HOW TO DO AS BUSINESS IS DONE IN GREAT COMMERCIAL CENTERS UC-NRLF CONTAINING ALSO BATONS NEW SHORT-CUTS IN FIGURES HOW TO DO BUSINESS AS BUSINESS IS DONE IN GREAT COMMERCIAL CENTERS BY SEYMOUR EATON Director of the Department of Industry and Finance, Drexel Institute, Philadelphia. Author of " The New Arithmetic," "One Hundred Lessons in Business, " Business Forms, Customs, and Accounts," etc. P. W. ZIEGLER & CO. PHILADELPHIA Copyright. 1896, BY SEYMOUR EATON. PREFACE. The field of business will never be wholly occupied. It will always offer large privilege and rich reward to the right kind of ability. It demands to-day the best brain power of the world. It is commonly stated, and with some truth, that more ability is needed for the position of president of a great railway than for the position of president of a great nation. The same is true of other great commercial concerns. No other field of action offers to-day larger inducements or greater responsibilities ; no other field draws more largely upon the ranks of able and ambitious young men. Modern business has grown so complex and its requirements are so exacting, that a knowledge of its laws, customs and tend 3ncies are necessary, not only to success, but to a comfortable existence. The American people are pre- eminently a business people. The world is both our harvest field and our market. Under these conditions no excuse need be offered for the publication of a business hand-book. Its pur- pose is self-evident. SEYMOUR EATON. M289368 CHAPTERS. PAGE Banking, Collections a,nd Negotiable Paper ... 9 Stocks, Bonds and Other Securities .... 101 Transportation of Mail, Money and Merchandise . . 135 Life, Fire, Marine and Indemnity Insurance . . , 167 Importing, Exporting, Shipping and Warehousing . . 183 Supplementary Notes Margin Trading . . . . 211 Hints and Helps for Young Business Men . . . .217 Letters Which Bring Business, and How to Write Them . 233 Valuable Hints for Corresponding Clerks .... 249 Slips in Grammar Corrected 260 How to Earn and Get a Good Situation . . . . 265 Communication by Telegraph 269 New Short-Cuts in Figures 273 Mechanics' Arithmetic 293 Postscript Notes 301 Modern Bookkeeping Ideas 307 Banking, Collections, and Negotiable Paper, Ancient Banking. The antiquity of banks is very great. In the Metropolitan Museum of Art, in New York, are Babylonian tablets bearing distinct records of transactions in banking that took place in the reign of Nebuchadnezzar. The origin of modern banking may be traced to the money dealers of Florence, who were in high repute as receivers and lenders of money in the fourteenth century. The name bank is derived from the Italian banco, a bench, the Jews in Lombardy having benches in the market place for the exchange of money. When a banker failed his bench was broken by the populace, and from this circumstance we have our word bankrupt. The business of borrowing and lending money was undertaken first by goldsmiths, although the two had no direct connection. In the process of the separation of employments, which is characteristic of an advancing society, banking became a business of its own. The Bank of England. The Bank of England was the fourth important national bank founded in Europe. The Bank of Venice was the first in date. The Bank of England is more than two hundred years old, and is to-day acknowledged to be the greatest financial institution in the world. It had a capital at commencing of six millions. The building covers a whole block bounded on the south by the famous 9 10 BANKING, COLLECTIONS, Threadneedle Street. Outside .it presents the appearance of a blind outer wall of a great building without windows, and having here and there ornamental pillars and a few entrances. The plan, as shown in our illustration, is a complex system of light- walls, -Account axt's Bank Sot e Office J _ _- PLAN OF THE BANK OF ENGLAND. offices, court yards, etc., the result of growth and necessity. Among the curiosities in the bank library is a million pound bank note. Tradition says, that there have been only four such notes issued. Samuel Rogers, the poet, had one framed and hung over his parlor mantelpiece. Among other curiosities in the bank AND NEGOTIABLE PAPER. library is a note for ^25, which had slumbered unobserved for in years, and was then presented and paid. If compound interest had been payable by the bank, the owner could have claimed over ;6o,ooo. About 50,000 notes of different values are paid into the bank every day. These are kept five years in the bank cellars and are then destroyed by burning. New notes are always given out in payment of bills and checks. The first bank founded in America was the Bank of North America, in Philadelphia, which was established in 1782. The Value to Business Men of Banks. Banks are absolutely necessary to the success of modern commercial enterprises. They provide a place for the safe-keeping of money and securities, and they make the payment of bills much more convenient than if currency instead of checks were the more largely used. But the great advantage of a banking institution to a business man is the opportunity it affords him of borrowing money, of securing the cash for the carrying on of his business, while his own capital is locked up in merchandise or in the hands of his debtors. Another and important advantage is to be found in the facilities afforded by banks for the collection of checks, notes, and drafts. Currency. The legal medium of exchange of a country is called its cur- rency, that which passes current, or circulates as money, such as coin and bills. Bullion is uncoined gold or silver. More than ninety per cent, of the cash circulation of the country is repre- sented by checks, etc. , and not by actual money. Opening a Bank Account. When you enter a bank to open an account, inquire for the cashier, and, if convenient, take with you some one who can introduce you and identify you as the person you profess to be. If you go alone, do not feel hurt if a number of questions are asked you. While you may be perfectly honest, a large number of people make their living by being sharp, and, besides, it is neces- sary to establish those confidental relations which ought to exist in all financial transactions, so that the cashier may know something more about you than he could ascertain by merely looking at you, 12 BANKING, COU,ECTIONS, DEPOSITED IN The Union Trust Company, 715, 717 & 719 Chestnut St., Philadelphia. DOLLARS. Bank Notes, Small Notes, 1's and 2's, Coin, . . V. . . Check, (ENTKE SINGLY) If in the city, name of bank : U oat of the city, name qf place where payable. 37 . a tbctt Cfu^Jju. 0~**, A* 10 Total, era and taking your name on a book. The cashier will have yoti place your signature in a book. Your name as written in this book should be the same in style as you intend to place on your checks. If necessary, the cashier or some officer of the bank, will show you how to make out a deposit slip. He will give you also a small bank book, in which you will be credited with the amount of money which you deposit. Each time you deposit money you will be required to make out a deposit slip. The banks furnish the printed blanks free. Under the word checks on the blank you write the names of the banks upon which the checks, if any, which you are depositing, are drawn. If a check is on a distant city, the name of the city should be given. Your bank book is in reality your only receipt from the bank for the money you deposit. When you deposit money hand it to the receiv- ing teller, and when you wish to draw money present your check to the paying teller. When you wish to have your bank book balanced hand it to the receiving teller. This is usually done on the first of each month. The paid or cancelled checks are returned to you in a day or two when you get your bank book back. These should all be filed in an orderly way. They serve as vouchers and may be useful in legal complications. TO *7 33 Z3L AND NEGOTIABLE PAPER. The Officers of a Bank. * The directors of a bank meet regularly to consider the char- acter of the paper offered for discount, and to consult regarding the general business of the bank. Sometimes the directors give the president or cashier authority to pass upon paper offered for discount. The ordinary officers of a bank are the president, who is the chief executive officer ; the cashier, who is the manager of the internal workings of the bank ; the paying teller, who pays out all moneys and has charge of the working cash of the bank ; he is familiar with the signature of each depositor and with his daily balance, and is really one of the most important officers of the bank. The paying teller should be a man of good ability, a man who can read motives from appearances, a man of quick and accurate judgment, and withal, a man of patience and unwavering good nature. The receiving teller receives all moneys coming into the bank, and makes the entries in the depositors' pass books. The note clerk has charge of the commercial paper handled. The book-keeper and his assistants have charge of the ledgers and other account books. Suggestions to Bank Clerks. Ability, enthusiasm, tact and determination are as necessary in banking as in any other commercial situations. Many of the most successful bankers in the country commenced as messengers and passed from one office to another until they became presidents. It should be the constant endeavor of officers of a bank who hold superior positions to cultivate and develop the self-respect of their subordinates. Faithful service and manly character in a janitor are entitled to just as much honor and to as full recognition as that rendered by a cashier. The man makes the place, not the place the man. It is the general opinion of bankers that the demand for the right sort of bank-clerk is much in excess of the supply. No young man should think of entering upon banking as a profession who has not a real love for the business. The best position for a young man, and the one affording the largest oppor- tunity for promotion will be that of general assistant. It is con- sidered better to enter upon a clerkship in a small bank than in a very large one, for the reason that the steps in the ladder of success are fewer and closer. The successful clerk must have a 14 BANKING, COLLECTIONS, true appreciation of the value of time. Kvery minute should be strictly given to the work of the bank. In the matter of prompt- ness the higher officers should set a good example for those in subordinate positions. There are exceptions, but as a rule, pro- motions are not the result of chance. The man in any calling who has the ability and the desire to do greater things will sooner or later be called upon to do them. Bank Checks. A check is an order for money, drawn by one who has funds in the bank, payable on demand. It is in reality a sight draft on the bank. Banks provide blank checks for their customers, and it is a very simple matter to fill them out properly. In writing in the amount begin at the extreme left of the line. The illustration given here shows a poorly written check and one which could be -.- -^ - ofwooDsrowy. - '^ Tm ORP'EH or Q-o/vyuLA (Ra/wvAA*ux/w>_/, -.- very easily raised. A fraudulent receiver could, for instance, write " seventy " before the nine and " 7 " before the figure "9," and in this way raise the check from $9 to $79. If this were done and the check cashed, the maker, and not the bank would become responsible for the loss. You cannot hold the bank responsible for your carelessness. A check was raised from $100 to $190 by the writing * ' and ninety ' ' after the words ' ' one hundred. " One of the ciphers in the figures was easily changed to a ' ' 9 " by adding a tail to it. It is wise to draw a running line~ , , after the amount in words, thus preventing any additional writing. Checks should be dated, but the absence of a date does not warrant a bank in refusing to cash the check. Notes made and executed on Sunday are invalid, but a check so dated is good. The signature should be in your usual style familiar to the paying teller. A check is a draft or order on a bank, and AND NEGOTIABLE; PAPER. need not necessarily be written in the prescribed form. Such an order written on a sheet of note-paper with a lead pencil might be in every way a legally good check. If it is necessary, any time, to write a check for a fractional part of a dollar, as 75 cts., write "Seventy Five Cents" and draw your pen through the printed word Dollars. There harder- ' _ cll e office of the Pacific Mills, Boston, the cancelled check of the United States for one cent ; and on the walls of the Bank of Commerce, New York City, hangs a handsomely framed check for $14,000,000, signed by the well- known banking house of Kidder, Peabody & Co. Usually checks should be drawn "to order." The words, "Pay to the order of John Brown ' ' mean that the money is to be paid to John. Brown or to any person he orders it paid to. If a check is drawn ' ' Pay to Bearer," any person, that is the bearer, can collect it. The paying teller may ask the person cashing the check to write his name on the back simply to have it for reference. In writing and signing checks use good black ink and let the copy dry a little before a blotter is used. Safety devices to prevent the fraudulent altera : tion of checks are of almost endless variety, but there has not been a preventive against forgery and alterations yet invented which has not been successfully overcome by swindlers. A machine for punching out the figures is in common use, but the swindler has successfully filled in the holes with paper pulp and punched other figures to suit his purposes. The method adopted by the express companies and by the post office department in its new money order is perhaps the best plan yet offered to prevent the raising of the amount of a check or order. We give here a photo-engraved copy of a Wells, Fargo Express order to illustrate this point. i6 BANKING, COLLECTIONS, Notice the printing on the left end. To raise such an order it would be necessary to add to the length of the paper, which of course would be impossible. The most experienced bankers favor a plain black and white check, drawn upon clear white paper with good strong black ink. There are often presented to banks for payment, checks in which the figures in the margin do not correspond with the amounts stated in writing in the body of the checks. The law governing cases of this sort provides distinctly that the amount in writing shall be considered correct. If the amount of money in- volved were large, the paying teller would be justified in withhold- ing payment until he satisfied himself that the amount in writing was what the maker really intended the check to call for. Identification. The banks of this country make it a rule not to cash a check that is drawn payable to order, unless the person presenting the check is known at the bank or unless he satisfies the paying teller that he is really the person to whom the money is to be paid. It must be remembered, however, that a check drawn to order and then endorsed in blank by the payee is really payable to bearer, and if the paying teller is satisfied that the payee's signature is genuine he will not likely hesitate to cash the check. In England, all checks apparently properly endorsed are paid without identi- fication. In drawing a check in favor of a person not likely to be well-known in banking circles, write his address or his business after his name on the face of the check. For instance, if you AND NEGOTIABLE PAPER. should send a check to John Smith, Boston, it may possibly fall into the hands of the wrong John Smith ; but if you write the check in favor of "John Smith, 849 Tremont St., Boston," it is more than likely that the right person will collect it. If you wish to get a check cashed where you are unknown, and it is not con- venient for a friend who has an account at the bank to go with you for the purpose of identification, ask him to place his signature on the back of your check, and you will not likely have trouble in getting it cashed. By placing his signature on the back of the check he guarantees the bank against loss. A bank is responsible for the signatures of its depositors, but it cannot be supposed to know the signatures of endorsers. The reliable identifier is in reality the person who is responsible. A Banker's Hints. Do not draw a check unless you have the money on deposit or in your possession to deposit. Do not test the generosity of your bank by presenting, or allowing to be presented, your check for a larger sum than your balance. Do not draw a check and send it to a person out of the city expecting to make good the amount before it gets back. Do not give your check to a friend with the condition that he is not to use it until a certain time. Do not send ignorant and stupid messengers to the bank to trans- act your business. Check Endorsements. In endorsing checks note the following points: i. Write across the back not lengthwise. 2. If your endorsement is the first, write it an inch or two from the top of the back ; if it is not the first endorsement write immediately under the last endorse- ment. 3. Don't endorse wrong end up ; the top of the back is the left end of the face. 4. Write your name as you are accustomed to write it, no matter how it is written on the face. 5. If you are depositing the check write or stamp "For Deposit" over your signature. This is hardly necessary if you are taking the check yourself to the bank. A check with a simple or blank endorse- ment on the back is payable to bearer, and if lost, the finder might succeed in collecting it, but if the words ' ' For deposit ' ' appear over the name, the bank officials understand that the check is i8 BANKING, COLLECTIONS, FOR DEPOSIT TO THT CREDIT OF intended to be deposited, and they will not cash it. 6. If you wish to make the check payable to some particular person by endorsing, write "Pay to . ( . N . or order," and under this write your own name as you are accustomed to sign it. 7. Do not carry around endorsed checks loosely. Such checks are payable to bearer, and may be collected by any one. 8. If you receive a check which has been transferred to you by a blank endorsement, and you wish to hold it a day or two, write over the endorsement- the words ( ' Pay to the order oj ?!H>: " This is allowable legally. The check cannot then be collected until you endorse it. 9. An autho- rized stamped endorsement is as good as a written one. Whether such endorsements are accepted or not depends upon the regulations of the clearing house in the particular city in which they are offered for deposit. In New York City the use of stamped endorsements is universal. The written endorsement is safer for transmission of out-of-town collections. 10. If you are endorsing for a company, or society, or corporation, write first the name of the company and then your own name followed by the word " Treas." n. If you have power-of-attorney to endorse for some particular person, write his name followed by your own, followed by the word ' 'Attorney ' ' or ' 'Atty " as it is usually written. 12. Where checks are sent out by the receiving (deposit) bank to all parts of the country for collection, it is customary for the bank to stamp upon the back of the check the words "ENDORSEMENT GUARANTEED." Sometimes a check reaches a bank through responsible parties, who are not its payees, without bearing the payee's endorsement. The bank may decide to pay without demanding the absent endorsement, since such a demand would cause considerable delay and trouble, if the presenter or the presentee of the check guarantees the absence of the AND NEGOTIABLE PAPER. endorsement. This he does by writing " Absence of endorsement guaranteed,'" with his signature, on the back of the check. Of course, this is practically a guarantee against loss and trouble to the banker, which might result from the absence of the endorse- ment. The banks of some cities will not accept such guarantee. It is sometimes permissable to endorse the payee's name "by ...... ( . ?.:> ....... V This may be done by a junior member of a concern when the person authorized to endorse checks is absent, and the checks are deposited and not cashed. If a check lacks the endorsement of the original payee, it may be wise, if con- venient to do so, to get it certified before sending it back for such endorsement. 13. Write your check payable to the order of some person, but don't write " Pay to the order of Chas. Hood & Co., for subscription to Ledger for 1897" Such information on a paid check may serve some purpose of yours, but it is not good business. Descriptive and qualifying matter is quite proper in the letter accompanying the check, and if the letter has been copied, it is just as legally valuable. 14. Do not write any unnecessary information on the back of your check. A story is told of a woman who received a check from her husband, and when cashing it, wrote ' ' Your loving wife ' ' above her name on the back. Gashing your own Check. If you wish to draw money from your own account, the most approved form of check is written " Pay to the order of Cash." This differs from a check drawn to "Bearer" The paying teller expects to see you yourself or some one well-known to him as your representative, when you write "Cash" If you write "Pay to the order of. ..... ?.....:> ...... ," you will be required to endorse your own check before you can get it cashed. Checks for Special Purposes. If you wish to draw a check to pay a note, write ' ' Pay to the order of Bills Payable" If you wish to write a check to draw money for wages, write ' ' Pay to the order of Pay Roll. ' ' If you wish to write a check to pay for a draft which you are buying, write ' ' Pay to the order of N. Y. Draft and Exchange ', ' ' or what- ever the circumstances may call for. BANKING, COLLECTIONS, "No Funds." If you have deposited a check and it is returned through your bank marked "No Funds," it signifies that the check is worth- less and that the person upon whose account it was drawn has no funds to meet it. Your bank will charge the amount to your account. The best thing to do in such a case is to hold the pro- tested check as evidence of the debt and write the person who sent it to you giving particu- lars and asking for an explana- tion. There is no advantage in having the check protested unless it has an endorser other than your- self. One of the bankers' jour- nals gives an instance of a man who had a check AND NEGOTIABLE PAPER. 21 for $900, which he took to get cashed. He learned that the drawer had only $700 on deposit, and knowing that he (the drawer) was embarrassed financially, the man deposited to the drawer's credit $200 of his own money, and then presented his $900 check and had it cashed. Stopping Payment. If you wish to stop the payment of a check which you have issued you should notify the bank at once, giving full particulars of the check. Cancelling Checks. Banks have a custom, after paying and charging checks, of cancelling them by punching or by making some cut through their face. These cancelled checks are returned to the makers at the end of each month. Checks presented after Death. As a general rule banks are expected to stop the payment of a check, the signer of which has died before its presentation. This is not always possible for the reason that information as to the death of a customer may not reach the bank for days, so that in reality banks are every day paying checks of men who are dead. In Massa- chusetts, checks are good for ten days after the death of the signer. Checks should he Numbered. Checks should be numbered so that each can be accounted for. The numbers are for your convenience and not for the convenience of the bank. It is important that your check book be correctly kept, so that you can tell at any time how much money you have in the bank. At the end of each month your small bank book should be left at the bank so that the book-keeper may balance it. It may happen that your bank book will show a larger balance than your check book. You will understand by this, if both have been correctly kept, that there are checks outstanding which have not yet been presented at your bank for payment. You can find out which these are by checking over the paid checks that have been returned to you with your bank book. The unpaid checks may be presented at any time, so that your actual balance is that shown by your check book. Checks should be presented for payment as soon after date as possible. 22 BANKING, COUvECTlONS, Certified Checks. If you wish to use your check to pay a note due at some other bank, or in buying real estate, or stocks, or bonds, you may find it necessary to get the check certified. This is done by an officer of the bank who writes or stamps across the face of the check the words " Certified" or " Good when properly endorsed" and signs his name. See illustration. The amount ' will immediately be 0V d " 2 5 j 5 CQ U J m , ^ . _ ^ - ~ ^. ^ ^ _ j^*2c^s*<-^.^*j^_^^r^^H^-^ -^ - -.. - "-- Dollars. GJ V Pay to the order of * 5 deducted from your account, and the bank, by guaranteeing your check, becomes responsible for. its payment. Banks will usually certify any check drawn upon them if the depositer has the amount called for to his credit, no matter who presents the check. If you should get a check certified and then not use it, deposit it in your bank, otherwise your account will be short the amount for which it is drawn. In Canada, all checks are presented to the " ledger keeper ' ' for certification before being presented to the paying teller. Bank Drafts. Your bank check is really your sight draft on your bank. Of course it differs from an ordinary commercial draft, not only in its wording, but in its purpose. A check is used for paying money to a creditor, while a draft is used as a means of collecting money from a debtor. The bank is obliged to pay your check if it has funds of yours sufficient to meet it, while the person upon whom your draft is drawn may or may not honor it at his pleasure. Banks keep money on deposit in one or more other banks located in some of the commercial centres. Nearly all large banks keep AND NEGOTIABLE PAPER. money on deposit with one or more of the New York City banks. They call these banks their New York corre- spondents. A bank draft is simply the bank's check, drawing on its deposit with some other bank. Banks sell .these checks to their custo- mers. Merchants make large use of these drafts, or cash- ier's checks as they are sometimes called, in making remittances from one part of the country to another. These drafts or checks pass as cash anywhere within a reasonable distance of the money centre upon which they are drawn. Banker's drafts on New York would, under ordinary financial conditions, be considered cash anywhere in the Uni- ted States. A draft on a foreign bank is commonly called a bill of exchange. Bills of exchange are usual y drawn "in duplicate, one of which is for- warded and the other retained. They are so worded that when the 24 BANKING COLLECTIONS, original is paid the duplicate becomes void. They are drawn in the currency of the country where they are made payable. These drafts are used to pay accounts in foreign countries just as drafts on New York are used to pay indebtedness at home. The Clearing-House System. In large cities checks representing millions of dollars are deposited in the banks every day. The separate collection of these would be almost impossible, were it not for the clearing-house system. Each large city has its clearing-house. It is an establish- ment formed by the banks themselves, and for their own con- venience. The leading banks of a city connect themselves with the clearing-house of that city, and through other banks with the clearing-houses of other cities, particularly New York. Country banks connect themselves with one or more clearing- houses through city banks which do their business for them. The New York banks, largely through private bankers, branches of foreign banking houses, connect themselves with L,ondon. So that each bank in the world is connected indirectly with every other bank in the world, and in L,ondon is the final clearing- house of the world. The clearings in New York in one day amount to from one to two hundred millions of dollars twice as much as all the other cities in America put together. Usually once a week the banks of a city make to their clearing-house a report, based on daily balances, of their condition. Check Collections* Each bank in a city receives on deposit, daily, checks on other banks. Instead of sending these by messenger to the other banks they are sent to the clearing-house at a fixed hour each day in some cities twice a day. The banks of a clearing-house city are numbered. These numbers are seen stamped upon checks which the bank handles in the process of collection. Bank A may for instance carry checks amounting to $200,000 to the clearing-house for collection. Banks C, D, H and F may have checks on A amounting to $189,240, which they send to the clearing-house for collection. This would show a balance of $10,760 in A's favor, which is paid to bank A by the clearing-house in clearing-house certificates or due bills. If the balance were against A, the amount due would have to be made up within the hour limit fixed by the AND NEGOTIABLE PAPER. clearing-house regulations. Suppose, for illustration, that Brown of Lynn owes Smith of Media $25, and pays the amount by a check on a Lynn bank. This check will go by mail from Lynn to Media. Smith will deposit it in a Media bank. The Media bank will send it with other checks to its Philadelphia correspondent, say the Penn National. The Penn National will send it with other checks to its New York correspondent, say the Chemical. The Chemical will forward it with other checks to its Boston correspondent, say the First National. Now the First National of Boston may not be the Boston correspondent of the Lynn bank. It therefore sends the check for collection through the Boston clearing-house to the bank which does the Boston business for the particular Lynn bank upon which the check is drawn, say the Second National. The Second National sends the check to Lynn, where it is charged up against Brown's account. This system of collections is almost as perfect as is the post office system of carrying registered mail. The Wanderings of Checks. Under old-fashioned methods, each bank was in the habit of selecting its collection agents, sending them by mail their collection paper, charging their customers very substantial collection rates, and passing the same to their credit when collected. Nowadays 26 BANKING, COLLECTIONS, the country trader, no matter where he is located, sends his check on a local bank to pay his account in a distant city, and the receiver of the check expects his bank to collect the amount of Yo **c the check free of expense, and to give him full credit for it the day it is deposited. Suppose for instance that a merchant of Selma, Ala. , sends his check on a Selma bank by mail to pay a bill in Alpena, Mich. The Alpena merchant deposits it in his local bank, and this local bank sends it to its Detroit correspondent. That is, deposits it in the Detroit bank where its account is kept. The Detroit bank sends the check to its Chicago correspondent. The Chicago bank may have no connection with a Southern city. It sends the check to its New York correspondent. The New York bank forwards the check to New Orleans, where it ma}" pass through the clearing-house to some other New Orleans bank which forwards it to its correspondent in Mobile. The Mobile AND NEGOTIABLE PAPER. bank sends the check to Selma and has it charged up to the account of the man who issued it. Now all these banks ana clearing-houses through which the check passes, stamp their endorsements and other information on the back of the check. Our illustration shows a photo copy of the backs of two checks *** flay WWM, TEB 27 1889 '" 3 ibt -Second Hall Bard, of 'A 'N ' A11D PAV T 1w i ? ORDER VW^ FOR OEPOSJT IN THS NATIONAL CITY BANK OF BAHK N. <*& PAY TCE ORDER OF THE which have "travelled." Millions of dollars are collected by banks daily in this way, and all without expense to their custo- mers. It is estimated that these collections cost the New York city banks more than two million dollars a year in loss of interest while the checks are en route. Ten thousand collection letters are sent out every day by the banks of New York City alone. 28 BANKING, COIJ/ECTIONS, Organization of Banks. The National banks are organ- ized under na- tional laws, while state banks, sav- ings banks, etc., are organized under the laws of the State in which they are located. Any person who has money and credit can start a pri- vate bank. Some of the largest banking institu- tions of the world are owned by private individu- als, and are not subject to law any more than is any other kind of business con- cern. Trust com- panies are, in some particulars, similar to banks. They receive deposits and make loans, but they do not usually under- take the general collection of com- mercial paper. They act as trus- tees for corpora- tions, as agents AND NEGOTIABLE PAPER. for the sale of stocks, as execu- tors, administrators and guardians of money for courts. They make invest- ments, collect inter- est and rents, and perform many other financial services. Kiting. Don't exchange checks to get twenty-four hours' credit. This is often done. The banks call it kiting. If your bank finds that kiting is in- cluded in your busi- ness methods, do not be surprised if you are asked to withdraw your ac- count. Banks can- not afford to lend you money even for twenty-four hours without interest or security . To illus- trate, suppose it is 12 o'clock noon after the bank-clear- ing at the clearing- house. A is short and needs $500. He gives B his check for $500 and takes B's check for $500. B's check BANKING, COLLECTIONS, may not be any better than A's, but A deposits it and has ample time before three o'clock to draw on the deposit and use some of the money. B may do the same with A's check. Other checks or cash are deposit- ed in the morn- ing before clear- ing-house hours so that the $500 checks may be met when they come in for col- lection. A may accomplish the same end by hav- ing accounts in two banks and by depositing a check on the one in the other, < Forged Cheeks. , Who is liable when a forged check has been paid? This ques- tion is often asked, and the answer varies with circumstan- ces. Ordinarily the bank must stand the loss, AND NEGOTIABLE PAPER. but if the fraud is the result of carelessness on the part of the person whose name is forged, the bank is not liable. Business men should not only make use of the most approved methods of protecting their checks but they should take every possible pre- caution to prevent improper use of the blank forms by keeping them in places inaccessible to anyone but those of their own count- ing-rooms who are authorized to write up their checks. Signatures. In the course of business we often come across very queer specimens of writing and eccentricities in signatures. A New York Insurance Company's Vice-President has a signature, as it appears on the policies issued by his company, which is fourteen inches one way and nine inches the other. In our illustration the BANKING, COLLECTIONS, signature at the top on the left is that of F. S. Watte, teller of an Iowa bank. Immediately under this name is that of John Mohr, Jr., cashier of a bank in Indiana. Under Mohr's signature is that of Tom Randolph, president of a bank in Texas. Directly under Randolph's signature we find a cross-etching which represents the treasurer of a manufacturing company in Connecticut Hugh Harbison. It ranks high as a curiosity in penmanship. The writing at the upper right-hand corner is that of Carmon Parse, cashier of a bank in New Jersey. The writing in the lower right- hand corner filled the entire page of a letter sheet. The name is that of Jas. V. D. Westfall. These specimens are interesting, but after all the best form of signature, and the one most difficult to forge, is that written in a plain business style, such as "John Johnston" in the illustration. Business men and bankers areas thoroughly familiar with the signatures of other business men as they are with their faces. The Bank's Cash. The actual usable cash of a bank is represented by the silver, gold and bills on deposit. It is estimated that the gold in use in the world amounts to $7, 000,000,000, and that an equal amount has been lost through wear and other causes since the earliest times. A million dollars in gold could be put into a box two feet square and a foot deep. All the gold in the world could be put into a room 64 feet by 50 feet with a height of 20 feet. It is estimated that a million dollars worth of gold is each year buried in the cemeteries of the United States in the mouths of the dead. The gold in our banks lies piled in bags containing $5000 each. Each bag weighs twenty-two pounds. Standard gold is worth $18.96 an ounce, and a $20 gold piece weighs 21 }4 pennyweights. In shipping gold from New York to London it is estimated that a million dollars in gold will be reduced in value, by the coins rubbing against each other, about $175. If a standard gold coin falls short one-half of one per cent, of its original standard weight, it is marked light weight the moment it reaches the United States Treasurer. It then ceases to travel as money. The United States bills which are considered cash are of a variety of kinds. There are in circulation over $300, 000,000 of treasury notes of the following denominations: $i, $2, $5, $10, $20, $50, $100, $500, $1000. These are payable in coin, either gold or AND NEGOTIABLE PAPKR. 33 silver. The national bank notes are really promissory notes, issued by the banks, and payable on demand. They are secured by, and issued upon, United States bonds. Every national bank must redeem its notes in full in lawful money at the treasury in Washington or over its own counter whenever a demand for pay- ment is made. The denominations of the national bank notes are the same as those of the treasury notes, except that there are no bills smaller than $5. The silver certificates are notes issued by the United States government and payable on demand in silver dollars. Some hundreds of millions of dollars of this form of money is now in circulation. Notwithstanding the fact that the paper used is of the very best quality, paper money, the world over, is constantly becoming ragged and mutilated. It may be well to quote here the law which regulates the redemption of mutilated bills. If the whole face of a note is in a condition which will permit its being recognized as a genuine bill it will be paid in full. If not more than two-fifths of the paper of a national bank note is gone and the note shows the name of the bank and the re of one of its officers, it will be paid in full. A fragment of a national bank note which does not clearly amount to two- fifths of the original paper is not redeemable at all, except a satis- factory affidavit can be presented, showing that the balance of the note has been destroyed. When a national bank note amounts to 34 BANKING, COLLECTIONS, two-fifths or more, and not over three-fifths, it is redeemed at its proportional value. The circular of the treasury department for other than national bank notes rules that one-tenth of .the value of the bill is to be deducted for each tenth or fraction thereof missing, unless the note is clearly less than one-half, when it is not redeem- able. Counterfeit Notes. All United States notes are printed in sheets of four notes of one denomination on each sheet. Each note is lettered and num- bered twice. All notes of which the number when divided by 4, shows a remainder of one, have the check letter A ; a remain- der of 2, the check letter B ; a remainder of 3, the check letter ; those numbers which divided by 4 show no remainder, have the check letter D. Any United States note the number of which cannot be divided by 4 and show one of the foregoing results is a counterfeit. There are no secrets in the art of detecting counter- feits. Careful study, long experience, and a thorough familiarity with all kinds of genuine bills, will make any person an expert. Banks are required by law to stamp as ' * Counterfeit ' ' all bad bills coming into their possession. Bank Loans. A portion of the loans of many banks consists of investments in solid bonds, but the bulk of the loans of banks are made on commercial paper ; time and demand loans are made upon collaterals of many descriptions. The larger banks loan, on an average, from fifty to one hundred thousand dollars a day. A very large pro- portion of the commercial paper discounted is first handled by note brokers. Banks discount paper for their depositors and simply term the operation discounting ; but when they go outside of their line of depositors, in making investments in time paper, they call it buying paper. They generally buy from private bankers and note brokers. National banks are prohibited from loaning over ten per cent, of their capital to any one individual or corpora - tion, except upon paper representing actually existing merchandise Accurate Interest. The treasury department at Washington pays accurate inter- est, founded on a basis of 365 days to the year. The great major- ity of banks pay and charge interest on a basis of 360 days to the year. AND NEGOTIABLE PAPER. 35 Money " On Call." National banks located in clearing-house centers, find it a very convenient thing to put out quite a percentage of their loans on call. In some cities banks have a habit of borrowing on call from each other at clearing-house settlements. Call loans are payable on demand and are secured by demand notes. Collaterals. If a business man borrow $1000 from a bank on his note and give ten shares of stock to the bank to be held by it simply as security, the stock thus given would be termed collateral. These collaterals are not the bank's property, and the bank is responsible for their safe-keeping. If coupons mature while bonds are being held as collateral, the owners are usually allowed to collect the amount for which they sell. Sometimes one note is given as collateral security for another which is discounted. Promissory Notes. A promissory note is a written promise to pay a specified sum of money. At the time of the note's issue, that is, when signed and delivered, two parties are connected with it : the maker and the payee. The maker is the person who signs or promises to pay the note, and the payee is the person to whom or to whose order the note is made payable. Negotiable in a commercial sense BANKING, COLLECTIONS, means transferable and a negotiable note is a note which can be transferred from one person to another. A note to be made nego- tiable, must contain the word order or the word bearer, that is, it must be payable either to bearer or to the order of the payee. A non-negotiable note is payable to a partic- ular person only. A note may be written on any kind of paper in ink or in pencil. Date of a Note. The date of a note is a matter of the first importance . Some bankers and business men now consider it better to draw notes and time drafts paya- ble at a certain fixed time ; as, ' ' I promise to pay on the loth of March, 1897." The common custom, how- ever, is to make notes payable a certain num- ber of days or months after date. A note made and issued on Sunday is void. The day of maturity is the day on which a note AND NEGOTIABLE PAPER. 37 becomes legally due. In most of the states a note is not legally due until three days, called days of grace, after the expiration of the time specified in the note. The words, y Draft. It is a very common thing to collect distant accounts by means of commercial drafts. A debtor is more likely to meet a draft than he is to reply to a letter and enclose his check. It is really more convenient and safer too, for there is some risk in sending personal checks through the mails. There are some houses that make all their payments by check, while there are others that prefer to have their creditors at a dis- tance draw on them for the amounts due. If a business man who is accustomed to honor drafts continues for a period to dishonor them, the banks through which the drafts pass conclude that he is unable to meet his payments. Circumstances of this character have a tendency to in- jure one's credit. The messenger from a bank who presents a sight draft is not authorized to accept a check in payment, but the person upon whom the draft is drawn may, if he chooses, write across the face, "Accepted, July , 189-, payable at First National Bank ," and under this write his name. See preceding page. Such a draft is then really a check an order on his bank to pay the amount due for him, and the particulars must be entered in the check book just the same as though an actual check had been issued. Some houses deposit their drafts for collection in their home banks, while others have a custom of sending them direct to some bank in or near the place where the debtor resides.. If the place is a very small one the collection may be made through one of the express companies. Draft Notices. When goods are sold for distinct periods of credit and it is gen- erally understood that maturing accounts are subject to sight drafts, there really should be no need of notifying the debtor in advance of drawing. Some houses, however, make a general custom of sending notices ten days in advance stating that drafts will be drawn if check is not received in the meantime. These notices may be often seen printed at the foot of statements sent out on the first of the month. When are accounts due? Custom has made some rules which are now considered absolute by the best business houses. On general monthly credit accounts, all goods bought during the month are due on the first day of the month following and may be paid any time between the first and the tenth. Goods sold for cash should be paid for at once or within ten days from the date of sale. If a discount is allowed for cash that discount can 4 40 BANKING, COLLECTIONS, be claimed and is usually allowed if payment is made within 10 days, Goods bought on March 3 at 30 days would be due April 3 plus 10 days or April 13. That is to say, if a discount were allowed for pay- ment within 30 days the discount could be claimed if payment were not made until April 13. It is a common custom to date sales ahead, to the first of the next month, or sometimes two or three months ahead. The dates then of drafts conform to the general custom of credits. Collections through Banks. If you desire to have your bills receivable and commercial drafts collected through a bank, you should place them with the bank at least fifteen days before maturity. About ten days before maturity the bank will send to the maker a formal notice stating that they hold a note against him, giving the amount, and date of maturity, and asking him to call and pay it. When a note is lert at a bank for collection, it should be endorsed " Collected for account of ." By this endorsement the note is not transferred to the bank. The bank is simply authorized to collect the amount. Three Party Draft. If the drawer of a draft owes some one in the same city with the person upon whom he draws, that is, if he has a creditor and a debtor in the same city, he can draw on the debtor in favor of the creditor and forward the draft by mail to the creditor. The creditor will de- posit it for collection in the ordinary way, usually after endorsing it. "No Protest." We often see attached to the end of a draft a little slip with the words "No Protest ; tear this off before presenting" This is simply private advice to the banker informing him that the drawer does not wish to have the draft protested. It may be that'he does not wish to wrong, or injure the credit of, or add to the expense of his debtor, or it may be that he considers the account doubtful and does not wish to add to his own loss that of protest fees. Discounting Drafts. It is quite a common thing to have drafts discounted before they are accepted. For instance a wholesale merchant may have accounts out amounting to $100,000 and he may need immediate working capital. He draws on his customers and sells his drafts to a bank either directly AND NEGOTIABLE PAPER. 43 or through a note broker. The amount of discount depends upon the money market. The drafts are as good as one-name notes. Some of them, of course, will be dishonored, but these are met by the drawer as soon as returned, or he may set aside an agreed upon percentage of the entire amount to cover the drafts likely to be returned. Drafts at- tached to bills of lading ancl other securities are frequently discounted when placed in the hands of the bank. Such drafts are usually drawn at sight or at one day. The Advantages of Taking a Note. It is generally understood that a debtor is more likely to pay a promissory note than he is to keep a simple verbal promise. It will in- jure his credit if he allows his paper to go to protest. It is difficult, too, to dispute a claim after a note has been given in settlement. The note may be used by the creditor in raising money for his own use, that is, he may get it discounted sell it to a note broker or to a bank. But there are some disadvantages. If a note is accepted from a debtor the account cannot be collected until the day of maturity of the note. You may hold a note against a debtor, and if your note is not due, you cannot by any process of law prevent your debtor from selling every- thing he owns and leaving for parts unknown. A note that is overdue is in some particulars better than a note not yet matured. An overdue note draws interest at the legal rate from the date of maturity and legal steps to collect it may be taken at any moment. Discounting Paper. To discount a note or draft is to sell it at a discount. The rates of discount vary according to the security offered, or the character of the loan, or the state of the money market. For ordinary commercial paper the rates run from 4 to 8 per cent. Notes received and given by commercial houses are not usually for a longer period than four months. Drafts and Bills of Lading. The use made of commercial drafts in connection with bills of lading is quite interesting. For instance, the live cattle are paid for in Texas by the proceeds of a draft, with bill of lading attached, upon Chicago, where they are slaughtered. Bills of lading for the dressed beef shipped East are accompanied by drafts on New York, and the shipment per steamer to Liverpool or Glasgow is drawn against, in sterling, upon London. The latter draft is sold to a New Yt*k BANKING, COLLECTIONS, banker, who in turn draws against it in favor of merchants who are buying foreign ex- changes. Protest Notice. The student will no- tice the copy of a protest notice the form used by notaries in Massachu- setts. An illustration is given also of a protested note stamped in red by the notary. The num- ber is the clearing-house number of the bank. Overdue Paper. Negotiable paper whether made for ac- commodation or other- wise may be transferred by endorsement and de- livery or by delivery alone either before it has fallen due or afterwards. There is a difference, however, in the liability attached to endorsers, and the value of the paper may be effected by the defences existing between the original parties. It would be well to consult a lawyer before accepting over- due paper, particularly if it has endorsers. AND NEGOTIABLE PAPER. 45 Who is a hoiia fide holder? If the endorsee or holder of a note has no notice at the time he receives it, of any facts or circumstances that would prevent any of the L VERNON 8RIGGS, Notary Public. ommotm>eatth of County U. S. PASSPORTS. ...fit da/ nefatS, tee-a+tinf ArrymtH-S. I, / have hereunto set my hand and affixed my Notarial Sea/, the day and year f rat above written. (Noting Non Acceptance, J Postage, Trarel and Expense, j Protesting for Non Payment, / I Postage, Trarel and Expense, ( Notary | Public. parties to the paper before him from recovering the whole amount, he is a bona fide or innocent holder, and if he has paid for the note, he is a holder for value, and^can recover its full face. An alteration or. BANKING, COLLECTIONS, change in some material part of a promissory note, by a party to it. makes the paper void as regards all parties except those who assent to the change. Adding an interest rate is a change. A Set-on^ If a man has a claim against you and you have also a claiit. against him, you call your claim a set-off, that is, something to set or cancel off part or all of his claim. Under ordinary conditions it is impossi- ble to have a set-off against a note not in the hands of the original payee. Notice of Non-payment of a Note. If the note has been discounted or is in a bank for collection, the bank will send notice to the endorsers to the effect that the note has been presented for payment and payment was refused. If the note is in the maker's hands and payment, upon presentation, has been refused, the maker should immediately send a written notice to the endorser, if any, stating that a certain note made by , for , in favor of dated , and "by you endorsed " was this day presented to for payment and payment was refused. Such notice may be sent by mail. A "Mark" Signature. When a man who cannot write is asked to sign a deed or mortgage or other legal docu- ment, the usual cus- tom is to have him affix a cross as in the illustration, some one doing the writing for him. Such a signa- ture should be wit- nessed. See illustra- tion. An endorse- ment of this kind is legal and is quite common. There are no legal rules governing the shape of the mark. An Important Provision. A very important provision of the national bank act is as follows AND NEGOTIABLE PAPER. 