MON&Y AND 
 INVESTMENTS 
 
 MONTGOMERY ROLLINS
 
 UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 MONEY AND INVESTMENTS
 
 Money and In 
 
 A REFERENCE BOOK FOR THE USE OF THOSE 
 DESIRING INFORMATION IN THE HANDLING 
 OF MONEY OR THE INVESTMENT THEREOF 
 
 By MONTGOMERY ROLLINS 
 
 Other boofa by the same author 
 
 Government Bond Values Tables Interest Payable Quarterly 
 
 Tables of Bond Values Interest Payable Semi- Annually 
 
 Tables of Bond Values Interest Payable Annually 
 
 Laws Regulating the Investment of Bank Funds 
 
 Cipher Code Banker's Edition 
 
 Etc., Etc. 
 
 BOSTON: DANA ESTES & COMPANY 
 LONDON: GAY & BIRD
 
 T 
 1 1*7 
 
 Copyright, 1907 
 BY MONTGOMERY ROLLINS 
 
 Entered at Stationers' 1 Hall, London 
 All rights reserved 
 
 ^rr 
 
 COLONIAL PRESS 
 
 Electrotyped and Printed by C. H. Simonds 6r* Co. 
 Boston, U. S. A .
 
 DEDICATED TO THOSE OF SMALL FOR- 
 TUNES AND WHO ARE DEPENDENT UPON 
 THE WISE INVESTMENT THEREOF.
 
 FOREWORD 
 
 IN EXPLANATION 
 
 THERE is not any book which is of especial value in 
 aiding one to an understanding of the many intricate ex- 
 pressions and terms of the financial world. Most attempts 
 in this line have either been by some " insider " who had an 
 " axe to grind " and, therefore, desirous of selling his own 
 wares, or, if not that, then some book or pamphlet which 
 treats of investments and money matters from the standpoint 
 of supposing the reader to already have a fair knowledge of 
 finance, which has resulted in the use of terms and expressions 
 not comprehensible to many. I am not aware of the existence 
 of any reference book treating of matters relating to money, 
 and the handling and investment thereof, in an elementary 
 way; in a fashion to which those entirely untrained in its 
 management may turn and find facts needful to their under- 
 standing plainly set forth. Such simple information as to the 
 correct way to draw a check, indorse the same, open a bank 
 account, and a thousand and one details of every-day life, 
 are things often not clear to many. 
 
 It has long been my belief that there is need of some pub- 
 lication in which a mere beginner in the handling of money 
 may seek for assistance in unravelling the mysteries of the 
 expressions of Wall and State Streets, and giving in a concise 
 form such instruction as above suggested. I wonder if the 
 financial writer of the average newspaper realizes what a 
 tremendous amount of financial slang 1 he uses, and how he 
 
 1 Examples of financial slang : 
 
 " The market is in a much overbought condition; things have been 
 sky-rocketing until there begins to be an evidence of pressure upon the 
 long side. Fancy stocks have advanced, deals have been in evidence, 
 off which Wall Street has been scalping points. Stock pyramiding is 
 noticeable everywhere; in fact, they have been jack-screwing the market." 
 < " The shorts will probably now begin to get in their work, for the 
 wise ones are beginning to act a little bearish. The old lady of Thread- 
 needle Street must be considered."
 
 vi MONEY AND INVESTMENTS 
 
 has come to depend upon such words as " gunning," " pyra- 
 miding," " scalping," etc., to convey his meaning. No less 
 a newspaper than one of the leading New York dailies recently 
 published a long detailed statement of the earnings of the 
 " Clover Leaf " Road, without anywhere giving the real title 
 of the company. Do the banking houses which issue circulars 
 offering bonds and other investments, or the stock exchange 
 houses which publish market letters, ever think what a hope- 
 less mass of matter this all is to the uninitiated? Necessarily 
 all this information has to be put in a condensed form, and 
 must be issued on the supposition that such common expres- 
 sions as " selling short," " bull market," " legal for savings 
 banks of New York State," " net debt," etc., are understood 
 by the readers, and it may be said that the last ten years has 
 been an era of education to the investing public, and that 
 most of the matter sent out is understood by the large ma- 
 jority. The monthly circular of the bond selling houses, 
 especially, have been mailed so broadcast of late that a great 
 deal of information must have been absorbed, even by the 
 most obtuse. But there is still much to be desired. Women, 
 in particular, who are unexpectedly called upon to handle 
 money, are generally puzzled to understand the meaning of 
 the words and phrases in common use by all financiers. 
 Many a man makes the mistake of telling his wife little or 
 nothing of his financial affairs during his lifetime, or in any 
 way preparing her for the care of his property, be it ever so 
 little, in case of his death. A woman so left with a modest 
 fortune may have to start at the very A B C of investing, and 
 needs knowledge sorely. 
 
 It will be my aim to explain in language as little technical 
 as possible the many most commonly used terms and ex- 
 pressions in relation to investment matters. In order to 
 avoid, to a great extent, the use of one financial term in the 
 explanation of another, it will be necessary to treat each sub- 
 ject at some, I fear perhaps too great, length. To the financier 
 I am aware it will appear unnecessarily detailed and elemen- 
 tary and some of the definitions almost ludicrously simple, but 
 I can perceive no injury likely to result from erring in that 
 direction. There are many things which the beginner should 
 
 " Sugar rose from the bottom of the cup and had a very sweet look." 
 
 " The mills where tips are manufactured were accordingly put on two 
 shifts, and pools went to work with zeal." 
 
 " Stocks went both ways to-day. There was some selling short, ap- 
 parently, some going long, some supporting of the cliqued stocks. 
 The cliqued stocks were strongest. London came firm, and New York 
 started the same way ; then came reaction and recovery. 
 
 "Great laundry establishments are now running night and day, and 
 unscrupulous manipulators of good, bad and indifferent corporations 
 are working overtime."
 
 FOREWORD vii 
 
 know: the ordinary rules to safeguard one's investing which 
 the experienced man applies almost unconsciously in making 
 his investments. To the latter it hardly occurs that there 
 are thousands who do not even know the desirability of a 
 sinking fund, or that it is generally considered better to have 
 a bond payable in gold than in lawful money, etc. I have 
 known a banker to spend more than an hour in explaining 
 the meaning of " accrued interest " to a woman, and a school 
 teacher at that. Such instances are by no means rare. 
 
 A book which will help to educate the investors will be not 
 only, I hope, of value to them, but also to the bankers, who 
 are necessarily busy men, by having made it possible to do 
 business with a greater dispatch with such as may have 
 received some benefit from its use. 
 
 Many investment bankers doubt the wisdom of doing busi- 
 ness at all with the average woman from the fact that so much 
 time is consumed in explanation of details, and often from the 
 lack of knowledge which many women have of the most com- 
 mon business rules, and which, either from courtesy or 
 charitableness, the banker often allows her to break, to his 
 own pecuniary loss. There must be necessarily more women 
 who can find need for the book than men, yet it is hoped that 
 there will be among the latter many who will find here and 
 there in its contents something previously not clear to them. 
 
 The necessity, perhaps, for a little financial knowledge on 
 the part of women is not so urgent as formerly. In early 
 days, the strenuous domestic cares left them little time, if 
 any, to the care or thought of money, and it is not to be 
 wondered at that the husband made no attempt to educate his 
 wife in such a direction. In the present day of greater wealth 
 and numerous servants to lighten the domestic burdens of 
 the housekeeper, it has become quite customary for the 
 woman of the house to have a bank account, and check against 
 it for personal and household expenses. Consequently, to a 
 limited extent, many women of late years have been gathering 
 experience, but, step by step, with this slight growth of 
 knowledge, have arisen more and more complicated questions 
 of finance, making it, year by year, harder to grasp even a fair 
 knowledge of the handling of money, with the many intricate 
 stock and bond issues now upon the market. Although this 
 book will endeavour to cover, in a brief way, such simple 
 subjects as the making of a draft, drawing a check, etc., yet 
 it is intended to cover financial and investment matters in 
 general, and to set forth in a clear light their many ramifica- 
 tions. 
 
 No attempt to lay down fixed rules to lead the investor to 
 certain success finds its way into these pages; rather, it is the 
 desire to make clear certain dangers which the investor should
 
 viii MONEY AND INVESTMENTS 
 
 avoid, and establish principles which should prove helpful in 
 reaching a fair idea as to the value of securities. 
 
 The writer has made an earnest effort to make clear some 
 of the many intricacies which surround the complicated 
 nomenclature of bond issues. It is not surprising that he 
 received a letter, not long ago, from a young man, unknown 
 to him, about to connect himself with a Southern bond house, 
 asking if there were not some book to which he could turn 
 to put him on horseback and start him out of the wilderness, 
 as it were, in regard to the complexity of names attached to 
 issues of securities. 
 
 The writer cannot undertake to give every possible com- 
 bination of names. For instance, there is a "general mortgage 
 bond," " sinking fund bond," a " first mortgage bond," and 
 so on, all of which will be separately described in the text, 
 but to undertake to give a fair definition for such possible 
 combinations as "first, general mortgage, sinking fund 
 bond," would lead to an increase in the number of subjects 
 too great to contemplate. 
 
 Again, it would not be safe to elucidate all the laws and 
 legal technicalities which may surround an issue. It is sup- 
 posed that every reputable bond house shall have taken the 
 legality of the issue into consideration before offering it for 
 sale; and in this connection the reader is asked to turn to 
 the subject headed " Attorney's Opinion." Reference to 
 issues in general can only be made, and the value of securities 
 referred to from the same standpoint, for there must be 
 many common stocks which, in the nature of things, frequently 
 sell higher than the preferred of the same company; or the 
 first mortgage bonds of one company may not sell at as high 
 a price as the third mortgage bonds of another. All these 
 facts must be taken into consideration, and the province of 
 the writer is only to undertake a reasonable interpretation 
 and definition of each security issued within the understand- 
 ing of the least experienced. 
 
 It is not the intent here to treat of mercantile affairs, but 
 upon financial matters and investments as dealt in by banks; 
 money and the handling of it, etc. The meaning of words 
 and phrases as defined herein is as understood in the world of 
 finance. 
 
 It is not advisable to follow accurately the nouns, verbs, 
 or adjectives, as the same are given in a dictionary or an 
 encyclopedia, but select, without regard to their grammatical 
 position, words used commonly in financial matters. In some 
 cases definitions will diverge widely from those of an encyclo- 
 pedia and will usually not give all the possible uses of a word, 
 but only such meanings as relate to the handling of money 
 and securities.
 
 FOREWORD ix 
 
 The effort has been made to arrange all subjects alphabetic- 
 ally under the headings by which they are most commonly 
 known. If the reader is unable to find information upon the 
 subject sought, let him endeavour to think of some other 
 term, word, or arrangement of words, which might refer to 
 the same subject, with the hope of locating it in some other 
 part of the book. 
 
 It will be useless to attempt to cover every conceivable 
 financial term used in this country and Great Britain, or in 
 the English-speaking world in general, nor can it be possible 
 to give all the intricacies of the law and the rights of the 
 lender, debtor, indorser, etc., but merely to cover those most 
 usually come in contact with in daily financial transactions 
 or in reading newspapers. And, as regards the rights of the 
 lender, etc., to give the most common principles to guide him. 
 This is not intended for an advanced book on finance, for there 
 are separate books which cover nearly every general subject. 
 It is more for daily reference and a guide to those greatest in 
 need of information. 
 
 There will naturally occur to some, now and then, points 
 not covered. To such I would say that the Encyclopedia 
 Britannica leaves much to be desired, and that the aim here 
 is to produce a simple " handbook " of most commonly used 
 expressions and most needed rules to aid the beginner in the 
 handling of money and investments. To enumerate in detail 
 all the many rules that the banker himself has to exercise, 
 first and last, in his own larger experience of buying and 
 selling, would be but to breed confusion. 
 
 The names chosen by different corporations for new security 
 issues are sometimes strange and conflicting, and very often 
 misleading; again, entirely improper, and it is not surprising 
 that a young man entering the banking business seeks relief 
 from the confusion. It is human nature, a fact well ap- 
 preciated in the financial world, that there is a good deal in a 
 name, leading to the giving to many security issues titles to 
 facilitate their sale. 
 
 The names of different classes of securities are so misused, 
 sometimes purposely, the different meanings of the same terms 
 overlapping one another, that it will not be strange if some 
 readers of this book take exceptions to the definitions given 
 herein regarding different security names. 
 
 A bond is not technically a " first mortgage," " second 
 mortgage," etc., but secured by a " first mortgage," or 
 " second mortgage," on the property, but throughout this 
 work the latter meaning will, for the sake of brevity, often 
 be taken for granted, and the former wording used. There 
 are so many securities which are commonly referred to in 
 Wall and State Street parlance by what may almost be called
 
 x MONEY AND INVESTMENTS 
 
 nicknames, or, at least, a great abbreviation of the full title, 
 that the most commonly used ones will be found throughout 
 the book, alphabetically arranged. To endeavour to cover 
 this ground fully would add too greatly to the size of the work. 
 A sample of the above would be that of the Chicago, Bur- 
 lington & Quincy R. R. Co., which is known by all of the 
 following: " Q,"'" B. Q.," " C. B. Q.," " Burlington," etc. 
 
 The statements made herein are compiled from reliable 
 sources, mainly official, and are the latest obtainable. Al- 
 though the author has left no stone unturned to verify his 
 information, he cannot suppose that this work goes forth 
 without errors, but it is hoped that those which exist will 
 prove unimportant. 
 
 To certain officials in various departments of the United 
 States Government; to many well-known bankers and 
 brokers, experts and specialists in their professions; to several 
 painstaking, resourceful lawyers of known reputation; and 
 to many others, busy and successful men in their separate 
 walks in life, I wish to express my deep sense of obligation 
 for most able and necessary assistance in the preparation of 
 this work. To them will be largely due whatever successes 
 may befall it, and to the author its shortcomings.
 
 II 
 
 INVESTMENT AND SPECULATION 
 
 Suggestions 
 
 THE tremendous and invincible force of prosperity which 
 spread throughout our States, beginning in 1897, the like 
 of which no other nation has ever experienced, has enabled 
 many corporations, which met financial disaster during the 
 middle of the " nineties," to regain a sound moneyed footing. 
 Many securities of such corporations, which were discredited 
 in the minds of investors, have since been eagerly sought for 
 by the most conservative and at very high prices. People 
 who, losing faith in the future of this great food producing 
 country, threw over their investments at enormous losses, 
 must look back with wonder upon their timidity, and feel 
 that until the United States has exhausted its resources, a 
 condition which at least this generation need give no concern, 
 the swing of the pendulum to hard times and low prices 
 furnishes no time to sell standard securities, but rather a 
 time to buy. Yet this is contrary to the custom of the small 
 investor; he loses confidence and sells at panicky prices, and 
 regains faith just in time to buy at inflated prices. Now, in 
 all such times, there must be some who reap the benefit of 
 this ill-advised selling and buying; they are the large in- 
 vestors; bankers and brokers, who trade for their own 
 accounts; and those associated in the management of our 
 corporations and who can judge the future of their earning 
 capacity. How is it so many rich men grow richer? Does 
 it ever occur to the small investor that no new money actually 
 comes into existence by the selling of a thousand shares 
 of stock at twenty dollars per share over the cost? Yet 
 such a transaction enriches some one $20,000. Not even 
 the equivalent of money, such as the farmer, the mechanic, 
 the miner, etc., produces, results from such a buying and 
 selling. Some one must at some time have produced the 
 money equivalent which pays the $20,000 profit. It is 
 the toiler who really, by his labour, creates the money equiva- 
 lent to buy the stock. Recognizing, therefore, how many 
 
 xi
 
 xii MONEY AND INVESTMENTS 
 
 rich men grow richer, and how few small investors profit in 
 the long run by buying and selling securities for gain, it must 
 be evident that there is a constant flow of the earnings of 
 the toiler into the pockets of the few, largely because, as illus- 
 trated by the old simile " like a flock of sheep," the " public " 
 sells at low prices and buys at high, and the wise ones, hav- 
 ing confidence in the future, go contrary to the majority, and 
 harvest the crops of other people's planting. The advice 
 once given by a merchant of broad experience to a young man 
 who thought, during 1893, that the commercial world had no 
 bright future, " never to sell the United States short " was 
 most sound. That young man held on to his goods and chat- 
 tels and saw values exceed what they even had been before. 
 
 By a little study of prices ranging long enough to cover 
 both years of prosperity and depression, some notion of 
 relatively high and low security- values may be had. This 
 done, the time to sell, if sell one must, is when the high level 
 seems to be reached; then put the money in a bank and 
 wait until the swing towards low prices and the wait may 
 be a long one is well accomplished, and thus the time to 
 buy is at hand. But buy the highest grade, standard invest- 
 ments, for even the most conservative stocks and bonds will 
 then be found at cheap figures. 
 
 The mere fact that one has money to invest is no argument 
 for so doing at the moment, even to buy the best the market 
 affords. Ruling prices should be considered. No merchant 
 would stock up to the limit of his financial capacity if he 
 considered prices exorbitantly high; he would leave the money 
 in his bank and wait. Why should not the investor do the 
 same? 
 
 Standard investments are mentioned in the second para- 
 graph preceding; and what such investments are is a subject 
 to ponder on; a subject which State legislators are con- 
 stantly considering in order to enact laws to safeguard the 
 investment of savings bank and trust funds. A person who 
 feels wise enough to divide all investments into two classes: 
 standard or safe and questionable or speculative, is, indeed, 
 possessed of self-confidence. Still some general advice can be 
 given which will help one to reach a fair conclusion. 
 
 A man blessed with a moderate property sufficient for the 
 welfare of his family, in case of his decease, provided the 
 principal should suffer no shrinkage, gave his wife this advice 
 he had made her his executrix under his will, and it would 
 devolve upon her to manage his property if she outlived 
 him " buy no security not sanctioned by law as a legal 
 investment for Massachusetts savings banks." Of course, 
 this anticipated no less conservative laws regulating the 
 investment of the funds of such institutions than at the
 
 FOREWORD xiii 
 
 time the advice was given, but, perhaps, on the whole, no 
 better reading of the future could have been undertaken, and 
 no better advice given in so few words. In general, the laws 
 regulating the investments of savings banks, as now in force, 
 in such other States as New York and Connecticut, and, to a 
 large extent, Maine, Vermont, and New Hampshire, may be 
 used as guides in the selecting of securities. 
 
 Now, many will say: " But I can't live on such small 
 interest returns as this kind of securities affords." Quite 
 right, but neither can they afford to lose any of their capital. 
 High interest rates beget loss of principal. This should be a 
 motto and hung as conspicuously in the household of those 
 of limited means, as other mottos once so common in the 
 New England home. To get with safety better than 3% 
 to 4% interest return one must either be a shrewd, well- 
 posted person in financial matters, or rely upon the advice 
 of some one who is. 
 
 Misplaced confidence has been ruinous to the small fortunes 
 of thousands. Undoubtedly there are numerous bonds of 
 Southern and Western municipalities as well as bonds of public 
 service corporations, which present a minimum of risk, paying 
 from 4J% to 5%, but buy such only of bankers of long 
 experience and good established reputations, and who are 
 known to follow carefully rules and customs which years of 
 practice have fixed as proper. It is partially from an attempt 
 to explain such rules, so that one may select with intelligence, 
 that the contents of this book are offered to the reader. 
 
 Again: let the careful thinker consider if there are not 
 certain investments based upon the needs of this nation of 
 great resources which must, in the very nature of things, be 
 sound. Who was it that once said " a man will see a fly on 
 a barn door and miss the door? " Look at a map of the 
 United States ; do not get too near it; one, by so doing, some- 
 times sees the name of a small village, but does not see county 
 or State names, which are in large letters. Consider this 
 map from a broad and general standpoint; grasp, in your 
 mind's eye, the enormous traffic of this country; the big 
 arteries of transportation. It would seem that the bonds 
 and many stocks of these large railroad lines must be reason- 
 ably safe, for these big systems carry commerce from ocean 
 to ocean, bringing the products of the West to the Eastern 
 marts, and, also, in vast quantities for shipment to the 
 European markets. They, likewise, transport the manufactures 
 of the East to the West as well as to the steamship lines, 
 largely controlled by these same railways, which pass them 
 on to the Asiatic countries. Such immense traffic as this 
 must furnish the basis for sound investment if anything can. 
 
 Unquestionably, there are almost countless small invest-
 
 xiv MONEY AND INVESTMENTS 
 
 ments, here and there, which are safe and very profitable in 
 interest return, but it is the belief on the part of so many 
 that they have found just such a security which leads 
 them astray. Better follow well-established rules and not 
 be tempted by the wayside. No one may gainsay that there 
 are not many gold and copper mines which are good, very 
 good, but how often does the outsider get a chance to buy 
 such a security at a legitimate price? When found to be be- 
 yond reasonable risk they are high in price. Certainly, they 
 pay more than 3% or 4%, but it takes an expert to pick 
 out the good ones among the multitude of mining issues for 
 the benefit of the kind of investor referred to here. It is 
 customary for reputable banking houses, handling mining 
 securities, to first have the properties examined by com- 
 petent engineers and other well-known experts. When this 
 has been done, they have gone as far as possible for the pro- 
 tection of the purchaser, for no one can see into the ground 
 beyond the property already developed. There is the ever 
 prevalent element of risk in investments of this class. 
 
 If the temptation to buy mining investments of any kind is 
 allowed to influence one, bear one very important point in 
 mind, viz., that a mine is ever consuming itself, so, like- 
 wise, are such properties as oil wells, quarries, etc., and at 
 some future time the product must cease altogether, or the 
 mine reach a depth too great for economical production. 
 The shares of a mine, therefore, should not be valued entirely 
 by dividends. A sufficient allowance should always be made 
 for the exhausting of the mine's resources. In case of a 
 bonded debt upon a mining property, the investor should be 
 sure that there is a sufficient sinking fund set aside for the 
 payment of this indebtedness, which sinking fund should be 
 ample to allow for the reduction in the mine's value, for the 
 reasons given above. In relation to mining, it is probably 
 true that " more money has been put into the ground than 
 has been taken out of it." 
 
 Do not be argued into buying a mining security based on 
 the location of the mine being near another similar property 
 of established value. 
 
 Let not the fact that a security can be bought at a dis- 
 count less than its face value alone entice you to a 
 purchase. That in itself is no argument to buy. It should 
 warn one even to a more careful scrutiny of the property 
 back of the investment. It is a well-known fact that the 
 suicidal policy of buying only at a discount wrecked one 
 savings bank. 
 
 Do not judge the value of shares by one dividend or by an 
 increase in the dividend rate. The value of shares based on 
 dividend rates can only be ascertained by a period long enough
 
 FOREWORD xv 
 
 to test the corporation's dividend paying ability through good 
 times and bad. A corporation which has been, for a term of 
 years, returning 4 % per annum to its stockholders and selling 
 at $100, enjoys extraordinary good business which, for the time, 
 warrants the increase of the semi-annual dividend rate from 
 2% to 2|%, equal to 5% yearly. Speculators seize this 
 opportunity to force the price of the stock to 125, at which 
 price the increased dividend rate still only equals 4% return 
 upon the investment. There is no certainty that 5% can be 
 maintained, nevertheless up has gone the stock, and investors 
 buy it more greedily at 125, yielding 4%, than they did at 100, 
 yielding 4%. It will take twenty-five years of the dividend 
 increase to return the market value increase of the stock. 
 Perhaps that is hardly a fair way of putting it, but it may 
 cause people to hesitate before acting according to the belief 
 that one swallow makes a summer. Stocks are forced up or 
 down in the market upon the least excuse, and those close to 
 the scene of action make money at the expense of those who 
 allow themselves to be influenced by surface appearances, 
 and who do not probe to the bottom for real conditions. 
 
