permitted the
formation of banks of issue, with more than six
partners, at any distance exceeding 65 miles from
London. In consequence of this act, more than thirty
joint stock banking companies of undoubted credit and
Solvency have been established in England, chiefly in
the manufacturing districts. The principles upon
which these establishments are conducted are the
same as those of private establishments, and hitherto
they have answered the views of their projectors
pretty well. The act of 1833, as we have seen,
116 BANKING IN SCOTLAND.
authorizes the establishment of banks, not issuing
notes, but with any number of partners, in any place :
a joint stock banking company, with a large paid-up
capital, has, in consequence, been formed in the
metropolis of England itself. The establishment of
joint stock companies is certainly an immense im-
provement on the English system of banking. Com-
mercial capitalists are by this means furnished with
safe depositories for such balances as are required in
conducting their daily transactions; the aggregate of
these balances afford a supply of capital for discounting
good bills of exchange; the credit of joint stock com-
panies secures them, to a great extent, from the
influence of panics; and their proceedings are ne-
cessarily more steady and uniform than those of private
copartnership. There is one clause, however, which
seems to act to the prejudice of these joint stock
banks, namely, that which enacts that every partner
shall be responsible, not only to the extent of his
shares, but to the whole amount of his private fortune.
Few are willing to place in jeopardy their whole
fortunes, for the small amount of profit each can enjoy
where there are so many partners; and it is not found
in practice that the chartered banks in Scotland possess
less of the public confidence than their rivals.
BANKING IN ScotlAND AND IRELAND.
The distinction between the two banking systems
of England and Scotland, it has been well observed,
hitherto has been, that the one has possessed great
capital without freedom in the mode of employing it;
BANKING IN SCOTLAND. 117
the other a limited capital with complete liberty
in its appropriation. Hence a stability almost unin-
terrupted in the banking establishments of the latter
country, no alarms, no runs, such as prevailed in
England to so fatal an extent in 1793, 1814, and
1825.
The banking system of Scotland presents three
great and leading features: 1. It offers to the frugal,
a safe and at the same time a profitable investment
for their savings. 2. It furnishes the industrious with
loans upon cash credits. 3. It provides the public
with a safe and enconomical circulating medium.
The amount of bank paper circulated in Scotland
is between three and four millions, of which more than
half is in notes of £1. The number of banks in
Scotland which issue notes is thirty, of which the five
principal hold charters, viz.:-
The Bank of Scotland, established in 1695, with an
exclusive privilege of banking for twenty-one years;
capital progressively augmented to £1,500,000, its
present amount. The Royal Bank, established in
1727; capital £2,000,000. The British Linen
Company, incorporated in 1746 ; capital £500,000.
The Commercial Bank; capital £600,000. The
National Bank; capital £500,000.
Of the other banking companies in Scotland, several
have a great number of partners, to the extent of two,
three, four, or even twelve hundred ; but as they act
without charters, each partner is liable for the engage-
ments of his bank to the whole extent of his fortune.
In the chartered banks the partners are absolved from
all responsibility beyond the amount of capital, The
118 RANKING IN SCOTLAND.
management is uniformly in a body of directors
chosen by the shareholders.
Notes of £1 have been issued in Scotland during
more than a century, being suitable to a country which
at that time was poor and thinly peopled. In 1826,
when parliament called in small notes in England, a
similar attempt was made in regard to Scotland; but
a committee being called for by the Scots members,
the result was a determination in no wise to interfere
with the existing system in that part of the island.
All the witnesses examined on the subject of Scotch
banking before the committee of the House of Com-
mons agreed in this, that without the profit arising
from the circulation of a paper currency under £5,
the branch banks could not be continued in thinly
populated districts and small towns. It is customary
with banks in Scotland to give what they term cash
credits, that is, to make advances of money, at a rate
of interest somewhat above the average of the money
market, on receiving personal security from the friends
of the borrower. An individual, whether engaged in
trade or in farming, finds two or more neighbors or
friends, of good character and circumstances, who
become his guarantees to a bank, to the extent of
£500, or any given sum. The amount, or any
portion of it, is forthwith advanced by the bank, and
an account opened with the party, in which he
receives credit for the sums, however small, which it
may suit him to pay from time to time in reduction of
his debt. It is this saving of capital on the one hand,
and encouragement to industry on the other—this
encouragement by which every shilling that can be
BANKING IN SCOTLAND. | 19
saved is carried to the local bank and employed
profitably—that has advanced Scotland's wealth and
prosperity so much within the last century.
Another custom of banks in Scotland has a claim
to unqualified approbation ; we mean that of allowing
interest on any deposit above £10. “It is astonish-
ing,” says Mr. Scrope, “to what shifts and expedi-
ents persons are driven in England for the utilization
of whatever small sums they have saved, in conse-
quence of the English banks not allowing interest
upon deposits. The establishment of saving’s banks
was of incalculable advantage in this respect; but the
amount of deposits in them being limited to £150,
the difficulty of placing out larger sums with safety
has led to much destruction of capital, and great
individual misery.” The Scotch banks perform the
part of savings banks on a large scale. The depositers
are very frequently mechanics or humble tradesmen;
yet the aggregate of the sums so deposited in the
different banks to the north of the Tweed, is said to
amount to £20,000,000. A similar service is thus
rendered in various parts of England by country
banks. But in Scotland it is an established practice;
and the depositers are wholly free from anxiety, there
scarcely being two instances in a century of money
being lost by confiding it to a bank. Of course this
interest is always at the lowest rate at which it can be
maintained without driving away the capital now
intrusted to the management of the Scotch bankers.
It is at present less by one per cent than could be
obtained on private loans; but the superior credit and
solvency of the banks, induce capitalists to give them
a preference.
120 BANKING IN SCOTLAND.
The chief checks by which an over issue and
consequent depreciation of bank notes are prevented
in Scotland, is the exchange of notes which takes
place twice a week in Edinburgh, between the whole
of the banks in Scotland; the balances for and against
each bank being settled for them in bank of England
notes, or exchequer bills. This effectually prevents a
forced issue of notes by any one or more banks beyond
their legitimate business. When a new bank of issue
commences business, the great banks in Edinburgh are
careful to assure themselves of its stability. If the
latter are not quite satisfied that the new competitor
for public patronage is possessed of sufficient capital
to carry on its own operations easily, they will
assuredly refuse to receive its notes. It is also to be
observed that the directors of these establishments are
bound to place annually before the subscribers a full
and accurate account of their affairs; and that as the
dividends are always paid out of the profits only, and
never from the capital, these furnish a pretty good
index to the prosperity of each establishment. Be-
sides, if a Scotch bank were to issue a larger amount
of paper than could be actually absorbed by the trans-
actions of its customers, the excess would constantly
find its way back to the bank : for it is manifest that
no person would keep on his hands more notes than
his necessities required, when he could obtain the
common rate of interest upon them merely by deposit-
ing them in the bank.
All the Scotch banks have agents in London upon
whom they draw bills, but their notes are only
payable in Scotland.
BANKING IN IRELAND. 121
In 1783, there was established in Dublin a national
bank, with privileges similar to those of the bank of
England, and most unfortunately containing in its
charter a clause, that “no other bank issuing notes
* The capital
of this corporation was £600,000, which was lent
should consist of more than six partners.”
to government at 4 per cent interest. In 1809,
£1,000,000 was added to its capital; and in 1821,
the capital was augmented to £3,000,000.
In a country so advanced in civilization and trade
as England, the defects of public institutions are
frequently neutralized by the prudence and reflection
of individuals; but in Ireland, an agricultural country,
with comparatively little experience in trade, the case
was very different, and the delicate business of banking
has been conducted in provincial towns with very little
method or judgment. What has been the consequence
of that and of the unfortunate limitation to six partners?
The failure of one bank after another, so that out of a
total of fifty country banks in Ireland, no less than
forty have stopped payment; and of these ten failed
in the year 1820, all in the southern part of the island.
The exemption from paying in cash granted to the
Bank of England in 1797, was extended in that year
to Ireland, and led forthwith to a great increase in the
circulation of bank paper. From £780,000 in 1796,
the circulation of the Bank of Ireland was carried to
£4,000,000. At present it is twice that amount, and
the income of the bank is large, the rate of discount
charged by it being higher by one per cent than in
London or Edinburgh. -
In the north of Ireland banking is better understood
11
122 BANKING IN IRELAND.
than in the south ; and in 1825, a joint stock bank
was formed at Belfast with a capital of half a million,
under the title of the Northern Banking Company.
In the same year there was established in London the
Provincial Bank of Ireland, with the large capital of
#2,000,000, subscribed chiefly in London. That
great establishment has since appointed in all the chief
towns of Ireland branch banks beyond the prescribed
distance of fifty miles from Dublin. The system of
business is the same as that followed by the Scotch
banks. Happily the Provincial Bank and the Bank of
Ireland carry on their business in perfect harmony,
their agents at the different towns giving cash for the
notes of either bank indiscriminately; the notes of
either bank are also received by the government in
payment of duties and taxes. -
The amount of the bank paper current in Ireland
on account of the Provincial Bank and the Northern
Banking Company is between two and three millions.
The charter of the Bank of Ireland extends to the
year 1838, and the restriction as to six partners
cannot be removed from country banks before that
time, except by a special arrangement between
government and the Bank of Ireland. The law
forbidding the issue of notes under £5, does not
extend to Ireland.
Besides the early banking establishments mentioned
in the beginning of this article, there exist several very
extensive banking companies in different parts of the
world. The bank of France established in 1803, has
a capital of £3,600,000, divided into 90,000 shares.
BANKING COMPANIES. 123
This is the only bank in France which enjoys the
privilege of issuing notes. It publishes an annual
statement of its affairs. The Commercial Bank of
Russia established in 1818, has a capital of about
£1,500,000. A government bank with a capital of
£500,000 was begun under the auspices of govern-
ment in Bengal, in 1809. It has hitherto yielded a
dividend of from 9 to 10 per cent. There is another
bank at Madras, but it does not do business to any
great amount. The business of banking in the interior
of India is chiefly conducted by natives, and confined
to the issuing and discounting of bills.
C H A P T E R X.
BILLs of PARCELs — INvoices — Account - SALEs — RE-
CEIPTs — Accounts-CURRENT.
THE accounts delivered by merchants to their
customers or employers, are Bills of Parcels, Invoices,
Account-Sales, and Accounts-Current. The uses of
these we shall now explain.
BILLs of PARCELs.
A BILL OF PARCELs, is a particular statement of
goods given by the seller to the buyer, containing the
description, quantity, and price of each article ; and
the amount, with the place and date. In making out
such accounts, the expression Bought of, is always
used ; but for work done, money lent, or the like, the
phrase To (A. B.) Dr., is substituted. When the
articles are sold and delivered at one time, the place
and date is written at the top of the account ; if not,
the different dates are placed in the margin.
The following abbreviations are used in merchants’
accounts, namely,–Bo' for bought ; Cº for company;
JMdze. for merchandize; B. P. for bill of parcels;
Recº Pay: for Received Payment; yds. for yards;
BILLS OF PARCELS. I25
pf for pieces; hkds. for hogsheads; bbls. for bar-
rels ; cwt. for hundred weight; qrs. for quarters;
lb. for pounds; doz. for dozen ; pr. for pair; gro.
for gross ; ea. for each : @ for at ; hdl.fs. for hand-
kerchiefs, &c. Shillings are usually expressed by an
oblique line, thus / ; per cent is sometimes expressed
thus: "... -
EXAMPLEs.
JNew York, May 1, 1838.
MR. PETER HARRIson,
Bought of Smith, Jones & Son,
3 pieces Cassimere, 48 yds. (a) 20ſ . . . . $120 00
4 ºr Toilinette, 62 m (a) 8) . . . . 62 00
I ºr Broadcloth, 24 m (a) 42| . . . . 126 00
2 tr do. 48 m (a) 40ſ . . . . 240 00
4 ºr Sheetings, 100 m (a) 1| . . . . 12 50
$560 50

JWew York, JMarch 1, 1838.
MR. JAMEs OTIs,
Bought of John Simpson,
7 lbs. Green Tea, (a). 6] . . . . , $5 25
8% tº Loaf Sugar, (a) I/6 . . . . . . . . I 60
93 m Brown do., (a) Iſ . . . . . . . . 1 22
54 tº Coffee, (a). 113 . . . . . . . . 81
$8 88
f
Received Payment,
John SIMPson, rº'-
Pr. T. CLERK.
11 *
126 |BILLS OF PARCELS.
WILLIAM WARD, Esq.
1838.
Jan. 1, For 373 yds Sheeting (a) 1/6
Feb. 3, 43% ºr Lace, (a) 8/3
1, 16, 75 tº Linen, (a) 7|
May 12, 25 ºr Muslin (a) 3|
ſt 15, 283 tº Cambric (a) 4/6 . .
June 3, 15 m Cotton, (a) 1/3 . .
ºr 15, 10 ºr do. (a) 21
Cr. —
May 1, By Cash,
Due R. J.
JVew York, July 4, 1838.
To Robert Johnson,
Dr.
. $6 98
44 86
65 62
9 37
16 T 7
2 34
2 50
$ 147 84
47 84
--ºe
$100 00
MR. GEORGE THOMAs,
6 pieces Linen,
No. 1 25 yds (a) $1 12%
2 24; tı (a) 75
3 25} ºr (a) 873,
4 25% ºr (a) 624
5 26 ft (a) 50
6 26%. 1, (a) 90
Deduct for damaged piece
Discount 5 per ct.
Boston, January 3, 1838.
Bought of Charles Green,
$28 12%
18 56}
22 093
16 093
13 00
23 85
$121 724
I 724
$120 00
6 00
$114 00
|BILLS OF PARCELS. 127
If a settlement takes place at, or soon after the date
of the purchase, it is marked at the foot of the bill or
parcel ; but when it is deferred to a subsequent period,
the buyer is furnished with a statement containing the
place of residence, the names or firms of the parties,
and the date of each purchase, referring for particulars
to the bill of parcels which accompanied the goods
when sold. This is called a general account. The
following is an
EXAMPLE.
MR. Rob ERT HARRIson,
To Lambert & Stone, ADr.
1838.
Jan. 10, To Mdze, as per B. P. . . . . . $575 25
f / 15, ºr do. // 1, . . . . . . 325 75
March 2, 1, Linen, ºr 11 . . . . . . . 430 31
April 9, 11 Ginghams, iſ . . . . . . 233 40
*-i-º-º-ºm-
$1,564 71
— Cr. —
March 1, By Cash, . . . . . $1,000 00
April 9, By Bill at 3 ms. for bal” 564 71–$1,564 71
Settled,
LAMBERT & STONE.
JVew York, April 9, 1838.
When an account is settled by cash, we write the
date, and say, By Cash, or Received Payment. If a
partial payment be made at the time of the purchase,
it is subtracted ; and if several partial payments be
made prior to the period of making up a general
account, they are collected, as above, in an inner
128 BILLS OF PARCELS.
column and their sum is extended and subtracted ;
the difference, if any, being the balance of the ac-
COUnt.
In making out invoices or bills of parcels of jewelry,
hardware, ribbons, tapes, and all other articles, where
the prices and qualities vary, it is customary to num-
ber each sort, and to place the price immediately above
the number.
ExAMPLEs.
JVew York, June 4, 1838.
MR. WILLIAM JoHNson,
Bought of JMarquand & Co.
20 22, 24
3 pr. Shell Spectacles, ea. *509, 510, 511, . . $24 75
25| 28|
4 doz. Silver Watch Guards, ea. 586, 589, . . 26 50
12| 16|
2 ºr Silver Thimbles, ea. 346, 347, . . . . 7 00
15| 18|
1 tº do. do. ea. 344, 401, . . . . 4. 12;
- 30| 40|| 42| 80ſ
1 Gold Finger Ring, ea. 14, 15, 16, 17 . . . 24 00
$50 $75 $110
1 tº Watch. ea. 12,201, 12,209, 12,231 . . 235 00
*-mºs ammºmºsº
$321 37;
Recº Pay! by note at 3 m?
MARQUAND & Co.
* The figures, 509, 510, 511, &c. are numbers to distinguish the different
qualities and prices of the articles: thus, 3 pair Spectacles, No. 509 at 20–3 prº
do. 510, at 22, and 3 pr. 511 at 24, and so of the rest.
EXERCISES IN BILLS OF PARCELS. I29
The forms of the following Bills of Parcels are to
be given in writing by the student.
1. JWew York, January 1, 1838. James Gray
buys of Reed & Co. as follows, viz. 10 pieces Cam-
bric, each 20 yards at 244; 5 pieces Calico, each
28 yards at 3| ; 15 pieces Cotton Sheeting, 28 yards
each at 1/9 ; 4 pieces French Muslin, 14 yards each
at 4/. - Jłns. $230 70%.
2. Philadelphia, January 10, 1838. William
Harris sells to Robert Morris, 14 pieces Quilting,
each 12 yards, at $1 25; 12 pieces Cassimere, each
30 yards, at $2 50. The account was paid 10th
February, and 5 per cent discount allowed for cash,
and 2 yards of the quilting was short. State the net
Sum paid, and discharge the account.
Jāns. $1,052 12#.
3. Boston, JMarch 4, 1838. William Watts buys
of Thomas Gray & Sons, 3 pieces 4-4 Muslin, each
24 yards, at 374 cts. ; 4 pieces 6-4 do., each 10
yards, at 624 cents; 6 pieces 7-8 do. each 9 yards
at 874 cts; 4 pieces 7-8 blue Gingham, each 28
yards, at 18% cts., and 1 piece Broadcloth, 21 yards,
at $7 874 ; for which he pays in part $85 62; ;
give a Bill of Parcels and tell the balance due.
./lns. $200 00.
I 30 EXERCISES IN BILLS OF PARCELS.
4. JNew York, JMay 1, 1838. Marshall, Jones & Co.
purchase of Henry Hunter 250 lbs. Cochineal at 30|
per lb., for which they are to be allowed 13 per cent
discount for cash. Write the form of the Bill of
Parcels and discharge it. Jāns. $923 44.
5. Philadelphia, June 1, 1838. John Brownson buys
the following groceries of Melrose & Co., viz. 4 lbs.
Congou Tea, at $1 12; ; ; lb. fine Hyson do. at
$1 75; 28 lbs. brown Sugar, at $10 50 per cwt. ;
64 lbs. double refined do. at 18% cts. ; 5% lbs. single
refined do. at 124 cts. ; 8 lbs. Starch, at 11 cts. and
27; lbs. Soap, at 8 cts., for which he paid in cash.
Write a Bill of Parcels and receipt it.
Jłns. § 13 48%.
6. Baltimore, June 15, 1838. Gilchrist & Co. sell to
Miss Jane Jameison 30 yds. printed Calico, at 28 cts. ;
84 yds. Jaconet Muslin, at 874 cts. ; 4% yds. Cambric,
at $1 75 ; 113 yds. Long Lawn, at $1 12%, and
6 Muslin Handkerchiefs, at $2 62%. They allow
5 per cent discount for cash. Write a Bill of Parcels
and discharge it. - .Ans. $50 64.
7. JVew York, JMay 10, 1838. William Smith buys
of Binninger & Co. 104 lbs. fine Green Tea, at 7/6;
93 lbs. Gunpowder do. at 10|; 124 lbs. best Bohea
do. at 6|3; 184 lbs. Java Coffee, at 1/6 ; 13% lbs.
Rice, at 4d ; 294 lbs. Refined Sugar, at 2ſ; 15 doz.
Sherry Wine, at 40ſ, and 10 doz. Claret, at 30ſ.
Write the Bill of Parcels, and require the amount in
dollars and cents. Jins. $155 46.
THE BOOK TRADE. 131
8. Boston, May 18, 1838. Thomas Williams sells
to Richard Simpson as follows, viz. 8 pair Worsted
Stockings, at 4/6; 5 pair Thread do. at 4/; 12 pair
fine Kid Gloves, at 6/; 6 pair Cotton Hose, at 3|;
7 yds. fine Flannel, at 1/6; 6 pair Silk half Hose,
at 9| ; and 6 Bandana Handkerchiefs, at 6|. Required
the amount in dollars and cents. Jáns. $41 08.
9. Boston, July 6, 1838. Wiley & Putnam buy of
Perkins & Marvin, 50 Foster's Book-keeping, 2d
edition, at $1 25; 50 Clerk’s Guide, at 75 cts. ;
50 Foster's Penmanship, at $1 ; 200 Foster's Ele-
mentary Copy Books, at $10; 50 Counting-house
Manual, at $1 25; 50 Hints to Tradesmen, at 31} cts.
Required the amount. Jāns. $248 12#.
Very simple discounts prevail in the book trade.
The affairs of this trade are regulated in England by a
committee of the most respectable publishers and
booksellers, and the full benefits of the discounts are
accorded only to those who acquiesce in their arrange-
ments. But in the United States no such regulations
have been established, and consequently the retail
prices of books are various. It must be observed, so
many parties are interested in the sale of a book,
that some regulation in this matter is indispensable for
the good of all. An author cannot introduce his book
into the market : he, probably, has neither time nor
business habits; he must therefore employ a pub-
lisher. A publisher does not transact business with
all the world, and therefore he must avail himself of
the instrumentality of booksellers. These again, in
132 THE BOOK TRADE.
the case of school-books, can introduce new publica-
tions only through the medium of teachers, and all
these different parties expect remuneration for their
trouble. Hence the discounts are so regulated, that
the purchaser shall be protected, while justice is done
to all parties consistently with the encouragement of
trade. The author, it will be conceded, deserves
some recompense for his labor, and if he retain his
copy-right, something additional, as interest, for his
capital invested. If he sell his copy-right, his claim
is then evidently transferred to the purchaser, whether
that purchaser be the publisher or not.
The publisher, as agent, claims 10 per cent dis-
count on what he sells; the bookseller also another
10 per cent; and the teacher, in addition, expects a
deduction from the retail price.
No greater discounts than these now specified ought
ever to be allowed, and though there be cases, wherein
a publisher might himself be enabled to supply schools
at a much higher discount, yet such a method of
transacting business would be highly prejudicial to the
trade generally, and authors in particular ; because,
purchasers who are ignorant of the peculiarities of
business, look only at the article they have bought,
wholly disregarding its contingencies. If one trades-
man allow a discount of 50 per cent in the sale of a
commodity, and another on the same deduct only 5
per cent, the purchaser considers himself actually
robbed by the individual who allows but 5 per cent ;
whereas, it is highly probable, that he who allows
50 per cent, gains much more than he who allows
only 5.
EXERCISES IN BILLS OF PARCELS. 133
It may be also added, that discounts in the regular
trade are in accordance with equity. All persons
engaged in business are not only liable to bad debts,
but have also to meet attendant expenses.
If the teacher be liable to defaulters in payment, so
is the bookseller, and therefore 10 per cent cannot be
considered too great a deduction to meet attendant
expenses, to counteract the liabilities of trade, and
afford any thing like equivalent interest for capital
invested in loaded shelves, which may not be cleared
even for years.
The publisher also has a very just claim, for an
additional 10 per cent, because he secures the author
against liability to loss, and takes upon himself all the
trouble of introducing new publications to the notice of
the booksellers.
These remarks are introduced, because very errone-
ous opinions are entertained by some as to the “enor-
mous profits' booksellers derive ; whereas, in the
general, there is no trade that requires more persever-
ance and extent of connection to secure anything like
a competent advantage.