47 "No bank shall loan or discount on the security of shares in its own capital stock unless such security or purchase shall be necessary to pre- vent loss upon a debt previously contracted in good faith." The Name "Bank." In some of the states the title Bank can be lawfully used by any one ; in other states, for instance, New York and Massachusetts, the title Bank can be used only by duly incorporated banks which are or- ganized and conducted under the provisions and restrictions of the State banking laws. Fower of Attorney'. To give some one else the power to sign or endorse checks, notes, or other important papers, is called giving such an one power of attor- ney, that is, the power or authority to be your attorney. Such author- ity when given should be in writing and have a witness and should state explicitly what the attorney has power to do. The post-office department issues a printed blank for use by those who wish to transfer to others the power to sign money orders. Powers of this sort should be filed with the post-office, or bank interested, or should be made mat- ters of public record at the offices of the register of deeds. The reader will find on the next page a power of attorney from Daniel Webster to Mrs. Webster giving her authority to draw and sign checks. This document appeared some time ago in Rhodes Journal of Banking and was taken from the files of the bank .where it was actually used by Mrs. Webster. The Return of Vouchers. Banks usually return to promisors and acceptors, all the paper which they have collected. When you pay a note or draft you expect to receive the cancelled note or draft in exchange for the money which you pay. In the same way paid checks are returned to the drawers of them, at the end of each month. This rule is not generally followed, however, between banks and their correspondents. The cancelled note or draft which you receive should not be destroyed. It may serve as an important voucher. A good plan is to tear the signature through the middle and destroy the torn off piece. The note is then destroyed as a credit instrument but remains sufficiently complete to serve as a voucher, 48 BANKING, COLLECTION, Due Bills. A due bill is an acknowledgement and evidence of a debt. It may be payable in money or in merchandise. The ordinary form of due bill is not negotiable. Hour Notes differ from other Contracts. There are three peculiarities which distinguish promissory notes from ordinary written contracts, i. Notes are negotiable. 2. There is no statement in a note of consideration. 3. There are no days of AND NEGOTIABLE PAPER. 49 grace allowed on ordinary contracts. A note must have a clear promise to pay, without any attached conditions. The time must be certain, that is, it must not depend upon the happening of some uncertain event. Legal Tender. In making money payments it is necessary often, or if the receiver demands it, to make payment in legal tender, that is, in the form of money required by law. For instance you cannot pay an account of $18 in ten-cent pieces, if the creditor refuses to accept, for the reason that silver coin of smaller denomination than one dollar are legal tender in all sums not exceeding $10. Clearing-house Management. The bank clerks who attend to the clearing-house business must be experts in their special work. The slightest error on the part of one clerk may prolong indefinitely the entire settlement. As a check against error very severe rules are established. The following are samples from the by-laws of a large clearing-house: 1. For disorderly conduct of any clerk, or other officer, at the clearing-house, or disregard of the manager's rules and instructions, for each offense, $4.00. 2. For any officer failing to attend punctually at the hour for mak- ing the exchanges, $4.00. 3. Debtor banks, failing to appear to pay their balances before a quarter past 12 o'clock, $3.00. 4. Any error in the credit ticket (that is the amount brought), $2.00. 5. Errors in making the balance ticket (that is, the amount re- ceived) entries $2.00. 6. Failing to deliver check tickets before half-past ten o'clock, $1.00. 7. All other errors, $2.00. Any clerk, or other officer, who shall repeatedly and perseveringly disobey the orders or instructions of the manager, shall, with the approbation of the clearing-house committee, be expelled, and not re- admitted without the written consent of the committee. Thirty minutes will be allowed for the morning business settlement, and for each additional fifteen minutes detention, $2 will be added to the fine under No. 5. The following selections from the general rules of the same clear- 50 BANKING, COLLECTIONS, ing-house will give the reader some idea of the exacting character of clearing-house regulations: Errors in the exchanges and claims arising from the return of checks or other cause are to be adjusted directly between the banks which are parties therein, and not through the clearing-house. Whenever checks which are not good are sent through the clear- ing-house they shall be returned by the banks receiving the same to the banks from which they were received as soon as it shall be found that said checks are not good; and in no case shall they be retained after one o'clock. The manager shall immediately report to the clearing-house com- mittee any apparent irregularity in the dealings of any bank belong- ing to the association that comes to his notice, and receive the in- structions of the committee in regard thereto. The committee shall have power to remove the manager or any of the clerks, whenever, in their opinion, the interests of the associa- tion shall require it. The hour for making the exchanges at the clearing-house shall be ten o'clock A. M. each day. At a quarter past twelve o'clock, noon, the debtor banks shall pay to the manager, at the clearing-house, the balances due from them respectively either in coin or in such other currency as the laws of the United States shall require, or in such cer- tificates as shall be authorized by the clearing-house association, ex- cepting sums less than one thousand dollars, which may be paid in bills of the debtor bank. At half-past one o'clock P. M. the creditor banks shall receive from the manager t at the same place the balances due to them respec- tively ; provided all the balances due from the debtor banks shall then have been paid to him. Should any bank fail to pay the balance due from it at the proper hour the amount of such balance shall be immediately furnished to the clearing-house by the several other banks in proportion to their respective balances against the defaulting bank resulting from the ex- changes of that day. Foreign Clearing-houses. England has three bank clearing-houses and France one. The clearing principle is used in England to adjust the complicated accounts of the through traffic of connecting railroads, and to simplify the fort- nightly deliveries of stock on the London Stock Exchange. Every AND NEGOTIABLE PAPER. 51 clearing-house bank in London and the clearing-house itself, keep ac- counts with the bank of England, and differences are settled by trans- fers from one account to another. London originated the clearing- house. It was formed spontaneously by the clerks of the London private bankers, who, to save themselves the trouble of going about to each bank, got into the habit of meeting in a central room to settle their mutual claims. A similar practice arose among French merchants, in old times, of making their bills payable at the great annual fair in Lyons, where they met to balance their debts, and pay the differences. If gold were to be used instead of the clearing-house machinery in either New York or London, the weight to be moved every day over long distances would exceed 200 tons. The clearing-house establishes a fellowship among banks that has already proved in times of money panics, of the greatest service to themselves and the community. Hints for Depositors* Do not wait until you get to the bank to count your money, or to endorse your checks and arrange your deposit. This should be done before you come to the bank, or at least, before you present yourself at the receiving teller's window. Be sure that you have the figures correct. Place the bills all one way, right side up. Separate your gold and silver, and sort the silver by denominations. Do not deposit your dimes, nickels, and pennies until you have a certain amount of them, say five dollars of each ; then put them in a package, with the amount and your name marked on it, and leave for the teller to count at his leisure, with the understanding that if short or over the proper correc- tion will be made. Borrowing from Banks. It is the business of a bank to loan, money to responsible persons, within reasonable limits. The regular customer of the bank is entitled to and will receive the first consideration if the demand is larger than the bank can safely meet. A business man should not hesitate, when occasion requires, to offer his bank any paper he may want discounted, if in his opinion it is good, nor should he be offended if his banker refuses to take it, even without giving reasons. Make your own notes and acceptances payable at your bank. Keep a careful record of the dates of maturity of all paper which you make or endorse. It is usually better, that is, more convenient tc the holder, to pay your note early on the day it falls due, rather than a day or two before. BANKING, COLLECTIONS, Rates for Loans. In loaning money on demand, when it is strictly understood be- tween bank and borrower that the money so advanced is positively minute money money returnable at any minute, when the bank calls for it banks usually charge low rates of interest.. When interest rates are high, bankers prefer to deal in long-time paper. This general rule is reversed when the situation is reversed. Bankers aim also to scatter and locate their maturities so that as the seasons roll around, they will not have very large amounts maturing at one time and very small amounts at another. They plan also to be " in funds " at those seasons when there is always a large and profitable demand for money. For instance in the centers of the cotton manufacturing interest the banks count on a large demand for money between October and January when the bulk of the purchases to supply the mills are made ; again, among those who operate and deal in wool there is an active demand for money in the wool clip in the spring months. The wheat and corn crops are autumn consumers of money. Midwinter and midsummer in the north are usually periods of comparative stagnation in the money market. All these things affect rates, and the successful banker is he who from observation and large experience shows the most skill in timing his money supply. When Interest Accrues* There are certain well-defined principles which make clear when interest is accruing and when it is not. Money voluntarily left by any one in the hands of another will not, of course, draw interest unless a specific mutual agreement to that effect is made. In most cases, a de- mand note bears, interest even though there be no statement to this effect* on the face of the note. Money on deposit in a bank without an agreement to pay interest will not accumulate interest even though it remain fifty years. Forged Endorsements. A bank is supposed to know the signatures of its depositors, it is one of its first and most important duties to have them on file and im- mediately accessible by the use of a well-kept signature book. Holders of checks, in very many cases, know nothing about these drawer-signa- tures. They have taken them, supposing, of course, that they are; genuine. When they have collected the checks at the banks upon which they are drawn they are to a very great extent relieved of all AND NEGOTIABLE PAPER. 53 further responsibility as to the signatures of the signers, for the bank by paying them has guaranteed their genuineness. But the bank which cashes for a good holder a much -endorsed check, the signature of which is all right, generally knows nothing about its many endorsements be- yond the fact that they seem to be all right and stand there in regular order, apparently correctly made. For the honesty and genuineness of these many or few preceding endorsements the last holder, for whom the check is cashed, whether he endorse the check or not, is fully and legally held, and no reasonable lapse of time before a discovery of the forgery is made will relieve him of this liability. Trust Companies. The ordinary trust company with which city people are familiar is very similar in its management to a national bank. They invest their deposits and capital in the same class of securities, and they are equally careful and conservative in the matter of their loans. They receive money on deposit subject to checks and allow interest on deposits which exceed a nominal sum usually from $300 to $1,000. They are organ- ized under and are subject to state laws. They have connection with the clearing-houses either direct or through some convenient national bank. They are in form of organization very similiar to the great joint-stock banks of England. They are usually authorized to receive and hold moneys and property in trust and on deposit from courts of law or equity, executors, administrators, assignees, guardians, trustees, corporations, and individuals, and may be appointed by probate courts trustees under any will, upon such terms and conditions as may be agreed upon. They act as trustees for widows or children, take charge of and man- age property, and collect interest and rent. They act as transfer agents for railroad and other stock, and as agents for the purpose of issuing, registering, or countersigning the certificates of stock, bonds, or other evidences of debt, and for the payment of dividends. They act as agents or attorneys for the care and management of invested property. Safe Deposit Vaults. Many of the banks, trust companies, and insurance companies make a special feature of renting small safe deposit boxes or drawers in their vaults to any and every person who chooses to pay the rent asked, which depends largely on the amount of space needed and is usually $10 for the smallest sized box. It is very convenient for one who has not a safe of his own to have a secure place in which to keep valuable 54 BANKING, COLLECTIONS, papers. In many of the larger safe deposit vaults there are desks and stationery for customers so that one may at any time and very conven- iently and privately examine one's papers and make entries or endorse- ments, or add new vouchers, or make changes, as the occasion may require. A Depositor's Credit. As a rule, banks do not make known even to a single individual the extent of a customer's business or the size of his bank account. How- ever any shareholder in a bank has a right, as one of the proprietors, to examine the books, so long as such examination is not an unreason- able interference with the regular routine of work, and it is pretty gen- erally known that a large depositor can either directly or through some other bank get at the condition of a small depositor's account. Giving Bonds for Faithful Service. Bank clerks and officers are usually required to give bonds, that is, they must get some person to go their suretyship, thus guaranteeing faithful service, and agreeing to make good any losses caused by defal- cation or carelessness. There are now several surety companies that give bonds for everyone and anyone whom they consider a "good risk " upon the payment of certain premiums as in insurance. If a young man is an applicant say for a cashier's position in a mercantile house and the house requires that some one give a bond, that is, go his surety for $10,000, and the young man has no rich father or uncle to guarantee the house against loss, he applies to a bond insurance com- pany and if his record and habits are good he has no difficulty in securing the necessary papers. The amount of the bond required de- pends upon the importance of the position applied for. Presidents of banks do not usually give bonds. The bonds of personal friends have always a good deal of moral weight and force and for this reason are considered superior to the bonds granted by a guarantee company. Such a bond is really a testimonial, and the last one that is likely to be violated. The record shows that marvelously few employees have vio- lated such bonds. The guarantee companies look into a man's stand- ing very thoroughly before taking the risk of becoming his surety. When an application is made three references are given and the com- pany corresponds with the persons whose names are given as references and asks a great many very pointed questions. A young man with good social standing can secure bonds for five or ten thousand dollars by trie payment of a small annual premium. AND NEGOTIABLE PAPER. 55 Know all Men by these Presents, That we, 2firewiy ctfj-ivw-ii as principal, and .....Ci Sp^-24 %>mz 2/rew'i-'?4- ^J/^/fWt/f?^ as sureties, are holden and stand firmly bound unto Tie Royal Exchange Bank, of New York, in the sum of Q^K-K, d^S^w^^*/ dollars to be paid unto the said f Whereas, the said <2trewi.-- ^'Ww^z has been duly appointed to the office of ^C4m**;..-...Of the bank aforesaid, by the Directors thereof, and has signified his acceptance of the said appointment : Now the condition of this Obligation is such, That if the said ^^re^ii-if c %jt&'iwi shall faithfully discharge the duties of his said office and all other duties that are, or may here- after be, prescribed by the President and Directors, for and during the term for which he has been ^ elected, and for and during such term of time as he may continue therein, by any re-election or otherwise, then this obligation shall be void, but otherwise shall re- main in full force. It is, however, understood, that in case of the death of either of the above-named sureties, or in case either of the above-named sureties shall at any time give notice in writing, to the President or Directors, for the time being that he does not wish to be held any longer responsible on this obligation, thereupon both of the above- named sureties shall be discharged from liability on account of any default of the said principal which may occur after thirty days from and after the notice of such death, or of such wish to be discharged as aforesaid. Signed and sealed in the presence of Witnesses : Qavned ^asM (SEAL.) BANKING, COLLECTIONS, Use of Instruments of Credit. All the wholesale transactions and a large part of the retail trans- actions are completed by the passing of instruments of credit nego- tiable titles : notes, drafts, checks, etc. ; a part of the retail trade only is conducted by what is called cash, that is, actual bills and small change. It is the function of banks to deal with these transferable titles. Banks deal to a very small extent in actual money. The notes, Loan Committee of the New York Clearing House Association. This Certifies, that the. has deposited with this Committee, securities in accordance with the proceedings of a Jfeetiny of the Association, held June JOth. 1893. upon which this Certificate ta j"or" CHATTANOOaA ClC common of these were the emergency clearing-house certificates, their object being to extend indefinitely the brief term of mutual credit in- volved in all clearing-house settlements. They were in reality not used as currency, but their effect was to add their face value to the volume of currency in circulation, by releasing, for use outside, that which would otherwise have been reserved for clearing-house settlements. In AND NEGOTIABLE PAPER. 59 each instance the use of the certificates was limited strictly to settle- ment of mutual accounts between members of the particular clearing- house association issuing the certificate. The certificates were issued to banks upon securities which they furnished. Note the reading on the New York certificate, an illustration of which is given. Other de- vices of similar character were clearing-house due bills. These stated that a certain sum was due by a particular bank to some other bank or to the order of some individual and usually had the following additional wording : This due bill is only good when signed by one and counter- signed by ajiother authorized person, and is payable, only in the ex- changes through the clearing-house the day after issue. Another expe- dient favored in all parts of the country, was the sale by banks of cer- tified checks against themselves for currency denominations, which when signed by the purchaser, were used by him as currency. Most generally used of all, however, were pay checks in currency denomina- tions, which in scores of manufacturing towns, were the only currency that was available for weekly payments and cash purchases by wage- earners. In addition to these well defined classes, there were others so varied that but a suggestion of them can be made negotiable certifi- cates of deposit; ninety-day and other short time paper in currency denominations; bond certificates; grain purchase notes; credit and corporation store orders ; improvement fund orders ; teachers' warrants ; shingle scrip, etc. In every case where the associated banks of a sec- tion failed to supply the needed currency, individuals and corporations were compelled to resort to extraordinary devices. This illegal bank- note currency was accepted by the community, the financial conditions became normal again, and every credit instrument was made good in actual money. Defalcations and Embezzlements. An experienced banker offers the following suggestions to prevent defalcations and embezzlements through the manipulating of the bank's record books : Secure clerks of high character and integrity and have a proper system of accounts with a perfect system of checking every- thing. If possible keep accounts in duplicate. The balance ledger ^ can be proved to a cent every day, and this should certainly be done. When practicable, it is better to have all differences investigated, and reported upon by some one who is not directly responsible. A number of banks in the large cities have created the position of auditor of ac- counts, and it is one o his duties to report to the cashier direct upon BANKING, COLLECTIONS, all differences. This auditor reconciles accounts-current with out-of- town correspondents, balances and delivers all pass-books, and furnishes information to all depositors respecting their accounts. A great benefit is secured to a bank by the examination of one man's work by another. Pass-books of active accounts should be written up once a month, and no pass-book should run longer than two months before being balanced. It should be a rule in every bank that no charge entry should be put through the books, except from a proper voucher, that is, a check signed by a depositor, or a charge ticket made out and signed by an officer of the bank. The discount clerk and the collection clerk should not be the same person, and neither of them should be the corresponding clerk. The monthly accounts-current rendered by a city correspondent should be reported upon promptly, and any disposition on the part of the bookkeeper to delay or neglect this matter should be corrected. A very important requisite in modern banking is a system of thorough examination at irregular intervals. No teller, bookkeeper, or other clerk can suffer the slightest harm from having his cash and books ex- amined and found correct. All notes held for collection should be ac- counted for, and balances due from other banks for collections, should be verified. Special deposits of securities held for safe-keeping should be examined occasionally. The more complex the bookkeeping the easier it is to " cook " the accounts. A rare Bank Note. The photo-copy of the $2-note here given is a good sample of the old style state bank notes in circulation sixty or seventy years ago. The note reproduced here is the property of Mr. John A. Kennedy, cashier of the Niagara Bank of Buffalo. He considers it worth $1,000. Foreign and Domestic Commercial Credit. It is to credit alone that we are indebted for that intermediate agent which plays so important a part in the transaction of business, whether it be in causing supply and demand to meet, or in applying to the industry of exchange the principle of the division of labor which is so favorable to production. Without credit this intermediary is im- possible in most instances. It gives birth to both industry and trade. It multiplies the producing and consuming power of society ; by facili- tating exchange it accelerates and increases it. In reality the largest share of the business of the world is done on a credit basis. In many instances the instruments of payment which we call cash are in reality AND NEGOTIABLE PAPER. only promises to pay. During the Middle Ages credit transactions of great importance and on long time were ef- fected without leaving the slightest trace in writing; and even to t'nis day the Russian producers and mer- chants who frequent the great fair at Nijni Novgorod, contract credit obligations for twelve months' time, without giving the least evidence of the debt, and that for a very good reason : very frequently they can neither read nor write. When we give credit we give value and wait for the value we are to receive in return ; but we often cannot afford to do this, so we get some other person to wait for us by giving him an instru- ment of credit which we take when we de- liver our goods. This person to whom we give the instrument of credit may not be able to wait either, so he takes the paper to the bank and discounts it. It is the business of the bank to wait, not the business 02 BANKING, COLLECTIONS, of the merchant. The latter should keep his full capital active every day and every dollar he is waiting for is inactive and is earning nothing. On the hand the bank increases its capital by waiting for the simple reason that it charges for waiting just as a lawyer charges for giving his time to his client. But does this increased circulation increase capital ? The machine runs faster and turns out more work but doesn't increase its size or its intrinsic value; it is the work that counts, not the machine. History of Financial Exchange. In early times foreign trade consisted in the direct exchange of commodities. A caravan set out with a variety of manufactured articles, across the deserts of Arabia or Sahara^ and came back with the ivory, spices, and other valuable raw products obtained by barter. In later times the merchant loaded his own ship and sent her forth on an adventure, trusting that his shipmaster would sell the cargo to ad- vantage, and, with the proceeds, bring 'back another cargo to be sold to great profit at home. Trade was thus reciprocal, and what was sent out paid for what was brought back. Wherever this direct reciprocal exchange did not exist it was necessary to devise some mode of trans- ferring debts. To the early Italian and Jewish merchants we owe the development of the use of the credit instruments which have since de- veloped into bills of exchange. As early as the fourteenth century bills were used under similar customs and of about the same form as those of the present day. Principles of Exchange. Iii commerce the term exchange is generally used to designate thai species of mercantile transactions by which the debts of individuals residing at a distance from their creditors are cancelled without the transmission of money. Among cities or countries having any consid- erable intercourse together, the debts mutually due by each other ap- proach, for the most part, near to an equality. There are at all times, for example, a number of persons in New York indebted to London, and perhaps, as many persons in London indebted to New York. Hence when A of New York wishes to make a payment to B of Lon- don, he does not send the actual money, but he goes into the market and buys a bill of exchange on London, that is, he goes to a New York bank, doing a foreign business, such as Brown Bros., or Drexel, Morgan & Co., and buys a draft, called a bill of exchange, which is in reality the New York banker's order on his London correspondent ask- AND NEGOTIABLE PAPER. 63 ing the latter to pay the money to the person named. It may be that about the same time some London merchant who owes money in New York goes to the very same London banker and buys a draft on the New York bank. In this way the one draft cancels the other, and when there is a difference at the end of a week or month the actual gold is sent across to balance the account. Inland or domestic bills are commonly called drafts. Foreign bills, that is, bills on foreign countries are called exchange. The par of the currency of any two countries means, among merchants, the equivalency of a certain amount of the currency of the one in the currency of the other, supposing the currencies of both to be of the precise weight and purity fixed by their respective mints. Thus according to the mint regulations of Great Britain and France, i sterling is equal to 25.2 fr., which is said to be the par between London and Paris. And the exchange between the two countries is said to be at par when bills are bought or sold at this rate; that is, for example, when a bill for ^100 drawn in London is worth 2520 francs in Paris, and conversely. When i in London buys more than 25.2 fr., exchange is said to be in favor of London. The par of exchange between Great Britain and the United States is 4.86^3, that is, a i sterling is worth $4.86^/3. Exchange is quoted daily in New York and other city papers at 4.87, or 4.87*^, etc., for sight bills and at a slightly lower rate for sixty day bills. These are the two common kinds of bills usually bought. The sixty day bills bought in New York are as good as cash when they reach London but they are cashed at a discount from their face value, unless they are held until the date of maturity. The foregoing statements explain in a gen- ^ eral way the meaning of the par of exchange, but its exact determina- tion, or the ascertaining of the precise equivalency of a certain amount of the currency of one country in the currency of another is exceed- ingly difficult. If the standard of one be gold and that of another silver, the par must necessarily vary with every variation in the relative values of these metals. The value of the precious metals even in con- tiguous countries, is always exposed to fluctuations from the overissue or withdrawal of paper, from circumstances affecting the balance of payments. Gold is usually high when there is a demand for gold or a scarcity of it just as in the case of potatoes or wheat. It is obvious, therefore, that it is all but impossible to say, by merely looking at the mint regulations of any two or more countries, and the prices of bullion in each, what is the par of exchange between them. The imports and exports of bullion is the real test of exchange. If bullion is stationary, 6 4 HANKING, COLLECTIONS, neither flowing into nor out of a country, its exchanges may be truly said to be at par; and, on the other hand, if bullion is being exported from a country, it is a proof that the exchange is against it, and con- versely if there be large importations. Variations in the actual course of exchange, or in the price of bills, arising from circumstances effect- ing the currency of two countries trading together, are nominal only: such as are real grow out of circumstances effecting their trade. When each buys of the other commodities of precisely the same value, their debts and credits will be equal, and the real exchange will be at par. ^x ^^S***Jkr~i* &*v /,. fa 2S& ,/ ; 6L/j^ /CN I -tTlff-n--r'innTimaitiAnnfiL^. .-.,- MiWHHWW^L' MCtAA/u'; X? ^ ' "7U \flAA. 0.05 0.05 0.04 0.04 004 0.02 0.09 0.38 0.88 Franc Mark 25.22 20.43 10.09 12.09 6.10 9.70 18.16 4.50 8.91 4.88 4.95 5.04 5.33 4.69 5.04 5.22 5.13 4.80 4.95 4.89 2.12 10.27 41.68 97.69 110.71 Florin, A. H Dutch Rouble Escudo Kroner Milreis P 44 B Dollar, U.S. A 41 Mexico 41 A. R 44 Chile 44 Uruguay * Ven 44 Bolivia 44 Ecuador.... 4 - Nfld . ... 44 P. I Yen Toman Rupee 44 Egypt 4 * Turkey W Q o> Dollar. c 1 1 i 02 i I 11 p 1 g 1 N 0.20 5.00 4.05 2.00 2.40 1.21 1.92 3.60 0.89 1.79 0.% 0.98 1.00 1.06 0.93 1 0.19 4.84 3.92 1.93 2.32 1.17 1.86 3.48 0.86 1.71 0.93 0.95 0.97 1.02 0.90 0.97 "6."96 0.92 0.9^ 0.94 0.41 1.97 799 18.73 21.24 fe 1 I 0.20 4.92 3.99 1.97 2.36 1.19 1.89 3.54 0.88 1.74 0.95 0.97 0.98 1.04 0.95 0.98 1.01 '(X94 0.97 0.95 0.41 2.00 8.13 9.0(1 21 62 M 2 1.08 0.95 1.09 0.20 4^05 2.00 2.39 1.21 1.92 3.60 0.89 1.77 0-96 0.98 1.06 0.93 1 00 4.73 396 1.89 2.27 1.14 1.82 3.40 0.84 1.67 0.91 0.93 0.95 "b!90 0% 91 0.21 5.25 4.26 2.10 2.52 1.27 2.02 3.78 0.94 1.86 1.01 1 03 1.05 1.11 l'.05 1.09 1.07 T(J3 1.02 0.44 2.14 8 68 20.39 23.08 0.47 11.87 9.62 4.75 5.69 287 4.57 8.55 2.12 4.19 229 2.33 2.37 2.51 2.21 2.37 2.45 2.41 2.30 233 230 4"84 19.02 45.99 52.14 0.10 2.46 1 9'J 0.98 1.19 0-59 0.94 1.77 0.40 0.87 0.47 0.48 0.49 0.52 0.46 049 0.51 0.50 0.47 048 0.48 0.21 "4"06 9.56 10.78 Franc . 5.38 4.36 2.15 2.58 1.30 2.07 3.87 0.96 1.90 1.04 1.06 1.C6 1.14 TOR Mark Florin AH 14 Dutch Rouble Escudo Kroner . Milreis, P 44 B Dollar, U. S. A 44 Mexico " A. R . 1.02 1.04 1.10 0.96 1.04 44 Chile " Uruguay... " Ven " Bolivia . 1.08 . 1.05 . 0.99 . 1.02 . 1.00 . 0.44 . 2.11 . K.56 1.05| 1.03 1.04; 1.02 0.97 0.95 1.00 0.98 0.99 0.97 0.43 0.42 2.08 ! 2.04 8.43' 8.26 19.8319.37 22.39 21.96 0.98 096 0.9 0.93 0.92 0.40 1.93 7.14 18.32 20.77 1.11 1.09 1.02 1.06 1.04 0-45 2.19 8.89 20.83 23.62 1.03 101 0.95 0.98 097 4'<> 44 Ecuador. ... Nfld " P. I.... Yen Toman Rupee . 2.04 Piastre, Tunis 44 Egypt . 20.07 '9.37 21.96 14 Turkey . 22.76 AND NEGOTIABLE PAPER. 73 English Money. Any person may take bar gold to the extent of ^20,000 to the English mint and have it returned to him in sovereigns and half sov- ereigns. The Bank of England receives bar gold at ^3 ijs. yd. per ounce and pays in gold coin. The English sovereign weighs 123.274 grains, and is a legal tender so long as it does not weigh less than 122.5. English silver and bronze coins are fiat money, that is, their intrinsic value is materially less than their face value. The difference between the token value and the real or intrinsic value is called seig- norage and this is a quite large source of revenue. English gold coins are a legal tender for any amount ; silver coins are a legal tender for only forty shillings or less, and bronze coins for one shilling or less The golrf is largely handled by bullion brokers. The Bank of England notes are very ordinary looking pieces of white paper with plain black printing, somewhat larger in size than those of the United States. The paper is specially made, is very strong, and is not easily burned. No note is paid out a second time. Every check or draft is paid in new bills. The smallest note is one pound. In sending bank notes by mail tne Englishman generally cuts them in halves, takes a careful record of their marks and numbers, and sends one of the halves by registered mail, and the other by ordinary post. The illustration here given is an America^ check or draft bearing a close resemblance to the Bank of England note. The Scotch and Irish banks have a paper issue of their own, and there are joint-stock banks and private banks that issue bank notes. These bank notes, although they pass current, are not legal 74 BANKING, COLLECTIONS. tender. There are 255 banks in England. Of these 57 are in London. The crossed check so common in England is unknown in the United States. It is simply an ordinary check that has upon its face marks which signify that it must be presented through some other bank or banker ; and checks of this descrip- tion will not be cashed if they reach the bank upon which they are drawn by any other way. They are abso- lutely worthless for pre- sentation in the hands of the wrong persons. The banks are forbid- den by law to cash such a check over the coun- ter. The receiver of such a check must necessarily deposit it. Our stamped words ' ' Payable only through the clearing-house when properly en- dorsed " have nearly the same effect. Some Iiouses say on their bill- heads how checks are to be crossed. When the check is crossed simply by two lines it may reach the bank upon AND NEGOTIABLE PAPER. 75 which it is drawn, through any bank ; when it is crossed with a bank's name, it must reach the bank upon which h is drawn through the banker whose name appears between the crossed lines. When the drawer knows the name of the payee's banker he usually inserts it; otherwise he simply draws the lines. English banks do not certify checks. Every check must bear a penny stamp no matter for how small an amount it is drawn. The British consols are securities representing the consolidated debt of England ; the word consol being an abbrevia- tion of consolidated. They are quoted in the financial columns of the newspapers. Here is an illustration : " Consols are unchanged at 94^ for cash and 94^ for November settlement." The word settlement is used as we would use the word account. On the London Stock Ex- change there are special settling days for securities of all sorts, includ ing transactions in foreign exchange. By " November settlement " it is understood that the consols are to be paid for on the November set- tling day. Canadian Money. Many Americans hesitate to accept Canadian money, usually foi the reason that they have difficulty in passing it and partly from igno- rance of its security. The Canadian silver coins are in reality of greater value than the corresponding coins of the United States for the reason that they contain more silver. The Canadian one-dollar-bill, two-dol- lar-bill, and four-dollar-bill are equal in value to the very best securi- ties offered here for the reason that they are issued by the Canadian government and are covered by actual gold and silver in the treasury. The notes issued by the Canadian banks are almost equally good, for the reason that the banks are very large institutions, many of them larger than the largest banks in the United States. The Bank of Montreal is one of the largest and strongest financial institutions in the world. It has a p:, id-up-in-gold capital of twelve millions and a gold surplus of six millions, and has about forty branches in the large cities and towns of the Dominion. Only two banks in New York city have a capital as great as $5,000,000. The Canadian Bank of Commerce has as many branches. The Merchants' Bank of Canada has six millions of capital and three millions of surplus. No bank is chartered that has not a capital of at least $500,000. There are in all about forty banks with more th-m 500 branches. These banks issue notes of denominations of $5 and upwards, but the government regulations are so exacting that if a bank should fail the holders of its notes would be almost sure tQ BANKING, COLLECTIONS, receive their full value. These banks always pay out over the counter their own bills. Under our United States system, which leaves each bank so largely dependent upon the fortunes of its locality, and the business of each locality so entirely dependent upon its local banks, it is a common thing to see mutual ruin of banks and businesses in numer- ; ous widely scattered localities, while the business of the* country as a whole is sound. Such results are impossible in Canada. The widely extended system of each of the great banks, with its branches in every part of the country, constitutes a sort of financial insurance, by which each helps to guarantee the soundness of all ; while the Canadian branch systems interlocking at every town leave it simply impossible > that any local point of the least importance should for a moment be lacking in the most complete discount, currency, and other banking ' facilities, so long as the whole business of the Dominion is not involved . in common ruin. The currency system is elastic and always meets the demands. Panics for fear of stringency are unknown. A run on a bank as we understand it is impossible. , Note Brokers. Merchants sell a great many of their notes in the open market, that is, to note brokers. The banks buy these notes from the note brokers. The assistance of the broker who handles commercial paper is a necessary and valuable aid to the purchasing bank. Fully seven- eights of all the paper purchased. by New York city banks is purchased upon the simple recommendation of the note brokers. As a rule these : brokers simply transfer the paper without guaranteeing by endorsement, , its payment. Notes bought by banks from note brokers without their endorsement are held to be guaranteed by them to be all right, in all points, except that which covers the question of whether they will be , paid or not. The bank uses its best judgment in taking the risk. If the note dealer, in selling notes to a bank, makes what he believes to be fair and honest representations regarding any particular paper, state- ments of such a straightforward type that upon them no charge of false pretenses can be made to rest, he simply guarantees the note genuine as to names, date, amount, etc., and that, in selling it, he conveys a good' title to the paper. As business men, however, they are very cautious, ; and are exceedingly anxious that the paper they sell shall be paid, andi as a rule they make good any losses which grow out of apparent mis- representations on their part. AND NEGOTIABLE PAPER. 77 Single-name Paper. The custom of issuing single-name paper has grown largely of late. The maker is the borrower, and the buyer must consider his personal credit when making the purchase. It is estimated that two-thirds of all the paper bought by New York city banks is single-name. Such paper makes no pretense to be anything else but what it appears, a simple promise to pay, and in this it differs from accommodation paper. Genuine double-name paper consists of notes given in actual payments of merchandise sales. Commercial Crises. Disturbances of the course of trade arise largely from the necessity of re-adjusting its conditions to the common standard and measure of value. The common standard of value is money, and the conditions of trade which require to be adjusted to it are the prices of commodities, and contracts and obligations of all kinds. Contracts and obligations, agreements to pay money at a future time for something presently re- ceived, form the credit system of modern commerce. Inability to meet these obligations constitutes bankruptcy, and a great multiplicity of bankruptcies occurring simultaneously constitutes a commercial crisis. If all persons were in the habit of paying immediately for everything received, there could be no debts, and consequently no failures nor panics. Those nations where the credit system has received its widest development, and where consequently the spirit of commercial adven- ture and speculation is most rife, are most exposed to the ravages of recurring periods of bankruptcy. Money panics are usually preceded by years of active trade, high wages, multiplication of new enterprises, and general prosperity. Each period of abnormal and exciting pros- perity is followed by a violent collapse resulting in increased rates of interest, closing of factories, failures of banks and mercantile houses, and enforced idleness of large numbers of people, often resulting in ex- treme social disturbances. There is no remedy except in the con- currence of mankind to keep out of debt and to avoid all temptation to make gain without equivalent labor. This is impossible however. Civilization is so interlaced with the credit system that it is idle to talk of abolishing it. The interests of mankind require that it should con- tinue, even at the cost of its abuses. There is, too, a desire for gain without labor which is legitimate. Nine-tenths of all the inventions and discoveries which have advanced mankind from the stone age 78 BANKING, COLLECTIONS, to the age of electricity have had their origin in this desire. It may be, too. that an occasional crisis is a good thing, in so much that it urn. of 3 I 3 I 47 Cash on hand 599*625 Stocks and bonds. , . 860,171 Banking house 215,675 Other real estate 76,015 Furniture and fixtures 32,928 Bonds and mortgages . . . 112,799 Current expenses and taxes paid 3368o Checks and other cash items . . 443 2 3 Other assets. 18,360 Total resources #10,310,130 LIABILITIES. Capital stock $1,684,360 Surplus fund 916,100 Undivided profits .... . . . . . . 224,827 Dividends unpaid . . , .,,.... l6 ' 7 Due depositors . . 7,160,010 Due to Banks I99.9Q4 Notes and bills re-discounted 68,425 Bills payable . . . . . . . . , . . . . . ' 39,ooo Other liabilities . e . ....... f5 Total liabilities , . . , BANKING, COLLECTIONS, Condition of Savings Banks. The following table shows the aggregate resources and liabilities of the savings banks of a particular state at the beginning of 189-. The table also sets forth the character of the assets and the proportion which each kind bears to the whole : RESOURCES. Jan. /, 189-. Bonds and mortgages $16,803,397 United States bonds 4,832,472 District of Columbia 3.65 bonds 541,200 Bonds of the State of New Jersey I 7>55 Bonds of cities in this State 4>95573& Bonds of counties in this State 1,299,690 Bonds of towns and townships in this State 942,416 Bonds of boroughs and villages in this State 152,368 Bonds of cities in other States 290,395 Bonds of counties in other States 15,800 Railroad bonds (first mortgage) 53 I 7,393 Other bonds and stocks 357>87i Call loans on collaterals 978,366 Banking-house properties 675,889 Other real estate 447,913 Cash deposited in banks and trust companies 1,420,221 Cash on hand 386,400 Interest due and accrued 524,255 Other assets 36*463 Total resources $39,995, 752 LIABILITIES. Amount due depositors $36,149,920 Other liabilities I34,4o6 Surplus 3,711,426 Total liabilities $39>99575 2 The Value of Paper Offered for Discount. One of the most valuable parts of a banker's education is to learn whom to trust. Every bank should have a well-organized and thoroughly equipped credit department, in charge of some one who can be relied upon to investigate carefully all names referred to him by the officers. A man who desires to borrow money from a bank should offer the same confidence that he would offer if he were going to a wholesale dealer to buy goods. The merchant has a commodity to sell and he looks for facts which will aid him in determining the line of credit to be granted. The banker has money to sell and he should be doubly sure of the responsibility of the party to whom he is selling it because the money does not belong to him. A banker has the right to expect the fullest AND NEGOTIABLE PAPER. 8$ confidence on the part of the borrower, and the borrower should furnish him with a complete and detailed statement of the condition of his affairs. It is safe to conclude that when a borrower refuses absolutely to give any information as to his financial condition, his credit is not in the most favorable condition. Many of the banks have blank forms which they from time to time ask borrowers to fill out. These state- , ments show in detail the assets and liabilities of the firm in question; they show the notes which are outstanding, the mortgages on real estate, and many other particulars including the personal or individual credit of members of the firm, if a partnership. The total net worth of the borrower should be first considered ; then the character of his business, whether it is speculative or staple ; then his record and stand- ing in the community; then his business habits; then a consideration of whether he is in enterprise abreast with modern ideas and methods. The paper offered for discount is of a variety of kinds. The larger proportion of it is from customers of the borrower who have extended " their credit by paying their accounts hi notes instead of in cash. Such paper is really, though having two names, very little better than single- name paper, for it is not the maker's credit, but the payee's, which the bank usually considers. Many very small notes offered for discount usually indicate a very needy condition. There are times when the character of the merchandise owned by the borrower should be con- sidered. What would it bring under the hammer? Groceries and raw material can usually be turned into cash at a forced sale at very small discount from current prices. Not so with hardware, glass, dry goods, boots and shoes, books, etc. Machinery and fixtures -are not a bank- able, asset upon which to base credit. The banker should note his borrower's bills payable. Why did he give notes? Are they met promptly ? Many houses prefer to sell their own paper in the open market and keep their banks open for accommodations when they are unable to secure outside credit. The insurance carried should be con- sidered, also the volume of business done. A large business on moderate capital, with long credits, will naturally have large liabilities, while a small business, with liberal capital, and short credits, should have small liabilities. There are many firms which carry two or more bank accounts and others who sell their paper to out-of-town banks. In buying paper it is important to ascertain whether the firm is in the habit of taking up paper at one bank by floating a loan at another. A prominent banker classifies paper as to its discount value as follows : i. Bankers' paper including bills of exchange. 2. Remittance paper 86 BANKING, COLLECTIONS, bills drawn by houses abroad on banks or correspondents in Europe. 3. Inland drawn paper bills drawn by shippers of goods on the houses to whom the goods are shipped. 4. Brokers' paper bills drawn by importers against commodities placed in brokers' hands for sale. 5. Trade paper bills arising out of our manifold trades and industries. 6. Drafts with bills of lading attached. 7. Paper having personal en- dorsements. 8. Paper secured by collateral. 9. Individual or one- name paper. Mercantile Agencies. In large cities and towns, bankers and other business men should avail themselves of the advantages offered by mercantile agencies. These concerns report to their subscribers upon the credit of men in , ._ ._ V/W. OolAAAjCLAA.C^_____ after date, AAjHE.- ...promise to pay to the order of TcnVK- NaYiot\a\ Bank ....oV-T 3 CRT* LAND 11^1 turo $UJUl*.JiflJt-cL - - '. ,_"._ - DOLLARS, with Interes't from date, without defalcation, for value received , and have delivered with this note, as collateral security, and do agree, on demand, to deposit with the holders such additional security as they may from time to time require, and in default thereof this note shall in or default in depositing additional security as above agreed, do hereby authorize and empower the holders hereof for the purpose of liquidation of this note, and of all interest and costs thereon, to sell, transfer, and deliver the whole or any part of such security, or any additions thereto, or substitute therefor wtlhout any previous demand, advertisement or notice, either at brokers' board or public or private sale, at any time or times thereafter, with the right on the part of such holders to become the purchaser and absolute owner thereof, free of all trusts and claims. And it is further agreed that the securities hereby pledged, together with any that may be pledged hereafter, shall be applicable in like manner to secure the payment of any past or of any future obligations of the undersigned held by the holders of this obligation, and all such securities in their hands shall stand as one general continuing collateral security for the whole ol said obligations, so that the deficiency on any one shall be made good from the collaterals for the rest, hereby remaining responsible for any deficiency in payment, and waiving any benefit, exemption, or privilege under any law now or hereafter to be in force. various lines of business. They gather their information from a variety of sources. This service has been very much perfected of late years, and after making all due allowance for the inherent defects of the sys- tem, it is still a useful adjunct to the man who is giving credit. Brad- streets and Dun & Co., are the two largest mercantile agencies in this country. Savings Banks. Savings banks have no special capital owned by stockholders. Their capital is the money received on deposit, which, of course, is the property of a great many people. Every depositor is an owner in the bank, and the profit is paid to depositors in interest. This capital is invested in choice securities. The corporation is simply the agent or trustee of the whole body of depositors, and works for their account and benefit and not for its own. In most of the states, the savings AND NEGOTIABLE PAPER. bank* are organized under State laws and are in a limited way under State supervision. Their chief purpose is to encourage the saving of money by the common people. In some countries government savings banks have been established. In Canada almost every post office is a branch of the government post office savings bank. Demand Collateral Note. An illustration is given on page 86 of a demand collateral note. The bank loans money payable on demand and accepts, in this instance, railroad stock as security. The stock is held by the bank until the note is paid, and if not paid, the stock becomes the property of the bank. Certificate of Deposit. If you deposit money temporally in a bank for safe keeping you will receive a receipt therefor. This receipt is usually called a certifi- jfe^-^Kojvclui^ Ttftf- ^ =w ,; . sr 7x/9 cate of deposit. See illustrations. It often occurs that such certificate is used instead of a bank draft, in the payment of distant bills. Interest is allowed under certain conditions. It is practically a bank's check on itself. In issuing certificates of deposits to strangers the bank should take their signatures upon the margin of the certificate book, so that, when the certificates come home for redemption, the endorsement may be compared with this original signature, if it seems necessary. Of course every properly managed bank has a ledger account of cer- tificates of deposits issued, which is a full record of the amounts and names of all certificates issued, together with their dates and numbers. Returning certificates can be compared with this record as they are pre- sented for payment through clearing-houses and over the counter. Waiver of Demand and Notice* All endorsed demand notes held by a bank should start with a 83 BANKING, COLLECTIONS, waiver of demand and notice by the endorser, since in time (in some states in 60 days) en- dorsers are lost unless a demand for payment is made upon promisors if this precaution has not been attended to. Usury and its Penalty. The laws of some of the states for col- lecting more than the legal rate of interest are quite severe. National banks which collect more than the legal rate can only be proceeded against under the U. S. Interest Penalty Act which provides that usury shall be punished by a forfeiture of twice the amount of interest paid, if action is com- menced within two years of the time of such usurious practice, and that recovery can be had for the entire amount of interest paid at any time. Bank Examinations. National banks are examined once or twice a year by the United States Bank Examiner who has authority from the Comptroller of the AND NEGOTIABLE PAPER. 89 Currency to whom his reports are made. These reports are seldom if ever seen by bank officers, and unless the examiner chooses to inform them that everything is right they are none the wiser. When a Na 7 tional Bank becomes embarrassed it is the business of the Bank Exam- iner to look thoroughly into its affairs and if necessary to close its doors. A Judgment Note. Some of the states, noticeably Pennsylvania, have a form of prom- issory note called a judgment note. In this form of note the maker confesses judgment if the note is not paid and authorizes the court to take possession of sufficient of his property immediately to satisfy the Duo amount of the claim. It is really a very severe form of contract and should be given only under the most extreme conditions. Suggestions to Bank Depositors. Don't exaggerate your financial condition. The bank has a his- tory of it on its books. Do not borrow money to swell your deposits. Don't ask for special favors in the way of credit ; good security is all the bank asks. Your intercourse with bank officers should be candid and courteous. Make your deposit as early in the day as possible. Never exchange checks to make large deposits. Never make deposits without your bank book. Avoid unnecessary conversation with the clerks. Make it an invariable rule to give checks only out of your own check book. Never give out checks dated ahead. Always consider a check paid when you give it out and mark the amount from your bal- ance. Let all your dealings be strictly honorable. 