 When an industrial business, which has been conducted as 
 a partnership, is changed to an incorporated company, and 
 the public is invited to buy its securities, the intending investor 
 should ask himself: " Why, if the business was such a good 
 one, did the old firm wish to let the public into its profits? " 
 All kinds of plausible answers can be given to such questions, 
 and in many cases the incorporation is justified. As a rule, 
 however, such methods of financing industrial concerns are 
 best justified where many firms or corporations, or both 
 together, in the same line of business, are united under one 
 management to reduce competition and expense. It is the 
 capitalization of a single firm which is more to be guarded 
 against. Even in the consolidation of several " industrials," 
 it is essential to consider if the business is dependent for its 
 success upon the continued management of some, or the 
 greater part, of the original owners. If so, it is necessary, 
 if such a management is retained, that its ownership in the 
 stock of the new company is sufficient to continue its interest 
 to make the company a success, or some plan adopted to 
 insure as good or better management of the whole as the 
 integral parts had formerly. In this connection, the reader 
 will do well to turn to the subject " Industrial Securities." 
 
 The question often arises as to the advisability of investing 
 money for a long or a short time. The best method to pursue 
 depends very largely upon the financial condition existing at 
 the time of the investment. During the early part of this 
 year (1907) corporations found difficulty in selling new issues 
 of bonds at normal prices. Consequently, they issued high
 
 xvi MONEY AND INVESTMENTS 
 
 rate notes running from one to three years, with the expecta- 
 tion that when they fell due the condition of the market 
 would be such as to permit the refunding of these notes by 
 the issue of long time low rate bonds in their stead. Other 
 bonds of the same corporations were selling upon the market 
 at extremely low figures. Yet what did the public do? In- 
 stead of buying the bonds, they bought the notes in preference, 
 thereby enabling the corporations to profit out of the expected 
 advance in the bonds to be issued later, rather than them- 
 selves seizing the opportunity with similar bonds then on the 
 market. There was great hesitation on the part of the in- 
 vestors buying bonds at the then low figures; but when they 
 have advanced to a price sufficient to warrant the issuing of 
 bonds to refund the note issues, then will they be readily 
 purchased, showing again that the public acts contrary to 
 good judgment. 
 
 Some financiers doubt, however, if the corporations are 
 judging the future accurately in the maturity of their notes, 
 reckoning on refunding at a more opportune moment; but 
 that matters not in this case, as it is the principle that it 
 is desired to illustrate. 
 
 From the above it is very easy to deduce this rule: Buy 
 short time securities when prices are high and the net return 
 consequently small, and buy long time securities when prices 
 are low and the net return high. This is all based upon every- 
 thing else being equal; that is, the safety of the security 
 being supposed to be satisfactory. 
 
 Why do so many people buy a stock in some little known 
 company with so little investigation? Such a person would 
 not buy a small partnership interest in a business of long 
 established reputation in his own neighbourhood; one which 
 he had every reason to believe prosperous, without the most 
 minute investigation. But how does it differ from the other? 
 The stock represents, to all practical purposes, his partnership 
 in the incorporated company. Is there some hypnotic in- 
 fluence in the names " stocks " and " bonds? " Or is it the 
 distance which lends enchantment? The " prophet is not 
 without honour save in his own country," and so, perhaps, 
 the investor believes not in his local industries, and, perforce, 
 must seek afar for an outlet for his money, buying on the 
 faith of some newspaper advertisement. By all this it is not 
 meant that the seeker for an interest-bearing security should 
 not make distant investments. Far from it, but either he 
 should deal with a firm of untarnished and long-established 
 reputation for fair dealings, or place his money near home 
 in properties concerning which he has some certain knowledge. 
 Choosing neither of these methods, then let him investigate 
 with as great care as would the deacon in a horse trade.
 
 FOREWORD xvii 
 
 There are enough good investments regarding which full 
 information may be had without wasting time over those of 
 uncertain value, and facts regarding which are withheld from 
 the searchlight of publicity. 
 
 At times a man but more frequently a woman says 
 that there is a very small sum of money to live on, and that 
 it is extremely necessary to get as high a rate of interest as 
 possible, consistent with safety. The conscientious banker 
 often advises putting the money in some good savings bank, 
 or buying what are known as high grade investment stocks or 
 bonds, and which return from 3% to 4% interest. They are 
 the next degree removed from Government bonds in safety. 
 The customer will immediately say that he cannot possibly 
 live on such a rate of interest, that he must have 5% or 6%. 
 In spite of all arguing and urging upon the part of the banker 
 he will insist upon this interest rate. The former, against his 
 better judgment, and contrary to his strong advice, will 
 select, to the best of his knowledge and belief, a security 
 which will return this desired rate of income with as little 
 risk as possible, knowing, all the time, that no matter how 
 earnestly he tries there is quite an element of risk. Finally, 
 the investment is made; all goes serenely for months, perhaps 
 years. The banker may do as well as he can to " keep track " 
 of this investment, and often succeeds in persuading his 
 customer to dispose of it in time to forestall a loss, and, 
 possibly, secure a profit. Frequently, in spite of his best 
 endeavours, a loss will occur, and then his troubles begin. He 
 will wish a dozen times that he had absolutely refused in the 
 beginning to invest the money; he will likely at the time 
 have requested the man not to invest it through him. The 
 customer may have replied: " Please advise me; to whom 
 else can I go for advice? " The latter is apt to remember very 
 little of this. The banker is to blame from the other's point of 
 view; he ought to have known that something was going to 
 happen to this security, and sold it. He should have been 
 more than human in his ability to foresee a loss; he has 
 neglected his duty. There have been numerous cases where 
 so little did the investor remember the conversation which 
 took place at the time of making the investment, that he has 
 heaped upon the banker the unjust accusation of having urged 
 the purchase of the security. 
 
 Let the investor assume his or her proportion of the respon- 
 sibility in case of loss, and give proper credit to the banker in 
 event of extraordinary profits. 
 
 Remember, always, that your investment banker is not 
 infallible; for it is not possible for any human being to carry 
 continually in his mind facts in relation to the multiplicity 
 of securities handled by him. It is not to be expected that
 
 xviii MONEY AND INVESTMENTS 
 
 he can be constantly and at all times fully acquainted with 
 every detail and ready, upon call, to decide upon the merits 
 of any question raised by his clients. Especially, in times of 
 financial panics, is it impossible for him to give many issues 
 which have passed through his hands proper attention. It 
 is natural that occasionally some one must err, and it is fair 
 that the client should consider that he is only one among 
 hundreds and, perhaps, thousands of other clients which the 
 banker has to consider. 
 
 Now and then the purchaser of a security, particularly a 
 bond, may not have money available for investment for some 
 little time. The banker, as an inducement to him to make a 
 purchase, may offer to sell the bond deliverable at some later 
 date to be agreed upon, merely charging the purchaser the 
 accrued interest; i.e., the rate which the bond bears until the 
 date upon which he makes payment. Suppose, however, the 
 matter is reversed, and the purchaser requests this accom- 
 modation on the part of the banker. In the meantime, 
 interest rates market prices for money advance con- 
 siderably, so that it is evident that the banker must have 
 been losing money in " carrying " the bond for the customer 
 at the " accrued interest " rate. Under these circumstances 
 it would be perfectly proper, and really morally obligatory, 
 on the part of the investor to offer to pay an additional rate 
 of interest, for the time, sufficient to compensate the 
 banker. 
 
 In considering the advisability of selling a security, the 
 original cost of it should not be given too serious consideration, 
 especially if the cost were such as to show a loss. If it is a 
 proper time to dispose of it, the cost should be left out of the 
 question. Ask yourself whether or not you would buy at the 
 present quotation, and if, for good reasons, you can decide in 
 the negative, is it not a fair argument to sell? This does not 
 mean that money is not often made by waiting, for 
 all facts in relation to any particular security have to 
 be taken into consideration in thinking of selling it as above 
 indicated, but the mere fact that it costs more than you 
 would give for it is no reason for delaying its sale. 
 
 That is the point it is desired to make clear, for probably 
 much unnecessary loss has been incurred by those unwilling 
 to take a small one, but who have held on and then taken 
 a greater one in the end. And all just because they allowed 
 themselves to be influenced by the original cost. 
 
 When you purchase a stock, bond, mortgage, or whatever 
 it may be, read it; see what conditions it contains. You 
 may find therein some clause detrimental to your interests. 
 It would not be hard to cite cases in which the holder of some 
 stock certificate has suddenly discovered that it carried con-
 
 FOREWORD xix 
 
 ditions, plainly stated, had he taken the pains to look, which 
 entailed hardships upon him. 
 
 It is not unusual for an investor to spend hours and, per- 
 haps, days in patient thought and study in seeking what he 
 deems a safe purchase, and then, at the last moment, spend 
 scarcely any time in the scrutiny of the paper itself. 
 
 When a banking firm buys an issue of bonds, or similar 
 security, from any corporation which is not by law compelled 
 to furnish public statements of its earnings from time to 
 time, or where the corporation is of such magnitude 
 that it is customary to furnish a statement of its earnings to 
 the public, such, for instance, as the United States Steel 
 Corporation, it is important that a contract be executed 
 between the corporation placing its securities and the banking 
 house purchasing the same, whereby the latter shall receive 
 semi-annually or yearly sworn statements of the earnings of 
 the company and its financial condition during the time which 
 the issue of securities may be outstanding. Furthermore, 
 that the banking house shall, for a like period, have access to 
 the books of the corporation at any time for the purpose of 
 auditing its accounts and verifying its statements. 
 
 The reason for this is perfectly clear: It affords a means 
 of protection to the bondholder, for in case the earnings of 
 the property during the life of the security seem to be falling 
 off, it will, by the banking house receiving a statement of 
 such earnings, be made known to it and afford an opportunity 
 for self-protection. It is no more than right that the parties 
 lending the money, by which the corporation is able to 
 operate, should be in possession at all times of adequate in- 
 formation to judge whether or not the property is being 
 properly managed. 
 
 Remember, at all times, that nothing is more sensitive to 
 conditions and impressions than the security market. This 
 is well illustrated in the actual happening of a woman who 
 possessed $5,000 in bonds of a small issue in one of the New 
 England cities. The issue was a perfectly sound one, but was 
 held closely by investors, and the bonds seldom offered for 
 sale. The woman desired to dispose of them, and went to her 
 banker in New York City and asked him to obtain a bid. He, 
 naturally, put himself in touch with one of the local brokers 
 of the city wherein the corporation itself was located. This 
 broker went from bank to bank and from banker to banker 
 to get the best bid obtainable. The woman, in the mean- 
 time, had gone to not less than six other bankers in New 
 York with the same request. They, in turn, had each sought 
 some local broker in the New England city, and, each pursuing 
 like tactics to the first mentioned, it was not long before there 
 seemed an avalanche of the bonds of that particular cor-
 
 xx MONEY AND INVESTMENTS 
 
 poration. It seemed that there were more bonds for sale 
 than the outstanding issue. The result was that intending 
 purchasers became suspicious and all bids were withdrawn. 
 The woman was unable, for the time being, to obtain any 
 market whatsoever. 
 
 In this connection it may be pertinent to say that in the 
 case of an issue of securities unknown in the market where 
 they are offered for sale, the fact of not being able to find a 
 purchaser does not argue that anything is wrong. 
 
 In comparing earnings, one month with another, always 
 compare with the corresponding month of the year preceding, 
 as that is the true test. If the corporation is one of long 
 standing, it is advisable to examine into its earnings during 
 a past period of business depression, and to see how it 
 " weathered the storm." 
 
 In the placing of money for investment purposes, in addi- 
 tion to the foregoing, these are some of the general principles 
 which should be considered: 
 
 The standing of the men in charge of the corporation; the 
 location of the property and the character of the country 
 upon which it is dependent for its business; especially is it 
 increasing in population and wealth, or the reverse? If it is 
 a municipal bond that is being considered, it is not advisable 
 to place too much confidence in a municipality which is so 
 located as to be entirely dependent upon lumber business, 
 oil wells, or some special form of mining; that is, a stability, 
 not likely to be furnished under such conditions, is needed. 
 An agricultural section is far better and more permanent 
 than gold mining. A study of the earnings has already been 
 advised. 
 
 Present competition, or the likelihood of the same in the 
 future, is very important. Is the corporation charging ex- 
 cessive rates so as likely to invite competition? Are its 
 earnings based upon patents which may be approaching ex- 
 piration? 
 
 It goes without saying that the condition of the money 
 market at the time of purchase must always be considered. 
 
 But when all is said, most business must rest upon faith in 
 someone, and, therefore, the character of your banker is all- 
 important. 
 
 This chapter thus far has been written mainly with the 
 idea of assisting those desiring to make careful and 
 conservative investments. The author, nevertheless, under- 
 stands that there are, and always will continue to be, those 
 who speculate, and, possibly, some of the essential points in 
 relation to speculation may be acceptable, and here follow. 
 
 Stock market prices, which, like the ocean, are never at 
 rest, are influenced by many forces. If one is to be even an
 
 FOREWORD xxi 
 
 occasional buyer or seller in the securities of the speculative 
 world, he cannot have too clear an idea as to these factors. 
 Monetary conditions, business conditions, and stock market 
 manipulation, together with the political outlook, both domes- 
 tic and foreign, are important subjects for study. Always 
 remember that, although values are largely determined by 
 business conditions, prices may, for the time being, move at 
 variance with basic principles. Prices in the long run do, 
 nevertheless, follow the course of existing values. (Many of 
 the subjects mentioned in this connection will be found treated 
 in the main part of the book, so they may be lightly touched 
 upon here.) 
 
 It is evident that " business conditions " is a broad subject, 
 but there are certain underlying principles which may be 
 taken as an infallible guide, namely: 
 
 First: The crops of main importance the principal 
 of which, grain and cotton, have a tremendous influence upon 
 business prosperity. 
 
 Second: The iron and steel industries. It is well under- 
 stood, and almost a tradition, that when these trades are 
 prosperous, other departments of industry are fully occupied. 
 The reverse is equally true. 
 
 Third: Watch the railroad earnings. They are a singularly 
 good index of the times. Busy railways and good earnings 
 mean work for the steel companies, car and locomotive builders, 
 etc. Beware of the continued steady decline from month to 
 month of these figures. The rise and fall in stock prices have 
 always closely followed the rise and fall in railroad earn- 
 ings. 
 
 Fourth: Study the bank clearings. They reflect business 
 conditions wonderfully well. The clearings of the country at 
 large are better to follow than those of a particular city which 
 may be temporarily affected by a speculative craze. 
 
 Fifth: What are known as " swings " from prosperity to 
 depression and the reverse. It is a well known fact that the 
 business of every country passes through alternate periods 
 of rising prices and prosperous times and then falling values 
 and hard times. It behoves one to always estimate, as well 
 as may be, at about what point in one of these cycles he 
 happens to be. 
 
 " Monetary conditions " have reference to the supply of, 
 and demand for, money; the effect of an increasing supply 
 upon the rise in prices of commodities; and the fact that low 
 money rates may encourage speculation. Money is the 
 representative in value of all things traded in, and the scarcity 
 of it does not tend to improve business conditions, yet, at the 
 same time, very low money rates may argue poor business, 
 as it shows a lack of demand. The comparative study of the
 
 xxii MONEY AND INVESTMENTS 
 
 daily quotations of interest paid for " call " and " time 
 loans" is desirable. 
 
 As to "political conditions;" we are always dependent 
 upon wise and sane government at Washington; we are sen- 
 sitive to war clouds, even if not at first involving our own 
 country. The successful speculator has world-wide conditions 
 to dwell upon now-a-days, as the large nations are so closely 
 associated in money and industrial matters that each is more 
 or less dependent upon the continued well-being of the other. 
 The searching, daily reading of domestic and foreign hap- 
 penings is essential. 
 
 Stock market manipulation is fully explained under the 
 subject " Manipulation," and is something to be carefully and 
 seriously considered, and ever borne in mind by whosoever 
 attempts to pick his way among the snares and pitfalls of 
 Wall and State Streets. 
 
 There are some shrewd investors who avoid the placing of 
 money in any enterprise of capitalization large enough to 
 attract the attention of Wall Street, and thereby become, 
 possibly, a puppet in the hands of some soulless " clique." 
 They think it better to invest in smaller companies, whose 
 securities are offered and recommended by reputable bankers, 
 or in local issues; in either case, the amount of the issues 
 being too small to warrant manipulation. 
 
 It is a peculiar truth that the general public usually buys 
 while prices are rising, instead of waiting for moderate re- 
 actions. It is better wisdom to buy after there has been a 
 decline, and to sell after a sustained advance; but the public 
 appears never to learn this rule. 
 
 Activity argues for rest; every excess is sure to be followed 
 by its opposite. Depression follows inflation; and the latter 
 precedes depression. 
 
 Nelson says in his " A B C of Stock Speculation: " 
 
 " The elder Rothschilds are said to have acted on the 
 principle that it was well to buy a property of known value 
 when others wanted to sell, and sell when others wanted to 
 buy." 
 
 And also, " that if your stock has been purchased and it 
 goes up, it is well to wait; but if it goes down, it is well to 
 stop the loss quickly on the ground that the theory on which 
 the purchase was made was wrong. The public, as a whole, 
 exactly reverses this rule. The average operator, when he 
 sees two or three points profit, takes it; but, if the stock goes 
 against him he holds on waiting for the price to recover, with, 
 oftentimes, the result of seeing a (small) loss . . . run into 
 a loss of ten points. He then becomes discouraged and sells 
 out near the bottom." 
 
 A financial writer gives expression to the following:
 
 FOREWORD xxiii 
 
 " Value has little to do with temporary fluctuations in 
 stock prices, but is the determining factor in the long run. 
 Values, when applied to stocks, are determined, in the end, 
 by the return to the investor, and nothing is more certain 
 than that the investor establishes the price of stocks. The 
 manipulator is all-powerful for a time. He can mark prices 
 up or down. He can mislead investors, inducing them to 
 buy when he wishes to sell, and to sell, when he wishes to 
 buy; but manipulation in a stock cannot be permanent, and 
 in the end the investor learns the approximate truth." 
 
 Wall Street always builds on the future, not on what has 
 gone. It always wants a change in security values. Either 
 way is acceptable to the professional trader if only he can get 
 on the track of the right way in advance, and Wall Street 
 thus act before the public. 
 
 And yet, thousands buy stocks who should not. Some buy 
 because others do. Some because the daily quotations show 
 a tremendous apparent buying on the part of others of a 
 stock at the moment attracting attention. They are ignorant 
 of the fact that many of the reported sales are not genuine, 
 but " wash sales," i.e., fictitious: trades made in the open 
 market, and quoted, by parties between whom there is a 
 private agreement that they shall be void; all part of the fine 
 art of manipulation. Some one has said that " ignorance 
 and credulity are at the bottom of most losses in speculation," 
 and he said well. 
 
 The writer's idea of enumerating in the foregoing matter 
 some of the things necessary for the successful speculator of 
 the present day to be posted upon, and some of the things 
 for him to consider, is to cause him to give time for thought 
 and consideration before making a purchase or sale ; to cause 
 him to think for himself, act more upon his own responsibility 
 and less upon what he may read and hear. The average 
 stock-exchange broker is sometimes so near the scene of 
 action that, however honestly inclined he may be, he may 
 fail in his judgment. 
 
 In the preceding pages emphasis is laid upon the investor 
 selecting a banking house of long experience and established 
 reputation with which to conduct his dealings. That same 
 advice is most strenuously offered for those who desire to 
 speculate, and still greater stress is laid upon this point in 
 the following chapter. 
 
 Finally, a few suggestions which are almost personal in 
 their character: 
 
 Keep a record in some form either by the stubs of your 
 check-book, or by a simple system of bookkeeping of your 
 receipts and expenditures, and balance at stated intervals 
 to find where you stand.
 
 XXIV 
 
 Do not destroy receipts; they should be kept at least six 
 years. 
 
 Do not allow a bill which is found correct and deserving of 
 payment to remain unpaid more than twenty-four hours. 
 
 Do as little business as possible with friends and relatives; 
 but, when so doing, conduct it upon strictly businesslike prin- 
 ciples. 
 
 Always retain copies of business letters sent as well as the 
 originals of all received, having some system of filing the 
 same. 
 
 In changing your address, notify all institutions or bankers 
 with whom you have any financial dealings, and send notice 
 to all corporations in which you are a stockholder; likewise 
 corporations or municipalities of which you happen to be a 
 registered bond holder. 
 
 Always write a telegram without punctuation marks. 
 Then, if it reads clearly, send it. 
 
 If anybody is to do considerable investing, some form of 
 filing information relating to the same, annual reports of the 
 different corporations, etc., is desirable. 
 
 Listed below are certain subjects which will be found in the 
 body of the book and which those of limited experience in 
 investment or money matters may read in connection with 
 the foregoing: 
 
 Accrued Interest Guaranty 
 
 Assessed Valuation Indorsed Bonds 
 
 Attorney's Opinion Manipulation 
 
 Auditor Mortgage 
 
 Bonded Debt Net Return upon the Investment 
 
 Bond Values Tables Note 
 
 Bucket Shop Optional Bonds 
 
 Care of Securities Par 
 
 Coupons Collection of Protest 
 
 Discretionary Accounts Registered Bond 
 
 Double Liability Serial Bonds 
 
 Engineer's Certificate Sinking Fund 
 
 Engineer's Report Tipster 
 
 Franchise Transfer in Blank 
 
 Fully Paid Transfer of Stock 
 
 In Relation to Banking 
 
 Bank Account Draft 
 
 Bank-Book How to Open a Savings Bank Account 
 
 Check Indorse 
 
 Check-Book Overdraw 
 
 Deposit Stop Payment 
 
 Miscellaneous 
 
 Interest Will 
 
 Fire Insurance Woman's Signature
 
 Ill 
 
 POWER OF THE FINANCIAL WORLD AND ADVERTISEMENTS 
 
 THE power of the financial world, as managed from New 
 York, Paris, and London, and possibly other large financial 
 centres, is such that a note of warning may be sounded here 
 to advantage. 
 
 Without the aid of the newspapers comparatively little 
 manipulating the market or shaping public opinion in line 
 with desires of the large powers in finance could be accom- 
 plished. 
 
 Readers of newspapers should not be too often led astray 
 in forming their opinions as to their acts relating to money 
 and investments. The financial leaders are so all-powerful 
 that news of an influencing nature can be circulated broadcast 
 throughout the newspapers of the world without the manage- 
 ment of such papers realizing, perhaps, that their columns are 
 being used for this object. One example of this nature will, 
 possibly, suffice to indicate the breadth of this power: 
 
 It will be recalled that during the spring of 1905 a Japanese 
 loan was offered for public subscription in London and New 
 York. Just previous to its issue the papers in Europe and 
 America teemed with news indicating an early peace between 
 Russia and Japan. Telegrams were quoted from many 
 European capitals, and the average investor was led to believe 
 that, on account of an early and impending peace, the Japanese 
 bonds would be an attractive purchase at the issue price. 
 The loan was enormously over-subscribed, then peace news 
 ceased immediately; in fact, within twenty-four hours after 
 the closing of the subscriptions all indications of peace were 
 authoritatively denied by both Japan and Russia. It is 
 impossible to state that this was all done with an object, but 
 the finger of suspicion strongly points that way. 
 