10. Messrs. Ramsden, Brown & Co. have purchased
the following goods. Make out the Bill of Parcels—
deduct 2; per cent. discount and discharge the ac-
count :—l doz. men’s Cotton Hose, each, No. 1, at
$10,—No. 2, at $12,-No. 3, at $14,-No. 4, at
$20,–2 doz. men's # Hose, each, No. 6, at $5 ;
No. 8, at $7; No. 9, at $10 ; 3 doz. Boy’s Hose,
each, No. 1, at $3; No. 2, at $5; No. 3, at $6.
12
134 EXERCISES IN BILLS OF PARCELS.
2 doz. men's Kid Gloves, each, No. 1, at #9 ; No. 2,
at $12; No. 3, at $18—per doz.
JWet .Amount $214 50.
11. London, January 1, 1838. W. Bronson buys
of Charles Dawson & Co. 29 pieces Muslin, viz. –
15 pieces 4-4 wide, each 24 yds. at 1/1; 14 pieces
6–4 wide, each 9 yds. at 2/4; and 42 pieces Ging-
ham, viz. 12 pieces Blue, each 28 yds. at 1/2; and
30 pieces Pink, each 28 yds. at 1/8. Required the
amount in Sterling money, and also the amount in
dollars and cents at par f*
Jìns. £123 I6
$550 22
12. Glasgow, January 3, 1838. G. Buchanan
purchases of George Fenton, 19 pieces Cambric, viz.
No. 1,–10 pieces, each 20 yds. at 2/4; No. 2,-
5 pieces, each 20 yds. at 3/6; No. 3,-4 pieces,
each 20 yds. at 4/6; at the same time he pays £30
in part. Write out the Bill of Parcels and state the
balance in Sterling, and also in dollars and cents, the
exchange being 12# per cent. above par.
.4ns. £28 16 8 Sterling.
$144 16 Federal Currency.
* The nominal par value of a dollar in sterling money is 46, or
$4 44 4-9 for the pound sterling. Hence, to change pounds sterling
to Federal money, multiply by 40 and divide the product by 9. If
there are shillings, pence and farthings in the question, reduce them
to the decimal of a pound, and multiply and divide as before. Since
the passage of the act of 1834, for reforming the American gold
coinage, the true par of exchange with England, estimating gold
against gold, is about 9% per cent above the nominal par. (See
page 84.)
INVOICES. I35
13. Leeds, April 16, 1838. Mr. James Thompson
bought of Jones & Harrison, 8 pieces Broadcloth, viz.
2 p. Blue, 52 yds., at 18/6; 2 p. Green, 50 yds. at
1916; 2 p. Brown, 54 yds. at 16/8; Wrapper and
papers, 6). The account was paid, and 5 per cent
discount allowed. Write the Bill of Parcels, and
state the amount in Sterling money and also in dollars
and cents, exchange at 10 pf cent.
Jłms. £135 2 9.
$489 06.
14. Liverpool, JMay 4, 1838. Mr. Henry Welles
purchased of James Black, 40 yds. Superfine Broad
Cloth, at 1816; 214 yds. Bottle Green do. at 20/9;
22# yds. light Blue do. at 24/6; 234 yds. Superfine
Black do. at 25|; 37; yds. Blue Black do. at 10/;
Boxes and Packing, 29/6. Write the Bill of Parcels
—give the amount in Sterling, and also in dollars and
cents, exchange at 8 p. cent. Ans. £136 10 3%
$655 27
INVoICEs.
An INvorce is an account of goods shipped to a
foreign port, either in consequence of an order from
the person to whom they are sent, and at his risk, or
consigned to him for sale at the risk of the shipper,
with the marks of the packages exhibited on the
margin, and the charges attending the shipment added
to the value of the goods, the sum of which is called
the amount of the Invoice.
T36 INVOICES.
The preamble of an invoice, generally, contains the
names of the consigner and consignee ; the name of
the ship and master; the place from which she sails
and destination ; and for whose account and risk the
goods are shipped. Sometimes, for the satisfaction of
the employers, the bills of parcels are not copied, but
sent along with the goods, and only the amount of
each bill stated in the invoice.
The commission for purchasing goods shipped is
generally 2% per cent on the value of the goods,
including charges. If the goods are insured, the agent
charges # per cent extra for his commission on the
insurance. The sum insured usually exceeds the
amount of the invoice by 2 per cent, as the recovery
of a loss involves a charge equal to that amount. It
is thus necessary to cover not only the price of the
goods and the charges at shipping, but such further
sum as may enable the shipper, in case of loss, to
recover the amount of the invoice clear of any deduc-
tions.
When an agent, or shipper of goods, charges what
is called the long price, he either deducts the draw-
back from the sum of the invoice, or gives his corres-
pondent credit for the same when he receives it ; but
when he charges only the short price, he keeps these
debentures or drawbacks to himself.
An invoice ought to be made out with the utmost
care, for it is a document of great importance in several
respects; first between the exporting merchant and
his correspondents; and next, when in the hands of
the latter, it generally forms a voucher for calculating
import duty, if any, as well as for sales effected to
retailers and other dealers.
INVOICES. 137
Invoices are of two kinds. The first is a mere
detailed account of goods, sold direct by one party to
another, containing nothing but the weight, measure
or tale of the articles, at their respective prices, with
a sum total. The second is a statement of goods
bought by one party for account of another, or con-
signed for sale by the purchaser to some agent.
When a merchant orders goods of a manufacturer
for shipment, the latter furnishes him with an account
of the qualities and prices of the articles, with the
weights, marks, and numbers of the several packages
or parcels of which the order consists. This account
the merchant enters in his invoice book, and adding
thereto all the charges incurred in the shipment, with
the insurance, commission, &c. makes up (as the com-
mercial phrase is) the invoice. Sometimes a dozen
or twenty bills of parcels are comprised in one invoice,
especially in the West India and South American
trades.
There are several objects to be kept in view, in the
formation of an invoice. This document compre-
hends, not only the particulars and value of the goods
invoiced, but the charges of various kinds thereon.
These charges are composed of custom-house and
other expenses, insurance, brokerage, and commission;
and your business will be to form the invoice in such
a way, that not only the parties for whom it is intended
will have a clear view of all its parts, as well as the
total result, but also the book-keeper in your counting-
house ; so that he may be able to pass the various
items to their respective accounts in the Ledger, with-
out loss of time or trouble.
12 *
138
INVOICES.
The following will serve as an exemplification of
the general form and arrangement of Invoices.
INVoICE of goods shipped on board the Sarah, Clintom, master, for JVew York,
on account and risk of Joseph Taylor, merchant there, and to him consigned.

J. T.
92 doz. blk. Cambrick Hakfs.
42 ºr red f f. //
134 doz. at 21| . . . . . . .
Box and Cordage, . . .
20 ps. White Cambric, 560 yds. at 212,
Box, &c. . . . . . . .
3 Boxes Saddlery, as pr. B. P. enclosed, . .
C H A R G E S.
. . . 6 140 14 00
19 10–
60 13 4
iſ 8–
I
l
;
l:
i
i
141 13 || 10
61 5
67 0 || 6
Tºggſ 19 |T
16|| 17 || 2 |
asg|T6 || 6 ||
Cartage and Wharfage, . . . .
Bills of Lading, . * - e.
Shipping charges,
Commission 2; pr. cent,
Insurance, . . . . .
Policy and Stamp, . . . . . . .
Commission on Insurance # pr. cent,.
London, JMay 24, 1838.
if:
INvo ICE of Printed Calicoes, shipped on board the Emily, Street, master, for |
Hamburg, and consigned to JMuller & Co. of that place, to sell on my ac-
I to 22
C H A R. G. E. S.
Packing and other charges, . . . . . .
Insurance and Policy, . . . . . . .
Brokerage, . . . . . . . . . . . .
LoNDoN, June 1, 1838.
Count.
M. Twenty-two packages, containing, -
Nos. 100 ps. 60 yds. ea. 132,000 yds at 4%d. . . . # 2,475 00
10 pr. cent off, e 247 10– 2,227 10 || 0
51 9 || 4
2,218, 19 4
*-
INVOICES. 139
In the first of the preceding invoices you charge com-
mission as a remuneration for your trouble, but the
second being a consignment for your own account, there
is no occasion to do so; neither is there any necessity
to explain the particulars of the charges, as these do
not concern your consignees; their only object being
to ascertain the gross cost, in order to see at what
price they can sell to realize a profit.
If you will now examine attentively the first of the
two preceding invoices, you will observe that a
separate total of each item of account in the Ledger
has been obtained for the convenience of the book-
keeper. This has been secured by first collecting
into one sum, all those small items which generally go
under the head of charges, and then proceeding to put
down those for commission and insurance, which are
the other accounts usually kept separate in a mer-
chant’s Ledger.
Had this arrangement been disregarded by first
putting down only a part of those sums constituting
charges, then commission, then more charges, then
finsurance, and so on — the document itself, inde-
pendently of its being disorganized, must have been
remodelled by the book-keeper before he could enter
it properly.
The forms of business require that every in voice
should be dated, and signed by the parties making it.
The letters E. E. are also frequently made use of to
represent the words “Errors Excepted,” as a sort of
140 INVOICES.
salvo against advantage being taken of any mistake in
the account.
Every thing necessary for the consignees to know,
must be fully explained in the invoice, particularly
all matters connected with weights, measures, and
quantities, in order that they may compare the goods
on arrival with the statement, to see that no loss or
plunder has been sustained.
Let me here recommend to young men never to let
an Invoice, Bill of Parcels, or other document pass
into the books before it be fully examined, checked,
and proved to be in every respect right; and when
this is done, the clerk who examines it, should mark
it with the word “Examined,’ and attach his initials
underneath.
ExERCISES IN INVoICEs.
IN voice of sundry Goods shipped on board the
steam-boat Neptune, Seaman, master, for Charleston,
S. C., by order of George Smith, merchant there, for
his account and risk, and to him consigned. JVew
York, July 10, 1838. Box No. 1, containing 50 ps.
# Cotton Checks, at 17|; 20 ps. # Cotton Bengal, at
18/6 per piece; Box, 20ſ. Box No. 2, containing
40 ps. Platillas, ea. 34 yds. at 40 per piece; Box,
18|6. Box No. 3, containing 60 Harness Shawls, at
8| ea. ; 62 # Harness Robes, at 14|; 78 : Spanish
Sleeves, at 4|; Trunk, 30ſ. Charges—Cartage,
Bills Lading, &c., 8) ; Freight, 80ſ; Insurance, 13.
per cent. on $7,178 31#; Commission on $7,285, 98%,
at 2% per cent.
EXERCISES IN INVOICES. 14]
INvoice of 10 Bales of Georgia Cotton, shipped
by George Griswold & Co. of New York, on board
the ship Europe, Lucas, master, for Liverpool, on
account and risk of Brown & Co. merchants there,
and to them consigned. JMay 31, 1838. 10 Bales,
weighing as follows, viz. No. 1, 327 lbs. ; No. 2,
491 lbs. ; No. 3, 500 lbs. ; No. 4, 338 lbs. ; No. 5,
435 lbs. ; No. 6, 375 lbs. ; No. 7, 540 lbs. ; No. 8,
328 lbs. ; No. 9, 441 lbs. ; No. 10, 387 lbs. Draft,
10 lbs. 4, 162 lbs. met at 10 cts. per lb. Charges—
Cartage, $6 25 ; Brokerage, 12 cts. per bale ; In-
Surance 13 per cent on $ ; Commission, 5 per cent.
INvoice of Goods shipped on board the brig
Harriet, William Capewell, master, for New Orleans,
on account and risk of Holmes, Watson & James,
merchants there, and to them consigned. Marked
H. W. & J. August 31, 1838.
Box No. 1, containing :-
20 pieces Linen, 500 yds. No. 1, at 50 cts.
16 do. do. 400 yds. No. 2, at 45 cts.
Box No. 2, containing :-
15 pieces Muslin, 360 yds. at 25 cts.
14 do. do. 126 yds. at 375 cts.
12 do. Gingham, 336 yds. at 22 cts.
30 do. Blue Gingham, 840 yds. at 28 cts.
Box No. 3, containing :-
10 pieces Cambric, 200 yds. No. 1, at 40 cts.
5 do. do. 100 yds. No. 2, at 35 cts.
4 do. do. 80 yds. No. 3, at 50 cts.
Boxes, $3 75 ; Cartage, 50 cts. ; Commission,
23 per cent on amount of goods and charges.
142 ACCOUNT OF SALES.
INvoice of 500 Barrels of Flour, shipped by
Richard Thomas, on board the schooner Hope, Kerr,
master, from New York to Halifax, N. S., by order
and for the account and risk of Fullerton & Brown,
merchants there, and to them consigned.
F. & B. 500 Barrels at $8 per barrel. Charges
—Cartage, $17 ; Bills of Lading, $1; Petty ex-
penses, $3; Cooperage, $8; Commission, 5 per
Cent. Jilmount, $3,827 55.
Account of SALEs.
An Account-SALEs is a mercantile document
transmitted to the owner or consigner of the goods
sold on commission, by the person to whom such
goods have been consigned for sale, containing the
name of the vessel by which the goods were received,
the parties for whose account and risk they have been
sold, with the charges deducted. Goods when sent
to an agent for sale, are said to be consigned to him.
The person who sends the goods, is called the con-
signer, the goods his consignment, and he to whom
they are sent, the consignee. The account trans-
mitted by the consignee to the consigner, is called an
JAccount-sales. The sum that remains after all charges
have been deducted, is the net proceeds ; which is
due to the consigner.
The commission generally allowed in the United
States upon sales of foreign merchandize, is 5 per
cent, and upon sales of domestic goods, 24 per cent,
exclusive of guarantee, brokerage, storage, and every
other charge actually incurred.
ACCOUNT OF SALES. 143
An account-sales should invariably agree with the
invoice of the consignee. Thus, if I am consignee of
a hundred casks of wine which I have sold ; when I
make out the account-Sales, it becomes my duty to
observe that I include in that document the whole
number of casks sent me as per invoice, otherwise I
make myself responsible for any deficiency. This
necessity implies another and foregoing one. As I
am bound to account for the whole of the goods
invoiced to me, I am bound to see that I do receive
them, by examining the goods on the arrival of the
vessel, and verifying them with the invoice previously
sent me by the proprietor. In the event of any
deficiency being then discovered and declared, I am
not responsible for it ; but if the examination be
neglected, I am responsible.
An account-sales should exhibit to the proprietor of
the goods sold, all the particulars of the sale—such as
the date when effected, the quantity sold, the names
of the purchasers, the terms of the purchase, and the
price paid, with the total amount ; and when the
whole is so stated, that is, the separate sales thus
described, the consignee deducts from the gross
amount, all the customary and necessary expenses,
including his own charge for the management of the
transaction. The difference is the net proceeds of
such sales, payable to the consigner at such date as
the terms of credit warrant.
The forms of making out an account-sales are
various. Some accountants enter the charges on the
left hand page, and the purchasers’ names, the
quantity, value and price of the goods on the right,
#44 ACCOUNT OF SALES.
in the manner of Dr. and Cr. In this case, the
difference between the two sides exhibits the
proceeds.
In the following example, we first specify the
numbers, quantity, price and amount of the goods,
and to whom sold ; next, the charges attending the
sales, including commission :-the difference between
the gross amount of the sales, $1,312, and the charges,
$77 30, is the net proceeds due to the consigner.
Accou NT SALE of 200 pieces of Limén, received by the Union from Dublin,
and sold by order and for account of James Forbes of that place.
1838 Sold to BARCLAY & Co. . . . . . . . 4 months,
Mar. 9 No. 1, 20 ps. Linen (6)
} 30 r/ F / (6)
3, 25 tº y/ (a)
4, 17 // // (6)
5, 23 / / f / (6)
6, 25 / / y/ (a)
7, 60 // // (6)
200
C H A R G E S. —
Freight and Custom-house Fees,
Cartage and Porterage, . . . .
Storage and Advertising
Commission on $1,312, at 2% if cent, .
To JAMES For BEs, for net proceeds,
NEw York, JMarch 11, 1838.
5 50
110:00
198|75
150|00
11()|j0
155.25
37 |50
450|00
$1,312|00
77 30
slº 70
*ss
|
When the agent or consignee guarantees or insures
the debts, though it is not indispensable to mention
the names of the purchasers, yet it is generally done
in the Account-sales.
Inet
ACCOUNT OF SALES. 145
Account SALEs of one hundred and mine Barrels Turpentime; four hundred
and twelve barrels Tar ; two hundred and fifty Barrels Rosin, and twenty
Barrels Spirits Turpentine, received per Schooner Enterprise, . Hill,
from Washington, JN. C. and sold per order, account, and risk, of Benjamin
Torrance.
May 22, Sold JAMEs FISHER & Sons . . . Cash,
*
57 Bbls. Turpentine, (a) $2 00 114 00
3 // (6) 5 25
f / I 75 119 25
f / / / Sold JASPER HolMEs, . . . . . 4 Mos.
48 Bbls. Turpentine, (6) $1 37% . . . 66 00
1 taken to fill.
June 4, Sold HENRY Jon Es, . . . . . . Cash,
250 Bbls. Rosin, (a) $1 50 . . . . 375 00
July 10, Sold PETER HARMony & Co. . . . 3 Mos.
401 Bbls. Tar, . .
. (3) $1 75 g a º 701. 75
11 taken to fill.
1, 13, Sold JoHN THOMPson, . . . . . 4 Mos.
20 Bbls. Spirits Turpentime,
631 gls. (6) 32 cts. . . . . . 201 92
Barrels, $2 each,. . . . . . 40 00 || 241 92

$ 1,503 92
C H A R G E S.
Insurance on $1,505 at 1 pr. cent, Policy, $1 25 16 30
Freight, 771 Bbls. (a) 50cts. and 20 Bbls. (3) 60 cts. 397 50
Cooperage, Inspecting, Filling, &c. . . . . . 15 41
Wharfage, Turpentine, and Rosin, . . . . . 3 59
Storage, Tar, 2 months, . e e g º G & e 20 60
Cartage, Labor, and Advertising, . . . . . . 6 40
Commission on $1,504, at 2; pr. ct. . . . . . 37 60 || 497 40
JWet proceeds, due 2 Sept. . . $| 1,006 52
NEw York, July 13, 1838.
E. E.
13
146 EXERCISES.
Account-SALEs of 1,500 boxes Tin Plates, re-
ceived by the Gladiator from London, and sold on
account of Jones, Lloyd & Co. of that place. July
8, 1838. 1,000 boxes marked I. C. at $10 per
box; 500 boxes marked I. X. at $12 per box. Sold
for cash. Charges—freight and primage, $606 67;
entry and custom-house charges, $4; cartage, labor,
&c. $70 ; delivery, and petty expenses, $8; bro-
kerage, 3 per cent; commission on amount of sales,
5 per cent. Required the net proceeds.
Jłns. $14,431 33.
Hoffman & Co. New York, received from Peter
Wilson, London, a consignment of 100 casks Linseed
Oil for sale and returns. They sell 50 casks, con-
taining 5,730 gallons net, to D. Henshaw & Co. at
$1 25 per gallon, on a credit of 4 months; and 50
casks containing 6,270 gallons to J. Milhau, on a
credit of 3 months, at $1 20 per gallon. The
Charges are, for freight and primage, $281 42;
duty, $2,895 90 ; entry, permits, &c. $3 50 ;
landing, cartage, and guaging, $46 10; receiving,
delivery, and cooperage, $25 ; advertising, postage,
and small charges, $10 50 ; storage, $25 ; bro-
kerage, # per cent ; commission, 5 per cent, and
guarantee, 2% per cent on amount of sales. Required
the form of the Account-sales, and the net proceeds in
dollars and cents, and in sterling money, the exchange
between New York and London being 10 per cent
above par. JWet Proceeds, $ fº
EXERCISES. - 147
Account-SALEs of 50 tierces Carolina Rice re-
ceived by the Siddons, captain Holmes, from
Charleston, and sold on account of Murray & Co.
merchants there. Sold for cash. 50 tierces weigh-
ing gross, 33,010 lbs. Tare, 10 per cent. Net
29,709 lbs., at 3 cts. per lb. Charges—cartage,
124 cts. per tierce; brokerage, 124 cts. per tierce;
cooperage, $5 ; insurance, $9 75 ; commission,
$31 07. JWet Proceeds, $
Shipped on board the Mediator for London, and
consigned to James Thompson to sell on my account
and risk, 1,000 barrels Turpentine ; the cost and
charges of which in New York amount to $2,500.
The charges paid by the consignee in London, are as
follows, viz. freight and primage, £183. 15|; duty,
#437 18|; entry warrant, &c. 15); landing, wharf-
age, &c. tº 12 10| ; cooperage, £1 1978; stamps
and petty charges, £2 4ſ ; brokerage, commission,
guarantee, and insurance, 5% per cent. The sales
amount to £2,375 18/9. Required the form of
the Account-Sales, and the net proceeds in sterling
money, and in Federal currency, exchange 94 per
Cent. JNet Proceeds, £ $
REED, Jon Es & Co. of New York, ship on board
the Nelson, Capt. Brown, for London, 20 barrels
Pot and Pearl Ashes, which they consign to Hopewell
& Sons of that place for sale and returns. The cost
of the Ashes is $5 per barrel, and the charges on
the shipment are as follows:–Inspection, $105 90 ;
148 RECEIPTS.
cartage, $16 ; cooperage, $16 ; marking, &c. $5;
brokerage, $25 ; insurance, $24.
The gross weight of the Ashes in London, is
1,054 cwt. 2 qts. ; tare, 14 lbs. per cwt. ; met,
922 cwt. 3 qrs. Sold for cash at 40] sterling per
cwt. The Charges incurred by Hopewell & Sons
are, for freight and primage, £55 146; duty,
£279 9| ; landing, wharfage, and loading, £5 ;
housing, weighing, and delivery, £2 17/8 ; rent
4 weeks, £1 13/4 ; stamp and petty charges,
£1 15|; commission, 24 per cent; and brokerage,
# per cent.
Required the form of the Invoice, and Account-
sales; cost of the shipment at New York; net
proceeds of the consignment in London ; and the
gain ; exchange between New York and London
being 10 per cent above par.
•Ans. $ Cost of shipment.
:E Net proceeds.
$ Gain.
RECEIPTs.
A RECEIPT is a writen discharge of the whole, or
part of a debt, in which the amount is expressed in
words, and underneath in figures, as a check on each
other, and to prevent mistakes.
It is a prudent precaution never to pay money
without having such an acknowledgment, as the best
security against forgetfulness or imposition.
ACCOUNTS CURRENT. I49
An Account CURRENT is a statement of the
mercantile transactions between two persons; disposed
in the form of debtor and creditor, which exhibits the
state of their affairs up to any given date.
The term Dr. is to indicate that the correspondent
is debtor for the sums on the left, and the term Cr. to
indicate that the correspondent is creditor for the
sums on the right. The word To, is employed to
denote debtor, and the word By, to denote creditor.
The difference between an account current and
any other, is simply that the former is an account of
continuous transactions from one period to another,
while other accounts embrace only particular things
of which the account current is the general depository.
The word current is in this case used to imply the
present state of an account in its course, or continued
progression. Accounts current are generally rendered
every six or twelve months, and it is common to
charge interest on such sums on the debtor side as fall
due prior to the time of making up the account, and
to allow interest on such sums on the creditor side
as are payable prior to the time of making up the
aCCOUnt.