7 BANKING, COLLECTIONS, Exchange Terms. There are several terms used in connection with exchange which should be understood. Bankers 1 Bills of exchange are bills drawn by bankers on bankers. Commercial Bills are those based upon move- ments of merchandise, and drawn by merchants. Documentary Bills are those which are accompanied by bills of lading. Normal exchange rates are those quoted in newspapers ; there are lower or inside rates which are made to brokers through whom most of the buying and sell- ing is done. Collection Laura. An attachment is a writ issued at the commencement of, or during a suit at law in court, commanding the sheriff, or other proper officer, to attach the property of the defendant, to satisfy the demands of the plaintiff. The property of corporations may be attached as well as that of individuals. By this process the plaintiff gains a lien on the at- tached property, which lien will await the judgment of the court in the suit. In many of the states the defendant may dissolve the attachment by giving a bond, with sureties, that he will pay such judgment as the plaintiff may obtain in the suit. A suit is ended by the court's giving a final judgment, either for the plaintiff or for the defendant, at the same time fixing the amount in dispute, if judgment is for the plaintiff. Execution is the act of carrying into effect the final judgment of a court. If property of any kind is sold under execution, the proceeds go to satisfy the judgment and any costs or charges; and then, if there is any surplus, it belongs to the defendant. By the homestead and exemption laws of many states, certain kinds and amounts of property are exempted from attachment and sale on execution. By garnishment or trustee process is meant the attaching of money or goods, due a de- fendant, in the hands of a third person. By exemption is meant the right given by law to a debtor to retain a portion of his property free from a sale on execution at the suit of a creditor. EXAMINATION QUESTIONS. 1. Give some particulars in which the Bank of England differs from our larger National Banks. 2. Enumerate some of the advantages afforded to the community and to commerce in general by banking institutions. 3 What in a general sense is meant when we speak of the cur- rency of a country? Is the same thing meant when we speak of the cash circulation of a country ? 4 Tell how you would proceed to open an account with a bank. Make a copy of a deposit ticket containing a record of bills, gold, silver, checks, and an express money order. 5 Give in brief the duties of each of the following bank officers : president, cashier, paying teller, receiving teller, discount clerk, book- keeper, attorney, messenger. 6. A bank check is a demand order for money, drawn by one who lias funds in the bank. How does a check differ from an order on John Smith to pay bearer a certain sum of money? 7" How does a check differ from a sight draft? 8. Why is it important that blank checks should be very carefully written up? Illustrate. 9- A check has no date. Does this make it void ? How about a check dated months ago? Is a check dated on Sunday good? How about a note? Why are checks sometimes dated ahead? Is it neces- sary that your check be written on the prescribed blank form ? Are you at liberty to print your own form of check? 10. Write out in full in the form of a business letter the check which you find on page 15. 11. How would you write a check for 75 cents? 12. Describe some of the common safety devices for protecting checks against fraudulent persons. I3 You present a check for payment at a bank where you are un- known. The paying teller asks for a satisfactory identification. You and he have no common acquaintance who can identify you. How would you proceed to show that you were really the person you repre- sent yourself to be? 92 BANKING, COLLECTIONS, 14. How would you word a check to give to a person who is un* known at your bank but who wishes to draw the money over the counter ? I5 You are sending a check through the mails to John Brown, Chicago. How will you prevent the check from falling into the hands of the wrong Brown ? 16. You are spending a few days with a business friend in his city. You receive a check for $100 and wish to get it cashed. How can your friend secure for you the prompt payment of the money at his bank if he is unable to go with you for the purpose of identification ? 17' You identify A. B. at your bank. The check A. B. presented turns out to be a forgery. Are you responsible ? 18. You receive a forged check from A. B. which you in good faith endorse and get cashed. The bank finds out that it is a forgery. Can they hold you responsible ? 19. A. B. transfers a check to you by a blank endorsement. It is then payable to bearer. How can you legally make it payable to your order ? 20. A. B. gives C. D. a check drawn to his order. C. D. endorses it : " For Deposit, C. D" He afterwards hands it to E. F. in pay- ment of a bill. Can E. F. cross out the " For Deposit?" 21. How will you write a check to draw money from your own account ? 22. You are treasurer of Bethany Church. You receive a check drawn payable to the order of "Bethany Church" How should you endorse the check ? 23. What is meant by power-of-attorney ? How should an attor- ney endorse checks for any person for whom he is acting? 24. The words "endorsement guaranteed" are sometimes found stamped on the back of cancelled checks. What is meant ? 25. You are buying a draft on New York and are paying for it at your own bank by your check : how will you word the check ? 26. A check which you deposited some days previously, is returned to you marked " No funds." Explain. What would you do in. such a case ? 27. How can the payment of a check be stopped ? AND NEGOTIABLE PAPER. 93 28. What is a certified check ? Note the illustration on page 22. Why is it made payable through the clearing-house? When is it cus- tomary to get checks certified ? 29. Why are bank drafts more acceptable in trade than individual checks ? 30. What are the advantages and what the disadvantages of mak- ing collections by commercial drafts ? 3i A of Philadelphia draws at 30 days on B of Lynn in favor of C of Boston. Follow the draft from the time it leaves A's hands until B files it away as a note which he has paid. 32. " In this city call loans are quoted at 3 @ 4 per cent, and time paper at 3j @ 6 per cent. In New York the quotation for time money on collateral is I @ 3 per cent, for all dates ; for commercial paper 3 @, $}4 P er cent." Explain the meaning, in a commercial sense, of the phrases printed in italics. 33. "Commercial paper is in good demand by all the usual buyers, but the scrutiny of the names is very rigid, for, with the low rates ruling, buyers do not care to take the risk of failure to meet the notes at maturity." Who are the usual buyers ? Why is the scrutiny of the names rigid ? What risk do buyers take and under what circumstances are they obliged to meet the notes at maturity ? 34- If a note were about to be transferred to you by endorsement and delivery in payment of a debt, would it make any difference to you whether or not it was overdue? Explain in full. 35 What are the advantages to the banks of a city of their central clearing-house? 36. Show how all the banks of the world are connected through the clearing-house system. Illustrate by showing how a draft on a merchant in York, England, would be collected by a manufacturer in Elgin, 111. 37- I find the number 27 stamped in large figures on the face of a cancelled check. What does it mean ? 38. How do state and national banks differ as to their organiza- tion ? How do banks differ from trust companies ? 39- To what do bankers give the name kiting? 40. Who is liable when ajbrged check has been paid ? 94 BANKING, COLLECTIONS, 41. What is standard gold worth an ounce? What is the weight of a $20 gold piece? 42. Describe in detail the various kinds of United States bills which pass as cash. How do these bills differ from promissory notes? 43 A bank note is very much mutilated and fully three-tenths of it is gone entirely. It, however, shows the name of the bank and the signature of one of its officers. Will it be paid in full? 44. Distinguish between discounting and buying paper as these terms are used by bankers. 45- A national bank has a capital of $500,000. A customer asks for a loan of $62,000 on endorsed paper. Can the bank legally grant the loan ? 46. A national bank has $6,000 on deposit with the "United States treasurer for 146 days, drawing interest at 3 per cent. How much in terest should be paid ? (Ans. $72). 47. What is meant by borrowing money on collaterals ? How is this done ? 48. Explain the meaning of negotiable. 49. Explain how a non-negotiable promissory note should be worded. 50. A note is drawn March i, at 4 months after date. When will it mature if in New York ? When in Philadelphia ? 51. A. B. gives C. D. a note in which he promises to pay a bill of $200 in potatoes at market value. Is such a note negotiable ? Is it j good contract ? 52. A. B. wishes to borrow credit from C. D. in the form of an accommodation note. How should such a note be worded ? Why should C. D. be the payee if A. B. does not owe him anything? 53. A steals a horse from B and sells it to C. B finds the horse in C's field and takes it. If it were a promissory note instead of a horse, would C have a good title to it? 54 If an endorser is compelled to pay a note against whom has he a good claim ? 55- A note is drawn payable to the order of A. B. How "can A. B. transfer it without becoming liable for rte payment ? AND NEGOTIABLE PAPER. 95 56. Why and how are notes protested ? Why is a formal protest sometimes desired even though the paper bears no endorsements? 57- Tell how you would receipt for a payment on a note. Why is not an ordinary separate receipt sufficient? 58. A note is worded " I promise to pay " and is signed by two persons. Is either responsible for the whole amount or for only one- half the amount ? 59 Write out in full in the form of a business letter the commer- cial draft which you find on page 32. 60. A sight draft for $200 is presented for payment by a bank messenger at your office. You have money on deposit but have not $200 in bills convenient. The messenger will not take your uncertified check. How can you meet the conditions ? 61. Dombey & Son give David Copperfield a check on the Na- tional State Bank of Camden, N. J., for $27.13. Copperfield transfers the check to you by endorsement and you endorse it for deposit. Make a copy of both sides of the check. 62. On Monday morning you have cash $94.27 in your cash drawer, and the balance in your bank to your credit is $496.25. Dur- ing the day you receive bills and silver $537.46, and a check for $94.59, and you pay out in cash (bills and silver) $243.18. You deposit $219.83, and you issue three checks ($29.13; $14.85 ; $46.17) inpay- ment of bills. On Tuesday morning you deposit all the cash on hand. What should your bank balance be then ? 63. How are out-of-town notes collected ? When would you con- sider it wise and when unwise to take a note in settlement of an ac- count? How would you proceed to get a note discounted at your bank? 64. How would you endorse a check in your favor upon the face of which your name is written incorrectly? 65. Chas. James owes you $320. He is considered a bad pay but he has property. Would it be advisable to get a note from him in set- tlement ? 66. What are the advantages, if any, of holding a note already matured rather than in taking a renewal ? 67. Who should pay the protest fee of protested paper? BANKING, COLLECTIONS, 68. Is it a criminal offence (i) to draw a check for more money than you have on deposit, (2) to draw a check on a bank where you have no money on deposit ? 69. If there are no endorsers, is an unpaid note as good after maturity as before ? 70. Is there any limit to the number of endorsers on a note ? 71* What would be the effect upon foreign exchange quotations under each of the following conditions : 1. Very large importations of foreign goods. 2. Discovery of very productive gold mines in the United States. 3. American goods or products not wanted abroad. 4. American securities in great demand abroad. 5. Export trade entirely by American ship-owners. 6. Rates of interest lower here than in Europe. 7. Large numbers of Americans traveling in Europe. 8. Heavy interest payments on securities owned abroad. 9. Gold carried free by all shippers. IO. Cost of shipping gold very much increased. 72. Contrast the Canadian banking system with that of the United States, pointing out some of the advantages of each. 73 Explain briefly the meaning or purpose of " instruments of credit,*' " safe-deposit vaults," " fidelity insurance," " seignorage," "sterling exchange," "letter of credit," "fiat money," "clearing- house certificate," "duplicate bills of exchange," "a bank's corres- pondents." 74- The following is a complete list of the items appearing in a National Bank's weekly report : Loans and discounts, $3,320,699. Capital stock paid in, $500,000. Individual deposits, $3,015,485. Undivided profits, $ . Overdrafts, $5,216. United States bonds to secure circulation, $152,500. United States bonds on hand, $126,- 650. Premiums on United States bonds accrued, $9,695. Surplus fund, $125,000. National bank notes issued, $135,485. National bank notes (own issue) on hand, $14,625. Securities on hand, $304,206. Banking house furniture, $12,608. Mort- gages owned, $1,984. Due from other banks,$9O5,i68. Checks on hand, 18,- 427. Exchanges for clearing-house on hand, $49,895. Bills of other national banks on hand, $13,695. Fractional currency on hand, $984. Due to other national banks, $1,269,800. Dividends unpaid, $1,176. United States deposits (with us), $114,697. Gold coin on hand, $188,402. Gold treasury certificates on hand, $121,- 275. Silver dollars on hand, $1,800. Clearing-house certificates on hand, $5,000. Silver treasury certificate on hand, $53,648. Legal tender notes on hand, $470,- 416. Five per cent, redemption fund with United States Treasurer, $6,695. AND NEGOTIABLE PAPER. 97 Make a neat copy of these items, separating them into resources and liabilities, and showing the correct "undivided profits." 75- Tell how it is possible for a young man of good character but without " moneyed " friends to secure bonds for his faithful conduct in a responsible position. 76* How does Canadian paper money differ in its security from American paper money ? 77- Give the general dating and credit rules which custom has es- tablished with reference to selling on credit and paying monthly bills. 78. A man buys goods on March 23, and is to be allowed a dis- count of 3 per cent, if paid within 30 days. What is the last day upon which payment can be made and the discount claimed ? 79* What is the usual method of endorsing drafts placed in a bank for collection ? 80. No protest ; tear off this before presenting" Explain. 81. Why are drafts attached to bills of lading usually drawn at sight or at one day ? 82. Explain what is meant by a set-off to a claim. 83. In what leading particulars do promissory notes differ from contracts ? 84. What in money is considered legal tender ? 85. Can you give any reason why it is necessary in clearing-house management to have rules more exacting than in the management of ordinary business ? 86. A new national bank has been established in a large city. Can the clearing-house of that city refuse to admit it to membership? 87. A young friend wishes to open a bank account. He has had no business experience, and writes to you for advice. Answer his letter fully. 88. What are the advantages, if any, of making your notes pay- able at your own bank? Ars there any disadvantages? 89. When rates are high, bankers prefer to deal in long-time paper. Why ? 90. John Smith deposited $3,000 on Jan. 2, 1880, in the First 98 BANKING, COLLECTIONS, National Bank to the credit of his son. His son demands the money Jan. 2, 1897. Can he demand interest? 9i Give a few of the leading differences in organization and man- agement between trust companies and banks. 92. A is a debtor to B. B wishes to know the extent of A's bank account. Can he get the information ? 93. Give some particulars of the currency famine of 1893. Was there less money in the country than us.ua! ? To what extent was the emergency currency issued by many mercantile houses illegal ? 94- Discuss fully the advantages of the extensive credit system of the world's trade and industry. Has it any important disadvantages? 95' Why are bills of exchange drawn in duplicate ? 96. "The imports and exports of bullion is the real test of ex- change." Verify the truth of this statement by added explanation. 97' " A favorable real exchange operates as a duty on exportation, and as a bounty on importation." Explain. 98. Is the "balance of trade" the same as the '-'balance of in- debtedness " ? 99 Enumerate conditions which will make an exchange expense on a large draft on San Francisco bought in New York. 100. Find the cost of freight and insurance on a shipment from New York to London of a million dollars. 101. Account for the fact that London is the financial center of the world. 102. What is meant by the Latin Union in the world's financial systems ? 103. Describe the money of Great Britain. 104. How do Canadian $4-bills differ from Canadian $5 -bills in the matter of security? 105. Name the largest bank (i) in Europe, (2) in North America. 106. Where is the Chemical National Bank located ? Account for the fact that its stock sells at such an enormous figure. 107. A run on a bank such as is not infrequent in the United States is unknown under the Canadian banking system. Account foi this. AND NEGOTIABLE PAPER. 99 108. Describe the crossed check as used in England. Have we the same idea in any other form in this country ? 109. In a London paper a certain stock is quoted at a certain price for " May settlement." What is meant by " May settlement " ? no. Explain in detail the business of a note broker giving some particulars of his responsiblity in connection with the paper handled. in. Distinguish between what is known as singk-Taaat and as <&#&-name paper. H2. Account in some measure for the constantly recurring seasons of financial depression. 113. Describe fully the plan and purpose of a letter of credit. Name a few of the leading American banking houses which issue such letters. 114. Enumerate the leading items of resource and liability in a national bank statement. 115. A bank receives from the comptroller of the treasury $100,- ooo in new bank notes of its own issue. What ledger entry? 116. A bank retires $10,000 of its own bank notes. What entry? "7. Discuss fully the points which should enter into a proper es- timate of the value of paper offered for discount. 118. To whom does the surplus fund of a savings bank belong? 119. Name two leading mercantile agencies. In what way do they serve business houses? Tell something of their methods. 120. Describe the form and use of a certificate of deport. How does it differ from a bank draft? Stocks, Bonds, and other Securities. The Stock Exchange. The general public too often regard the stock exchange merely as a noisy congregation of brokers who gamble in the securities of govern- ments and corporations, under the guise of legitimate business. A deeper insight, however, into the character and functions of these in- stitutions will admit the important part which they play in the financial mechanism of the country. The exchanges of the world are instru- ments of enormous economic value in subdividing and distributing capital and in directing its employment in great commercial and indus- trial enterprises. When the Wall street man goes down to his office his first inquiry is for the two-o'clock prices on the stock exchange of Lon- don, which are received before ten o'clock in New York. The quota- tions of American stocks, with the accompanying price of consols and the Bank of England rate, give him the financial condition abroad translated into figures by the keenest financiers. New York has no more entertaining public exhibition than its Stock Exchange. The visitor who, for the first time, looks down from a gallery upon its mem- bers in the act of transacting business, is astonished at the turmoil and confusion he witnesses. There is no reason why bonds and shares should not be publicly dealt in, and in large quantities, as well as dry goods, corn, or cotton. But, unfortunately, few stock exchanges con- fine their transactions to ordinary legitimate business. The members are divided into two classes those who execute commissions for others, and those who deal on their own account. Among the latter are the IO2 STOCKS, BONDS, boldest and sharpest speculators of the day. You will look in vain in the quotations for the stock of dozens of corporations whose securities are among the choicest investments. It is upon fluctuations that stock speculation grows strong, and the largest profits are often made on the poorest stocks. In London, Paris, Berlin, Vienna, and New York there are very large private banking institutions which buy and sell bonds and stocks on the stock exchanges of the world on commission. These great financial institutions negotiate loans for governments and great corporations and are the intermediaries in all the great movements of capital from one country to another. The London Stock Exchange has scarcely more than one hundred years of history. In the early part of the century the elder Rothschild was one of the giants " on 'change," and it was in this business that he amassed the great fortune which makes the name of his house synonymous with money power. The London Stock Exchange occupies an old dingy building on Capel Court close to the Bank of England. The membership is not limited to a fixed number as in Paris and New York. One of the marked pe- culiarities of the Stock Exchange of London is the distinction between those who act as agents for the public, and who are technically called brokers, and those who do business on their own account and are de- scribed as dealers or jobbers. In the Paris Bourse all agents are strictly forbidden to trade on their own account. The New York mem- bers who operate on their own account are called room-traders or scalpers, whose profits or losses consist in quick turns made during the day. They endeavor to detect immediate monetary influences without considering the ultimate tendency of prices. Nominally the stock ex- changes guard public interest in declining to admit to their regular quo- tations the stocks of questionable enterprises. Before any shares, bonds, or debentures can be quoted in the official lists, application must be made in behalf of such issues and their bona fide character must be es- tablished. The membership of the New York Stock Exchange is lim- ited to about 1,100 and seats becoming vacant by retiring members bring prices all the way from $20,000 to $50,000 each. Stocks and bonds sold in the regular way are deliverable to the buyer during ex- change hours on the following day. Transactions are quickly collected and rapidly reported to the outside world. In hundreds of offices in New York City and in other American cities can be seen a little instru- ment called a ticker which automatically prints abbreviated names of stocks, with their prices, on a narrow ribbon of paper. These tickers are rented to these offices, as are telephones by New York telegraph AND OTHER SECURITIES. companies, and as fast as the sales are made the quotations are ticked off in thousands of offices in all parts of the United States. There are many exchange institutions in the country. Nearly every large city has its stock exchange, and scattered in trade centers are cotton exchanges, produce exchanges, petrolium exchanges, mining exchanges, etc. Technical Terms of Stock Exchanges. The term bull is applied to those who are purchasers of stock for long account, with the purpose of advancing prices as the tendency of a bull is to elevate everything within his reach. The term bear is ap- plied to those who sell stock short, with the purpose of depreciating values. The bear operates for a decline in prices. To buy one stock and sell another with the expectation that the one bought will advance and the one sold will decline, is a hedge. The broker's charge for his services is called a commission, which in the New York Stock Exchange is one-eighth of one per cent, each way on the par value of the security purchased or sold. A point means one per cent, on the par value of a stock or bond. Stock privileges or puts and calls are extensively dealt in abroad and to some extent here. A put is an agreement in the form of a written or printed contract filled out to suit the case, whereby the signer of it agrees to accept upon one day's notice, except on the day of expiration, a certain number of shares of a given stock at a stipu- lated price. A call is the reverse of a/&/, giving its owner the right to demand the stock under the same conditions. A //// may serve as an insurance to an investor against a radical decline in the value of stocks he owns ; a call may be purchased by a man whose property is not immediately available, but who may desire to be placed in a posi- tion to procure the shares at the call price, if they are not below that in the open market when he secures the necessary funds. The specu- lator usually trades on margins. If he has $500 to invest he buys $5,- ooo worth of stock, his $500 being ten per cent, of the total amount. He expects to sell again before the remaining amount falls due. The margin is usually placed by the speculator in the hands of a broker as a guaranty against loss. Although these brokers are really agents for others, yet on 'change they stand in the mutual relationship of princi- pals. A margin is merely a partial payment, but a broker buying stock for a client on margin is compelled to wholly pay for it. If he has not the necessary capital his usual custom is to borrow from banks or money-lenders, pledging the stock as collateral security. In foreign exchanges the element of credit enters more largely into the conduct of 104 STOCKS, BONDS, business. Where the credit of the client in London is established, his broker does not, ordinarily, call on him for any cash until the next " settlement day." There are a variety of methods of securing what is called a corner, that is, a controlling interest in marketable stocks which others are compelled, owing to previously made contracts, to buy. A syndicate is a party of capitalists who unite their resources to accomplish some financial object, such as the purchase of a property, a public loan, an issue of bonds or stocks, or any other undertaking re- quiring large capital. A pool is in some respects similar to a syndicate. The funds of individuals are put into a common undertaking with a view of manipulating particular securities and dividing the profits. It flavors of speculation if not of gambling. A boom is an expansion of credit and a large inflation of value. A panic is an unusual fright among speculators which reduces prices and causes a general collapse of credit. A small boom is called a flurry. The rules of the ex- changes of New York forbid trading after closing hours, but in times of great financial excitement business overflows into the streets and ho- tels and is called trading on the curb. A wash sale is a fictitious trans- action made by two members acting in collusion, for the purpose of swelling the volume of apparent business in a security, and thus giving a false impression of its value. Stocks sell dividend- on between the time the dividend is declared and the day the books of the company close for transfer ; after that they sell ex-dividend, in which case the div- idend does not go to the buyer. When a company decides not to de- clare a dividend it is said to pass its dividend. To sell stock buyer j is to give the buyer the privilege of taking it on the day of purchase, or on any of the three following days, without interest ; and to sell stock seller j is to give the seller the privilege of delivering it on the day of purchase, or on any one of the three following days, without in- terest. Buyer j is a little lower, and seller 3 a little higher than regu- lar way when the market is in a normal condition. Bucket-shops are establishments conducted nominally for the transaction of a stock-ex- change business, but really for the registration of bets or wagers, usu- ally for small amounts, on the rise or fall of the prices of stocks, there being no transfer or delivery of the commodities nominally dealt in. There are thousands of these counterfeit concerns throughout the country conducted without any regard for legitimate commercial enterprises. Brokers. Brokers are persons employed as middlemen to transact business AND OTHER SECURITIES. or negotiate bargains between different merchants or individuals. There are bill or exchange brokers who buy and sell foreign bills ; note brokers who deal in promissory notes ; stock brokers who buy and sell stocks for others ; ship brokers who buy and sell cargoes in transit or upon arrival ; insurance brokers who are middlemen between the insurance companies and the insured ; custom house brokers who act for mer- 106 STOCKS. BONDS. chants in getting consignments through the custom house; and brokers in cattle; in dry goods; in coffee; in cotton ; in drugs; in flour; in grain; in hides; in oil; 'in real estate; in sugar; in tobacco; in wool; in everything or anything that is bought or sold in large quanti- ties. By attending to one class of business constantly they acquire a more intimate knowledge of its various details, of the houses from which to buy, of the best market for sales, and of the credit of those engaged in it, than could possibly be expected of a general merchant. The large manufacturers living outside of the great centers find it to their advantage to engage brokers to buy their raw material for them, so we find that each broker has his regular customers, and for a small com- mission he goes into the market and buys or sells as carefully as though he were spending his own money. It is to these circumstances to a sense of the advantages to be derived from using brokers in the trans- action of business that they are so extensively employed in New York, Chicago, London, and other great cities. In France the brokers are called agents de change, and their number in Paris is limited to sixty. They are severally obliged to give bonds for the prevention of abuses, and are not allowed to charge more than a fixed rate of commission. Stock Companies. To organize a stock company it is necessary for a number of per- sons to come together and make a certificate to the effect that they pro- pose to form a company to bear a certain name, for the purpose of transacting a certain kind of business at a certain place. The certifi- cate states that they propose to issue a certain number of shares of stock at a certain price per share, that the capital stock is to be a cer- tain amount, and that the company is to continue to exist for a definite period of time. Blank forms for such certificate are supplied by the secretary of the state where the company is being organized and when properly filled out, signed, and delivered to him, he issues a license or charter to the persons making such certificate, giving them permission to open books, sell stock, and carry on the enterprise outlined. State laws regarding stock companies differ very largely. Shares of Stock. The usual par value of a share of stock is $100. That is, if a company organize with a capital of $50,000, they will have 500 shares to sell. Each person who buys or subscribes for the stock, that is, who joins the company, receives a certificate of stock. See illustrations. AND OTHER SECURITIES. l(>7 These certificates are transferable at the pleasure of the owners. The r er is made by a form of endorsement on the back of the certifi- fc * - subscribing in this way become responsible for the good management o, 1 . and ^ ^ ^ ^ the laws of the state in which in,, .,, . . ., ,. , -^ Dany is organized. Usually they are responsible individually for the liaDiiu.. . r . ,-, i u -i t * ie concern should be come bankrupt. Every person who subscribes own^ , . ,. , 777, AH i i v. ,, ^ r t of the busi- ness and is called a shareholder. All the shareholders gather, and out of their number they choose a certain number o rectors. The directors choose a president and other necessary officers and fix the amount of salary which shall be paid such officers for their work. As a rule directors have no salaries attached to their positions. A regular meeting of all the shareholders is held at least once a year to elect the directors and hear the reports of the officers. It is necessary to file a statement of resources and liabilities each year with the State Secretary. Capital Stock Increased. The capital stock of a concern may be increased or diminished by a vote of the majority of the stockholders representing a majority of the stock. Preferred Stock. The preferred stock of a corporation is given to secure some obli- gation of the company and upon it dividends are declared in preference to common stock. That is to say, if a man holds a share of preferred stock he will receive interest thereon out of the profits of the business before such profits are given in the form of dividends to shareholders generally. Dividends. The directors of a company after paying the expenses and laying b'y a certain amount for contingencies, divide the profits among the shareholders. These profits are called dividends, and in well managed companies the dividends which are declared quarterly, semi-annually, or annually usually amount to good interest on the shareholder's invest- ment. Surplus Fund. It is not customary to pay a larger dividend than good interest on the investment. In some states some classes of corporations are not xo8 STOCKS, BONDS, 7, H'lt/ /Hilt r /V DOLLARS 'Jif first tin// i>f '/f/tf IH( *'tftye If out/ (tithe off If* JANUARY tJiat rtay NO. *2S. ,,J.llimW, at the offtrf of U U L.Y \9t3^ ^.ifi tfatf rt N.w.HA/rinsSiim WrTtvfimrarf DOLLARS office o/lM mBf>-e/isun'/i)u0it' first " ,v>-o>9 ^ AND OTHER SECURITIES. I0 9 NTHE STATE OF NEWJERSET. JNTEREST PAYABLE JUNE I STAND DECEMBER Isi limited. Sale of Stock. Stock is usually sold on certain explicit conditions, such a: the paying of ten per cent, down and the balance at stated intervals. If the conditions which are agreed to by the shareholder are not met his stock is declared forfeited, or he can be sued in the same manner as upon any other contract. Some companies organize with the under- standing that a certain percentage of the nominal value of the shares is to be paid at the time of subscribing, and that future payments are to be made at such times and in such amounts as the company may re- quire. Under these conditions the stockholders are assessed whenever money is needed to pay the company's expenses. Such assessments are uniform on all stockholders. AND OTHER SECURITIES. Ill 112 STOCKS, BONDS, Corporations. A corporation is a body consisting usually of several persons, em- powered by law to act as one individual, and continued by a succession of members. Public corporations are those which are created ex- clusively for the public interest, as cities, towns, counties, state univer- sities, hospitals, etc. Private corporations are created wholly or in part for the private emolument of the members, as railroad companies, banks, manufacturing companies, etc. Corporate bodies whose mem- bers at discretion fill by appointment all vacancies occurring in their membership, are sometimes called close corporations. In the United States the power to be a corporation is a franchise which can only ex- ist through the legislature. There are two distinct methods in which corporations may be called into being: first, by a specific grant of the franchise to the members; and second, by a general grant, which be- comes operative in favor of particular persons when they organize for the purpose of availing themselves of its provisions. When the specific grant is made, it is called a charter : it specifies the grantees, indicates the purpose to be subserved by the corporation, and the powers and privileges it shall possess to that end, perhaps imposes special liabilities and penalties for abuse, and makes provision for perpetual succession of members by a transfer of interests, or by elections or appointments to fill vacancies. In the case of private corporations the charter must be accepted by the members, since corporate powers cannot be forced upon them against their will ; but the charter is sufficiently accepted by their acting under it. Public corporations, on the other hand, may be organized at the legislative discretion, without consulting the pleasure of the people incorporated. When special charters are not granted, a general law is passed, under which individuals may volun- tarily associate, and, by complying with the provisions of the law, take to their organization corporate powers. In some of the states private corporations are not suffered to be. created otherwise than under general laws, and in others, public corporations are created in the same way. A corporation must have a name, by which it shall be known in law and in the transaction of its business. The name is given to it in its charter or articles of association, and must be adhered to, though doubtless a corporation might render itself liable on engagements assumed in another name which it had used as its own, and it is pos- sible for a corporation to have two names, as has sometimes been the case with municipal bodies, which are permitted to make contracts or bring suits in one name for one purpose^ and in another name for an- AND OTHER SECURITIES. 1 14 STOCKS, BONDS, other. In municipal corporations in the United States the members are the citizens ; the number is indefinite ; one ceases to be a member when he moves from the town or city, while every new resident becomes a member when by law he becomes entitled to the privileges of local citizenship. In corporations created for the emolument of their mem- bers, interests are represented by shares, which may be transferred by their owners, and the assignee becomes entitled to the rights of mem- bership when the transfer is recorded ; and if the owner dies, his per- sonal representative becomes a member for the time being. In such corporations also, shares may be sold in satisfaction of debts against their owners. The necessity for the use of the corporate name in the transaction of business, flows from the fact that, in corporate affairs, the law knows the corporation as an individual, and takes no notice of the constituent members. It was formerly supposed that a corporation could transact no business except under its corporate seal ; but now it is only in the execution of solemn instruments, such as deeds, bonds, mortgages, etc., that the seal is commonly used. Most of the business of a corporation is necessarily carried on with as little formality as if transacted by an individual. The laws which corporations may make for their own government are made under the several heads of by-laws, ordinances, rules and regulations; and they are made by the governing body for any object not foreign to the corporate purposes. A munici- pal corporation, for example, makes ordinances for the cleaning and lighting of its streets, for the government of its police force, for the beautifying and regulation of its parks, for the supply of water to its citizens, and for the punishment of all breeches of its regulations. A railway corporation establishes regulations for signals, for the running of trains, for freight connections, for the conduct of its passengers, and for hundreds of other things. But such by-laws and regulations must be in harmony with the charter of the corporation and with the general law of the land. For instance, a municipal corporation could not en- force a by-law forbidding the use of its streets by others than its own citizens, because by general law all highways are open to the common use of all the people. Again, a railway corporation could not make a rule that it would carry goods for one class of persons only, because, as a common carrier the law requires that it carry impartially for all. A railway company may properly and justly require every passenger to remain upon the car until it is brought to a stand, because prudence and safety require this; but a regulation that no one shall leave his seat after taking it until he leaves it to pass from the car would have no such AND OTHER SECURITIES. IJ 5 STOCKS, BONDS, AND OTHER SECURITIES. 117 considerations to support it. As a general rule private corporations organized under the laws of one state are permitted to do business in other states. It is sometimes to the interest of a stock company to organize under the laws of one state for the purpose of doing business in another. For instance there are many companies chartered under the laws of Maine and with headquarters in Boston. The Massachu- setts laws require that a large portion of the capital be paid up when the company is organized, while a company with twenty-five dollars can organize in Maine for $100,000 and not a single member be a resident of the state. So it is that many large companies doing busi- ness in New York and Philadelphia are organized under the laws of New Jersey. A corporation ceases to exist when it was limited by its charter to a certain period of time, and that period has elapsed. A corporation may be terminated by a repeal of its charter when a right to repeal was reserved. A corporation may make an assignment just as may an individual. If all the members die the property interests pass to the rightful heirs and under ordinary conditions the corporation still exists. It is usual to provide for the winding up of corporations which are found to be insolvent. Persons wishing to form a corporation or stock company should study carefully the State laws under which they intend to organize. Bonds. If a railroad or a steamship company or a city or any other cor- poration desire to borrow money, instruments of credit called bonds are issued. Bonds bear almost the same relation to the resources of a cor- poration that mortgages do to real estate. A bond means something that binds. Bonds are usually issued for a period of years and have coupons attached which are to be cut off and presented for payment of interest at regular intervals. The portion of the earnings of a corpora- tion is usually set aside each year as a sinking fund to meet the bonds when they mature. Thus you see that a bondholder runs less risk than a stockholder, for the corporation is bound to pay interest on its bonds, but is not obliged to pay dividends on its stock. On the other hand, if the concern is very successful, the shareholders may receive more money than the bondholders ; for no matter how large the profits are, only the promised rate of interest is paid on the bonds, whereas the dividends paid will grow larger as the earnings increase. A bond is evidence of debt, specifying the interest, and stating when the princi- pal shall be paid ; a certificate of stock is evidence that the owner is a STOCKS, BONDS, part-owner in the company, not a creditor of the company, and having no right to regain his money except by the sale of the stock, or the winding up of the company's business. The name debentures is given to a form of municipal bond in general use. Nearly all the large sums of money used by states and cities for the building of government in- stitutions, bridges, canals, etc., are raised through the issue of bonds which are sold, usually at a price a little below par, to large financial institutions, banks, and insurance companies. Generally speaking such bonds are considered good securities and are marketable anywhere. Corporation Franchise. A franchise is a right granted by the state to individuals or to corporations. The franchise of a railroad company is the right to operate its road. Such franchise has a value entirely distinct from the value of the plant or the ordinary property of the corporation. When a corporation sells its property, the buyer should expressly bargain for the franchise. Frequently a corporation is not allowed to sell its fran- chise except by consent of the state. Liability of Stockholders. The stockholders of a corporation are usually not liable for its debts beyond the amount of the stock held by them. The members of a joint-stock company are liable as partners. The holders of national bank stocks, in case of the failure of the bank, are liable to double the amount of the face value of their stock; that is, each stockholder, in addition to the loss of his stock, may be assessed to pay all the debts of the bank, up to an amount equal to his stock. There is no personal liability as in the case of partnerships or joint-stock companies. An instance is given of a gentlemen in Boston who had $30,000 invested in the stock of a national bank of that city. The bank failed. He lost his entire $30,000 and was compelled to pay an additional $30,- ooo. That is, the failure reduced his property $60,000. Arbitrage. This name is given to stocks and shares bought in one market and sold in another ; as shares bought on the London market and sold in New York. This class of business is in the hands of brokers and is carried on by telegraph. Advantages over Partnerships. The following are given as a few of the advantages which are claimed for corporations and joint-stock companies over partnerships; AND OTHER SECURITIES. 119 i. Union of capital without the active service of the investors. 2. Better facilities for borrowing. It is a common thing for a partnership to be changed to a corporation for the express purpose of raising money by the issue of bonds or stock. 3. Limited agency of directors. A partner may pledge and sell the partnership property, may buy goods on account of the partnership, may borrow money and contract debts in the name and on the account of the partnership. These powers can- not be limited by agreement between the partners so as to bind outsid- ers. Accordingly, a person dealing with a partner is entitled, unless he has express notice to the contrary, to assume that the partnership has the usual powers. The directors of a company are in a very different position. They are special agents, and have only such powers as are given to them by regulations of the company. The power of thus ef- fectually limiting the authority of the acting partners is of great value, and constitutes one of the chief advantages which a company has over a partnership. 4. The continuous existence of a company. Where a man is possessed of a profitable business he very commonly wishes to provide for its continuance in the event of his death. If he proposes to bequeath the concern to his son or some other relative absolutely, there is no difficulty ; but it may be that his sons are under age or are not anxious to engage in the business ; in such cases the ordinary course, if the concern is not converted into a company, is to bequeath the business, with the capital employed in it, to trustees who are di- rected to carry it on so as to effect the testator's wishes. But in these work-a-day times it is very difficult to find trustees willing to undertake such trusts. If, however, the business has been changed to a private company these difficulties disappear. All the shares in the company with the exception of a very few, are issued to the former owner as fully paid up and he becomes managing director. By his will the shares are bequeathed to trustees, who become or appoint directors. Upon the death of the testator the business will go on, and in due course the shares may be sold, distributed, or otherwise disposed of as his will directs. 5. In the case of a partnership the title of the prop- erty held may be affected by the death or bankruptcy of one of the partners, but in the case of a company the property is vested in the company as a body corporate, and no changes among its members af- fects the title. 6. Contracts with a partnership are in law regarded as contracts with the members of it, whereas contracts with a company are not contracts with individual shareholders. 7. New shareholders are admitted much more easily than are new partners. 8. A retiring 120 STOCKS, BONDS, partner is still liable for existing debts ; a shareholder can retire abso- lutely by selling his stock and having it legally transferred. Illustrating why Companies are 1'ormed. It may be helpful to the student to give some instances of the many AND OTHER SECURITIES. 121 causes which lead to the formation of stock companies and corpora- tions : 1. A firm consists of several members, each of whom has put to- gether some private means which he is desirous of freeing from the risk of trade. To effect this they convert the business into a stock com- pany ; they become the sole directors of the company ; and they re- ceive paid-up shares in substitution for their interests in the business. Henceforth their assets outside the business are under certain conditions free from risk. 2. A firm consists of several members, one of whom is entitled to the greater part of the capital, and has also large private means. He is disposed to retire on the fortune he has accumulated. If his liability could be limited, he would be willing to leave part of his capital in the business, and to assume the position of a sleeping partner. The only way in which this can be effected is by converting the business into a limited liability company. 3. The owner of a profitable business dies. There are competent managers, but the owner's sons are not inclined to devote themselves to the concern, or to incur the uplimited liability involved in carrying it on through managers. Accordingly, they convert the business into a private company. 4. A capitalist is willing to supply a person or a firm engaged in trade with additional capital in consideration of a share in the profits, but does not wish to incur the liabilities of partnership. He therefore stipulates that the business shall be converted into a limited company. He then brings in the additional capital by paying cash for the shares of the company. 5. A, B, and C are entitled to a valuable business. By reasons of a temporary lock-up of funds or otherwise they find it necessary to con- sult their principal creditors. Bankruptcy, with its grasping officialism and discredit, would be disastrous to all concerned, and more especially to the creditors. Accordingly, the concern is converted into a company, the smaller creditors are paid off in full, and the principal creditors all take debentures for their debts, and are given paramount control in the management of the company. The concern is thus placed on its legs, and as soon as practicable the debentures are cleared off, and mean- time the creditors have the fullest security that it is possible to give them, and are able in fact to manage their own affairs and protect their pwn interests. 6. A, B, and C desire to start a newspaper, or to supply a town 9 122 STOCKS, BONDS, with water, or to bu'ld a theatre, or to provide swimming baths, or to erect a hotel. They consider it necessary to unite their capital. Ac- cordingly they form a private company and each becomes a director, and further funds, if Wanted, are raised by the issue of additional stock or first mortgage bonds. 7. A has a patent for an invention, but no capital. The utility of the invention is fairly obvious, but it requires to be more thoroughly tested, and a large expense must be incurred in putting it on the market. B, C, and D agree to put up the necessary capital for a share in the profits and to carry out their plans properly they find it necessary to form a stock company. The foregoing are simple illustrations. There are thousands of reasons why companies and corporations are formed. In four cases out of five the major reason is the need of the larger working capital which can be more easily secured by the formation of a chartered concern. Investing. With the growth of wealth, we find increasing numbers of persons who want to invest their means in good securities. To do this success- fully and safely is a very difficult question. It is even more difficult to keep money profitably employed than to make it. Changes and in- novations are of continual occurrence. Not only are new securities constantly coming upon the market, but new subjects as a basis of their production are industrious!} sought after. Every newly-discovered force or process in mechanics means the appearance of another de- tachment of paper securities. The war of the rebellion popularized the coupon bond, in consequence of its adoption by the government, and made it the favorite form of investment paper. Railroads and other corporations soon availed themselves of the confidence which that species of paper inspired, and states, cities, and counties were soon flooding the country with obligations carrying long coupon attach- ments. Many persons have purchased and paid good prices for mortgage coupon bonds, giving them no control over their security, who would have rejected share-certificates standing for an equal interest in the property pledged, and giving them the right to participate in its manage- ment, with the possibility of a greater return for their money. Many of the states through careless legislation have permitted corporations to decide for themselves the anuunts of obligations they might put out, and the privilege has been very much abused. We now have stocks and AND OTHER SECURITIES. 