 Now a word as to advertisements and the gullibility of the 
 American public. Do the people really like to be fooled? 
 One is almost inclined to think so, or why do these adver- 
 tisements appear in such large type and at such immense cost 
 to the advertiser if they do not pay? What is the motive 
 behind all these philanthropists of finance; men who, 
 at great sacrifice and cost to themselves, are willing to dis-
 
 xxvi MONEY AND INVESTMENTS 
 
 credit so many investments, and to save the public from loss 
 in buying such? Can it be possible that these same " saviours 
 of the people " can have any object in depressing prices of 
 the securities referred to? Can it be possible that they have 
 some stocks or bonds of their own to sell? How many things 
 are done in this world without an object? Banking houses 
 of long standing and integrity do not appear in print and 
 publicly abuse other people's goods. Well-known stocks 
 and bonds do not need long columns of praise. A mere state- 
 ment of facts suffices; description of the security; statement 
 of earnings, etc. Beware of advertisements. It is strange 
 that the very fulsomeness of so many of them does not in 
 itself warn people away. Beware of advertisements of a 
 security wherein the reader is told that he can only buy at 
 the price then offered for a certain limited period, after which 
 it will be advanced to a certain named higher price. Columns 
 of " financial advice " and " logic " are better left unread. 
 Advertisers thrive on the gullibility of the human race.
 
 IV 
 
 BANKS 
 
 IT is not surprising that many persons hesitate in the 
 making of a deposit in a savings bank, on account of the 
 many defalcations continually taking place throughout the 
 country. Undoubtedly there are thousands of persons who 
 look with suspicion upon the majority of bank treasurers, as 
 well as cashiers, especially in what are known as country 
 banks. Unquestionably it behoves the depositor to select 
 his bank with the same care that he would select an in- 
 vestment. 
 
 It is not the desire of the writer to undermine faith in bank- 
 ing institutions; as a rule, they are the safest places in which 
 the majority may intrust their money. A less percentage of 
 risk, in the long run, is probably incurred in a savings bank 
 deposit than in any other investment paying an equal interest 
 return. Everything else being equal, it is wise to deposit in 
 a bank in which the officer who is the leading spirit and 
 responsible, to a great extent, for its funds, is a man not 
 absolutely dependent upon the salary which he draws from 
 such management, UNLESS THE SALARY is A GOOD ONE. The 
 handling of large amounts of money belonging to other people 
 is, and must always be, a temptation to many, but that 
 temptation is greatly lessened when such funds are handled 
 by persons who have practically all they need, and who do 
 not feel the want of many things which the possession of some 
 of the bank's funds would enable them to enjoy. 
 
 The writer would make no deposit in any banking institu- 
 tion which did not also pay other officials and clerks a suffi- 
 cient compensation to give them a decent and respectable 
 living, without the necessity for stealing, and it is due to just 
 this short-sighted, narrow-minded policy of underpaying 
 which has resulted in so many disasters. It does not stand 
 to reason that every man will resist the temptation of handling 
 funds in the hundreds of thousands, and at the same time 
 live upon a salary which frequently forces him to economize, 
 in order to maintain a social standard at the level with the 
 respectable position which a bank official is supposed to 
 occupy. The handling of large sums of money is a vast 
 
 xxvii
 
 xxviii MONEY AND INVESTMENTS 
 
 responsibility, and small salaries cannot employ sufficiently 
 capable persons to undertake it. The fault of this largely 
 rests with the directors who are striving to handle the banks 
 at a minimum of expense in order to keep up dividends as 
 high, or higher, than their neighbours. It takes courage to 
 reduce dividends in savings banks, but the long run shows 
 that those who have had the courage to make a reduction, 
 although, perhaps, temporarily losing deposits, have proved 
 to be worthy of the confidence of the people, and to have 
 built up large resources and institutions of undoubted strength. 
 
 The presidents and directors of banks are themselves, in 
 another way, often indirectly responsible, and very much so, 
 for their officials and clerks becoming defaulters. The pos- 
 session of the control of a million or more of dollars belonging 
 to a bank is a source of power to those who can control its 
 investment. The officials so controlling it must be good 
 clients to any banking house through whom they choose to 
 invest the bulk of this money, and it is a self-evident fact 
 that they will obtain opportunities for judicious investment 
 of their own funds through an earnest desire on the part of 
 the banking house to place such opportunities before them. 
 The lesser officials of the bank, therefore, become aware that 
 some of their superiors are very profitably making outside 
 investments. They see small and, in some cases, considerable 
 fortunes made in this way. This book does not question the 
 honesty of such fortunes, but the temptation on the part of 
 the underpaid lesser officials of the bank to do the same 
 thing leads to the downfall of many of them. 
 
 Let the directors look to many such points as are suggested 
 above and there will be fewer thieving officials in their em- 
 ploy. There is no doubt that many of the defalcations can 
 be attributed indirectly to the laxity of directors of the banks 
 in which they occur, if the careful examining into the 
 history of a great many actual happenings is any proof. 
 
 William B. Ridgely expressed much the same idea when he 
 said: 
 
 " The ruin of a bank is practically always the result of 
 fraud, or the use of its funds in unlawful amount by its 
 officers and directors. The money is sometimes lost in 
 legitimate enterprises, through bad judgment and mis- 
 management, but far the most frequent cause for actual 
 stealing or defalcation in banks is speculation. It is specu- 
 lation which is the curse of the day, which tempts so many men 
 beyond their endurance." ..." No man who assumes the 
 responsibility of the custody of funds belonging to others 
 should take the risk of subjecting himself to this tempta- 
 tion, nor allow others with whom he divides such a trust to 
 do so."
 
 FOREWORD xxix 
 
 The writer ventures the statement that most bank troubles, 
 such as the above, occur on a declining market. It is human 
 nature to speculate for a rise in prices, and, as a result, many, 
 who are speculating with the funds of others, are successful 
 when prices advance. But let a long period of declining 
 prices set in, and then the daily papers will begin to exhibit 
 startling headlines of exposures and suicides. 
 
 The average State savings bank report gives much infor- 
 mation of value to such as care to investigate the banks of 
 any particular State. These books may usually be obtained 
 from the Bank Commissioners at the several State Capitols. 
 
 The reader will find other matter pertinent to this subject 
 under " Savings Banks."
 
 PROSPERITY AND THE FUTURE 
 
 THESE are times 1 of great prosperity. The swing of the 
 pendulum has been steady and far out from the perpendicular. 
 How much farther it will go, and how long stay at rest, before 
 beginning its inevitable return swing is not for man to safely 
 prophesy. 1896 was the low ebb of the last period of depres- 
 sion, and since then the march of increasing riches and good 
 times has had but little interruption. But the end will come; 
 the downward movement will follow this era of inflation as 
 certainly as the winter's cold grips the Arctic Circle in its 
 clasp of ice and snow. Benner, the prophet of panics, claims 
 that one is due in 1911. However that may be, all good 
 financiers should put their houses in order and prepare for 
 one in the not very distant future. Benner may have set the 
 date too early, or he may have erred in the other direction. 
 
 Let us take brief stock of our riches: we may be so laden 
 with wealth, and the money powers may have things so well 
 in hand that there never will be as continued a period of low 
 prices and hard times as preceded 1896. 
 
 TEN YEARS' GROWTH 
 
 The Journal of Commerce publishes the following table of 
 statistics showing the growth of the United States in the past 
 ten years, compiled from the latest available sources: 
 
 Population 
 Agricultural products 
 Manufactures 2 
 Mineral products s 
 Imports, Fiscal year 
 Exports, Fiscal year 
 Railroad mileage 
 Railroad stock 
 Railroad bonds 
 
 
 P. ct. 
 
 1905 
 
 1895 Inc. 
 
 83,609,000 
 
 70,253,000 19 
 
 $6,415,000,000 
 
 $4,189,000,000 53 
 
 $16,000,000,000 
 
 $11,000,000,000 45 
 
 $1,289,660,000 
 
 $526,838,000 145 
 
 $1,117,512,000 
 
 $779,724,000 43 
 
 $1,491,744,000 
 
 $863,200,000 73 
 
 211.000 
 
 187,000 18 
 
 $6,447,000,000 
 
 $5,027,000,000 28 
 
 $7,475,000,000 
 
 $5,605,000,000 33 
 
 1 Latter part of 1906. 
 
 2 Estimate. 
 
 3 1904 and 1894. 
 
 XXX
 
 FOREWORD 
 
 XXXI 
 
 Railroad Net Earnings 
 Railroad Freight ton mileage * 
 Lake commerce, freight, net tons 
 Money in circulation 
 Bank Clearings 
 Bank loans 
 
 The Minneapolis Journal of August 31, 1905, gave the 
 following figures; from which it is worthy to note that we 
 are no longer a " one crop country." These cover the three 
 States of Minnesota, North Dakota and South Dakota, only. 
 
 $639,000,000 
 173,613,000,000 
 2 44,270,000 
 $2,653,000,000 
 $142,869,000,000 
 $1,001,000,000 
 
 $317,000,000 101 
 82,289,000,000 111 
 15,062,000 193 
 $1,602,000,000 65 
 $53,348,000,000 167 
 $489,000,000 104 
 
 1905 
 Wheat 
 Oats 
 Corn 
 Flax 
 Barley 
 Rye 
 
 Total 
 
 Hay Tons 
 
 Potatoes 
 
 Bushels 
 
 182,296,800 
 
 154,492,000 
 
 95,863,500 
 
 27,851,000 
 
 63,634,000 
 
 2,945,631 
 
 527,082,931 
 
 2,314,490 
 
 21,058,400 
 
 " Increase in value of all principal field crops for 
 
 1905, compared with 1904 
 " Increase in value of all principal field crops for 1905, 
 
 compared with 1903 
 
 Farm Value 
 
 $139,939,538 
 
 37,946,100 
 
 34,631,302 
 
 25,096,835 
 
 23,429,854 
 
 1,206,118 
 
 $262,249,747 
 
 13,432,366 
 
 7,241,798 
 
 $282,923,911 
 $29,588,143 
 $44,901,921 
 
 " In addition to the value of the annual production of field 
 crops given above, it is safe to say that the value of the annual 
 production of the dairy farms, the truck farms, the market- 
 able increase in cattle, sheep, hogs and horses, will bring the 
 farm production of the current year for the three States of 
 Minnesota and North and South Dakota up to $340,000,- 
 000, or about one hundred million dollars more than the 
 combined value of the entire output of the United States in 
 gold, silver, copper and iron ore." 
 
 As the South is calling upon the North for much money to 
 aid her in the upbuilding of her almost countless enterprises, 
 it is germane to the subject to reprint the following statistics 
 furnished by the Manufacturers' Record of Baltimore: 
 
 FACTS ABOUT THE SOUTH 
 
 Capital invested in cotton 
 
 mills 
 Spindles 
 
 Cotton bales used 
 Value of cotton crop 
 Pig iron made, tons 
 
 1880 
 
 1890 
 
 1905 
 
 $21,000,000 
 667,000 
 225,000 
 $313,696,000 
 397,000 
 
 $60,000,000 
 1,712,000 
 546,000 
 $390,000,000 
 2,600,000 
 
 $225,000,000 
 9,205,949 
 2,163,000 
 $680,000,000 
 3,300,000 
 
 1 1904 and 1894. * Sault Ste. Marie.
 
 XXX11 
 
 MONEY AND INVESTMENTS 
 
 6,000,000 
 $39,000,000 
 
 21,200,000 
 $90,700,000 
 
 67,000,000 
 $250,000,000 
 
 $257,000,000 
 $457,000,000 
 $261,000,000 
 20,600 
 $660,000,000 
 $3,051,175,000 
 
 $659,000,000 
 $917,589,000 
 $306,000,000 
 42,900 
 $773,000,000 
 $4,510,925,000 
 
 $1,500,000,000 
 $1,750,000,000 
 $555,480,000 
 60,000 
 $1,750,000,000 
 $6,500,000,000 
 
 Coal mined, tons 
 Lumber products, value 
 Capital invested in manu- 
 facturing 
 Value of products 
 Value of exports 
 Railroads, mileage 
 Farm products, value 
 Property assessed 
 
 Our tremendous immigration is an example of prosperity. 
 Commercially and financially immigrants should prove an 
 advantage, but the political significance of such a vast inflow of 
 good, bad, or indifferent population, the future only can solve. 
 
 No better indication of prosperity, which is always reflected 
 by activity upon the great stock exchanges, can be exampled 
 than this: During the business depression of 1897 a seat on 
 the New York Stock Exchange sold at $18,000, and now 
 (1906) one has just sold at $95,000; a large sum just for the 
 privilege of doing business upon an exchange. 
 
 There is no doubt of our exceeding wealth, developed and 
 undeveloped. A Japanese of broad reputation, predicts a 
 population of 600,000,000 for these United States within a 
 time so little distant as to startle one. It may all be true, 
 but keep all your financial life-saving apparatus in working 
 order, nevertheless. 
 
 It may be worth remembering that in times of acute busi- 
 ness depression, the railroads of the West and South have 
 shown a far greater proportionate shrinkage in earnings than 
 have those in the more thickly settled portion of the country. 
 
 In the meantime we are safe for the moment, for the great 
 natural causes of prosperity, which no stock manipulator can 
 control, as our great crops with good prices, are silently but 
 surely exercising the controlling influence.
 
 The following is but a partial list of the books, periodicals, 
 newspapers, official publications, statutes, etc., referred to 
 in the preparation of this book. A vast amount of research 
 work has been necessitated, and much of it unproductive. 
 It is deemed advisable, therefore, to only list such authori- 
 ties as have actually been helpful to the author, omitting 
 those from which no benefit has been derived. Recognition, 
 however, is due to the vast number of daily papers in different 
 sections of the country, which have been read seeking for 
 terms and expressions as in local use, and for information in 
 relation thereto. A list of the prominent and leading news- 
 papers of the United States might properly be included in 
 this list, but are omitted from lack of space. 
 
 For the benefit of those who desire to follow further any of 
 the subjects briefly covered in this volume, some help may be 
 derived by referring to the letters prefixed to certain of the 
 following authorities; the prefix "a" indicating books in 
 relation to banks and banking; " b," to railroads and railroad 
 securities; " c," to stocks and the stock market; " d," to 
 foreign exchange; " e," to "options;" and " /," to general 
 matters of interest in relation to money and finance. 
 
 a AMERICAN FINANCE. W. R. Lawson. 
 
 b AMERICAN RAILWAY TRANSPORTATION. Emory R. Johnson. 
 
 APPLETON'S CYCLOPEDIA OF AMERICAN BIOGRAPHY. 6 vols. James 
 Grant Wilson and John Fiske. 
 
 BANK RATE AND THE MONEY MARKET. R. H. Inglis Palgrave. 
 
 BOARD OF TRADE OF CHICAGO. 47th Annual Report. 
 b BRITISH RAILWAY FINANCE. Walter W. Wall, 
 a CLEARING-HOUSES. James G. Cannon. 
 
 COMMENTARIES. Sir William Blackstone. 
 
 CONSTITUTION OF THE BOSTON CLEARING-HOUSE ASSOCIATION. 
 
 CONSTITUTION OF THE BOSTON STOCK EXCHANGE. 
 
 CONSTITUTION OF THE NEW YORK STOCK EXCHANGE. 
 b f CORPORATION FINANCE. Thomas L. Greene. 
 
 CREDIT AND ITS USES. William A. Prendergast. 
 
 ECONOMIC METHOD AND ECONOMIC FALLACIES. William Warrand 
 
 Carlile. 
 
 a d FOREIGN EXCHANGE. H. K. Brooks, 
 a FUNDS AND THEIR USES. Frederick A. Cleveland. 
 a GOVERNMENT BONDS. The National City Bank of New York City. 
 
 xxxiii
 
 xxxiv MONEY AND INVESTMENTS 
 
 HISTORY OF THE CONQUEST OF MEXICO. 3 vols. William H. 
 
 Prescott. 
 HISTORY OF THE CONQUEST OF PERU. 2 vols. William H. 
 
 Prescott. 
 HISTORY OF THE UNITED STATES MINT AND COINAGE. George 
 
 G. Evans. 
 
 How TO INVEST MONEY. E. R. Gabbott. 
 LAW OF BANKER AND CUSTOMER. (London.) James Walter 
 
 Smith. 
 
 LIFE OF ALBERT GALLATIN. John Austin Stevens. 
 LIFE OF ALEXANDER HAMILTON. Henry Cabot Lodge. 
 LIFE OF ANDREW JACKSON. William Graham Sumner. 
 LIFE OF DANIEL WEBSTER. Henry Cabot Lodge. 
 LIFE OF THOMAS JEFFERSON. John T. Morse, Jr. 
 a / LOMBARD STREET. Walter Bagehot. 
 
 a MEMORANDA CONCERNING UNITED STATES BONDS. Fisk & Robinson. 
 / MONETARY SYSTEMS OF THE WORLD. M. L. Muhleman. 
 d f MONEY AND THE MECHANISM OF EXCHANGE. W. Stanley Jevons. 
 b MOODY'S MANUAL OF RAILROAD AND CORPORATION SECURITIES. 
 a NATIONAL BANK ORGANIZATION. National City Bank of New York 
 
 City. 
 
 / ON THE PROBABLE FALL IN THE VALUE OF GOLD. Michel Che- 
 valier. 
 
 6 POOR'S MANUAL OF RAILROADS. 
 
 a / PRINCIPLES AND PRACTICE OF FINANCE. Edward Carroll, Jr. 
 RULES AND REGULATIONS OF THE LONDON STOCK EXCHANGE. 
 STEVENS' COPPER HANDBOOK. 
 
 a THE A B C OF BANKS AND BANKING. George M. Coffin. 
 e THE A B C OF OPTIONS AND ARBITRAGE. S. A. Nelson. 
 c THE A B C OF STOCK SPECULATION. S. A. Nelson. 
 c THE A B C OF WALL STREET. S. A. Nelson. 
 / THE ACCOUNTANCY OF INVESTMENT. Charles Ezra Sprague. 
 / THE AMERICAN LAW RELATING TO INCOME AND PRINCIPAL. 
 
 Edwin A. Howes, Jr. 
 6 THE ANATOMY OF A RAILROAD REPORT AND TON-MILE COST. 
 
 Thomas F. Woodlock. 
 
 c THE ART OF WALL STREET INVESTING. John Moody. 
 c f THE COUNTRY BANKER'S HANDBOOK. (For London Transactions.) 
 
 J. George Kiddy. 
 
 / THE ESSENTIALS OF BUSINESS LAW. Francis M. Burdick. 
 / THE FUNDAMENTAL PROBLEM IN MONETARY SCIENCE. Correa 
 
 Moylan Walsh. 
 
 / THE HISTORY AND PRINCIPLES OF BANKING. James William Gilbart. 
 THE HISTORY OF ENGLAND. 6 vols. T. Smollett. 
 THE LAW OF BILLS, CHEQUES, NOTES AND I. O. U's. (London.) James 
 
 Walter Smith. 
 
 6 c THE MANUAL OF STATISTICS STOCK EXCHANGE HAND-BOOK, 
 a d THE MODERN BANK. Amos Kidder Fiske. 
 THE PEOPLE'S MONEY. W. L. Trenholm. 
 a f THE PRINCIPLES OF MONEY AND BANKING. 2 Vols. Charles A. 
 
 Conant. 
 
 e THE PUT-AND-CALL. Leonard R. Higgins. 
 c THE TICKER BOOK AND MANUAL OF THE TAPE. S. S. Fontaine and 
 
 R. L. Neville. 
 c f THE WORK OF WALL STREET. Sereno S. Pratt. 
 
 TREATISE ON THE LAW OF STOCK-BROKERS AND STOCK EXCHANGES. 
 
 John Randolph Dos Passes. 
 
 / TRUST FINANCE. Edward Sherwood Meade. 
 / TRUSTS, POOLS AND CORPORATIONS. William Z. Ripley. 
 WEALTH OF NATIONS. Adam Smith.
 
 FOREWORD xxxv 
 
 OFFICIAL PUBLICATIONS 
 
 ANNUAL REPORTS OF THE SECRETARY OF THE TREASURY. 
 
 BONDS ISSUED, SINKING FUNDS AND ASSESSMENTS OF METROPOLITAN 
 DISTRICTS AND ARMORIES. Massachusetts. 
 
 BULLETIN OF THE BUREAU OF LABOR IN RELATION TO BUILDING 
 AND LOAN ASSOCIATIONS OF THE UNITED STATES. Depart- 
 ment of Commerce and Labor. 
 
 CLASSIFICATION OF OPERATING EXPENSES. Interstate Commerce 
 Commission. 
 
 COMMISSION ON INTERNATIONAL EXCHANGE, REPORT OF, Document 
 No. 144, 58th Congress, 2nd Session. 
 
 CONGRESSIONAL GLOBES. 
 
 DAILY CONSULAR AND TRADE REPORTS. Department of Commerce 
 and Labor. 
 
 DOMESTIC AND FOREIGN MAIL MATTER. United States Post-Office 
 Department. 
 
 INFORMATION RESPECTING UNITED STATES BONDS, PAPER CUR- 
 RENCY, COIN, PRODUCTION OF PRECIOUS METALS, ETC. United 
 States Treasury Department. 
 
 INSURANCE COMPANY REPORTS (FIRE AND LIFE) OF THE VARIOUS 
 STATES. 
 
 LAWS OF THE VARIOUS STATES AND GREAT BRITAIN IN RELATION 
 TO CERTIFIED PUBLIC ACCOUNTANTS. 
 
 LAWS OF THE VARIOUS STATES RELATING TO THE ORGANIZATION OF 
 CORPORATIONS. 
 
 NATIONAL-BANK ACT AS AMENDED. Comptroller of the Currency. 
 
 NEGOTIABLE INSTRUMENTS LAW. Michigan. 
 
 RAILROAD REPORTS OF THE VARIOUS STATES. 
 
 REGULATIONS OF THE TREASURY DEPARTMENT IN RELATION TO 
 UNITED STATES BONDS. 
 
 REPORTS OF THE COMPTROLLER OF THE CURRENCY. 
 
 REPORTS OF THE DIRECTORS OF THE MINT. 
 
 REPORTS OF THE GAS AND ELECTRIC LIGHT COMMISSIONERS OF 
 THE VARIOUS STATES. 
 
 REPORTS OF THE SAVINGS BANK COMMISSIONERS OF THE VARIOUS 
 STATES. 
 
 STATISTICS OF RAILWAYS OF THE UNITED STATES. Interstate Com- 
 merce Commission. 
 
 STATUTES OF MASSACHUSETTS (AND OTHER STATES) RELATING 
 TO CO-OPERATIVE BANKS. 
 
 TELEPHONES AND TELEGRAPHS. Bulletin No. 17 of the Department 
 of Commerce and Labor. 
 
 THE BUSINESS CORPORATION LAW OF 1903. Massachusetts. 
 
 VARIOUS LAWS IN RELATION TO THE ENGLISH COINAGE AND MINT. 
 
 PAMPHLETS 
 
 A HAND BOOK OF THE MASSACHUSETTS COLLATERAL LEGACY AND 
 
 SUCCESSION TAX. State Street Trust Co., Boston. 
 ARTICLES OF ASSOCIATION AND RULES AND REGULATIONS OF THE 
 
 CHICAGO CLEARING-HOUSE ASSOCIATION. 
 CLEARING OUT-OF-TOWN CHECKS IN ENGLAND AND UNITED STATES. 
 
 James C. Hallock. 
 
 HISTORY OF THE EARLY SCHOOLS IN LONG ISLAND. J. H. Thiry. 
 INFLUENCE OF THE NEW GOLD SUPPLIES. George E. Roberts. 
 MEMORIAL TO THE WEST VIRGINIA LEGISLATURE REPRESENTING 
 
 A PLAN OF SETTLEMENT FOR THE WEST VIRGINIA DEBT. 
 TELEPHONE DEVELOPMENT. Vinton A. Sears. 
 THE CURRENCY REPORT. Special Committee of the Chamber of 
 
 Commerce of the State of New York. 
 THE STAMP SAVINGS SOCIETY OF BOSTON.
 
 xxxvi MONEY AND INVESTMENTS 
 
 MAGAZINES AND FINANCIAL PAPERS 
 
 ATLANTIC MONTHLY. Boston, Mass. 
 