There are two ways in which an account current
may be arranged. In the one, the interest due on
each sum is placed opposite to it ; in the other, the
interest due is subjoined at the foot of the page, and
the difference between the Dr. and Cr. sides is carried
to the proper sides of the account current.
13 *
FO R M OF A N A C C O U N T C U R. R. E. N. T.
Dr. James Hill & Co., New York, in Account Current with W. Watts, to Dec. 31, 1838. Cr.
1837. S | S I837. S | *
June 30, To balance of last account, . . . . $ 4,163 00 sº 157 55||Aug. 10, By met proceeds, 20 tierces Coffee, per --
juſy %|To you draft to H. fiji, due Aug. 13, "| "Gia Điſol iſ 33 "| "Louisa, due sept. io. . .”. : 1,968 00||12| 36 72
ſt 9, To goods, per Jane, due Oct. 9, . . . 3,609 60 83| 49 93|| 1, 20, By your remittance on J. Austin, due 1,680 00| 82 22 96
Oct. 10, To cash paid Home on your account, 362 40| 82| 4 94 Oct. 10, . . . . . . . . . . 3.
// 20, To insurance on ship Hope, . . . . I57 92 Sept. 15, By net proceeds, 17 Hhds. Sugar, per
Dec. 3i. To postages and petty expenses during S 40 y Hercules, due 'oct. 15, . --- rº | 1,142 40|77|| 14 65
this half year, * * * * * * * 1, 20, By Cash received from Johnson on your 1,248 00|102| 21 21
To commission, # per cent on $4,128 10 20 64 account, . . . . . . . . . . 5
paid on your account, . . . . . . Dec. 31, By Balance of interest carried to your 13] 20
To balance of interest, to date, 131 20 debit, . . . . . . . . . . .
By balance due W. W., carried to new
account, ...”.” & 3,029 16
9,067 56 926 74 $19,067 56 226 74
NEw ORLEANs, Dec. 31, 1838. Errors Excepted,
W. WATTS,
g
C H A P T E R X. I.
PRINCIPLEs of Book-KEEPING.
CoMMERCIAL Book-KEEPING is the art of recording
the transactions of persons in trade, so as to show at
all times the actual state of their affairs.
To accomplish this object a merchant’s books should
contain the following information, viz.
1. The nature and extent of his property originally
embarked in trade.
2. The debts owing to him — including bills or
promissory notes — and also those which he owes to
others — including his acceptances.
3. The daily progress of his business or the changes
and variations which his property undergoes in the
course of his commercial transactions.
4. His gains and losses from year to year and the
increase or decrease of his capital.
The method of book-keeping which answers these
purposes, must be founded upon the principles of
152 PRINCIPLES OF BOOK-KEEPING.
double entry; and the plan which exhibits the above
particulars in the most simple and perspicuous manner,
is the best adapted to the nature of the business.
A statement of any transaction written in the proper
book, or transferred from one book to another, is called
an entry.
An account, whether of persons or things, is a
systematic statement of all the particulars relative to
that person or thing by which the property of a con-
cern has been affected ; the debit items being entered
on the left and the credit items on the right hand side
of the page. The terms Dr. and Cr. are used to
denote the increase or decrease of an account, and as
they are of a contrary nature, to add to the Dr. is
equivalent to taking from the Cr. side.
The most important book of accounts, and to which
all the rest are subservient, is called the LEDGER.
In every art or science there are certain fundamental
principles which must be first clearly impressed upon
the mind before any sensible progress can be made in
its attainment. This remark is particularly applicable
to our present subject. There is one prominent
defect in the ordinary methods of teaching book-
keeping, which is, that rules are substituted for reasons,
and particular forms are confounded with general
principles. -
The principles of double entry are unfolded in the
ledger only — the journal being merely a prepara-
tory book — it must be obvious, therefore, on a
moment’s reflection, that the nature, object, and
arrangement of the accounts in the ledger should be
PRINCIPLES OF BOOK-KEEPING. 153
the first, and not, as is usual, the last thing to which
the student’s attention is directed. The book-keeper
always considers the effect of an entry as it regards the
ledger; and this leads him to select the true Drs. and
Crs. But at school the art is too often taught me-
chanically—the learner's knowledge being based upon
certain superficial rules for journalizing and posting ;
and when he enters the counting-house, he discovers
that all he knows respecting accountantship is of little
practical utility.
If a person has a clear and comprehensive idea of
the various applications of Dr. and Cr. — which he
never can have until the ledger is perfectly familiar to
him — the forms and details of the subsidiary books
will be understood as soon as seen ; and he will expe-
rience no difficulty in journalizing the most compli-
cated and intricate transactions. Unless the abstract
principle of double entry be fully understood and
clearly comprehended by the learner, before he is
embarrassed with the process of journalizing, his
knowledge will necessarily be superficial and im-
perfect.
The chief difficulty which learners experience in
arranging the journal, arises from the want of a com-
prehensive and accurate knowledge of the nature and
use of the accounts in the ledger. In our view of the
subject, this difficulty would be completely obviated
by “beginning at the end ; ” that is, instead of pur-
suing the ordinary plan, let the learner first obtain a
thorough mastery of the leading principles of the
science as they are developed in the ledger, and then
proceed to its details, -
154 EXPLANATION OF THE LED GER.
— Dr. — S T o C K . — Cr. —
This account is simply a statement of the merchant's affairs on commencing
business. It represents the entire value of his capital in trade.
On the Dr. side, or in the left hand money On the Cr. ide, or in the right hand money
colºnin, is entered the amount of his debts or | column, is et tered the gross amount of his
liabilities, if any. property or his assets.
*** The difference or balance, is the merchant's real worth, or net capital.
— Dr. — A. B. — Cr. —
The object of personal accounts is to show the state of the transactions
between the merchant and individuals with whom he has dealings on credit.
On the r. side is entered those sums for
which yo have become inciebted to him, or
which he as paid to you.
On the T) r. side is entered the sums for which
the person has become indebted to you, or those
which you have paid to him; and
*** The difference between the two sides is what he owes you, or what you
owe him, as the case may be, and is called the balance of the account.
— Dr. — C A s H. — Cr. —
The object of this account is to show the cash in the merchant's possession.
On the Cr. side is entered all monies paid out
On the Dr. side is entered the cash on hand -
or otherwise disposed of.
at the beginning, and all sums which the mer-
chant receives.
*...* The balance or difference, at any period, is the cash on hand.
— Dr. — BILLS RECEIVABLE. — Cr. —
The object of this account is to show the amount of bills on hand.
On the Dr. side is entered the amount on On the Cr. side is entered the amount of every
hand at the beginning, and also all bills which such bill disposed of, or for which he receives
the merchant receives. payment.
*-
, the merchant in notes and acceptances.
*** The balance shows what is due tº
EXPLANATION OF THE LED GER. 155
— Dr. — BILLs PAYABLE. — Cr. —
The object of this account is to show what the merchant owes in notes or bills.
The Dr. side contains the amount of such bills On the Cr. side is entered the amount of all
as he has paid, or otherwise retired from circu- notes or bills issued by the merchant.
lation. .8
• {
i
*mºm-mººn sºm-m-sº *-i-º-º-º-º-º-º-º-º-º-º-º-º-º-º-º:
*** The balance is what the merchant owes in bills or acceptances.
— Dr. — MERCHANDISE. — Cr. —
The object of this account to ascertain the gain or loss by the purchase and
sale of merchandize. -;
*-*-ºs.
i
On the Dr. side is entered the amount of all On the Cr. side is entered the proceeds, that
goods purchasel, and the charges connected is, the amount of all goods sold or otherwise
with the original cost. ~) disposed of.
! |
1.
*** The value of the goods unsold—if any—is the balance of this account, and
after it is entered on the Cr. side, the difference is gain or loss, as the case may
be, and is periodically transferred to the proper side of Profit and Loss account.
— Dr. — PROFIT AND LOSs. — Cr. —
This is simply a branch of the Stock account, its object being to collect the
individual augmentations and diminutions of the capital.
On the Dr. side is entered every item of loss On the Cr. side is entered every item of gain
which may occur in the course of the business. which arises from the business.
*m-mºmº-º-º:
*** The difference is the net gain or loss. At every general balance, all the
gains or losses which may appear at the Debit or Credit of any other account in
the Ledger are transferred to the proper side of Profit and Loss. The result is
then transferred in one sum to the Stock account, and shows the net gain or loss,
| as the case may be.
Hous E ExPENSEs, or PRIVATE Account, is also
a branch of Stock account, its use being to record all
the moneys or other property withdrawn from the
business for private purposes, which is transferred at
every general balance to debit of stock.
I56 ADVENTURES.
CoMMIssion, INTEREST, CHARGES, &c. are simply
subdivisions or branches of the Profit and Loss ac-
count ; the result of each being transferred, at every
general balance, in one entry, to the proper side of
Profit and Loss.
On the Cr. side of CoMMIssion, are entered all
sums received for transacting business for others.
There are seldom any entries on the Dr. side. The
result is therefore gain.
The INTEREST Account is debited for all sums
paid by the merchant for interest on money borrowed,
discounts, &c., and is credited for all sums received
for interest on debts due to him, discounts allowed to
him, &c. The result is either gain or loss, and is
transferred accordingly.
The account of CHARGES, contains on the Dr.
side all sums paid for rents, clerk’s salaries, carriage
of goods, postages, advertising, &c.; and on the Cr.
side such sums as you charge your correspondents for
postages, &c. The result is loss, and is transferred to
the Dr. side of Profit and Loss account.
ADVENTUREs.
When goods are consigned to an agent for sale, at
the risk of the owner, it is necessary to open several
accounts which do not occur in domestic trade. A
merchant’s Ledger should exhibit a true statement of
every kind of property which belongs to him, and
COMMISSION ACCOUNTS. 157
point out the circumstances under which he possesses
it. Therefore, goods sent abroad on consignment must
be entered so as to show the situation and value of
such property. For this purpose it is usual to open
an account for the shipment under whatever title may
render it most distinct ; as, ADVENTURE TO ; Or
, (naming the place,) or CoNSIGN-
MENT per , (naming the ship.)
The following is an exemplification of this class of
accounts as they are arranged in the Ledger.
SHIPMENT To
— Dr. — A DVENTURE TO e — Cr. —
The object of this account is to show the gain or loss on the shipment.
On the Dr. side is entered the cost or value of On the Cr. side is entered the returns, that is,
the goods shipped and all charges upon them. the net proceeds of the goods when sold.
*** The difference is gain or loss, and is transferred, when the account is
closed, to the proper side of Profit and Loss.
In joint adventures or company accounts, when you
are the manager, debit your partners for their respec-
tive shares, and the shipment, under its appropriate
title, for your share ; but when you are not the man-
ager, enter your own share only.
CoMMISSION A Coounts.
When a merchant transacts business as an agent or
factor and receives goods to sell on commission, the
value or cost of such goods is not entered on the Dr.
side of his ledger, because the goods do not belong to
14
158 COMMISSION ACCOUNTS.
him. In this case an account is opened for the Sales,
under some appropriate title ; – as A. B.’s Sales, or
Sales per ship , (naming her,) or Sales No. 1.
Sales JNo. 2. &c., distinguishing each individual’s con-
signment by the number. Such accounts are debited
for all charges incurred upon the goods, including the
agent’s commission ; and credited for the total amount
of sales. The difference between the two sides,
when the goods are all sold, is the net proceeds, due
to the consigner.
If the account is to be balanced before the goods
are all sold, debit the consigner for the charges in-
curred and credit him for the amount of sales up to
the time when the balance is struck.
— Dr. — A. B.’s SALEs. — Cr. —
The object of this account is to ascertain the net proceeds of goods received
from A. B. and sold on his account and risk.
On the Dr. side are entered all the charges paid On the Cr. side is entered the total amount of
by the agent on such goods, including his com- I the sales and any other returns.
mission.
*** The difference is the net proceeds. The account is closed by transferring
the net proceeds to the consigner's personal account.
If the agent or factor advances money on goods
consigned to him before they are sold, he must enter
the amount to the debit of his employer's personal
account, and credit it as above for the net proceeds.
Instead of opening a separate account for each con-
signment, or for each kind of goods, some book-
keepers open only one account for all sales, on com-
~
PRINCIPLES OF DOUBLE ENTRY. 159
mission, under the general title of Sales of Consign-
ments ; which is credited for all sales, and when any
account-sales is made up, is debited for the charges,
commission, and the net proceeds. In this case the
particulars of each individual consignment are entered
in the Sales Book. -
In the classification and arrangement of accounts in
the ledger, property may be considered as a whole,
composed of various parts. The whole mass or capital
is technically called Stock. The component parts are
Cash, Bills Receivable, Debts Receivable, Goods, &c.
The design of book-keeping is to show the mer-
chant at all times the value of his whole capital and
of every part of it. Stock account records the entire
capital, abstractly considered, and the personal and
property accounts record the component parts of
which it is composed.
Property in trade is in a state of continual transfor-
mation. Purchases convert cash into goods; and
sales re-convert goods into cash. Or, if credit is
given, the changes are still more numerous. Pur-
chases create personal creditors; sales convert goods
into personal debtors ; receipts convert personal
debtors into cash ; whilst payments destroy cash and
personal creditors. The introduction of bills would
multiply the changes still more ; but all these meta-
morphoses and destruction of the parts resolve them-
selves into the single case that in every transaction
two accounts are affected, the one receiving what
the other communicates. The imparting account is
160 PRINCIPLES OF DOUBLE ENTRY.
always creditor, and the recipient account always
debtor, so that debtor and creditor must perfectly
equilibrate.
All the component parts of property are distributed
into Drs. and Crs. ; the positive parts constituting
the former and the negative * parts the latter. If,
therefore, for every debtor there must be an equal
creditor, it follows that the respective sums of these
equalities must always be equal. For instance, when
a person becomes indebted to me, the amount is
placed to his debit ; and, if for money paid, it must
also be entered to the credit of Cash; if for goods
sold, to the credit of Merchandize ; or in whatever way
the debt arises it is entered to the credit of some other
account. And, on the contrary, when we become
indebted to any person, the amount is placed to his
credit ; and if for money received, it is also entered
to the debit of Cash ; if for goods bought to the debit
of Merchandize. In this manner it is evident that
every item in any account corresponds to some other
item on the opposite side of a different account, and
consequently, if all the accounts be added at any
given period, the aggregate of the Dr. sides of the
ledger will be equal to that of the Cr. sides.
The clear and simple principle of the equality of
the whole to the sum of its parts is, therefore, the
basis of double entry. The equality of Drs. and Crs.
is the immediate but less obvious consequence of this
principle and may be considered as the general law
for its observance. Every transaction being virtually
a transfer between two accounts, it must be entered to
* By positive parts is meant Effects, and by negative parts, Debts,
PRINCIPLES OF DOUBLE ENTRY. 161
the debit of one and to the credit of the other. These
two balancing entries are made in the ledger, and
they comprise all that is systematic in the Italian
method. The entries in the daily, or subsidiary,
books are merely preliminary steps, totally uncon-
nected with the principle and proof of accounts.
Suppose a merchant’s capital, on commencing busi-
ness, to consist of the following items : —
Cash . . . . . . on hand . . . . . $10,000
A. B. . . . . . . owes him . . . . 5,000
Merchandize . . . valued at . . . . . 10,000
$25,000
In this case, on opening his books, we should enter
to the credit of Stock, the aggregate amount of his
property, $25,000, and debit CASH, $10,000, MER-
CHANDIs E, $10,000, and A. B. $5,000 thus : —
— Dr. — S T O C K . — Cr. —
By Sundries . . . . . 25,000
— Dr. — C As H. — Cr. —
To Stock . . . . . . 10,000
tºº Dr. *E* A. B. ass=sº Cr. &º
To Stock . . . . . . 5,000
— Dr. — M E R C H A N D I Z E. — Cr. —
To Stock . . . . . . 10,000
162 PRINCIPLES OF DOUBLE ENTRY.
Cash and Merchandize are debited for their respec-
tive value, and A. B. for what he owes; and Stock
is credited for the total sum ; whence it is plain that
the accounts are in a state of equilibrium and so far
show, not only the amount of the whole capital, but
the value of each particular kind of property of which
it is composed. In like manner all the changes and
alterations that his affairs can possibly undergo, will
admit of proper Drs. and Crs. in conformity to each
other. For instance, suppose he sells his goods for
$12,000, and receives payment in CASH ; we should
debit Cash, for the amount received, $12,000, and
credit MERCHAND1ze, for the goods sold, $12,000,
and the accounts would stand thus : — -
— Dr. — S T O C K. — Cr. —
By Sundries . . . . . . 25,000
— Dr. — C A s H. — Cr. —
To Stock . . . . . . 10,000
To Merchandize . . . . 12,000
*=- Dr. - A. B. - Cr. -
To Stock . . . . . . . 5,000
— Dr. — M E R C H AND 1 z E. — Cr. —
To Stock . . . . . . . 10,000 | By Cash . . . . . . . 12,000
By this arrangement all that is requisite in account-
antship is obtained in the most clear and concise
PRINCIPLES OF DOUBLE ENTRY. 163
manner. If you would ascertain the state of your
cash transactions, you have only to subtract the
amount of the Cr. from the Dr. side; the difference
is the cash on hand. If you would know whether
you have gained or lost by the purchase and sale of
merchandize, or any other description of property,
you have only to add the value of what remains unsold
to the credit side of its account, and subtract the sum
total of that side which is least, from that which is
greatest, and the difference is the gain or loss.
The chief skill in book-keeping lies in a judicious
arrangement of the accounts in the ledger ; the
process of journalizing and posting being mere matters
of routine. Every diversity of trade or business will
necessarily require some modifications in the accounts
peculiar to itself; but a steady adherence to a few
general principles, such as the following, will enable
the young book-keeper to perform his duties in a
correct and satisfactory manner.
1. An account must be opened” for every individ-
ual or firm with whom you deal on credit; in other
words, every person must be debited for what he owes
you, and credited for what you owe him.
2. An account must be opened for every description
of property which forms a part of your original cap-
ital, or which by purchase comes into your possession.
But when no advantage is derived from keeping the
* To open an account is to enter its title for the first time in the
ledger; after which the items are posted to it as the transactions
OCCUIT,
164 PRINCIPLES OF DOUBLE ENTRY.
gain or loss on each kind of goods, distinct, they
may be classed under one head; thus, instead of
opening separate accounts for Cotton, Sugar, and Flour,
all the transactions in these articles might, with equal
propriety, be recorded under the general title of
MERCHANDIZE ; and instead of separate accounts for
Houses, Lands and the like, a record of such property
may be kept under the more comprehensive title of
REAL ESTATE.
The accounts of property must be debited for the
cost or value of what is on hand at the beginning, and
also for what is afterwards purchased, with all charges
connected with the cost; and credited for the value
of what is sold, or in any way disposed of, together
with the returns that particular kind of property has
produced. -
One object of book-keeping is to know in what
manner your property is invested, whether in ships,
goods, or real estate, and as in the course of trade it
is continually varying, it becomes necessary to keep
an exact register of these variations. Another object
is to ascertain whether you are losing or gaining; how
much you have gained or lost during any given period,
and by what particular transactions the gains were
made or losses sustained. These objects are accom-
plished by keeping an account of property of every
kind as above explained.
3. An account must be opened for Bills Receiva-
ble and another for Bills Payable, upon the same
principle that an account is opened for cash.
Bills receivable, are promissory notes, or accept-
PRINCIPLES OF DOUBLE ENTRY. I65
ances, payable to the merchant, or for which he is to
receive payment.
Bills payable, are promissory notes, or acceptances,
which the merchant has issued, and for which he has
to provide payment.
4. Every description of outlay for which no return
is to be received, or of income for which no property
is exchanged; such as store rent, clerks’ salaries,
postages, interest paid or received, commissions,
discounts, &c., must have an account opened for it
in the ledger; but if the total sum only is required,
such receipts and disbursements may be entered at
once in the Profit and Loss account.
5. Every transaction must be entered twice in the
ledger; that is, on the Dr. side of one account, and
on the Cr. side of some other acceount, or accounts.
This rule is absolute and universal.
6. When the value or cost of any kind of property
or adventure is entered on the Dr. side of an account,
it must be entered on the Cr. side of the same account
when the property is disposed of, or transferred.
When any debt contracted is entered on the Cr.
side of an account, it must be entered on the Dr. side
of the same account when it is paid, or discharged, and
vice versa. For instance, suppose I purchase 50 bags
cotton, I may in the first place enter its cost to the
debit of the general account of Merchandize, or open
an account for this article under the title CoTTON ;
but when I sell or otherwise dispose of it, the account
which was debited for its cost must be credited for the
returns.
166 PRINCIPLES OF DOUBLE ENTRY.
The following transactions are arranged in the form
of a ledger, for the purpose of illustrating the abstract
principles of double entry.
— Dr. amº S T O C R tº tº- Cr. tº-º
Capital invested . . . 9,000
wº- Dr. * A. B. *- Cr. tºmº-º-º:
ſº ſº
He owes me : — ; I owe him: — . . . *}
(*#) 110
tºº-ºº. Dr. tº-mºmº C. D. * Ch". *
1,000 ſ 3,040
4,540 3,500
He owes me: — . . 2,000 I owe him : — & © 1,500
1,500 1,000
1,000 U 1,325
sºm- Dr. * C A. S H g sºmsº Cr. *
2,875 1,500
9,000 3,500
Receipts : — . . . . 4,040 Disbursements: — . . 2,225
3,500 7,360
5,900 1,440
— Dr. — C o TT O N. — Cr. —
4,540 9,000
7,360 4,500
Purchases: — . . . . 1,000 Sales: — . . . 5,000
4,000 900
U 250 - 150
— Dr. — S U G A R s. — Cr. —
5,725 4,500
Purchases: — #; Sales: – tº e º s 3;
{ijöö 50

PRINCIPLES OF DOUBLE ENTRY. I67
The entire property of a concern is represented by
the ‘Stock’ account, and the assets at any given period
—deducting the liabilities—can be nothing more or
less than a substitute for ‘Stock’ account, increased
by the gains or decreased by the losses. Thus, on
investigating the above transactions, the result is as
follows:
— A. B. — — C. D. — — CASH. —
Has received $7,675 Received from him $ 10,365 Received . . $25,315
and paid 6,240 I have paid him . . 10,040 Paid . . . ]6,025
He owes me $ 1,435 I owe him $325 | Cash on hand $9,290
— Corto N. — — SUGARs. –
The sales amount to $19,550 The purchases amount to $ 10,050
The purchases . . 17,150 The sales . . . . . . 9,050
Gain on Cotton . . . $ 2,400 Loss on Sugars . . . $ 1,000
In double-entry book-keeping the merchant’s real
worth is ascertained by two distinct processes, the
exact agreement of which constitutes a satisfactory and
independent proof that the accounts are correct, so
far as they relate to the ledger, namely:-
1. If to his original stock or capital you add his
net gain, or deduct his net loss, the result will be
his actual worth.
2. If from his Effects, you deduct his Debts, the
difference will be, as before, his actual worth. This
difference will include his original capital and his gain
for the given period—if his business has been profit-
able—but it will exhibit his original capital diminished:
by his losses for that period, if his business has been
the reverse.
16S SUBSIDIARY BOOKS.
For an illustration of these two propositions, take
the preceding example.
— Stock. — — EFFECTs. –
Capital invested . . . . $9,000 Cash on hand . . $9,290
A. B. owes . . 1,435
Gain on Cotton $2,400 $10,725
Loss on Sugars 1,000
—DEBTs. –
Net gain . . . $1,400 Due to C. D. . . 325
Present worth is . . . $10,400 Present worth . . $10,400
SUBSIDIARY Books.