123 bonds upon the market representing nearly all conceivable kinds of property telegraph and telephone companies, mining companies, cattle ranches, grain farms, water-works, canals, bridges, oil and gas wells, electric lighting, trolley companies, factories and mills, patent rights, steamboat lines, apartment houses, etc. Not only are properties of many kinds used to issue bonds upon, but many kinds of bonds are often issued upon the same properties. Thus we find among our rail- roads not only first, second, and third mortgages, but income bonds, convertible bonds, consolidated bonds, redemption bonds, renewal bonds, terminal bonds, divisional bonds, sinking-fund bonds, collateral trust bonds, equipment bonds, etc., until they lap and overlap in seem- ingly endless confusion. One issue of bonds is sometimes made the basis of other issues. Some one has said that there never was a time ii: tne history of the world when it was so easy to invest money and to lose it. Of the securities that are offered with first-class recommen- dations, it is probable that about one-third are actually good, one-third have some value, and one-third are practically worthless. In making investments, the first and main thing to be studied is safety. Never buy a security of any kind without having read it. Do not buy what are commonly known as cheap securities. Do not rely solely upon the advice of a broker. He may have personal interest to serve. By far the greater number of losses to investors has been in securities purchased exclusively on the recommendation of interested commission men. It is a mistake to give preference to listed securities that is, those re- ported on the stock exchange lists. Stocks are too often listed simply for speculative purposes, and the price represents not so much the value of the property as the pitch of the speculation at the time. Se- curities, in the long run, must stand upon their merits. As a rule, the best time for an experienced investor to buy, is when others are un- loading. U. S. Government Bonds. At different times the United States government has issued bonds to relieve the treasury. No better investments are offered. They draw interest at rates from 3 to 4 per cent., and late issues have been sold at prices slightly above par. These bonds are absolutely safe and are al- ways marketable. It is estimated that the civilized nations of the globe r.ow owe, without including local obligations, not less than thirty billions of dollars, a sum equal to a mortage of $800 OD each square mile of their territory. 184 STOCKS, BONDS, State Bonds. History has shown that state bonds bonds issued by the states for local enterprises and improvements, such as government buildings, schools, hospitals, etc. have not always proven profitable as invest- ments. As a rule, however, the bonds of such states as Massachusetts, AND OTHER SECURITIES. 125 New York, Pennsylvania, etc., rank next to those of the Federal gov- ernment as safe securities. Municipal Bonds. These are issued by cities and other municipalities to raise money for local improvements, such as city buildings, street paving, water- works, etc. They have an important element of security that state bonds do not possess. Their collection can be legally enforced, but in buying them, it is very important that all points affecting their validity should be carefully inquired into. If proper precautions are taken by buyers, municipal securities may be considered among our safest and most remunerative investments. Railroad Mortgages. As our railways, with few exceptions, are valuable and productive properties, they furnish an excellent security for interest-bearing paper, provided always that they are properly managed and not overburdened with debt. Railroads are now built for the purpose of profit. Rail- roading is an industry just as is the raising of cattle, the growing of grain, or the manufacture of machinery. When a new railway enter- prise is undertaken, its promoters expect to make the road not only supply funds for its own construction, but to give them working capital in addition. This is accomplished by mortgaging the property to that ex- tent that the bonds can be sold for a larger sum than the actual cost of the road. Default in the payment of interest throws the road into the hands of a receiver. The securities immediately fall in value. They are perhaps bought up by a syndicate of crafty speculators who are permitted to reorganize the road and its management. This is the his- tory of many of our roads. There are exceptional cases, of course, but the investor should be familiar with the facts before buying railroad mortgages. Railroad Stocks. These are of such varied character that it is impossible here to make more than general statements. Many of our railroad stocks bring prices far above par and pay liberal interest on investments. Some of them are so profitable that they are really not on the market and cannot easily be bought. Others represent roads loaded down with mortgages and other obligations so heav) AS to make the stock really a liability 126 STOCKS, BONDS, rather than a resource to its owner. The stock quotations represent in a general way the comparative value of these securities. Miscellaneous Stocks. To make a profitable investment in stocks the buyer must antici- pate the future. A mill that may be working day and night this year may be obliged to shut down entirely next year. A business which is open to public competition must take its chances on its future success. The greater the earnings the more certain the competition. Many cor- porations owning monopolies by virtue of patent rights have made large fortunes, but there is always the possibility of new discovery. Ele^ tricity has succeeded gas ; the telephone is competing with the tele- graph ; the trolley is cutting into the profits of railways. A good thing in stocks to-day does not necessarily mean a good thing next year. Farm Mortgages. Mortgages upon improved property, if properly graduated in amount, should be safe and profitable investments. The buyer, how- ever, must exercise great care and good judgment. Should there be collusion between the loaning agent and the land owner, the money advanced may be largely in excess of the actual property value. Vil- lages with less than a dozen houses are often the sites of investment companies doing business under pretentious names, and offering mort- gage investments at interest rates which by the local conditions are im- possible. One of the devices of these enterprising companies is to >offer their own guarantees as to both principal and interest of all mort- , gages negotiated by them. The investor should be sure of two things: i. the safety of the principal, 2. regularity in the payment of the in- terest. There is great danger of default from causes not anticipated by .the farmer and over which he has no control. Electric Railway Stock. Of recent stock this is the most popumr and in many instances the most profitable. The introduction of electric power has reduced the working expense one-half and in most instances has doubled the traffic without any reduction in fares. The buyer should make sure that the road is in a busy community able to sustain it, that its fran- chise will protect it from dangerous competition, and that the securities have been legally issued. Substitution Securities. There have recently been formed several large companies whose AND OTHER SECURITIES. business it is to issue bonds on the security of other bonds. The idea is similar to that of real estate title insurance. Such companies are supposed to have superior facilities for investigating securities. They purchase those which they consider good and at the best prices pos- sible. These they deposit with some trust company or banking in- stitution. With these bonds, which they buy, as their original prop- erty, they issue new bonds of their own which they sell to the public and which they guarantee. The differences in prices and in interest make up their profits. Stock Quotations. The stock quotations as given in our daily and financial papers are easily understood. In some instances the price offered by buyers and the price asked by sellers are both given. Bonds quoted for in- stance at 99@ioo would indicate that if you wish to sell yo'j can get 99 and if you wish to buy they will cost you 100. Bottomry Bonds. A bottomry bond is a kind of mortgage peculiar" to shipping. K is a conveyance of the ship as security for advances made to the owner. If the ship is lost, the creditor loses his money, and has no claim against the owner personally. It is allowable for a loan mftde on such a bond to bear any rate of interest in excess of the legal rate. A vessel arriving in a foreign port may require repairs and supplie? before she can proceed further on her voyage, and in occasions of this kind a bot- tomry bond is given. The owner or master pledges the keel or bottom of the ship, a part, in fact, for the whole, as a security. General Mortgages. A mortgage is a conveyance of property for the purpose of securing a debt, with the condition that if the debt is paid, the conveyance is to become void. A mortgage of personal property is called a chattel mort- gage. A mortgage in form is really a deed of the land, with a special clause stating that the grant is not absolute, but only for the security of the debt. It is usual for the debtor at the time o f executing the mortgage to also execute a bond or promissory note in favor of the creditor for the amount of the debt. This is called a mortgage note. When land is bought by one who is unable to pay for it in full, it is common for the purchaser to give back to the grantor a mortgage on the land conveyed for the unpaid balance. Mortgages are frequently given, in cases where there is a debt existing, to secure or indemnify 128 STOCKS, BONDS, AND OTHER SECURITIES. 12 9 the mortgagee against some liability which he may possibly incur on be- half or for the benefit of the mortgagor. For instance, where a man has endorsed another's note for the latter's accommodation, or gone on his bond as surety, the latter may execute to the former a mortgage of indemnity. When a married man makes a mortgage his wife should sign with him, in order to cut off her dower rights. The power of a corporation to make a mortgage is regulated by its charter or the gen- eral law under which it is organized. Religious corporations can mort- gage only upon consent of the court. All mortgages must be iccorded in the office of the register of deeds for the county in which the property is located. The object of recording is to'give notice of the existence of the mortgage to any one who might wish to purchase the land, or to take a mortgage upon it. There may be several mortgages upon the same property. The first mortgagee is entitled to be paid in full first, then the second, and so on. The mortgagee may use his mortgage as security for loans or may assign it as he pleases. When the requirements of a mortgage are not met the holder has under certain conditions the right to foreclose, that is to advertise the property for sale, and within a time fixed by law, to sell it to satisfy the mortgage. It is usual for the mortgagor to insure the property for the benefit of the mortgagee. EXAMINATION QUESTIONS. I. Enumerate some of the advantages to the general commerce of the country of our stock exchanges. a. What are Consols ? Explain the meaning of U. S. 45. 7^07 Registered. 3- If Pennsylvania R. R. stock is quoted in New York at 52^ and in London at 54^3, with exchange at 4.88, what is the gold advantage or disadvantage to a Londoner who buys 1,000 shares? 4 Distinguish between the two classes of dealers who generally operate on stock exchanges. 5 Give some particulars of the history and workings of the New York Stock Exchange. 6. What is meant by selling stocks or bonds in the regular-way ? 7 What is a ticker? Give particulars of its use. 8. Distinguish between the use of the terms bear and bull\n stock exchange manipulations. What is a hedge ? 9 A broker buys 1,000 shares of stock for a customer and sells it ygain, what should his commission amount to? 10. Explain the meaning of puts and calls. 11. " The speculator usually trades on margins." What is mear' by this? 12. What is the general commercial meaning of securities ? 13 Explain the meaning of mortgage bonds, debentures, certificates of stock, syndicate, substitution securities. 14 Explain the difference between par and market value. Why do stocks and bonds vary in value? 15- What is the dividend? What is the usual commission of a stock broker ? 16. Is the income from bonds affected by the prosperity of the business or corporation? Explain. i? If I buy 3^ per cent. U. S. bonds at H3^i, what rate of in- terest do I receive ? (130) STOCKS, BONDS, 135 18. At what rate should stock paying annual dividends of 12 per cent, be bought to realize 7^ per cent, on investment? 19. Stock is originally bought at 37}^. It is doubled by " water- ing " three times. It nows pays quarterly dividends of 4^ per cent. What per cent, does it pay on original investment ? (Ans. 384 per cent.) 20. I bought 720 shares railroad stock at 71 y& through a broker, an a margin of 10 per cent., and he sold for me at 74^. What per cent, profit did I make on my actual investment? (Ans. 44 per cent , nearly). 21. At what price must U. S. 3^'s. be bought to net 4 per cent. ? 22. What is meant by the settlement days of English exchanges? 23. Explain the following stock exchange terms: Pool, boom t panic, trading on the curb, a wash sale, buyer 3, bucket-shops. 24. Distinguish between selling dividend- on and selling ex-divi- dend. 25. Discuss in a general way the business of brokers in large cities. Why do merchants and manufacturers find it to their advantage to em- ploy brokers ? 26. Give the successive and necessary steps in the formation Mi a joint stock company. 27. Why are companies who exist and belong in one State organ- ized under the laws of another State ? 28. To what extent are purchasers of shares of stock responsible for the liabilities of the concern represented? 29. Explain very fully the difference as to resource and liability between a bondholder and a stockholder. 30. How can the stock of a company or corporation be increased ? 3i Explain clearly the difference between a stock company and a corporation. 32. What is the effect of an arrangement between partners as to sharing the liabilities of a concern? How about share-owners in this particular ? 33. How may a stock company be. dissolved ? 132 AND OTHER SECURITIES. 34- What is the difference between a voluntary association such as a society or club and a stock company? 35 Explain what is meant by preferred stock. What is treasury stock ? 36* In reports of banks, insurance companies, and other large cor- porations we notice that large sums of money are classed as surplus fund. How is this fund formed, to whom does it belong, and why is it held by the corporations ? 37- Explain very fully the meaning of Limited when it forms par of the legal title of a company. 38. A invests $10,000 in the stock of a manufacturing company j B invests $10,000 in the stock of a national bank; C invests $10,000 in the stock of a limited liability publishing company. All three con- cerns fail and their existing assets apart from the liability of the stock- holders is 10 cents on the dollar. How much will A, B, and C lose respectively ? 39- Can A transfer a share of stock to B ? Give full particulars. 40* Explain clearly the two distinct methods by which corpora- tions may be called into being. Can the members of a corporation be indefinite as to number? Explain. Can they be indefinite as to person ? 4* Could a municipal corporation enforce a by-law forbidding the use of its streets to others than its own citizens ? Why ? 42. If all the members of a corporation die, to whom will the property interests pass ? Will the corporation still exist ? 43 What is the purpose of the coupons which we find attached to bonds ? 44- Distinguish between the franchise of a railroad and that of aj> individual. 45 What is arbitrage ? 4<* Give fully some of the advantages which stock companies and corporations have over partnerships. 47. Discuss the subject of investments showing the ujvestnrg* chances of gain or liability to loss. 48. The United States government makes and issues money ana STOCKS, BONDS, AND OTHER SECURITIES. 133 has its vaults well filled with coin and bullion. Why is it necessary to issue government bonds ? 49 What provision is usually made for the redemption of munici- pal bonds which have a long period to run ? 50- Is it legal to sell shares of stock and issue mortgage bonds upon the same property? What relationship do they bear one to the other ? 51. What is meant when we say that a certain railway is in the hands of a receiver ? Transportation of Mail, Money, and Merchandise. History of Transportation. The Romans had an admirable system of roads, and a highway legislation not unlike that now prevailing in France. But in the middle ages both the roads and the law were allowed to decay. As the central governments of Europe grew in power, from the sixteenth to the eighteenth century, they also laid claims to rights over the roads; first in the form of a right to levy tolls; and later in undertaking to build roads, and maintain them under their own control. Throughout the continent the road taxes were oppressive and the highways extremely bad. A thorough reform was instituted in France by revolutionary legislation which provided for roads free from tolls, and supported by the nation. Similar legislation was carried out during the same period in other parts of the continent. In England the course of events had been different. The roads had always been recognized as the king's highways. The experiment of tolls was cautiously tried. Turnpike trusts were introduced at the beginning of the last century with tolerable success. The early American system was modeled upon that of En- gland especially so in New England. The development of the canal system in England and America was almost simultaneous with that of turnpike roads.' In internal navigation France took the lead while in railroad building England took the lead. Competition has increased greatly the speed and reduced materially the expense of transportation. By the study of the prevailing winds, the speed of sailing vessels on many frequented routes was nearly doubled, and the expense of carriage [135] 136 TRANSPORTATION OF MAIL, thereby greatly diminished. Fifty years of constant improvement in postal facilities have been marked by a reduction of postal charges to less than one-fifth what they were at the beginning. There has been the same kind of improvement and reduction in the steamship service. When ocean steamships were first introduced, it was not supposed that they could ever compete with sail for the carriage of ordinary freight, even on the most frequented routes. Railroads soon after their intro- duction, proved themselves more than a match for any competition from the old system of hauling in wagons; and transportation has now reached such perfection that the one cent per bushel which it costs the farmer to haul wheat a mile by wagon, is a higher rate than he has to pay per ton per mile by railroad. Or, to put the same results in an- other way, in most of the wheat regions it would not pay to grow grain which had to be hauled 25 miles by wagon ; in some places the limit of wagon hauling is as low as ten miles. Economic Results of Improved Means of Transportation. The successive railroad improvements, both in engineering and in management, culminating in the wonderful substitution of steel rails for iron, and the enormously increased loads thus rendered possible, have produced such astonishing results, that it is not safe to predict the possibilities of the near future. The most immediate effect of cheap- ened transportation is to increase the distance at which it is possible for producer and consumer to deal with each other. To the producer it offers a wider market and to the consumer more varied sources of supply. On the whole, cheapened transportation is more uniformly beneficial to the consumer ; its temporary advantage to the producer very often leads to overproduction. It has the effect also of bringing about nearly uni- form prices the world over. In the case of less bulky manufactured products, these differences of price almost disappear, except as they are due to artificial obstructions. The time was when nearness to market was of the greatest possible advantage. At the present time a farmer can raise his celery in Michigan or his beets in Dakota and market them in New York city about as easily as though he lived on Long Island. It is no longer location which determines the business to be carried on in a particular spot, but natural advantages more or less independent of location. These changes have had a wonderful influence upon inter- national relations. Even the barriers raised by high protective tariffs hardly avail to counteract the effects of reduced transportation. It is the railroad or the steamboat which determines where a new business MONEY, AND MERCHANDISE. shall be developed, quite as often as the policy of a government. The grant of special rates and privileges to shippers is nowadays the most efficient kind of protection. It is this quickening and cheapening of transportation that have given such stimulus in the present day to the growth of large cities. It enables them to draw cheap food from a far larger territory, and it causes business to locate where the widest busi- ness connection is to be had, rather than where the goods or raw mate- rials are most easily procured. With this growth of city life, comes the increased gain of large dealers at the expense of the small ; with it comes organized speculation, and its attendant results, good and evil ; and with it comes the development of enormous wealth in the hands of a few. It is because these indirect results are so far-reaching that the question of government control of transportation agencies has reached its present importance. Transportation Rates. As a general rule transportation rates are lower in Europe than in America. Transportation agencies in private hands will of course be managed on business principles, that is, they will charge all that the traffic will bear. It would seem, at first sight, as if non -competitive points were thus left entirely at the mercy of railroad managers. Prac- tically, however, this danger is checked by two important limitations. In the first place, the competition of different localities in the same market is such that if one railroad charges rates arbitrarily higher than its competitors, it renders it impossible for the localities along its route to ship goods at a profit, and will thus quickly destroy its own traffic ; secondly, exorbitant rates may induce the building of a parallel rail- road ; and however ineffective such roads generally prove after they are built, the prospect of one in the future has the tendency to keep rates down. The dangerous kind of discrimination, and one which cannot be too strongly reprehended, is that which makes special rates for dif- ferent individuals, doing the same kind of business in nearly the same place. The rates of transportation in America are partly regulated by state and federal legislation, but more largely by mutual arrangement of transportation companies. Freight Companies. Prior to the completion of the organization of trunk or through lines, freight was compelled to break bulk and suffer trans-shipment at the end of each line, where a new corporation took up the traffic and 10 TRANSPORTATION OF MAIL, carried it beyond. To prevent this breaking of bulk, and to expedite the carriage of freight, fast freight lines on separate capitalization were organized, at first by the managers of the railways themselves owning or leasing their freight cars, and then made profitable by special arrangements with the railways readily enough secured, because of the fact that the railway officials themselves were largely interested in the fast freight lines. Notwithstanding the fact that many of the state legis- latures have made laws to regulate the carrying trade, it is generally known that many large business firms, the leviathans of modern busi- ness, can and do dictate their own terms between rival corporations, while small concerns are compelled to accept the best terms they can get. Special contracts covering long periods of time are made every day with heavy shippers, under which the common carrier, whose first duty it is to serve all equally, gives to certain houses a practical control of the markets. The names of the leading freight companies such as Merchants' Despatch, Union Line, etc., are familiar to every one. Common Carrier. In a legal sense a common carrier is one whose regular business is to carry articles of personal property from place to place for the public. Expresses, stages, railroads, canal boats, steamboats, teamsters, ferries, etc., are instances of common carriers. A common carrier must carry for every one who desires to employ him and is ready to pay him his reasonable charge, so long as he has accommodations, and holds him- self out to carry the kind of articles offered. It is the carrier's duty to load the goods carefully and to carry them safely and without unrea- sonable delay, and he is liable under certain conditions for damage or loss while in his possession. A Bill of Lading. A bill of lading is an acknowledgment by a transportation com- pany of the receipt of goods specified, and contracts for their delivery at a certain place, under conditions stated thereon upon payment of freight an'* expenses. Bills of lading are negotiable and may be trans- ferred jy endorsement, but are of no value apart from the goods to whicii they give title. A bill of lading goes with certain named goods and cannot be transferred to other goods even though of precisely the same kind and price. Marine bills of lading are usually made in tripli- cate; one is kept by the shipper, another by the vessel, and the third is sent by mail to the person to receive the goods. Original re- MONEY, AND MERCHANDISE. 139 ceipts, stating marks and quantities of goods, go with each separate lot to the freight sheds or vessel, and these are summed up in a formal bill of lading, for which they are exchanged, when all the cases or bundles ERIE DESPATCH. iBCBlfinj! .,. I A.. SIS WSmitWtSSSS*^ Bsscvrffiw.fwan Q ' Br.3SSerii.3. PHILADELPHIA & READING RD., PHILADELPHIA, PA.,. JL3- RECEIVED FROM V*-^** . 4. CU^cU'* . jjy%4^VrvlLtfv*.,-Uiq -^ g ^f*'" ^ ' .a MARKS 4KD NUMBERS. DESCRIPTION OF ARTICLES. CONSIGNEES mn DESTINATION "Bur^, Ao^rC/i V/Avj ERIE DESPATCH *** Advanced Charges, $ | jL,^rr^?s The Condltlono upon which the uDore-m.ntlonea ORIQINAL.-SHIPPINC RECEIPT. (To to rurnii la MMMkj ,,,,,., ._ Exchange for Bill of Lading, at 333 Chestnut Street. transportation bf the CRIK DISPATCH are printed on the back hereo.. ERIE DESPATCH. ERIE & PACIFIC DESPATCH DIVISION. GREAT WESTERN DESPATCH DIVISION. SOUTH SHORE LINE DIVISIO PHILADELPHIA & READING RD., PHILADELPHIA, PA., ^*jcl. l<{ 189t>_. RECEIVED FROM JVe*i4.i,/> C74*U%.*> OUPLICATE.-FORWAROING ORDER. a. M t.l.H , R,.,^ w> Received by . belonging to the particular shipment have been delivered. The part of the receipt marked invoice is kept by the receiver of the freight, and the other end is given to the drayman. In making small shipments, or 140 TRANSPORTATION OF MAIL, shipments at short distances it is not usual or necessary to make out a formal bill of lading. Of course when no bill of lading is made out the receipt should be preserved by the shipper. The full contract is usually printed on the receipt but it must be remembered that a receipt is not a negotiable instrument and cannot be used as security for money. The parties to a bill of lading are three, the shipper, the consignee, and the transportation company. The declaration of having received the goods in good order and condition and the consequent obligation, sub- sequently expressed, of delivering them in like good order and condi- tion, is sensibly lessened in its importance by the additional clause now FORV.124A. ISPATCH. For Information and Bills of Lading apply at 33 S. Sixth St., W. F. TREXLER. Agent. MARK PACKAGES "C. S. D." AND DELIVER AT DEPOTS OF PHILADELPHIA & READING R. R. Dread and Hut South Wtirfc* Porttichraond. Kaljtn'i Pciul, Camden. N. J l.indrns>iree..Can,den.N J btiow in apparent o~t orde PMhdelphio. Pa., 5A*AX| ^ . j<| ..... r, netpl af notedjconlcnu and condition 1895* Street. d.,.! - - - II It n.ulull 4gnd In con.ldtrll'.n ot lr.t rate of freight named In thr Bill or La.linu Icr which Ihli rer.oipt li to be exfl.ngt.l. and u to e.ch cirrirr of all or any of laid property or<7.l! an, port.on of .aid ,oul* to d..ln.tion. and a. to each part, ai an. lin>. Inureiud in a^l or any ot ...d property, that erery ,erv,c. to be per- formcj '-triund-r >h>n b. tabltrt to 1 the condiuoni whether printed o. written, tndomd heraon. and which arc he.-c-!w afteed to by the ihippti and by him accepted MARKS AND NUMBERS. ( Pall Name of Consignee mmt bo given.) | cci The Condition upon which the above mentioned property is i ed lor transportation are printed on the back hereof. adopted by almost all transportation companies, namely, "contents and condition of contents of packages unknown." Should the goods or part of them be shipped in a damaged condition, or in a bad condition of packing, a note to that effect should be made by the transportation company on the bill of lading, which ceases then to be a clean bill of lading. Like any other instrument of credit, a bill of lading may be either deposited with a creditor as security for money advanced, or transferred to a buyer by means of endorsement, and the property of will be thereby either mortgaged or assigned. Acting upon this MONEY, AND MERCHANDISE. I4Z principle, the owner declares in the bill of lading that the goods shall be delivered unto the consignee or his assigns. When a merchant is O-Form 163. PENNSYLVANIA RAILROAD CO.-PENNSYLVANIA COMPANY. The * UNION LINE is thr authori/.er) THROUGH FKEIGIIT 1. I raufa west of Pittsburgh, which secures to thr p.-ope'rty entrusted t movement ^hjtt the roads , 3/.v(>_ RECEIVED from CuLA. ^ifrXAg**, *****. ......... proper', described below. In apparent good order, except a- noted (contents and condition of contenta of packagea unknown), marked, consigned and destined aa indicated below, which the if UNION LINE agree, to carry to the add destinition. if on the Pennsylvania Railroad tyatem otherwise to deliver to another carrier on the route to aaid destination. IT IS MUTUALLY AGREED, In consideration of the rat of freight hereinafter named, as to each carrier of all or any of slid property over all or any portion of saiy fir*, or by ourijiuo ( or bj rtoU, itrlkM 01 oriulL i:\ery crrlr ibfcJl b*v th rigttt, in ctM of ueccully, to forward to or uku from > ititloD whloi there U no regultrtj iptxilo lJ gem, .bull tie entlnlr >t run of owoei obeli aolooctej from on. y until loidetf Into can . nd hn receiid .llbi i^"Stf55 Kir^Ticb'ed'tKT'tr^l'" " 6. No carrier l ;( -r--.r,dej .,: > */ry,or be Iwtle In nj way for ftoj documcou,pcie or for an. anicl. of eitrwrdioar; talM not ipeciCcalli rited In tie piMHbtd clai.iScV tloni, un'leaa > ipecia] agneiueDt U do io. and it'imlaud the differ- ential lines. Passenger Railway Rates Local passenger rates are usually based on 2^ or 3 cents a mile for a single ride, and for a round trip two-thirds of the double rate. The through passenger rates are made by the mutual agreement of the general passenger agents of the several roads interested. The entire amount charged is proportioned between the roads carrying the rx.3- sengers according to the mileage of each. Sometimes it is necessary to take into consideration also the fact that one section of tht chroughline is permitted to charge 3 cents per mile for local traftie while another section of the through line passing through a different state may not charge more than 2^ cents per mile for local traffic. By a stop-off is meant a break in the continuous passage at some intermediate point. Stop-off privileges are granted on certain trains at no additional ex- pense. Most of the railways sell what are known as mileage-book MONEY, AND MERCHANDISE. 145 tickets. These are books good for 1,000 miles of transportation. They are usually sold for two cents a mile and can be used only by the pur- chaser. Coupon tickets are those issued by one road for transportation over several roads. Almost all through tickets are of this class. Ticket scalpers are men whose business it is to buy and sell tickets at cut rates. They are not permitted to do business in Pennsylvania and soms other states. Freight Classification. The transportation business of the United States is so varied and complicated that a proper study of its freight tariffs and classifications would require much more space than can be given to this paragraph. Most of the transportation companies issue freight guides which give in detail the classifications of all kinds of commodities. It is evident that it should cost less to ship a hundred pounds of wheat from Minneapolis to New York than to ship a hundred pounds of jewelry from New York to Minneapolis. The farmer would necessarily be obliged to quit grow- ing wheat if it cost him 60 cents a bushel to ship it to the sea-board. The jeweler can easily afford to pay two or three dollars to transport one hundred pounds of jewels from one point to another. A transpor- tation company in making a schedule of rates would consider, i. the competition of other roads, 2. the total volume of business, 3. the direction that is, of loaded trains or empty trains, 4. the value of the article, 5. the bulk and weight, 6. the risk of transportation, 7. the facilities for loading and unloading, 8. the special equipment, if any, necessary. The classifications now generally adopted by railways have been brought about by a variety of influences and many compromises. At the present time there are three distinct freight classifications : i. The official classification covering the territory east and northeast of Chicago. 2. The southern classification. 3. The western classifi- cation. That is to say that a particular commodity might be considered first-class in one section, second-class in another, and third-class in another. Freight Regulations. When freight is consigned to a certain party, the freight is delivered to that party only, or upon his written order. When consigned to one party in care of a second party, the freight is delivered to the second party only, or upon his written order. Wiien consigned to one party, notify a second party* the second party is notified, but delivery of the 146 TRANSPORTATION OP MAIL, freight is only made upon the presentation and surrender of the original shipping receipt or bill of lading, properly endorsed by the first party. When consigned simply to order or to order of shipper, the freight is only delivered upon presentation and surrender of the original shipping receipt or bill of lading, properly endorsed by the party to whom it was issued. When consigned to order of a certain party, the freight is only delivered upon the presentation and surrender of the original shipping receipt or bill of lading, properly endorsed by the party to whose order the property is consigned. No freight or any portion of a consignment can be removed from a station until all the charges are paid. Transportation Accounts. There are no more complicated systems of accounts than those necessary to railroading. The collecting of freight and holding local agents responsible for it, the dividing of the freight collected between several lines, the following of freight cars, the checking and auditing of way-bills, the proportioning of ticket receipts, the purchasing of material, the traffic expenses, and a thousand and one other things go to make up a system of account keeping which in the best regulated companies, is remarkable for exactness and thoroughness. We give here in tabulated form an analysis of a set of railway accounts : I. Capital Stock and Funded Debt. Supt. and Engineers Expenses Right of way Road-bed and Track 2. Cost of Road and Equipment Rolling Stock Repair Shops Telegraph Lines Offices Additions and Betterments ( Passengers and Freigm, Earnings < Express and Mail 3. Income rui, c~ - / Interest and Rents Other Sources j gurplus of preyious yeaj( 4. Operating Expenses General Expenses Traffic Department Expenses Maintenance of Way Maintenance of Engines and Cars Conducting Transportation {Interest Taxes $ Franchise Charges MONEY, AND MERCHANDISE. 6. Balance Sheet Assets 7. Balance Sheet Liabilities Cost of Road Cost of Equipment Real Estate and Buildings Stocks and Bonds Franchise Other Permanent Investments Cash on Hand Bills Receivable Open Accounts Material and Supplies Sinking Fund Sundries Profit and Loss (Surplus) Capital Stock (Preferred and Common) Funded Debt Interest Due and Accrued Dividends Unpaid Audited Vouchers (Ready for Payment) Pay- Rolls (Unpaid) Open Accounts Bills Payable Sundries Profit and Loss (Deficit) Deficit of Previous Year Interstate Commerce. The theory under which the Interstate Commerce Law was framed, contemplated the maintenance of the independent existence of railway corporations, subject to such organic changes as their owners might from time to time accomplish by contract among themselves in subor- dination to the laws of the several states under which they held their various charters, and all working together under a uniform national control. The maintenance of through routes and of through tariffs was provided for, and it was expressly made unlawful for any common carrier in any manner to prevent the continuous carriage of freight from the place of shipment to the place of destination. All agreements between the various railway associations are required by law to be filed with the Interstate Commerce Commission. The fundamental purpose of the Interstate Commerce Law is the prevention of discrimination of every form. Before its enactment unjustifiable discriminations were made between business houses and between different towns or localities; also by the secret cutting of rates and by systems of rebates; also by the granting of free passes. These abuses have been greatly reduced through the action of this Federal law. It requires the establishment and publication by carriers of tariffs showing rates, fares, and charges for all interstate carriage of passengers and freight. These tariffs are filed with the commission and must be absolutely adhered to. 148 TRANSPORTATION OF MAIL, Railway Management. The president is the executive head of tne company and with the aid of a boa-rd of directors he directs the general policy of the road. There are also vice-presidents and general managers who have much of the active management in charge. The superintendent of the roadway keeps the road in good condition. The superintendent of transportation has charge of the handling of trains. The superintendent of machinery has charge of the construction and maintenance of all rolling stock, and is assisted by the master car builder. The traffic manager or gen- eral freight and passenger agent has charge of the making of rates and the solicitation of business. The comptroller has charge of the ac- counts. The paymaster receives money from the treasurer and dis- burses it under the direction of the comptroller. Then there are real estate departments, legal departments, purchasing departments, operat- ing departments, roadway departments, etc. The officers of a very large railway company are given here in tabulated form: 1. President 2. Vice President 3. General Manager 4. Secretary 5. Treasurer 6. Counsel ^ . ,, f Local Auditors 7. Comptroller < v . ^ 1 raveling A 8. Purchasing Agent Storekeeper 9. General Superintendent 10. Supt. of Machinery Receiving Clerk Shipping Clerk Loading Clerk Discharging Clerk Collectors Laborers f Yard Engineers -.r , ,, . I Switchman Yard Master j Conductors (^ Brakeman Train Despatches Operators of the Telegraph Conductors and Brakemen f Record Clerks " Foreign and Local" j Mileage " ( Lost Car and Tracing Clerks {Engineers and Firemen Hostlers and Cleaners Mechanics and Laborers {Mechanics and Laborers Greasers Car Inspectors Station Agent Train Master Car Accountant MONEY, AND MERCHANDISE. II. Supt. of Roadway 12. Traffic Manager Road Master Supt. of Bridges Supt. of Road ' Bridge Foreman Watchman Mason and Carpenter Gang Section Foreman Gang and Track Walkers Wood and Water Tenders Floating Gang Constructing in Transit General Freight Agent General Passenger Agt Division Freight Agents Traveling Freight Agents Rate Clerks Tariff Clerks Freight f Re g ister Clerk Claim J In vestigating Clerk ~ lai 1 Voucher Clerk A g ent [ Special Agent Division Passenger Agent Traveling Passenger Agent Rate Clerk Apportionment Clerk Advertising Agent Baggage Transfers. Every one in America is familiar with the railway methods of carrying passengers' baggage from one point to another. Usually a bag or trunk can be checked from and to the points indicated on the passenger's ticket. In all the large cities there are transfer companies whose agents board in-coming trains and check baggage to the passen- ger's city destination. The charge for this is usually 25 cents. These transfer companies have offices in the railway depots and usually do the business of taking baggage to and from trains. When trunks are more than the regulation weight an over-weight charge is made. Storage is usually charged when baggage is allowed to remain at a depot more than 24 hours. Baggage to Canada. If the passenger's ticket reads from an American point to a point in Canada or Mexico the accompanying baggage is usually checked only to the point where the railway crosses the border where it is examined by a customs official and re-checked by the baggage master to the passenger's destination. Passengers are expected to claim their baggage at the Canadian or Mexican border and permit the customs officer to see that nothing dutiable is being carried across. This is usually the work of but a few moments. It is quite safe, if late at night, to give your trunk keys and baggage checks to the sleeping-car porter with, of course, a small fee to keep him awake. Baggage is examined by an officer of the country into which the passenger is go- 150 TRANSPORTATION OF MAIL, ing. Sometimes excursion parties to Canadian points have their baggage sent through in bond and examined upon their arrival. Un- claimed baggage is held at the border until called for. Food Staples and Transportation. About one-half of the business of this country consists in the pro- duction, conversion, transportation, and final sale of articles of food. This consumption of food cannot stop even in the hardest of hard times, because the mos f productive country is always within about one year- of starvation. A pa., of the food supply is consumed where it is produced but about six times as much become articles of commerce that is of purchase, sale, and transportation. Western grain is sold by the farmer to the miller or his agent, the flour is sold by the miller to the merchant, by the merchant to the baker ; finally the baker sells the bread to the consumer. It has been estimated that twelve tons of food, fuel, fabrics and fibres are moved one hundred and ten miles by steam railways only, for every man, woman, and child of our population, taking no account of transportation by river or canal. Retail transpor- tation by wagons costs more than wholesale transportation by railway. It costs more to deliver the bread by wagon than it does to carry the flour from which it is made 2,000 miles. Transportation "by Express. The express business of the country is done by a few very large private corporations. There are six of these the names of which are well known. The United States Express is confined largely to the northeastern portion of the country with leading offices in New York, Philadelphia, Boston, and Chicago. The Wells-Fargo Express has its principal offices in the far west. It also does a large foreign business. The Adams Express covers the eastern states with principal offices in New York, Philadelphia, and Baltimore. The Pacific Express has its principal offices in San Francisco, Galveston, and New Orleans. The Southern Express has its principal offices in New Orleans, Savannah, and Baltimore. The American Express covers the central and eastern states with principal offices in St. Louis, Cincinnati, and Boston. There are many other express companies some of which do a large carrying trade. By mutual arrangement packages are delivered from one company to another where this is necessary for the destination to be reached, and money orders of one company are usually cashed by Other companies, so that in reality the public is as well served by a MONEY, AND MERCHANDISE. number of com- panies as it would be if all were un- der one manage- ment. In some instances the ex- press companies build and own their own cars. The charges are higher than trans- portation by freight, but quick- er and better ser- vice is rendered. Merchandise by Express. When ordering goods to be de- livered by express give the address precisely. Coun- try residents in particular, often receive mail at one office and ex- press at another. Express charges vary according to the character and weight of the arti- cle and the dis- tance to be car- ried. As a rule the charges may be prepaid or not, as the sender pre- fers; but on long distances advance I5f TRANSPORTATION OF MAIL, payment is sometimes required. Express agents will always give a receipt for the packages taken into their charge if so requested, and the possession of such receipt may be of particular value when a package has been damaged, delayed or lost by the way. The address of the sender should always appear on the outside. The re- ceiver of an express parcel is obliged to sign a receipt when he takes it from the express company. The word " collect " written on the lower left-hand corner of a C. O. D. invoice, indicates that the expressman is to collect from the receiver of the parcel not only its C. O. D. value and express charges, if not paid in advance, but the small fee which the company charges for carrying the money back to the shipper. The accompanying illustration is a reduced photo-engraving of a return C. O. D. envelope. Money "by Express. The great bulk of the money, that is, the actual coin and bills, carried from one point to another, except that carried in the pockets of individuals, is carried by the express companies. A leading express company carries money for the United States government at the very low rate of fifteen cents for every $1,000 in greenbacks. The profit is made out of the large shipments. In 1889 this company carried atone time $15,000,000 from Washington to New York, in bills of large denominations packed in two small wooden boxes. The fee was $2,250 and the actual expense less than $25. On another occasion this same company carried at one time seven million dollars in gold from Philadelphia to New York. For this shipment the express company received $3,500. The express companies do a great deal of the carry- ing trade for banks. Money may be sent from any one point to any other through the express companies at a very small expense. The express agent will furnish you with a special envelope in which to place your bills. When properly addressed he will put a cord through the center of the envelope and bills and after tying will seal the cord to the envelope in such a way that a bill cannot possibly be taken from the package without breaking the seal. This method is absolutely safe for although the express company does not take a record of the amount of money which you enclose, they guarantee the safe delivery of the parcel in the secure condition in which you see it leave their hands. Transportation of Mail. It costs about fifty millions of dollars annually to transport the MONEY, AND MERCHANDISE. S3 United States mails. This sum is spent simply for carrying the mails. The star service is that which is let under con- tract without reference* to the mode of transpor- tation other than that the mails shall be car- ried with "celerity, cer- tainty, and security." It includes nearly all of the inland service that is not performed by rail- roads, steamboats, or mail messengers. The system of star routes, starting from railroads as bases of supply and reaching out to the most remote settlements, comes nearer to the peo- ple in rural communities than any other branch of mail transportation. The total length of star- service routes in 1895 amounted to about 260,- ooo miles. The regula- tion wagon service pro- vides for the transport- ing of the mails in the largest cities. The total mileage of steamboat ser- vice wholly within the United States is about 10,000. There are in operation nearly 3,000 railroad routes, aggre- gating 175,000 miles in ii . anssi jo,i*ioiv A8C3J.VQ ONV OJNeiSHIiNaOO SSSIND OHViMON SIH30UOSIHJ. TRANSPORTATION OF MAIL, length. The government pays $42.75 per annum for carrying 200 pounds of mail daily per mile of route. For 500 pounds $64.12 is paid, for 1,000 pounds, $85.50, and so on. Land grant railroads -pn ^ ^ / SERIES 5- ^ ~~ *r f- m -X^~~^te- V' e X. ^p J?J . ^^f . ^eJte'l PITED oT4TEs n otuvtuic}, jjgED^Il^ IF JN TE DAYS "* TC^S)L- receive 20 per cent, less than these rates. The electric car is becom- ing each year a more important factor in mail transportation. The seaport offices maintained on several of the fastest ocean steamers, are a valuable and indispensable feature of foreign mail transportation. Under the existing regulations of the universal postal union, an MONEY, AND MERCHANDISE. '55 ordinary letter may now customarily go, at an expense of only five cents, to almost any place in the civilized world, carried there by the most rapid means of conveyance, its privacy uninvaded, its safety zealously cared for, and its delivery into the hands of him for whom it is intended, practically guaranteed. It may traverse country after country in its journey, and may, as a rule, exact the fullest accessory service from the government of each in hastening it to its destination, without other cost than that comprehended in the little postage stamp affixed to it by the sender when he starts it on its travels. Moreover, every nation included in the postal union is obligated to receive and ""* _JL_' **:. 1 R 77 ? "Bandino (BMOnKp?fili X xx 48907 9 safely carry to Us own boundary, in bulk, all mails, however great, sent to it for transmission to countries beyond, at charges plainly laid down, and under conditions admitting of ready international settle- ment. One of the main instrumentalities by which this almost ideal condition of things has been brought about is the assembling, once every five years, of what is known as the " Universal Postal Congress," made up of representatives of nearly all the nations of the world, by whom are discussed all defects, if any, of system or service, by whose votes all practicable improvements are inaugurated, and in whose de- liberations such a spirit of fraternity usually prevails that self-seeking is TRANSPORTATION ~OF MAIL, almost unheard of. Every one has at some time or another received a letter which through an error in the address or for some other cause went to the wrong post-office or to some other person. The effort made by No. 370 Cooper St, OTTAWA. OHT. the post-office department to find the right person is usually shown by the number of suggested addresses prefixed by " Try " which appear on the face. We take the liberty of reproducing by photo -engraving on a preceding page, a copy of the envelope of such a letter. It was origin- ally sent from a point in the United States to a European address. The MONEY, AND MERCHANDISE. 