 BULLETIN OF THE AMERICAN INSTITUTE OF BANK CLERKS. New 
 
 York City. 
 
 DAILY BOND BUYER. New York City. 
 JOURNAL OF THE INSTITUTE OF BANKERS. London. 
 LONDON ECONOMIST. 
 
 MANUFACTURERS' RECORD. Baltimore, Md. 
 NEW YORK JOURNAL OF COMMERCE. 
 STREET RAILWAY JOURNAL. Chicago. 
 THE AMERICAN BANKER. New York City. 
 THE BANKER'S MAGAZINE. New York City. 
 THE COMMERCIAL AND FINANCIAL CHRONICLE. New York City. 
 THE INTER-NATION. Boston. 
 THE MONEY MARKET REVIEW. London. 
 THE NORTH AMERICAN REVIEW. New York City. 
 THE OUTLOOK. New York City. 
 
 THE QUARTERLY JOURNAL OF ECONOMICS. Harvard University. 
 THE STATIST. London. 
 
 THE WALL STREET JOURNAL. New York City. 
 THE WORLD'S WORK. New York City. 
 UNITED STATES INVESTOR. Boston, Mass.
 
 OCT 2 4 1907 
 
 MONEY AND INVESTMENTS 
 
 A. The " ticker " abbreviation for " assented," or " Class 
 A." 
 
 A and 0. Interest or dividends payable Bend-annually, 
 April and October. 
 
 A. i. Highest grade; none better. 
 
 " A " Bond (or " A " Stock). Used when securities are 
 divided into classes, such as " A bond," " B bond." (See 
 " Preferred Stock.") 
 
 Abrasion. The reduction in weight of coins or bullion 
 resulting from friction. 
 
 Absolute Indorsement. This binds the indorser of an in- 
 strument to pay the same only in case of failure on the part 
 of all prior indorsers so to do, and upon due notice to him 
 of their failure. 
 
 Absorbed. There are two common uses of this word: 
 First, " the market absorbed all stock offered." By this it 
 is understood that all the stock that was offered found a 
 market, or purchasers. Second, we say that one railroad has 
 " absorbed " another, meaning that it has obtained control 
 of, or bought it. 
 
 Abstract of Title. See " Mortgage." 
 
 Acceptance. When a " time draft " is received for collec- 
 tion, although not due, it is presented to the person against 
 whom it is drawn for " acceptance." This is done by his 
 writing across its face the word " Accepted," followed by 
 his signature, and it is then said to have been " honored." 
 It has now become an evidence of indebtedness against him; 
 very much the same thing as a promissory note. The person 
 drawing the draft has, in like manner, assumed the position 
 of an indorser, so that if it is negotiated in the meantime, or 
 the " drawer " has been given use of the money by his bank 
 which has assumed the collecting of the draft, he must make 
 it good if the " acceptor " fails to pay it.
 
 2 MONEY AND INVESTMENTS 
 
 It is customary to date a draft when it is " accepted," and 
 to name a place of payment; otherwise it is payable at the 
 " acceptor's " place of business. 
 
 " Formerly in England the drawee of a bill could accept it 
 orally, and such is still the rule in some of our States. But 
 by the usage of merchants, as well as by modern statutes in 
 England and in many of our States, an acceptance must be 
 in writing on the bill. This is a proper requirement, for it 
 enables any one who receives the bill to tell at once whether 
 it has been accepted." 1 
 
 A " qualified acceptance " should not be allowed by the 
 party presenting a draft to be accepted. If the person against 
 whom the draft is drawn, in addition to writing the word 
 " accepted," adds thereto some qualification, such as making 
 it conditional upon the receipt of merchandise against the 
 shipment for which it was drawn, a " qualified acceptance " 
 results. The reason for not permitting this is that the 
 " drawer " or indorser upon a paper is entitled to his rights 
 as set forth in its original form, and any change as above, 
 except with their knowledge and approval, relieves them from 
 any liability upon the paper. 
 
 (See also " Time Draft.") 
 
 Acceptor. See " Draft." 
 
 Accident Insurance. A form of insurance by which the 
 person taking out the policy may recover from the company 
 in case of accident to himself, the form of payment by the 
 company being either so much per week according to the 
 amount of the policy during the time of disability resulting 
 from the accident; or a given sum in event of death as the 
 result of an accident; or lesser stated sums if the loss of a 
 limb or loss of sight, or a lesser permanent injury is sustained. 
 Any one of the latter payments would be in addition to the 
 weekly payments on account of inability. These last, how- 
 ever, are generally limited to a duration of a fixed number 
 of weeks. 
 
 Many people who are traveling a great deal or who are 
 engaged in a more or less hazardous form of occupation, carry 
 such policies continually; others take them out for special 
 occasions, as before a railroad trip or an ocean voyage, to 
 cover the period of the journey. The cost is not excessive 
 and this form of insurance has come into very general and 
 satisfactory use. A person taking out such a policy should, 
 however, read it with great care, and follow accurately the 
 instructions given therein in case of accident, and also post 
 himself upon the conditions under which the company be- 
 comes liable, as there are numerous " ifs " to these policies. 
 
 This is a very old form of insurance, having been known for 
 1 Francis M. Burdick,
 
 MONEY AND INVESTMENTS 3 
 
 several centuries, but the Travelers Insurance Company of 
 Hartford was the first to bring it into successful use in America, 
 in 1863. At this present time many companies are writing 
 this sort of risk, the amount outstanding running into the 
 billions of dollars. 
 
 Accommodation. " Borrowers succeeded in finding ac- 
 commodation," meaning that they succeeded in borrowing 
 money. To be " accommodated " in finance means the same 
 as in its general sense, to accomplish what is desired. 
 
 Accommodation Indorser. See " Accommodation Paper." 
 
 Accommodation Note. See " Accommodation Paper." 
 
 Accommodation Paper. Instruments which the maker, 
 drawer, acceptor, or indorser signs merely as an accommoda- 
 dation to another, reaping no financial benefit for so doing, 
 unless paid a commission for the act, as is sometimes the 
 case. In other words, a person becomes a party to an in- 
 strument without consideration, and for the purpose of 
 loaning his credit to another. The rights of all parties con- 
 cerned in " accommodation paper " are somewhat complex, 
 and should be thoroughly understood. For example: cor- 
 porations cannot legally make " accommodation paper." 
 Also: the signer for accommodation is under no liability to 
 the person benefited or accommodated, as no consideration 
 was given; but he is liable to any other holder for value, 
 of the paper. 
 
 The lending of one's credit in the shape of " accommoda- 
 tion paper " is a very bad practice and should be seldom, if 
 ever, indulged in. Financial ruin has resulted in many 
 instances from this sort of thing. 
 
 Account. See " For the Account." 
 
 Account and Risk. A transaction in which the broker acts 
 merely as " agent " for the account of the customer, who 
 assumes all the risk incurred. 
 
 Accountant. See " Auditor." 
 
 Account Current. Same as " Current Account." 
 
 Account Day. Strictly, the last of the " fortnightly settling- 
 days." Also called " pay-day " and " settlement day." This 
 is the day upon which stocks are delivered and paid for, and 
 settlements made. 
 
 Account Days. See " Fortnightly Settling-Days " 
 
 Account Sales. The statement which a broker, agent, or 
 commission merchant gives his customer, showing how his 
 account stands. 
 
 Accounts Payableo Open accounts with others showing 
 sums due them, but not evidenced by forms of indebtedness 
 such as notes or acceptances.
 
 4 MONEY AND INVESTMENTS 
 
 Accounts Receivable. Open accounts on the books of a 
 firm, corporation, etc., against its customers, not evidenced 
 by written obligations such as notes or acceptances. 
 
 Accrued Dividend. This has the same relation to a stock 
 as " accrued interest " has to bond. Not many stocks are 
 sold with " accrued dividend " or " with dividend," and 
 then only in case of " guaranteed stocks " or stocks where the 
 dividend is certain and fixed. 
 
 Accrued Interest. One of the most common expressions in 
 connection with investment dealings, and one very fre- 
 quently not clearly understood. Let us take, for example, 
 a $1,000 bond bearing 4% interest, or, in other words, paying 
 the holder $40 yearly. The interest is payable January 1st 
 and July 1st, each year; $20 at each time. This interest will 
 not be paid before it is due; that is, in the month of June 
 the interest due July 1st cannot be collected; but, suppose 
 Maria Jones had held the bond in her possession until the 
 1st of June, she would, therefore, be entitled to the interest 
 upon her money at the rate of 4% annually from January 1st 
 last, at which time she received the interest then due. There- 
 fore, if Maria Jones wishes to sell this bond to Henry Drake 
 at a price, say, of par and " accrued interest," she would re- 
 ceive from him $1,000 the principal sum of the bond 
 and also the interest upon the $1,000 from January 1st to 
 June 1st, or five months, at the rate of 4% per annum. Drake 
 would, therefore, have paid to Maria Jones five months' 
 interest, which he could not collect until the 1st of July, at 
 which time he would collect not only the five months' inter- 
 est paid Maria Jones, but the additional one month's interest, 
 for the time which he had had his money invested; there- 
 fore, the amount of money paid to Maria Jones would not be 
 lost by Drake, but would come back to him, together with 
 his one month's interest, on July 1st. 
 
 This is the only method by which it is possible to sell any 
 security upon other than interest dates, without loss of 
 interest to the holder, except an additional price be placed 
 directly upon the security at the time of its sale, equal to the 
 interest which has " accrued " since the last interest pay- 
 ment. Most stocks are sold in this latter way, and, in fact, 
 all securities dealt in upon the New York Stock Exchange. 
 Bonds upon the Boston Stock Exchange are sold with " ac- 
 crued interest," except " defaulted " and " income bonds," 
 which are sold without interest or " flat," as it is called. There 
 is, therefore, generally a difference in quotations of bonds 
 upon the two exchanges, from the fact of being sold " flat " 
 upon the New York, and " with interest " upon the Boston 
 Exchange. " With interest," " and interest," or " interest 
 added" are expressions, either of which is used in the same
 
 MONEY AND INVESTMENTS 5 
 
 sense as " accrued interest." If a note is drawn payable 
 " with interest " and no rate is mentioned, the legal rate of 
 interest prevailing in the State where the note is made payable 
 is understood. 
 
 Accumulated Dividends. The dividends which have accrued 
 but not been paid on " cumulative " (which see) stock. 
 
 Accumulative. See " Cumulative." 
 
 Acknowledgment. A certificate of the proper officer that 
 the maker of a written instrument has appeared before him 
 and declared it to be his wilful act and deed. 
 
 Acquittance. A written agreement relieving one from the 
 necessity of making a payment of money. 
 
 Active Account. Bank deposits against which many 
 checks are drawn, and at frequent intervals; accounts with 
 brokers which show many transactions. 
 
 Active Partner. One actively engaged in the business, and 
 who incurs full liability, as distinguished from " silent part- 
 ner " and " special partner." 
 
 Active Stocks or Bonds. Securities which are frequently 
 bought and sold; quoted daily, or nearly so, in the news- 
 papers or reports of the various stock exchange transactions. 
 When trading in a security ceases for any considerable time, 
 it becomes " inactive." 
 
 Actual Rates. See " Posted Rates." 
 
 Actual Reserve. The same as " Reserve Held." 
 
 Actuary. A person skilled in the theories and mathemat- 
 ical calculations on which life insurance is founded and con- 
 ducted. He computes mathematically the reserve upon 
 policies, premiums, surplus, dividends, and performs any 
 other mathematical calculations needed in the practice of 
 the company. The study of death rates always has been, 
 and must continue to be, a very important item in the 
 activity of the " actuary," and the measuring of probabil- 
 ities based on his calculations is one of his most responsible 
 duties. 
 
 Adjustment Mortgage Bonds. There are very few of these 
 in existence, the most notable example being that of the 
 Atchison, Topeka & Santa Fe Railway Co., which, in the 
 reorganization of 1895, scaled down its original first mort- 
 gage to 75%, for which new first mortgage bonds were issued, 
 and the difference, namely, 25% of the principal, and the 
 defaulted interest, adjusted by issuing other bonds. These 
 were accumulative " income bonds " for the first five years 
 and then became a fixed obligation. These are known as 
 " adjustment mortgage bonds." 
 
 Administrator (or Administratrix). A person named by the
 
 6 MONEY AND INVESTMENTS 
 
 Probate Court, or other proper authority, to take charge of 
 the goods and estate of one dying without a will. 
 
 Admitted to Quotation. This expression is frequently seen 
 in financial news relating to this or that security, and by it 
 is meant that the security in question is allowed to be dealt 
 in upon the Unlisted Department of the Stock Exchange. 
 To clearly understand this, however, the reader should turn 
 to the two subjects " Listed " and " Unlisted Securities." 
 If a security is admitted into the " listed " department, 
 that is, placed upon the regular list by the Governing Com- 
 mittee, the term " listed " would be used instead of " ad- 
 mitted to quotation." 
 
 Advance. " The market has advanced; " " prices have 
 advanced; " expressions indicating a rise in prices. 
 
 An occasional use of the word is to indicate that money 
 has been loaned, 1 or that a payment has been made. When 
 Jones " advances " Smith $50, it may indicate either of these 
 transactions. 
 
 Advance Bill. This is a regular " commercial bill " of ex- 
 change, only drawn against goods to be afterwards shipped 
 instead of against a shipment already made. They are 
 usually drawn only when there is a considerable regularity 
 of trading between the drawer and the acceptor of the bill, 
 whereby the latter leaves it largely to the judgment of the 
 drawer as to the character, amount, and date of shipment 
 of the goods. 
 
 Adventure. The Adventure Consolidated Copper Co. Also 
 an old term for a shipping venture or speculation. 
 
 Advice. If, as an example, you forward a check to some 
 bank for deposit accompanied with a letter containing the 
 words " for the credit and advice of James Taylor," it means 
 that the bank must credit the amount to James Taylor 
 and notify him; i.e. send him " advice," that it has done so. 
 Also " letter of advice," to which refer. 
 
 Afloat. A term used by traders in grain indicating the 
 amount loaded in vessels which may be in harbour, or ex- 
 ported, but not yet reached its destination. 
 
 After Sight. After presentation for " acceptance," to 
 which refer. 
 
 Agent. One who represents, acts for, or in behalf of, an- 
 other, who is called his " principal." 
 
 In brief, they are divided into two classes " special " and 
 " general." The latter is " one who is appointed to do acts 
 of a class, and a special agent . . . appointed to do indi- 
 
 1 In the remarks by the Governor of the Bank of England following 
 the Panic of 1866, loans made to assist the business community in tiding 
 over the strained condition of affairs were referred to as " advances."
 
 MONEY AND INVESTMENTS 7 
 
 vidual acts." * An illustration would be that a " general 
 agent " might be employed to buy pig iron, no restriction 
 being placed upon him as to where or of whom he should buy. 
 He would become a " special agent " if his principal had 
 restricted him to the purchase of a certain lot of iron and his 
 authority ended with the success or failure to purchase the 
 especially described article. 
 
 The relationship between agents, their principals and third 
 parties, and the rights and liabilities of the same, are matters 
 worthy of serious consideration, and should be thoroughly 
 understood before one becomes involved as any of the above 
 parties. (The reader wishing to pursue this subject further 
 is referred to the subject of " Agency " very clearly set 
 forth in " Essentials of Business Law," by Francis M. Bur- 
 dick.) 
 
 One very important point, however, it may be well to 
 mention here, namely: the signing by an agent of any nego- 
 tiable instrument or contract under seal. It is a safe rule for 
 him to pursue to sign the name of his principal, by himself 
 as agent; as, for instance, " James Jackson, by Thomas 
 Jones, Agent; " not " Thomas Jones, Agent, for James Jack- 
 son." This is to avoid personal liability on the part of the 
 agent. 
 
 Agent de Change. 2 The French term for a stock broker. 
 
 Agio. (There are various other ways of spelling this word.) 
 The rate of exchange between the moneys of two countries; 
 also the percentage of difference in values between two differ- 
 ent moneys in the same country. For instance, a paper cur- 
 rency in some country may not be accepted at its face value 
 in exchange for metallic currency. The percentage by which 
 the latter exceeds the former in value is known as " agio." 
 The percentage in value at which the paper currency is ac- 
 cepted below the metallic currency is called " disagio; " 
 " agio " representing a premium upon a better currency, and 
 " disagio " a discount upon a depreciated currency. The 
 wear and tear, or " abrasion " of a metallic currency is also 
 called " disagio." 
 
 Agiotage. This is a foreign term having commonly two 
 meanings: First, the rate or price of " exchange; " second, 
 speculation in stocks, bullion, exchange, etc. 
 
 1 Defined by the Supreme Court of the United States. 
 
 2 " The French stock market has since (1795) remained under official 
 supervision, although alongside of the seventy official agents de change, 
 occupying the parquet, has arisen the unofficial board known as the 
 coulisse. Several legal conflicts have occurred between the privileged 
 brokers and the coulisse, which led in 1898 to the reorganization of the 
 stock exchange and the prohibition of dealings on the coulisse, except in 
 certain classes of securities." The Principles of Money and Banking, 
 Charles A. Conant.
 
 8 MONEY AND INVESTMENTS 
 
 Agricultural Chemical. American Agricultural Chemical 
 Co. (Chemical fertilizers and by-products.) 
 
 Aj. The " ticker " abbreviation for " adjustment." 
 
 A. J. O. J. April, July, October, and January; interest or 
 dividends payable quarterly, beginning with April. 
 
 Albany. Boston & Albany R. R. Co., leased to New York 
 Central & Hudson River R. R. Co. 
 
 Allonge. When checks, promissory notes, or similar nego- 
 tiable instruments have their backs entirely covered with 
 indorsements, a slip of paper, called an " allonge," is often 
 attached to receive any further indorsements. 
 
 All or Any Part. The next subject explains this in part, to 
 which it is the opposite, as the condition is that any amount, 
 or even all, of the issue may be sold to the successful bidder. 
 
 All or None. This can best be understood by first reading 
 " Sealed Bid." " All or none " is a condition imposed by 
 the bidder for an issue of securities, by which it is understood 
 that in the event of his bid being accepted, he is to take the 
 entire issue, but no lesser amount. Or the seller of the se- 
 curity may stipulate that the successful bidder shall be 
 bound by this same condition. 
 
 Allotment Note. Signed by a seaman, giving authority for 
 the payment of a portion of his wages from time to time to 
 some other person. 
 
 Allouez. Allouez Mining Co. (Copper.) 
 
 Amal. Amalgamated. 
 
 Amalgamated. Amalgamated Copper Co. 
 
 American Pneumatic. American Pneumatic Service Co. 
 (Pneumatic tube service.) 
 
 American Rails. The general foreign particularly Lon- 
 don name for United States railway shares. As a rule, 
 however, railway shares which are traded in upon the New 
 York Stock Exchange are those referred to. 
 
 Americans. The general foreign particularly London 
 name for United States securities. As a rule, however, 
 securities that are dealt in upon the New York Stock Ex- 
 change are more especially understood. 
 
 American Telephone and Telegraph Co. See " Telephone 
 Securities." 
 
 Amortise (or Amortize). The payment of a debt by means 
 of a sinking fund. (See " Sinking Fund.") 
 
 Anaconda. Anaconda Copper Mining Co. 
 
 Ancillary Receiver. A second, or assistant receiver, who 
 manages the property situated in some State other than that 
 in which the " receiver " (principal one) gets his authority.
 
 MONEY AND INVESTMENTS 9 
 
 And Interest. See " Accrued Interest." 
 
 A. N. F. M. August, November, February, and May; 
 interest or dividends are payable quarterly beginning with 
 August. 
 
 Anna. See India Money Table under " Rupee." 
 
 Annual Interest. Interest payable once a year. Very few 
 investments have interest payable at such infrequent inter- 
 vals, and are not considered as desirable as in the cases where 
 interest is payable semi-annually or quarterly. 
 
 Annuity. A fixed sum of money payable yearly; or, to put 
 it differently: a fixed sum granted or bequeathed pay- 
 able at certain regular periods. 
 
 Anthracite Roads. See " Hard Coalers." 
 
 Anticipation of Taxes. See " Tax Relief Bonds." 
 
 Anti-Stock Watering Laws. Laws which require that 
 there shall be a dollar invested for every dollar of stock 
 issued. 
 
 Apd. The " ticker " abbreviation for " assessment paid." 
 (See " Assented Stocks.") 
 
 Appraised Value. The value set upon a property by an 
 " appraiser." 
 
 Appraisement. The placing of a value upon a property ; 
 the value set. 
 
 Appraiser. One who is named by an individual or ap- 
 pointed by law to estimate values. 
 
 Arbitrage. Buying a security in one market and selling it 
 in another at a better price; taking advantage of a difference 
 in current quotations upon the same security in two different 
 markets, by buying in one and selling in the other, at a 
 higher price; the difference, less certain expenses, represent- 
 ing the " arbitrageur's " profit. Sometimes the sale is made 
 in one market before the purchase in the other. " Arbitrage " 
 business is carried on very extensively between London and 
 New York, but chiefly by what is known as " international 
 banking houses," to a much lesser degree between different 
 American markets. Some " arbitrage " transactions, how- 
 ever, are conducted between the New York Stock Exchange 
 and the " New York Consolidated Stock and Petroleum 
 Exchange." 
 
 " Rights " for the privilege of subscribing to a new stock 
 issue may be handled as an " arbitrage " dealing in this 
 way: Suppose " rights " in a certain corporation can be 
 purchased at 4^. An " arbitrage " dealer buys 100 of these 
 for $450. These give him the privilege of subscribing to 100 
 shares, we will say, of new stock in the company. Imme- 
 diately upon making the purchase, he sells 100 shares of the
 
 10 MONEY AND INVESTMENTS 
 
 old stock of the company at 105 per share, borrowing the 
 stock temporarily to make delivery until the new stock shall 
 be issued in accordance with his " rights." By this trans- 
 action he makes fifty cents per share, for his " rights " cost 
 him but $4.50 each, carrying the privilege of subscribing to 
 the new stock at $100 per share. The new stock would cost 
 him but 104^, whereas he has sold the old stock at 105. 
 
 Also, in case of merging of one company into another, 
 where the stock of one company may be exchanged for stock 
 in the other, opportunities for " arbitrage " dealing often 
 arise. 
 
 In the business known as " foreign exchange " (see " Tri- 
 angular Operation ") the triangular plan of using a credit 
 at one place to settle a debit at another, is a transaction 
 known as " arbitrage." (See " Back Spread.") 
 
 Arbitrage Houses. Stock exchange houses which make a 
 specialty of dealing in " arbitrage." (See that subject.) 
 
 Arbitrageur. A dealer in " arbitrage." (See that subject.) 
 
 Arbitrary. A fixed sum paid by a main line of railway to a 
 branch, or connecting line, for freight originating on the 
 latter, regardless of what is its proportion of the through rate 
 on such freight. This is on the theory that a branch road, 
 delivering freight to a main line, is entitled to more than its 
 mileage proportion of the through rate. 
 
 Arbitrated Exchange (or Arbitration of Exchange). Refer 
 to " Triangular Operation," which is what is understood by 
 this subject. 
 
 Arcadian. Arcadian Copper Co. 
 
 Argentines. The various securities of the Argentine Re- 
 public dealt in on the London Stock Exchange. 
 