In the infancy of commerce, mercantile transactions,
though varied in their nature, were on a small scale as
regarded any particular department. The same indi-
vidual did business in a number of articles, but in none
to an extent to require separate books of account.
Hence the practice prevailed of recording the pur-
chases and sales, the receipts and payments of cash, in
short all the transactions in trade, in one book, called
a WASTE Book.
In process of time, as commerce extended and
mercantile affairs took a wider range, separate books
were required for particular departments of business;
such as a CASH Book, for the cash received and paid,
and a BILL Book, for the bills received and issued.
When from the gradual improvement in the manage-
ment of counting-houses these books were kept in a
manner to supply all that was necessary for the
Journal, entries, the use of the Waste Book was
dispensed with.
SUBSIDIARY BOOKS. 169
In every counting-house the number of books
is varied and multiplied according to the different
branches of business in which the parties are engaged.
To enumerate all these, and to explain their nature,
would be a task as endless as it is needless; for the
general principles of book-keeping being once well
understood, it will be found very easy to apply them
to all the possible cases that may occur.
The subsidiary books in general use are:—
1. The Cash Book; containing only the cash
transactions. -
2. The Bill Book; which contains a daily record
of the bills received and accepted.
3. The Invoice Book ; containing the particulars
of goods purchased.
4. The Book of Shipments; containing the par-
ticulars of goods exported or sent abroad on consign-
Inent.
5. The Account-Sales Book; containing the sales
of goods on commission ; and *
6. The Day Book; which is used to record every
transaction that cannot properly be entered in any
other subsidiary book.
THE JOURNAL is simply an epitome of the entries
contained in the daily or subsidiary books, with the
Drs. and Crs. pointed out in such a manner that the
total amount of each transaction may be easily trans-
ferred to its respective account in the ledger.
1 5
170 SUBSIDIARY BOOKS.
|
The principal use of the journal is to abridge the
ledger; for by classing similar transactions together,
one line in the month, under each head, will gen-
erally be all that is required.
The journal of a mercantile house ought to open at
the beginning of each year, with a summary statement
of the merchant’s assets and liabilities. The form of
such an entry is as follows:— &
SUNDRIEs Dr. to Stock.
Cash . . . . . . . . . for amount on hand.
Bills Receivable . . . . . for amount owing to you.
Merchandize . . . for amount on hand.
A. B. and C. (personal debtors) for sums due by them.
Stock Dr. to Sundries.
To Bills Payable . . . . . for acceptances unpaid.
To C. D. and E. . . . . . for sums due to them.
In the modern practice of book-keeping the first or
daily entries are made in the subsidiary books;–thus,
the money receipts and payments are entered as they
occur, in the Cash Book ; the bills received and
accepted in the Bill Book; the purchases of goods
in the Invoice Book, and the sales in the Sales Book,
&c. The process of forming the entries from these
books, is called Journalizing ; and it is usually per-
formed once a month. Hence the Journal contains a
monthly abstract of all the transactions classified and
arranged under distinct heads.
The rules for distinguishing Drs. and Crs. are
inferred from the nature of the accounts in the ledger.
SUBSIDIARY BOOKS. I 71
THE LEDGER is merely an index to the journal,
exactly as the journal is an index to the subsidiary
books, and it should be kept in the most concise form.
The insertions in it ought never to exceed a line each,
or to contain more than the title of the entry in the
journal to which they refer. On opening a page in
the ledger, a person unacquainted with book-keeping
is apt to consider this brevity unsatisfactory; and it
was formerly the practice to add in each line, a few
words in explanation of the entry. This method is
still followed in some counting-houses, and such ex-
planations are certainly conducive to clearness; but
they are practicable only to a limited extent;-when-
ever the transactions are numerous and varied they
should be omitted.
As the ledger contains a complete abstract of every
transaction in trade, arranged under the respective
title to which it belongs, in the form of Dr. and Cr.,
the true state of a merchant's affairs can at any time
be made out from this book alone. All the items
which are dispersed in different parts of the subsidiary
books are collected and reduced each to its distinct
head; so that the state of any particular account, as
well as the result of the whole, may be seen at one
view. •
Thus, in the CASH Account, all moneys received
during the year are entered from time to time on the
left-hand side ; and moneys paid during the same
period, on the right-hand side—the difference is the
cash in hand. -
In the personal accounts, every sum for which an
individual is indebted to me is entered on the left-hand
172 SUBSIDIARY BOOKS.
side; and those for which I am indebted to him, on the
right-hand side—the difference shows the state of his
aCCOunt. - .
In the accounts of property, the original cost or
value, with all charges connected with its cost, is
entered on the left-hand side, and all freights, rents,
profits, dividends, or other returns arising from such
property are entered on the right-hand side; hence
the loss or gain is seen at once.
The merchant is by this means enabled to compare
the past and present expenditures, and to ascertain if
his business is in a prosperous condition, or whether
any particular branch of it requires curtailment. In-
deed, the order, arrangement, and disposition of the
ledger, is such, that all the accounts may be adjusted
at any moment with the utmost precision, and the true
state of every transaction clearly exhibited.
C H A P T E R XII.
EQUATION, or AvrBAGE TIME of PAYMENTs.
To find the average time at which several sums of
money due at different periods may be paid, so that
no loss shall be sustained by either the debtor or
creditor, is called equating, or reducing the times of
payment to one. For example :-
A. owes B. $440, of which $200 is payable in 2
years, $160 in 34 years, and $80 in 43 years. At
what period may B. receive the whole amount, so that
the interest accruing on the sums which are overdue,
may be counterbalanced by the interest on the sums
which are not yet due
The sum due at the end of the first period, if not
paid till the last, will have the interest accruing on it
during the intermediate time. The sum due at the
second period, if not paid till the last, will likewise
have the interest accruing upon it during the interval
between the second and last period; and so on. Now
these several interests added together, will give the
whole interest, if all the money were to be paid at the
last period. But this would not fulfil the intended
purpose, which is to discover a precise intermediate
15 %
174 EQUATION OF PAYMENTS.
time, at which the interest due upon the portions
payable before that time, would amount to the same
sum as the interest receivable upon the portions
payable after that time. By calculating interest upon
the different portions from the time of payment to the
day when the last sum is due, we have found what
amount of principal and interest would be due if the
whole debt were to be discharged at that period. To
fulfil the intended purpose and annul the interest, we
must ascertain what number of days’ interest upon
the entire principal will equal the aggregate interest
upon the individual sums; and anticipating by that
number of days the time at which the last payment
will be due, we ascertain precisely the period at which
the interest due upon the amount forborne is equal to
the interest upon the portions anticipated; in other
words, we have discovered the average or mean time
of payment.
RULE.—JMultiply each debt by the time it has to
run till it becomes due, and divide the sum of the
products by the total amount ; the quotient is the
average or equated time of payment.
Thus the average time of payment in the preceding
example is ascertained as follows:—
200 × 2 = 400
160 × 3.} = 560
80 × 44 = 360
440 1,320
Then 1,320, the sum of the products, divided by 440,
the total amount of the debt, gives 3 years, which is the
average time of payment. -
EQUATION OF PAYMENTS. 175
Bought goods as follows, viz.: $.50 payable the
1st of May ; $64 the 4th of June ; $86 the 1st of
August, and $90 the 5th of September ;-required
the equated time for paying the whole sum.
May 1st,........ $50 *
June 4th,.......... 64 × 34 days = 2,176
Aug. 1st, .......... 86 × 92 “ = 7,912.
Sept. 5th,.......... 90 × 127 “ = {I,430
290 21,518
The sum of the products is 21,518, which, divided by
290, the amount of the debts, gives 74 days from the first
of May—that is, July 14th.
Bought goods as follows at six months’ credit ;
what is the average time of payment
IXates. Sums. Days. Products.
May 1,............ 5
“ 12,.......... 150 × 11 = 1,650
“ 19,..........120 × 18 = 2,160
“ 27,.......... 100 ×26=2,600
$420 $6,410
The amount of the products, 6,410, divided by 420, is
equal to 15 days from the 1st of May; therefore, the
average time of payment is six months from the 16th of
May.
Proof–Multiply each purchase made before the
equated time, by the number of days from its date to
the equated time. Multiply each purchase after the
* The equated time may be found by reckoning either from the present
period or from the time that the first payment becomes due. In the latter
case the time or multiplier of the first payment is nothing.
The day from which you compute, is not reckoned; but the day to which
you compute, is always included.
f
gº
176 EQUATION OF PAYMENTS.
equated time, by the number of days from the period
of equation to the time of the purchase, and if the
sum of the former products be equal to the latter, the
work is right.
CASE II.--When goods are purchased at different
periods and at different terms of credit, find the time
when each amount becomes due, from which make an
equation as before.
Bought goods as follows:–What is the equated
time of payment for the whole amount
Date. Amount. Terms. When due.
Feb. 1, $100 at 120 days.............. June 1
Feb. 15, 150 “ 90 “ .............. May 16
May 7, 70 “ 60 “ .............. July 6
Aug. 12, 90 “ 80 ‘‘ .............. Oct. 31
May 16,..................... $150
June 1,........................ 100 × 16 = 1,600
July 6,.......................... 70 × 51 = 3,570
Oct. 31,.............. 3-......... 90 × 16S = 15,120
410 20,290,
20,290 –– 410 = 49 days, from May 16th, will bring the
average time of payment to July 4.
CASE III. — When partial payments are made
before the eapiration of the term of credit, to know
how long the balance may run to cancel the interest on
such payments.
1. Multiply the whole debt by the term of credit.
2. Multiply each payment by the time it has run
EQUATION OF PAYMENTS. 177
from the date of purchase, and subtract their products
from the product arising from the whole debt mul-
tiplied by the whole term of credit. Divide the
remainder by the balance due at the expiration of the
term of credit, and the quotient will show the time
that this balance may run to cancel the interest on the
payments made before maturity.
Bought goods amounting to $2,500 at 12 months’
credit ; at the end of three months, paid $400 ; at
the end of six months, $500, and at the end of eight
months, $200 ; when will the balance become due
2,500 × 12=30,000
400 × 3 = 1,200
500 × 6 = 3,000
200 × 8 = 1,600—5,800
24,200--1,400–173 months.
CASE IV.--To equate an account-current, so that
neither debtor or creditor shall be entitled to any
balance of interest.
Find the equated time of the Dr. and Cr. side ;
then multiply the smallest sum by the number of days
between these dates, and divide the product by the
balance of the account ; the quotient is days, to be
carried back or forward, as the case may require.
{G If the balance be on the side of the EARLIEST
date, count back from that date ; if on the side of the
LATEST date, count forward from that date.
I 78 EQUATION OF PAYMENTS.
A. B. owes me $600, due May 1 ; and I owe him
$800, due May 16. When will the balance be
payable, so that neither party is entitled to interest
$600 the smaller sum.
15 difference of dates.
200) 9,000 (45
9,000
The balance in this example is on the side of the
latest date, therefore, count forward 45 days from
May 16, which brings the equated time to June 30.
C. D. owes me $600, due May 16. I owe him
$800, due May 1. When can I pay the balance,
$200, so that neither party shall be entitled to
i
interest ?
$600 × 15 = 9,000 -- 200 = 45 days, which, sub-
tracted from the 1st of May, will carry the time back to
the 17th of March.
In this case, C. D.'s credit is greater than my
debit, and being first payable, it is evident that interest
will accrue from the 1st to the 16th of May on the .
amount, after which he will be entitled to interest on
the balance, $200, so long as the accounts remain
unsettled ; but if the accounts be settled on the 17th
of March, I shall pay $800, 45 days before it is due,
and he will pay $600, 60 days before it is due—the
interest of both amounts, for the time that they are
paid in advance, will be equal.
EQUATION OF PAYMENTS. 179
Average the following account, and ascertain the
time when the balance can be paid, so that neither
party is entitled to interest.

* Dr. smm.simº A. B. & Co. tºº Cr. cº-
May 6 To Cash T$600T MayT3TBy Cash $450
May 27 || To do. 700 May 29 | By do. 600
June 11 || To do. 500 June 15 | By do. . . . 300
Balance . 450
$1,800 $1,800
PRACTIOAL OPERATION.
PR. SIDE. CR. SIDE.
May 6,...... 600 May 12,...... 450
// 27,......700 × 21 = 14,700
| 1, 29,......600 × 17 = 10,200
June 11,......500 × 36 = 18,000 |
June 15,......300 × 34 = 10,200
1,350 20,400
1,800 32,700
32,700--1800 = 18 days from the 6th
May. Therefore the Dr. side of the
account is due 24th of May.
20,400 -- 1,350 = 15 days from the 12th
May. Therefore the Cr. side of the ac-
count is due 27th May.
The amount of the Dr. side, $1,800, is due by
equation May 24, and the Cr. side, $1,350, is due
May 27—difference, 3 days.
account, $450, is payable May 15th.
The balance of the
Thus :-
1350 × 3 = 4050 -- 450 = 9 days from May 24.
C H A P T E R XIII.
REMARKs on MERCANTILE LETTER WRITING.
A BUSINEss letter should be clear, explicit and
concise. There should be nothing defective, nothing
superfluous, nothing ambiguous. It should give full
information of every fact inquired into, without
digression, or unnecessary detail.
The proper characteristics of a commercial style
are neatness and perspicuity. Brevity also is de-
sirable, so far as may be consistent with the latter
quality; for a waste of words is a waste of time, both
to him who writes and him who reads.
In letters of business, the point at issue should be
stated first, nakedly and directly ; the explanations
and qualifications may come afterwards. If you have
decided to refuse a request, it is much better to state
your refusal at the outset of your letter, in the fewest
possible words ; then add as many regrets as you
think fit. Mr. Burke's speech at the hustings, upon
the death of one of the candidates, is a model for all
business communications. The fact is stated in the
very first line,—“Gentlemen, I decline the election; ”
the reasons then follow at half an hour's length.
COMMERCIAL CORRESPONDENCE. 181
In replying to a letter, discuss one subject fully
before you proceed to the next.
It is important that all orders should be clear and
explicit; and if their execution depend upon any
contingency, the correspondent must have full di-
rections how to act under any change of circumstances
that may be contemplated. This is necessary to
obviate misunderstandings and disputes. With the
same view, it is usual to recapitulate the principal
subjects of the letter replied to. In this, however,
merchants have also another object, which is to render
their letter-books, as far as possible, a history of their
business, for the advantage of ready reference after a
lapse of years, and for production in court with the
better effect, in case of litigation.
Accordingly, every letter should speak, as it were,
for itself, and give all the necessary particulars of the
transaction to which it refers. For the same reason,
merchants seldom arrange any important matters
verbally ; or, if they do, a letter is immediately
written, stating the nature of the arrangements made,
which is thus placed on record in the letter-book,
and is corroborated by the answer of the party con-
cerned. In the practice of letter-writing there are
some few points to be observed, which I shall briefly
notice.
In writing to his correspondents, a merchant should
begin a letter by referring to any former one to which
he has not yet received an answer; then give a
full reply to the letters he may have received in
the order of the dates, before he enters upon any
Inew matter.
16
I82 REMARKS ON
When he orders goods from a person from whom
he has not been accustomed to purchase, it is proper
to mention the quantity, quality and price, and the
mode of conveyance. -
When he consigns goods, he must instruct his agent
at what price and on what terms he is willing to sell ;
and in what manner to remit the proceeds. If any
thing be reserved to his discretion, it should be ex-
pressed in such plain terms that there may be no
doubt where he is restricted, and where his power is
discretionary ; but it is not necessary when an agent
is in the frequent habit of doing business for the
merchant, to repeat such particulars in every letter.
The usual orders, if not countermanded, are under-
stood to be continued ; and some things may be
determined by the custom peculiar to the place.
When he receives bills from his correspondent, or
advice of drafts, it is not sufficient to notice them in a
general manner, in his answer ; the particulars should
be specified.
In giving orders for effecting insurances, he must
be exceedingly particular, as immediate dispatch is
necessary. He must mention the name of the ship ;
the master and voyage ; the amount to be insured on
the ship, cargo and freight ; the time at which it is
warranted safe, and the premium and policy.
When notice of bills being drawn or remitted is
given, the circumstances of date, time of payment,
and names of the parties concerned, should be mar-
rated in the letter.
Advice respecting the circumstances of other mer-
chants and their suspected deficiencies, is necessary
COMMERCIAL CORRESPONDENCE. I83
in confidential correspondence, but requires the utmost
prudence and caution.
Articles of public intelligence may be mentioned in
a letter of business, without any impropriety ; but
matters of friendship and private confidence never
should be, as circumstances may make it necessary to
read the letter to neutral persons.
In cases of dispute, the reasons upon which the
writer founds the justice of his claims should be clearly
stated, without any expression of acrimony or resent-
ment, such expressions being not only unavailing, but
even hurtful.
In letters containing a statement of drafts and
remittances, every sum for which an agent’s cor-
respondent is indebted to him should be distinctly
noted. If several articles are to be mentioned in the
same letter, add them, and write opposite to the sum,
placed to your debit. The merchant then specifies the
articles for which he is indebted to his correspondent
in the same manner, and writes opposite to them,
placed to your credit. -
There is a great deal of difficulty imagined, in the
construction of a mercantile letter, for which, in
reality, there exists no foundation whatever. Fine
writing, rounded periods, rhetorical flourishes, and
elaborate sentences, are as much out of place in a
business letter, as a lady’s cashmere shawl would be
at the mast-head of a frigate.
A confusion of ideas naturally begets a confusion of
language ; the first thing, therefore, to be done in
putting a narrative of commercial facts upon paper, is
to arrange those facts; so that every thing connected
184 ** REMARKS ON
with each transaction is joined to, and, as it were,
dove-tailed into it. The necessity for this arrange-
ment must be obvious ; but as the thing “in black and
white’ is more easily comprehended than by any
other means, I will give an instance of the right and
wrong way of doing the same thing.
NEw York, June 31st, 1838.
Messrs. Roberts & Co.
Liverpool.
Gentlemen, We acknowledge the receipt of yours of the
12th, 16th and 20th inst.
We observe that you have procured acceptance to our
draft of $1,000 upon Provost & Co. We also received your
account-sales of our 25 bales of cotton per Amelia, the net
proceeds of which, $2,506 is passed to your debit in account-
CUlrrent.
In yours of the 12th we received bill of lading of one
hundred casks of Ancona skins, marked B. and D. 1 to 100,
Shipped by the James, captain Green, which we have insured
agreeably to your orders for $1,500, at 13 per cent. On the
arrival of these goods, we shall effect the best possible sale
of them for your account.
By yours of the 20th we received instructions to pur-
chase 200 bear-skins, first quality, and here with transmit
you bill of lading and invoice of the same, amounting to
$1,506, at your debit in account-current. We have insured
these goods for $1,550, at 3 per cent, and shipped them by
the Rover, captain Cooper, which vessel will leave for your
port next Monday or Tuesday.
Your very obedient servants,
BALDw1N & DAvis.
An examination into the contents of this letter, will
exhibit the following summary of transactions.
Acceptance of draft remitted to Roberts & Co.
Account-sales received of goods consigned to them.
Charging their account with the net proceeds of
the same.
COMMERCIAL CORRESPONDENCE. 185
Receipt of bill of lading of goods consigned for
sale for their account.
Purchase of bear-skins for their account.
Insurance, invoice and bill of lading of the same.
In order to show how, for want of arrangement,
these transactions may be described in a way to
produce confusion only, let us imagine the following
letter to have been written, instead of the other.
Gentlemen,_We have received your three letters of the
20th, 12th and 16th of June, and observe in one of them,
that you wish us to buy 200 bear-skins of the best sort.
This has since been done, and we have shipped them on
board the Rover, captain Cooper. . In another, we observe
that Provost & Co. have accepted our draft for $1,000,
which we remitted you, and now we wait upon you with
the bill of lading of the bear-skins; and also beg to inform
you that the account-sales you sent us of our 25 bales of
cotton by the Amelia, is quite right. Accordingly we have
debited you with $1,506 for the skins. We have also insured
the hundred casks of skins consigned to us by you for
$1,500. The premium is 1% per cent. The amount of the
account-sales is $2,506. The amount of the invoice is
$1,506. We insured the bear-skins for $1,550, at # per
cent ; and we have charged your account-current with the
amount of the invoice and the account-sales. We received
in one of the said letters the bill of lading of the Ancona
skins, and we have insured them for $1,500, at 13 per cent,
and when we get the goods, we will sell them for you as
well as we can, observing at the same time, that they are
marked B. and D. 1 to 100.
We are, &c. &c.
Do not imagine that such a letter is too confused
and absurd to have ever been actually written. We
have seen much worse specimens than this in the
counting-houses of persons of no mean eminence in
the commercial world.
16 %
186 REMARKS ON
Every merchant ought to keep an exact copy of
all important letters; and the letters he receives
should be so carefully arranged, as, should he have
occasion to refer to them, he may be able to do so
without the loss of time required to search for them.
This facility is insured by folding the letters in a
uniform manner, and then endorsing each with the
name of the writer, the place and date, and the day
on which it was received, leaving a corresponding
blank whereon to enter the date on which it may be
answered. The form of an endorsement is as follows:
1838.
Col.IN, BLANC & Co.
Boston, 21st January.
Rec’d 23d Jan.
Jìns’d
This practice is universal, but we would farther
recommend that the principal subjects of the letter be
briefly noted immediately after the endorsement of
the date, &c., for example :
Remittance of $1,500.
Bill of lading Cotton per Fortuna.
Proposed adventure on joint account.
Now, by merely looking at the outside of the
letters, as they lie in the parcel, without untying the
tape, you have an index of their contents. These
remarks should be made at once, when the letter is
filed and docketed ; for delay in this respect, as in
every thing else, occasions ten-fold trouble.
COMMERCIAL CORRESPONDENCE. 187
In all well regulated counting-houses, the greatest
order and exactitude pervade every department of the
business. Not only letters, but invoices, account-
sales, bills and receipts, are endorsed, filed and ar-
ranged in such a manner that any paper which may
be wanted can be found in a moment. All docu-
ments appertaining to the transactions of the current
year are accessible at once. When the year ter-
minates, they are collected into separate parcels and
deposited in a box, on which the year itself, as 1838,
is painted. By this means each years’ papers are
kept distinct, all confusion is avoided, and any mer-
cantile document can be immediately produced.
Unless this uninterrupted regularity were systemat-
ically maintained, the business could not go on ; for
the accumulation of papers in a mercantile establish-
ment is so great, that they would completely bewilder
all concerned were they not thus arranged as soon as
received. The wheels would otherwise be clogged.
C H A P T E R XIV .
LETTERS of INTRoDUCTIon AND CREDIT — CIRCULAR
LETTERS — GENERAL CoRREs Pond ENCE.
NEw York, 4th JMay, 1838.
C. Holden, Esq.
Boston.
Dear Sir, The bearer of this is Mr. Edward Wat-
son, of the firm of Watson & Brothers.
In introducing to your acquaintance the nephew of
our esteemed friend, Mr. Bryce Watson, of Pittsburg,
so old a connection of your house as well as our own,
we feel it to be quite superfluous to claim for him that
friendly reception which we know awaits him at your
hands. -
We doubt not that you will feel the same interest
as we do in the prosperity of the above mentioned
firm, and be equally anxious to promote, to the utmost
of your ability, the particular objects of Mr. Watson's
visit to Boston.