157 effort made by foreign post office officials to find the owner is clearly outlined in the abundant stamping and writing which can be seen on the front and back of the envelope. Money by Registered Mail. Every country in the postal union has a registered mail service. Our illustrations show photo-copies of registered letters from British Honduras, the island of Cyprus, Canada, Italy, and other places. It is interesting to note the peculiar stamping of these letters showing the R St-Eustatius. (CURASAO.) Sto /0 ~--?' it A %*AV \ ^TTA^r records taken of them and the care with which they are handled. In many countries a special heavy linen envelope is used and special care is taken in sealing. In this country money or other valuables may be sent by registered mail from any post office in the country. Besides the address, the letter or parcel to be registered must have the name and address of the sender plainly written or printed upon it. The registra- tion fee is eight cents in addition to the regular postage. The sender receives a receipt from the postmaster but if his letter is lost he has no redress. A special effort will be made by the post office department to find the thief but under no circumstances will the loss be made good. TRANSPORTATION OF MAIL, For this reason it is safer to send money by express than by mail, for the number of registered packages stolen yearly is quite large although small in comparison with the large number handled. In the United States thousands of dollars are sent daily through the mails in small amounts in unregistered letters. This cannot be said of the mail of foreign countries where the people are not accustomed to take the risks wnlch are e very-day matters with our people. Other Methods of Sending Money, There are several comparatively safe methods of sending money from one point to another*. Checks and bank drafts are most common. The post office department provides money orders for sums not exceeding $100 at a very small expense depending upon the amount of the order. These orders are simply drafts by a postmaster at one place on a post- master at another, asking him to pay a particular person the sum named in the order. The actual money is not transmitted. The order, which you enclose in your letter, contains the name of the person to whom the money is to be paid, but not the name of the sender. The postmaster issuing the order sends to the postmaster upon whom the order is drawn a blank advising him of the particulars of the order, its number, and the name of the person who bought it. The postmaster on whom the order is drawn will not pay the order until he has received the advice^ and until he has satisfied himself as to the identity of the MONEY, AND MERCHANDISE. person to whom the money is to be paid. To obtain a money order it is necessary to fill out a printed blank provided for the purpose at the post office. In filling out this blank be careful to write the names asked for correctly. When paying a money order the postmaster asks the person receiving the money to receipt the order. A post office money order may be transferred by endorsement, but only once. A blank form is printed on the back. In case of the loss of a money c rder a duplicate will be issued if application is made to either the : s.siiing or the paying postmaster. The duplicate will be issued by the department at Washington and forwarded to the person making appli- cation. All the leading express companies issue express money orders payable at any of the larger offices of these companies. They are negotiable anywhere and banking institutions take them on deposit as they do checks and bank drafts. Any person can buy an express money order by simply paying the amount of the order and the small fee to the express agent. It is necessary sometimes to send money by telegraph. This is more expensive than other PACKAGE Under 10lbs. - 5cts tOto25lbs. V 10cts. Qv$rJ2& to 50 Ibfc. 1 5 cts. *.l*bilit/ limited *oTi methods. Only the larger tele- graph offices are money order offices. The rate is one per cent, of the amount of the order plus double the tolls on a single message of fifteen words between the transfer places. Parcel Delivery. The delivery of parcels has come to be quite an important business in large cities. There are private companies who deliver parcels and and messages to any part of the city for a small consideration, usually five or ten cents according to the size of the parcel or the distance to be covered. The railways in connection with such companies carry parcels into suburban towns. In this way by paying five or ten cents additional one can have a parcel delivered ten or twenty miles from the point where it was purchased. The smaller stores deliver all their out- of-town parcels to the parcel companies. The accompanying engraving shows a kind of delivery stamp in use in Philadelphia. The use of these stamps is an advantage^tp the merchant for the reason that he can i6o TRANSPORTATION OF MAIL, buy them as he would postage. They are also of great convenience to the delivery company. The larger business houses deliver daily by wagons within certain distances, and to points ten or twelve miles dis- tant on certain days. The accompanying illustration is a copy of a delivery tag from a parcel delivered from John Wanamaker's immense establishment. With from five to ten thousand salesmen and women and from fifty to one hundred thousand customers daily the system of packing, checking, and delivery with rarely a blunder must be almost perfect. The time may not be far distant when parcels as well as mail will be shot through tubes at lightning speed, when we can telephone ten miles for our breakfast steak and in five minutes have it drop from a tube to our kitchen table. Transportation by Water. By the provisions of the United States Constitution the Federal courts have jurisdiction of questions involving maritime matters and shipping interests generally. A ship is personal property and when sold, a bill of sale should be recorded in the custom house of the port where the ship is registered or enrolled. The captain or master of a ship in serious distress and without opportunity to communicate with the owners of the cargo can mortgage the cargo no matter to whom it belongs, or he can throw the cargo overboard to save the vessel or its passengers. The captain of a vessel must, within a certain number of hours after arrival at any port and before " bulk is broken," deliver to the customs officer the ship's report or manifest. This is a declaration of her cargo and the stores existing on board, the whole drawn up in a , AND MERCHANDISE. l6l prescribed form, and signed by the captain. The captain of a ship preparing to sail must have her entered outwards at the custom house before taking any cargo on board. When the cargo is completed, the captain is delivered a manifest of the goods shipped, and, upon ap- proval, the vessel is cleared outwards. The regulations as to transpor- tation, bills of lading, etc., are similar to those applying to railways and other common carriers. When two vessels are approaching each other, the one going free must give way to the one close-hauled. If they are both free or close-hauled, each must go to the right. Sailing vessels need not change their course, as they have the right of way over steamers. The captain of a ship has absolute control of the crew and the passengers. Outgoing vessels must have on board shipping articles which describe the voyage for which the sailors ship, and the terms on which they ship. These must be signed by each sailor on penalty of a fine. A ship coming into port is obliged to take the first pilot that offers. The captain is not responsible while the pilot is in charge. Salvage. By salvage is meant the compensation which is given to persons or vessels that voluntarily assist in saving either ship or cargo, wrecked, or in danger of being wrecked. The amount of salvage to be given is fixed in each instance by the United States Court, and sometimes is very large. Dunnage. It is usually the duty of the first mate to attend to the dunnaging, chocking, and securing of the cargo. By dunnage is meant the wood- packing placed between the cargo and the sides and bottom of the ship. Log-book. Ships are required by law to keep what is known as log-books in which are written a full account of the voyage, the daily locations of latitude and longitude, and the names and addresses of passengers and crew. Entering Port. Vessels entering American ports are boarded by custom house offi- cials who examine the cargo and superintend its delivery. Inspectors may board vessels, not only in port, but within four leagues of the coast, if bound inland, for the purpose of demanding manifests and of examining and searching the vessels-, l62 TRANSPORTATION OF MAIL, Quarantine. The quarantine regulations of United States ports are very exact- ing. These come under the control of state Boards of Health and differ somewhat in different ports. The quarantine station is usually located outside the harbor and vessels cannot enter until they get a cer- tificate of health from the quarantine officer. The captain is obliged under penalty to furnish the health officer with complete and correct information regarding the sanitary condition of his vessel. No vessel from a foreign port must attempt to approach a port of entry until the health officer has granted his permit, nor can any person leave the vessel which has not been visited by such officer, without permission. Where no contagious disease is found to exist on board, and where the vessel does not come from an infected place, a certificate will be promptly given, and the vessel permitted to proceed. Wharfage. It is lawful and customary to charge and receive wharfage or dock- age, from every vessel that makes fast to any pier, wharf, or bulkhead. Local regulations differ, and some cities grant free wharfage to encour- age shipping. Clearance at Consulate. Having cleared at the custom house, the captain of a foreign vessel is then required to clear at the Consulate of his country. For this pur- pose he must produce to the Consul his certificate of clearance from the customs, as, until the production by him of this certificate, the Consul is not permitted to part with the certificate of registry which was lodged with him upon the ship's arrival and which the vessel cannot enter an- other port without. It is customary for the Consul to attach to the custom house clearance a certificate of his own, signed with his official signature, and bearing the seal of the Consulate, setting forth that the vessel has been entered and cleared according to law. EXAMINATION QUESTIONS. 1. Give some account of the early methods of transportation. 2. Enumerate some of the advantages to civilization of the mod- ern facilities for speedy and safe transportation. 3. " On the whole, cheapened transportation is more uniformly beneficial to the consumer; its temporary advantage to the producer very often leads to overpro- duction." Discuss this statement. 4. Which should have the strongest influence in determining the Business to be carried on in a particular place, i. the location of the place, 2. its natural advantages independent of its location ? 5. Give reasons for the rapid growth of large cities at the expense of smaller places. 6. Can you give any good reason for the fact that transportation rates are lower in Europe than in America? 7 Enumerate some of the abuses of rate discrimination in the United States and tell how they are met. 8. What are the advantages to the public of the freight organiza- tions which arrange for through service? 9 In a legal sense what is meant by a common carrier ? 10. A stage runs daily from A to B. Mr. Brown wishes to ride from A to B but the driver refuses to carry him. Is the stage company liable ? 11. What is a bill of lading? How does it differ from a shipper's receipt? Is a shipper's receipt negotiable? 12. What is a way-bill? 13. Who are the three parties to a bill of lading? 14. Is the transportation company obliged to know the contents of the cases shipped ? If not, how are they classified under first, second, or third class freight ? 15* When a merchant is unable to insert the name of the con- signee at the time the bill of lading is made out, how does he draw up the bill ? Who is the consignee ? 164 TRANSPORTATION OF MAIL, 16. What are the advantages to the shipper of the bill-to-order system ? 17* Freight is shipped from A through B a junction point to C. From A to B it is carried over one road and from B to C over another. Explain fully the method of adjusting the freight between the two roads. 18. Explain in detail the methods adopted by leading and compet- ing railway lines to regulate and adjust freight rates. 19^ How is freight classified ? Why does it cost less to bring a ton of wheat from Minneapolis to New York than a ton of paper? 20. Why was the Interstate Commerce Act passed ? Enumerate the chief abuses corrected by it. 21. Explain fully the application of the term differential to freight regulations. Name a differential line between New York and Chicago. Name the three standard lines between New York and Chi- cago. 22. How are (i) through, (2) local passenger rates regulated ? 23. Explain the use of mileage book tickets. 24. What is meant by a stop-off privilege? 25. What are ticket-scalpers ? Where do they secure their tickets ? 26. Enumerate the chief things to be considered by a transporta- tion company in making a schedule of freight rates. 27. Freight is consigned to A in care of B. Under what condi- tions can A secure the freight ? 28. In the annual statement of a railway company the following items appear: Cost of Equipment; Deficit of Previous Year; Dividends Unpaid; Franchise; Sinking Fund; Capital Stock. Which are resources and which liabilities? 29. Give in detail the leading officers of a railway company and an outline of the duties of each. 3<>. How is passengers' baggage transported from one point to an- other? When is it necessary to pay extra baggage ? What weight of baggage is allowed ? If a trunk is lost through the carelessness of the company what amount of damages can be collected ? 3* Tell something about the business of the transfer companies. MONEY, AND MERCHANDISE. 32. How long may baggage remain at a depot before storage is charged ? 33. A traveler buys a ticket in Albany, N. Y., forGuelph,Ont. He finds that his baggage is checked only to Niagara Falls. Explain the reason for this. 34 . " It costs more to deliver the bread by wagon to the consumer than to carry the flour from which it is made, 2,000 miles." Account for the truth of this statement. 35. Name the leading express companies of the United States. 36. Compare mail, express, and freight transportation. 37. Give some particulars of the C. O. D. express business. What is the significance of the word collect written on the lower left-hand corner of a C. O. D. invoice ? 38. What methods have been adopted by the express companies for the safe transportation of money from one point to another? 3p. About how much does it cost annually to transport the U. S. Mails? 40. What is meant by the star service in mail transportation ? 4 1 * Give some particulars of mail service under 1. The registry system. 2. The special delivery system. 3. The money order system. 42. The government pays $42.75 per annum for carrying 200 pounds of mail daily per mile of route. A certain railway carries an average of 855 pounds of mail daily for the months of June, July, and August. How much should be received for the service? 43- What is meant by the Universal Postal Union ? 44 Describe in detail the several common methods of sending money from one point to another. 45 A telegraphic message from A to B costs 40 cents for ten words and 3 cents for each additional word. What will it cost to wire $250 from A to B ? 46. Give some particulars of the parcel delivery systems of our large cities. 47. A merchant sends $1,000 worth of goods from A to B by 166 TRANSPORTATION OF MAIL, MONEY, AND MERCHANDISE. steamer and another $1,000 worth from A to B by rail. The steamer becomes disabled and the merchant's goods are thrown overboard. The train is wrecked and the goods are totally destroyed. Has th merchant equal claims against the transportation companies? 48. What is meant by 1. Breaking bulk? 2. The ship's manifest ? 3. Clearing outwards ? 4. Close-hauled? 5. Shipping articles ? 6. Dunnage ? 7. The log-book ? 8. Salvage? 9. Wharfage? 10. Certificate of registry ? 4p. Why and under what authority are vessels from foreign ports detained at quarantine upon arrival at New York or ^.h?r seaport cities ? 50. Give in detail the official duties of a captain (i) ur*cn enter- ing port, (2) when about to clear. 51. "The question of the demoralization of railway rates is as important as the tariff or the currency question, and is worthy of Presidential proclamation. The transportation rate fixes the price of every commodity, whether raw material or manufactured. Therefore, rates by all lines from all points similarly situated to all places similarly situated should be the same, and should be as well known to the public as the postage upon a letter. Then no advantage could be secured by the rich shipper or the great trust over the enterprising neighbor who has less capital but equal ability." Chauncey M. Depew. Show how the transportation rate fixes the price of commod- ities, and discuss fully Mr. Depew's statement. 52. Would the Mississippi River serve larger transportation inter- ests if its course were east and west instead of north and south? 53. Locate the following canals and give some particulars of their advantages to commerce: Kiel; Suez; "Soo; " and Manchester. INSURANCE Life, Fire, Marine, and Indemnity Insurance. Antiquity of Insurance. We find some evidence of the existence of insurance associations as far back as the Punic Wars between Rome and Carthage when the government of Rome guaranteed the transportation concerns against loss by storm or the enemy. Spain and Portugal dispute the real credit of having invented insurance as a practical business. About the beginning of the fifteenth century marine insurance was pretty gen- erally understood and made use of by the great maritime concerns of Spain and Portugal. Following marine insurance which was soon adopted by other nations, came life insurance against which there was a strong prejudice from the beginning. It seemed to be setting a premium upon murder to insure a man's life, and society was in altogether too lawless a condition four hundred years ago to make it judicious to offer any inducements for life destruction. Some of the largest insurance associations of Great Britain have a history of nearly two hundred years. Principles of Insurance. It is the purpose of the state and of good government to aid and protect its citizens, but there are all kinds of losses, accidents, storms, panics, etc., which it is impossible for even the best governed state to protect its people against. These losses and accidents cannot be wholly prevented and the many must bear the burden of the few and that the many may do this in a legal and business-like way, the various 1 68 LIFE, FIRE, MARINE^ forms of insurance have been instituted. A loss which is distributed among many is scarcely felt by each individual. The majority of families are not so well provided with means that they can endure without financial suffering the loss by fire or shipwreck of their prop- erty, or by death of the head of the household. Statistics play an im- portant part in insurance estimates. The insurance association can estimate from years of careful records, almost absolutely, as to how large their losses will be in any given year. Systems of Insurance* In modern times the forms and systems of insurance have multi- plied greatly. There are, however, two general divisions, namely, the mutual, and the industrial. In mutual insurance every policy holder is a member of the association. In the industrial system the insurance company is a stock-company and for certain premiums it insures those who have no connection whatever with the concern as a corporation. The mutual insurance system needs no capital stock. The means of repairing losses comes exclusively from the contributions, or pre- miums, of its members. The various labor and benevolent organiza- tions have systems of mutual insurance. In case of death every mem- ber is liable to an assessment which varies in amount. If the assess- ment is not paid the policy is forfeited. The larger mutual companies have fixed premiums payable at stated intervals and in their management, they are similar to the industrial companies. In the larger mutual companies the yearly surplus that is, the receipts from fixed premiums, over and above, the loss claims and expenses is either added to a reserve fund, or is treated as a profit and is deducted proportionately from the next annual premiums of the various members. In the in- dustrial system the premium is a fixed sum, by the payment of which the insured party secures the right of complete restitution under all circumstances, and nothing more. If the premiums amount to more than the losses, the surplus belongs to the company and not to the policy holders. If the premiums are less than the actual loss, the company must meet the loss. It makes no difference to the insured whether there are many or few accidents, whether the damage done is great or small. There are now insurance companies covering all kinds of risks from death, accident, fire, flood, hail, breakage, embezzlement, etc. Fire Insurance, Fire insurance covers those losses of property which occur through the destructive agencies of fire. In the valuation of buildings the cost AND INDEMNITY INSURANCE. THE GIRARD FIRE AND/MARINE INSURANCE COMPANY, in consideration of a deposit - TDolIars, and thf '.tiputatioos herein named doei hereby agree to inl*-fr^ .any shall not be liable beyond ihe interest of the assured in the j^ropertv or beyond the actual cash v t ;,,, t ; me atn . ; .- ,.^- ,l !A \) hr asortaiiHjd or wtimatfd acct>rtliag to such acntd cash valur, with proper * <-\vx notice, asceruunment, csdmatc. and satisfactory proof of tin roropany m accordance with the tana of this policy. It shall lie optional, however, with this comiMuy to rqak, rebuild, or n-pUcc the in a reasonable time on Riviivj} notice, wilhin thirty days & the receipt of the prool hcre'ui riuired, of property destroyed or / This Policy ol' Iiisiiiviic(>\VUucss< % Ui,Tluil JJitf ttpjtvr (Ciuttjwn tj nl |!ftM^W^W!k By these Presents. fi ^ j^-zis--- k \-:K; e :r:;zt::.,.^^; M ^^::'^;' . ^TOUCHISO Ih. rf.ilur u p I UWqh Uuim. U.^ >ra of Ih. 30. flro, Jtrale, Bot.rt . Tobco. TobAoco otemv Brawl. lnd>n Mcl. M:uof Dd CBMIA (ucrpt , n.n or bulk, P,r>p U. bl or bull. RI Sut". Flu. ud Ult>lra, "jntriftuM wfrmrf The Delaware In.nrance Company TMMM|pMi*fU *< oriftiui 6"f.- Thc Delaware Insurance Company of PI u..^a^r,/^fiate.gf^-a, *...- t ^CtiftA**^Vs/....<~ LIFE, FIRE, MARINE, The amount of insurance on a cargo is measured by the invoice value of the commodities, plus the costs of transportation to the place of destina- tion, plus the insurance premium. The insurer of the cargo is not LA11K-. lioiw and Siipiiiulioio iiuulc in the 7>pp!iulkw for I lib Volicy usually liable for loss through the unseaworthy condition of trie vessel. Policies on cargoes are issued for a certain voyage, or from port to port, and on vessels for a specified time or for a certain voyage. The AND INDEMNITY INSURANCE. '73 adjustment of marine losses is on the same principle as the adjustment of fire policies containing the average clause. life insurance and other Life Insurance. There is a marked difference between kinds of insurance. The in- surance of houses and goods against fire is a contract of in- demnity against loss, and in like manner an insurance on human life may be considered as indemnifying a man's family or creditors or others interested against the loss of future in- come occasioned by death. But it does not necessarily take the value of such income into account, nor does it relate to any intrinsic value of the sub- ject of insurance, which is the life of the insured party. Again, in fire or marine insur- ance the loss may be only par- tial, while in life insurance, the loss, if it occurs must be total. And again in life insurance, the event is certain to occur, and the time of its happening is the only contingent element. A person is permitted to insure not only his own life but also that of another, although it is taken for granted that he has some special interest in the life of the insured party, growing out of business or other rela- tionship. The insured party may contract that the sum insured him shall be paid to him during his life, after reaching a certain age. Life insurance has many very important advantages over other methods of saving. It secures to the individual a substitute for the guarantee of life which he can never have, by put- 174 LIFE, FIRE, MARINE, ting him in a condition in which the advantages connected with an average length of life are assured him, and by fixing his services with reference thereto; it keeps him from touching the savings ac- cumulated, by depriving him of control of them ; it prevents him from growing negligent in his economy by making him lose all or part of what he has saved if he fails to pay his premiums. The pecuniary means of meeting their obligations are derived by the insurance associations from several sources : first, from the annual premiums which vary according to the conditions of the insurance ; secondly, from temporary insur- ance, lapsed policies, and from the income from judicious investments. Exact information as to the expectation of life at different ages is fur- nished to a satisfatory degree by statistics. Statistical observations on the rate of mortality at various ages, and on the average duration of life, are tabulated in the mortality tables, which, beginning with a fixed number of persons of the same age, show for each year the pro- portion of deaths in that number and the expectation of life of the sur- vivors. These tables date back 200 years and the results vary very lit- tle. Weak and sickly persons, particularly those suffering from chronic diseases, as well as those engaged in dangerous occupations, are very properly excluded from insurance. The reserve fund is an ob- ject of great importance to life insurance companies. Those who take out policies for life or for a period of years continue to pay the same annual premium which was fixed with reference to their age at begin- ning. They ought really to pay a lower premium at first, and as they grow older, a higher one. As a matter of fact they pay in excess of the average rate of mortality and at advanced age their premiums are much below the demands of the advanced-age mortality. To meet this con- tingency the insurance companies set aside the excesses of the earlier years as a reserve fund, as one of the necessary conditions of a con- tinued existence. The following table of insurance represents the maximum rates of the leading New York companies : AND INDEMNITY INSURANCE. 175 LIFE POLICIES. ENDOWMENT POLICIES. Insurance payable at death only. Premiums payable annually for 10 years. Insurance payable Premiums payable annually as stated, or at death for Single j *** if it occur earlier. Payment. 20 IS 10 In 20 fit 15 In 10 Age. Life. Age. years. years. years. years. years. years. 25 19.89 $27.39 $32-34 $42.56 $326.58 $75-39 $87.92 $103.91 25 26 20.40 27-93 3 2 -97 43-37 332.58 75-54 88.05 104.03 26 27 20.93 28.50 33-62 44.22 338.83 75-71 88.19 104.16 27 28 21.48 29.09 34-31 45.10 345-31 75-89 88.34 104.29 28 29 22.07 29.71 35-02 46.02 352.05 76.08 88.50 104.43 29 3O 22.70 30.36 35-76 46.97 359.05 76.29 88.67 104.58 30 31 23-35 3I-03 36-54 47.98 366.33 76.52 88.86 104.75 31 32 24.05 37-35 49.02 373-89 76.76 89.06 104.92 32 33 24.78 32.48 38.20 5. IO 381.73 77.02 89.27 105.11 33 34 25.56 33-26 39-09 51.22 389.88 77-30 89.50 105.31 34 35 26.38 34.08 40.01 52.40 398.14 77.62 89.75 I0 5-53 35 36 27.25 34-93 40.98 53-63 407.11 77-95 90.02 I0 5-75 36 37 28.17 35.83 42.00 54.91 416.21 78.33 90.31 106.00 37 38 29.15 36.78 43.06 56.24 425.64 78.73 90.63 106 28 38 39 30.19 37-78 44-17 57-63 435-42 79.18! 90.98 106.58 39 40 3I-30 38.83 45-33 59.09 445-55 79.68 91-37 106.90 4O 41 32-47 39-93 46.56 60.60 456.04 80.23 91.79 107.26 41 42 33-72 41.10 47-84 62.19 466.89 80.83 92.26 107.65 42 43 35-5 42.34 49.19 63-84 478.11 81.49 92.78 108.08 43 44 36.46 43-64 50.61 65-57 489.71 82.22 93-34 I0 8-55 44 45 37-97 45-03 52.11 67.37 501.69 83-03 93-97 109.07 45 46 39.58 46.50 53.68 69.26 5 T 4-04 83.93 94-67 109.65 46 47 41.30 48.07 55-35 71.25 526.78 84.92 95-46 110.30 47 48 43- * 3 49-73 57-1 73-32 539-88 86.02 96.31 III.OI 48 49 45.09 58.95 75-49 553-33 87.22 97.27 111.81 49 50 47-18 53-38 60.91 77-77 5 6 7- I 3 88.54 98.32 112.68 5O Surplus premiums or dividends are returned annually commenc- ing at the payment of the second premium. Policies which do not share in the dividends of the company, are issued at a somewhat lower rate. The above rates are for annual payments only. To obtain semi- annual payments, add 4 per cent, and divide by 2. To obtain quarterly payments, add 6 per cent, and divide by 4. Accident Insurance. Accident insurance does not date back more than fifty years. We first find mention of a company formed in London in 1849 for insur- ing against railway accidents. At present there are a great many com- panies representing much capital which insure against all kinds of acci- i 7 6 LIFE, FIRE, MARINE, IP ... y K^ o m IS! B*M at dents for any length of time from one day to ten years. One can buy at any railway station for twenty-five cents an in- surance policy taking a $3,000 risk for one day. Annuity Insurance. This is almost the op- posite to life insurance. The simplest form is that in which the pay- ment of an annuity is assured until death to a person in return for the deposit of a fixed amount of capital. The insured begins to receive the annuity at once or at some later period, usual- ly after reaching a cer- tain age. This class of insurance is more popu- lar in Europe than in America. The Ameri- can who has capital pre- fers to take chances for his income on more pro- ductive forms of invest- ment. Other Kinds of In- surance. The guarantee of employers against the fraud or insolvency of their servants has be- come of late years of considerable import- ance. Companies have been formed to insure AND INDEMNITY INSURANCE. merchants against loss by bad debts, and others to insure builders and contractors against accidents to their employees. Almost every conceiv- able kind of risk is now covered by insurance in some form or other. */M W 3 ///// < '/,,///> - is/,,'*",;,,/,, '//f/f'/fify' fa sv //.tt'f/fsrti/t'f'f/ r/ S/tf ff/t, 9 of (St^ *tf*'a, in the United i that the saio invoice was ufade at .sfy^ *X**~&tr~*S~~ 1D * consular district of Glasgow, whence the said Merchandise is \itrtx- ^ported to thtfCuited States, and that it is ID all respects true ; that it contains n true and full statement of iho lime when, the place where, and the person from whom the merchandise therein mentioned was purchased, and the actual price paid, or to be paid, to* ^^^^ "by the purchaser, to whom' /4ft' nave so'd '^ 8atno ID the ordinary course of ffade,> ? Tlfl which tre mentioned and described cectrfm Merchandise, to wit : of S&f- 2 ~/0 was produced to me by _ writing in my entry "of said in the Urffted States of America. I do further certify that I am satis6ed that the person making the declaration hereto annexed is the person he represents himself 'to be, and that the price stated in said invoice represents the actual market value or of the Merchandise described in the said invoice in the principal markets of the country at the tion, excepting as noted by roe upon said invoice, or respecting which I shall make special k proper authority. I and seal of Office, at GLASGOW (be day and year aforesaid. be. and that the price* stated try said invoice represents the actual market value or wholesale price of the merchandise described in the taid invoice, in: She principal markets of the country at the time of exportation, excepting as noted by me upon said, invoice, or respecting wnich t shall make^special communication to proper authority. Quantity: ./* (Anzahl der Colli) Mark: tZeichen) (Betrag) Port of Shipment: _J^7^J (Verschiffungs-Hafen Port of Entry: (Einfuhr-Hafen) In Bond to (Unter Zollverschluss uach) Destination: (Bestimmungsort^ Witness my band and seal of office at ,GE8A; /FeTT.f Here the examiners have the cases opened and compare the goods to see if they correspond with the invoices, and that the prices are correct. Should the appraiser deem the goods rated wrong, he returns the invoice to the collector's office where the matter is adjusted, and notice of the additional duty necessary is sent to the SHIPPING AND WAREHOUSING. importer. Should the importer consider that he has been unfairly TELEPHONE CONNECTION. OFFICE OP J. J. Buchey & Co. Custom House and fdmardtog Agents, NOTARIES PUBLIC. No. 57 Beaver Street, No. 404 Library Street, NEW YORK PHILADELPHIA. Please call at our 'office before 3 o 1 clock, on and complete-, same, as vessel obtains General Order jipon that da,te K/n very respelfully t J. /. BUCHEY 6- CO. 404 LIBRARY STftlEfr. treated he has redress by formal protest to the board of govern- ment appraisers. If this board decides against him he can sue 192 IMPORTING, EXPORTING. the collector and bring the matter before the United States Court. TELEPHONE CONNECTION!. OFFICE OF J. J. BUCHEY & CO.. ORU(pRDI|(j p NOTARIES PUBLIC, No. 404 Literary St. fio. 57 Beaver St. PASSPORTS lifts oeoi liquidated as foticn\'S ShonM you (fiscovtittJiy W'fi['J n the above liquidation^ kindfy notify us before., ft ? *rff*> after which tfme t rorrcctions. alterations or fprotelts cannot be made. Yours Very Respectfully, J J. BUCHEY & Co., 404 LIBRARY STREET. Should the appraiser consider that the goods have, been invoiced at too low a figure he an advance the same to what he considers SHIPPING AND WAREHOUSING. 193 right. If this advance is over ten per cent. a penalty fine (as may be prescribed by law) is charged, and if the advance is over forty per cent, the case is presumed to be one of fraud,, and the goods may be confiscated. Every entry has to be sworn to by a member of the importing firm, before the collector or one of his deputies. If it is not convenient for a member of the import- ing firm to do this, then his agent who holds power of attorney, makes oath, and gives a bond for the production of the importer's declara- tion at some subsequent time. When a con- signee receives his bilU of-lading-, but no in- voice, he can, where the value is less than $100 make what is known as an appraisement entry , but where the value ex- ceeds $100, and he knows the contents and prices, he can make out a pro -forma invoice, giving a bond to the government for the pro- duction later of a proper certified invoice. Intiiin rlfar the .iu m fif, IltSUmftft' Ct'/MH"i ... _rfl?J VrqistreTlfrk 3* I 2 1 \{. . ^~ v. ^ i^'i 1111 1 ^s \ Ifll iltif it u c u *,i C7/ ; - iiu'/u f>jj&j ,>xj>/} jfi^vifj of pMJ.>xt.i si v.)fiitj>f.) 194 IMPORTING, EXPORTING, Storage and "Warehousing. Warehousing is a very important industry of large cities. There are hundreds of large warehouses for the storage of furniture and valuables. The rates for large articles are usually a fixed price per month for each cubic foot of space occupied. These storage com- panies usually have large vans which are hired for moving household effects. Perishable products such as meats, vegetables, etc., are often MAXRIEDEU ' *io. 862 BROADWAY. to Alfred Miinch, Gera: C^ @ .. - JJ to Max Riedel, New York: en caitt yeut stored in cold-storage warehouses where the temperature is kept at all times a little above the freezing point. Railroad and transportation companies have warehouses for storing freight. Besides these, there are government and private bonded warehouses for storing goods re- ceived from foreign countries. These have a double advantage to the importer. He need not pay the duty until he wishes to remove the goods, 01 he can negotiate his warehouse receipt, or in other words SHIPPING AND WAREHOUSING. raise mojey on his goods without their removal, if he is in need of ready cash and is waiting for a profitable market. Bonded warehouses, both those owned by the government and by private companies, are under the control of custom house officials known as government store- keepers. The storekeeper carries the keys and no goods can be re- moved without his consent which is given only upon order from the custom house, and not then unless the storage charges have been paid. Only goods which are dutiable go into bonded warehouses. The warehouse receipt given by private warehouse companies is a negotiable instrument and maybe used with banks as collateral security for money borrowed, or the goods stored may be sold and the storage receipt passed from the seller to the buyer just as would a deed or other instru- ment of value. The storage rates vary greatly. The space occupied and the labor of handling are the most important considerations. Flour, for instance, would cost about 30. a barrel for the first 30 days, and 2c. a barrel for each succeeding 15 days, If a rate were quoted as 10 and 8 it would indicate ipc. for storage and 8c. for labor for the first period of time, and ice. for each successive period. When the goods are being unloaded the ship-master gives a ticket with par- ticulars of the goods to the driver of the bonded dray. Upon delivery of the goods to the warehouse this ticket is turned over to the store- keeper who delivers it to the custom house. The importer receives a delivery order for each lot of goods stored. These orders may be ex- changed for a warehouse receipt just as railroad receipts may be ex- changed for a bill-of-lading. The holder of the warehouse receipt has a title to the merchandise it represents. They may be transferred by endorsement. The usual form of endorsement is as follows : "De- liver to - or order, the within merchandise," followed by the sig- nature of the owner. Storage companies do not insure the goods. When the accrued storage charges amount to the value of the goods, the company can get an order from the court for their sale to cover ex- penses. How Goods are Exported. Our export trade has grown to very large proportions. We send millions of dollars worth of raw and manufactured products to all parts of the world. All goods shipped abroad have to be decreed at a custom house on a blank known as a shipped s manifest which contains a de- scription of the goods shipped. This must be sworn to before the col- lector of customs or one of his deputies by the party making the ship- I 9 6 IMPORTING, EXPORTING,. ment or his authorized agent. When this is done the ship's master or the transportation company issues a bill-of-lading as in local shipments. (CAT. No. 657.) NOTICE T(f IMPORTER "OF BALANCE IN HIS FAVOR. * PAID COLLECTOR'S OFFICE, Sir: The duties on the importation of yours been ascertained, and there is a balance in your , ss-&^ favor, amounting to $ .//.. ./.*$T.. ................... .-, which can be obtained on application io the Auditor's Office by you or your~agent 'authorized in writing to receipt for the same. Collector. (Ed. 6-19-UM 7,000.) A ship cannot clear for a foreign port until it has properly attested manifests representing its entire cargo. The manifest blanks are usu- SHIPPING AND WAREHOUSING. I 97 ally provided by the ship-transportation company as are bill-of-lading blanks. Goods can be brought into the United States and immediately exported to Canada, without payment of duty, providing the bill of- lading states " For immediate exportation," or the imported goods may be placed in a bonded warehouse and exported any time within three years. The owner of goods on which import duties have been paid, is entitled to have such duties wholly or partly paid back if he de- cides to export the goods to a foreign point. For instance a merchant might import $1,000 worth of goods from England, store them in a New York bonded warehouse and at his convenience export them to 198 IMPORTING, EXPORTING, Cuba or Brazil or some other country. It is evident that it would be unfair to pay the United States duty when the goods were not for use here. The amount refunded in such a case is called drawback, and is fixed by schedule approved by the secretary of the treasury. The claim for drawback must be made before the goods are shipped and in such form as the secretary may prescribe. The advantage of this system is easily seen in the fact that it enables our merchants to compete with for- eign traders in business outside of our own country. Competition. It is really true that competition is the life of trade. If there were but one producer, this producer would take his ease, and would hardly dream of improving either the conditions of his production or the quality of his products. This is too often the case wherever there exists a monopoly. Competition is, therefore, a necessary condition that industry may be kept up and the public well served. Competition is usually disastrous to the dealer who cannot meet his competitors in either price or quality of goods. Imposition and fraud too often usurp the favor which is due to real merit. The public are deceived by gaudy signboards or by fallacious announcements ; they are attracted by the bait of cheapness, and are cheated with adulterated products. The competition of trade is always an advantage to an intelligent community. It brings more attractive stores, better goods, lower prices, and usu- ally a more intelligent and careful service. The grocer who has a mo- nopoly of the town's trade allows you to call with your order and carry home your packages ; he sells you what he has rather than what you want. With competition, he calls for your order and delivers your groceries, and gets for you what you want whether it pays him or not. Competition is in reality the true motive power of commercial progress. It is also the one sovereign regulator. Things right themselves through competition. The railway charging exorbitant rates " comes to time " when paralleled by another line. It is competition, and competition alone, which puts upon goods their just price. It does this so well, that there is not anywhere, where competition exerts its full power, a single product which sells regularly either for more or for less than its cost of production including a reasonable profit. It is through compe- tition that all the occupations of industry are filled continuously, com- pletely, and in the proper proportion. The number of grocers, or doc- tors, or teachers must not be very largely in excess of the demand. When the number approaches an excess the trade or profession rights AND WAREHOUSING. 199 itself through competition. If there be at any time too much labor for any particular kind of production, the wages for that class of labor de- clines, and the laborers are thereby warned to seek employment else- where. If, on the contrary, there be a scarcity of labor, wages go up > and this is a warning to those who are engaged elsewhere to apply themselves in greater numbers to where the scarcity exists. Thus, by the sole influence of high or low wages, labor is distributed and divided with an almost infallible precision among the different branches of pro- duction according to the measure of their needs, and equilibrium is nearly always maintained between the work to be done and the labor assigned to it. Balance of Trade. In commerce this term is commonly used to express the difference between the value of the exports from, and the imports into a country. The balance used to be considered favorable when the value of the ex- ports exceeded that of the imports, and unfavorable when the opposite was the trade condition. The attainment of a favorable balance was for many years regarded as an object of the greatest importance. The precious metals, in consequence of their being used as money, were long considered as the only real wealth that could be possessed either by individuals or by nations; and as countries without mines could not obtain supplies of these metals except in exchange for exported products, it was concluded, that if the value of the commodities exported ex- ceeded that of those imported, the balance would have to be paid by the importation of an equivalent amount of the precious metal, and conversely. A very large proportion of the restraints imposed on the freedom of commerce during the last three centuries grew out of this notion. The importance of having a favorable balance being univer- sally admitted, every effort was made to attain it ; and nothing seemed so effectual for this purpose as the devising of schemes to facilitate ex- portation, and to hinder the importation of almost all products, ex- cept gold and silver, that were not intended for future exportation. It is now conceded on all hands that the gold and silver are nothing but commodities ; and that it is in no respect necessary to interfere either to encourage their importation or to prevent their exportation. The proper business of a wholesale merchant consists in carrying the various products of the different countries of the world from the places where their value is least to those where it is greatest ; or, which is the same thing, in distributing them according to the effective demand. It is 200 IMPORTING, EXPORTING, clear that there could be no motive to export any species of produce, unless that which it was intended to import in its stead were of greater value. So far as an excess of exports over imports being any criterion of an advantageous commerce, it is directly the reverse and the truth is that unless the value of the imports exceed the value of the exports, foreign trade could not be carried on. Were this not the case that is, were the value of the exports always greater than the value of the im- ports merchants would lose on every transaction with foreigners, and the trade with them would be speedily abandoned. It is almost impos- sible to compare the real value of the imports with the real value of the exports. The value of an exported commodity is estimated at the moment of its being sent abroad, and before its cost is increased by the expense of transporting; whereas the value of the commodity imported in its stead is estimated after it has arrived at its destination, and, con- sequently, after its cost has been enhanced by the expense of freight, insurance, importers' profits, etc. In the second place, when a balance is due from one country to another, it is not always evident from the fact that one country is sending gold to the other* The laws which regulate the trade in bullion are not in any degree different from those which regulate the trade in other commodities* It is exported only when its exportation is an advantage, or when it is more valuable abroad than at home. It is next to impossible, then, to tell from the imports or exports, or from the fact that gold is being shipped abroad, whether the balance of trade is against or in favor of a particular country. EXAMINATION QUESTIONS. 1. Distinguish between the terms commerce and business as these terms are generally used. 2. Enumerate the countries and agencies which contribute to pro- duce a full-course dinner such as might be given at one of our best hotels. 3. We find in every city, institutions known as boards of trade, chambers of commerce, etc. Give the nature and purpose of such organizations. 4. What are our internal revenue taxes and how are they collected ? 5- Distinguish between duties for revenue and duties for protec- tion. 6. Distinguish between an ad valorem duty and a specific duty. Which kind of duty would you expect upon the following : glass ; silk; flour; knives; raw wool; furniture; potatoes; wine; books; rice; marble; carpet? 7 What is a " port of entry " ? 8. What are the duties of a customs naval officer? of an appraiser? of a custom house storekeeper ? 9. Distinguish between import trade and in-transit trade. What is meant by entry for consitmption ? 10. A of Boston buys in Holland $5,000 worth of china, through a New York agent who charges him 2^/2 per cent, commission. The goods are entered at Boston where $250 freight is paid. They are im- mediately exported to Brazil : what is their foreign export value? 11. Give in detail the routine necessary 1. in importing goods. 2. in exporting goods. 12. What are the duties of our foreign consuls with reference to the importation of goods? How may goods be shipped from a point where there is no consul located ? 13. What is the business of a Custom House Broker f 14. Distinguish between what is known as a cash entry of goods and a warehouse entry. [202] IMPORTING, EXPORTING, SHIPPING AND WAREHOUSING. 203 15. What is the penalty for incorrectly or fraudulently invoicing imported goods? 16. Give some particulars of the storage and warehouse business of large cities. 17- What are the advantages to the importer of bonded ware- houses ? 18. Give the particulars in which a warehouse receipt resembles find differs from (i) a promissory note, (2) a bill-of-lading. 19* Describe the form and use of a ship's manifest. 20. What is known as a drawback in " foreign export trade" ? 21. The competition of trade is always an advantage to an intelli- gent community and usually to the competing houses themselves. Ex- plain. 22. " Things right themselves through competition." Discuss tli is statement from an economic standpoint. 23. Is it an encouraging or discouraging economic condition when uur imports are in excess of our exports? Discuss fully. 24. Find the duty on 100 boxes of plate glass, each containing 16 plates (20x36). Duty 22C. per square foot. (Ans. $1,760.) 25. What is the ad valorem duty on 45 boxes of brass nails, 2olb. per box, invoiced at I3C. a ft>., duty 45 per cent., and tare 4^ft>s. per box? (Ans. $40.80.) MISCELLANEOUS QUESTIONS AND EXERCISES. 1. What are the advantages to the United States commercially cl its (i) foreign consuls? (2) the international Postal Union ? (3) its census statistics ? 2. What city is America's greatest (i) leather market ? (2) cotton market ? (3) flour market ? (4) wheat market ? (5) tobacco market ? 3. Name and locate the five cities which in your opinion do the largest shipping trade in the world. 4. Of the raw products produced by the United States name the three which are commercially the most valuable. 5. Why do not foreign steamers engage in the carrying trade of the Mississippi? 6. Enumerate the executive departments of the Federal govern- ment represented by cabinet officers, and describe the duties of each. 7 Describe the process by which a bill becomes a law in the Federal Congress. 8. S. T. Jacobs makes a deposit of $20 on an order for goods (to be manufactured) which he places with your house. Write a receipt for the money. 9. What is the foreign letter rate? What will it cost to send a book weighing 2^ fts. and a parcel weighing i^ rbs. to Denver ? How may money be sent safely by mail ? Give particulars. 10. You ship goods by freight and draw at sight on the pur- chaser ; how can you keep control of the goods until your draft is paid ? How can you raise money on goods which you have bought and paid for, while they are in transit or in bonded warehouse? 11. Explain what is meant by (i) vouchers, (2) accrued interest, (3) in bond, (4) collateral security, (5) blank endorsement. 12. What is meant by a trust as this term is used by manufac- turers ? How does a trust differ from a syndicate ? 13. Why is it necessary to search the title to real estate ? Where are the titles recorded ? What are the advantages, if any, to the public, of title insurance companies? 14. How do country banks clear their checks ? [204] MISCELLANEOUS QUESTIONS AND EXERCISES. 205 15. Distinguish between statute and common law. Explain the meaning of executor, chattel mortgage, lien, attachment, judgment, and trustee process. 16. How does a mortgage differ from a deed ? !? What bookkeeping entries would you make when you pay in cash a time draft by Robson Davids, brought to you for acceptance ? 18. You have material from your store valued at $72.23 made up into coats at an expense for labor of $32.90. What entry ? I9 You have made three errors in your bookkeeping : i. You have entered $27.50 on the debit side of expense when it should have been entered on the debit side of merchandise. 2. You have forgotten to charge A with a cash payment of $17.39. 3. You have be.2n charged interest $5.33 and you have entered the amount on the wrong side of the interest account. Which side of your trial balance will be the larger and how much ? 20. What great advantages have resulted to society through the in- troduction of machine methods of production ? What evils have arisen from this industrial development? 21. Describe fully the national banking system. 22. Bookkeeping problem : Value of merchandise on hand, Jan. i, $2,372; bought during the year rndse. costing $1,486 (cash) : and bought on credit, mdse. costing $2,432. Cash sales during the year amount to $2,946. Credit sales same time, $2,007. Gross expenses, $494. Accounts against others which cannot be collected, $304. Value of mdse. on hand, Dec. 31 following, $3,270. Make out a financial statement showing the gain or loss. 23. Exchange on London is quoted in Paris at 25.32^ francs to the , and the London exchange is quoted in New York r/. 4.89^. Find the value in American money of 5,000 francs. 24. Find the net capital (Jan. i, 1895) having given the follow- ing items : On hand, cash, $3,469. Consignment of mdse. from A valued at $2,000, upon which freight of $93 has been paid. Note made Nov. 15, 1894, at 2 months, for $1,200 with interest at 7 per cent. We shipped mdse. valued at $984 to B, and paid insurance, $23, on Dec. 15, but have not yet received net proceeds. We have rent paid in advance for Jan. and Feb. at $67 a month. We owe a note of $1,700 made Dec, i, at 60 days, with interest at 7 per cent. 206 MISCELLANEOUS QUESTIONS AND EXERCISES. 25. What is meant by the balance of trade between America and Europe ? 26. Draw up an agreement between yourself and Henry Banner- man with reference to some particular venture, or sale, or contract. 27. Write a receipt for borrowed money returnable with interest. Write a receipt in part payment of an account. 28. When does a bill of lading cease to be what is known as a clean bill of lading? Give some of the conditions which usually ap- pear on a bill of lading. 29. Describe fully the different methods of sending money to dis- tant points. 30* Describe fully (i) how to send a package by express C. O. D. ; (2) how to send a box by freight; (3) how to get a check in your favor cashed at a bank. 3i What is meant by 1. foreclosing a mortgage ? 2. discharging a mortgage ? 32. You are keeping a business man's cash book. During your temporary absence, and without your knowledge, $5 is stolen from your cash drawer. How will you find this out at the end of the day? 33. Describe fully the different kinds of money in use in the United States. 34. Borrowed $4,000 on Jan. i, to invest in merchandise. Gross purchases of merchandise during the year $8,426.37, and gross sales $7,246.39. On Dec. 31, I owe accounts (exclusive of money borrowed) amounting to $3,734.25, and others owe me $3,682.76. I have cash on hand, $2,942.48, and mdse. valued at $4,076.21. Make out a statement showing how much I gained or lost during the year. 35. Explain any difference in meaning between the terms : trade and traffic ; currency and money ; goods and wares ; buyer and con- sumer ; commerce and business. 36. Explain any reasons for the great variations in the rate of in- terests in different classes of investments. Why is money cheaper in London than in New York? 37. The American Express Company's traveler's cheque for $20 is quoted as worth ^4 is. 2d. in England, 102.5 francs in France, and MISCELLANEOUS QUESTIONS AND EXERCISES. 2Of 82.5 marks in Germany. Find the value in each of these currencies of a cheque for $39.18. 38. A savings bank pays % per cent, per month interest and credits the interest to all accounts on the first day of each month, in- terest dates from the first of each month and is not allowed for frac- tional parts of a month. The following is a transcript of Henry Brown's deposits and withdrawals : Deposits: Jan. 13, $94.16; Jan. 27, $14.86; Feb. 3, $49.03 ; Mar. i, $87.24; Mar. 20, $96.37; April 19, $80; July 5, $120.47 ; Aug. 30, $103.64; Sept. 3, $7.50; Oct. 13, $96.80; Dec. 10, $200. Withdrawals : Feb. 15, $50; Mar. 13, $15.67; April 2i,$ioo; June 4, $17.80; Aug. 13, $28.30; Oct. 3, $42; Nov. 8, $20; Dec. 24, $100. How much should Brown's balance be Jan. i ? 39. Describe fully the monetary system of Canada. 40. Enumerate some of the advantages of decimal money systems such as ours over the English system of pounds, shillings, and pence. 41. Are there any interest advantages in using instruments of credit instead of actual cash in the mechanism of exchange? 42. What would be the immediate economic effect if every man, woman, and child in the United States were given, say $50,000 ? Is increase of money increase of wealth ? 43. What would be the immediate economic effect if Congress should pass a law making all paper-money in circulation interest-bearing at the rate of 4 per cent ? 44- " The currency and credit instruments of a country should at no time exceed in value its real and personal property." Discuss this statement. 45- What European city is recognized as a clearing or adjusting center for the telegraphic business of the world? 46. Enumerate some of the commercial advantages derived from the general use of checks and other instruments of credit. Is a credit system an advantage or a disadvantage to a community? 47 What are the advantages to the world's commerce of the great expositions held here and abroad ? 20* MISCELLANEOUS QUESTIONS AND EXERCISES. 48. Enumerate some of the advantages which a large business has over a small one. 49- Enumerate some of the business qualifications necessary to success. 1. as a banker. 2. as a manufacturer. 3. as president of a railway. 4. as a retail merchant. 50. What is the commercial or economic effect of the large in- crease in cities of large department stores? 51. In considering the wealth of a nation would you include (i) public roads? (2) its bank-notes? (3) its foreign credit ? 52. Distinguish carefully between what is wealth to an in- dividual, and what is wealth to a nation. 53. Does the payment of wages increase or diminish capital ? Would you regard the groceries in your home ready for use as capital? How about the groceries on the shelves at the grocers ? 54. Generally speaking does increased population increase wealth? Give illustrations. 55 Note carefully the effect on the price of a particular article of food of each of the following : 1. A very large crop. 2. A very small crop. 3. A larger number of sellers. 