 Arnold. Arnold Mining Co. (Copper.) 
 
 Article. This is the English term for our " item," to which 
 the reader may refer. 
 
 Ash Bed. Ash Bed Mining Co. (Copper.) 
 
 Asked Price. The price at which a security or commodity 
 is offered for sale. The " asked price " of Western Union 
 Telegraph stock is 95 when that is the price at which it can 
 be bought. 
 
 Assaying. A chemical analysis of ores or metals. 
 
 Assay Office. A branch of the U. S. Mint next to the Sub- 
 Treasury on Wall St., in New York City. Its functions are to 
 assay, part, and refine gold or silver when presented in the 
 form of crude bullion, jewelry, or whatever it may be, and the 
 manufacture of gold and silver bars. All such that pass 
 through the " assay office " bears the Government stamp 
 certifying to weight and fineness. A charge is made for doing
 
 MONEY AND INVESTMENTS 11 
 
 the work for others than the Government. There are " assay 
 offices " at other points in the country. 
 
 Assay Office Bar. A United States Government bar of fine 
 gold or silver manufactured at a government " assay office," 
 and so termed to designate it from one made without govern- 
 ment regulation, which is called a " commercial bar." 
 
 Assented Stocks (or Bonds). In the event of a corporation 
 passing through a reorganization where the security holders 
 are requested to give " assent " to a certain plan; in the case 
 of a stock being " assessed; " or similar instances where the 
 consent of each share or bondholder is desired, some banking 
 house or trust company is usually selected to receive the 
 securities and stamp thereon in each case the fact that the 
 holder has " assented " to the plan or paid the " assessment." 
 If more than one " assessment " is called for, " first assess- 
 ment paid," " second assessment paid," etc., as the case may 
 be, will be stamped on the security. Securities so stamped 
 may have quite a different market value from those not 
 stamped, for it is evidence of the assent or non-assent to the 
 plan. 
 
 Financial columns and stock exchange sheets refer to the 
 above in the brief method of " assented," " ass't. pd.," " 1st 
 ass't. pd.," etc. 
 
 Assessable. See " Non-assessable." 
 
 Assessed Valuation. When a banker offers for sale a bond 
 of any municipality, the " assessed valuation " is one of the 
 important facts set forth. There is a general rule that the 
 total debt of a municipality shall not be greater than a certain 
 percentage of the " assessed valuation " after taking into 
 consideration any sinking fund or debt for water works 
 which are supoosed to be self-sustaining. The " assessed 
 valuation " is the value fixed upon the property of the mu- 
 nicipality by authorized officials for the purpose of taxation, 
 but the rules for fixing the assessment vary in the different 
 States. In Massachusetts, for instance, it is customary to 
 assess property somewhere near its marketable, or real, value, 
 whereas, in many of the Western States the assessment is based 
 upon about a third of the marketable value, or, even, in some 
 cases, a lesser percentage; therefore, it is necessary to have 
 some knowledge as to the percentage which the " assessed 
 valuation " in a given State bears to the marketable value of 
 the property in satisfying oneself as to whether or not the 
 indebtedness of a municipality is too excessive for the valua- 
 tion given. 
 
 The " real valuation " is very frequently given in banker's 
 circulars, offering municipal bonds, for the purpose of en- 
 abling an investor to reach the conclusion above mentioned. 
 This " real valuation," however, is largely guess work, but
 
 12 MONEY AND INVESTMENTS 
 
 long familiarity with such matters has enabled the bankers to 
 approximate such figures with a reasonable degree of cer- 
 tainty. 
 
 Assessment. See " Non-assessable " and " Double Lia- 
 bility." 
 
 Assessment and Fraternal Insurance. A system of life 
 insurance by which the annual premium to be paid by the 
 insured is not fixed, but subject to change from time to time, 
 according to the deaths during the period, each member being 
 assessed for his proportion of the expense of the Society and 
 the death losses. 
 
 This is probably, as a class, the cheapest kind of insurance, 
 but has proved to be the most uncertain, on account of the 
 many associations which have failed, and the at times 
 high assessments levied. It is taken out largely by those 
 of limited means and in small amounts. It is commonly 
 maintained by Granges and secret orders in general, and is a 
 very old form of insurance, its most successful exponent 
 being the " Guilds " of the older countries. 
 
 Assets. Everything of any supposed value belonging to a 
 person, business, or corporation, are called "assets;" such 
 as property, real estate, machinery, merchandise, material 
 and stock in process of manufacture, cash and debts re- 
 ceivable, patent rights, trade marks, good will, profits, 
 etc. 
 
 Assets Currency. A currency which it has been suggested 
 that national banks issue but has not yet been attempted. 
 It has received much attention and certain recommendations 
 from the Committee on Currency and Banking of the House 
 of Representatives. It was proposed to issue bank notes, 
 secured with certain limitations by the general assets 
 of the issuing bank, instead of Government Bonds. 
 
 Assign. To transfer in writing any right or interest. A 
 .merchant is commonly said " to assign " when, being unable 
 to pay his debts, he transfers his property to another for 
 distribution among his creditors. 
 
 Assignat. During the French Revolution of 1789, mone- 
 tary difficulties were experienced in France, resulting in an 
 issue of paper currency known as " assignats," the security 
 behind it being church land that had been confiscated, 
 besides which they were additionally secured by all the 
 national domains and other property. The issue became so 
 great, over 45,000,000,000 of francs, that there was a great 
 decline in their value before their withdrawal. 1 Conant says 
 that their depreciation was due to " the attempt to base cir- 
 
 1 The People's Money, by W. L. Trenholra, and Century Dictionary and 
 Cyclopedia.
 
 MONEY AND INVESTMENTS 13 
 
 culating notes upon land and other wealth of unquestioned 
 value, but not of immediate exchangeability." 
 
 Assignee. One to whom some right or interest is transferred 
 by writing. An " assignee for the benefit of creditors " is 
 one to whom an insolvent merchant voluntarily transfers 
 his property for conversion into cash and distribution among 
 his creditors. An " assignee in insolvency " is a person 
 appointed by a State court under the State insolvency law 
 to take possession of the property of an insolvent debtor, 
 convert it into cash, and distribute it among the cred- 
 itors. 
 
 Assign in Blank. A written transfer (see " Assign ") in 
 which there is no name inserted of any party to whom transfer 
 is made, but which may be done at any time. 
 
 Associated Banks. Members of the " Clearing-House As- 
 sociation." 
 
 Ass't. Assessment. 
 
 Assumed Bonds. Bonds issued by a corporation, the con- 
 trol or ownership of which passes into the hands of another 
 corporation, which latter agrees to be responsible for the 
 payment both of the principal and interest of such bonds, 
 are spoken of as "assumed bonds;" that is, the "parent 
 company " assumes the indebtedness. In railroad finance 
 such securities are spoken of as " divisional issues," which is 
 really what they are. Again, they are frequently referred 
 to as " guaranteed bonds," but in the latter case the fact of 
 the guarantee appears upon the bonds themselves. 
 
 Unless a payment of an issue of an absorbed company has 
 been actually assumed by the " parent company," the in- 
 vestor can only look to the value of the property actually 
 mortgaged as security for its investment, although the prin- 
 cipal and interest on such issues might be protected by the 
 larger company for the protection of its own credit. Where 
 the bonds have been actually assumed, then the " parent 
 company " may be looked to for the final payment, although 
 even in such a case it is not advisable to purchase securities of 
 a branch or division which is not of sufficient importance to 
 the controlling company to make it worth while to maintain 
 the same and keep it in good physical condition. 
 
 " A " Stock (or Shares). See " Preferred Stock." 
 
 Atch. Atchison, Topeka & Santa Fe Railway Company. 
 
 Atchison (or Atch). Atchison, Topeka & Santa Fe Railway 
 Co. 
 
 Atlantic. Atlantic Mining Co. (Copper.) 
 
 Atlantic Coast. Atlantic Coast R. R. Co., controlled by the 
 Atlantic Coast Line Co.
 
 14 MONEY AND INVESTMENTS 
 
 Atlantic Ports. As usually understood, Boston, New York, 
 Philadelphia, and Baltimore. 
 
 At Sight. Payable on presentation. 
 
 At the Market. An order to buy or sell at the best price 
 the market affords at the time, no actual price limit being 
 named. 
 
 At the Opening. An order to buy or sell at the best market 
 price obtainable immediately after the opening of the ex- 
 change, no actual price limit being set. 
 
 At Three Days. Delivery of the security upon the third day 
 following the contract. 
 
 Attorney in Fact. One who acts under the authority con- 
 ferred by power of attorney. 
 
 Attorney's Opinion. The necessary procedure by a corpo- 
 ration issuing bonds is very complex, and the work, after it is 
 accomplished, is generally reviewed by some competent law- 
 yer, and approved by him, before such an issue of bonds is 
 accepted by a banking house. His written statement or 
 approval is called an " attorney's opinion," or " legal opin- 
 ion." 
 
 In the case of a municipality issuing bonds, the 'steps 
 which it must take also necessitate great care, and it is like- 
 wise customary to have some competent attorney approve 
 the issue. In fact, all banking houses of repute condition a 
 purchase of bonds upon the same being approved by their 
 attorney, and in making a contract for purchase this 
 phrase is usually inserted: " The necessary papers evidencing 
 the legality of the issue satisfactorily to our attorney to be 
 furnished us, prior to our taking up and paying for the bonds." 
 
 An investor in bonds should assure himself that the banking 
 house offering the same has a proper " attorney's opinion " 
 covering the issue, unless it is some well known established 
 issue which has been upon the market for years, and which 
 is the obligation of such a stable and established corporation 
 or municipality that he has the right to assume that all such 
 steps have been properly taken. One would hardly ask for a 
 " legal opinion " covering an issue of City of Boston bonds, 
 which has been outstanding for some years. 
 
 The opinion of a lawyer, no matter how clearly setting 
 forth the correctness of the legal status of an issue, does not 
 for a moment imply that such an issue is a sound investment, 
 for, as Moody puts it in his excellent book: " The Art of Wall 
 Street Investing," he " has never yet known a security so 
 poor that a lawyer's opinion could not be had to back it." 
 
 When an " attorney's opinion " is produced there are one 
 or two precautions which should be taken. In the first place, 
 the bond issue covered by the opinion should be thoroughly
 
 MONEY AND INVESTMENTS 15 
 
 described, so that there may be no way of mistaking its 
 identity; again, the attorney should state clearly that he 
 has not only examined all the papers necessary to establish 
 the legality of the issue, but, furthermore, that he has exam- 
 ined one of the executed bonds and approved the same. 
 There have been cases known where all the steps leading up 
 to the issue of bonds had been approved by some attorney, 
 but when the bonds themselves were finally issued, they did 
 not agree with the conditions set out in the papers furnished. 
 Such a bond would probably not be a legal or binding obli- 
 gation, or at least it might give an opportunity to escape 
 payment, if the inclination to do so existed. 
 
 Au Besoin. Literally, " in case of need." This often ap- 
 pears in bills of exchange naming so'me one to whom applica- 
 tion for payment may be made in case the original person 
 (drawee) refuses. 
 
 Auction Sales. Quotations of securities sold at auction 
 frequently appear in the papers. In Boston the custom is to 
 hold auction sales of securities twice a week except during 
 the summer months, and then once a week upon fixed days, 
 the securities having been previously advertised in the daily 
 papers. These sales have no connection whatsoever with 
 the stock exchanges; are held in the auction sales rooms of 
 certain private banking firms, at which time any person may 
 be present. Many securities not listed upon the stock ex- 
 changes are sold in this way, as well as securities which the 
 law provides must be sold at auction. There is no restriction 
 as to securities which may be offered for sale through such a 
 medium. 
 
 Auditor. One who makes a profession of examining and 
 reporting upon the financial condition of a firm, corporation, 
 municipality, etc.; a person competent to examine accounts; 
 compare the charges with the vouchers; to establish the fact 
 that the financial condition is, or is not, as represented. A 
 railroad " Auditor " is the official who examines the ac- 
 counts of the different ticket offices, departments, etc., to 
 ascertain that no errors or dishonest acts have occurred. 
 The Auditor of Public Accounts is he who examines into the 
 accounts of all the departments of a State, for instance, and 
 soon. 
 
 It is generally customary for investment bankers to employ 
 an " auditor," or expert accountant, to examine in detail 
 the books of a corporation which is already in existence and 
 running, to verify the earnings as rendered by such corpora- 
 tion, and whose bonds, stocks, or other obligations it is the 
 banker's intention to purchase. Of course, in the case of 
 many corporations, like large established railroads, who are
 
 16 MONEY AND INVESTMENTS 
 
 obliged to furnish, at stated intervals, a public statement of 
 their earnings, sworn to by the road's own officials, it is very 
 often not customary to have their accounts verified in this 
 way, but in the case of street railways, electric light com- 
 panies, gas companies, etc., and even in the case of the smaller 
 railroads, the custom is generally followed. 
 
 The necessity for such examination is well set forth in the 
 following true case: Several existing properties had been 
 consolidated and operated as a single property for about one 
 year; a statement of the earnings of the property since con- 
 solidation had been furnished to the bankers intending to 
 purchase the bonds. The earnings seemed very satisfactory, 
 but an expert accountant, in making a very exhaustive and 
 careful investigation of the books, found that at the time of 
 consolidation, each of the various properties had on hand 
 quite an amount of supplies, such as coal, oil, etc., and that 
 during the period since consolidation, these supplies had 
 been consumed without any charge for the value having 
 been made against the earnings. If these supplies, which 
 were necessary supplies, had been purchased during the 
 period of operation, the net earnings as rendered would have 
 been very much lessened. The result was, that the earnings 
 were found insufficient to warrant the banker's taking the 
 bonds. This is not an unusual case, and any " auditor " 
 should have readily discovered the discrepancy. It does 
 not argue in any way a desire to deceive upon the part of the 
 officials of the corporation. They were very likely uncon- 
 sciously deceiving themselves, and were as much surprised 
 as any one to find that they had misrepresented the true 
 state of affairs. 
 
 Now, be it said, in support of the honourable banking 
 fraternity, that this banking firm having contracted for the 
 purchase of this issue of bonds, based upon everything being 
 as represented, had in turn sold it to a large institution, which 
 had sent its own expert to examine the property, and who 
 had made a careful and favourable report. The issue of bonds 
 was of some considerable size and represented an attractive 
 profit to the bankers. Upon finding the discrepancy in the 
 earnings, the matter was at once reported to the institution, 
 the bankers declining to have the issue pass through their 
 office, necessitating not only the loss of anticipated profits, 
 but an actual financial loss resulting from employment of 
 experts, etc., running into quite a sum. 
 
 This specific example has been set forth here to show some 
 of the troubles and tribulations of the banking houses, of 
 which the investment public may know but little. It is 
 perhaps a safe statement to make that on the average, one 
 out of three issues of corporation bonds investigated, and
 
 MONEY AND INVESTMENTS 17 
 
 generally at some considerable time and expense, are de- 
 clined by bankers after examination. The direct money 
 expense, and the loss of time to the banking houses from this 
 source/ is considerable in the long run, and an investor must 
 understand that it is done primarily to protect the investors' 
 interests, and, next, to maintain the good reputation of the 
 banker. 
 
 There are, of course, some exceptions to this rule; banking 
 houses have been known to buy issues of bonds without 
 proper investigation or the employment of sufficiently expert 
 examiners, but the bankers in general must not be condemned 
 on account of the faults of the few. This fact is emphasized 
 because of the unfair charge often made of the desire of the 
 average banker to sell anything that will sell and so make a 
 profit. The investment public little knows the care which is 
 generally taken to safeguard its interests, and even in spite of 
 all this care, some unforeseen condition, like possibly un- 
 expected competition, or the invention of some new method 
 of accomplishing what the corporation in existence may al- 
 ready be doing, will bring disaster, and, in such cases, the in- 
 vestor is too prone to heap all the blame upon the banker. 
 And let me say a word here to the investor, before he puts the 
 blame of financial loss upon the person from whom he makes 
 the purchase. Let him make a thorough investigation of 
 what has brought about the loss, let him ascertain the care 
 that was taken at the time of purchase to safeguard his 
 interests, and then let him be willing to take his own share 
 of the responsibility, and remember that there is no invest- 
 ment of any kind that can be made without some risk, and 
 the greater the interest obtained, as a rule, the greater the 
 risk. Remember that risk increases tremendously with the 
 growth of the size of the promised interest return. When 
 an investment turns out favourably, and, as in some cases, a 
 profit from the increase in value of the security additional to 
 the interest return is derived, the investor is inclined to pat 
 himself upon the back with great satisfaction and give him- 
 self all the credit for this profit; whereas, it may have been 
 due entirely to the advice of the banker. The banker usually 
 gets no credit ; but, if a loss results you may rest assured that 
 the banker will get all the odium of the blame. 
 
 The writer desires to lay considerable stress upon the im- 
 portance of the wording of an " auditor's certificate." There 
 are certificates and certificates, and although a banker may 
 state that a certain issue of bonds has been safeguarded by 
 a careful examination into and report upon the earnings of 
 the corporation yet that fact in itself is not sufficient. Knowl- 
 edge should be had somewhat as set forth by the following, 
 which appeared in the Wall Street Journal:
 
 18 MONEY AND INVESTMENTS 
 
 " The public . . . has suffered enough disappointment 
 from accounts certified by reputable auditors to make the 
 whole question of the public accountant and his function a 
 matter of direct interest to the investor. It is very hard for 
 the outsider to discriminate between what is really a trust- 
 worthy certificate and what is a bad one. There is no standard 
 form. 
 
 Here is a typically bad certificate : 
 
 " ' We certify that the above condensed balance sheet is correct, 
 according to the books and accounts. 
 
 " ' (Signed) 
 
 " ' Accountants. 
 
 " Such a certificate has little value. If the affairs of the 
 company have been administered against the stockholders' 
 interests and for the benefit of a dishonest executive it is 
 certain that the books submitted to examination will balance. 
 The certificate professes to give independent protection to 
 stockholders, but it could be used by the crudest swindler 
 that ever deluded the unwary investor. 
 
 11 There are plenty of good certificates. Here is one in 
 abridged form which amply protects the stockholder: 
 
 " ' We have examined the account books and vouchers of 
 this Company and its associated companies and have verified 
 the consolidated profit and loss account and balance sheet 
 published herewith. We find the inventories sound and con- 
 servative. The depreciation and reserves are such as to leave 
 no doubt in our minds that the final balance asset values are safe. 
 Every care has been taken to include in the balance sheet all 
 ascertainable liabilities of the company.' 
 
 " What should an examination be? It should be such an 
 investigation as the stockholder would make for himself if 
 he were an expert accountant. The great societies of account- 
 ants in Europe demand a certain standard of their members, 
 and will not tolerate certificates given where no real audit has 
 been made. Every one is willing to believe that this is the 
 aim and ideal of our Society of Public Accountants. They 
 can do more in a month than ill-informed State legislatures can 
 in a year. They can establish a standard form of analysis 
 for their members of such a character that no respectable 
 corporation will care to use the certificates of accountants 
 not responsible to a powerful and high-principled organiza- 
 tion such as theirs." 
 
 Authorized Issue. The total amount of stocks, bonds, or 
 whatever the security may be, which a company may legally 
 sell in accordance with the terms imposed by its charter, by- 
 laws, or otherwise.
 
 MONEY AND INVESTMENTS 19 
 
 Authorized Stock, Bonds, etc. The amount of each which a 
 company may lawfully issue. 
 
 Available Assets. Property which can be had for sale or 
 use, and which is not already given as security for an indebt- 
 edness. 
 
 Average Life of Securities Maturing at Different Intervals. 
 The reader will find, toward the end of the subject " Net 
 Return upon the Investment," an explanation of how to 
 compute the average life of securities maturing at different 
 intervals. 
 
 Averaging Down. Buying more stock at a lesser price than 
 the last or previous purchases, in order to reduce the average 
 cost to the holder. 
 
 Averaging Up. Buying more of a given security as prices 
 advance. By this process the average cost of the whole in- 
 creases. If one has been " selling short " (see that subject) 
 a certain security, and, contrary to his expectations, the 
 price continues to advance, he may make additional sales 
 of the same security at the higher quotations. This would 
 also be known as " averaging up " or " averaging." 
 
 Award. In relation to investments, acceptance of a propo- 
 sition to buy; generally used in reference to some issue of 
 bonds, for the purchase of which bids have previously been 
 submitted. (See " Sealed Bid.") 
 
 A. & F. August and February; interest or dividends 
 payable semi-annually beginning with August. 
 
 A. & 0. Interest or dividends payable semi-annually, 
 April and October. 
 
 B 
 
 B. This is the " ticker " abbreviation for " Bonds," " Class 
 B," or, accompanied by figures, " Bid," or " Buyer." 
 
 Back. For " backwardation." (Explained under " Con- 
 tango.") 
 
 Back Spread. This is a term used in connection with 
 " arbitrage " dealings, which subject it is first necessary to 
 understand. In dealings of this kind between New York and 
 London, for instance, there is a difference in quotations 
 between the two markets to make one equivalent to the other, 
 as the cost of shipment, rate of exchange, loss of interest, etc., 
 has to be taken into consideration. For the sake of illustra- 
 tion, we will call a stock selling in London at 102.50 the 
 equivalent price to a stock selling in New York at par. Or- 
 dinary " arbitrage " dealings are based, therefore, upon the 
 London price being in excess of 102.50, so that there may be
 
 20 MONEY AND INVESTMENTS 
 
 a profit made by purchasing in one market and selling in the 
 other. Should, however, this difference in price be less than 
 the normal; that is, should the London quotation be less than 
 102.50 when the New York quotation is at 100, the profit 
 would be made by buying in London and selling in New York. 
 Transactions of that kind are known as " back spreads." 
 
 Backwardation. See " Contango." 
 
 Bad Delivery. A security not fulfilling the conditions im- 
 posed by the stock exchanges as referred to under " Good 
 Delivery." 
 
 Balance. The amount due from one party to another after 
 adjusting accounts. It is the difference between the charge 
 and credit sides of an account. The word " balances " is often 
 used to indicate " clearing-house balances," to which subject 
 refer. (Also see " New York Balances.") 
 
 Balance between Banks. See " Clearing-House Rates." 
 
 Balance of Trade. The " balance of trade " is in favour 
 of the United States as against Germany, for example, when 
 we have sold the merchants of Germany merchandise greater 
 in value than they have sold us. This will naturally result in 
 the shipment of gold to adjust the balance, or the selling in 
 the United States of " exchange " on Germany at a discount, 
 if the condition is a temporary one. The " balance of trade " 
 does not always determine the debtor country, as there are 
 other factors to be considered, such as interest and principal 
 due on account of securities of one country held in the other. 
 (See " International Movement of Gold.") 
 
 Balance Sheet. A statement showing the assets and lia- 
 bilities, as well as the profits and losses, of a business or cor- 
 poration; a statement showing the true financial condition. 
 To put it in more exact language: the assets show one side 
 of the account, the liabilities and capital invested i.e. 
 proprietorship the other. The two sides should balance, 
 i.e. equal each other. 
 
 Balboa. Monetary unit of Panama, and the equivalent of 
 our American dollar. 
 
 Ballooning. To manipulate prices up beyond legitimate 
 values, to unsafe limits; in excess of intrinsic worth. 
 
 Baltic Ports. Ports of the Baltic Sea from which most of 
 the Russian wheat was formerly shipped. This is now to a 
 great extent accomplished through the Black Sea ports. 
 
 Bank. 1 A corporation which undertakes the care of money 
 
 1 The most ancient bank is supposed to have been established in Venice 
 in 1157. (See " The History and Principles of Banking " by James William 
 Gilbart.) Other writers give this date as late as 1171. 
 