We are, dear sir,
Yours very truly,
T. Holm Es & Son.
COMMERCIAL CORRESPONDENCE. 189
SALEM, 4th August, 1838.
Messrs. Napier & Son,
Bombay.
Gentlemen, Our highly respectable and esteemed
friend, Mr. John Favell of this city, having requested
an introduction to a Bombay house, to which he is
desirous of intrusting the settlement of some affairs of
considerable delicacy and importance, we beg leave to
refer him to you ; well convinced that we cannot more
effectually serve him, than by soliciting your best
influence and exertions in his behalf.
We are, gentlemen, yours respectfully,
REID & CURTIs.
*º-
Boston, 8th June, 1838.
Edward Smith, Esq.
JNew York.
Sir, Mr. Charles Burton, the eldest son of our
senior partner, being about to visit your port for the
purpose of embarking for Buenos Ayres, we are
sensible that we cannot better ensure to him such
polite attentions as are calculated to render his short
stay agreeable, than by introducing him to you. We
need scarcely say that we shall feel personally obliged
by any marks of kindness you may have the goodness
to evince towards this young gentleman, and by any
assistance it may be in your power to render him, in
making his arrangements for the voyage.
We remain, with much esteem, yours truly,
BURTON, OGLEBY & Co.
190 COMMERCIAL CORRESPONDENCE.
QUEBEC, 15th April, 1838.
H. Edwards, Esq.
Charleston.
Sir, We recommend to your particular favor and
attention, the bearer, Mr. Frederick Schmidt, eldest
son of Mr. Augustus Schmidt, of the highly respecta-
ble house of Schmidt & Meyer, of this city.
Our esteemed young friend is about to visit the
western States, by way of Charleston, on business for
the house; we therefore request you, most urgently,
to afford him your advice and assistance, and to render
his stay in your city as agreeable as possible. He is
steady and unassuming, and we are convinced that on
a near acquaintance will prove himself deserving of
your esteem and good will.
Command us freely in similar cases, and be assured
that we will use our best endeavors to do justice to
your introduction.
We are, respectfully yours,
STICKLER & Co.
NEw York, 15th ſlug. 1838.
Messrs. J. Phillips & Co.
JNew Orleans.
Gentlemen,_I have the pleasure of introducing to
your acquaintantance the very respectable firm of
Dugard & Co. of Montreal, whose senior partner, Mr.
James Dugard, is at present in this city, and purposes
to visit New Orleans. Any civilities or attentions you
COMMERCIAL CORRESPONDENCE. - 191
may be pleased to show him, I shall consider a favor
conferred on myself. -
I shall feel happy should the present introduction
lead to transactions mutually advantageous and agree-
able. I remain, your ob’t servant,
JoHN LUCAs.
LIVERPool, 31st July, 1838.
Messrs. G. Wallis & Co.
Savannah.
Gentlemen,_This will be delivered to you by
captain Purkis, of the ship Ceres, whom I beg leave
to introduce to your acquaintance. You will greatly
oblige me by giving him the preference, should you
have any cottons for shipment, while his vessel is
loading at your port.
The owners of the Ceres are my friends and cor-
respondents, George Carter & Co. of Hull.
Recommending captain Purkis likewise to your
good offices and attentions in other matters,
I am, gentlemen, your ob’t servant,
Jo HN BRIGGs.
LoNDON, 1st October, 1838.
Messrs. Bright & Co.
Bristol.
Gentlemen, We beg leave to introduce to you the
bearer of this letter, Mr. Richard Templeton, a
192 COMMERCIAL CORRESPONDENCE.
partner of the highly respectable house of Moore,
Templeton & Co. of New York, who is about to visit
your city for the purpose of extending the commercial
relations of his house. In strongly recommending our
friend to your notice, we particularly request that you
will not only forward his views by your influence and
advice, but that you will also render his stay as agree-
able as possible, by showing him every attention that
may be in your power. In case Mr. Templeton
should have occasion to take up any money, either
for travelling expenses, or operations of business, you
will please to supply him with funds to the extent of
five thousand pounds sterling,” taking his drafts upon
us at three days’ sight in reimbursement. We beg
that upon similar occasions, you will freely command
our services, and
Remain, gentlemen, faithfully yours,
G. LYNCH & Son.
ALBANY, 5th April, 1838.
Messrs. Harwood & Co.
JNew York.
Gentlemen, We have much pleasure in introducing
to your acquaintance, Mr. Frederick Meyer, of the
highly respectable firm of Meyer & Sons, Buffalo.
* Letters of credit, contain the amount of money to be advanced,
and the name of the person in whose favor they are granted ; the
receipt, or voucher, to be taken for it, and how it is to be reim-
bursed. If a merchant grant a letter of recommendation, he must
be so careful and guarded in expressing his meaning, that it cannot
be taken as a letter of credit.
COMMERCIAL CORRESPONDENCE. 193
This gentleman is on the point of commencing a
tour through the principal commercial towns in the
Atlantic States, with a view as well to business as
amusement. Should it be in your power to further
his objects in any way, we shall be particularly obliged
by your so doing : and shall be most happy, should
the introduction prove of mutual advantage to your-
selves and our young friend.
In the event of Mr. Meyer requiring a supply of
cash for his travelling expenses, be so obliging as to
accommodate him with any sum to the extent of
$1,000, taking his draft on us at three days’ sight for
the amount.
We remain, gentlemen, your very ob’t serv’ts,
G. THOMPson & Co.
LoNDoN, 16th July, 1838.
Messrs. Beriot, Brothers,
JNew York.
Gentlemen,_We request the favor of your furnish-
ing the bearer, lord George Ryder, with any cash that
his lordship may require during his stay in the United
States, to the extent of $10,000, taking his lordship's
receipt for the sums advanced, and placing the same
to our debit.
We refer you to our letter of this date, per ship
Francis, for his lordship's signature, and remain,
Gentlemen, respectfully yours, -
- HARDY & Cox.
17
194 COMMERCIAL CORRESPONDENCE.
RICHMOND, VA., 28th Aug. 1838.
Mr. George Symons, -
Philadelphia.
Sir, Permit me to introduce to your acquaintance
the bearer, Mr. John Phillips, who proceeds to Phila-
delphia on his way to England.
Should Mr. Phillips desire, you will please to
advance him any sum of money not exceeding $500,
taking his draft at three days’ sight on his house here,
Richards, Phillips & Co., in reimbursement.
I shall feel greatly obliged by such marks of civility
and attention as you may have it in your power to
show my young friend, whom you will find highly
deserving of your regards.
I am, sir, yours respectfully,
JoHN CARSTAIRS.
NATCHEz, 1st JMay, 1838.
Messrs. John Pope & Son, s:
JNew Orleans.
Gentlemen, I take the liberty of opening a credit
with you in favor of the bearer, Mr. John Ashton.
Any sum of money that this gentleman may require, to
the extent of $6,000, be pleased to advance on my
account, either against his receipt, or his draft on me,
to your order, as may be most agreeable to yourselves.
I am, gentlemen, your ob’t servant,
. T. CLARK.
COMMERCIAL CORRESPONDENCE. I95
CIRCULAR LETTERs.
LoNDoN, July 18th, 1838.
Jonathan Farr, Esq.
Liverpool.
Sir, I beg to inform you that, under the auspices
of the highly respectable house of Burtwell & Bro-
thers, I have commenced business as a broker for
colonial produce.
In soliciting the favor of your countenance and
support, I beg leave to assure you that no exertion,
assiduity, or attention, shall be wanting on my part,
to justify the good opinion of my friends, and to give
complete satisfaction to those houses who may intrust
me with their orders.
I have the honor to be, sir, your ob’t servant,
CHARLES HOPE.
LoNDoN, 1st Jan. 1838.
Messrs. Bell & Co.
Broad Street.
Gentlemen, We beg leave to acquaint you that
we have opened a house of general agency at Mobile,
under the firm of Young, Forbes & Co., the two
senior members of which have been for some years
established at Kingston, Jamaica, in the same line,
under the firm of Young & Forbes.
It is our intention to confine ourselves to commission
196 COMMERCIAL CORRESPONDENCE.
business, and we venture to solicit your countenance,
assuring you that the strictest attention shall be paid
to the management of any affairs which you may think
proper to intrust to our care.
We hope it will justify our confidence in addressing
you, that we are enabled to refer to the annexed list
of commercial friends, comprising houses of the first
standing both in Europe and America, on whose
consideration and support we have the advantage of
being permitted to rely. .
The signature of the only member at present in
England is subjoined; those of the resident partners
will be given in a circular from the island of Jamaica.
We are, gentlemen, your ob’t servants,
YouNG, FoRBEs & Co.
NEw York, 10th July, 1837.
Richard Bassett, Esq.
London.
Sir, It is with deep regret that we have to apprise
you of the death of our senior partner, Mr. John
Allsop, which occurred in the beginning of last month.
At the same time we have the satisfaction of stating,
that this event will in no way interfere with the future
conduct of our business, as arrangements are made to
supply the place of our deceased partner, and we have
every reason to hope that we shall form a connection
with a London house of the first respectability, on
whom the active management of our concerns in that
city will devolve.
CUMMERCIAL CORRESPONDENCE, I97
For the present, no alteration will be made in our
firm. The surviving partner, Mr. James McIntosh,
will conduct the affairs of the house in this city, as
heretofore ; and we confidently hope, from the expe-
rience you have had of our uniform punctuality, that
you will continue to favor us with your correspond-
ence; resting assured that the same unremitting
attention as formerly, will be paid to the interests of
all our commercial friends.
We remain, sir, your ob’t servants,
ALLsop & McINTos H.
NEw York, Jan. 1st, 1838.
Richard Bassett, Esq. - -
London.
Sir, Referring to our Circular of the 10th July
last, we have now the pleasure of intimating that
articles of Copartnership have been entered into be-
tween James McIntosh, the surviving partner, John
Stephens, of Jeffrey’s Square, London, and Alfred
Bowring, a gentleman who has been for many years
our confidential clerk. Accordingly the business of
the house will henceforth be conducted under the firm
of McIntosh, Stephens & Co. We trust this arrange-
ment will not only meet your approbation, but also
ensure your entire confidence. In the name of the
old firm, we tender you our best thanks, for past
favors and support; and, on behalf of our present
establishment, we beg to assure you that our best
endeavors shall be used, on all occasions, to promote
17 &
198 COMMERCIAL CORRESPONDENCE.
the interest of our correspondents, by a faithful execu-
tion of their orders.
Requesting your attention to the signatures of the
two resident partners,
We remain, sir, your ob't servants,
McINTos H, STEPHENs & Co.
Mr. McIntosh's signature............ JMcIntosh, Stephens & Co.
Mr. Bowring's signature.............. JMcIntosh, Stephens & Co.
PERNAMBU co, 1st June, 1838.
John Jones, Esq.
JNew York.
Sir, We beg leave to inform you that, under the
auspices of our friends, Dawson, Coverdale & Co. of
Boston, we have formed a partnership, and established
a house of general agency in this city, under the firm
of Sharp & Reynolds.
Our Mr. Sharp having resided in various parts of
South America for the last eleven years, and Mr.
Reynolds having spent a great part of his life in
Oporto, Lisbon, and other towns of Portugal, we feel
confident that our experience and local knowledge will
enable us to give entire satisfaction whenever you may
require our services. -
We shall make arrangements for keeping ourselves
regularly advised of the state of the markets at Bahia
and Rio de Janeiro, with the view of availing ourselves
of any advantage that they may present in forwarding
cargoes by vessels directed to call here for orders;
COMMERCIAL CORRESPONDENCE. I99
and, in such cases, it shall be our constant aim to
further the interests of our friends to the best of our
ability.
We beg to subjoin references, and to assure you
of our zeal and attention, if favored with your con-
fidence.
We are, sir, your ob’t servants,
SHARP & REYNoLDs.
Mr. James Sharp's signature.............. Sharp & Reynolds.
Mr. John Reynold's signature............ Sharp & Reynolds.
- Boston, 5th April, 1838.
Robert Smith, Esq.
Liverpool.
Sir, Our term of copartnership with Messrs. Mal-
hiot, Collet & Co., of Oporto, and of Rio de Janeiro,
having expired on the 31st December last, it was
decided, by mutual consent, that the same should not
be renewed. Accordingly, both the above houses
ceased to exist from that date ; and we take the liberty
of informing you, that we have no interest whatever
in the new establishments formed by the respective
partners.
The liquidation of the concerns of the Oporto house
is intrusted to Mr. James Collet of that city, now
trading under the firm of Collet & Larue; while Mr.
Langford will undertake the adjustment of the affairs
of the house at Rio, and will, for that purpose only,
sign JMalhiot, Collet & Co. in liquidation.
Our worthy friend and relative, Mr. John Langford,
200 COMMERCIAL CORRESPONDENCE.
continues the business of the Rio house for his sole
account, as his circular will have informed you; and
we avail ourselves of the present opportunity to re-
commend his establishment to the patronage of our
friends, soliciting, in his behalf, a continuance of their
confidence and commands.
Yours, respectfully,
LANGFORD & KNAPP.
SINGAPORE, JW ov. 1st, 1837.
Samuel Brooks, Esq.
Salem.
Sir, It is with the most sincere regret that I have
to communicate to you the melancholy intelligence of
the death of Mr. Papineau, an event which has
deprived the commercial community of one of its most
useful and distinguished members.
As managing partner of the house, and executor of
my lamented friend, the charge of liquidating the
affairs of the firm devolve on me, and I shall, conse-
quently, henceforth sign “Papineau & Co. in liqui-
dation,” of which be pleased to take notice.
The business of the house will be carried on as
heretofore, and my best care and attention shall be
given to any affairs with which you may intrust me.
The esteem and friendship of my late partner, and
the experience of nearly twenty years devoted to
commercial pursuits, are, I trust, sufficient claims to
a continuance of that confidence with which you have
COMMERCIAL CORRESPONDENCE. 201
hitherto honored our establishment, and which it will
be my earnest endeavor to merit at your hands.
I remain, sir, with respect, -
GEORGE Swif T.
* NEw York, JMay 10th, 1838.
John Lamb, Esq.
Buffalo.
Sir, Having removed to this city, and established
myself as a General Agent, I beg leave to tender you
my services in that capacity. Any business which
you may have in this city, or at any place within a
moderate distance, and for the sake of which it may
not be worth your while to incur the expense of a
journey expressly, I shall be happy to transact as
agent, and beg to assure you that it shall be my
endeavor to act with promptitude and efficiency, as
well as with a due regard to economy, in all matters
intrusted to my care.
Yours, respectfully,
RoBERT L. AD AIR.
PHILADELPHIA, 1st Dec. 1837.
Wm. Pell, Esq.
Savannah.
Sir, I beg to acquaint you that, having taken into
partnership Mr. Charles Harris, the business of my
establishment will, henceſorward, be conducted under
202 COMMERCIAL CORRESPONDENCE.
the firm of T. Harris & Co. Please to note our
respective signatures at foot.
Returning you my sincere acknowledgments for the
proofs of confidence with which you have favored me
during so many years, and which I trust will be con-
tinued to our new firm,
I remain, sir, yours respectfully,
T. HARRIs.
T. Harris's signature............... T. Harris & Co.
C. Harris's signature............... T. Harris & Co.
LIVERPool, 11th August, 1838.
Messrs. James Gray & Co.
JVew York.
Gentlemen, Having formed an establishment in
this place, as merchants and general agents, we take
the liberty of acquainting you there with, and solicit
the preference of your orders. From our experience
in mercantile affairs generally, and our intimate ac-
quaintance with business as conducted in this place in
particular, we venture to promise that we shall be
enabled to execute any commission with which you
may favor us, to your satisfaction, and in the most
prompt and economical manner. At least we can
safely guarantee, that neither zeal nor attention shall
be wanting on our part, to insure to our friends every
advantage that our market may afford ; nor will there,
we trust, be any deficiency of ability to fulfil their
instructions, and promote their interests. Possessed
of ample funds, not only for the service of our friends,
COMMERCIAL CORRESPONDENCE. 203
but also for carrying on an extensive export and
import trade on our own account, we shall be glad to
avail ourselves of any advantage that your market for
British products or manufactures may, from time to
time, present, by making you consignments. We
shall, therefore, thank you to keep us constantly
advised of the state of your market; and as we shall
be ready to make advances, to the extent of two-thirds
of the invoice amount of goods consigned to us for
sale, on receipt of invoice, bills of lading, and orders
for insurance, we shall, on the other hand, expect the
same indulgence from our friends and correspondents.
Requesting your attention to our respective signa-
tures at foot, we subscribe ourselves,
Gentlemen, your faithful serv’ts,
HARRIson & Co.
B. Harrison’s signature............. Harrison & Co.
T. March's signature................. Harrison & Co.
NEw York, 11th August, 1838.
Thomas Adams Esq.
JNew Orleans.
Sir, I take the liberty of apprizing you that, under
the auspices of several highly respectable and influ-
ential houses in this city, I have commenced business
as a Ship and Insurance Broker and General Com-
mercial Agent.
Feeling confident of my ability to conduct any
transactions, and to execute any orders committed to
204 COMMERCIAL CORRESPONDENCE,
my charge, in a speedy, economical, and satisfactory
manner, I solicit the favor of your commands ; to
merit a continuance of which I assure you no exertion
shall be spared to promote your interests and attain
the accomplishment of your wishes.
Referring you to my friends, Messrs. Price & Co.
of this city, for the requisite information as to stability
and character, I have the honor to be,
- Your ob’t servant,
PETER DUNSTART.
NEw York, 1st August, 1838.
Wm. Richards, Esq.
Rochester.
Sir, Having taken my son into partnership in the
business of Tea dealer and Grocer, which I have for
so many years carried on in this city, I beg to intro-
duce him to you as my associate in the firm of S.
Stephens & Son, requesting your attention to our
signatures subjoined.
I take this opportunity of soliciting a continuance of
your custom and favors, venturing to assert that you
will find the same unremitting attention paid to your
orders, which first secured to me the advantage of
your encouragement and support.
I remain, sir, yours truly,
S. STEPHENs.
S. Stephens's signature..................... S. Stephens & Co.
G. Stephens's signature....................S. Stephens & Co.
COMMERCIAL CORRESPONDENCE. 205
CHARLEston, S. C., 14th April, 1838.
Joseph Bunfield, Esq.
Columbia.
| Sir, Permit us to communicate to you an altera-
tion that is to take place in our copartnership on the
1st of May ensuing. At that period our Mr. John Cus-
tance will retire, and the business of the establishment
thenceforward will be carried on by the remaining
partners, under the firm of Williams, Wilson & Wood.
Requesting a continuance of your favor and support,
and assuring you that there will neither be a diminu-
tion of our means, nor a relaxation in our endeavors
to conduct the extensive affairs of the house on the
usual Scale, we remain, sir,
Yours, truly,
CUSTANCE, WILson & Co.
BosTon, 1st Jan. 1838.
James Cornish, Esq. • .
JNew York.
Sir, Desirous of establishing in the city of Balti-
more, a branch of my business, I beg to acquaint you
that I have committed the management of that de-
partment to Mr. John Newman, a gentleman on
whose zeal, ability, and integrity, I place the utmost
reliance. Mr. N. having been managing clerk in my
counting-house here for several years, is perfectly
conversant with the routine of business. I shall feel
much obliged by any arrangement you may make
18
206 COMMERCIAL CORRESPONDENCE.
with him, as he will visit your city prior to his de-
parture for Baltimore, for the purpose of forming
connections; and I undertake to guarantee the due
execution of any orders with which you may favor
him, as he will be furnished with full powers to act
in my name, and on my behalf. Not doubting that
you will find Mr. Newman as agreeable in social
intercourse, as he is intelligent in matters of business,
I strongly recommend him to your kind attentions;
and remain, very truly yours,
WILLIAM Monson.
NEw ORLEANs, 22d July, 1838.
Alex’r Kent, Esq.
- Cincinnati.
Sir, It is with the deepest regret we inform you,
that, on balancing our books on the 1st inst. we found
so considerable a deficiency, resulting from engage-
ments which we had entered into with the firm of
Rouse, Commins, & Co.—who became insolvent last
month, that we were induced to submit our affairs
to the inspection of our principal creditors.
These gentlemen have, after a full investigation,
consented to appoint assignees for the liquidation of
our outstanding debts, the sale of our property, and
the due distribution of the proceeds amongst our
creditors, in proportion to their respective claims on
our estate. We indulge a hope that you will not
object to this arrangement, but will immediately
furnish the assignees, Messrs. Thomas Jones and
COMMERCIAL CORRESPONDENCE. 207
William Daniels, with an abstract of your account
current, for the purpose of having it compared with
our books, in order that the correct balance may be
ascertained.
We are respectfully, your ob’t serv’ts,
JAMES THOMPson & Co.
HAVANA, 30th June, 1838.
Messrs. Purdy & Lowe,
JVew York.
Gentlemen, – Our partnership having ceased by
mutual consent, we beg to inform you that both this
establishment and that at Matanzas, will forthwith
liquidate their pending engagements, for which pur-
pose alone, our firm will be used hereafter. We beg
your reference to the accompanying circular of our
new establishments; and soliciting a continuance of
your confidence,
We are, gentlemen, your ob’t serv’ts,
BURRITT & CLARKE.
PHILADELPHIA, 6th July, 1838.
John Lamson, Esq. -
Savannah.
Sir, My establishment at New Orleans having
ceased to exist on the 31st December last, in con-
sequence of my partnership with Mr. Joseph Smith,
of that city, being dissolved by mutual consent, I beg
to make known my intention to establish two mer-
208 COMMERCIAL CORRESPONDENCE. .
cantile houses, one in Philadelphia, and the other in
Boston.
The partnership in this city will consist of my
friend Mr. Richard Ellis and myself, under the firm of
RICHARDson & ELLIs. The Boston house will
comprise myself and my eldest son, John Richardson,
under the firm of THOMAs RICHARDson & Son.
Herewith you will receive the circular of each firm,
with the signatures of the respective partners, of which
you will be pleased to take due note.
Your ob’t servant,
THOMAS RICHARDSON.
PHILADELPHIA, 6th July, 1838.
John Lamson, Esq.
Savannah.
Sir, We beg reference to the prefixed circular, of
Mr. Thomas Richardson, announcing the establish-
ment of our firm in this city. - -
We shall be glad to be favored with your orders, in
the execution of which we will neglect nothing that
can contribute towards giving you entire satisfaction.
At foot you will find our respective signatures, to
which we request your attention, as likewise to that of
Mr. William Richardson (son of our principal), who
has authority to sign for us by procuration.
Your ob’t servt’s.
RICHARD so N & ELLIS.
Signature of Thomas Richardson............................... Richardson & Ellis.
Signature of Richard Ellis..........................................Richardson & Ellis,
Signature of Wm. Richardson........... 9 * * * * * * * * * * per pro. Richardson & Ellis,
|Win. Richardson.
COMMERCIAL CORRESPONDENCE. 209
BosTon, 6th July, 1838.
John Lamson, Esq.
Savannah.
Sir, We take the liberty of informing you that we
have this day commenced business here, in connec-
tion with the house of Richardson & Ellis, of Phila-
delphia.
Permit us at the same time, to make you a tender
of our services, accompanied by an assurance that
your interests will be attended to uniformly with the
most conscientious zeal, and that our resources are
such as to place it always in our power to afford you
every facility. -
Referring to our respective signatures subjoined,
and in expectation of being shortly favored with your
commands, -
We remain, sir, your ob’t serv’ts,
THOMAS RICHARDson & Son.