4. Fewer sellers. 36. Consider whether wages would be increased by 1. A successful system of technical education. 2. A large increase in the value of land. 3. A larger number of competing manufacturers. 57 Discuss fully the advantages of Trades Unions and Labor Or- ganizations, such as are common throughout the country. 58. What are the advantages of co-operative industries ? Give il- lustrations. 59 A manufacturer arranges to distribute among his employees ^ of his profits, after taking 5 per cent, on his invested capital. Wherein does this system resemble, and wherein does it differ from, co-opera- tion ? What would be the chief advantages, and what the chief dif- ficulties, of such a plan ? MISCELLANEOUS QUESTIONS AND EXERCISES. 209 60. " The value of any commodity, of which the supply can be increased, tends towards the cost of reproducing a commodity of equal utility, and this cost depends on the quantity and quality of the labor involved in the production, and on the rate of interest, and the time during which capital is locked up in the production." Discuss fully this general law of value. 61. Analyze as fully as you can the causes which determine the price of peaches at a given time in a given market. 62. Give a definition of money. Would you consider bank-notes or checks money ? What would be the advantage or disadvantage in the use of wheat as money ? 63. Explain what is usually meant by bimetallism. 64. To what extent do prices depend upon the productiveness of mines? 65 What is meant by the appreciation of gold? 66. What would be the effect upon the industries and finances of the country of discontinuing entirely the use of bank-notes ? 67. What would be the immediate effect upon American industries (i) of a harvest equal to double that of an ordinary year ? (2) of a great European war? 68. Consider how far credit is an efficient substitute, (i) for money ; (2) for capital. 69. What do you consider to be the chief causes and effects of commercial panics? Were there any commercial advantages in the panic of 1893 ? 70- Why is it that this country imports very largely what it can easily produce in abundance ? Give instances. ?i Enumerate some of the economic advantages of an extensive foreign trade. 72. In England the excess of imports over exports is considered a satisfactory feature of her economic condition. In India, which is a British colony, the opposite is true. Account for this. 73. How should you expect the exports and imports of two countries to be affected by the fact that one was able to impose a heavy tribute on the other ? 74- How should you expect the rate of exchange between England 2io MISCELLANEOUS QUESTIONS AND EXERCISES. and America to be affected by a bad English harvest, assuming that the deficiency was largely made up by importation from America? 75 To what extent should you consider the foreign trade of a country to be a test of its prosperity. 76. What is generally understood by (i) a protective tariff? (2) a tariff for revenue only? Discuss the policy of imposing duties to es- tablish an industry which is expected ultimately to flourish without protection. 77 From an American standpoint consider arguments for and against : 1. The government ownership of railways. 2. Congress fixing wages and hours of labor. 3. Government pensions for all kinds of workers. 78. How do cities make provision for special expenditures? 79. Name the various ways in which a Philadelphia merchant may discharge debts due in Boston, Montreal, London and Calcutta. 80. Why are notes of individuals or of corporations often held in large quantities, in preference to bank notes ? 81. Explain the use of the terms warrant, scrip, actuary, admin- istrator, arbitrage, bill of stores, bond of indemnity, bounty, charter party, composition deed, debenture, dockage, executo^, notary public, salvage, voucher. 82. The purchasing power of money in the markets of the world is governed by its commodity value." Explain the meaning of this statement. 83. What is meant by fiat money ? 84. Where is the United States Sub-Treasury located? It is a member of what clearing house association ? What advantage does if secure from this membership ? 8s, Give a brief outline of the National Banking Act of 1863. SUPPLEMENTARY NOTES. 211 SUPPLEflENTARY NOTES. Prime Exchange. This name is given to bills issued by houses of known solvency, whose drafts are everywhere accepted, and the character of whose credit is beyond question. Paper Due Outside the State. If you hold a note due in another state, deposit it in your own bank for collection, or send it direct to a local bank in the city or town where it is payable. Buying Goods. Large houses in the great commercial centers employ buyers who are specialists men who are thoroughly familiar with the market prices and who know the trade and all its influences through and through. The buyers for large houses are well paid, some of them re- ceiving as high as twenty thousand dollars a year. Credit Department. This name is given to that department of a large mercantile estab- lishment which has charge of the credits, that is, which passes upon the credit of its buyers. A well managed credit department does not rely entirely upon the reports of mercantile agencies but gathers infor- mation as to the standing of customers from all possible sources. Mercantile Agencies* The tv/o leading commercial agencies of the United States are Bradstreef s and Dim <5r Co.'s. These concerns gather from every village, town, and city reports upon the financial condition of every man or firm doing business. A digest of these reports is printed in a very large book which is issued quarterly and sold to subscribers at quite a high price. Nearly all large houses doing a credit business are subscribers to one or both of these agencies. " Should information furnished by an agency, except where obtained from the injured person, be injurious to the credit of a person, and such information be proven to be false, the courts have held that he has a cause of action against the agency for the damage he has sustained through the injury thereby done to his credit. Or should credit be extended upon the strength of information given by a commercial agency, which information was clearly inaccurate, and the agent of such agency could easily have dis- covered it to be inaccurate, the agency can be held for the damage thereby suffered." 212 SUPPLEMENTARY NOTES- Foreign Commercial Bills. The price is governed by the condition of the exchange market, and the length of time the bills have to run. Bills payable at sight are purchased at the market rate of exchange, and those payable on time at the market rate, minus the interest considered at the current rate in the country where the bill is payable. The interest-time is the time from the date of purchase to the date of maturity. The interest is deducted when the bill is bought. Time bills usually cost less than their face value. Charges for Letters of Credit. A commission of one per cent is charged upon all letters not ex- ceeding ^500. Interest is allowed when the face of the letter exceeds ^1,000. When the face of the letter is not entirely drawn upon, the balance due is payable upon demand at the issuing bank or any of its correspondents. Value of Standard Coins. The Treasury Department at Washington issues quarterly a table giving the government estimate in gold of the coins of all countries. This estimate is made simply for the purpose of valuing imports. Declaring Dividends. A dividend cannot be declared until the operating expenses, fixed charges, etc., of a stock company have been met. The shareholder is regarded in law as a partner, and therefore the last person entitled to share in the distribution of its assets. Bondholders. The student must distinguish clearly between a bondholder and a stockholder. To illustrate : A buys a quarter interest in a piece of property; he is in a sense, a share-holder. B loans money on the property and takes a mortgage as security ; the mortgage is a form of bond ; he is therefore a ^^^/-holder. Classification of Stocks. i. Assessable. 2. Non -assessable. 3. Preferred. 4. Common. 5. Cumulative. 6, Non-cumulative. Assessable Stock. The holder of assessable stock is liable, upon the failure of the company, to be assessed personally for an amount equal to the amount of the stock which he held. SUPPLEMENTARY NOTES. 13 Preferred Stock. This stock has a preference over other stock in the payment of dividends. The holder is one of the first to share in the net earnings. The dividend is usually stated in the stock certificate; that is to say, the holder of preferred stock carrying 6% dividend will receive his 6%, and share also in the general division of the remainder if it is likely to be in excess of the dividend which he has received as a pre- ferred stockholder. Cumulative Stock. When the corporation agrees to pay dividends past due and un- paid before declaring new dividends the stock is said to be cumulative. This feature is effective only against subsequent shareholders. Issue of Bonds* Bonds can only be issued by the consent and direction of the shareholders of a company, because of the fact that their property be- comes mortgaged, making them necessary parties. In the case of rail- roads, bonds are issued against its road, its branches, its securities, its equipment, its earnings almost anything in the nature of a security. First Mortgage Bonds. These bonds constitute a first lien on the property, as such prop- erty exists when mortgaged. Second mortgages are payable only after the first mortgages have been met. Consolidated Mortgage Bonds. These are issued to take up and fund the prior bonds standing against a property. They are a first lien only upon the retirement of previous liens. Income Bonds. These are secured by a mortgage on the earnings of a corporation after the payment of prior claims. They are interest bearing and the interest is payable before any stockholder's dividend can be declared. Collateral Trust Bonds. Bonds issued upon collaterals deposited with trust companies giv- ing the trust companies power to sell the collaterals and redeem the bonds upon the failure of the issuer to carry out the conditions of the bonds. These bonds are frequently issued upon the absorption by one corporation of smaller companies. 214 SUPPLEMENTARY NOTES. Debenture Bonds. This name is commonly given to bonds which have real estate mortgages as collateral security. Debenture bonds frequently contain a sinking fund clause. Certificate of Indebtedness. The holder of such a certificate issued by a corporation has a claim upon the assets of the company and if the certificate is not paid within the time named he may apply to the court to have a receiver ap- pointed. Receiver. When a property is placed under the management of a receiver, it is in the hands of the court under whose jurisdiction the receivership has been granted. " The rules which ordinarily apply to the financier- ing of a corporation as regards its stock and bonds may, at the will of the receiver, if approved by the court, be set aside. The receiver operates the property, under the direction of the court, for the benefit of its security holders." Occasionally it is necessary for the court to recommend the issue of receiver' s certificates for the purpose of raising money for the company. Such certificates take precedence over every other obligation of a company, and for this reason are considered good investment securities. Officers of Stock Companies. The duties or powers of officers are usually prescribed by the by- laws of the company. The president is usually the chairman of the board of directors. By direction of the board of directors he signs contracts, agreements, etc. He is intrusted with the general management of the company and the employment of its subordinates. The vice- president assists the president or acts for him in his absence. The sec- retary is responsible for the records of the company and signs docu- ments with the president. The treasurer is the financial manager. The general manager acts for the company in its general manage- ment. Active Stocks. These have separate places assigned to them on the floor of the stock exchange, and when out of the continuous roar of voices we hear a broker call out "five hundred ^ths," we learn the name of the stock from the broker's location on the floor, and know that SUPPLEMENTARY NOTES. 215 is the fraction of a dollar at which the stock is offered, no one consider- ing it necessary, except in case of an unusual rise or fall in stocks, to state the whole number of dollars, as that is presumed to be known by everybody on the floor. Private Bankers. The volume of business done by private bankers is very large. The aggregate capital of the New York City national and state banks does not exceed $140,000,000, while the capital of the private bankers of New York City exceeds $450,000,000. The character of the busi- ness of private bankers is somewhat different from that of national banks. They lend their capital largely for the promotion of new en- terprises, that is, they advance money, and receive in exchange the bonds and stocks of the enterprise promoted ; these they dispose of to their customers. Stock on Margin. A great deal of stock is bought on margins. Some brokers require a larger margin than others, and all brokers require heavier margins on some stocks than on others ; while there are stocks that brokers will not handle on margins at all. The amount of margin required is de- pendent both on the character of the stock and the condition of the money market. Brokers reserve to themselves the right to call for more margin if necessary. As a rule, any of the active stocks can be bought on a ten per cent, maxjjin, with an interest charge of five per cent, on the ninety per cent. wbiDh the broker assumes. Warrant, The name wan %nts is sometimes given to the drafts drawn by its officers upon the treasury of a corporation. Scrip. A dividend payttle in stock issued upon the capital of a com- pany is sometimes calk 1 scrip. Primage A percentage alia Ted by shippers to the owners or characters of a vessel for the loading e ' goods is called primage. Notary Public. A state officer empowered by commission to take acknowledg- ments, administer oaths, take depositions, and protest negotiable paper f within a certain count/ prescribed by law. Il6 SUPPLEMENTARY NOTES. Actuary. An expert in the application of the doctrine of annuities, especi- ally with reference to insurance is called an actuary. His duties are usually to deduce from statistics, data, mortuary tables, etc., the value of contingent assets, the amount of accruing indebtedness, the proper premium charges, and to furnish statements of the company's condition. Bounty. A premium paid by the government to men engaged in certain in- dustries, such as the bounty at one time paid to sugar growers, is called a bounty ; when paid to steamship or railway companies it is called a subsidy. Call Loans. Banks lend very large sums of money on call, taking stocks and other similar properties as security. For such loans they charge a very small rate of interest. The money can be called in on very short no- tice and in case of failure to meet the call the securities are put upon the market and sold. Call loan money is usually money which would if not loaned in this way remain in the vaults of the bank. It may be needed by the bank at any moment and the risk of a long loan cannot be taken. Reserve Fund* The national banks in certain large cities are required by law to hold a lawful money reserve of 25 per cent, of their deposits; all other national banks 15 per cent. The 5 per cent, redemption fund is in- cluded in the reserve. Bank Tax* The national banks pay to the United States a tax of I per cent, annually upon the average amount of their notes in circulation, ^ per cent, annually upon the average amount of their deposits, and j per cent, annually upon the average amount of capital not invested in U. S. bonds. Bank Surplus. The law provides that a surplus fund shall be accumulated, by set- ting aside, before the usual semi-annual dividend is declared, one-tenth part of the net profits of the bank for the preceding half-year, until the surplus fund shall amount to 20 per cent, of its capital stock. Hints and Helps for Young Business Men. Business Experience. It is stated on good authority that ninety-seven men out of every hundred who engage in mercantile life either fail or go out of business with greatly reduced resources. The statistics of New York City give these figures. If it were possible for business men to use the experience of others the number of failures would be greatly reduced. The only experience, however, that is really worth anything to us is our own ex- perience, and as a general rule our experience is valuable only in pro- portion to its cost not so much its cost in money, as its cost in effort, and worry, and trial, and hardship, and work. Good advice and in- telligent sense can never take the place of actual experience, but they may reduce very largely the cost of experience, and with this idea in view the hints and suggestions given under the heading of this chapter are offered for the thoughtful consideration of young business men. How to Succeed as a Sal* Cultivate a memory for faces and names. Remember that selling ability depends very largely upon common sense. It is not the quan- tity but the quality of speech which .tells. The successful salesman knows how to talk, what to talk about, and more especially when to stop talking. To say the right thing at the right time is not nearly so difficult as to say nothing at the right time. The seller should only talk enough to keep the buyer talking. The faculty of holding trade, or of selling repeatedly to the same people, is the highest attribute in the qualifications of a successful salesman. Understand thoroughly 'S 2l8 HINTS AND HELPS FOR YOUNG BUSINESS MEN. what you are trying to sell. Know your goods, believe in them your- self, and you are sure to inspire confidence in the buyer. If a salesman cannot bring himself to believe in himself, his house and his goods, he is either very badly placed, or he has mistaken his calling. A con- ceited, pretentious and affected manner disgusts and repels, while a person whose bearing is simple and natural attracts and makes friends. Remember that he who puts another in the attitude of being a teacher to him pays him a delicate compliment which is generally appreciated. A good salesman seldom asks a man if he wants to buy goods ; he doesn't come at him that way. The man who smilingly assents to everything the salesman says does not intend to buy ; he is framing an excuse for himself. The eye is the chief medium through which a man fires off whatever personal magnetism he possesses. One who really feels good-will may often infuse it into the heart of another by looking kindly and pleasantly straight into his eyes. There is an old maxim : " When you buy, keep one eye on the goods, the other on the seller; when you sell, keep both eyes on the buyer." The best salesmen of the future will not be illiterate. Education informs the mind, trains the thinking powers, and stamps the face with intelligence. Activity is not necessarily energy or industry. A Westerner says that it does not matter what kind of tracks you leave so long as you get there. This is certainly not true when applied to salesmen. There are cold, bil- ious, disgruntled people, who can no more be opened out by politeness than oysters. Such can only be reached through their self-interest. The well-dressed man has more self-respect, and commands more than the man in seedy attire. You will sell more goods in five minutes on a bright, busy day, when the store is full of customers, than in an hour on a rainy day, when everything is dull and the merchant gloomy. Faithfulness and trustworthiness are more valuable than in- telligence, for they are very much harder to find and can't be bought. You can't frighten common sense into anybody, or bulldoze trustworth- iness out of him. Your associates should be pure and good, and your personal habits correct. You must be governed by sound principles of morality and religion, without which no true success can be at- tained. Failures in Early Life. The following reference to the secret of a great preacher's success is worthy a place in any publication intended to aid young business men. The preacher is not any more called to preach than the manu- HINTS AND HELPS FOR YOUNG BUSINESS MEN. 2 19 facturer is called to make shoes, providing of course, that the shoes are made to wear rather than to sell. Sermons like shoes are too often intended for the market rather than for the individual. It came out in a memorial address to Philips Brooks that his first attempt in real, practical life was a failure. Immediately after his graduation from col- lege, young Brooks obtained a position as usher in the Boston Latin School, but as he did not show the capacity that the principal of the school considered necessary in undermasters, his resignation was de- manded. And when Brooks at once turned to preparing himself for the ministry, the school principal predicted his failure on the ground that he had never known any one to succeed in anything else who failed in school-teaching. If that schoolmaster lived twenty years longer, he was doubtless willing to admit that he had made a mistake. And yet his error of judgment was probably fully justified by the lack of power Philips Brooks had shown up to the time he left the Boston Latin School. The capacity that this schoolmaster did not recognize, notwithstanding his long acquaintance with young men, was Brooks's sincere trust in himself and his willingness to persevere and work out the destiny for which he believed nature had fitted him. If he had taken the school principal's opinion as final, and had decided that he had capacity only for ordinary things, he would have sunk into some obscure place and the world would have lost the profit of one of the richest natures that came to it in the nineteenth century. Philips Brooks persevered, and that is the whole secret of his after success. He had fixed before him a high ideal in life, and he held to it. He refused to let the disappointment of a first essay in life change his plans a particle or influence him to withdraw his gaze from the goal he had in view. Young as he was, he felt that the world could be made better by his living in it and working out the talent with which he had been endowed. Greater than the capacity he displayed as a preacher and nobler than the broad and generous humanity that be- came so conspicuous in his life, was the perseverance he showed in clinging to his purpose, of refusing to be discouraged by his first disap- pointment and by the doleful predictions of friends. There are very few men who have carved out their own lives who will not admit that it was perseverance in the time of failure that made them. Courage, steadiness to purpose and a refusal to surrender high ideals at s.ich a crisis makes it the turning point in a man's life. It is said of the English that they have won in many decisive battles, when the enemy believed themselves the conquerors, simply because they re- 220 HINTS AND HELPS FOR YOUNG BUSINESS MEN. fused to acknowledge that they were beaten. By keeping up the fight- ing they convinced the enemy that it was they who were beaten and not the English, and the history of the world shows the result of this perseverance. It is the same with men. The man who " keeps up the fighting," no matter how discouraging the circumstances, is sure to win in the end. He may not gain all he hopes for, as no man accomplishes that, but he is certain to gain enough to compensate for his efforts and perseverance. It is not alone to himself that a man owes this duty to persevere. He owes it as much or more to mankind. For every man who elevates himself and works out his ideal the nation is the richer and mankind the better. The early history of almost every successful man is a history of early difficulties and failures overcome by large faith and constant effort. Now and then one gets to the top of the ladder as a result of a happy accident. But, as a rule, especially in this land of ours with its abundant opportunities for all, men achieve it by doing their best at whatever their hands find to do while yet they are unknown. The reason why so many on the lowest round of the ladder never rise much higher evidently is, that they aspire eagerly but neglect to work thoroughly. Men yearn mightily to be rulers over many things, but in the meantime place stumbling-blocks in the path of their own hopes by being unfaithful to the few things. Thousands of men and women are out of employment and yet the supply of first-class ability of whatever sort, be it to sweep a room or preach a sermon, is never equal to the demand. A Poor Man's Chances* It is said nowadays that poor men have not the chances that they once had. There is no doubt about the fact that the man who suc- ceeds in the twentieth century will have larger ability and greater faith and stronger purpose than had the successful man of the nineteenth century, but it does not follow that he will require more money. The poor boy has ten chances to secure the necessary educational training to one chance offered the poor boy of fifty years ago. The opportunity always makes the man. He can measure up to the requirements if he has the purpose and ability to do so. A well-known American humor- ist puts the poor man's chances in a very favorable light as follows: The poor man takes all the chances. We must curtail his chances, and give the rich man a chance. The poor man has crowded the rich man out. But for the poor man, this old world would have cast anchor 6,000 years ago, and be covered with moss and lichens HINTS AND HELPS FOR YOUNG BUSINESS MEN. 22! to-day, like a United States man-of-war. Edgar Allan Poe was the son of a strolling player; George Peabody was a boy in a small grocery; Benjamin Frankim, the printer, was the son of a tallow chandler; John Adams was the son of a poor farmer; Gifford, the first editor of the Quarterly Review, was a common sailor; Ben Jonson, rare Ben Jonson, was a bricklayer; the father of Shakespeare couldn't spell and couldn't write his own name; neither can you; even his illustrious son couldn't spell it twice alike; Robert Burns was a child of poverty, the eldest son of seven children, the family of a poor bankrupt; John Milton was the son of a scrivener; Andrew Jackson was the son of a poor Irishman ; Andrew Johnson was a tailor; Garfield was a boy of all work, too poor even to have a regular trade ; Grant was a tanner; Lincoln a keel boatman and common farm hand ; and the Prince of Wales is the son of a queen. It is his misfortune, not his fault; he couldn't help it, and he can't help it now. But you see, my dear boy, that's all there is of him; he's just the Prince of Wales, and he's only that because he can't help it. Be thankful, my son, that you weren't born a prince; be glad that you did not strike twelve the first time. If there is a patch on your knee and your elbows are glossy, there is some hope for you, but never again let me hear you say that the poor man has no chance. True, a poor lawyer, a poor doctor, a poor printer, a poor workman of any kind, has no chance; he deserves to have none, but the poor man monopolizes about all the chances there are. Stick to a Legitimate Business. Well directed energy and enterprise are the life of American prog- ress, and safety lies in sticking to a legitimate business. No man manufacturer, trader, banker has any more right to be so energetic and enterprising as to take from his legitimate business the capital which it requires to meet an emergency. Apologies are made for firms who have failed, by recuiring to the important experiments they have aided, and the unnumbered fields of enterprise where they have freely scattered their money. We are told that individual losses sustained by those fail- ures are as nothing compared with the benefits conferred on the com- munity by their liberality in contributing to every public work. There is little force in such reasoning. A man's relation to a creditor is dif- ferent from his relation to the public. The demands of the one are definite ; the claims of the other are just what the ambition of the man may make them. The histories of successful men unite in exalting the 222 HINTS AND HELPS FOR YOUNG BUSINESS MEN. importance of sticking to a legitimate business. Failures are too often the result of branching out into fields outside of one's experience. The more a business man spreads himself the thinner the spread. A Millionaire's Pointers. Nothing is so hard as to make a fortune dishonestly. Things slowly attained are long retained. Buy nothing unnecessary, no matter how cheap. Don't overwork to gain $200 and then spend $500 in re- gaining your health. Do your best every time, even in small matters. Incur no responsibility which you cannot meet without distress. When you open one hand to secure a new customer, be sure not to allow an old customer to escape from the other hand. The easiest way in all the world to get a dollar is to earn it. When you seek to obtain credit in excess of the amount of your capital, you have crossed the prudent line which divides business from speculation. Mr. Depew is reported to have said that he wouldn't stay awake an hour any night to make a hundred dollars but he would stay awake an hour every night for a week rather than lose a hundred dollars. Men fail because they lose money not because they are unable to make it. Any man of ordinary ability can make money. Business Location. In retail trade the location is a very important matter, Trade centers around centers. People do not like to go out of their way to buy things. An inferior or small store in a good location is preferable in every way to a fine large store poorly located. Just a little around the corner is not so good as on the corner. Two or three steps up is not so good as on a level with the sidewalk. A rent of $400 a month on the main street may look high compared with $40 a month three or four doors from the main street, but the rent is only ten times as great and there may be twenty-five shoppers on the main street for every one that passes up the side street. A Boston dealer made money enough in a little three angled room scarcely big enough for three customers at once but located on a famous corner, to build one of the largest and finest business blocks for which that city is noted. His rent was $1500 a month and his three-cornered store of one- hundred years' standing wasn't worth, apart from the lot, as much as a good suit of clothes. Larger sales, even though profits are smaller, afford opportunities for closer buying and nowadays when the fixed prices of manufacturers and jobbers are blown to the four winds, the buyer gets the best bar- HINTS AND HELPS FOR YOUNG BUSINESS MEN. 223 gain who can buy the largest quantity upon the shortest time. In fact, in these days of active competition when profits seem reduced in so many directions, the buying of the goods is equally important with the selling. The merchant who cannot buy to advantage might as well step aside and let the large dealer have the trade. The old maxim, " goods well bought are half sold" is truer to-day than ever before. In opening up a new business wait, if necessary, until an excellent lo- cation can be secured. This is one-half the secret of many an abund- ant success. Method and System. The young man who lacks order will nineteen times out of twenty fail of success. The merchant ought to cultivate systematic habits in all his affairs. If it is known among his clerks and employees that the same hour every morning will find him in his store or counting-room, this very fact will infuse punctuality throughout the house. The work should be systematically distributed among the clerks and each article of goods should have its special place, convenient of access and ready to handle. If there are crowds of customers there is not likely to be much dust on the goods but the clerk whose time is not full and who allows the dust to accumulate should be bounced. Every moment of his time should be used either in selling or in re-arranging goods, in scattering dust, or in soliciting trade. The young man who has an op- portunity to work and who doesn't work doesn't deserve success. The change system should be so complete that customers will not be kept waiting. The clerks should be so thoroughly familiar with their stock that all reasonable questions can be answered promptly. In our largest and most prosperous business houses the work is divided and sub-di- vided into departments ; a man is placed in charge of each special line of goods ; he is under instructions to see that his stock is in every sense up-to-date ; he must keep to the front such articles as are likely to at- tract custom ; remnants and dead stock instead of being put out of reach on a top shelf are carefully sorted, specially bargain marked, and so displayed as to be easily worked off. Nearly every mercantile fail- ure finds about half the stock so old and shop- worn and dusty and dead as to be almost unsalable even under the hammer. Exercise system in buying. The successful merchant lets novelties alone and deals in goods which he knows he can sell. By not scattering his resources, he can buy greater quantities and at better figures. And above all things have order arid system in the counting-room, in the k'eerjing of books, 224 HINTS AND HELPS FOR YOUNG BUSINESS MEN. in the filing of papers, in the payment of bills, in the collection of ac- counts in everything in any way related to the finances of the busi- ness. The Talent of Success. Longfellow once said that the talent of success is nothing more than doing what you can do well, without a thought of fame. Man was made for action and life is simply a field for brain and heart exer- cise. We owe a large part of our happiness to our mistakes, and yet it is true that happiness is never found in failure. Don't mistake aspira- tion for inspiration. Ambition without genius is sure to end in failure. A man maybe a very successful lawyer, though he might fail if ap- pointed chief justice ; a man may be a very successful teacher but en- tirely unfit for the position of college president. It is a mistake to say that a man can be whatever he wills to be. The strongest and most constant will in the world is not an entire substitute for brains. All callings are alike honorable if pursued with an honorable spirit. A blacksmith may be a man of polished manners while a bank president may be a clown. It isn't enough to say that if a young man will only do thus and so he may reach success. The power of patient labor is the very essence of genius. What a man does is the real test of what he is, and to intimate that a certain person would accomplish great things if he had more activity of mind is to say that he would be stronger if he had more strength. All experience shows that it is the nature of genius to labor patiently, and hence it is easy to leap to the conclusion that genius is but patient labor. Don't run away with the idea that will can do the work of intellect, or that effort can take the place of genius, or that mere intensity of desire can give intensity of power. Great deeds are done by great men and often without effort. Neither do great occasions make great men. They bring great men to the front, before the public eye, use them, but do not make them. It is more often that great men make great occasions. No man is ever a great man who wants to be one. Shakespeare wrote for money, not fame. Homer sang to kindle patriotism in the hearts of his country- men. Grant, apart from his work, was the most ordinary man in a thousand. However, no man knows what are his powers, whether he is capable of great things or small, until he has tested himself by ac- tual trial. The more limited your powers the greater need of effort. The Spartan youth who complained to his mother that his sword was too short, was told to add a step to it. TQ a large extent, as William HINTS AND HELPS FOR YOUNG BUSINESS MEN. 225 Perm declares, " industry supplies the want of parts; patience and dil- igence, like faith, remove mountains." "There lives not a man on earth, out of a lunatic asylum," says Sir Edward Bulwer Lytton, and the words should ring in every young man's ears, " who has not in him the power to do good. What can writers, haranguers, or speculators do more than that ? Have you ever entered a cottage, ever traveled in a coach, ever talked with a peasant in the field, or loitered with a mechanic at the loom, and not found that each of those men had a tal ent you had not, knew some things you knew not? The most useless creature that ever yawned at a club, or counted the vermin on his rags, under the suns of Calabria, has no excuse for want of intellect. What men want is, not talent, it is purpose ; in other words, not the power to achieve, but the will to labor." Very ordinary ability properly made use of must bring a certain measure of success. There are few really great men while there are thousands of really great things to be done. Men are pushed forward by events over which they have no control. They never know their own power until it is measured up against enor- mous obstacles. Success depends more upon ability adapted to work than upon any superior intellectual power. The man whose ability best fits him for a profession might be a failure in business no matter how great his genius. A moderate talent well applied will achieve more useful results, and impose more on mankind, than minds of the highest order, whose temper is too fine for mechanical or industrial pur- suits. Besides, there is a discretion more valuable than the most ex- tensive knowledge. Men must have tact and good judgment and clear and quick perception. Men of genuine ability are rarely idle. To al- low them to remain so is to allow capital which might pay large profits to remain uninvested. Hold your ground and push hard. Watch op- portunities. Be rigidly honest. The young men who spend their even- ings smoking cigarettes and telling shady stories, with the street corner for their location and packing boxes for chairs, need not spend any time learning " how to write a check " for the chances are a thousand to one that they will never have a bank account. Favoring Circumstances in Life* We meet people daily who are so profoundly dull that they seem to be experts in this particular qualification. Dr. Johnson described one of these persons by saying, " Why, sir, he is dull, naturally dull; but it must have taken him a great deal of pains to become what we now see him. Such an excess of stupidity is not in nature." There S26 HINTS AND HELPS FOR YOUNG BUSINESS MEN. is no such thing as luck in the ordinary sense, but as Shakespeare has it, " There is a divinity that shapes our ends, rough-hew them how we will." There is no doubt about the matter that many able men were " born to blush unseen, and waste their sweetness on the desert air." There are environments and circumstances which make for success and if we fail to get into the tide, we are sure of failure. True, some men seem to make money at every turn and without apparent effort while others with the most careful planning and closest economy, fail to make money. The sum of the matter is that success depends upon opportunity as well as upon ability. Men pass by the footpaths which lead to larger roads leading* to great commercial routes simply because the paths run up hill, and seem rough, and their direction is unknown. The tree that grows soft and spongy in a swamp grows hard and noble on the hillside. "All things work together for good," but not al- ways for gain, "to those who love God." While circumstances may make or mar a man, it is more often true that man is privileged to make his own circumstances. The race is not always to the swift or the bat- tle to the strong. Opportunity is coy. The careless, the slow, the unobservant, the lazy, fail to see it, or clutch at it when it is gone. It isn't enough, however, to strike the iron when it is hot, we must strike it till we make it hot. It is an interesting fact that Wellington, who never lost a battle, never spoke of luck, though no man guarded more carefully against all possible accidents, or was prompter to turn to account the ill-fortune of an adversary. Napoleon, on the other hand believed in his star. What some would call bad luck are the very discouraging incidents of his life which the successful man uses for his own advancement. The rungs of the ladder of success are made of failures which the climber puts his foot on to reach higher. Use Every Minute of Time. Gladstone is reported to have said "that thrift of time will repay you in after-life with a usury of profits beyond your most sanguine dreams, and that the waste of it will make you dwindle, alike in intel- lectual and in moral stature, beyond your darkest reckonings." The young business man's most important lesson is along the line of time economy. Habits of indolence, listlessness, and procrastination, once firmly fixed, cannot be suddenly thrown off, and the man who has " wasted the precious hours of life's seed-time finds he cannot reap a harvest in life's autumn." Go hunt out the men in any community who have done the most for their own affd the general good, and yo HINTS. AND HELPS FOR YOUNG BUSINESS MEtf. 227 will find that they are almost uniformly the overworked class, the almost- driven-to-death men who seem piled all over with work. It is these men who are most active in public affairs, in church affairs, and in all matters concerning the public good. Men of this class, however crowded with business, are always found capable of doing a little more, and you can rely upon them in their busiest season with ten times more assurance than upon the idle man. Give a busy man five minutes to write a letter and he will dash it off at once ; give an idle man a day, and he will postpone it till to-morrow or next week. There is a mo- mentum in the active man which of itself almost carries him to the mark, just as a very light stroke will keep a hoop agoing, when a smart one was required to set it in motion. The men who do the greatest things in this world have the genius for hard work, the most desirable kind of genius. Most persons, to achieve anything, need to be always busy; and for them it is better never to have any idle moments, but always to have some work on the anvil to which they can turn their hand. Use Money Carefully. Don't waste your breath talking about money being a great evil. Men will make any kind of sacrifice for money. Whatever may be said about the dangers of riches, ten times as much may be said about the dangers of poverty. The poor man is hourly beset by temptations which the rich man knows nothing of. Poverty is a condition which no man should accept except it is forced upon him. It is the want of money which makes men workers. It is this scantiness of means, this continual deficiency, this constant hitch, this perpetual struggle to keep the head above water and the wolf from the door, that keeps society from falling to pieces. Money is desired not merely for the comforts it affords but for the influence which it brings. It is said that in England no man* can afford to have an opinion who has not an income of two thousand a year. An anecdote was told some years ago of two men who were conversing about John Jacob Astor's wealth. The one asked the other if he would be willing to take care of the fifteen millions merely for his board and clothing? " No ! " was the indignant an- swer, " do you take me for a fool? " " Well," said the other, " that's all Astor gets for the job." Let every one who would get on in the world estimate fairly the value of money. Let him use it that he may personally be a blessing to others. To work hard, to improve every moment, to economize, to avoid debt these are the only sure steps to 228 HINTS AND HELPS FOR YOUNG BUSINESS a comfortable old age. What clerk that spends twenty cents a day for a couple of cigars, dreams that by this expenditure, with the accumu- lated interest, he will in fifty years have smoked away $20,000? Yet a man who by a life of industry had laid by such a sum would, in most country towns, be deemed rich. No amount of means or earnings can justify waste by a nation or by an individual. The Great Teacher, when displaying His infinite power to the multitude, taught the needful lesson of economy by asking that the fragments of loaves and fishes be gath- ered that nothing be lost. l Cheerful Daily Life. A man's daily life is the best tesf of his moral and social state. Take two men, for instance, both working at the same trade and earn- ing the same money ; yet how different they may be as respects their actual condition ! The one looks a free man ; the other a slave. The one lives in a snug cottage; the other in a mud hovel, The one has always a decent coat to his back ; the other is in rags. The children of the one are clean, well-dressed, and at school; the children of the other are dirty, filthy, and often in the gutter. The one possesses the ordinary comforts of life, as well as many of its pleasures and conven- iences perhaps a well-chosen library ; the other has few of the comforts of life, certainly no pleasures, enjoyments, nor books. And yet these two men earn the same wages. What is the cause of the difference be- tween them? It is in this: The one man is intelligent and prudent; the other is the reverse. The one denies himself for the benefit of his wife, his family, and his home; the other denies himself nothing, but lives under the tyranny of evil habits. The one is a sober man, and takes pleasure in making his home attractive and his family comfort- able ; the other cares nothing for his home an.d family, but spends the greater part of his earnings in the gin-shop or the public-house. The one man looks up; the other looks down. The standard of enjoyment of the one is high, and of the other low. The one man likes books, which instruct and elevate his mind ; the other likes drink, which tends to lower and brutalize him. The one saves his money ; the other wastes it. How is it that of t wo men working in the same field or in the same shop, one is merry as a lark; always cheerful, well-clad, and as clean as his work will allow him to be; comes out on Sunday morn- ings in his best suit to go to church with his family ; is never without .a penny in his purse, and has something besides in the savings bank; is a reader of books and a subscriber to a newspaper, besides taking in HINTS AND HELPS FOR YOUNG BUSINESS MEN. 22p some literary journal for family reading; while the other man, with equal or even superior weekly wages, comes to work in the mornings sour and sad ; is always full of grumbling ; is badly clad and badly shod ; is never seen out of his house on Sundays till about midday, when he appears in his shirt-sleeves, his face unwashed, his hair un- kempt, his eyes bleared and bloodshot ; his children left to run about the gutters, with no one, apparently, to care for them ; is always at his last coin, except on Saturday night, and then he has a long score of borrowings to repay; belongs to no club, has nothing saved, but lives literally from hand to mouth ; reads none, thinks none, but only toils, eats, drinks, and sleeps why is it that there is so remarkable a differ- ence between these two men ? Simply for this reason .hat the one has the intelligence and the art to extract joy and happiness from life ; to be happy himself, and to make those about him happy ; whereas the other has not cultivated his intelligence, and knows nothing whatever of the art of either making himself or his family happy. With the one, life is a scene of loving, helping, and sympathizing ; of carefulness, forethought, and calculation ; of reflection, action and duty : with the other, -it is only a rough scramble for meat and drink; duty is not thought of, reflection is banished, prudent forethought is never for a moment entertained. Character. Character tells in all conditions of life. It is the crown and glory of life. It is man's noblest possession, constituting a rank in itself, and an estate in the general good-will; dignifying every station, and exalt- ing every position in society. It exercises a greater power than wealth, and secures all the honor without the jealousies of fame. It carries with it an influence which always tells; for it is the result of proved honor, rectitude, and consistency, qualities which, perhaps more than any other, command the general confidence and respect of mankind. Character is human nature in its best form. It is moral order em- bodied in the individual. Men of character are not only the con- science of society, but in every well-governed State they are its best motive power ; for it is moral qualities in the main which rule the world. Even in war, Napoleon said the moral is to the physical as ten to one. The strength, the industry, and the civilization of notions, - all depend upon individual character ; and the very foundations of civil security rest upon it. Laws and institutions are but its outgrowth. In the just balance of nature, individuals, nations, and races, will obtain 230 HINTS AND HELPS FOR YOUNG BUSINESS MEN. lust so much as they deserve, and no more. And as effect finds its cause, so surely does quality of character amongst a people produce its befitting results Though a man have comparatively little culture, slender abilities ; and but small wealth, yet, if his character be of ster- ling worth, he will always command an influence, whether it be in the workshop, the counting-house, the mart, or the senate. Energy of character has always a power to evoke energy in others. It acts through sympathy, one of the most influential of human agencies. The zealous, energetic man unconsciously carries others along with him. His example is contagious, and compels imitation. He exercises a sort of electric power, which sends a thrill through every fibre, flows into the nature of those about him, and makes them give out sparks of fire. The same qualities which determine the character of individuals also determine the character of nations. Unless they are high-minded, truthful, honest, virtuous, and courageous, they will be held in light es- teem by other nations, and be without weight in the world. Character is one of the greatest motive powers in the world. In its noblest em- bodiments, it exemplifies human nature in its highest forms, for it ex- bibits man at his best. Although genius always commands admiration, character most secures respect. The former is more the product of brain-power, the latter of heart-power ; and in the long run it is the heart that rules in life. Men of genius stand to society in the relation of its intellect, as men of character of its conscience ; and while the former are admired, the latter are followed. A life exclusively occupied in affairs of business insensibly tends to narrow and harden the charac- ter. It is mainly occupied with self watching for advantages and guarding against sharp practice on the part of others. Thus the character unconsciously tends to grow suspicious and ungenerous. Character is property. It is the noblest of possessions. It is an estate in the general good-will and respect of men ; and they who invest in it though they may not become rich in this world's goods will find their reward in esteem and reputation fairly and honorably won. And it is right that in life good qualities should tell that industry, virtue, and goodness should rank the highest and that the really best men should be foremost. The best sort of character can not be formed without effort. There needs the exercise of constant self- watch fulness, self-discipline, and self-control. There may be much faltering, stum- bling, and temporary defeat; difficulties and temptations manifold to be battled with and overcome ; but if the spirit be strong and the heart be upright, no one need despair of ultimate success. The very effort HINTS AND HELPS FOR YOUNG BUSINESS MEN. 231 to advance to arrive at a higher standard of character than we have reached is inspiring and invigorating; and even though we may fall short of it, we can not fail to be improved by every honest effort made in an upward direction. Without principles, a man is like a ship with- out rudder or compass, left to drift hither and thither with every wind that blows. He is as one without law, or rule, or order, or govern- ment. Integrity of word and deed ought to be the very corner-stone of all business transactions. To the tradesman, the merchant, the manufacturer, it should be what honor is to the soldier, and charity to the Christian. In the humblest calling there will always be found scope for the exercise of this uprightness of character. Hugh Miller speaks of the mason with whom he served his apprenticeship, as one who "put his conscience into every stone he laid." Narrow-minded- ness in living and in dealing is generally short-sighted, and leads to failure. The penny soul, it is said, never came to twopence. Gen- erosity and liberality, like honesty, prove the best policy after all. A Strong Will. Egotism, skepticism, and selfishness are always miseraole compan- ions in life, and they are especially unnatural in youth. The egotist is next door to a fanatic. Constantly occupied with self, he has no thought to spare for others. He refers to himself in all things, thinks of himself, and studies himself, until his own little self becomes his own little god. A man may be feeble in organization, but, blessed with a happy tem- perament, his soul may be great, active, noble, and sovereign. Pro- fessor Tyndall has given us a fine picture of the character of Faraday, and of his self-denying labors in the cause of science, exhibiting him as a man of strong, original, and even fiery nature, and yet of extreme tenderness and sensibility. "Underneath his sweetness and gentle- ness," he says, " was the heat of a volcano. He was a man of excit- able and fiery nature ; but, through high self-discipline, he had con- verted the fire into a central glow and motive-power of life, instead of permitting it to waste itself in useless passion." A strong temper is not necessarily a bad temper. But the stronger the temper, the greater is the need of self-discipline and self-control Doctor Johnson says men grow better as they grow older, and improve with experience ; but this depends upon the width and depth and generousness of their nature. It is not men's faults that ruin them so much as the manner in which they conduct themselves after the faults have been committed. Th wise will profit by the suffering they cause, and eschew them for 232 HINTS AND HELPS FOR YOUNG BUSINESS MEN. the future ; but there are those on whom experience exerts no ripening influence, and who only grow narrower and bitterer, and more vicious with time. What is called strong temper in a young man, often indi- cates a large amount of unripe energy, which will expend itself in use- ful work if the road be fairly opened to it. There are, of course, times and occasions when the expression of indignation is not only justifiable but necessary. We are bound to be indignant at falsehood, selfishness and cruelty. A man of true feeling fires up naturally at baseness or meanness of any sort, even in cases where he may be under no obligation to speak out. Strong temper may only mean a strong and excitable will. Uncontrolled, it displays itself in fitful outbreaks of passion ; but controlled and held in subjection like steam pent up within the organized mechanism of a steam-engine, the use of which is regulated and controlled by slide-valves and governors and levers it may become a source of energetic power and usefulness. Hence some of the greatest characters in history have been of strong temper, but of equally strong determination to hold their motive-power under strict regulation and control. Letters which bring Business, and How to write them. Kinds of Letters. The primary idea of a letter is conversation at a distance. If this be kept in mind, one can scarcely fail to write appropriately, if one can converse properly ; for a letter may be familiar or reserved, jocular or dignified, according to the relations between the writer and the person addressed. Letters of friendship should be simple and natural. It is the little things, the incidents of every-day life, the home-chat which makes a friendship letter interesting. Letters of courtesy include invi- tations, acceptances, acknowledgements, letters of congratulation, of condolence, of introduction, and of recommendation. Letters of busi- ness include all correspondence relating to business matters. Public letters embrace communications to newspapers regarding public affairs. Frequently a writer publishes a letter addressed to some prominent per- son, criticising his opinions or actions, or putting to him a number of formal questions witlv the purpose of receiving a published reply. This is usually called an open letter. Arrangement of a Letter. You have a right to make your own style and as a rule the more characteristic it is of yourself the better. But custom has established certain forms and usages for business and social correspondence which it is generally convenient to follow. The parts of a letter are the head- ing, the address, the salutation, the body, the complimentary close, and the signature. This is a good form for the beginning of a letter. It is 234 LETTERS WHICH BRING BUSINESS, neat and compact and has about it all the information and formality necessary. Quite often we see letters the salutation of which is carried so far over to the right that scarcely any room is left for the first line of the body of the letter. This is a very awkward form for both manu- script and typewritten letters and should not be encouraged. Bring the " My dear Sir " over to the left so that it will be flush with the " Mr." and one space from the left end of the second line. This is the most approved form, and it is certainly the neatest. See that your address at the top is full and complete. Write the street, or the P. O. Box, or whatever supplemental address is necessary, just above the name of your post office. If your business letter is to a married woman, say "My dear Madam" instead of " My dear Sir." If you are well ac- quainted with the man, drop the name and address, and write simply, " Dear Mr. Adair," or if a woman, write " Dear Mrs. Brown." If he 100 S '1fVui is younger than you, either in years or experience, or even if he is on equality and is a warm friend, you might begin " My dear Mr. Adair." Note that when written this way " dear " is not written with a capital. If you are addressing a business letter to a young lady whom you do not know, simply write "Miss Kate Sanderson," and begin your letter without any further introduction. If you are acquainted, either form- ally or if your names are familiar one to the other, you may write " Dear Miss Sanderson." Of course when written in this way there is no othsr part to the salutation as in the business letter addressed to " John Adair," when his address is given. Friendly letters to men or \>oys may begin te My dear Charley " or " My dear Brown." The old forms " Kind friend " or " Dear friend " are a good deal out of date. If you are addressing a business letter to a firm, write "Gentlemen " instead of " My dear Sir." Never use the vulgar contraction " Gents." Neatness and correctness are essential in all correspondence. There is AND HOW TO WRITE THEM. 235 no excuse for a carelessly written letter. There are towns and cities in the different states which have the same name. In writing from any such, even though it be a large and well-known place, be careful to add the name of the state. It is better to put your street and number upon every letter. Your correspondent does not want to spend an hour look- ing for an old letter containing your address. Be careful not to crowd your letter. Leave a good inch at the top of the sheet perfectly blank. Titles should not be omitted, but they should be used sparingly. "Mr." is good enough for anybody from the President down. Never put on a title at each end of a name or more than one at either end. The salutation of letters addressed to public officers should be quite rasBSBSESBsasasas i s j o N i* o s T A , "if NI v K it $ A i, ^sssssssssassSssss\ U Jf I'0,K P 8 f A I K U Jf 1 V J5 H 8 E-L J I formal, if the letters relate to public affairs. In such letters the ad- dress is usually put at the close. Keep the margins of your letter even. Do not make many paragraphs. The chopping up of a letter into para- graphs seems to be about all that the average amateur typewriter knows about arrangement. Make a new paragraph only when there is an en- tire change of subject. If you have been writing about the death of your great grandmother and have finished and wish to say something about the weather, begin with a new paragraph. When a new para- graph is necessary it should begin directly on a line with the first word of the body of the letter, that is, one space in. Learn to write straight on unruled paper. The complimentary close follows the body of the letter, and immediately precedes the signature. The closing words LETTERS WHICH BRING BUSINESS, should not be more familiar than the salutation, and, like the words of the salutation, they depend upon the relation between the two persons. "Respectfully yours," " Very truly yours, ^ " Yours cordially," etc., are the usual closing words of formal correspondence. They don't NSONE POSTALS IMA PER us ^ - v-jv^-QJOT. 1O.) C&Sf&**j*K && mean anything, not even as much as "Good Day" to the passer-by. A man will write a letter abusing another shamefully and then sign himself " Very truly yours.''' Letters of friendship, of course, admit of less formal terms. The first word only of the complimentary close should begin with a capital. AND HOW TO WRITE THEM. 237 The Signature. Write your signature plainly. Your friends may be very familiar with your dashing ink lines, but the man who sees your name for the first time may have considerable difficulty in transforming it correctly into readable script. Three Important Points. The abbreviated form of instant is inst. In correspondence the / ~^^^ / (7 / 1. Ha 3Tofi cropOHt KPOM* a^peca HO RosBOJiaeTca HBiero Apyraro 2. Ho^TOBoe ynpaB.ieuie aa co^epacanio nncbsia HO OTB-feqaeTir. word means "present month." The abbreviated form of ultimo is itlto. or ult. In correspondence this Latin word means " the month last past." The abbreviated form of proximo is prox. In correspondence this Latin word means " next month." (?