 " The first banks were hardly more than agencies for concentrating and 
 managing the loans of the governments, and as such had their origin in
 
 MONEY AND INVESTMENTS 21 
 
 for other corporations, firms, or individuals, called its " de- 
 positors," this money always being subject to the written 
 order of those making the deposit, either to be repaid to them 
 or to others as appears in the orders, called " drafts," 
 " checks," etc. Interest may or may not be allowed the 
 depositor for the use of the money, according to the nature 
 of the bank, and the agreement made with each depositing 
 party. Banks must make use of money entrusted to their 
 care so as, in turn, to make it earn enough to not only defray 
 their own expenses, but to pay the depositors such rates of 
 interest as may be agreed upon. To do this, banks are 
 authorized to reloan this money; to collect drafts, notes, and 
 other claims for which they may make charges. Banks are 
 of several kinds, each having its own peculiar function, 
 according to the National or State laws under which it acts. 
 (See " National Bank," " Savings Bank," " Bank of Deposit," 
 " State Bank," and " Trust Company.") 
 
 Bank Account. For the benefit of those who have had no 
 experience, and who desire to open a bank or trust company 
 account against which to draw checks, a few suggestions are 
 here given: 
 
 Select your bank; find out the minimum sum of money 
 which it will receive on deposit. If you have it, well and good. 
 Then secure an introduction to some one of the bank's officers. 
 State to him or the one to whom he may turn you over 
 how much you will probably keep on deposit, and whether 
 you will wish to borrow from the bank from time to time, and 
 the nature of the loans. Large banks do not, as a rule, desire 
 small accounts. Everything being satisfactorily arranged so 
 far, you will next hand your deposit in to the " receiving 
 teller," accompanied by a " deposit slip " or " ticket " 
 (furnished by the bank) with the blanks filled out, giving the 
 character, amount, date, etc., of the deposit, together with 
 your name at the top. He will return you a " pass-book " 
 with the sum deposited entered on the debit side. Ascertain 
 if this is correct before leaving the counter. This book should 
 be sent in to the bank the first of every month to be balanced, 
 and, when returned to you with the cancelled checks, it is 
 important that you check it up yourself to see if the total 
 amount of the checks paid, plus the balance reported by the 
 
 Italy as early as the twelfth century. The word ' bank ' originally signi- 
 fied a ' pile ' or ' mass ' of funds, like the Italian ' monte ' and the French 
 ' mont,' and was applied to the massing together of various government 
 obligations, or their consolidation in sets of negotiable securities, which 
 were issued, transferred, and paid through ' bankers/ who sometimes 
 collected the public revenues and made payments in connection with the 
 handling of public debts. It was for such functions as these that the first 
 banks were established at Venice, Florence, and Genoa." " The Modern 
 Bank," by A. K. Fiske.
 
 22 MONEY AND INVESTMENTS 
 
 bank to your credit, added to the sum of the checks drawn 
 and not yet presented to the bank for payment, equal the 
 sum of your deposits. 1 (Read " Bank-Book " and " Check.") 
 Save your cancelled checks. 
 
 Before leaving the bank you will sign in a book (or on a 
 signature card) kept for the purpose, so that your checks 
 may be identified when presented, and will be handed a 
 check-book usually furnished at the bank's expense. Where 
 the latter has a numbering machine it is well to let it first 
 number the checks and stubs. 
 
 Do not open a bank account in your own name as agent, 
 trustee, or attorney, unless you are acting in that capacity 
 for some other person or persons, and the relationship 
 is clearly evidenced by some formal instrument to that 
 effect. 
 
 Some of the large trust companies will furnish, upon re- 
 quest, a pamphlet going into all matters of necessary infor- 
 mation in reference to opening and conducting an account. 
 
 Bank Balance. As commonly used denotes the amount 
 to one's credit in a banking institution, but has been extended 
 to mean a bank's debit or credit at " clearing." (See " Clear- 
 ing-House Balance.") 
 
 Bank Bill. See " National Bank Notes " and " Bankers' 
 Bills." 
 
 Bank-Book (or Pass-Book). The book in which a bank 
 makes a written entry of each sum of money deposited by 
 the customer, and is that person's evidence of the bank's in- 
 debtedness to him. In the case of a national bank, trust 
 company, or any " bank of deposit," the book should be 
 presented to the institution once a month to have it balanced. 
 In the case of a savings bank, once or twice a year, according 
 to the custom of the particular bank. The depositor must 
 not make any changes or additions to the book, as all such 
 must be made by the bank. 
 
 The bank used formerly to enter onthe credit, 2 or right 
 hand, page of the book, a list of all checks paid during the 
 month, but the custom more generally prevails now of re- 
 turning a list of the checks on a separate sheet of paper, 
 the total amount of which is entered upon the credit page. 1 
 
 1 Banks are now beginning to adopt the plan of returning the cancelled 
 checks the first of each month, in envelopes with a printed form upon the 
 face, on which appears the statement of the account as formerly entered 
 upon the " pass-book." This obviates the necessity of the customer's 
 handing in his " pass-book " from time to time, and with this statement 
 he may check up his account. 
 
 2 Remember that the book shows the bank's account with the depositor, 
 not his account with the bank, so that what he deposits is a "debit " of 
 the bank.
 
 MONEY AND INVESTMENTS 23 
 
 On the left-hand, or debit page, has been entered the de- 
 posits as made from time to time. These (for the sake of 
 simplicity we will assume that we are discussing the period 
 covering the first month's business with the bank) are added 
 up; the total amount of the checks paid deducted from it, 
 and the remainder, or balance, entered upon the credit page, 
 showing the amount of money to the credit of the depositor 
 at the time. 
 
 The sum of the checks paid and the amount still to the 
 credit of the depositor should equal the sum total of deposits. 
 This balance to the depositor's credit is carried forward on to 
 the left-hand page and is added in with the next month's 
 deposits. 
 
 Immediately upon the bank's returning the depositor his 
 " pass-book," the slip of paper containing the list of checks 
 paid and the cancelled checks themselves, he must satisfy 
 himself that the bank has made no mistake, and, therefore, he 
 proceeds in this way: 
 
 The checks paid during the period are checked off with the 
 " stubs," a comparison of numbers facilitating this process; 
 those which have been drawn by the depositor but not pre- 
 sented to the bank may thus readily be ascertained, and 
 their sum total is added to the total amount of the checks 
 paid, as given by the bank. These are added to the balance 
 still to the credit of the depositor, which all together should 
 exactly equal the sum of the deposits for the period; allow- 
 ance being made, of course, for interest on the account, or 
 collection charges. These will be entered in the " pass- 
 book " as follows: 
 
 In event of interest being allowed upon the account, the 
 amount of such interest for a given period will be entered at 
 stated intervals among the deposits. On the other side of 
 the book may be found occasional charges for the collection 
 of a check, coupon, or some such item. (See " Collections.") 
 This charge will be evidenced to the depositor by a 
 slip of paper giving the amount of the charge and for 
 what it was made, which is called a " charge ticket." There- 
 fore, in balancing the " check-book," -- and in this con- 
 nection it would be well to refer to that subject, the 
 interest and collection charges should be taken into consider- 
 ation. 
 
 Any error should be immediately reported to the bank 
 for correction. 
 
 To withdraw money from a savings bank, the depositor 
 may present his book in person, and have the amount with- 
 drawn entered therein, besides signing in a book kept by the 
 bank, the amount withdrawn being opposite the signature. 
 This is the bank's receipt. To withdraw money when at a
 
 24 MONEY AND INVESTMENTS 
 
 distance, draw an order on the bank following the form gen- 
 erally to be found at the back of every savings bank book, 
 and forward to the bank with the book itself. Money is 
 withdrawn from national banks, trust companies, etc., by 
 the use of checks. (See " Checks.") 
 
 Bank Check. Same as " Check." 
 
 Bank Clearings. See " Clearings." 
 
 Bank Commissioner. One who examines into the affairs 
 of, and has certain supervision over, the chartered banks 
 in the State under which he is appointed. For example: 
 the Governor of the Commonwealth of Massachusetts ap- 
 points a man whose duty it is, with his assistants, to see that 
 all the savings banks and trust companies within the Com- 
 monwealth comply with the laws regulating them. This 
 is largely done by making periodical examinations into the 
 affairs of each institution. This board of commissioners 
 is empowered to pass upon and decide many questions which 
 may be referred to it by various banks and trust companies, 1 
 such as whether a particular investment may be legally 
 bought, etc. In fact, the powers are broad, and when prop- 
 erly exercised there should be comparatively few financial 
 disasters among the banks and trust companies over which 
 it has control. 
 
 Bank Deposit. See " Deposit." 
 
 Bank Discount. Simple interest paid the lender of money 
 in advance, the sum being reckoned upon the face value of 
 the note or other obligation. 
 
 Bank Draft (or Banker's Draft). (See " Draft.") A 
 " draft " drawn by one bank or banker against another. 
 
 Banked. In financial slang, to be backed with money by 
 some one else. He " banked " Smith in the enterprise; that 
 is, furnished the money. 
 
 Banker. It seems hardly necessary to define this term 
 other than to say that the " banker," in general, is a custo- 
 dian of the funds of others. Ricardo distinguishes between 
 a " banker " and a " capitalist," however, by stating that the 
 function of the former begins as soon as he uses the money 
 of others, but he is only a " capitalist " as long as he uses his 
 own money. 
 
 The term " banker " is used in altogether too broad a 
 sense, and should not include those who make an exclusive 
 business of note broking, stock broking, etc., or in cases 
 where no custodianship of money is involved. 
 
 " The banker is a dealer in money more precisely than 
 some writers have been willing to grant. He is a dealer in 
 
 1 Their powers extend to certain other institutions.
 
 MONEY AND INVESTMENTS 25 
 
 money, because money is, in the ultimate analysis, the 
 commodity which he promises to deliver on demand." 1 
 
 Bankers' Bills (or Bills of Exchange). If the reader will 
 first understand the meaning of " commercial bills," it will 
 be seen that these are " bills of exchange " drawn against a 
 shipment of merchandise. They are distinguished from 
 " bankers' bills " which are so called because drawn by 
 bankers rather than by a shipper of merchandise on 
 account of the latter's being drawn by a banker in one country 
 against one in another with whom he has credit. 
 
 Banker's Check. A check drawn by one banker upon an- 
 other. 
 
 Banker's Note. A promissory note of a private banker, 
 or a banking house which is not incorporated. 
 
 Banker's Sterling. " Exchange " (to which refer) on Great 
 Britain as purchased at some bank or banking house, as dis- 
 tinguished from regular " bills of exchange " accompanied by 
 bills of lading, as held by the sellers or exporters showing 
 amount due them. 
 
 Bank-Holiday. A day, other than Sunday, in Great Brit- 
 ain, upon which all negotiable paper may not be pre- 
 sented or paid; banks are closed. In England, for exam- 
 ple, Easter Monday, Whit Monday, and others are " bank- 
 holidays." 
 
 Banking Power. By this heading the wherewithal for tlae 
 business of banking is understood, meaning the capital, de- 
 posits, surplus, undivided profits, outstanding bank notes, 
 etc. 
 
 Banking Power of the World. In 1890 Mulhall estimated the 
 world's banking power was $15,985,000,000; in 1905 the 
 estimate was $34,492,400,000, divi'ded between the United 
 States at $15,333,900,000; and foreign countries at $19,- 
 158,500,000. 
 
 Bank Money-Orders. A form of " money-order " sold by 
 banks in competition with the United States Postoffice and 
 express companies. More than 1,000 banks have adopted 
 this " money-order," and many have sold large quantities of 
 them; and, although this plan was adopted but a little more 
 than a year ago and has not permitted of a very long test, 
 a number of decided advantages have been discovered in the 
 issuance of such orders, aside from whatever profit there 
 may be. 2 
 
 Bank Note. Not real money, but a substitute for money. 
 A bank's non-interest-bearing promise to pay lawful money 
 
 1 Charles A. Conant. 
 
 2 The American Banker. 

 
 26 MONEY AND INVESTMENTS 
 
 to bearer on demand, the transfer from one person to another 
 being accomplished by mere delivery, no indorsement or 
 other formality being required. (See " National Bank 
 Notes.") Paul Leroy-Beaulieu defines a " bank note " as 
 a " promise made by a banker to pay a definite sum to bearer 
 at sight." 
 
 Many financiers claim that there is no essential difference 
 between a " bank check " and a " bank note " for the reason 
 that the depositor is a voluntary creditor of the bank, but 
 his checks do not obtain wide circulation without indorse- 
 ment; while a bank note finds circulation as a substitute 
 for money among people who have little or no knowledge of 
 the bank by which it was issued. In both cases, however, the 
 check and note represent money and must both be redeemed 
 upon presentation. 
 
 Bank of Circulation. One which issues bank notes. Also 
 called " bank of issue." 
 
 Bank of Deposit. 1 It would seem that any banking institu- 
 tion receiving deposits might properly be called a " bank of 
 deposit," but banking men understand an institution of this 
 class to be not a trust company, savings bank, or any such 
 taking " time deposits," or deposits upon which interest is 
 allowed, but banks which receive deposits subject to check, and 
 upon which no interest is allowed. State and national banks 
 are of this latter class. 
 
 Bank of Discount. One which employs its deposits and 
 other funds largely in discounting (see " Discount ") notes, 
 bills of exchange, etc. National banks are of this kind, but 
 savings banks are not. 
 
 Bank of England. Known as the " Old Lady of Thread- 
 needle Street." Its corporate name is " The Governor and 
 Company of the Bank of England." Situated in an irregular 
 square opposite the Royal Exchange and residence of the 
 Lord Mayor in London; bounded on every side by the open 
 street, it covers about four acres, all light being secured from 
 interior courts. The largest financial institution in the 
 world. Since the great riot of 1780 a guard of soldiers has 
 been marched into the bank every night for protection. 
 The employees number over 925. The land covered by this 
 building is probably one of the most valuable pieces on the 
 surface of the earth. 
 
 The original charter was granted in 1694, and its existence 
 is due to one William Paterson, 2 a Scotchman. The present 
 
 1 Gilbart said in 1834 that " a bank which receives lodgments of money, 
 is called a bank of deposit." 
 
 2 Those interested in the granting of this charter used as an argument 
 that " it would rescue the nation out of the hands of extortioners and 
 usurers, lower interest, raise the value of land, revive and establish public
 
 MONEY AND INVESTMENTS 27 
 
 charter was granted in 1844. The currency of England to- 
 day is largely in the hands of this bank. The " Bank of 
 England " probably has greater influence upon the financial 
 concerns of the world than any other institution. Its state- 
 ments are published weekly, and give the minimum rate 
 of discount at which the Bank will handle first-class paper. 
 The influence of the Directors' Meeting, which takes place on 
 every Thursday, is felt throughout the world. 
 
 The rate of discount established by the " Bank of England " 
 fixes the rate of interest allowed by all the London joint- 
 stock banks on deposits, such interest being generally at the 
 rate of about one and one-half per cent, less than the " Bank 
 of England " rate of discount. This rate of discount also 
 establishes the interest rates which London banks allow on 
 cash balances of foreign correspondents, as well as the rate 
 of interest charged on over-drafts; besides the discount rate 
 in the open market throughout Great Britain. Likewise, 
 it fixes the rate of discount on documentary bills, as to the 
 rebating of interest on account of anticipating repayment. 
 Its influence is felt on the value of all international bills 
 of exchange. It often works as a protection to the gold 
 reserve held by the bank itself, for it often increases the 
 value of money in London, checking exports of gold as well 
 as encouraging imports of the same. 1 
 
 By it are issued the " Bank of England Notes." It allows 
 no interest on deposits. It is a bank in which all London 
 banks keep their reserves. It receives and disburses the 
 government funds and manages the government debt. 
 
 The management of the Bank rests in the hands of a Gov- 
 ernor, Deputy Governor, and twenty-four Directors, who are 
 elected by the shareholders. It is a private corporation. 
 
 Although the above is but a brief sketch of the " Bank of 
 England " and the field which it covers, yet it is sufficient to 
 make one comprehend the magnitude of this institution's 
 position in the financial world. 
 
 credit, extend circulation, consequently improve commerce, facilitate the 
 annual supplies, and connect the people the more closely with the govern- 
 ment." Smollett's History of England. 
 
 1 This fact was well illustrated by the action of the Bank on Oct. 19, 
 1906, in raising the discount rate to 6%, it already having previously been 
 raised to 5%. This was on Friday. It was natural to expect any change 
 in the rate to have been made at the regular bank meeting on Thursday. 
 There had been a tremendous drain of gold to America, a large demand 
 from Egypt, and an anticipated demand from Argentina, besides which 
 it was reported that the Bank of Germany was accumulating gold for 
 Russian account. The reserve in the Bank of England had been reduced 
 by gold withdrawals to about 18,000,000, and it was to check further 
 encroachments upon this that the sensational advance referred to was 
 made. This was the highest rate since Friday, Nov. 1, 1890, just before 
 the " Baring Panic," when the rate was advanced to 6%.
 
 28 MONEY AND INVESTMENTS 
 
 Bank of England Discount Rate. 1 Each week the " Bank of 
 England " publishes a statement and makes an announce- 
 ment as to the minimum rate of discount at which it will 
 handle first-class paper. This may be better understood by 
 reading the preceding subject. 
 
 Bank of England Notes. The promise to pay of the " Bank 
 of England " in the form of " paper money/' much the same 
 as our " national bank circulation." The only form of paper 
 money or bank bills in general use in Great Britain, 
 as the issues of other banks are of no great volume. The 
 " Bank of England " has a separate department, called the 
 " Issue Department/' where the notes are printed and all 
 the machinery of issuing, redeeming, cancellation, etc., is 
 carried on. " Bank of England notes " are secured to the 
 amount of 11,015,100, by a debt due to it from the govern- 
 ment. In that particular there is quite a similarity to our 
 national bank notes secured by a deposit of government 
 bonds. It is allowed to issue 7,434,900 against securities, and 
 against all additional notes issued there must be a deposit of 
 coin or bullion. Although gold alone is used, it is legally 
 permissible to use one-fifth silver. As appeared in the 
 bank's statement of Nov. 9, 1905, the total amount of notes 
 issued was 48,612,645. 
 
 Bank of England Return. See " Bank of England State- 
 ment." 
 
 Bank of England Statement. An idea of the weekly state- 
 ment of the Bank of England (for further information upon 
 this subject see " Bank of England ") is given from the 
 following, which is the actual statement as issued Nov. 9, 
 1905: 
 
 ISSUE DEPARTMENT 
 
 1. Notes Issued 48,612,645 2. Government Debt 11,015,100 
 
 3. Other Securities 7,434,900 
 
 4. Gold Coin and Bullion 30,162,645 
 
 48,612,645 
 BANKING DEPARTMENT 
 
 5. Proprietors Capital 14,553,000 10. Government Securi- 
 
 6. Rest 3,213,176 ties 17,039,131 
 
 7. Public Deposits 12,141,417 11. Other Securities 32,806,689 
 
 8. Other Deposits 41,261,064 12. Notes 19,700,765 
 
 9. 7 day bills & other bills 103,968 13. Gold and Silver Coin 1,726,040 
 
 71,272,625 71,272,625 
 
 No. 1 needs no explanation, as that is simply the bank circulation. 
 No. 2 is the debt due the bank from the government, and against which 
 the bank is allowed to issue circulation. 
 
 1 Pratt declares that " The Bank of England discount rate sounds the 
 key-note of the international monetary situation."
 
 MONEY AND INVESTMENTS 29 
 
 No. 3. Through the retirement of the banks issuing notes at the time of 
 the Bank Act of 1S44, the Bank of England has been able, under the pro- 
 visions of the Act, to issue new notes against securities to the amount of 
 4,450,000, which brings its total issue up to 18,450,000. 
 
 No. 4. In the statement above there is shown an issue of 48,612,645 
 in notes. If we deduct from this issue the 18,450,000, notes authorized 
 to be issued against the government debt and other securities; we find the 
 amount of notes uncovered unsecured to be 30,162,645, which is 
 exactly the amount of gold coin and bullion on hand in the Issue Depart- 
 ment. 
 
 No. 5 represents the proprietors' advances in cash to the Government. 
 This is the bank's capital the same as that of any other institution. 
 
 No. 6. Reserve fund and undivided profits. This is not allowed to fall 
 below 3,000,000, the excess being considered available for dividends. 
 
 No. 7. Deposits made by the Government. 
 
 No. 8. Deposits of banks, corporations, firms, and individuals. 
 
 No. 9. Bills of exchange, etc. 
 
 No. 10. Government Securities needs no explanation. 
 
 No. 11. Same may be said of this. 
 
 No. 12. Bank notes. 
 
 No. 13. Needs no explanation, other than to say that these, together 
 with the notes, constitute the real reserve of the bank held against deposits, 
 and any changes are watched for with keen interest. 
 
 Bank of France. Established during 1800 by Napoleon, 
 after he became First Consul, who desired a financial institu- 
 tion that should not only be of service to the Government, 
 but also subservient to it. 1 
 
 It has one central, or head office, in Paris, but has branches 
 or auxiliary offices in, or is connected with, all the principal 
 cities and towns in the country. The governor and two sub- 
 governors are nominated by the Government, but the general 
 council, consisting of fifteen regents and three censeurs, are 
 chosen by the stockholders, except that three of the regents 
 must be selected from the treasury disbursing agents. The 
 business of discounts and advances at all its offices is trans- 
 acted at the same rates as in Paris, which regulates interest 
 rates throughout the country. The Bank has never raised 
 its rate of discount over 9% 2 and the fluctuations in its rate 
 have always been less violent and frequent than in the case 
 of the Bank of England. From 1844 to 1900 the rate of dis- 
 count of the former was altered 111 times, and of the latter, 
 400 times. 
 
 The ownership in the Bank of France is represented by 
 shares held by individuals, but is very largely under the con- 
 trol of the Government. It is the only institution in the 
 country which can issue bank notes, which is done under 
 the direction of the regents, who are responsible, and report 
 to the Government. The only security behind the notes is 
 the general assets and credit of the Bank, although, in case 
 of necessity, the Government would sustain the bank with 
 
 1 " The Modern Bank," A. K. Fiske. 
 
 2 " Bank Rate and the Money Market," R. H. Inglis Palgrave.
 
 30 MONEY AND INVESTMENTS 
 
 its credit. These notes are legal tender so long as they are 
 redeemed in specie. The maximum limit of issue has been 
 increased until now it stands at 5,800,000,000 francs. 1 Al- 
 though no special reserve is held, the Bank makes a point of 
 retaining on hand a large amount of bullion and coin. It 
 protects its gold reserve by charging a premium when it is 
 demanded for export. From the fact that checks are still 
 comparatively little used in that country, bank notes and 
 specie are principally employed in making payments. This 
 naturally results in the extensive use of bank notes throughout 
 the country, and calls for a large issue on the part of the Bank 
 of France, which is generally six or seven times the amount 
 of the deposits. 
 
 The Bank receives deposits of public money, and is, to a 
 great extent, the Government's fiscal agent. 
 