Signature of T. Richardson.................................. T. Richardson & Son.
Signature of J. Richardson T. Richardson & Sox.
SALEM, 30th June, 1838.
John Rusden, Esq.
JNew York.
Sir, We are under the painful necessity of inform-
ing you, that owing to a series of misfortunes during
the last six months, we find it is not in our power to
meet our engagements, and are consequently com-
pelled this day to suspend payments.
18 %
21() COMMERCIAL CORRESPONDENCE.
As soon as our books can be balanced, we purpose
to call a meeting of our creditors, when we shall lay
before them a balance-sheet, exhibiting our liabilities
and the means we may possess of meeting them. In
the mean time, we beg you will suspend judgment
upon us ; as we can truly assert that our embarass-
ments have arisen solely from events which it was
impossible to foresee, and over which we had no
control. ‘’s
Believe us, under all circumstances,
Sir, your ob’t serv’ts,
WILLIAM WELSH & Co.
GENERAL MERCANTILE CORRESPONDENCE,
- NEw York, 18th Aug. 1838.
Messrs. Lewis, Drake & Co.
Charleston.
Gentlemen, My partnership with Mr. Bull having
terminated on the 30th June, I have, since that time,
been acting for myself and in my own name only ;
following, however, the same principles and branch of
business as my late firm, namely, the commission line;
the cotton trade being the chief object to which I
intend to devote my attention.
From what your Mr. Drake was kind enough to
say, when I had the pleasure of seeing him here, I
presume that you will readily ship any cottons for
which I may get orders, at your fixed prices, allowing
COMMERCIAL CORRESPONDENCE. 211
me the usual commission of 24 per cent. On all cotton
shipped to this port; and # per cent on remittances.
Mr. Drake also spoke of doing something in ex-
changes. I shall have no objection to make a trial on
a small scale, by way of enlivening our correspondence,
and in hopes of reaping a better interest than by having
my capital locked up in public securities. For this
purpose, I will appropriate a sum not exceeding
$5,000; and if you will come forward with an equal
amount, we can work the ten thousand on mutual
account, each of us charging only our respective dis-
bursements, and allowing interest on advances, at the
rate of 6 per cent per annum, each party to guarantee.
or be responsible, for the bills he takes.
If, at any time, you wish to make remittances in
specie on your own account, I shall charge you only
# per cent commission on the sales, and nothing on
payment of drafts, or on remittances. I trust you will
give me the preference in your orders and consign-
ments here.
I remain, gentlemen, your ob’t servant,
JAMES CoRDELL.
CHARLEston, S. C., 2d Sept. 1838.
James Cordell, Esq.
- JNew York.
Sir, We have to thank you for your very friendly
letter of the 18th ult. and beg, in reply, to assure you
that we shall have much pleasure in continuing to
transact what little business we have in your city with
212 COMMERCIAL CORRESPONDENCE.
you, on the same terms as with the late firm of Bull
& Cordell. Our present prices for cottons are steady.
We shall be glad to receive orders for any quantity,
and you may, from the past experience of your late
copartnership, be convinced that all you may transmit
us will be faithfully executed. With regard to the
proposed speculation in exchanges, we must decline
entering on it for the present, as our capital is at this
moment fully employed; but when we have a surplus,
we shall gladly avail ourselves of the opportunity of
employing it in the manner the writer proposed, when
in your city. Any insurance or other business we
may have to transact, we shall, as a matter of course,
intrust to your good management ; and with an offer
of our best services here, we subscribe ourselves,
Yours very truly,
LEwis, DRAKE & Co.
- OPoRT.o, 20th Aug. 1838,
James Cordell, Esq.
JNew York.
Sir, You will please to effect an insurance for my
account of $7,500, on one fifth part or share of the
ship Ocean, Captain A. Nogueira, from your port to
this, against all risks, and at the lowest premium pos-
sible, not exceeding, however, 2 per cent. It was
intended that she should sail within three weeks from
the date of my last advices. You may draw on me,
as usual, for the amount of premium and charges.
I remain very truly, sir, your ob’t serv’t,
- JoHN MATTHEws.
COMMERCIAL CORRESPONDENCE. 213
NEw York, 15th Oct. 1838.
John Matthews, Esq.
Oporto.
Sir, Agreeably to the order contained in your
favor of the 20th August, I have effected insurance
on your fifth share of the Ocean, captain A. Nogueira,
from hence to your port, say $7,500, as per copy of
policy and account annexed, at 2 per cent. I have
taken the liberty of valuing on you for $179 25,
under this date, to my own order, for the cost of this
insurance, at sixty days’ sight.
Always anxious to receive your orders, and deter-
mined to answer them in the most punctual and
advantageous manner in my power,
I remain, sir, your ob’t serv’t,
JAMES CORDELL.
NEw ORLEANs, 12th Sept. 1837.
John Luke, Esq.
Liverpool.
Sir, We are in receipt of your much esteemed
letter of the 6th inst., and beg to assure you that we
are much pleased with the insurances effected by you,
per Wellington and Citizen, and have credited you
with the amount of premium in the sum of $959 79.
We have the sum of $26,000, to remit to our com-
mon friends, J. Newfield & Co., at Oporto, which we
will do through your agency, provided you consent
not to charge us any commission thereon, because this
214 tº
COMMERCIAL CORRESPONDENCE.
being more a family transaction than a matter of
business, we are anxious to avoid expense as much
as possible; brokerage and postage, we presume, must
be incurred. On receiving your answer, if in the
affirmative as we anticipate, we shall cause the amount
to be paid to your agent; therefore, you must favor
us with particulars, and we shall rely on your remitting
the same to our above mentioned friends in undoubted
paper, either on Lisbon or Oporto, as you may be
best able to find bills.
We are truly, sir, your ob’t servt’s,
J. PHILLIP's & Co.
LIVERPool, 29th Oct. 1837.
J. Phillips & Co.
JNew Orleans.
Gentlemen,-In reply to your favor of the 12th ult.
I beg to assure you, that it will afford me much
pleasure to remit the $26,000 to which you allude,
to our Oporto friends, J. Newfield & Co., without
any charge for commission. You will, therefore,
please order that sum to be paid into the hands of
Bosanquet & Co. when I will immediately proceed
to execute your order. As soon as any good paper
offers, I shall secure it, and to keep the transaction to
ourselves, I will have the bills made payable to my
order, endorsing them to J. N. & Co.
I remain, gentlemen, your ob’t servant,
JoHN LUKE.
COMMERCIAL CORRESPONDENCE. 215
OpoRT.o, 30th JNov. 1837.
Messrs. J. Phillips & Co.
JNew Orleans.
Gentlemen, Your much esteemed favor, informing
us of your intention to remit us $26,000, on our Mr.
Thompson's late partnership account with you, was
duly received; but we deferred answering it until
we could advise, as we have now the pleasure of
doing, the receipt of the whole of the said sum.
The various bills of which this remittance consisted,
having been honored, and not doubting that they will
be discharged at maturity, we place the amount to the
credit of our Mr. Thompson’s private account as
desired.
We are, gentlemen, respectfully yours,
J. NEWFIELD & Co.
LONDON, 14th Jan. 1838.
J. M. Souza, Esq.
Bahia.
Sir, At the commendation of Messrs. W. Thomp-
son & Co. of Hamburg, I take the liberty of address-
ing you, and avail myself of the opportunity to make
you a tender of my best services in this city.
The object of my present application is, to request
you to purchase, and ship to the consignment of our
above mentioned friends at Hamburg, from 1,000 to
1,200 mangotes of tobacco, of prime quality, if you
can ship them at or under the price of 2 mil. 300 reis,
216 COMMERCIAL CORRESPONDENCE.
(say two mil. three hundred reis.) per mangote—all
charges of shipping, your commission, and freight
included. To enable you to ascertain this point, you
will please calculate the mark banco at 300 reis, or
the pound sterling equal to 4 mil. 100 reis.
For your reimbursement, you will draw on me at
sixty days’ sight, and at the most favorable exchange,
furnishing me at the same time with invoice and bill
of lading, and anticipated advice for insurance ; when
you may rest assured your draft shall be duly honored.
Trusting that this introduction may lead to more
important transactions, -
I remain, sir, your very ob’t serv’t,
RoBERT JACKSON.
P. S.—I have ordered the tobacco in mangotes,
because rolls are not saleable at Hamburg.
QUEBEC, 8th JMay, 1838.
J. G. Sommers, Esq.
Havre de Grace.
Sir, I am now under the disagreeable necessity of
informing you, that a bill has been presented for ac-
ceptance which appears to have been drawn by you
on 2d ultimo for £700, at three months date, to the
order of De Rue & Co. (without the La.) Having
no advice from you, although you wrote to me on the
same day from Havre, I have been obliged to dishonor
it. I hope you will, immediately on receipt of this,
do the needful, and put me out of suspense. This
neglect on your part has exposed me to very serious
COMMERCIAL CORRESPONDENCE. 217
consequences with Messrs. De La Rue & Co. who
will perhaps attribute my refusal of your draft to some
sinister motive. For my credit’s sake be more regular
and cautious in future. I always considered you a
man of business; but these inattentions will shake my
confidence in you, which has hitherto been unlimited.
Awaiting with impatience your explanation,
I remain truly, sir, your ob’t serv’t,
JAMEs Box.
NEw York, 21st Dec. 1837.
George Payne, Esq.
Liverpool.
Sir, In acknowledging the receipt of your letter
of the 12th ultimo, I beg to assure you that I feel
very much obliged by your prompt attention to my
request relative to the vexatious business of the
Sophia. I must now further trouble you to deliver
to captain Barker the inclosed letter, (which is left
open for your perusal ;) and I hope you will not relax
in your endeavors to prevail on him to do justice to
the parties whose property has been placed under his
Cà Tê.
I am in possession of a power of attorney from the
owners, and shall act upon it, if captain Barker does
not, without further procrastination, either proceed on
his voyage or deliver up the goods for which I hold
bills of lading. .*
I hope Mr. Knight will furnish you with copies of
19
218 COMMERCIAL CORRESPONDENCE.
the documents required, in accordance with his
promise. Be so good as to state in your next,
whether the cargo is still on shore, or whether the
Sophia has begun to re-load, and
Believe me truly, sir, your ob’t serv’t,
JAMES BYRNE.
NEw York, 21st Dec. 1837.
Captain J. Barker,
Ship Sophia.
Sir, Being informed that you refuse to deliver up
the remainder of the goods for which I hold a bill of
lading, and still delay the prosecution of your voyage
to Oporto, I take the liberty of addressing you on the
subject, and of intimating that unless you do the one
or the other, without further procrastination or excuse,
it will be my duty to take the necessary legal
measures to compel you to do justice to the owners.
I hope, however, that an alternative so disagreeable
to me, and so troublesome and expensive to yourself,
will be rendered unnecessary by your immediate de-
parture for your port of destination.
I am, sir, your ob’t servant,
JAMES BYRNE.
- LIVERPool, 24th Jan. 1838.
James Byrne, Esq.
JNew York.
Sir, Your esteemed favor of the 21st ultimo, is
before me, and I have, in compliance with its contents,
COMMERCIAL CORRESPONDENCE. 219
again waited on captain Barker, who has the greater
part of his cargo on board; therefore, there are some
hopes that he will now soon get under weigh. I
delivered to him your letter, and it appeared to have
some little effect.
I remain, sir, your ob’t servant,
GEORGE PAYNE.
AUGUSTA, 11th JMarch, 1838.
Messrs. Martin & Son,
Savannah.
Gentlemen, The fruit per Jane, sold by you at
auction having become due yesterday, I fully expected
you would send me the amount. When I gave you
orders to sell, you assured me that I might rely on
being in cash in a month. Confiding in that assur-
ance, I have remitted a bill for the net proceeds to
the party who made me the consignment, calculating
that I should receive the same from you in time to
take up that bill. I must, therefore, request you will
have the goodness to send me a check for the pro-
ceeds of the sale, without delay.
I am, gentlemen, your ob’t servant,
THOMAS JAMEs.
SAVANNAH, 12th JMarch, 1838.
Thomas James, Esq.
-- Jługusta.
Sir, In reply to your letter of yesterday, we beg
to inform you that several of the purchasers have not
220 COMMERCIAL CORRESPONDENCE.
yet cleared their oranges, per Jane; and that notwith-
standing we furnished you with an anticipated account
sales at your earnest request, we cannot close the
transaction until the fruit is all taken off our hands.
This we expect will be the case in the course of two
or three days, as we have given the parties notice of
re-sale, if the goods be not taken away this day or
to-rn Orro W.
We remain, sir, your ob’t serv’ts,
MARTIN & Son.
AUGUSTA, 13th JMarch, 1838.
JMr. James presents his compliments, and begs to
inform Messrs. JMartin & Son, that the reason stated
in their note of yesterday for not paying the proceeds
of fruit per Jane, is by no means satisfactory. If the
purchasers have not taken away their lots, it is no
concern of his, as Messrs. Martin should have enforced
the conditions of the sale, which took place under their
guarantee. Consequently, Mr. James looks to them
for the proceeds, agreeably to the account rendered,
and expects a check for the amount, $969 19,
without further correspondence on the subject, or loss
of time and interest.
LoNDoN, 16th June, 1838.
Henry Holland, Esq.
Paris.
Sir, The draft for £23, which, as I advised you
on the 1st instant, had not been accepted, having since
COMMERCIAL CORRESPONDENCE. 221
become due and not being discharged, I have now to
return it to you with a protest for non-payment,
together with an account of my commission and
charges, amounting to £25 014 for which I have
drawn on you at sight, and to the order of Robert
Collins, who has endorsed my bill to you. I debit
you frs. 646 70 for the same, at the exchange of
25 82, and trust you will experience no difficulty in
recovering that amount from your endorser.
I am, sir, with great regard, your ob’t ser’t,
Jo HN LAPIDGE.
LoNDoN, 11th JMarch, 1838.
Captain Benjamin Britten,
Brig Eliza.
Sir, You will avail yourself of the first opportunity,
after the receipt of this, to proceed, agreeably to the
charter party, to Newcastle, and on arrival there
deliver the enclosed letter to Wm. Cook & Son.
These gentlemen will put on board the Eliza, with
all possible dispatch, a full and sufficient cargo of
coals, for which you will, when loaded, sign proper
bills of lading.
As soon as you have cleared out from the custom
house, you will immediately proceed with your cargo
to the island of Fayal, and on your arrival off that
island, hoist as a signal the Spanish ensign, with
which you will be provided. Which signal, together
with your cargo and the enclosed letter, you will
deliver to Mr. J. T. Maciel, merchant of that island;
19 %
222 COMMERCIAL CORRESPONDENCE.
and follow his directions with respect to unloading,
But in case the said Mr. J. T. Maciel should have
unfortunately died, quitted the said island, become
bankrupt, or be otherwise incapacitated from receiving
the cargo, you will please to get a certificate of such
death, removal or incapacity, drawn up by the British
Consul or Vice Consul at Fayal, and signed by two
or three respectable merchants at that island ; and
instead of delivering the coals there, proceed with
them to Lisbon with as little delay as possible, and
deliver the said cargo to Mr. P. A. Silveira, who will
have my authority to receive the same. And in such
case you will also deliver to Mr. Silveira the letter
directed to “The Consignee of the Cargo, per Eliza,
at Fayal or Lisbon.” *
You have received on board here, two puncheons
of brandy, which are likewise to be delivered to Mr.
Maciel at Fayal, if there; but if not, or he be ren-
dered incapable of receiving them, you will deliver
them to the British Consul, or Vice Consul, requesting
him to sell them for my account, and deliver over to
you the net proceeds; out of which you can defray
the expenses of your vessel during your stay at the
island, and account with Mr. Silveira at Lisbon for
the balance.
Whether you discharge your cargo at Fayal or
Lisbon, you will take in another for St. Petersburgh,
which Mr. Maciel or Mr. Silveira will put on board;
furnishing you with the necessary instructions for the
further prosecution of your voyage, and the delivery
of your said return-cargo on reaching your destination.
You will also accommodate a cabin passenger. Such
COMMERCIAL CORRESPONDENCE. 223
cash as you may require for the ship’s use, will be
advanced by Mr. Maciel, at Fayal, or by Mr. Silveira,
at Lisbon, or by their correspondents at St. Petersburgh,
on your endorsing at each place on your charter party,
the sums received respectively.
On your return to this port you will, without loss
of time, wait on me at my counting-house with such
letters and documents as may be intrusted to your
care by the party to whom you will be consigned at
St. Petersburgh.
Wishing you a successful voyage, and quick return,
I remain, very truly yours,
WM. MATTHEws.
NEw York, 24th Oct. 1837.
R. H. Lynch & Co.
Havana.
Gentlemen, We have the pleasure to address you
for the first time under the auspices of your R. H.
Lynch, Esq. who was lately in this city, and with
whom we had the gratification of becoming personally
acquainted ; and are induced in consequence of an
arrangement entered into with him, to give you an
order for 400 boxes of sugar on joint and equal
aCCOunt.
Permit us to remind you of what will tend in a
great degree to the fortunate issue of this our first
undertaking; that is, the selecting sugars of good
quality. We are well convinced that you will pay
the most careful attention to this point. The limits
as to price we leave to your own judgment, knowing
224 COMMERCIAL CORRESPONDENCE.
you to be thoroughly acquainted with the state of the
market here—for your further convenience we enclose
you the last price current. The invoice and bills of
lading of this sugar, should be made out to our ad-
dress, and forwarded to us. On receipt thereof, your
drafts for half the invoice shall be duly honored. Be
pleased to hand us, by two or three opportunities, the
requisite advice to enable us to effect insurance in due
time.
We remain, gentlemen, your ob’t serv’ts,
MULLER, SoN & Co.
GALLAIz, IBRAIL, 13th August, 1837.
Messrs. Merivale & Bohte,
London.
Gentlemen, We are approaching the season in
which the products of this country assume the most
importance, and which is so much the greater this
year, from the lamentable deficiency of our last crops
being so abundantly compensated by the bounty of
Heaven on our present harvest.
Consequently, we deem it our duty to inform you
of the state of our market, in order that you may take
advantage of the low prices of all our export articles;
not doubting that the considerable demand to be
expected from our produce, will influence our import
trade also, and impart to it more activity.
Our agricultural products form the principal branch
of our commerce; and in a year of abundance, like
the present, we can export to the extent of 1,000
cargoes of moderate tonnage.
COMMERCIAL CORRESPONDENCE. 225
Although the hard wheats of Moldavia are equal, in
Several respects, to those of New Russia, and the soft
descriptions, principally the growth of Wallachia, im-
prove from year to year, still we cannot state them to
be of prime qualities.
Wallachia alone is capable of exporting annually
500 cargoes, and even more, of this class of agricul-
tural produce. Purchases have been made on deliv-
ery, which, on the quay of Ibrail, come to about 50
piastres of Bucharest per kilo of Ibrail, equal to about
400 ocche.
We have already some parcels of barley at market,
the price of which on board, is estimated at 36 piastres
of Bucharest per kilo above mentioned.
Rye is to be had at about 10 to 12 piastres less
than the soft wheat. Millet, and especially maize,
promises a superabundant crop, and consequently, low
prices; but which, however, we cannot at present
quote with any certainty. The same observations
apply to beans and lentils. The culture of oats is
totally neglected in this country.
Our import trade, already important, cannot fail to
keep pace with the progress of agriculture and popu-
lation. Moldavia possesses no other port than Gallaiz;
and all goods arriving from abroad, by sea, for Walla-
chia, have no alternative but to come to the port of
Ibrail. In the month of May, and particularly in
October, import articles find the readiest sale, from
the afflux of numerous buyers, who assemble at those
periods at our market, as at a fair, to supply them-
selves for the autumn and winter.
According to appearances, trade will be this autumn
226 COMMERCIAL CORRESPONDENCE.
the more brisk, in consequence of our rich harvest,
which will enable the people to satisfy all their wants,
many of which they could not provide for last year,
owing to the deficiency of the crops. The chief
articles of home consumption are sugar, coffee, pepper,
oil, lead, dried fruits, rum, plates of tin, &c.
At foot you will find a list of our prices; but we
beg you to observe, that it is not at all desirable to
send goods of prime quality to our market, as they
would never fetch prices proportioned to their value.
The middling and inferior qualites are more in request,
being better suited to the wants and means of our
COI) SUl IYY 62FS.
All other articles of exportation, as well as those of
importation, whether at Gallaiz or Ibrail, pay indis-
criminately a duty of 3 per cent with the exception
of tobacco, inwards.
The brokerage on purchases and sales is 4 per cent.
Bank commission . . . . . . . . . 1 per cent.
Del credere for all sales on credit, and
purchases by anticipation . . . . .
Interest on our real disbursements, and
anticipations in account-current per
annum . . . . . . . . . . . . 12 per cent.
Warehouse rent and market dues accord-
ing to their actual amount, with every
possible attention to economy. -
Commission on sales or purchases . . . 3 per cent.
2 per cent.
You will not be surprised at our charging a com-
mission somewhat higher than is usual at other com-
mercial towns in Europe, if you consider the difficulties
and hazard connected with our trade, which are
COMMERCIAL CORRESPONDENCE. 227
greater, beyond all comparison, than those of any
other. In the first place we can never meet with
entire parcels of goods; these having, even prior to
their maturity, passed through the hands of a number
of petty dealers, who purchase them without fixing the
price, by paying a small sum in advance, engaging to
take the goods at the price which shall be determined
on at the period of delivery. The majority of these
dealers being persons without character or funds, those
who treat with them are always exposed to imposition,
and, in addition to the inconvenience of never obtain-
ing from them any thing but very trivial parcels, we
have no security for the anticipated payments, owing
to their intrigues and bad faith.
Besides, these goods can never be purchased in one
place, and it is necessary to go to a different quarter
for almost every article.
The difficulty of transport, the number of coins
current with us, and their different value in the neigh-
boring countries, as also the want of a well organized
post office, are so many obstacles to our trade, which
justify the charging a higher commission. It is the
same with sales, which can only be effected in detail,
or in small parcels on credit, to persons whose credit
is very limited. However, we expect to procure for
our friends a very considerable advantage in the ex-
change on our reimbursements, which will, in some
degree, indemnify them for the high commission
charged.
In conclusion, we refer to the specification of ex-
changes and prices at foot; and should any article
228 COMMERCIAL CORRESPONDENCE.
interest you more particularly, we shall be most
happy to procure it for you. . In the mean time,
We are, gentlemen, yours truly,
BIENworTH & Co.
HALIFAx, 29th June, 1838.
Thomas Saunders, Esq.
-- London.
Sir, We are, this morning, in possession of your
letters of the 17th and 20th April, and are not much
surprised at the contents, as you evidently write under
an impression that we have neglected to acknowledge
the receipt of some goods, which you had thought
proper to consign to our address. Our communi-
cations, however, of the 9th April and 27th ult. will,
we trust, remove the unfavorable opinion you appear
to have formed of our mercantile correctness. It
would have been, indeed, difficult to answer letters
not delivered to us, or to acknowledge the receipt of
goods which never came into our possession. Such
as were handed over to us by Mr. Black, we have
disposed of, and we now remit the proceeds in the
bills noted at foot. The deficiencies in your invoice
must, of course, be accounted for by that gentleman,
who appears to have been authorized to hold the
goods back on your behalf.