# M the deposit to consist of coin, bank notes, express orders, local and out-of-town checks. 40. An associate of yours has done you a great injury in mistak- ing facts regarding your character. Write him, asking an explanation, and demanding a full reparation of the wrong. 41* Baker & Jones, 246 William St., New York, owe you $125. Write them a brief note, stating that you will draw on them for the amount, on the loth of the following month. 42. The draft drawn on Baker & Jones has been returned with the word " refused" written on the back. Write them, expressing your surprise and asking an explanation. 43' Put yourself in the position of Baker & Jones' accountant, an4 reply to the letter you have just written. AND HOW TO WRITE THEM. 247 44. You are one of twenty-five citizens desiring certain improve- ments on one of the streets of your town. Draw up a letter to the mayor and aldermen, placing the matter before them and requesting their attention thereto. 45^ You are a teacher and desire a situation. Write to a school inspector or superintendent. Ask information about certain vacancies, and state your qualifications and the salary you will accept. 46. Prepare a circular to be sent out to all customers whose ac- counts are overdue, requesting them to pay before a certain day, and notifying them of a proposed change in the management of your busi- ness. 47- Charles Henry Bowlipp, of Fernwood, Pa., owes F. A. Black & Son, Philadelphia, a bill of $137.40 for papering and decorating. The bill has been rendered several times and the account has been standing almost a year. A letter comes to-day stating that the bill is in excess of the contract price which was $125. This statement Black & Son find to be correct, but they find also that Mr. Bowlipp ordered the contract arrangement changed with reference to the library, adding instead much more expensive decoration. This change besides being more expensive caused a loss of time of two whole days for two men. Write for Black & Son a courteous reply offering a full explanation and urging immediate settlement. 48.' You have a house which you desire to sell. Write an adver- tisement describing fully your property. 49. Write a receipt for a month's rent received from Thomas Hardy who lives in your house at 246 Willow Ave. 50. Write three short reading notices of your goods, to be printed in the local column of your village paper. 51. Prepare (for printing) a circular letter to be sent to your cus- tomers who are behind with their payments. Be careful to word it in such a way that your customers will not take offence. 52. Rule off a square on your paper the size of a business card, and write or print neatly in it such matter as you think would make a suita- ble business card for any business with which you are familiar. 53 For what do the following abbreviations stand : Prox., ultimo, i. e., MSS., pro tern., viz., ft 9 54 The Delaware Dairy Company, of Darby, Pa., owe a bill of 248 LETTERS WHICH BRING BUSINESS, $93.20 to Elias Rogers, of Earlham, Ind., for three new patent milk condensers which they bought from him. 7 he machines give excel- lent satisfaction. They desire to order three more, but wish to have Rogers send on with the machines, and at then expense, an experienced man who can put them up. Write the letter ordering the condensers and enclosing a draft for the amount of the bill already due. 55- Write a letter to the wholesale dry goods house of Pancroft, Perth & Co., 397 Madison Ave., New York City, ordering five pieces No. 2460 Black Dress Velvet, four pieces No. 1263 Black Satin, thirteen pieces No. 843 C. L. Gingham, twelve pieces No. 924 Black Dress Silk. State that these are the same as goods ordered through their traveler on a certain date (give date) last year. Ask to ship by Mer- chants' Dispatch at earliest date. Expect usual discount and time. Sign the letter for your firm. 56. The Wheeler Manufacturing Company of Courtland, N. Y., have written The Richmond Manufacturing Company, Richmond, Va., ordering 500 sets of certain mouldings which they use in manufacturing carriages. They have never ordered goods from "your house before and ask the "usual 30 days' credit." You find them well-rated but have not in stock the particular moulding which they describe. You have something else which is very similar and which may answer their pur- pose. If they should order a thousand you could afford to manufacture what their order calls for. Answer fully the letter for the Richmond house. ABBREVIATIONS. Avoid abbreviations such as "&" for " and," " X Roads" for " Cross Roads," "Bait." for "Baltimore," "Phil." for "Philadelphia," "C'wood" for " Collingwood," " Wms'town " for " Williamstown," " Jns'town " for "Johnstown," "ad." for "adv." or "advertisement," etc. ADDRESS. Write your name and address plainly and in full. What you intended for "N. Y." may look to the corresponding clerk who reads your letter like " N. J." Contractions of names should be made distinct. ANONYMOUS LETTERS. No gentleman or lady ever writes an anony- mous letter. BOTH SIDES. In business correspondence, it is better not to write on both sides of the paper. Letters so written are not easily trans* ferred to a copying-book. BREVITY. The subject matter of a business letter should be stated as briefly as is possible consistent with perfect clearness. Short sentences and words are preferable to long ones. BUSINESS LETTERS should be clear, brief, direct and gentlemanly. Everything irrelevant to the business in hand should be excluded. If necessary, reference should be made to former correspondence. Every business man should keep an exact copy of all business letters which he mails. Be positive and determined but always kind and generous. CAPTAIN. When this title is used instead of "Sir" in the salu- tation or complimentary close, it should not be abbreviated. The same rule applies to " Colonel " and other titles. CARELESSNESS in spelling, blunders in construction, or want of taste in the expression of thought, often interfere with success in the business world. The business character of a man is judged of by strangers from his correspondence. CONDOLENCE. A Letter of Condolence is a letter sympathising with a friend who has suffered loss or bereavement. Great care should be taken in the writing of such letters. COPYING LETTERS, Copies of all letters containing matter of im- 17 (249) 2 5 HINTS FOR CORRESPONDING CLERKS. ^e^-S^l^^TtJ^^mA^m^ ^-^ / /7 JACKSONYILLE,S 1 AUGUST!NE&1ND1ANR1YERRAILWAY 1 ''The S'AuGustlric fate. 1 ' JDSEPH RlCHARDSOK Cener?! Passenger Agent Betnrn to A. E MoLEA5, I 208 Sixth 8t, EAST LIVERPOOL, Ohio, If not delivered within 5 dart HINTS FOR CORRESPONDING CLERKS. 251 portance should be preserved. A facsimile made with a letter press is a most satisfactory means of preserving a copy of a letter. CORPORATION. A petition or memorial to a Board of Aldermen, or other officers, may begin with "Gentlemen," and close with "All of which is respectfully submitted." DATE. The date consists of the month, the day of the month, and the year. It is not necessary to write the forms ist, yth, 23d, etc.; the figures are sufficient. Note that the proper contractions of the ordinals ending in 2 and 3 are 2d, 3d, 22d, 23d. In acknowledging the receipt of a business letter, give the date of it. DEAR SIR. This saluation is more intimate than "Sir," and not so officious. It is preferable to " Sir " for ordinary business corres- pondence. DEGREES. Scholastic degrees M. D., D. D., M. A., A. B.,etc., are always abbreviated in addresses. Titular addresses of high rank, however, such as President, Governor, Archbishop, etc., should never be abbreviated in such use. It is not in good taste to address a man as "Mr. Charles King, M. A.," or "Charles King, Esq., M. D." Titles are multiplied on title-pages and catalogues, but not more than one should appear on letters. "Esq.," as an honorary title, is going into disuse. DOCTOR. Doctors of Divinity may be addressed "Rev. Dr." or Rev. , D. D." Doctors of Medicine maybe addressed "A B , M. D." or "Dr. A. B ." DON'T. Don't write illegibly. Don't write crooked. Don't use red, or violet, or green ink. Don't use fancy note paper. Don't place a " bill poster " advertisement on either envelope or letter paper. Don't direct an envelope wrong side up. Don't use postals for private correspondence. Don't write like Horace Greeley. Don't flourish. Don't write " My dear Sir " with a capital D for " dear." Don't write " & " for " and." Don't use slang. Don't cross your letter. Don't grumble on paper. DROP LETTERS. Drop letters require postage at the rate of two cents for each ounce or fraction thereof at letter-carrier offices, and one > cent at all other offices. ENVELOPES. In social correspondence, the envelopes, like the paper, should be white and plain, and should correspond to the paper used in sise and quality. The square envelope is not generally used 252 HINTS FOR CORRESPONDING CLERKS. for business correspondence. It is considered bad taste to use colored paper. ERASURES. Avoid all erasures or blots, even if you have to re- write your letter. Avoid writing with a pencil, or with other than black ink. ESQUIRE. The correct abbreviation is "Esq.," not "Esqr." or " Ecq're." In addresses, this word is accepted as the correct title of a gentleman who has no professional title. It is decidedly English, how- ever, and is little used in the United States. EUPHONY. Avoid the frequent repetition of the same word, or of similar sounds. Be sparing of your and" 1 s, and verf s, and so's. The principal words of a sentence should be placed where they will make the most impression. FIGURES. Except in writing dates and sums of money, do not use figures in the body of a letter. For example, it would be considered an error to write, " We have had 4 orders for this article already." FIRST-CLASS MAIL. This includes letters and all other written matter, whether sealed or unsealed, and all matter sealed or tied in such a manner that it cannot be easily examined. The postage is two cents per ounce or fraction thereof. The following are a few specified articles among those subject to first-class rates : Accounts, whether partly or wholly in writing. Autograph albums, containing writing of any kind. Bank books, with entries in writing. Bank checks, when written, whether cancelled or not. Contracts, wholly or partly in writ- ing. Copies, made by typewriter or caligraph, or other similar pro- cess. Copies of manuscript for publication, when not accompanied by proof-sheets or corrected proofs of same. Deeds, wholliy or partly in writing, whether executed or unexecuted. Designs, or plans drawn or sketched by hand. Diaries, with entries in writing therein. Drafts, wholly or partly in writing, signed or unsigned, cancelled or uncan- celled. Envelopes, with written addresses thereon. Insurance poli- cies, wholly or partly in writing, and applications therefor. Invitations, wholly or partly written. Letters, whether written or printed (except circulars), and whether written by hand, or typewriter, caligraph or other similar process. " Old letters," whether sent singly or in a bulk. Manuscript matter, maps, music, or other manuscript designed for pub- lication, unless accompanied by proof-sheets or corrected proofs. Packages, when sealed or sewed or otherwise closed against inspection. If one full rate be paid they will be forwarded, rated up with the defi- HINTS FOR CORRESPONDING CLERKS. 253 cient postage. If less than a full rate be paid, the package will be treated as a short paid letter. Printed letters, not bearing internal evidence of being sent to several persons in identical terms. Promis- sory notes, wholly or partly in writing, signed or unsigned. Receipts, whether wholly or partly in writing, except receipts for subscription to, and enclosed with, second-class publications. Stenographic or short- hand notes. Telegrams, when offered for mailing are letters, and not to be receipted fur unless registered. Pictures, Prints, when matter is written thereon other than the name of the sender. FOLDING. A letter-sheet should be folded from the bottom for- ward, bringing the lower edge near the top, so as to make the half length a little shorter than the envelope, and then break the fold. Next fold twice the other way, beginning at the left edge, folding towards the right. Measure these folds also, so as to fit the envelope. A note-sheet should be folded twice, from the bottom forward. When the envelope is nearly square, a single fold of the note-sheet is sufficient. If you want to make a good letter look slovenly, endeavor, by folding down a half inch at each end, to make it fit an envelope an inch too short. FOURTH-CLASS MAIL embraces all kinds of mailable merchandise not included in other classes. The rate of postage is one cent per ounce or fraction thereof. The limit of weight is four pounds. FRIENDSHIP. Matters of friendship, and private confidence, should never be mentioned in business communications. HASTY* REPLIES. " Many preplexing and provoking matters arise in the correspondence of a business house, and a judicious corres- pondent will be constantly on his guard lest he write something in 254 HINTS FOR CORRESPONDING CLERKS. haste, and perhaps in anger, that he would afterward deeply regret. It is wise to consider carefully and act deliberately. When constrained to write severe things, the letter should be permitted to lie overnight for review before mailing. If this be done, it is probable that the character of the letter will be changed radically, or perhaps it will remain unwritten. Many letters which would seem ample provocation for a sharp reply, had better go unanswered. This advice is especially com- mended to those seeking trade. Kind words make and hold friends* while hasty or vindictive words alienate friends and business." HOSTESS. Be sure to write a friend, or hostess, after making a visit at her house, thanking her for her hospitality. Don't wait for a fortnight before doing so. INITIALS. Many persons, in subscribing their name, have a fancy for giving only initials of their first, or given name ; thus, R. King, J. T. Jones. No one can determine from these signatures whether the writer is Reuben or Rebecca, James or Juliet, and the person addressed who is often a stranger, is at a loss whether to send his reply to Mr. King or Miss King, Mr. Jones or Miss Jones. This is especially the case if the penmanship has the appearance of a lady's hand. INTRODUCTION. Letters of Introduction are used to introduce one friend to another who lives at some distance. Do not give a letter of introduction to any one with whom you are not thoroughly acquainted. Such letters are generally left unsealed, and the name of the person in- troduced should be written on the lower left-hand corner of the en- velope, in order that the persons on meeting, may greet each other without embarrassment. INVITATIONS. If you have an invitation to write, write it as you would any other brief note. Let it show in its big heartedness that you mean the spirit as well as the letter of your invitation. JUNIOR. The abbreviation of this word is ''Jr." or " Jun." Its place is immediately after the name, as " William Brown, Jr., Esq." It never takes the place of any title. The same rule applies to Senior. Both words should begin with capitals. LANGUAGE. A letter is but a talk on paper. The style should de- pend upon the terms of intimacy existing between the parties. To superiors, be respectful ; to inferiors, courteous ; to friends, familiar ; to relations, affectionate. Write as you are in the habit of thinking or speaking, only be more particular in the selection of your words than in conversation. Short sentences are most suitable for business corre- HINTS FOR CORRESPONDING CLERKS. 255 spondence. In social correspondence, do not be afraid to write about little things. Things worth talking about are worth writing about. MATERIALS. Use the best stationery you can afford, and see that your letter paper and envelope correspond in quality and color. The size of the letter sheet ordinarily used in business, is either what is termed note size, about 5 by 8 inches, or letter size, about 8 by 10 inches. MESDAMES. The contraction of this word is Mmes. It is the plural of the French Madame, and is used in English as the plural of Mistress (Mrs."). Any number of spinsters associated in a business firm, in a committee, or in any other co-operative body, should be ad- dressed with the pro-title " Misses" ; but if any one of them rejoices in the title " Mrs.,' 7 then the pro-title of the body must be " Mmes." The salutation in any case should be " Ladies." Miss. In youth the masculine of the word is Master, and in adult age Mister (Mr.). This word in any form should never be used as the salutation of a letter. Not like Sir, Madam, and General, it cannot be used alone. In addressing a young lady, one must know either her given name or her surname ; and with these one may say "Miss Mary" or "Miss Brown." In writing to strangers a woman should, in her signature, indicate not only her sex, but also whether she is a "Miss " or a " Mrs." MISTAKES. Five million mistakes are made every year in envelope addresses, for that number of letters go astray. A Boston publisher says : "A dozen times a day we search for the name of the post office or state, in the postmaster's stamp on the envelope, and we frequently receive letters without any signature whatever. Occasionally," he says, "we find in our mail an envelope containing money but no letter." The experience of this publisher is the experience of every publisher in the country. Don't make mistakes. MISTER, MESSRS. The plural of "Mr." and of "Esquire," is " Messrs." This is a contraction of the French Messieurs (Gentle- men). We say " Mr. President," "Mr. Speaker," "Mr. Chairman," " Mr. Editor," etc. MISTRESS. This, the pro-title of a married woman, is almost al- ways used in the abbreviated form, " Mrs.," and is pronounced misses. It is sometimes coupled with a husband's title, as " Mrs. Dr. Stone." This use is convenient, but questionable. MONEY. In opening letters containing money, the latter should 256 HINTS FOR CORRESPONDING CLERKS. be immediately counted, and '.ne sum noted. Acknowledge the re- ceipt of money promptly. NOTA BENE. The abbreviation is N. B., and the meaning " note specially." This, like the postcript, follows the completed letter. OFFICIALS. In letters to ordinary officials, it is customary to be- gin with the salutation " Sir," and close with " I beg to remain your obedient servant," or " I have the honor to be, Sir, your obedient ser- vant." OFFICIAL LETTERS. In official correspondence, it is better to ad dress the office than the officer, as " To the Minister of Agriculture, etc., Sir," instead of " To the Hon. B K , Minister of Agriculture, etc." OFFICIAL TITLES. In strictly official letters, it is proper for the writer to place his official designation after or below his signature, thus forming part of his signature. ORDERS. In ordering goods, complete directions as to the method of shipment, should always be given. In advising of the ship- ment of goods, say " Shipped via N. Y. C. Merchants' Despatch," 01 whatever the railway and transportation company may be. ORDER LETTERS. In ordering goods or any articles state explicitly the amount, kind, etc., and what terms wanted. Always state the amount of money you send and how you send it. PAGING. If the letter consists of more than one sheet, the sheets should be arranged in order and paged carefully. PAPER. For social correspondence, four-page note size is preferable. Business men generally use single sheets letter size, with printed busi- ness headings. Use plain paper, either ruled or unruled. The paper should be, whether letter or note size, the best that the writer can af- ford. Let it be white, or with the faintest tinge possible of blue or cream. Unruled paper is to be preferred. The names of the various hinds of paper in general use are Legal- cap, Bill-paper, Foolscap^ Letter-paper, Commercial note, Note-paper and Billet. POSTAGE STAMPS. The proper place for the stamp is at the top of the envelope at the right margin, in the right-hand upper corner, and above the address. Put on as many stamps as the weight of the letter or parcel demands. POSTAL CARDS. There is no need of salutation or complimentary HINTS FOR CORRESPONDING CLERKS. close. The economy that resorts to cards need not waste time and two lines on mere civilities. POSTSCRIPT. The abbreviation P. S. is usually made use of. The ordinary use of the post-script is to add some after-thought to the letter. P. O. Except in special instances, it is not necessary to write the letters P. O. after the name of the post office. The letter, if it reaches the town, is not likely to go to the courthouse or jail. PROMPTNESS. Be prompt in answering all letters, but be specially so in acknowledging favors and in business correspondence. RECOMMENDATION. "It ought to be the pride of every man who writes a letter of recommendation to feel that his letter will have weight, because it is known that he recommends only the deserving and the competent, and recommends truthfully." RETURN STAMP. Letters about one's own affairs, to other than intimate friends, requiring an answer, should always enclose a stamp to pay return postage. R. S. V. P. These initials stand for respondez s'il vous piait, (answer, if you please). They are sometimes written at the lower left- hand corner of the invitations. SALUTATION. Do not be familiar or presumptuous, in greeting a person who is older, or more learned, or in a higher position than yourself. SECOND-CLASS MAIL. This includes all newspapers and other periodical publications within the conditions required by the post office department and which will be furnished by any postmaster upon appli- cation. The postage on second-class matter when mailed from the office of publication is one cent per pound. Any person can mail a newspaper or magazine at the postage rate of one cent for four ounces or fraction thereof. SIR. This title' may be used apart from the name, while "Mr." must go with the name. The plural is " Gentlemen," not the vulgar contraction " Gents." " Dear Sirs " bears the same relation to " Gen- tlemen " as "Dear Sir " does to " Sir." SPECIAL DELIVERY. The special delivery system has been extended to every post office in the United States, and embraces every class of mail matter. The special delivery stamp must be added in addition to the regular postage. Registered letters containing special delivery stamps are entitled to immediate delivery by messenger. 258 HINTS FOR CORRESPONDING CLERKS. SPECIAL DIRECTIONS. If any special directions are required in connection with the envelope address, they should be put in brackets to indicate that they are not part of the address proper. SPELLING. It is the fault of the English language that we have so many "bad spellers." If you are doubtful of a word, it will be better to look it up rather than make a blot, or a running line, where the let- ters are questioned. Careful reading, and lots of it, will make a good speller. STAMPED ENVELOPE. Letters aoout one's own affairs, when re- quiring an answer, should contain a stamp or a stamped envelope for return postage. STATES. The abbreviations of the names of states and provinces should be written with great care. What you mean to be Me., may easily be taken for Mo., and what you are sure is Md., may be read Ind. STYLE. Paragraph and punctuate carefully. Spell correctly. Write legibly and with care. Avoid blots, erasures, and interlinea- tions. Never economize in paper by writing cross lines. In writing to the most intimate friend, a certain degree of attention, both to the sub- ject and the style, is requisite and becoming. It is no more than we owe both to ourselves and to the friend with whom we correspond. A slovenly and negligent manner of writing is a disobliging mark of want of respect. THE PRESIDENT. The preferred form of addressing the President is, Hon. , Executive Mansion, Washington, D. C.; the saluation is simply " Dear Sir " THIRD-CLASS MAIL embraces printed books, pamphlets, circulars, engravings, lithographs, proof-sheets and manuscripts accompanying the same, transient newspapers, and in general all miscellaneous printed matter. The limit of weight for mail-matter of this class is four pounds, except in the case of single books exceeding that weight. The rate of postage is one cent per two ounces, or fraction thereof. Printed circulars may bear the date of mailing, address and signature in writ- ing at third-class rates. Reproditctions from originals by the electric pen, papyrograph, etc., are entitled to pass in the mails in sealed en- velope as third-class matter. The only restrictions upon corrections to proof-sheets is that everything written must be part of the publication and not contain references to business or other matters. Photographs containing no writing other than the name of the sender, are third-class matter. A circular does not lose its character as such when the date or HINTS FOR CORRESPONDING CLERKS. 259 the name of the sender is written thereon. Packages of third-class matter when sent in bulk to postmasters to be distributed to different persons, must be prepaid at regular rates. TITLES. The following miscellaneous titles for use in addressing letters or notes of invitation cover the field of ordinary subscriptions : His Excellency and Mrs. R. B. Hayes ; Governor and Mrs. Geo. B. McClellan ; Hon. and Mrs. Jas. G. Blaine ; Sir and Lady John A. Macdonald; Rev. Dr. and Mrs. T. DeWitt Talmage ; Prof, and Mrs. F. H. Anderson ; Mr. and Mrs. W. H. How land. STYLE IN CORRESPONDENCE. The first and indispensable quality of a good style is clearness. Generally it is enough if the writer de- vote his efforts simply to being understood. Plainness and clearness are the foundations upon which all other qualities are built. Too ex- clusive endeavor after precision may make the style stiff and angular. It is always unwise to impair the thought for the sake of the expression. To the quality of clearness must be added the quality of force. In a letter the spirit of the writer should show itself. The strongest thoughts find brief expression. As a rule the language which simply suggests the thought is more interesting than that which gives it full expression. IN GRAMMAR Plurals. Be careful in writing such plurals as moneys, journeys, valleys, chimneys, turkeys, negroes, calicoes, buffaloes, sons-in-law, solos, twos, quartos, step : sons. Verbs and Numbers. Follow plural subjects with plural verbs ; as, we were, not we was; you were, not you was ; they are, not they is ; they were, not they was ; they have, not they has ; they write, not they writes ; the men are, not is ; the children were, not was ; the boys have, not has ; my sisters write, not writes ; they are the boys who were at school. Jen- nie and Annie were schoolmates. To Do; to See. These two verbs give considerable trouble. Their principal forms are, do, did, done, and see, saw, seen. The second forms, did and saw, should never follow is, are, was, were, have, has, or had. The third forms, done and seen, should always follow one of these words expressed or understood ; as, I did the work, or I have done the work, or the work is done. I saw the picture, or I have seen the picture, or the picture was seen. Verbs in General. The rules given for to do and to see apply alike to all verbs. Such expressions as have came, have sang, was drove, have broke, have be- gan, have knew, is froze, have gave, knowed, has went, has give, has rang, have ran, were took, has stole, throwed, have mistook, etc., are gross errors and should be avoided. Possessives* The possessive of nouns, both singular and plural, is formed by adding an apostrophe and " s " ('s) ; as, The man's hat is on the table. The children's playground is behind the house. When a plural noun [260] +^. SLIPS IN GRAMMAR CORRECTED. 261 ends in "s," only the apostrophe (') is added; as, the pupils' lessons should be explained. Birds' nests attract boys. The apostrophe is never used in forming the possessive of pronouns. I, Me, He, Him, She, Her. Many persons continually make mistakes in conversation and in correspondence in the use of these words. The following are exam- ples : Let you and /go ; say, me. He is as good as me ; say, /. She is as tall as him; say, he. You are older than me ; say, /. Nobody said so but he ; say, but him. John went out with James and I; say, and me. You are stronger than him; say, than he. Between you and // say, you and me. He gave it to John and // say, and me. Your brother was with Mrs. Brown and // say, and me. He sat between him and // say, me. Me and him can carry it ; say, he and /. Her and her sister are coming; say, she and her sister. Her and him are the same age; say, she and he. Was it her ; say, she. If I was him ; say, were he. We, Us, They, Them, Who, Whom. Errors in the use of these pronouns are frequent. Us boys enjoy the holidays ; say, we boys. Who is it for? say, whom. Was it them ? say, they. Who did he choose; say, whom. Who did the mischief? Them ; say, they. Be careful who you trust ; say, whom. Comparison. Do not use the superlative degree where only two things are com- pared ; as, he is the best of the two ; say, better. Jennie is the eldest of my two sisters; say, elder. Avoid double comparatives and double superlatives ; as, A more healthier location cannot be found ; say, more healthy. He took the most pleasantest route ; say ; most pleasant, or pleasanter. Negatives. Do not use two negative words so that they shall contradict each other; as, He didn't do nothing; say, did nothing, or didn't do any- thing. He is not there, I don't think ; say, I think. Adverbs. Do not use adverbs for adjectives, nor adjectives for adverbs ; as, The river rises rapid; say, rapidly. He does his work slow ; say, slowly. She looks charming, not charmingly ; I feel bad over it, not badly. He did his work well, not good. 262 SLIPS IN GRAMMAR CORRECTED. Prepositions. The needless insertion of a preposition is to be avoided, as, In what latitude is Boston in ? Care must be taken to connect preposi- tions with appropriate verbs and nouns; as, This book is different to that ; say, from that. I was followed with a crowd ; say, by a crowd. He is angry at his father ; say, with his father. Collective Nouns. When the idea of unity is prominent, collective nouns take singu- lar verbs ; as, The fleet was under orders to sail. There was a large crowd in the building. Your committee begs leave to report. When the idea of plurality is prominent, collective nouns take plural verbs; as, The public are requested to be present. Shall, Will. Will expresses the will or pleasure of its own subject. Shall sub- ordinates the will of its subject to that of the speaker. " We will go " means " we are willing to go." " We shallop" means " we have de- cided upon going." Never say " Will I do so and so? " The literal meaning of such an expression would be, "Am I willing to do, etc." Remember that will always expresses willingness rather than futurity when it has a personal significance. Similar Tense Forms. Lie, /ay, lain; /ay, laid, laid; sit, saf, sat ;, flee, fled, fled; fly, flew, flown ; flow, flowed, flowed ; rise, rose, risen ; raise, raised, raised. His roommate lies in bed until noon. The apples lay on the ground all winter. He has lain on the floor since morning. He laid the book on the table. I have sat here for more than an hour. She set her pitcher on the ground. They vr\\\flee from the plague. The river has overflowed its banks. John raised the flag. Errors to be Avoided. Administer. Blows are dealt. Medicine is administered. Afraid. Say I fear it will rain, not I am afraid. Agriculturist. Not agriculturalist. Alike. Do not couple this word with both. All over. Over all the country, not all over the country. Allow. Do not say, " He allows he will do it." Alone. Distinguish this word from only. Amateur. Not necessarily a beginner. And. Say try to go, not try and go. SLIPS IN GRAMMAR CORRECTED. Angry. Say angry with a person and at a thing. Answer. Answer questions ; reply to assertions. Anticipate. Distinguish from expect. As. Say not that I know, instead of not as I know. At all. Superfluous in " any at all" Atheneum. Pronounce ath-eh-nee-um. Accent 3d syllable. Asphalt. Pronounce ess-fahlt, not ash-fault. Awful. A thing cannot be awful pretty. Balance. Not to be used for rest or remainder. Beautifully. Looked beautiful, not beautifully. Beg. Say " I beg leave to acknowledge." Belongs to. Do not use for is a member of. Between. Between two ; among more than two. Blacking. This word is not blackening. Brakeman. Not brakesman. Certain. Distinguish from sure. Character. Distinguish from reputation. Deal. Great deal, not good deal. Die with. Persons die of, not with disease. Disremember. Say forget. Don't. Say he doesn't s\ng, not he don t sing. Either. Means the one or the other of two. Either alternative. Alternative means choice. Equally well. Do not say equally as well. Every. Followed by a verb in the singular. Expect. Refers to future time. Fix. Incorrectly used for arrange or prepare. Folk. Folk implies plurality as well as folks. Gent. Never use this contraction of gentlemen. Good. " It looks good." Say well. Got. Omit got in " I have got a dollar." Granary. There is no such word asgrainaiy. Guess. Do not use this word for suppose. Had have. Never use together. Hardly. Do not use with don t and can't. Healthy. Distinguish from wholesome. Hundred. Use the singular form with numerals. Idea. This word is not idea-r. Just. Incorrect in the sense of now. Learn. To receive instruction. See teach. Less. Relates to quantity ; fewer to number. Loan. Lend is considered a better word. May. Distinguish from can. Near. Do not use in the sense of nearly. flew. A pair of new boots ; " not " a new pair/* 264 SLIPS IN GRAMMAR CORRECTED. Nice. Think twice before using this word. None. Contraction of no one, takes singular. One. Followed by one, and not by be. Otherwise than. Not otherwise but. Party. Do not use this word im person. PerpettuJ. Distinguish from continual. Portion. Often incorrectly used {Q\ part. Portion. A portion is a part set aside. Posted. Do not use instead of informed. Prevalent. Disti ng uish from preva iling. Promise. Distinguish from assure. Propose. Distinguish frcrn purpose. Prudence. Distinguish from discretion. . Quantity. Things measured or weighed. Real. The adverb is really ; as, really good Remember. Distinguish from recollect. Returned back. The prefix re means back. Seem. Distinguish from appear. Settle. To settle does not mean to pay. Shampoo. Not shampoon. Shampooing. So, such. So long journeys, not such long. Some better. Say somewhat better. Splendid. Splendid things glitter. Stop. We stay at a certain hotel, not stop. Streamlet. Do not use with little. Summon. Summon is a verb, summons a noun. Teach. To give instruction. See learn. Those kind. Say that kind. Kindis singular. Transpire. Do not use for to happen. Try. We make an experiment, not try. Vacation. Distinguish from vocation. Widow woman.. Woman is here superfluous. Without. Do not use without for uniess. Year-old. A two-year-old colt, not a two-yean. Yours. Never close letters '" ; th " Yours, etc** to Sonrw- 1T Bo Good for Something. No use applying for a situation if you cannot do anything. En- courage and develop some one talent for the use of which the world offers a money value. The man who can do almost anything fairly well isn't drawing half the salary of the roan who can do one thing better than other people. Never be Idle. If you are out of work and can't find any, go and help some poor fellow who has more than he can carry. Don't consider that you are doing him a great favor either. He is really doing you the favor. For every one man who can't find work, there are five who have more than they can do. If you read your bible, you will find that the men whom God called to higher work were not standing around with their hands in their pockets waiting for a job. Never Despair. You can do almost anything you make up your mind to do, and resolve upon doing, willingly and earnestly. Do not be afraid of pounding persistently at one thing, even if people do call you a crank. Get at Something. If nothing turns up, turn something up. The man who is at work has ten chances to get a better place for one chance the man who is out of work has to get anything to do. If the place isn't good enough or the pay not big enough, fill the place chuck full, so that you will bulge over a little where people can see you, and earn every cent of the pay. The people who are most tired in this world are working for themselves and not for the good of others. Market Overstocked. The market is always overstocked with middling work of all sorts, while first-class work in every department of human effort is always so scarce as to command high prices. Every employer knows that when he has need of a man capable of really first-class work, he must search diligently for him, and pay him a high price when he is found. 18 1-265] I r are **' ^ ien 5 anc * 7 are 12, put down 2 and carry i. Then, i and 7 and 6 are 14, put down 4 and carry i. Then, i and 6 and 2 are 9. Then, 2 and 3 are 5. Then write the left-hand figure, 3. This is a very simple method. Try a few exercises, first working them the long way, then by applying this short-cut. 11. The Lowell Rule. No. 1. To multiply any two numbers of two figures each, when the right- hand figures add to 10 and the left-hand figures are the same : For in- stance, 76 by 74. Multiply the two right-hand figures, 6 by 4, placing 24 in the product, then carry i, and multi- ply 7 by 8, placing 56 in the product. Always carry one, 5624 adding it to one of the left-hand figures. Apply this rule to any similar numbers, such as 24 by 26, 35 by 35, 27 by 23, 81 by 89, 42 by 48. 12. The Lowell Rule. No. 2. The rule explained in No. n can be applied to large numbers. Take, for example, 298 by 292. Here the left-hand numbers (29) are tne same, and the right-hand numbers add to 10. Saj- twice 8 are 16, and put down both figures. Then carry one to 29, and you have 30. Now, it is quite easy to R7O16 mu ltipty 2 9 by 30 mentally. The product is 870, all of which is placed in the answer. Apply this rule to 104 Vy 106, 112 by 118, 152 by 158, 127 by 123, 993 by 997. 278 SHORT-CUTS IN FIGURES. 13. The Square Rule. To multiply numbers such as 37 by 43. Here the mean number that is, the number which is as much greater than 37 as it is less than 43 is 40. Forty, squared, or multiplied by itself, gives 1600. The square of 3, the difference between the mean number and one of the numbers, is 9. 1600 9 =i59i=the product of 37 and 43. Apply this rule to 87 by 73> 63 by 57, 22 by 18, 1009 by 991, 116 by 124. The "J591 entire work should be done mentally. 14. Rule No. 4. Extended. If you wish to multiply two large numbers, each of which is a little over 1,000, such as 1,235 by 1,003, proceed as * n Rule No. 4. Multiply the excesses, that is 235 by 3, carrying the product, 705, three places 12387O5 to the right. Then add the numbers, omitting one of the ones at the left. Apply this rule to such numbers as 1,312 by 1,003, 1,199 b y i>5 etc - 15. Multiplication "by Subtraction. It is easier for most people to subtract than to multiply. Instead of multiplying by 9, we multiply by 10 and subtract the number from this product. 8435625X9=84356250 8435625 Product =75920625 To multiply by 99, add two cyphers and subtract ; to multiply by 399, add three ciphers and subtract, etc. 16. From an English Arithmetic. To multiply two small numbers, each of which ends in 5, such as 35 and 95, take the product of 3 and 9, increase this by one-half of Jthe sum of these figures, and prefix the result to 25. Thus : 35 5X5=25 95 9X3=27, 27+* (9+3)=33 3325 This rule will be found to hold good with any two numbers each of which end with 5. Apply it to such numbers as 45 by 85, 35 by 75, 95 by 45 etc. SHORT-CUTS IN FIGURES. 279 17. The Single Line Rule. In multiplying any number by 21, or 31, or 401, or any number of two figures where the last is one, or of three figures, where the last two figures are 01, a good deal of time can be saved by abbreviating the ordinary process as here illustrated. For instance, suppose we have to multiply 231,423 by 462o46O 21. Instead of putting down 231,423 with 21 under it, then drawing a line, multiplying by i, then by 2 or 20, then adding, as is the ordinary custom; all that is necessary is simply to multiply by the 2, placing the product, one figure to the left, and then to add. Try this method, using 31, 51, 61, 91, 201, 3,001, and 901 as multipliers. There is a saving in the above example of eight figures. 18. How Some Accountants Add. It is quite common with accountants to put down both figures, as ^^ in the illustration. The sum of the first col- 26 umn is 26; carrying 2, the sum of the second m^y column is 29 ; carrying 2, the sum of the third I 4 column is 14; carrying i, the sum of the 1 9 fourth column is 19, and the total is 19,496. r ^ ne tota l is found by taking the 19, and the right-hand figures of the other three partial sums. There is an advantage in this method, if you desire to go back and add a column a second time. 19. English Invoices and American Money. Invoices of goods bought in English markets are in pounds, shillings and pence. The money items have, of course, to be changed to our currency. When money is at par value, and for nearly all practical purposes, the following is the best and shortest method of reducing English money to dollars and cents. This rule ap- peared originally in " The New Arithmetic " by the author of this publication. It has since been copied into several text-books. Begin by reducing the shillings and pence to the decimal of a pound as fol- lows : Write one-half of the greatest even number of shillings as tenths, and if there be an odd shilling, write Jive-hundredths ; reduce the pence to farthings and write their number as thousandths. If the number of farthings is between 12 and 36, add one to the thousands : if between 36 and 48, add two to the thousandths. 3 14s 6d=3.725 NOTE. Divide 14 by a and put down 7; then multiply 6 by 4 and add I, getting 25. 280 SHORT-CUTS IN FIGURES. 4 15s 1Od=4.7t2=4.792 The pound sterling is equal to $4.86f. Now 80 is | of 400, 6| is iV of 80. Then, to multiply by 486^, multiply by 400 ; divide the product by 5 and place the quotient under; then divide the quotient by 12, and place the second quotient under the first. Add, and the sum will be the same as though the number were multiplied by 4.86! in the ordinary way. Find the value of ^3.725 in dollars and cents. 3.725 3.725X4.861=^ 12 - - Multiply by 4 for the dollars. Then fr"*'"" divide this product by 5, which is equivalent 2.980 .248 $18.128 ^3.725 by .06] to multiplying ^3.725 by 80; then divide 2.98 by 12, which is equivalent to multiplying 20. To Multiply by 21, 22, 23, Etc. This rule applies to numbers of two figures each, the first of which ends with 2. Multiply each figure in the multiplicand by the unit figure of the multiplier, adding to each sep- arate product double the figure to the right of the one multiplied ; add the tens to the last figure dou- bled. In this example say : Three twosr=6. Three times 3 and 4 (2 doubled) = 13. Three times 4 and 6 and i to carry=i9. Three times 2 and 8 and i to carry=i5. Three times 3 and 4 and i to carry =14. Three doubled and i to carry = 7. Practise this method. 21. Adding Backwards. -FO/IQO 1 Q Q To add backwards, i O^l5^f 1 O OO begin at the left-hand 2345678 column, and write 5432456 26 down the full amount 721 4382 29 of each column in 4 1 32O94 25 regular order, bring- 6863213 38 ing each total one 342634O 34 place to the right, as 2534538 _ in the illustration. 39291914 39291914 A knowledge of this method serves as a ready and reliable proof to the accountant. SHORT-CUTS IN FIGURES. 28? fllSCELLANEOUS SHORT-CUTS. 22. Rule ii applies to large numbers such as 127 by 123, or 295 by 295. By adding one to 29 you make 30, and it is an easy mat- ter to multiply 29 by 30 mentally. 23. You can extend the multiplication table to the 'teens by the following rule : To one of the numbers add the units figure of the other and affix a cipher ; increase this result by the product of the two units figures, and this will give the product required. 24. You can prove multiplication by the method given on page 5 for the proof of addition. Find the unitate of the multiplicand and multiply this by the unitate of the multiplier. The product should equal the unitate of your product. 25. The six per cent, method of interest is very simple. It is sometimes called the 6o-day method. To find the interest of $248 at 6 per cent, for 60 days, you simply cut off two figures and you have the answer, $2.48. For 30 days the interest is $1.24. Then multiply by the number of months necessary. For 3 days grace you would add one-tenth, or i2c. For 7 per cent, add one-sixth. For 5 per cent, deduct one-sixth ; and so on. 26. Here is an interest rule which is popular with some book- keepers : Multiply the principal by the time reduced to days; then divide this product by the quotient obtained by dividing 360 bv the per cent, of interest. 27. Here is another method : Reduce the time to months, and to the number thus obtained annex one-third of the days, which whole number multiplied by one-half of the principal will produce the re- quired interest at 6 per cent. 28. The Detroit rule has some advantages : Multiply the prin- cipal, days, and rate together. Suppose this product to be 16,380. Divide by 5 and we get 3,276. Divide this by 4 and we get 819. Divide the first three figures of 3,276 by 5 and we get 65. Now add 3,276, 819, 327, and 65, and we get $4.487, the interest. 29- There are more short-cuts in multiplication than in any other department. If you want to multiply by 427, multiply by 7 and then by 42 which is 6 times the product by 7. This same application can be made in hundreds of numbers such as 927, 279, 728, 287, 7291 14,412, 81,273. 19 r ^ 282 SHORT-CUTS IN FIGURES. 30- Sometimes the multiplier can be separated. For instance, instead of multiplying by 372, multiply by 360-1-12, that is by 12, first, and then that product by 30. 31- To add 373+391 + 265 in one column, begin by saying (men- tally) 374 and 300=674, and 91=765, and 200=965, and 65=1,030. 32. In the French method the divisor is placed on the right of the dividend, and the quotient below the divisor. In the Italian method of division, each product is subtracted mentally from its par- tial dividend, and only the difference written down. 33 Eleven is an exact divisor of 1O+1, of 1OO-1, of 1.OOO+1, of 1O.OOO-1, etc 34 Seven, eleven and thirteen and their multiples 77, 91 and 143, are exact divisors of 1,001 and its multiples 2,002, 3,003, 9,009. etc. 35- Every prime number, when divided by 6, will leave a re- mainder of i or 5. Not every number is prime, however, which leaves these remainders. 36. Every prime number greater than 5, is an exact divisor of any number expressed by as many figures, less i, and all alike, as there are units in the given prime number. Thus, 7 is an exact divisor of 1 1 i,in or any multiple of it. 37- Much time can be saved in almost any arithmetical exercise involving division by cancellation, that is, by rejecting equal or com- mon factors from both divisor and dividend. 