 Bank of Germany. The Imperial Bank of Germany; com- 
 monly called the Reichsbank. The King of Prussia in 1765 
 founded a State institution entitled The Royal Bank, which 
 continued until 1846, when it underwent a change and became 
 a bank of issue. On the 31st of December, 1875, it was suc- 
 ceeded by the Imperial Bank of Germany. This institution, 
 like the Bank of France, is under governmental control, but 
 its ownership is represented by shares in the hands of in- 
 dividuals. It is situated in Berlin, where it carries on a very 
 large business, but also has branches forming a net work 
 throughout Germany. It receives, holds, and disburses the 
 government funds, discounts bills, both inland and foreign, 
 which is a very large proportion of its business, receives 
 deposits and issues circulation, but is compelled by law to 
 retain in its vaults cash to the amount of one-third of its 
 notes outstanding, which cash must consist of legal tender 
 notes of the Empire, gold bars, or foreign coins of a prescribed 
 weight and fineness. The remainder must be represented by 
 discounted bills. Its notes are not legal tender, but must be 
 paid in gold upon presentation at any of its branches. They 
 have no prior claim upon the bank's assets, but are simply 
 part of the general liabilities. There are three limitations 
 placed upon the note issue; first, no more than 472,829,000 
 marks, 2 which is called its " Kontingent," can be issued in 
 excess of what is covered by the cash reserve; second, a 5% 
 per annum tax on any excess above this limit; and, third, 
 the one-third cash holding already mentioned. 3 
 
 1 Law of February 11, 1906. 
 
 2 This sum is subject to further increase, for as a smaller bank of issue 
 in Germany goes out of business its " Kontingent " passes to the Reichs- 
 bank, and so increases the latter's limit by whatever the limit was of the 
 bank giving up. 
 
 3 " Bank Rate and the Money Market in England, France, Germany, 
 Belgium, and Holland, 1844-1900," R. H. Inglis Palgrave.
 
 MONEY AND INVESTMENTS 31 
 
 | 
 
 All other banks throughout the Empire must agree in their 
 discount rate with that of the Reichsbank when it is as high 
 as 4% and when it is lower must not cut under it more than 
 one-quarter of 1%. 
 
 The rate of discount has been raised to 7% but once in 
 thirty years December 19, 1899, to January 11, 1900 
 and has never exceeded that figure. 1 
 
 Bank of Issue. Any bank authorized by law to issue money 
 of its own in the form of " bank notes; " to issue paper 
 money to circulate as currency. National banks are such, 
 and so formerly were State banks, which issued " State Bank 
 Notes," until 1865, when Congress passed an act taxing such 
 notes 10%, which resulted in their speedy retirement. 
 
 Bankrupt. 2 When one is unable to meet his debts as they 
 fall due he may make a fair statement of his condition out 
 of court in order to pay his creditors, and effect a settlement 
 with them on what may seem to them the best obtainable 
 basis, and, after accomplishing such a settlement, receive a 
 discharge from them relieving the insolvent party from any 
 further obligation to his creditors. But, when unable to make 
 a satisfactory settlement, he may take advantage of what 
 is known as the National Bankruptcy law and go through 
 " bankruptcy," by giving up all his property to be divided 
 among his creditors, by which method he compels them to 
 make a settlement, and after the accomplishing of which, he 
 receives a legal discharge, freeing him from further liability 
 on account of any unpaid portion of the debts, providing, of 
 course, he does not defraud his creditors by the concealing 
 of property, of which, if afterwards discovered, the law would 
 usually allow the creditors to take possession. 
 
 " Involuntary bankruptcy " is brought about by the action 
 of creditors; the " insolvent " person is forced into " bank- 
 ruptcy." 
 
 " Voluntary bankruptcy " is brought about by the action 
 of the debtor or the " insolvent." 3 
 
 1 Report of the Special Currency Commission of the Chamber of Com- 
 merce of the State of New York. (Oct. 4, 1906.) 
 
 2 The Italian word " banco," meaning a " bench," gives us our word 
 " bank." The Lombardy Jews occupied benches in the market-place, for 
 the exchange of money and bills. If one failed, the people broke his bench, 
 hence " bankrupt." 
 
 3 " Under the present Federal law any person who owes debts, except 
 a corporation, may be adjudged a bankrupt if he wishes to take advantage 
 of the act. Such a proceeding is one of voluntary bankruptcy. Not every 
 person, however, can be forced into bankruptcy by his creditors. A ' wage- 
 earner ' cannot be, nor ' a person engaged chiefly in farming or the tillage 
 of the soil.' Even in the case of a person not belonging to one of these ex- 
 cepted classes, he must owe debts to the amount of one thousand dollars 
 or over; he must have committed an act of bankruptcy, and the aggregate
 
 32 MONEY AND INVESTMENTS 
 
 Bank Statement. It is customary in many of the larger 
 cities to issue at stated intervals, generally once a week, a 
 tabulated statement of the condition of the banks which are 
 members of the Clearing-House Association. 
 
 At about 11.30 in the forenoon of the last business day of 
 each week, the " New York Bank Statement " is issued to 
 the public, and is awaited with great interest by financial 
 men. Each bank in that city, national and State, belonging 
 to the Clearing-House Association, tabulates a statement 
 giving the average of each item for the period covering all 
 the preceding business days of that week and the last business 
 day of the previous week. 
 
 Saturday morning or Friday, if Saturday is a holiday 
 these averages for each bank are turned in to the Clearing- 
 House manager, who proceeds in a similar manner to obtain 
 the average of each item for the combined statement. The 
 " bank statement " deals with averages for the period covered, 
 and never reflects actual conditions at the date of issue. 
 A separate statement is issued by the " non-member banks," 
 i. e. banks which are not members of the Association, but 
 " clear " through banks which are. 
 
 Not so much value is now placed upon the " bank state- 
 ment " as before the tremendous increase in the number of 
 trust companies and their resources, as, on account of their 
 not being included directly in it, no true condition of the 
 banking institutions is obtainable. These unknown figures 
 of the trust companies render the " bank statement " a very 
 incomplete affair. Again, the statement may be purposely 
 made misleading by sudden withdrawals, or deposits, by the 
 trust companies, large moneyed firms and institutions carry- 
 ing accounts with the Clearing-House Association banks. 
 This Wall Street system of jugglery is attempted in order to 
 influence the loaning rates of money, and, furthermore, 
 through a change in loaning rates to affect the prices of 
 stocks. The trust companies issue a report twice a year. 
 
 The New York Sun well expresses this " wheel within a 
 wheel " system, as follows: 
 
 " As the power of the trust companies to lend money de- 
 pends upon the quantity of cash possessed by them, and as 
 all but a trifling portion of this cash is kept by the trust com- 
 panies in the banks rather than in their own coffers, the total 
 quantity of cash held by the banks comprises in substance 
 the entire lendable funds of the community. It is also evident 
 that this sum constitutes the sole cash reserve standing 
 against the loans of banks and trust companies combined. 
 
 of his property at a fair valuation must be insufficient to pay his debts, 
 or he cannot be declared a bankrupt in an involuntary proceeding." 
 Frauds M. Burdick.
 
 MONEY AND INVESTMENTS 
 
 33 
 
 According to the Clearing-House statement Saturday, the 
 total volume of bank cash was $278,723,600, and of the bank 
 loans $1,085,825,900, and while trust company loans can only 
 be estimated, the fact that they stood at $845,000,000 June 
 30 and have been unquestionably heavily increased since that 
 time, notably in the last two weeks, makes it manifest that 
 the total quantity of outstanding credits in the community 
 at present is not far from two billions of dollars, against 
 which there is a present reserve of but about 13 per cent." 1 
 
 For an explanation of the items in the " bank statement," 
 such as " reserve," " surplus reserve," etc., reference may be 
 made to the separate subjects elsewhere. 
 
 NEW YORK BANK STATEMENT FOR SATURDAY, APRIL 28, 1906 
 
 Loans 
 Circulation 
 Net deposits 
 Specie 
 
 Legal tenders 
 Reserve held 
 Legal reserve 
 U. S. deposits 
 Reserve (new) 
 Surplus (new) 
 Surplus (old) 
 
 Bargain. Besides the ordinary meanings for this word, 
 which are unnecessary here, it is used in London to indicate 
 transaction between two members of the stock exchange. 
 (See " London Stock Exchange Transactions.") 
 
 Bargain Counter. When securities are for sale cheap they 
 are " on the bargain counter." 
 
 Bar Gold. London quotations of " bar gold " are frequently 
 seen, as 77s. 9fd., meaning the open market price of gold in 
 the form of bars of the British standard, which is 11-12 fine. 
 The Bank of England is compelled by law to pay 77s. 
 per ounce for all gold offered, the mint value being 77s. 
 which equals our own mint price per ounce of " fine gold " 
 of $20.672. 
 
 When in London the market price of " bar gold " falls 
 below 77s. lOirf. per ounce, gold imports are favoured to the 
 extent of the difference. The more the price of gold advances 
 in London, the greater must be the fall of " sterling ex- 
 change " in America to make gold imports permissible. 
 
 On September 20, 1906, the Bank of England obtained a 
 price of 78s. Id. for 200,000 bar gold a record price. 
 
 1 On April 30, 1906, a law went into effect by which the trust companies 
 of New York State are now obligedTOTBaiatain a " reserve." 
 
 CHANGES FROM 
 
 1906 
 
 PREVIOUS WEEK 
 
 1905 
 
 $1,039,210,500 
 
 Inc. 
 
 $21,781,500 
 
 $1,097,902,100 
 
 51,138,400 
 
 Dec. 
 
 342,900 
 
 44,149,200 
 
 1,028,683,200 
 
 Inc. 
 
 21,218,900 
 
 1,146,528,600 
 
 186,734,300 
 
 Dec. 
 
 2,919,300 
 
 217,715,100 
 
 80,803,900 
 
 Inc. 
 
 2,224,700 
 
 85,582,300 
 
 267,538,200 
 
 Dec. 
 
 694,600 
 
 303,297,400 
 
 257,170,800 
 
 Inc. 
 
 5,304,725 
 
 286,632,150 
 
 28,953,300 
 
 Inc. 
 
 11,515,200 
 
 16,818,800 
 
 249,932,475 
 
 Inc. 
 
 2,425,925 
 
 282,427,450 
 
 17,605,725 
 
 Dec. 
 
 3,120,525 
 
 20,869,950 
 
 10,367,400 
 
 Dec. 
 
 5,999,325 
 
 16,665,250
 
 34 MONEY AND INVESTMENTS 
 
 Baring Panic. During the autumn of 1890, when specula- 
 tion on the London Stock Exchange was running riot, prin- 
 cipally in regard to securities of the Argentine Republic, 
 including not only the national obligations, but municipal 
 loans and investments in commercial enterprises, a cloud 
 began to appear in the financial sky. The great banking 
 house of Baring Bros, was on the edge of collapse. The 
 failure of that great firm of bankers would undoubtedly take 
 down with it many other moneyed institutions, and such a 
 disaster in London's financial centre would carry untold 
 misery to the rest of the financial world. 
 
 The forerunner of impending disaster was already begin- 
 ning to be felt and the feeling that the world's finances were 
 standing on the brink of disaster was apparent everywhere. 
 The actual realization, however, was averted by a heroic 
 effort on the part of the Governor of the Bank of England, 
 who obtained a loan of gold from the Bank of France, and 
 St. Petersburg, against which an issue of paper money was 
 made by the Bank of England to temporarily accommodate 
 the public. 
 
 He also persuaded many of the leading bankers of London 
 to unite and subscribe a large guarantee fund, and the total 
 assets of the Baring Bros, were taken over, the Bank of 
 England, liquidated, and eventually a large surplus returned 
 to that firm. Therefore, by a wise and prompt action on the 
 part of Mr. Lidderdale, then the Governor of the Bank of 
 England, a world panic was prevented. 
 
 Barometer Stocks. Certain standard and active stocks the 
 prices of which are averaged daily (except on Sundays and 
 stock exchange holidays) ; the rise or fall of the average price 
 being a good indication of the trend of the market, and a 
 comparison with previous averages helpful to those interested. 
 
 Bar Silver. Silver as it comes from the smelter in the form 
 of bars and which has not been, or, in fact, may never be, 
 minted into coins. On June 30, 1904, the commercial value 
 of an ounce of fine silver was 57.339 cents, and in a silver 
 dollar the commercial value of the silver was 44.348 cents. 
 There has been a continued advance recently in the price so 
 that at the time of writing (November 9, 1906), it is $.71952 
 per ounce. This rise has been brought about by a deficiency 
 in the supply resulting from the steady drain to India and 
 China, together with the demand from France and Russia 
 for coinage purposes. The increase in the world's production 
 of gold has undoubtedly influenced the advance in price of 
 silver. There is also almost constant speculation in the 
 metal in London, where " bar silver " is bought and sold as 
 a hedge against business transactions. A recent estimate of
 
 MONEY AND INVESTMENTS 35 
 
 the annual production was only 175,000,000 ounces, of which 
 it is believed about 60,000,000 are consumed in the arts, and 
 a like amount shipped to the far East. On November 27, 
 1902, the price of silver in London fell to 21 11-16 pence 
 (about 43 cents) per ounce, which is the lowest price in the 
 world's history. On September 3, 1890, the price in New 
 York was $1.21. 
 
 Bay Shilling. See " Pine Tree Money." 
 
 " B " Bond (or " B " Stock). Used when securities are 
 divided into classes, such as " A bond," " B bond." (See 
 " Preferred Stock.") 
 
 Bear. One who believes that conditions are ripe for a 
 decline in prices or one who desires such an event, and talks 
 " bearish " accordingly. One may believe that the price of 
 a certain security is about to decline, and, therefore, is said 
 to be a " bear " on that particular security, whereas he may 
 not necessarily be so on others. The natural attitude of a 
 " bear " is that of a seller, but he may be so for the sake of 
 buying later at a lower price. It is said that the greatest 
 " bears " are " bulls " who have sold out their holdings. 
 
 Bear Clique. Those whose interests lie in the direction of a 
 decline in price of one of several securities, or market prices 
 in general, and who unite in mutual efforts to obtain such a 
 result. A " bear clique " in Union Pacific, for instance, is a 
 combination formed to effect a decline in price of Union 
 Pacific common stock. (See " Clique.") 
 
 Bearing the Market. An artificial lowering, or forcing 
 down, of prices. 
 
 Bear Market. (See " Bear.") When so many are bears that 
 their influence is predominant in the market a " bear market " 
 is said to exist, or a general fall in prices. 
 
 Bear Panic. A sudden and great advance in prices of a 
 certain stock may cause those who have been trying to de- 
 press " bears " and who have gone " short " of it, to 
 suddenly, with panic-stricken energy, try to buy in 
 " cover " what is needed to fill their contracts. 
 
 Bear Pool. See " Bear Clique." The difference between a 
 " pool " and " clique " is explained under the latter subject. 
 
 Bear Raid. When those who are " short " of the market 
 desire to " cover " and there happens to be at the same time 
 a considerable " long " interest, the " bears " may take 
 advantage of this knowledge and by " selling short " so 
 force prices down that those who are " long " will be obliged 
 to sell; thus permitting the " shorts " to buy in, i. e. " cover " 
 at a profit. (An explanation of the terms in quotation marks 
 will be found under the separate subjects.)
 
 36 MONEY AND INVESTMENTS 
 
 Below Par. A price less than face value. (See " Par.") 
 
 Belt Lines. Short lines of railroad located at terminal 
 points for the purpose of transferring traffic from one railroad 
 to another. The name originated because of railroads ap- 
 proaching a city from different directions and finding the 
 necessity of connecting with one another over another line 
 of rails, which, owing to the density of the population, have 
 generally followed a circular or belt course around all or a 
 portion of the city. Where there are two or these belt systems, 
 one encircling the other, they are often distinguished by being 
 known, one as the " inner belt " and the other as the " outer 
 belt." 
 
 " Belt lines " are valuable and necessary properties, and 
 as a rule, have proved good investments. 
 
 Beneficial Interest. " Certificate of Beneficial Interest." 
 Example: The Temple Iron Co. is controlled by certain rail- 
 road companies, and operated in their mutual interests. 
 The latter, not wishing to use their funds for investment in 
 the Temple Iron Co., but, at the same time, wishing to retain 
 its voting control, sell certificates of " beneficial interest," 
 equal in their total amount to the capital stock of the Temple 
 Iron Co. Such " beneficial interest " conveys to the investor 
 the right only to receive dividends, and right to the equity 
 in the property in case of financial disaster to it. These 
 certificates were issued by the Guaranty Trust Co. of New 
 York, certifying that the actual stock of the Temple Iron Co. 
 was deposited with it, and that the voting power of such stock 
 rested with the company. To a certain extent the railroads 
 " ate their cake and had it too; " that is, they obtained money 
 from investors at the latter's own risk, for the benefit of the 
 railroad companies, without the necessity for investment 
 upon their part, enabling them to so control the output of 
 the Temple Iron Co. that the railroads in interest should get 
 the benefit of its freight. 
 
 One meaning of " beneficial " in a general sense is that of 
 a dependent or secondary possession, from which must arise 
 its use as above outlined. 
 
 Berlin Discounts. Rates at which good " commercial 
 paper " is being " discounted " (read " Discounted ") at that 
 point. 
 
 Betterment (or Improvement). When a railway company 
 replaces a 60 Ib. rail with a 90 Ib. rail, the cost of the addi- 
 tional 30 Ibs. of metal per yard is usually charged first to a 
 " betterment account " or " improvement account." The 
 question as to how it should be eventually treated at the end 
 of a fiscal year depends largely upon the financial condition 
 of the company. One which is prosperous very likely may
 
 MONEY AND INVESTMENTS 37 
 
 charge this directly to " operating expense; " otherwise, it 
 may be charged to " capital account " or " construction 
 account, " but only companies of limited financial resources 
 would so treat an expenditure of this nature. Many experts 
 hold that the capitalization of a " betterment " should be 
 only in proportion to the increased earning ability conferred 
 upon the property by the " betterment." (See subjects in 
 quotations.) 
 
 Bid. (See " Bid Price.") Sometimes called a " tender." 
 
 Bidding Up. An advance in prices brought about by bidding 
 higher and higher, always a little above the last actual sale. 
 
 Bid Price. The price offered, or " bid," for any security or 
 commodity. The " bid price " of Western Union Telegraph 
 stock is 95 when that is the price at which it can be sold. 
 (See also " Sealed Bid.") 
 
 Bids and Offers. All offers to buy or sell securities in the 
 New York Exchange are for 100 shares of stock or for $10,000 
 par value of bonds unless otherwise stated. 
 
 Bids and offers may be made only as follows: 
 
 " Cash," i. e. for delivery upon the day of contract. 
 
 " Regular way," i. e. for delivery upon the business day 
 following the contract. 
 
 " At three days," i. e. for delivery upon the third day fol- 
 lowing the contract. 
 
 " Buyer's " or " seller's " options for not less than four days 
 nor more than sixty days. (See " Buyer's Option " and 
 " Seller's Option.") 
 
 Bids and offers made without stated conditions shall be 
 considered to be in the " regular way." 
 
 " Bids or offers " shall not be made at a less variation than 
 one-eighth of one per cent. 
 
 " Bids and offers " shall be made on the basis of a percent- 
 age of the par value of the securities dealt in; except that in 
 securities of a par value of ten dollars or less per share the 
 bid and offer shall be in dollars or fractions thereof. 
 
 In all deliveries of securities, the party delivering shall have 
 the right to require the purchase money to be paid on de- 
 livery; if delivery is made at transfer, payment may be 
 required at time and place of transfer. 1 
 
 After the dealing in " puts " and " calls " had been pro- 
 hibited by the directors of the Chicago Board of Trade, 
 similar methods were attempted under another name called 
 " bids and offers," which is nothing more or less than a modern 
 name for " puts " and " calls," which will be found explained 
 
 1 The foregoing matter under " Bids and Offers " is from the Constitu- 
 tion of the New York Stock Exchange, and contains most of its important 
 rules in connection therewith.
 
 38 MONEY AND INVESTMENTS 
 
 under those subjects. The Appellate Court has just rendered 
 a decision to the effect that transactions of this kind 
 " bids and offers " are prohibited under the Illinois statutes. 
 Big. Preferred stock. 
 
 Big Four. Cleveland, Cincinnati, Chicago & St. Louis Rail- 
 way Company. 
 
 Big Katy. The preferred stock in the Missouri, Kansas 
 and Texas Railway Co. 
 
 Big Kitty. Same as last subject. 
 
 Big NPR. (Nipper). Northern Pacific R. R. Co. preferred 
 stock. 
 
 Big Steel. The preferred stock of the United States Steel 
 Corporation. 
 
 Big Three. The name applied to the three largest life in- 
 surance companies of New York City; namely, The New York 
 Life Insurance Co., The Equitable Life Assurance Society, 
 and The Mutual Life Insurance Company of New York. 
 
 Big Union. Union Pacific Ry. Co. preferred stock. 
 
 Bill. " Bill of Exchange." This term is also extended not 
 only to the ordinary bill, or statement, of money due, as a 
 grocer's bill, etc., but to cover a promissory note, or any paper 
 demanding money settlement. In the language of the " clear- 
 ing-house " " bill " refers to bank bills or government notes. 
 
 Bill at Sight. Same as " Sight Bill " or " Draft." (See 
 " Sight Draft.") 
 
 Bill-Book. A bank's record of drafts, notes, etc. 
 
 Bill Broker. In England, one who makes a business of 
 handling promissory notes, " bills of (inland) exchange," etc. 
 Sometimes called " bill merchant." 
 
 Bill Merchant. See " Bill Broker." 
 
 Bill of Credit. Really paper money issued by authority of 
 a government. No better definition has ever been given than 
 that of Chief Justice Marshall, who defined a " bill of credit " 
 as " paper issued by the sovereign authority and intending 
 to circulate as money." The Constitution of the United 
 States provides that the Legislature of the United States shall 
 have power to borrow money and emit " bills of credit " of the 
 United States. The Constitution further provides that the 
 individual States shall not emit " bills of credit " or make 
 anything but gold and silver coin a tender in payment of debts. 
 
 Bill of Exchange. 1 (See first paragraph under " Ex- 
 change.") 
 
 1 " Bills of exchange are said to have been invented in the 14th century, 
 by the Jews or the Lombards, for the purpose of withdrawing their prop- 
 erty from the countries from which they were expelled." J. W . Gilbart.
 
 MONEY AND INVESTMENTS 39 
 
 The laws of one of our States well defines a " bill of ex- 
 change " as follows: " A bill of exchange is an unconditional 
 order in writing addressed by one person to another, signed 
 by the person giving it, requiring the person to whom it is 
 addressed to pay on demand or at a fixed or determinable 
 future time a sum certain in money to order or to bearer." 1 
 
 Bill of Lading. A receipt given by land or water transpor- 
 tation companies for goods accepted for shipment, and which 
 is the shipper's evidence of the fact. 
 
 Bill of Sale. A paper which conveys interest or right in 
 personal property from one party to another. 
 
 Bills. An abbreviated expression for " bills of exchange." 
 
 Bills Payable. A person's " bills payable " are all his un- 
 paid evidences of indebtedness, such as notes, acceptances, 
 etc., held by others against him. (See " Accounts Payable " 
 and " Notes Payable.") They are " bills payable " from the 
 standpoint of the person owing them and " bills receivable " 
 from the standpoint of those to whom they are due. The dis- 
 tinction between " bills payable " and " receivable " and 
 " notes payable " and " receivable " is that in the former case 
 they represent indebtedness due or receivable for goods 
 bought or sold or services rendered, whereas they become 
 " notes payable " or " notes receivable " when, instead of 
 payment in cash being made for the sum due, a note or other 
 formal instrument of indebtedness is given in lieu thereof. 
 " Notes payable " or " notes receivable " would also include 
 evidences of indebtedness for money in the direct form of 
 loans. 
 
 Bimetallic Standard. The use of two metals as a standard. 
 (See next subject.) 
 
 Bimetallism. In reference to the currency question, the 
 free coinage and use of both gold and silver as legal tender 
 to any amount at a standard of value established by law, is 
 known as " bimetallism; " the system of coinage by which 
 both gold and silver coins (or any two metals) are recognized 
 as legal tender to any amount. 
 