It has always been our desire, and, we may con-
fidently say, our practice, to be regular in our cor-
respondence, and prompt in our remittances. We
COMMERCIAL CORRESPONDENCE. 229
therefore feel your remarks the more keenly, as being
what we are totally unaccustomed to ; and we are
extremely hurt that we should be subjected to them,
through the mistake or negligence of another indi-
vidual. At the same time, as the whole may prove
to have originated in some inadvertency, or misunder-
standing, we have only to assure you, that we shall
always endeavor to render you, or your friends, our
best services; conceiving that by accuracy and at-
tention we shall contribute most effectually to the
advancement of our own interests, as well as those of
our constituents.
We are, sir, your ob’t serv’ts,
ANDREws & CoRBYN.
HALIFAx, 8th Dec. 1838.
Thomas Saunders, Esq.
London.
Sir, We have to acknowledge the receipt of your
esteemed favor of the 12th Oct. and are much pleased
to find that any unfavorable impression formerly en-
tertained in regard to us, is now totally removed.
You may be assured, that it will always be our
pleasure and pride to maintain our credit for mer-
cantile regularity and exactness, and, more particu-
larly, in cases where property is intrusted to our good
faith and attention.
We sincerely hope that your friends, Messrs. M.
& Co., being on the spot, will have no difficulty in
arranging your business with Mr. Black, whom it is
20
230 COMMERCIAL CORRESPONDENCE.
but justice to say, we have always found to be very
punctual and correct in his transactions with us.
We certainly felt extremely hurt at your shipments
being withheld from us, as well as the letters, but Mr.
Black accounted for it, by stating that the arrangement
was only conditional, and to be acted upon in case of
his non-arrival. As this appears, by your own letter,
to have been, in some measure, the fact, we have
not made any comments upon the circumstances, but
contented ourselves with handing him a copy of your
letter. We should be very happy to render Messrs.
M. & Co. our best services; and we beg to assure
you, that your recommendation will, at all times,
receive our most prompt attention.
We are, sir, your ob’t serv’ts,
AND REws & CoRBYN.
Kon IGSBERG, 25th August, 1837.
Abraham Meyer, Esq.
London.
Dear Sir, I am in possession of your kind letter
of the 10th instant, handing me my account-current,
showing a balance, on the first of this month, of
£1058 16/3 in your favor. The account is quite
correct, and I carry forward the balance in conformity.
Against this balance you will, I trust, have received,
ere this, a remittance of £332 11/6 through the me-
dium of our friends, Messrs. Toussaint & Co., and I
have placed in their hands a further sum of 4,200 rix
dollars, Prussian currency, to be remitted to you as
Soon as the exchange becomes a little more favorable.
COMMERCIAL CORRESPONDENCE. 231
By next post, Messrs. Toussaint & Co. will hand
you a bill of lading of a small assortment of quills,
which I have purchased, and instructed them to ship
to your address for my account. At foot you have
the invoice, wherein I have inserted the lowest prices
at which I should wish them to be sold, and which I
do not in the least doubt you will realize, these being
summer goods and very dry. Besides, the weight is
Berlin, which you will please to note in effecting
Sales, as there is a difference of several pounds per
cent between it and the English weight, in favor of the
former; therefore, I feel confident, you will obtain, at
least, the prices stipulated ; and as soon as I find that
this small parcel answers my expectations, I will
make you consignments of some considerable quantity.
With regard to the goods in the hands of Messrs.
G. V. Branting & Son, at Gothenberg, I am much
surprised at the negligence of that firm, in giving no
reply to the letter which you wrote to them three
months ago, when I was in London. I must request
the favor of your writing to them once more, to desire
them to use their best endeavors to dispose of the
goods, if it be only at cost price, to put a stop to the
expenses which are already so considerable on this
unfortunate consignment. If they find it out of their
power to sell, even on these terms, let them send the
goods to the address of our friends, T. & Co. here,
where I hope to be more successful, and may, perhaps,
realize a tolerable profit. It is truly vexatious, that
So small a parcel of goods should remain on hand a
whole twelve month.
I now beg to trouble you with a small order, as
232 COMMERCIAL CORRESPONDENCE.
particularized at foot, and shall esteem your kind and
particular attention to its execution as a mark of per-
sonal regard.
Believe me always, dear sir,
Yours very faithfully,
W. BE HRENDs.
Konigsberg, 8th Sept. 1837.
Abraham Meyer, Esq.
London.
Dear Sir, Since I had last the pleasure of writing
a few lines to you, on the 25th ultimo, I have been
favored with your letter of the 16th of that month,
the contents of which I duly note.
Messrs. Toussaint & Co. will this day remit you
£500 on my account, for which you will please to
credit me ; another considerable remittance will follow
in a few days.
I am anxious to know the result of the little specu-
lation in quills, having lately been tempted to make
further purchases on very favorable terms; but I
deemed it better to lose the chance of this opportunity
than to be working in the dark.
The small order contained in my last has, I have
no doubt, received your inamediate attention, and I
may shortly expect the invoice and bill of lading.
I hope you will not forget me, should it be in your
power to procure any commissions from your friends;
and you may rely on all occasions on my most stren-
uous efforts being used to do credit to your recom-
COMMERCIAL CORRESPONDENCE. 233
mendation; a course, indeed, which is dictated by
common prudence and the natural desire to extend
one’s connection.
A cargo of coffee, sugar, and indigo, would, I think,
answer very well, as our prices for these articles
always rise very much in the winter. On this subject,
however, I have written more at length to our common
friend, Adolph Schmidt, from whom you may obtain
further information, should you desire it.
I am, dear sir, yours truly,
W. B.E.H RENDs.
HAMBURG, 12th JMay, 1838.
Messrs. Francis Lupton & Co. *
Buenos Ayres. -
Gentlemen,_By the Thought, captain John Sin-
clair, we are shipping to your consignment fifty bags
of Saxony wool, on our own account, on which we
hereby request you will be so good as to effect a con-
ditional insurance to the amount of £2,000 sterling.
On the shipment being completed, we shall furnish
you with bill of lading and invoice, and state the value
of each bag, for indorsement on the policy. We hope
these wools will arrive at a good market, and encour-
age us to continue our speculations in this article, the
present being our first essay therein.
You will please to observe, that this consignment
will consist of an assortment of Electoral Saxony, first
and second qualities, and some socks. We will thank
you, on receipt of this, to give us all the information
20 *
234 COMMERCIAL CORRESPONDENCE.
in your power on the subject, and to furnish us with
quotations of your present prices.
We remain, gentlemen,
Your obedient servants,
FELDHEIM & Sons.
Buenos AYREs, 25th June, 1838.
Messrs. Feldheim & Sons,
- Hamburg.
Gentlemen,_In reply to your esteemed favor of the
12th ultimo, we beg leave to thank you, in the first
place, for your kind consideration in making us the
consignment of the fifty bags of Saxony wool, per
Thought, captain Sinclair. Conformably to your
directions, we have insured them provisionally in the
sum of £2,000, at 7| per cent; and on receipt of
invoice and bill of lading, shall be ready to accept
your drafts for two-thirds the amount of the former,
should you feel disposed to value on us at usance for
the same. Our market is not at present overstocked
with Saxony wools, and sales are pretty brisk, at re-
munerating prices. Nor do we anticipate any great
deterioration or amelioration, so that in your further
speculations, we think you may safely calculate on a
fair market—but the price will, of course, depend
materially on the quality.
Repeating our thanks, we are, with great esteem,
Gentlemen, your ob’t servants,
FRANCIs LUPTON & Co.
COMMERCIAL CORRESPONDENCE. 235
SEVILLE, 20th JMarch, 1838.
Messrs. T. Gore & Co.
Boston.
Gentlemen,_By this vessel, the Pendennis, captain
Rutter, we have shipped from Cadiz to your con-
signment, as per bill of lading and invoice enclosed,
twenty-two bags of Spanish wool, of excellent quality,
and which we have no doubt you will be able to
dispose of per samples, which go under the care of
captain Rutter, in a parcel addressed to your firm.
These 22 form part of the 100 bags, on which we
requested you, in our letter via France, of the 30th
ult. (and of which you have a copy annexed,) to
effect insurance, per ship or ships; the remainder we
shall ship as occasion offers. Being confident that
you will find the 100 bags as nearly as possible of the
same quality, we expect the price you obtain for
these 22, will regulate that of the whole ; we must,
therefore, strongly urge you to use your utmost
endeavors to fix the best possible price for this first
parcel. -
We trust you will be able to find a purchaser at 3|
sterling per lb., but we do not limit you, relying con-
fidently on your accustomed zeal in promoting your
correspondents’ interests. The amount of invoice,
you will perceive, is $2,666, which is the actual cost
for your government in effecting sales.
We remain, gentlemen,
Your obedient servants,
RICHARD THOMAS & Co.
236 COMMERCIAL CORRESPONDENCE.
- CALCUTTA, JNov. 9th, 1837.
Messrs. Reed, Jones & Co. -
Baltimore.
Dear Sirs, The ship Cornelia, captain Thompson,
leaves for your port to-morrow, and we avail ourselves
of the opportunity to wait upon you with the state of
our market.
The season has opened with considerable activity,
and since the holidays we have had numerous arrivals
both of French and English, which have given an
impetus to the market. Purchases of indigo to arrive
continue to be made, and up to this date about 23,000
maunds have been taken in this way, and prices may
be considered as having somewhat advanced since
the middle of September, when the first of these
transactions took place. It is difficult, indeed, to
say what prices would at present be given for the
highest qualities. The highest, thus paid, has been
230 rupees per maund, but this is for a whole parcel,
containing some inferior and washing. Fine blue
would probably bring 250 rupees per maund, and
ordinary copper violet 185 a 200.
The accounts from the upper provinces have lately
been unfavorable, and the estimate of the crop should
be reduced to about 112,000 maunds. Of this a
large proportion has been sold as stated above, and
together with 26,000 maunds that will be shipped to
England on planters' account, and not to be brought
into market at all, will amount to 48,000 maunds;
so that nearly half the crop may be considered
disposed of already, before any of it has reached
COMMERCIAL CORRESPONDENCE. 237
Calcutta. Accounts of the July sale of indigo in
London have been received, and those of course tend
to keep up the market.
Silk piece goods and raw silk continue very high
and in active request, the late advices from England
being very favorable for them. Saltpetre has lately
been in demand, and prices have advanced to 6 a 7
rupees per maund for first quality, and 5 a 6 for
middling. Freights to England are lower than they
have been, and considerable shipments are going
forward. Hides have lately risen considerably, and
are now in good demand. Goat skins very scarce,
and worth 35 rupees per 100. Shellac more in
demand the last week, owing to the arrival of several
French vessels and consequent inquiry of the article
for France. Lac dye has risen with shellac ; the
supply of stick lac is small this season, and there is
a prospect the advance will be maintained. Ginger
scarce and high, good quality worth 7 a 7 4 per
maund; the demand is not so great as it was. Dollars
207 8 per 100. Exchange 2/34 a 2/4 and difficult
of sale, and there is a prospect of its being at a worse
rate as soon as a large amount is brought forward for
sale. - -
The following is the cargo of the Cornelia : 2,335
bags saltpetre, 829 do. ginger, 110 bals. twine, 100
bales gunnies, 20 casks shellac, 2,590 pcs. silks, 500
cow-hides, and 1,500 goat-skins. -
We are, gentlemen,
Yours respectfully,
SMITH, PAYNE & Co.
23S CONMERCIAL CORRESPONDENCE.
LoNDoN, January 22d, 1838.
Messrs. John Harmer & Co.
Jłmsterdam.
Gentlemen,_Confirming our last of the 18th inst.
with invoice and bill of lading of 120 packages
printed cottons per the William, captain Thomas
Young, for your port, to be sold for our account, we
have now the pleasure to advise the receipt, in due
course, of your letter of the 15th inst., by which we
received your bill for £1,000 on John Gore & Co. at
three months’ date, which has since been accepted,
and is passed to your credit. We have also received
three firsts for acceptance, of £1,000 each, on Sir
William Curtis & Co., which having met due honor,
await the disposition of the seconds. -
We observe that you have succeeded in purchasing
100 tubs of spirits, 22 per cent over proof, at our
limits ; and we credit you with the amount of invoice,
£3,802 16/6 in cash, 20th of February.
Your order for the purchase of 600 pieces of printed
calicos has been executed. The goods have been
packed in six bales marked J. H. & Co. No. 1 to 6,
and shipped on board the William, captain Holmes,
who will leave this place for your port, early in the
ensuing week. We have insured the goods for
328,000, and here with transmit bill of lading and
invoice, amounting to £7,206 1812 at your debit the
19th inst.
Enclosed you will also receive two bills drawn by
Jones, Lloyd & Co. on Muller & Co. of your place,
21st January, at three months’ date, amounting to-
COMMERCIAL CORRESPONDENCE. 239
gether to £2,340, with which please do the needful,”
and place the amount at maturity to our credit.
We take this opportunity of transmitting the ac-
count-sales of your 20 tubs of butter per the Ann,
the net proceeds being £350 16/8 due 30th June,
which amount is placed to your credit.
We remain, gentlemen,
- Your obedient servants,
BARING, BROTHERS, & Co.
* This is a technical expression of considerable value in mercan-
tile correspondence, as saving a great deal of circumlocution.
E x P L A N A TI O N
OF
COMMERCIAL TERMS OR EXPRESSIONS.
Jībandonment. Its most ordinary application in commercial
transactions is to marine insurances; it then signifies the
exercise of a right, which the assured claims, to call upon
underwriters or insurers to accept of what is saved, and to
pay the full amount of the insurance, as if a total loss had
happened.
.Abatement. A discount allowed for prompt payment; it
is likewise allowed at the custom-house on goods which
have received damage by Salt water, &c.
.Acceptance. An engagement to pay a bill, when due,
according to the tenor of the acceptance.
Jłccommodation, when applied to bills or notes, are those
for which no value has been given ; that is, when the drawee
only lends his name ; and that the drawer engages to provide
him with the means of payment when the bill falls due.
.Account-Current. A state of mercantile transactions with
correspondents, drawn out in a plain and circumstantial
manner in the form of Dr. and Cr., showing how affairs
stand between the parties at the time when the account was
made up.
JAccount-Sales. An account of goods sold on commission,
drawn out by the agent to whom they were consigned, to
be sent to his employer, or the person who made the con-
signment.
.Administrator. A person to whom the court commits the
administration of the goods of a person deceased, in default
of an executor.
COMMERCIAL TERMS. 241
JAdvance. Money paid before goods are delivered, or in
case of consignment, before they are sold.
.Adventure. When a merchant exports goods to or from
a foreign market on his own account and risk, it is called an
individual speculation, or adventure, to or from that place.
.Advice. Mercantile intelligence ; to advise a bill is to
describe the amount, date, term, to whom payable, &c. and
request the person on whom drawn to accept it.
JAgent. A person duly empowered to do business for
another. The duty of an agent is to procure the best in-
telligence of the state of trade at the place where he resides
—of the quantity and quality of the goods in the market—
their present prices, and the probability of their rising or
falling—to pay exact obedience to the orders of employers—
to consult their interest in all matters referred to his dis-
cretion—to execute their business with all the despatch
which circumstances will admit—and to be distinct and cor-
rect in his accounts.
Jännuity. A periodical payment of money, either yearly,
half yearly, quarterly, weekly, or at any other intervals.
Jłmnul, in book-keeping, signifies to render an article of no
import in the account. Instead of erasing a sum which has
been entered by mistake on the Cr. side of an account, the
account is debited for the same sum ; and, on the contrary,
if a sum has been entered on the Dr. side, the same sum is
placed to Cr. side of the account.
•Arbitration. The determination of a cause by persons
mutually chosen by the parties.
•Assignee. A person deputed by another to manage the
subject of a bankrupt. -
JAltachment. The act by which a creditor may claim an
seize the effects of his debtor, wherever they may be found.
JAverage. . A contribution made for losses at sea. Averages
are distinguished into general and particular. General Average
is a proportionable contribution paid by all the proprietors
of a ship and cargo for losses, which are made with a view
to safety, such as throwing goods overboard, or cutting away
masts to prevent shipwreck. Particular Average is a contri-
bution for such damages or losses as may happen from the
common accidents of sea. -
.Award. The judgment of arbitration of one or more per-
Sons, at the request of two parties who are at variance, for
ending the matter in dispute.
Balance of Trade. The difference between the commercial
exports and imports of one country with respect to another.
Balance. The difference between the Dr. and Cr. sides of
an account in a merchant’s books.
Banks. – Banking-houses. Establishments wherein the
21
242 EXPLANATION OF
various operations of banking are carried on. The former
term is more properly applied to such as belong to Joint
Stock Companies trading under an assumed title, whose
capital is subscribed by a numerous body of shareholders,
and whose affairs are managed by a cashier and a board
of directors; the latter to a few individuals in copartnership,
trading on their own capital and in their own names. The
system of banking affords many advantages and facilities
for business, the principal of which are the following. It
provides places of safety for the custody of money. It ob-
viates the inconvenience of carrying cash from place to
place at the risk of loss or robbery. It effects a great
saving of time, and consequently of expense, to merchants
and tradesmen, who would otherwise have to count out
every sum of money they had to pay, and to send their own
clerks to all parts of the town to demand payment of their
notes and drafts. The term bank, is derived from bamco, the
Italian word for bench, as the Lombard Jews in Italy kept
benches in the market-place, where they exchanged money
and bills. When a banker failed, his bench was broken by
the populace ; and from this circumstance we have the term
bankrupt.
Bankrupt. A trader whom misfortune or extravagance has
rendered unable to pay his debts.
Barter. The exchanging of one commodity for another:
such was the original mode of commerce till money was
invented.
Bill. A term generally applied to a draft or promissory
note, and frequently to an account of goods.
Bill of Entry. A list of the particulars of goods entered at
the custom-house. e
Bill of Lading. A printed agreement between the shipper
of goods and the captain of a ship, binding the latter to de-
liver them “in good order and well conditioned,” on pay-
ment of a certain freight. It is usual to make out three bills,
one to the shipper, the second to be held by the captain, and
the third to be sent to the person to whom the goods are con-
signed, by which he can claim them on their arrival.
Bill of Sale. A contract, under seal, whereby a person
conveys the right and interest which he has in goods and
chattels. :
Bill of Store. A license granted by the custom-house to
merchants, to carry such stores and provisions as are neces-
sary for a voyage, free of duty.
Bill of Exchange. A written order for the payment of
money, issued from one place, and directed to another.
Blank Credit. The permission which one house gives to
COMMERCIAL TERMS. ' 243
another to draw on it to a certain extent, at any time, for
their own accommodation. -
Bounty. A premium given for the encouragement of some
branch of trade, manufacture, or agriculture. -
Bonded Goods. Certain articles which, on being landed,
are warehoused, upon bond being given by the owner for the
payment of duties, &c. - * *
Bottomry. A contract in the nature of a mortgage of a
ship, when the owner of it borrows money, to enable him to
carry on a voyage, and pledges the keel or bottom of the ship
as a security for the repayment; and it is understood, that if
the vessel be lost, the lender loses his money.
Broker. An agent employed by merchants in buying and
elling; who, for a trifling charge, finds the merchant buyers
in one case, and sellers in the other. There are several kinds
of brokers—such as ship brokers, insurance brokers, exchange
brokers, stock brokers, &c.
Brokerage. A commission or per centage paid by mer-
chants to brokers, either for the sale or purchase of goods,
bills of exchange, stock, &c.
Case of need, acceptance and payment for honor. Every indi-
vidual, whose name is found upon a bill, whether as drawer,
drawee, or endorser, is alike responsible to the last holder for
its payment when due ; and, as the return of a bill is not only
prejudicial to the credit of a merchant, but is also attended
with considerable expense, a plan has been devised for
guarding against this unpleasant occurrence. This plan con-
sists in adding what is called “..A Case of JWeed,” or reference
to a correspondent in the same place, who is thus called upon
“to interfere for honor” of the merchant by whom the bill is
referred to him. This reference is made by writing at the
bottom of the bill, thus:—“ in case of need, with Messrs,
.” When acceptance or payment is refused by the
drawee, the holder applies to the house thus indicated, who
accept or pay, as the case may be, whder protest and act of
honor; such being the name given to the notarial instrument
drawn up to enable their correspondent for whose account
they interfere, to recover from the drawers of the bill.
Capital or Stock. The effects of a house in money or
wares, by means of which it carries on trade and supports its
credit. - - -
Charter Party. The engagement between the owner of a
ship and the merchant, who engages the whole ship to go
from one port to another with goods, for a certain sum.
Check. Sometimes called a draft. An order addressed
to a bank for the payment of money to the individual named,
or bearer, on dermand. Checks are negotiable like bills, but
require no endorsement, and are payable instantly on pre-
244 EXPLANATION OF
sentation. All checks should be presented for payment with
as little delay as possible ; for, if retained beyond the day of
their dates, and the banks on whom they are drawn should
fail, the holder cannot recover from the drawer. On opening
an account with a bank, every person is required to write his
name in a book, in order that his signature may be known,
and always referred to when necessary. He is then supplied
with a cash-book and printed checks. In the former, all the
sums received and paid on his account are entered to his
debit and credit, as frequently as he chooses to leave the
book for that purpose. When he has an occasion to pay an
account, or to draw cash for his own use, he has only to fill
up and sign a check, and the bank immediately pays it.
Chevisance. A composition between debtor and creditor.
Circulating JMedium. Cash, bank notes, or other paper
money payable on demand.
Circular Letter. The printed notice of the establishment
or dissolution of a house, or alteration in the firm, &c. See
Firm.
Clearing. The name given to a daily exchange of bills
and checks, which takes place between most of the bankers
resident in the city of London, at the clearing-house in Lom-
bard street. The banking houses who “clear,” are thirty in
number, and a clerk from each, attends first at twelve and
then at three o’clock, with all the bills and drafts on the
others that have been paid in up to those hours. There is a
drawer appropriated to each house, and in these all the
drafts and bills are distributed by the respective clerks. Each
being provided with a printed list of the clearing bankers
called a balance sheet, he enters to the debit side all the sums
the other houses owe him, and on the credit all that he owes
them. If he has money to receive, he takes it from any body
who has money to pay ; for it is obvious that the amount to
be paid, must be equal to the amount to be received ; and the
only point to be attended to is, that each shall obtain the bal-
ance due to him on the clearing.
Clearing a Vessel, is entering all particulars relating to her,
at the custom-house.
Commission. An allowance given to agents or factors for
transacting the business of others, always so much per cent.
Compromise. To adjust a dispute by mutual concessions.
Composition. A contract between an insolvent debtor, and
his creditors, by which the latter accepts of a part of the debt,
in compensation for the whole.
Consignment. Goods sent by one house to another to sell
for their account, allowing them so much per cent for their
trouble. See Commission. -
Consul. An accredited agent of government at a foreign
COMMERCIAL TERMS. 245
port, appointed to protect the maritime interests of the coun-
try more especially. Documents of any kind attested by the
consul, under his hand and seal of office, are admitted as evi-
dence in courts of justice.
Contraband Trade. That which is prohibited by law.
Contingent. The proportion that falls to the share of a
person concerned in any business or advantage.
Convoy. Ships of war sailing with other ships in order to
protect them.
Counter-Order. An order sent to revoke a former One,
either for the sale or purchase of any commodity.
Credit. In general, the confidence which one house reposes
in another: more particularly the reverse of Debit.
Currency. The money in circulation, as distinguished from
bank paper, &c. -
Current. A term used to express the present time. Hence
the price current of any merchandise, is the known or ordi-
nary price at the time it is published.