38. To add two fractions, such as y$ and ^, the shortest method is by cross-multiplication. That is, 2X4=8, and 3X3=9; 9+8=17 the numerator. Then for denominator, multiply the denominators 3 and 4, and you have 11 for answer. 39^ This same rule applies to subtraction of fractions, except that you subtract the products instead of adding them. 4 The following is a business method of multiplying mixed numbers: Multiply the integers together, then multiply each integer by the fraction in the other number to its nearest unit, and add the products. 41- To square 5^, that is to multiply it by itself, say 6 times SHORT-CUTS IN FIGURES. 283 five are 30 and add ^. This rule applies to all similar numbers. To square i6)4 Sa 7 *7 times 15, and add }. 42. To find the value of grain when sold by the bushel : divide the weight by the number of pounds in a bushel, and multiply this by the price. 43. To find the value of hay or coal when sold by the ton : mul- tiply the weight by the price and take half the product, cutting off three decimal places. 44. To find the area of a right-angled triangle, multiply the base by the perpendicular and take half the product. 45- To find the circumference of a circle, multiply the diameter by 3.1416. 46. To find the area of a circle, multiply the square of the diameter by .7854. 47^ To find the area of the surface of a globe multiply the square of the diameter by 3.1416. 48. To find the solidity of a globe, multiply the cube of the diameter by .5236. 49. To find the area of a cylinder multiply the area of the base by the length. 50. To find the hypothenuse of a right-angled triangle, find the sum of the squares of the sides and extract the square root. 51. To find the diagonal of a square, multiply the side by 10, diminish this by one per cent, of itself, and divide the remainder by 7. 5-2. To find the amount of lumber in a log, making proper al- lowance for waste : from the square of the diameter in inches subtract 60; multiply the remainder by half of the length in feet, and point off the right-hand figure. 53. To reduce logs to square timber, multiply the square of the diameter in inches by the length in feet ; take one-third of the product, and point off two figures. The result will be cubic feet. 54- To find the amount of grain in a bin, take four-fifths of the number of cubic feet. 55- To find the number of acres in a rectangular piece of land, multiply the length in rods by the breadth in rods, and divide -by i6p. 284 SHORT-CUTS IN FIGURES. S<> To find the capacity of a vat or cistern, multiply the square of the diameter in feet by the depth in feet, and this product by 5^. The result will be in gallons. 57* To find the capacity of a square tank, multiply the number of cubic feet by 7^, and you will get the result in gallons. 58. To square any number of two figures, square the units; take twice the product of the tens by the units, then square the tens. 59 To square any number of nines. Begin on the left hand and write as many nines less one, as there are nines in the given num- ber, then write an 8, then as many ciphers as there are nines, then write one. Thus the square of 999 is 998,001. 60. Any number is divisible by three if the sum of its digits is divisible by three. 61. Any number is divisible by four if it ends with two or more ciphers, or if the number expressed by its two right-hand figures is di- visible by four. 62. Any number is divisible by five if its right-hand figure be five or a cipher. 63. Any number is exactly divisible by 7, n and 13, if the units' period and the thousands' period are the same. 64. The product of all the prime factors of a number equals that number. 65. The product of the greatest common divisor and least com- mon multiple of two numbers equals the product of the two numbers. 66. To multiply any two small numbers, each of which end in one-half, to the product of the whole numbers, add half their sum, plus i^. 67. When (in Rule 66) the sum is an odd number, take half the next number below it, and the fraction in the answer will be ^. 68. To multiply any two numbers having the same fraction : to the product of the whole numbers, add the product of their sum by the fraction ; to this add the product of the fractions. 69. A square number multiplied by a square number produces a square number. 70. Any number is divisible by nine if the sum of its digits is divisible by nine. SHORT-CUTS IN FIGURES. 7i To multiply any two numbers such as 86 by 84, where the first numbers are the same and the second numbers add to 10 simply say 4 times 6 are 24, carry one, and 9 times 8 are 72, putting down 7,224 as the product. 72. Here is a very excellent rule for finding the area of a trian- gle when the three sides are given : From half the sum of the three sides subtract each side separately, multiply the half-sum and the three remainders together; the product will be the area. 73 To find the volume of a solid ring, multiply the area of cir- cular section of the ring by the length of the ring. 74- To find the sum of any number of numbers in arithmetical progression, as 2, 4, 6, 8, 10, etc., i, 2, 3, 4, 5, etc., 3, 6, 9, etc., add the first to the last and multiply half the sum by the number of numbers. 75. (a b) (a+b)=a 2 b 2 . 76. To find the diagonal of a cube multiply its side by the square root of 3. 77 The diameter of a circle multiplied by .8862 is equal to the side of an equal square. 78. One half the sum of two numbers plus one half their difference is equal to the larger number, and one half the sum minus one half the difference is equal to the smaller number. 79. The square of the sum of two numbers minus the sum of their squares is equal to twice their product. 80. The difference of the squares of two numbers divided by the sum of the numbers is equal to the difference between the numbers. 81. To find the volume of a pyramid or cone multiply the area of the base by one third of the altitude. 82. To find the volume of a cylindrical ring multiply the ful diameter of the circle formed by the square of the thickness, and that product by 2.4674. 83. To estimate the weight of coal in any given space, multiply the contents in cubic feet by 54 for anthracite, or by 50 for bituminous coal, and the product will be the weight in pounds. 284 SHORT-CUTS IN FIGURES. 56. To find the capacity of a vat or cistern, multiply the square of the diameter in feet by the depth in feet, and this product by 5^. The result will be in gallons. 57. To find the capacity of a square tank, multiply the number of cubic feet by 7^, and you will get the result in gallons. 58. To square any number of two figures, square the units; take twice the product of the tens by the units, then square the tens. 59 To square any number of nines. Begin on the left hand and write as many nines less one, as there are nines in the given num- ber, then write an 8, then as many ciphers as there are nines, then write one. Thus the square of 999 is 998,001. 60. Any number is divisible by three if the sum of its digits is divisible by three. 61. Any number is divisible by four if it ends with two or more ciphers, or if the number expressed by its two right-hand figures is di- visible by four. 62. Any number is divisible by five if its right-hand figure be five or a cipher. 63. Any number is exactly divisible by 7, n and 13, if the units' period and the thousands' period are the same. 64. The product of all the prime factors of a number equals that number. 65. The product of the greatest common divisor and least com- mon multiple of two numbers equals the product of the two numbers. 66. To multiply any two small numbers, each of which end in one-half, to the product of the whole numbers, add half their sum, plus #. 67. When (in Rule 66) the sum is an odd number, take half the next number below it, and the fraction in the answer will be ^. 68. To multiply any two numbers having the same fraction : to the product of the whole numbers, add the product of their sum by the fraction ; to this add the product of the fractions. 6p A square number multiplied by a square number produces a square number. 70. Any number is divisible by nine if the sum of its digits is divisible by nine. SHORT-CUTS IN FIGURES. ?' To multiply any two numbers such as 86 by 84, where the first numbers are the same and the second numbers add to 10 simply say 4 times 6 are 24, carry one, and 9 times 8 are 72, putting down 7,224 as the product. 72. Here is a very excellent rule for finding the area of a trian- gle when the three sides are given : From half the sum of the three sides subtract each side separately, multiply the half-sum and the three remainders together; the product will be the area. 73- To find the volume of a solid ring, multiply the area of cir- cular section of the ring by the length of the ring. 74 To find the sum of any number of numbers in arithmetical progression, as 2, 4, 6, 8, 10, etc., i, 2, 3, 4, 5, etc., 3, 6, 9, etc., add the first to the last and multiply half the sum by the number of numbers. 75. (a b) (a+b)=a 2 b 2 . 76. To find the diagonal of a cube multiply its side by the square root of 3. 77. The diameter of a circle multiplied by .8862 is equal to the side of an equal square. 78. One half the sum of two numbers plus one half their difference is equal to the larger number, and one half the sum minus one half the difference is equal to the smaller number. 79- The square of the sum of two numbers minus the sum of their squares is equal to twice their product. 80. The difference of the squares of two numbers divided by the sum of the numbers is equal to the difference between the numbers. 81. To find the volume of a pyramid or cone multiply the area of the base by one third of the altitude. 82. To find the volume of a cylindrical ring multiply the ful diameter of the circle formed by the square of the thickness, and that product by 2.4674. 83. To estimate the weight of coal in any given space, multiply the contents in cubic feet by 54 for anthracite, or by 50 for bituminous coal, and the product will be the weight in pounds. 286 SHORTHAND MULTIPLICATION. SHORTHAND MULTIPLICATION. Under this heading we give a full and complete explanation of some peculiarities of figures which have been taken advantage of in framing rules for shortening the process of multiplication. Multiply 34 by 36. Note these numbers. The left-hand figures are the same and the right-hand figures add to ten. To find the product, say 6 times 4 are 24, putting down both figures; carry one, and say 4 times 3 are 12, putting down both figures. ' Always Note the numbers to which this rule applies. 13 14 15 17 16 15 In the teens. 21 22 23 24 25 29 28 27 26 25 In the twenties, 31 32 33 34 35 39 38 37 36 35 In the thirties. 41 42 43 44 45 49 48 47 46 45 In the forties. 51 52 53 54 55 59 58 57 56 55 In the fifties. 61 62 63 64 65 69 68 67 66 65 In the sixties. 71 72 73 74 75 79 78 77 76 75 In the seventies 1 OO QO GiA OR Oas OO O4 OO 9 88 87 86 85 In the eighties. 91 92 93 94 95 99 98 97 96 Jg. In the nineties. SHORTHAND MULTIPLICATION. 287 This rule applies also to numbers of more than two figures each. Note the following examples : 295 295 392 393 491 792 996 398 397 499 798 994 The difficulty, if any, will arise in multiplying the two left-hand figures of each, for instance, in 132 by 138, we say 8 times 2 are six- teen, then carry one, and 14 times 13 are 172, giving the answer 17,- 216. When we carry one to 39, for instance, we make it 40, and the product of 40 and 39 is easily obtained by mental process. Multiply 66 by 82. Here the two figures of one product are the same and the two figures of the other product add to ten. The rule is the same. Twice 6 are 12, put down both figures ; carry one, and 9 times 6 are 54, giving the product 5,412. Note a few of the numbers to which this rule applies : 22 22 22 73 64 55 28 82 37 22 22 22 33 33 33 91 1_9 46 73 37 82 44 55 66 77 88 99 91 82 73 64 46 28 Multiply 31 by 68. The complement of a number is the number which added to it makes an even ten, or an even 100, or an even 1,000. Thus the com- plement of 8 is 2, of 93 is 7, etc. The complement of 8 is 2. Now suppose for the 8 in this exam- ple we put 2 and then by cross-multiplication we have 3X2=6X1. 288 SHORTHAND MULTIPLICATION. Q -J Whenever (by the use of one complement) the products by cross-multiplication are equal the same rule applies. In this example say 8 times i are 08, carry one and say 7 times 3 21 Oo are 21, which gives as product 2,108. This adds a very large number of numbers to our list. Note the following, and apply the rule to each : 13 13 24 31 14 28 17 24 16 26 18 48 22 21 21 22 23 18 19 48 67 46 44 23 24 39 24 26 36 61 34 24 42 31 26 48 46 69 42 63 84 26 27 27 29 29 29 31 31 32 32 48 34 68 97 66 94 34 62 36 68 64 96 93 41 42 36 38 38 39 88 42 43 46 86 63 84 86 84 61 47 48 48 82 93 96 12 88 62 49 68 66 26 55 97 This application of this rule holds good also with numbers of three figures each, or numbers where one factor contains three figures and the other two. It holds good also in fractional numbers. Note the follow- ing examples : 128 146 126 328 246 94 77 86 88 49 1O5 147 246 143 124 127 43 53 62 121 151 242 84 92 443 186 SHORTHAND MULTIPLICATION. 289 This same simple rule applies also to fractional numbers, more es- pecially to numbers where only one of the factors is fractional. Note the following examples, and in finding the product, say 6^ times 7 are 45j/2 and put down the whole product; then carry one, and say 5 times 8 are 40, giving the answer 4045^. 87 93 42 65 49 46^ 481 3J& 371 172 74 34 63 37 98 38? 701 3&z 171 37J, The author does not claim that this application is practical, for the reason that the application of the rule cannot be seen at a glance. It shows, however, to what extent this very simple discovery can be car- ried. The rule applies also in quite Urge numbers. Note the follow- ing : 276 843 1127 2568 362 1126 1282 2243 Multiply 76 by 36. 36 ^is is a modification of the same rule. Note that the 76 left-hand figures add to ten and the right-hand figures are 2736 ^ ie same> The process is as follows: 6X6=36 7X3+6=27 Instead of carrying one, you carry one of the unit numbers (in this instance six), and add it, not to either of the tens, but to their product. Note the following examples : 26 25 24 23 22 21 86 85 84 83 82 81 29 31 _ _ 89 71 _ 34 35 36 37 3 74 75 76 77 7 SHORTHAND MULTIPLICATION. 41 42 43 44 45 46 61 62 63 64 65 66 47 48 49 51 52 53 67 68 69 51 52 53 54 55 56 57 58 59 54 55 56 57 58 59 The same rule applies to larger numbers. In the following ex- amples add double the unit figure. Always add double when the sum of the tens 20 ; when 30, add three times the unit number, and so on. 126 6X 6=36 86 8X12+ (double 6)=1O8 1O836 133 134 135 136 137 73 74 75 7Q 77 142 143 144 145 146 62 63 64 65 68 151 153 154 157 159 51 53 54 57 59 162 163 165 167 48 43 45 47 183 184 185 186 18 .25 .26. Multiply 32 T>y 52. Here the left-hand figures add to 8, and the right-hand figures are the same. Instead of saying twice two, take the complements 8 and 8 and multiply them for the first 32 8X8 = 64 two figures of the product. 52 5X3 + 2 116 Find the remaining figures as 1664 in the last rule ' only subtract one in every case from your SHORTHAND MULTIPLICATION. 29! result. Five times 3 plus 2 less i equals 16. Apply this modification to the following examples : 23 24 25 26 27 28 63 64 65 66 67 68 32 33 34 35 36 49 52 53 54 55 56 59 41 32 43 44 45 47 41 42 43 44 45 47 13 14 15 16 17 18 73 74 75 76 77 78 The same rule applies to larger numbers. When the sum of the ten? is 18, add double one of the unit numbers; when 28, add three times the unit number, and so on. Note the following examples : 124 125 123 128 127 64 65 63 _68 67 231 232 233 234 239 51 52 53 _54 _59 542 643 744 849 947 _42 _43 44 49 47 When the sum of the left-hand figures is 5 and the right-hand figures are alike, add one-half of the like number to the product of the left-hand numbers, as : If the right-hand numbers 36 6X6 = 36 are odd, it will be impossible 26 3X2+ (2 of 6) :=: 9 to take an even half. The Q36 difficulty can be overcome by making the half a decimal wc\& adding it in. In this example, if it were 37 by 27, the product would be 999. Here we have 7 times 7 are 49, and 50 (the decimal of 3}^ or 3.50) makes 99. If the sum of the left-hand figures is 15, add one and one-half times the equal number; if the sum is 25, add two and 29 2 SHORTHAND MULTIPLICATION. one-half times apply this rule the equal to each : number. Note the following examples, and 32 22 34 24 38 28 31 21 33 23 35 25 37 27 45 15 47 17 46 16 48 49 19 86 84 85 83 82 88 76 74 75 73 72 78 63 64 65 66 67 62 93 94 95 96 97 92 The same rule applies to numbers of more than two figures each. Note the following: 135 127 172 169 238 25 37 182 199 328 When the sum of the left-hand figures is 3, or 13, or 23, proceed as when 5, or 15, or 25, only deduct one from your left-hand total. That is, when you find the product of the left-hand numbers, deduct one, then add as before. There are many other modifications, rules and exceptions. These, however, are the most practical and will be found of great benefit to all who give them study. MECHANICS ARITHM1 NOTES AND DEFINITIONS. A straight line is a line which does not change in its direction. Parallel lines are lines which always remain the same distance from each other, however far they may be produced. The opening between tw.o straight lines drawn from the same point is called an angle. When two straight lines cross each other so as to form four equal angles, the angles are called right angles. An angle greater than a right angle is called an obtuse angle, and an angle less than a right angle is called an acute angle. A surface has length and breath without thickness. A plane sur- face is a level surface. The amount of space over which a surface ex- tends is called its area. A surface bounded by four straight lines, and having four right angles, is called a rectangle. A rectangle is called a square when its four sides are equal. The line joining two opposite corners of a square or rectangle is called the diagonal. A plane figure bounded by three straight lines is a triangle. The base of a triangle is the side on which it is supposed to rest. The altitude of a triangle is the perpendicular distance from the angle opposite the base to the base, or to the base produced. A four-sided plane figure having no two sides parallel is called a trapezium. The perimeter of a plane figure is the sum of its sides. A circle is a plane figure bounded by a curved line, every point of which is equally distant from a point within, called the center. The boundary line is called the circumference. A straight line (293) MECHANICS' ARITHMETIC. drawn through the center and terminating at the circumference on both sides is called a diameter. A straight line drawn from the center to the circumference is called a radius. A solid has length, breadth, and thickness, or height. A cube is a solid figure contained by six equal squares. A rectangular solid is a solid figure contained by six angular surfaces. The volume of a rectangular solid is the portion of space which it occupies. A solid bounded by a curved surface, every point of which is eq::?,% distant from a point within, called the center, is called a globe, or sphere. A cylinder is a solid figure described by the revolution of a rec- tangle about one of its sides, which remains fixed. An uncut lead- pencil is an example. Measurement Tables. Linear measure is used in measuring lengths and distances. The table is as follows : 12 inches . . . . = i foot ...//. 3 feet ..... = i yard . . . yd. 5^ yards (16^ feet) = i rod . . . rd. 320 rods ..... = i mile . . . mi. Remember that i mile equals 1,760 yards. Surveyor's linear measure is used by surveyors in measuring land and distances. The table is as follows : 7.92 inches . . . = i link ' . . . /. 25 links . . . . r= i rod . . . rd. 100 links (4 rods) . = i chain . . . ch. 80 chains . . . . = i mile . . . mi. Remember that a chain equals 66 feet or 4 rods. Surface measure is used in measuring surfaces. The table is as follows : 144 square inches 9 square feet 30^ square yards 1 60 square rods 640 acres square foot . sq. ft. square yard . sq. yd. square rod . sq. rd. acre . . . A. square mile . sq. mi. A square measuring 208.71 -f feet on each side contains i acre. MECHANICS' ARITHMETIC. 295 Surveyor's square measure is used by surveyors in computing the area of land. The table is as follows : 625 square links . . = i square rod . sq. rd. 1 6 square rods ... = i square chain . sq. ch. 10 square chains . = i acre . . . A An acre equal 4,840 square yards. Cubic Measure is used to measure the contents or volume of solids. The table is as follows: 1728 cubic inches . = i cubic foot . . cu.ft. 27 cubic feet . . = i cubic yard . cu. yd. 128 cubic feet . . = i cord . . . cd. Rectangular Planes. The area of any rectangle is expressed by the product of the length and the breadth. Before multiplying it is necessary that both dimensions be expressed in units of the same denomination. In the same manner, if a rectangle be 3 feet long and 3 feet broad, its area is 12 square feet ; that is, the rectangle might be divided into 12 equal figures, each being a foot long and a foot broad. Rectangular Solids. The volume of a rectangular solid is expressed by the product of the length, breadth, and height, when the three dimensions are ex- pressed in units of the same denomination. To measure a solid block, or to find how much a box, a bin, or * cellar will contain, we have to ascertain, by actual measurement, its length, breath, and depth, and with these three dimensions find the volume by simple multiplication. Thus, if we desire to find the num- ber of cubic yards of earth removed in digging a cellar 40 feet long, j8 feet wide, and 10 feet deep, we multiply 40, 18, and 10 together, jind get 7,200 feet, or 266^3 cubic yards. "Wood. Wood cut in lengths of 4 feet is called cord wood. A pile of cord wood 4 feet high and 8 feet long, or equal bulk of other material, is called a cord. Thus, a cord of wood is 8 feet by 4 feet by 4 feet, and contains 128 cubic feet. To find the number of cords in a pile of wood or bark piled in the form of a rectangular solid, find its solid contents or volume in cubic feet, and divide the result by 128. 296 MECHANICS' ARITHMETIC. Lumber. Lumber, as the term is used here, includes all kinds of sawed boards, planks, scantlings, etc. A foot of lumber is i foot long, i foot wide, and i inch thick, and is used as the unit of lumber measurement. The term scantling is given to lumber 3 or 4 inches wide, and from 2 to 4 inches thick. Joist is usually narrow and deep. Lumber heavier than joist or scantling is called timber. Thick boards are called planks. The usual outside covering of wood houses is siding. All lumber less than i inch in thickness is considered inch lumber in measuring. In measuring the width of a board a fraction greater than a half- inch is called an inch, and if less than a half it is rejected. A board 5^3 inches wide would be considered 6 inches wide. The price of lumber is usually quoted at a certain rate per thou- sand feet. A board 14 feet long, 12 inches wide and i inch in thickness would contain (14X12X1) -*- 12, or 14 feet. A board 10 feet long, 16 inches wide, and 3 inches thick, would contain (10X16X3) -*- 12, or 40 feet. Note that in measuring 1 2-foot lumber, i inch or less in thick- ness, the width of the board in inches is the number of feet it contains. Stone-work. A cord of stone is the same size as a cord of wood. In esti- mating stone-work no smaller part than quarter cords is allowed. A cord of stone will make about 100 cubic feet of wall. In estimating the amount of stone or the cost of the mason- work, it is customary to measure around the outside of the wall, and make no allowance for openings except they are large. Three bushels of lime and a cubic yard of sand will lay a cord of stone. A perch of stone- work is i rod long, i ^ feet thick, and i foot high : it contains 24^ cubic feet. A fractional part of a perch is reckoned as a perch. Brick-work. Bricks vary so much in size and style that a table of exact dimensions is impracticable. Ordinary bricks are 8^ inches long, 4 inches wide, and 2^ inches high. It is sufficiently accurate to reckon 20 bricks to the cubic foot laid dry. MECHANICS* ARITHMETIC. In half-brick walls, such as are built in veneering wooden houses, each brick, with the mortar required to lay it, has an external surface of 3 inches by 9 inches, or a brick is required for each 27 inches of sur- face. In estimating material, corners are measured once, and allow- ance is made for doors and windows. In estimating labor, the cor- ners are measured twice ; that is, the outside measurement is taken and usually one-half is deducted for openings. Shingling. Ordinary shingles have an average width of 4 inches, and are generally laid 4 inches to the weather. A bunch of shingles contains a quarter of a thousand. It is 20 inches wide, and has 25 courses on each side. Allowing for waste, 1,000, or a square of shingles, will lay 100 square feet, 4 inches to the weather. Jjathing. A bunch of laths contains 50 laths. Laths are 4 feet long, \y 2 inches wide, and are laid three-eights of an inch apart. Allowing for waste, contractors reckon that a bunch of laths will cover 3 square yards. Lathing is estimated by the square yard. Only one-haif the sur- face of openings is deducted. Plastering. Plastering is estimated by the square yard. Only half the sur- face of the openings is charged. Painting. Painting and kalsomining are estimated by the square yard. Wall-paper. Wall -paper is sold only by the roll, any part of a roll being counted as a whole one. American paper is 18 inches wide, and has 24 feet in a single roll, and 48 feet in a double roll. Paper-hangers measure the distance around the room in feet and deduct 3 feet for each door and window. The difference, divided by i^, gives the number of strips. The exact cost of papering a room can be ascertained only by taking account of the number of rolls actually used in doing the work. 2Q8 " MECHANIC*' ARITHMETIC Miscellaneous Rules. 1. To find the circumference of a circle multiply the diameter by 3-MI59- 2. To find the diameter of a circle, divid* the circumference by 3 HI$* 3. When the three sides of a triangle are given, to find the area : From half the sum of the three sides subtract each side separately. Multiply the half-sum and the three remainders together, and extract the square root of the product. 4. To find the area of a circle, multiply the circumference by one-half the radius. 5. To find the surface of a sphere, multiply the circumference by the diameter. 6. To find the contents of a sphere, multiply the surface of the sphere by one-third-of the radius. 7. To find the hypothenuse of a right-angled triangle, add the square of the base to the square of the perpendicular, and take the square root of the sum. Drill Exercises for Home Students. 1. How many inches are there in 2^ rods? 2. How many inches are there in a chain ? 3. How many links are there in 1,760 yards? 4 What is the cost of a cable 1,230 feet long at 95 cents per yard? 5 The hold of a vessel is 30 feet deep, and her topmast is 90 feet high. If she sinks in 16 fathoms of water, how much of her rigging will be visible ? 6. What is the cost of 35 miles of telephone wire at 40 cents a pound, supposing a pound to stretch 20 feet? ? Find the cost of 80 rods of barbed wire fencing of five wires, at 2 cents per yard. 8. What will it cost to survey 36 miles of railway at $i.i2}4 P er chain ? 9. Find the cost of carpeting a stairway of 24 steps, each 12 inches MECHANICS* ARITHMETIC. 299 wide, and having a rise of 8 inches, allowing 2 feet extra for the pro- jection of the steps, the carpet costing $1.25 per yard. 10. How many telegraph poles placed 60 yards apart will be re- quired in 75 miles? 11. How many square feet are there in a square chain? 12. Find the cost of 20 square rods of sodding at 3 cents per square foot. 13. What will 3,200 square rods of land cost at $1.25 per square chain ? 14* Find the cost of waxing a floor 24 feet long by 12 feet 9 inches wide, at 75 cent per square yard ? 15. How many yards of cotton i* yards wide will it take to line 15 yards of cloth ^ of a yard wide ? 16. How many bricks, each 9 inches by 4)^ inches, will be re- quired to pave the floor of a basement 36 feet by 27^ feet ? 17. How many cubic inches are there in a cube whose edge is 4 feet? 18. If a block of stone 5 inches long, 3 inches wide, and 2 inches high weighs 44 ounces, what will be the weight in pounds of a cubical block of the same kind of stone whose edge is 2^ feet? 19. What weight of water will a rectangular tank contain, the length being 8 feet, breadth 5^ feet, and depth 7 feet ? A cubic foot of water weighs 62^ pounds. 20. How many cords of wood are there in a pile 16 feet long, 12 feet wide, and 6 feet high ? 21. What is the value of a pile of wood 120 feet long, 16 feet wide, and 8 feet high, at $4.50 per cord ? 22. What is the value of a pile of tan-bark 120 feet long, 36 feet wide, and 12 feet high, at $6.10 per cord? 23. A sleigh upon which four-foot wood is piled is 12 feet long. How high should the wood be piled to make i^ cords? 24. What is the value of a township of land at the rate of $80 for each half-section ? 25. How many acres are there in the right-angled triangle formed 300 MECHANICS' ARI'.UMETIC. by joining the opposite angles of a rectangular field 40 rods long and 25 rods wide ? 26. From a lot 40 rods square I sold 40 square rods. What is the value of the remainder at $120 per acre? 27. How many feet of lumber are there in a board 12 feet long, 6 inches wide, and i inch thick ? 28. Find the number of feet of lumber in a plank 16 feet long, 14 inches wide, and 2 inches thick. 29. How much inch lumber will laj floor 16 feet by 20 feet? 3<> How many feet of lumber in &> .stick of timber 1 6 feet long, and 9 inches square ? 31. How many feet of lumber in 40 pieces of siding, each 12 feet long, 6 inches wide, and half an inch thick? All lumber less than i inch in thickness is considered inch lumber in measuring. 32. How much lumber is there in 40 two-by-four scantlings, each 12 feet long ? 33- Find the cost of 1,274 feet of lumber at $18 per thousand. 34 Find the cost of 20 planks, each 16 feet long, 10 inches wide, and 2^ inches thick, at $15 per thousand. 35. Find the cost of the inch lumber in a tight board fence 40 rods long and 6 feet high, at $10 per thousand feet. 36. Find the cost of an inch-board sidewalk, 4 feet wide, around the outside of a garden 200 yards by 90 feet, at $12 per M. 37 A feeding floor, 40 feet long, is laid with 1 6-foot planks 2^ inches thick. Find the cost at $11 per thousand. 38. If two-by-four studs are used, and they are placed 16 inches apart, how many feet of lumber are there in the studd ; ng of a wall 20 feet long and 1 2 feet high ? 39 If 4X5 rafters are used, and they are placed 30 inches apart, how many feet of lumber are there in the 20-foot rafters of a double- roof 40 feet long ? 40. A pile of ordinary bricks is 8 feet 6 inches high, 14 feet long, and 15 feet wide. What is the pile worth at $12.50 a thousand? OSTSCRIPT NEW YORK POINTERS ON MARGIN TRADING. Select an honest broker. There is no reason why bonds and shares should not be publicly dealt in and in large quantities, as well as dry goods, corn, or cotton. But, unfortunately, few stock dealers confine their transactions to ordinary legitimate business. The members of stock exchanges are divided into two classes those who execute com- missions for others, and those who deal on their own account. Among the latter are the boldest and sharpest speculators of the day. All stocks are not quoted. You will look in vain for the stocks of dozens of corporations whose securities are among the choicest investments. The reason is very evident. The largest profits (to the speculator) are most often made out of the most abominable rubbish. Profits are made upon fluctuations. To those who are anxious to try "stocks," we say go carefully. As a rule it is safer to earn money than to make it. Let us suppose for illustration that you wish to speculate in wheat. You order your broker to buy, say 10,000 bushels. He asks for a cash deposit of 5 cents a bushel, or $500. You ask him not to buy until the price reaches a certain limit, and if the price does not drcp to the figure you quote, you either change your limit or withdraw your order. Suppose he buys your wheat at 67^. He will charge you y& cent per bushel, so that the wheat will actually cost you 67^ cents. If the market continues about the same you are not asked to put up any more margin. If the price should drop your broker will immediately call for more margin. That is to say, the margin in any case must be sufficient to protect him against loss. If the price advances you can sell out when you think it has reached its highest point. The broker will charge you the same commission for selling as for buying. If you order* your trade closed out below the purchase price you will lose the differ- ence between the buying and selling price upon each bushel including POSTSCRIPT NOTtt. the brokerage and also the interest at a nominal rate for the time which the broker carried the trade for you. The interest is charged upon the amount of money which the broker puts up. If you fail to respond to your broker's call for margins and the market declines to the point where your margins are exhausted, or nearly so, the broker will be com- pelled to close your trade out in order to save himself from the loss which would occur on a further decline. If your trade is closed out exactly at the exhaust price you lose all the margins you have put up. A deposit must be kept with your broker larger than the loss that would be shown by all your trades if they were closed at the market price. Failure to do this gives your broker, by the rules of the exchanges, the privilege of closing all your trades to prevent a loss. As a rule people wish to buy when the market is rising and are obliged to sell when the market is falling. In ordering your broker to buy, state that your order is " open " if you wish it to be considered good for more than one day. Note the following points : Bank Clearings. The total amount of checks on banks paid in a given day through the clearing house. This total indicates the volume of business done by the business community for the day. When business is active, clear- ings are large ; when dull, clearings are small. Bradstreets* This commercial agency makes a weekly veport on the world's finances and the movements of raw products. The speculator should be thoroughly familiar with such reports. Cable Reports. The Chicago Board of Trade receives daily advices as to the condi- tion of foreign markets from London, Liverpool, Antwerp, Berlin, and Paris. These are publicly posted for general information. A great many daily private reports are received by commission houses from their foreign correspondents. Call Prices. See the chapter on Securities. Calls good until the close of the next regular session of the exchange are usually sold a $i per thousand bushels of grain. Calls good for a week are often sold at $1.25 per thousand, and the call price is furtherjfrom the market price than is POSTSCRIPT NOTES. 303 the case with daily calls. Calls on stocks vary in price according to the conditions. Future Delivery. Grain is stored in warehouses until needed for milling or shipment. When we speak of December wheat we mean wheat that is to be de- livered to the buyer in December. The carrying charges include stor- age, interest, and insurance, so that wheat sold for May delivery would necessarily bring a higher price than wheat sold for December delivery. Carrying charges are in favor of the short seller. When sold for im- mediate delivery it is known as cash grain. Commissions. Stock commission is usually ^ per cent, or $1.25 for 10 shares. Wheat commission is ^ c. per bushel or $1.25 per 1,000 bushels. Pork commission is 2^ c. per bbl., or $6.25 for 250 barrels. Lard is charged at the rate of 2 c. per 100 Ifos., or $21.25 f r 2 5 tierces. A tierce is a cask of lard containing 340 pounds. Cotton commission is 2 points per 100 rbs. or 10 cents per bale. Most of the commission houses deal in futures for their customers. Futures* Buyers of cash grain protect themselves against possible loss by selling an agreed amount for future delivery in some'general market, such as Chicago. Such contracts are called futures because they do not terminate until some designated month in the future. These trans- actions pass from hand to hand and may be turned over hundreds and thousands of times in an active market before maturity, and this is called dealing in futures. Nearly all speculative operations are in futures. Seller's Option. All future contracts are at the sellers' option to deliver the grain on any business day of the delivery month. Therefore the buyer must stand ready to take the grain on any day of the delivery month, or turn his contract over to someone else by selling out the first day of the delivery month. Split Trading. The name split is given to a transaction, one-half at one quotation and one-half at another. For instance, the quotation 53^-?^ means 304 POSTSCRIPT NOTES. that one-half of the quantity traded in was at 53^ and the other half at 53^. This quotation is just half-way between the two prices. Only an even number of thousand bushels can be traded in in this way, such as 2,000, 4,000, 10,000, etc. Good Delivery. A Stock which exactly fulfills the conditions of sale and is de- livered to the buyer in exact accordance with the rules of the stock exchange is known as " good delivery." If the shares offered are of an unacceptable issue, or the rules of the exchange are violated in any particular it is called " bad delivery " and the buyer can appeal to the Board. Storage Rates. Storage rates at Chicago are ^ c. per bushel for the first ten days, and % c. for each additional ten days or part thereof. This is what the elevator proprietors charge, but must not be construed to mean that this charge comes out of the country shipper. The rules of the Board of Trade .provide that ^ c. storage must go with the first purchase of grain, and this is accepted by the buyer, so that the country shipper has no storage to pay, providing he has his grain sold within the first five days after arrival, as the receipts must have five days to run free of additional storage the first charge being for ten days. Should the country shipper prefer to have his grain held until the five days have elapsed, then he is charged y c. storage, but has the right to hold the grain ten days more, thus virtually having obtained fifteen days storage for his grain for ^ c. Each additional ten days will cost y$ c. more, and so on. The point which many country shippers have not under- stood, and frequently inquire about, is the first ^ c. storage. If the grain is sold on arrival or within the first five days thereafter, the coun- try merchant pays no storage. There are three names applied to these storage receipts. The gilt edge are under four days old and have seven days to run before the first storage payment of ^ c. per bushel is ex- hausted. The regular are five days old. The short receipts are those the first limit of which is nearly exhausted. Shippers should know also that interest is charged on all advances made on property handled on the Chicago Board of Trade ; also the approved rate of insurance. POSTSCRIPT NOTES. HOW Bid CONCERNS KEEP THEIR BOOKS. I have made a careful study of the bookkeeping methods in opei ation in several large concerns including the great retail st< re of John Wanamaker, Philadelphia. I find that the actual methods in use and the old time methods taught in the average business school are as widely different as are the new department stores of great cities and the general store of a country district. The tendency is along the line of labor saving devices. In Wanamaker' s store, for instance, where there are perhaps six thousand clerks, every salesman has a pad of blank forms upon which original records are made. These forms are so printed and arranged that they can be used for almost any kind of an order. If the goods are delivered and paid for at once, part of the slip goes with the cash and finally to the audit department, while another part goes with the goods and is wrapped up in the parcel. If the goods are paid for, but to be delivered, one part of the slip will follow the goods to the shipping department, where the particulars are copied to the parcel clerk's book and checked off when the parcel is delivered next day, perhaps at a country house ten or fifteen miles out of town. If the goods are to be delivered C. O. D. the same slips are used, but the entire slip is sent to the C. O. D. department, where the proper record is made before the goods are wrapped for shipping. If the goods are to be charged the same slips are used, and records are made almost similar to those made for the C. O. D. sales. All these record slips are finally collected and checked off in the audit depart- ment. Entries are made in the sixty-five large credit ledgers directly from the credit slips, and from these ledgers accounts and statements are made out. The original slips are all filed by days and ledgers and names so that any particular slip of any old date can be looked up im- mediately when needed. This method refers simply to the sales de- partment, and the record is the same no matter whether the sale is a spool of thread, a thousand dollar lamp, or the complete furnishings for a hundred thousand dollar house. Such a thing as a journal is unknown in the best houses and only business college trained bookkeepers understand what is meant by the antiquated system called journalizing. The object of bookkeeping in any establishment is primarily to know the proprietor's financial condition what he owes, what he owns, what is due him. If goods are sold the record should show (i) that the goods are actually delivered, 2) that the correct charge is made 306 POSTSCRIPT NOTES. against the buyer, (.3) that he receives proper credit when the account is paid. Modern bookkeeping is trying to reach these ends in the shortest possible way and with the least expenditure of time and labor. The Preparation of Accounts for the Court. The first thing an administrator has to do is to file an inventory which should include the personal assets of the decedent. A life insurance policy, for instance, in favor of a man's wife should not be included in his estate; the proceeds belong to the wife exclusive of all creditors. Rents should not be introduced into the administrator's in- ventory. Although rents, when collected, are personal estate, yet if a man dies intestate, and there are rents due him uncollected they go to his heirs. An executor differs from an administrator in that he derives his power from the will. The administrator has his authority from the law, which appoints him, the decedent having died intestate; the executor has his authority from the will, which has made him executor. An executor does not usually have to give security; such is not the case with an administrator. The function of an administrator is to collect and distribute; the function of a trustee is to hold. It isn't a good plan to make any distribution before the court orders you to do so. If you do pay, you should secure yourself by taking refunding bonds. If you should pay a creditor in full and the estate fails to produce enough to pay all in full, you are liable to the other creditors for the amount paid over and above his pro rata share. You must remember also that the widow is entitled to her exemption of $300, or whatever the law grants, in advance even of the undertaker or of the doctor. The chil- dren are entitled to an exemption, in the absence of a widow, whether they are minors or not, if they are dependent. BOOK-KEEPING It is much more important to learn the principles that govern cor- rect systems of bookkeeping, than it is to learn any particular form according to which books should be laid out. An intelligent yotJng business man may learn bookkeeping by acquiring the fundamental principles of scientific accounting, and draw up his own forms in ac- cordance with those principles. For this reason, a knowledge of the principles and methods that are used by the best bookkeepers in any business will enable any one to vary the forms so as to apply them to any other business. In general, those forms are best which (i) require the least copying, (2) the fewest entries, (3) the least ruling; (4) which require the books of original entry to be posted directly to the ledger, and (5) in which the journalizing is done by means of ruled columns. (6) The best forms also should facilitate, as much as possible, taking balances and ascertaining losses and gains. If the intelligent book- keeper criticises his forms on these six lines and finds them satisfactory, while they show all the results that the proprietors wish to ascertain, he may be satisfied with his work. The following special points are worth noting : Renewed Notes. When a note is renewed the best way to record it is simply to make the memorandum in the bill-book, marking out the old and entering the new. If something is paid on the note, a journal memorandum may be made, or if the note has been discounted by us, and we are obliged to take it up, the complete entries had best be made. Branch Houses. The books of branch houses should be kept the same as though the branch were independent, excepting that the parent house is credited with the net investment. When closing the books debit or credit the parent house with the net loss or the net gain. Daily reports should be required. [307] 308 MODERN BOOKKEEPING IDEAS. Trial Balance Errors. If the difference is in round numbers, as $100 or $10,000, the error is likely one of addition. If the difference is divided by 9, the error may be caused by the transposition of figures, as 72 for 27. If the difference is divided by 2, the error may have arisen from posting an item representing just one- half the difference to the wrong side. Change of Bookkeepers. In taking a set of books from another bookkeeper, begin by taking a trial balance to ascertain whether or not the books balance. They mitst balance before you can proceed. C. O. D. Sales. When we ship goods C. O. D., or ship them and draw at sight as soon as they are shipped, we charge the person to whom shipped in a special C. O. D. book, and credit him when the money is received. Price Book. The wholesale dealer uses a price-book in about the same way that a manufacturer would use a cost-book. The illustration given in this chapter is taken from a book in use by a wholesale hardware merchant. The book should be alphabetically indexed and the articles entered alphabetically. Pocket size price-books are manufactured for the use of salesmen. In these the cost and selling prices are expressed in letters or other marks. Customers' Accounts. The new form of retail ledger shown on page 323 is being used quite generally by some western houses. It has some advantages. The space at the right gives opportunity for entering records of the cus- tomer's credit. Under \.\\Q folio heading is entered the page or number of other records giving the particulars of the debit or credit. The ac- count can be kept in compact form and is easily checked off. Merchandise Stock Register. Many large concerns keep a stock register for each department. Such a register will show the daily condition of the stock. Note the illustration given on page 320. A similar register is kept by large furniture dealers showing at the end of each day the exact number of pieces of each particular kind of furniture remaining on hand. MODERN BOOKKEEPING IDEAS. 309 Purchase Journals. For manufacturing concerns (page 321) contain special columns for the various kinds of raw material used in the factory, and for the principal sources of outlay or expense in conducting the business. The number of columns will depend largely upon the character of the business. Wanamaker Credit Ledger. The style of credit ledger in use in one of the largest department stores in the country is shown on page 314. Notice that there are two columns for the items to be charged and one column for the credits. The complete items are entered and the bills are made out directly from the ledgers. Daily Cash Balance Book. In a large concern it is not convenient to balance the cash in th~ cash book and a special book is necessary. The form on page 315 shows the ruling of a cash balance book in use in a Philadelphia house. The gross cash items are brought from other books, including the bank book and check book, and are entered in this book at the close of each day. Instalment Accounts. Within a few years a very large number of concerns have engaged in what is known as "selling on instalments." The property appar- ently sold, whether it be worth $1.00 or $1000.00, is simply leased, with the understanding that the weekly or monthly payments of rent are to credited upon the general purchase price until the entire amount has been met. An illustration of an instalment register is given on page 317. The other books necessary will depend largely upon the general character of the business. Law Ledger. A new form of ledger for lawyers is shown on page 313. It will be readily understood by any person familiar with law accounts. A similar form of ledger could be used by a small manufacturer. The column heading " docket" could be used for particulars of the order and the cost of material. Mail Order Register. See page 316. No explanation is necessary. There are thousands 310 MODERN BOOKKEEPING IDEAS. of concerns doing a successful mail- order business and many large retail houses find this department of their trade very profitable. Horizontal Sales Ledger. See page 319. For some kinds of business, particularly small jobbers, this form of ledger is considered specially desirable. If con- tinued across the double-page so as to represent a whole year, the entire condition of any account could be seen at a glance. Pay Roll. Note the pay-roll form on page 322. The particular advantage comes from the change columns. In these columns are entered the bills or silver necessary to pay each. Suppose the amount due to be $22.47. Now, to pay this amount, we need two $10 bills, one $2 bill, one 25- cent piece, two 10 cent pieces, and two i-cent pieces. Write 2 in the $10 column, I in the $2 column, I in the 25-cent column, 2 in the lo-cent column, and 2 in the i-cent column. Remember always to take the largest bills or coins possible. The check for wages should be written "Pay to the order of Pay Roll" and a memo, of the actual change needed should be pinned to it or written on the back. If when all the pay envelopes are filled the cash is over or short an error has been made, and some person is receiving either too little or too much. Stepladder Balance Sheets. When you see a bookkeeper making out an old fashioned step- ladder balance sheet, one of these things laid out like the maps of three new prairie towns printed on top of each other, put him down for a back number. A form of balance sheet is shown on page 324. It is complete enough for a railway of a city and is simple enough to be un- derstood by every person having occasion to look at it. Municipal Accounts. The books necessary and the methods to be used in keeping the accounts of a city or municipality do not differ except in detail from the books and accounts of other corporations. General Information. The value of the goods can be known only by accurate count and estimation, and must be clearly stated both at the beginning and at the end of a term of business. An inventory should be taken yearly. MODERN BOOKKEEPING IDEAS. This should show the goods on hand at the beginning of the year, the goods bought during the year, and the goods remaining on hand. The balance sheet should show the resources and liabilities both at the beginning and at the end of the year. It should really be an abridged history of the business. Every business man should know exactly what his profits and losses have been. Wrong estimates are ruinous, and it is better to see the truth than to continue an enterprise on a mistaken basis. You should keep a stock or capital account in your ledger. This should show the original capital which you invested, and the yearly additions. This account may be opened under your own name. Credit it with the cash and other resources invested and debit it with you liabilities. Debit this account with the sum total of the moneys or goods which you draw for the business for your private use. The net loss is also debited to it, and the net gain credited. Although the merchant's account-books are his private records, they also partake of the nature of a trust, and should bear internal evi- dence of being kept honestly and in good faith. They should be competent to bear the scrutiny of creditors, if it become expedient or necessary. If errors are made, they should be so corrected as to show the original error, and the reason for its correction. Account-books should be so plain and clear as to be understood at once by a stranger who sees them for the first time, and explicit and ample enough for the guidance of an executor or administrator, in case of the merchant's death. The particular form that one chooses for recording his business transactions is a matter of much importance. The record should be full, yet brief as possible; every transaction should be so recorded that its essential facts can be found easily; the form should be adopted to the business. Don't make blind entries that only yourself will understand. Be neat and orderly. Get into a habit of doing things right. Don't let small matters " stand over." Promptness is essential to success. LAW LEDGER. 313 r a 1. B 3 I s I * i 314 CREDIT LEDGER. DAILY CASH BALANCE BOOK. 315 jfca'.i'.r g,' i ....' 316 MAIL ORDER REGISTER. Ol i c WJ VI ? I in 9 s s 1 s i 8 ^H 8 i 1 1 i u Hj 8 8 1 s S ft a w 1 i 1 ' t I s w ft 1 o s w 8 | s o ^ s ^ 5 ^ CO 5 w w B 1 H u ^ e I 318 PRICE BOOK. OQ i 9 g HORIZONTAL SALES LEDGER. 319 James Brown 15 State Street Buffalo, N. Y. CUSTOMER i V % 2 S 5t ~7 * CO g H 2 8 3 5 g -* oo 3 S ^ 8 J2 ts S 88^^88 I as f> S 8 , g 1 8 o S eo p: i g S m S ^ w w U O w ^ S S * H 3 - i 5 ^ * i^ > i 1 320 MEECHANDISE STOCK REGISTER. 3 i w o H CO W o W K 3 s PURCHASE JOURNAL. 321 w * r\v KOLL. i i ^ I X i i 8 i 1 H ' i ^ - j i - bi! i 1 5 3 *c ' tt ! a 1 1 i ii i i i ill lr. ii Kj==a ill 1 -- 30 i; 5 - S a t- I * ^ iS - s - ^, < - I 1 t f * fUSTOMEKs' AfCOUNTS. 323 324 BALANCE SHEET. THE BEST FORM OF BALANCE Net Investment 4200 Net Gain 2954 18 Resource! : Cash on Hand 2000 Merchandise 9420 Accounts Receivable 3682 40 Bills Receivable 1024 75 Real Estate 3692 45 Furniture 212 13 Stocks and Bonds 1000 Liabilities : Accounts Payable 5260 20 Bills Payable 6372 10 Mortgage Payable 2000 Other Liabilities ... 245 25 21031 73 21031 73 THE UNIVERSITY OF CALIFORNIA LIBRARY