Custom-house. The place where entries are made on goods
exported or imported, and the duties innposed by law paid.
Days of Grace. A customary number of days allowed for
the payment of a bill after the same becomes due. -
Demand. Calling upon a man for any sum of money, or
any other thing due. A bill at sight therefore is payable on
demand. - -
Debenture. A certificate given by the proper officers of the
customs on certain goods exported, on which the exporter or
seller is entitled to a drawback or bounty.
Del Credere. A per centage made by merchants in selling
goods for guaranteeing the solidity of the purchaser.
Demurrage. A penalty incurred by merchants for delaying
a ship beyond the time specified in her charter party.
Deviation. A departure without legal cause from the
regular course of a voyage, which deviation incapacitates the
insured from recovering, in case of loss.
Dishonor. An expression made use of when bills of ex-
change, &c. are refused acceptance or payment.
Dividend. A share of any capital, debt, or profit; also the
interest in the stocks.
Dock. A place where vessels are built, repaired, laid up,
or lodged for loading or unloading.
Draft. A bill or check by which one person draws money
on another; also a small allowance on goods sold by weight,
Drawee. The person on whom bills of exchange are
drawn. -
Drawback. A premium allowed on exportations.
Due Protection. Regular acceptance or payment of a draft
or bill, - -
21 %
246 EXPLANATION OF
Dubious-paper. Bills drawn on houses of little credit.
Duty. Tax imposed by government upon the import or
export of goods. * - -
Effects. Moneys, goods, or movables in the hands of one
person belonging to another. :
- Embargo. An arrest on ships or merchandise by public
authority. - -
Emporium. A principal place for the importation and sale
of merchandise.
Endorsement. The signature which the holder of a nego-
tiable bill writes on the back of it, by which he transfers his
interest to a third person. -
Exchange. A place in most large cities where merchants,
agents, bankers, brokers, and other commercial characters
meet, to confer and treat together of matters relating to ex-
changes, remittances, payments, adventures, freights, assu-
rance, and other mercantile negotiations both by sea and land.
Exchanges. The paying or receiving of money in one
country for its equivalent in the money of another country,
by means of bills of exchange.
Failure. Where a person in trade, through misfortune or
imprudence, is unable to pay his debts.
Finances. A terrn generally applied to the public revenues.
Firm. The mercantile appellation of a house engaged in
CO ſº II), G H C62.
Firsts for Acceptance. When a merchant purchases a
foreign bill, (for the first, second, and third constitute but one
bill,) he transmits the first immediately to a correspondent in
or near the town on which it is drawn, to procure acceptance
to it. By this means he secures the responsibility of the
drawee, without delay, and without incurring any risk what-
ever, since the first not being endorsed is not negotiable ; and
in the mean time he can dispose of the second, writing upon
it at foot, “First, with Messrs. —.” The second, travel-
ling, as it must ultimately do, to the place on which it is
drawn, is presented to the house indicated in the above notice ;
and the first is immediately given up, being in the language
of merchants held at the disposal of the second.
First-rate Paper. Bills drawn or accepted by a good house,
such as has always paid its bills regularly. - -
Flat. An article of merchandise is said to be flat when
there are few buyers.
Fore-stalling. The purchasing and laying up goods before
they come to market, with the intention of raising the price.
Folio. The debtor and creditor side of a ledger or account
book. - -
Freight. The sum paid for transporting merchandise by
sea, &c.
COMMERCIAL TERMS. 247
Government. “For your government,” is an expression
adopted from the French, signifying, “in order to give you
better information, and rules for acting by, in the purchase, or
sale of any merchandise.” -
Guarantee. A person who undertakes that certain stipula-
tions shall be fulfilled.
Honor. To honor a draft is to accept it on presentation.
Importation. The act of bringing goods into a country from
foreign parts.
Indemnity. Where one person secures another from re-
sponsibility against any particular event.
Insolvent. A person in trade who has not a capital adequate
to the payment of his debts.
Instalments. Certain proportions in which, by agreement
between debtor and creditor, a sum due is to be paid at stipu-
lated times.
Insurance or Assurance. A contract of indemnity, by which
one party engages for a stipulated sum, to insure another
against a risk to which he is exposed. The party who takes
upon him the risk, is called the Insurer, or Underwriter; and
the party protected by the insurance is called the Insured;
the sum paid is called the Premium ; and the instrument con-
taining the contract is called the Policy.
Insurance Broker. A person employed by merchants to
effect insurance on their ships and cargoes.
Interest. A premium paid for the use or loan of money.
To guard a person’s interest, is to protect his property, and
watch over his concerns.
Inventory. An account or catalogue of effects; a schedule.
Invoice. A paper sent off with goods exported on commis-
sion, or for the shipper’s own account. +
Journal. A book in which is recorded the transactions of
the Day Book, and the subsidiary ones, having the Drs. and
Crs. pointed out, in order to post them with more ease into
the ledger.
Landwaiter. An officer belonging to the custom-house,
whose duty it is to take an account of goods imported.
Lease. A contract by which, in consideration of some pay-
ment, a temporary possession is granted of houses or lands.
Ledger. The principal book of accounts kept by merchants
and tradesmen, in which the state of every person’s account
is seen.
Letter of Advice. A letter giving notice of any transaction.
Letter of Attorney, or Power of Attorney. A writing which
empowers one person therein named to act for another.
Letter of Credit. A letter by which one person can receive
money on the credit of another.
248 EXPLANATION OF
Letter of License. A written permission granted to a person
under embarrassment, allowing him to conduct his affairs for
a certain time without molestation.
License. A privilege from government for carrying on a
trade or business, on which a certain duty is laid.
Lieu. A claim, or attachment on any property which a
person has in his possession, for a debt due to him from the
owner of the property.
Lighterage. A charge for carrying goods to and from a
ship, in a lighter.
Liquidation. The winding up of a business, such as paying
and receiving all debts, &c. -
JManifest. A list of a ship's cargo, which paper must be
signed by the master of the vessel, before any of the goods
can be landed.
JManufacture. An article produced by labor or machinery
from any raw material.
JManufactory. A place where several artificers are making
any commodity, or article of merchandise.
JMart. A place of public traffic ; a great market or fair.
JMaturity in Bills, is when they become due, or payable.
JMaazimum. The highest price of any article, as fixed by
some law or regulation.
JMerchandise. All sorts of goods which may be bought or
sold.
JMerchant. A wholesale dealer in all sorts of goods on his
OWn a CCOUInt.
JMinimum. The lowest price of any article, as fixed by
some regulation.
JMint. The place where the public or current money is
coined. -
JMonopoly. The sole power or privilege of selling any
commodity, whereby any person, or bodies politic or corpo-
rate, are sought to be restrained of any freedom they had
before.
JMutual Debts. When two traders are indebted to each
other, one debt may be set off against the other, and in case
of bankruptcy, mutual credits, as well as mutual debts, may
be set off. -
JMutual Promise. When one person promises to another
to pay money, or do some other act, and he, in consideration
thereof, promises to do a certain act, &c.
JVational Debt. A debt due by any whole political com-
munity, as represented by their legislature and government.
JWet Proceeds. The sum which goods produce after every
deduction is made.
JWet Weight. The weight of any commodity, after every
deduction is made, and for which the price is charged.
COMMERCIAL TERMS. 249
JWom Claim. Where a creditor neglects to make his claim
within a proper time, in which case he cannot enforce his
demand.
JVotary Public. A person duly appointed to attest deeds
and writings; he also notes or protests bills of exchange,
inland and foreign, and promissory notes, when refused or
returned.
JVoting. The act of a notary when a bill or draft is not
duly honored, or, in other words, refused acceptance or
payment. -
Obligation. A bond containing a penalty with a condition
annexed, either for the payment of money, performance of
covenants, or the like.
Office. A place where business is transacted.
Omnium. A term used among stock-jobbers, to express all
the articles included in the contracts between government and
the original subscribers to a loan. .
Order. A direction from one house to another to effect
certain purchases, &c. upon linited or unlimited conditions.
Package. Any quantity of goods tied up for carriage. The
latter term also denotes the charge made for tying up the
goods.
Par of Exchange. The intrinsic value of the money of one
country, compared with that of another, with respect both to
the weight and fineness.
Parcel. A term applied both to small packages of wares,
and to large lots of goods. In this last sense, 20 hlids. of
Sugar, or more, if bought at one price, or in a single lot, are
denominated, “a parcel of sugar.”
Partnership. When two or more persons unite in trade,
and agree to participate in the profits or losses according
to their respective shares in the capital employed in the
COI) CeI’I].
Part owners. Persons concerned in ship matters, and who
have joint shares therein.
Pass in Conformity. To acknowledge that an account
transmitted is correct.
Please do the needful. A technical phrase used by mer-
chants in their correspondence, which means, “Do all that is
requisite in the case.”
Pierage. Money paid for the support of an established
pier.
Policy of Assurance. The deed or instrument by which a
contract of assurance is effected.
Portage. Money paid for sailors' wages while in port;
also money paid for the use of a port in shipping or landing
goods.
Posting. In book-keeping, is the mode of transferring
250 EXPLANATION OF
articles from the journal, or the subsidiary books, to the
ledger. *
Premium. The money paid an underwriter for insuring
the safety of ships, goods, houses, &c.
Price-current. A list of the various articles of merchandise
in the market, with the present prices annexed to each. In
most of the great commercial cities and towns, lists of this
description are generally published once or twice a week.
Principal. The capital sum due, or lent, in opposition to
interest. It also means the head of a firm, or commercial
house.
Pro forma. Imaginary, fictitious. The utility of a pro
forma document is this.-A Hamburg merchant is desirous
of shipping a parcel of wools to London on speculation, and
in order to ascertain whether he can realize a profit by such
a consignment, applies to his correspondent for a pro forma
account-sales of wool. The merchant in London either
transmits him a copy of a real account, suppressing names,
marks, &c., or makes up one altogether fictitious, but which
suffices to show the duties, charges, commission and expenses
of all kinds, on wools in the port of London.
Promissory JVote. A note of hand purporting the payment
of a certain sum, at a stated period.
Protest. A paper made out by a notary public, declaring a
bill has been presented for acceptance or payment, and was
refused.
Primage. So much per cent generally allowed to the
captain of a ship on the amount of freight.
Procuration. The power of using the signature of a house
on letters and bills.
Quarantine. The time a ship suspected of infection, is
restricted from intercourse with the shore; also certain duties
imposed on ships.
Quoted on board. The price for which a merchant agrees
to put goods on board, free of expenses of shipping to the
buyer.
Rebate. An allowance in the purchase of goods, for prompt
payment. -
Receipt. An acknowledgment in writing of having received
a sum of money, or other value; and is either a voucher for
an obligation discharged, or one incurred.
Respondentia. A contract by which money is borrowed
on the security of goods and merchandise, the same as in
bottomry on the security of a ship.
Restitution. When money has been paid wrongfully or by
mistake, the person so paying has a right to demand it back.
Retire. In mercantile phraseology to retire a bill means to
pay it, or to take it out of circulation by some other means,
COMMERCIAL TERMS. 251
Retail. A dealing in commoditrés, in small quantities.
Returns. A term expressing the value in goods or in
money, returned by the consignee of a cargo or parcel of
goods to the consigner: the term also means, a return or
remittance of bills.
Return of Premium. The whole or part of the premium
of an insurance which is given back in terms of the Policy.
Remittance. A sum of money sent either in bills of ex-
change, or otherwise, from one house to another.
Renewal of a Bill. The cancelling a bill or promissory
note due, and accepting another at a given date in lieu
thereof.
Sample. A small quantity of an article at a public or
private sale, as a specimen of the commodity.
Salvage. A certain allowance due to those, through whose
instrumentality property is saved from the perils of the seas,
enemies, &c.
Schedule. The statement of a bankrupt’s affairs, delivered
by him to the commissioners appointed to investigate his
CàSe.
Searcher. An officer of the custom-house, whose business
is to search all ships outward bound, to see whether any
prohibited or uncustomed goods are on board.
Sea-worthy. When a ship is, in every respect, fitted for her
destined voyage.
Seizure. An arrest of some merchandise, movable or other
matter, either in consequence of some law, or express order
of the government.
Set off of JMutual Debts. Where tradesmen are mutually
indebted, one debt may be set against the other; and in case
any action be brought, notice is to be given of the particular
sum or debt intended to be set off against another.
Smuggling. The act of importing or exporting goods
without payment of the customs, or excise duties.
Solidity. The character which a mercantile house bears
as to property.
Staple Goods. Such as are sold at a staple; or, the principal
produce of a country; and also, goods not being liable to
perish, as wood, lead, iron, &c.
Stock. A fund raised by a commercial company to be
employed in trade; in book-keeping, it denotes the owner,
or owners of the books. Stocks is a term likewise applied to
the capitals of banks.
Surety. When one person becomes bound that another
shall pay a certain debt, or perform a certain act.
Tally. A cleft piece of wood to score any account or
reckoning upon.
252 COMMERCIAL TERMS.
Tare. An allowance ºf the weight of the bag, box, cask,
or other package in which the goods are packed up.
Tariff. A table or catalogue containing the names of dif-
ferent kinds of merchandise, with the duties to be paid.
Tellers. Clerks in banks and public offices, who reckon,
receive, and pay money.
Tidewaiters. Officers employed to see the loading and
unloading of ships, in order to prevent contraband trade. “
Tonnage. The admeasurement of a ship, by which she
pays the tonnage duty ; or, it is her actual capacity for Stow-
age, and is in that case not unfrequently called her burthen.
Trustee. A person who has an estate, or money, put or
trusted in his hands for the use of another.
Umpire. When two arbitrators cannot agree in settling a
dispute, a third person is named, who is called an umpire, and
whose decision is binding.
Underwriters. Persons who insure ships, cargoes, or other
risks, which is performed by writing their names under a
policy of insurance.
Usury. Consists in taking more than legal interest for the
loan of money.
Walue. To value, in a mercantile sense, is to draw a bill ;
the words “value received,” or “value in account,” are always
mentioned in every bill of exchange.
Wharfage. Money paid for the use of a wharf.
Ntiºn anti $opular &&#drità
PUIBILISHED BY
P E R K M N s & MH A R W H N,
# 114 Washington Street; -
B O S T ON .
THE COUNTING-HOUSE ASSISTANT; containing a
summary of the law and usage of Bills of Exchange;
Tables showing when Notes and Drafts will fall due, &c.
&c. For the use of Merchants, Bankers and Accountants.
By B. F. FostER.
“This is a convenient manual, containing much useful information, which
men of business find it indispensable to obtain from some quarter. The first
part embraces a summary of the laws and usages relative to bills and notes,
intended to guard the merchant against the losses and litigations frequently
arising from imattention, or want of proper information; showing the proper
steps to be taken to preserve the legal claim on drawers, acceptors, indorsers,
&c. Next follow tables for ascertaining instantly, by inspection, when any
bill or note will full due, drawn or accepted any day of the year; together
with information respecting the modes of conducting business generally—
the value of foreign moneys, and rules for the equation of payments.”—
New York Evening Post.
“A remarkably useful and well-arranged compendium of information upon
the subject of which it treats. There are the laws and usages of bills of
exchange, with the requisite features of those documents; some curious and
important circumstances with regard to the maturity of bills and notes; tables
showing when notes become due at any date, commencing in any month;
rates of commission; various other tables of importance ; and rules for the
equation of payments. . All these appear to have been prepared with great
care and accuracy, and we believe will be found extensively useful in every
counting-house.”—New York Albion.
“Here is a work of evident utility, convenience and accuracy, containing
statements showing when motes, though dated on different days, fall due on
the same, and when one day’s difference in date will make several in the time
of payment; together with a mass of information relative to exchange, value
of money, &c. We should judge this to be an invaluable work for those
for whom it was prepared. In size it is convenient, in arrangement for
reference clear, and in mechanical execution meat.”—IWew York Sun.
A CONCISE TREATISE ON BOOK-KEEPING: eluci-
dating the Principles and Practice of Double Entry, and
the modern methods of arranging Merchants’ Accounts.
By B. F. Foster. Second Edition.
** The design of this work is to exhibit a view of Book-keeping as
actually practised among well-informed merchants, and to furnish learners
22
2 New and Popular Works
with a text-book so clear in its illustrations as to be easily understood, yet
so comprehensive as to afford aſ the information requisite for the practical
accountant. It contains the latest improvements in the art, and will be found
alike useful to the learner, the merchant, and the man of business.
“The excellence of Mr. Foster's system, and its acknowledged superiority
over others, is, we believe, fully admitted; and within a short period it has
been very extensively adopted in the practice of the first commercial houses
in our principal cities. The author has aimed mot to promulgate new or
fanciful theories, but rather to select information from the best sources, and
to embody the excellencies of the most approved writers on the subject. That
he has succeeded, the rapid sale of the first edition affords the most satisfac-
tory evidence.”—IVew Bedford Mercury.
HINTS TO YOUNG TRADESMEN AND MAXIMS
FOR MERCHANTS.
“A new book—and a rare one it is too—which tells how to get MoREY,
and what is more, how to keep it. We assure our readers that it is no
humbug—but full of good common sense, got up in the true style of Frank-
lin. There is no mistake about it—it is a first rate book of the kind. A
strict adherence to its maxims, will, in our opinion, save to a man of business
fifty dollars every year, besides freeing him from no little trouble and
vexation.”—Newburyport Watchtower.
“It contains much good advice in relation to matters of business, which
if followed will doubtless lead to WEALTH and RESPECTABILITY.
The lessons and maxims should be conned with care; if so, they may be
ºve of much good to individuals and to Society.”—Boston Mercantile
Oll/'720/.
“Any young merchant who should follow the directions and maxims laid
down in this book, could hardly fail to succeed in business, and eventually to
become rich.”—New York Journal of Commerce.
“These Hints and Maxims’ are of a very practical character, and evi-
dently the result of shrewd observation and long mercantile experience—
written in a plain off-hand style, and cannot fail to convince the reader—
whatever may have been his misgivings about the matter—that ‘ the way
to WEALTH is as plain as the way to market.’”—Boston Times.
“It contains specific rules relating to the transaction of business, and in a
careful adoption of the precepts therein laid down it must be worth its
weight in rubies to the mercantile community.”—New Bedford Mercury.
“This is a small book, with an hundred heads full of good counsels and
wise directions to young men in business; which if followed will lead to
frugality, industry and success. They will indeed teach them to be the
architects of their own fortunes. The maxims are excellent.”—Christian
Watchman,
“We advise every young man who is or who intends to be . in
business to possess this little book. By attention to the “Hints and Maxims’
here laid down, he cannot fail to be successful.”—Boston Recorder.
THE MERCHANT'S MANUAL, comprising the principles
of Trade, Commerce and Banking; with Merchants’
Accounts; Inland and Foreign Bills, Par of Exchange;
Equation of Payments, &c. By B. F. FostER.
Published by Perkins & Marvin. 3
THE ART OF RAPID WRITING ILLUSTRATED
AND EXPLAINED: to which is added an elucidation
of the Angular and Anti-Angular Systems. By B. F.
Fost ER. With plates.
“The bold, flowing, graceful writing, distributed throughout this work, is
enough to prove that the author is a skilful and competent teacher. The plan
is novel, simple and ingenious, and admirably adapted to secure the attain-
ment of fine penmanship.”—New York Evening Star.
“We conscientiously recommend this system to all who are intrusted with
the education of youth, or who feel a natural anxiety for the progress of their
children in so useful an accomplishment as that of penmanship.”—Boston
Mercantile Journal.
“The rules laid down in this treatise are sound, and if duly followed out
will lead to excellence.”—New York American.
THE PENMAN'S GUIDE: being a series of Large Text,
Small-Hand, and Current-Hand Copies; with Remarks
on Teaching Penmanship. By B. F. FostER.
FOSTER'S ELEMENTARY COPY-BOOKS : designed
to render the acquisition of Penmanship simple, pro-
gressive and agreeable; to save Teachers the trouble of
setting copies, and to furnish Schools and Families with
a practical system by which the art may be taught with
facility and correctness. Numbers 1 to 8.
* The slope of the letters, the thickness of the down strokes, and the
points where the hair strokes commence, are all indicated in the ruling with
mathematical exactness, which produces a constant check on carelessness
and inadvertency, and the learner is thus enabled to acquire an elegant
and masterly use of the pen in one-third of the time usually devoted to this
object. -
Description of the Copy-Books.
No. 1, Is designed for beginners. The copies consist of straight marks and ex-
ercises on the turns; leading progressively from the simplest rudiments of the art
to the formation of letters.
No. 2, Contains a series of exercises systematically arranged, designed to disci-
pline the muscular powers of the fingers, and to prepare the learner for the easy
execution of large hand.
No. 3, Contains the letters of the alphabet, arranged according to similarity,
with reeded lines and grooved spaces, to guide the learner in the formation of
each letter, together with large text copies. -
No. 4, Contains an alphabetical set of text-hand copies, with outline capitals;
designed and engraved in the first style of excellence.
No. 5, Contains a series of medium or round-hand copies, each beginning with
a capital, designed to prepare the learner for small-hand.
No. 6, Consists of small, round-hand exercises, and contains a set of copies, al-
phabetically arranged, preparatory to the lessons in running-hand.
Nos. 7 and 8, Complete the system, and consist of exercises, in current-hand;
being an improved plan of teaching mercantile penmanship. The specific design
of the excrcises in Nos. 7 and 8 is to teach swift writing.
4. Perkins & Marvin's Publications.
SPEECHES AND FORENSIC ARGUMENTS, by DANIEL
WEBSTER. 2 vols. 8vo.
BIOGRAPHY OF SELF—TAUGHT MEN, with an In-
troductory Essay by B. B. EDw ARDs.
LETTERS TO A YOUNG STUDENT in the first stages
of a Liberal Education.
THE YOUNG MAN'S GUIDE. By WILLIAM A. ALcot.T.
Twelfth Edition.
THE WRITINGS OF JANE TAYLOR. In 3 vols. 12mo.
“Very few authors in the language have done more to benefit the young
than this accomplished lady. An increasing acquaintance with her writings
affords us increasing satisfaction and delight.”
A TREATISE ON THE EDUCATION OF DAUGH-
TERS. Translated from the French of Fenelon, Arch-
bishop of Cambray.
MAXIMS on Health, Business, Law, Policy and Mind. By
Joe L. GILEs.
ICELAND, or the Journal of a residence in that Island
during the years 1814 and 1815; containing observations
on the Natural Phenomena, History, Literature, and
Antiquities of the Island, and the Religion, Character,
Manners and Customs of the inhabitants. By EBENEZER
HENDERson. Illustrated with a Map and Engravings.
“We can truly say, that we have seldom perused a volume of this kind
with more thrilling interest. As we follow the traveller on his route, we find
ourselves surrounded with some of the grandest scenes of nature, and the
most terrible workings of the power of Him, who “ looketh on the earth, and
it trembleth; who toucheth the hills, and they smoke.’” -
ESSAY ON THE HIEROGLYPHIC SYSTEM of M.
Champollion, Jr., and on the advantages which it offers
to sacred criticism. By J. G. H. GREPPo, Vicar-general
of Belley. Translated from the French by Is AAC STUART.
With Notes by Prof. Moses STUART.
THE PURITAN, a series of Essays, Critical, Moral and
Religious. By Jo HN OLD BUG, Esq.
LECTURES TO YOUNG PEOPLE in Manufacturing
Villages. By Rev. DoRUs CLARK. With an Introduc-
tion by Rev. AMos BLANCHARD. - -
s
|