 Bingham. Bingham Consolidated Mining & Smelting Co. 
 (Gold and Copper.) 
 
 Biscuit. National Biscuit Co. 
 
 Bit. A term much in use upon the Pacific Coast as the 
 equivalent of 12^ cents. " Two bits " is the ordinary ex- 
 pression there for a " quarter " or 25c. 
 
 Black Friday. September 24, 1869. One of the greatest 
 convulsions of the many that Wall Street has experienced. 
 Jay Gould and his partner, James Fisk, had engineered a bull 
 
 1 Michigan, Act 265, P. A. 1905.
 
 40 MONEY AND INVESTMENTS 
 
 movement in gold which had advanced to 162^. The Govern- 
 ment suddenly broke the " corner " by buying $4,000,000 
 of its own bonds with gold, and a financial upheaval 
 followed. 1 
 
 Bland-Allison Law. In 1878 the bill which had been intro- 
 duced into the House of Representatives by Mr. Bland and 
 afterwards amended by Mr. Allison, became a law on February 
 28th, which provided for the purchase from time to time of 
 silver bullion at the market price to the amount not less than 
 $2,000,000 per month nor exceeding $4,000,000 per month. 
 It provided for its coinage into silver dollars of 412^ grains as 
 fast as purchased. As first introduced by Mr. Bland the bill 
 provided for what is known as a " free coinage of silver " 
 at the ratio of 16 to 1 ; namely, the coinage of silver upon the 
 same terms as gold. The " Bland-Allison Law " was repealed 
 in 1890 and superseded by what is known as the Sherman 
 Act, to which refer. 2 
 
 Bland Bill (or Law). See " Bland- Allison Law." 
 
 Bland Dollar. Another name for the " standard silver 
 dollar," but uncommonly so. 
 
 Blanket-Mortgage. A mortgage covering several different 
 properties, or a collection of properties, and given to secure 
 a single debt, or sometimes given to secure indebtedness 
 previously created in different forms. When a mortgage of 
 this kind is given, an underlying lien (indebtedness having 
 prior claim) is generally implied. The usage of this term is, 
 after all, somewhat vague. It is occasionally applied in about 
 the same sense as " general mortgage," but, the writer thinks, 
 improperly so, unless, possibly, upon a system composed of 
 two or more companies, for there is, perhaps, this difference: 
 The latter covers property owned by one corporation, and 
 used in the general conduct of its business, as a railroad, for 
 instance, whereas a " blanket mortgage " more particularly 
 covers several separate properties, each of which may have 
 no similar or common use with the others. A mortgage might 
 be issued to cover a property under construction, and so 
 worded as to also cover the property when completed; all 
 equipment, future acquired property, etc. This would really 
 be a " first mortgage," and so called, as there is a certain 
 dislike to the term " blanket mortgage," and, although in the 
 case just cited the mortgage might also be considered a 
 " blanket " first mortgage, on account of its liberal provisions 
 
 1 There have been other days than the one mentioned above which are 
 also referred to as " Black Fridays." At the time of the failure of the 
 large London banking house of Overend & Gurney, May 11, 1866, a catas- 
 trophe followed which resulted in the designation of " Black Friday " for 
 that day. 
 
 2 United States Treasury Department Circular, No. 72.
 
 MONEY AND INVESTMENTS 41 
 
 in regard to the future, no one would think of using that word 
 in such a connection. 
 
 The present tendency in creating mortgages is to eliminate 
 the " future " or " hereafter acquired " clause, as it may 
 become troublesome when companies desire new property 
 and must raise additional funds for the purpose. To be pro- 
 hibited from so doing on account of being obliged to place 
 new property under an existing mortgage, may be a hardship. 
 It is often possible to get around this restriction, however, 
 in many ways; as by the issue of a " purchase money mort- 
 gage " or an issue of bonds by a separate corporation, guar- 
 anteed by the parent company. 
 
 Blank Indorsement. See " Indorsement in Blank." 
 
 Blind Pool. When a group of individuals, firms, or corpora- 
 tions place their interests in a particular matter in the con- 
 trol of some one person generally one of the group for 
 a definite time, agreeing that that one shall manage their 
 interests without any instructions from the others, except 
 as set forth at the outset, what is called a " blind pool " is 
 formed. The members may, by the term of agreement, not 
 even be allowed any information from the one in control 
 during the life of the pool, unless the object for which it was 
 formed shall have been sooner accomplished. 
 
 Sometimes the term " blind pool " is given to a corporation 
 whose operations are completely shielded from the knowledge 
 of its stockholders or the public, only those actually in the 
 management or closely associated with the same, having any 
 knowledge of the company's financial condition and earning 
 ability. 
 
 Block. A " block of stock " or a " block of bonds " means 
 a considerable amount of such security bought or sold in one 
 transaction. The sale of 5,000 shares of stock at one time 
 would be considered as a " block." Sometimes, when the 
 securities of a corporation are offered for public sale or sub- 
 scription, a certain amount of stock is required to be purchased 
 with a given amount of bonds; these combinations of securi- 
 ties are known as " blocks." 
 
 Blotter. Commonly called a book of original entry. A 
 book in which a first and temporary record of transactions 
 are made, later to be transferred " posted " into books 
 of more permanent record. 
 
 Bnk. Bank. 
 
 Board. " On the board," meaning on the exchange. (Also 
 see " Board Room.") 
 
 Board Man. A broker, being a member of some exchange, 
 who goes upon the floor of such an exchange and transacts 
 business. Such a man may buy and sell for his own firm or
 
 42 MONEY AND INVESTMENTS 
 
 for some other; that is, a firm need not necessarily send 
 upon the floor of an exchange some one of its members pos- 
 sessing a seat thereon, but may employ, at fixed rates of 
 commission (see " Two-dollar Man "), some other member 
 of the exchange to act in its stead. In any event, the one 
 actually doing the business upon the exchange itself is called 
 the " board man." 
 
 Board of Education. For school purposes, a separate 
 municipality is often created with its own officers and terri- 
 torial lines. Such geographical divisions are often called 
 " School Districts." This custom is very common in the 
 middle and far West, and " Board of Education " and " School 
 District " bonds are those issued by such municipalities. 
 The name " School District " is more commonly applied in 
 certain sections of the West where the cities are subdivided 
 into several districts and the same method of subdivision 
 is extended to the rural sections; whereas the title " Board 
 of Education " is more commonly in use in sections where 
 practically the entire city is embraced in the district. 
 
 These bonds have, as a rule, proved very safe investments. 
 The appropriation of money for the education of children 
 appeals to the average American, which, together with the 
 fact that many of the Western States have received financial 
 aid in the way of public lands for school purposes, has made 
 a sound basis for the establishment of good credit. 
 
 Board of Investment. (See " Savings Bank.") 
 
 Board of Trade of the City of Chicago. A commercial ex- 
 change organized and chartered under the laws of Illinois 
 to promote uniformity in the customs and usages of mer- 
 chants, and acquire and disseminate valuable commercial 
 and economic information. It is a place wherein such com- 
 modities as grains, seeds, flour, provisions, etc., are dealt in. 
 Inasmuch as Chicago is claimed to be not only the great grain 
 clearing-house of the world, but also the largest lumber 
 market in the world, and inasmuch as the volume and value 
 of the different grain crops of the West have a direct bearing 
 upon the transportation rates and consequently railroad 
 earnings, and as they generally fix the rate of interest on 
 money, the importance of the " Chicago Board of Trade," 
 and of the information which is distributed broadcast there- 
 from, can be well appreciated. For here is collected all 
 information concerning crops; on the bulletin of the Ex- 
 change is posted the price of wheat, maize, oats, and pro- 
 visions in all the principal markets of the world, and this 
 information is spread broadcast for the benefit of both pro- 
 ducer and consumer. 
 
 One obtains membership by being voted in by the Board
 
 MONEY AND INVESTMENTS 43 
 
 of Directors, and upon the payment of an initiation fee of 
 $10,000, or upon the presentation of an unimpaired and un- 
 forfeited membership duly transferred, and by signing an 
 agreement to abide by the rules, etc. 
 
 In all trading on the Exchange actual delivery is contem- 
 plated by tender of regular " warehouse receipts " representing 
 the commodity in question unless otherwise agreed between 
 buyer and seller. The regular trading hours are from 9.30 A.M. 
 to 1.15 P.M., except on Saturdays, when 12 M. is the closing 
 hour. 
 
 To insert here all necessary to completely cover the matter 
 of commissions charged by the Board of Trade would occupy 
 too much space, as it varies on each commodity, according to 
 amount and conditions of sale. The usual trading unit in 
 grain is 5,000 bushels; the commission is c. per bushel for 
 the purchase or sale, or for the purchase and sale. 
 
 There is a clearing-house maintained for the convenience of 
 members, conducted in a similar manner to a " stock ex- 
 change clearing-house." 
 
 The Chicago Board of Trade has issued a very voluminous 
 book, containing not only all the rules in relation to trans- 
 actions thereon, but an enormous amount of information, 
 statistical and otherwise, which is well worth the perusal on 
 the part of any person who wishes to investigate this subject 
 further. 
 
 Board Room. A room in a broker's office wherecustomers 
 may obtain quotations of sales almost immediately after the 
 transactions are made upon the various exchanges. " Tick- 
 ers " are installed in all these rooms, but the method of dis- 
 playing the information differs in various firms. In some, 
 the customers read it directly from the " tape; " in others, 
 a boy copies the quotations as fast as received upon large 
 sheets of especially ruled paper, with columns headed with the 
 names of the securities, and, in others, the quotations are 
 displayed upon a blackboard similarly arranged, that all may 
 see from the various parts of the room. From the latter 
 custom arises the name, " board room." 
 
 This term is also applied to the trading room of an exchange. 
 
 Boat Loads. A Chicago Board of Trade term which refers 
 to canal boats, averaging to carry about 8,000 bushels of 
 grain. 
 
 Bob. An English shilling (24 3-10 cents). 
 
 Bobtail Pool. (Read first part of " Pool.") A " pool " in 
 which the members buy or sell independently of one another, 
 and not through one member. 
 
 John Moody defines it as an informal pool in stocks, in 
 which the members join together to move the stock either up
 
 44 MONEY AND INVESTMENTS 
 
 or down, and then each is usually allowed to suit his own 
 pleasure in closing out his interest. 
 
 Bolivar. The monetary unit of Venezuela, being equal to 
 the French " franc," and to $.193 United States money. This 
 name was chosen in honour of the hero of Venezuela. 
 
 Boliviano. The monetary unit of Bolivia, silver, and 
 equal at this time 1 in value to about $.478 United 
 States money. 
 
 Bonanza. Any lucky strike of rich ore in a mine; an un- 
 usually profitable speculation or investment. 
 
 Bond. 2 An instrument by which a government, munici- 
 pality, or corporation contracts and agrees to pay a specified 
 sum of money on a given date (sometimes reserving the right 
 for earlier payment), the bond itself being a coupon-bearing 
 (or registered) note under seal; the coupons representing 
 the quarterly, semi-annual, or annual interest, as the case 
 may be, at a fixed rate. 3 (See " Corporation Bonds.") 
 
 In the case of a " corporation bond," a mortgage is usually 
 placed upon the property to secure the issue. In the case of 
 the government or municipality, no mortgage is necessary, 
 although sometimes certain revenues are pledged for payment 
 of the principal, or interest, or both. The government or 
 municipality, as a rule, simply issues its promise to pay under 
 seal in the form of a " bond " as already described. 
 
 " Bonds " are issued by corporations, when sufficient money 
 for the capital of same cannot be raised by the issuing of 
 stock at satisfactory prices, or when, perhaps, the limit of 
 stock which can be issued legally has been reached, and ad- 
 ditional money is required. Again, suppose a corporation is 
 enjoying very good profits, earning and paying, for example, 
 10% dividends upon its stock; it needs money for additions 
 and extensions; to issue more stock would be equivalent to 
 borrowing money at the high rate of interest of 10%, for that 
 
 1 United States Treasury Department Circular issued April 1, 1906. 
 
 2 Two men of finance once made the attempt to define a " bond " in the 
 fewest possible words with this result: First, " Promise to pay under seal." 
 Second, " Chosen action under seal." The writer offers these for con- 
 sideration. 
 
 3 Cleveland, in his " Funds and Their Uses," distinguishes between a 
 bond and an ordinary promissory note in this way: " The only way that 
 a bond is distinguished from an ordinary promissory note is by the fact 
 that it is issued as a part of a series of like tenor and amount, and, in most 
 cases, under a common security. By rule of common law the bond is also 
 more formal in its execution. The note is a simple promise (in any form, 
 so long as a definite promise for the payment of money appears upon its 
 face), signed by the party bound, without any formality as to witnesses or 
 seal. The bond, on the other hand, in its old common-law form, required 
 a seal, and had to be witnessed in the same manner as a deed or other 
 formal conveyance of property, and though assignable was not negotiable. 
 This is still the rule within many jurisdictions."
 
 MONEY AND INVESTMENTS 45 
 
 is what the stock issue already outstanding is returning to 
 its owners. The company finds it is possible to sell bonds 
 bearing 5% interest to raise the needed capital. It is ex- 
 pected that the increased capital will return earnings to the 
 corporation not less than that already invested; viz. 10%. 
 Consequently, by the sale of bonds bearing 5% interest, the 
 difference between that and the expected earning capacity 
 of the new capital, or another 5%, would accrue to the benefit 
 of the stock already outstanding, and increase, therefore, 
 the rate of dividends upon that stock. 
 
 Bonded Debt. The fixed indebtedness of a municipality or 
 incorporated company in the form of bonds. (See " Bond.") 
 
 The question of the amount of bonded indebtedness fair 
 to place upon property, fair to both the shareholders and 
 bondholders, is a question deserving of much serious con- 
 sideration. There is a general belief that the property of a 
 corporation should only be mortgaged to the extent of its 
 unchangeable value; that is, the minimum value of such 
 property, as generally recognized, in a time of public ad- 
 versity. Mortgaging a property to this extent would leave 
 the shareholders to take the risk of the fluctuating value, and 
 it is proper that they should do so, for, as a rule, the bonds on a 
 property are expected to pay a lesser rate of interest than 
 the dividend return to the shareholders. It is impossible to 
 give any set rules here: each case will have to be judged upon 
 its own merits. The amount of sinking fund must be taken 
 into consideration, also the kind of property mortgaged. 
 For instance, some properties depreciate through wear and 
 tear much faster than others street railways, for instance, 
 more rapidly than electric light or gas plants. (This subject 
 will be found more fully treated under the heading " Sinking 
 Fund.") 
 
 In the case of municipal bonded indebtedness, a very 
 prominent lawyer once made the statement that no munici- 
 pality could ever stand a greater " net indebtedness " than 
 5% of its assessed valuation, and that is a very good rule to 
 follow, but, like all good rules, it has its glaring exceptions; 
 for instance, the assessed valuations of some Far West and 
 Middle West communities are very much less, in proportion 
 to the marketable value of the property, than here in the 
 East (This is more fully set forth under the heading " As- 
 sessed Valuation "), and, in such cases, a greater net indebted- 
 ness than 5% might be fully justified. 
 
 Another thing to be considered is not to be influenced too 
 much by the offer of a new issue at a figure below the par 
 value that is, at a discount. If a railway corporation sells 
 an issue of bonds having 20 years to run, bearing 5% interest, 
 and receives but 80 cents on a dollar for the same, the pur-
 
 46 MONEY AND INVESTMENTS 
 
 chaser is prone to believe that the net earnings need to 
 provide for only 5% on the bond issue, but when these bonds 
 mature, 20 years afterwards, they must be paid off at par, 
 or 20% in excess of the original selling price. This 20% must 
 come from some source, and, therefore, it would be better 
 for the purchaser to spread this 20% over the time which the 
 bonds have to run, estimating the issue roughly, bearing, say, 
 a 6% rather than a 5% rate; then, judge whether, or not, 
 the corporation can stand such an interest charge. On the 
 whole, it is better financiering for a corporation to issue its 
 bonds at a rate of interest which will warrant their sale in 
 the close proximity to par. 
 
 Bond for a Deed. An instrument which the seller of land 
 gives to the one wishing to purchase it, and which binds the 
 former to convey the title upon receiving price agreed upon. 
 
 Bond of Indemnity. In investment matters the common 
 use of the " bond of indemnity " is in case of a lost security. 
 It is a form of guaranty protecting a corporation (firm or 
 individual) in event of presentation at some future time of a 
 security which had been lost by the owner and the corpora- 
 tion issuing the same had issued a new security in its stead. 
 The usual way of obtaining such a " bond of indemnity " is 
 to apply to some " guaranty and indemnity company " 
 which makes a business of furnishing such bonds upon 
 satisfactory evidence that the security has been lost or 
 destroyed. For this bond, which is really a form of insurance, 
 a reasonable charge is made. 
 
 A " bond of indemnity " has many uses to secure one 
 against loss in money matters, but one of the most common 
 is as a protection for the employer against loss resulting from 
 the handling of funds, securities, etc., by an employee; as 
 the cashier or treasurer of a bank. Such a bond may be 
 obtained by an executor or administrator of an estate when 
 required by law. 
 
 All " bonds of indemnity " used formerly to be obtained 
 by getting one or more private individuals to " go on his 
 bond." This was almost always done as a distinct favour on 
 the part of the signer, and generally against his better judg- 
 ment; he receiving no pecuniary return for his risk, as a rule. 
 It gradually became more and more difficult to get such 
 bonds, and, naturally, the " insurance " feature entered into 
 it, and properly organized companies have taken over most 
 of this work. 
 
 Bond Reserve. In recent years, banks in this country have 
 adopted the practice of investing some portion of their funds 
 in bonds, which are supposed to be quickly convertible into 
 cash in case of necessity. This is a safeguard, and an invest-
 
 MONEY AND INVESTMENTS 47 
 
 ment of this kind by a banking institution is often known 
 by the above title. 
 
 In his recent investigation of bond holdings by banks, 
 Wm. C. Cornwell ascertained that banks in the United States 
 containing $10,458,000,000 of deposits, held $1,771,000,000 
 of bonds, not including United States bonds. Therefore 
 19.94% of the total deposits were held in bonds. 
 
 Bond (payable) to Bearer. Either an ordinary coupon bond, 
 or a registered (registered as to principal only and with 
 coupons) bond which has been so registered that it is good 
 in the hands of the bearer and may pass from hand to hand 
 without transfer upon the registration books. 
 
 Bond Values Tables. It is expected that the reader has first 
 familiarized himself with the matter under " Net Return 
 upon the Investment." 
 
 As there suggested, tables of bond values are used to com- 
 pute this " net return." The writer has many times been 
 asked the principle on which the computation of these tables 
 is based, and surprise is often expressed upon finding that a 
 mere calculation by simple arithmetic does not give the same 
 results as are to be found in the ordinary tables in use. These 
 people have proceeded to take, as an illustration, a bond 
 bearing 6% interest, maturing in ten years, for which they 
 had paid 110. They immediately divide the amount of 
 premium i. e. 10% by the length of time the bond has 
 to run in this case, ten years and obtain 1 as the result, 
 which they deduct from 6%, and assume, therefore, that the 
 " net return " to them upon the investment is 5%. Ten per 
 cent, premium being charged off at the rate of 1% per annum. 
 
 The failure in this reasoning arises from the fact that tables 
 of bond values are based upon the fundamental principle that 
 the holder of a bond is expected, at the maturity of each one 
 of the coupons, to re-invest a sufficient portion of the interest 
 money received, and keep it so invested until the maturity 
 of the bond, so that the face value of the bond added to the 
 accumulation of re-invested interest, will, at its maturity, be 
 exactly equivalent to the original cost of the same. 
 
 Right here is where the authors of such tables diverge and 
 form two separate schools, so to speak. The first assumes that 
 the rate of interest at which the money set side from the 
 maturing coupons shall be compounded is the same as the 
 computed net return upon the investment. That is to say, 
 if a bond is sold at such a premium as to net the investor 
 6%, it is assumed that the portion re-invested shall be com- 
 pounded at 6% without regard to the average rate of interest 
 that will probably prevail during the life of the bond. Sup- 
 pose, for example, an investor in bonds may have one lot
 
 48 MONEY AND INVESTMENTS 
 
 netting him 6% per annum and another lot netting him 4% 
 per annum. The assumption arises that a certain portion 
 of the interest payments, even although they may happen 
 to fall due upon the same day, shall be re-invested at com- 
 pound interest at 6% and 4% respectively. It seems absurd 
 to assume that those two separate rates of interest will be 
 prevailing at the same time for a similar grade of securities, 
 or that there is any possibility that a holder of bonds will in 
 any way guide himself in the re-investment with any con- 
 sideration of the " net return " existing upon the bonds in 
 question. 
 
 The second school, which is undoubtedly the correct one, 
 but which principle has never been generally adopted, assumes 
 the rate for re-investment of the interest as fixed at some 
 definite per cent., say 4, with entire disregard of the " net 
 return " upon the original investment. It will be seen at a 
 glance that it is much fairer to predict the future investment 
 of money at an average rate of, perhaps, 4%, than in such 
 widely diverging rates as in the first plan. 
 
 Bonus. In matters financial this has several uses. It may 
 be a premium given for a loan, for a charter or other privilege 
 granted a corporation; it may be an extra dividend to share- 
 holders, or may be stock thrown in with the sale of bonds or 
 other stock, and in this last use perhaps it is most common. 
 An illustration would be: A banker offers a client, say, $10,000 
 bonds of a certain railway or other corporation, which bonds 
 in themselves might not be very attractive to the investor; 
 in order, therefore, to accomplish the sale of the same with 
 greater ease, the banker gives, or throws in, as a " bonus " 
 a certain amount of stock, probably of the same corporation. 
 
 Another use is in the case of a holder of a mortgage or a 
 note that may not be due for some time, and on which the 
 maker desires to anticipate payment. The holder may con- 
 sider it a good investment and not wish to give it up unless 
 he is given some extra consideration for so doing. Such a 
 consideration would be called a " bonus." 
 
 Bonus Bonds. Bonds issued by a municipality to encourage 
 the building of a railroad or some manufacturing industry, 
 for more information regarding which, turn to " Railroad Aid 
 Bonds." They are not considered a desirable investment. 
 
 Books. The various books, such as ledger, journal, etc., 
 in which the accounts of an individual, firm, or corporation 
 are entered. 
 
 Books Close. In order that corporations, especially the 
 larger ones, may pay a dividend, it is necessary to fix an 
 interval of one or more day's duration, during which it is 
 possible to make a correct list of the stockholders as shown
 
 MONEY AND INVESTMENTS 49 
 
 by the transfer books, so that the dividends may be sent to 
 the stockholders as of record the date provided for in the vote 
 passed declaring the dividend. It is desirable that no stock 
 shall be transferred during this process, and it is, therefore, 
 customary for each corporation to " close its books; " that is, 
 its transfer books, during such an interval. This period 
 generally precedes shortly the actual payment of dividend. 
 Many corporations are accustomed to give ample notice to 
 stockholders either by mail or by advertising, stating the 
 dates of closing and opening of the books. Books may be 
 closed for other than the above reason. 
 
 The New York Stock Exchange rules provide that on the 
 day of the closing of the transfer books of a corporation for 
 a dividend upon these shares, all transactions therein for cash 
 shall be " dividend on " up to the time officially designated 
 by the closing for transfers. All transactions on that day 
 may be made therein for " cash " deliverable the same day 
 rather than on the following day as is the usual custom 
 in order that the dividend due may be obtained by the buyer. 
 All transactions on that day, other than for " cash," shall be 
 " ex-dividend." Should the closing for transfers occur upon 
 a holiday or half holiday observed by the exchange, transac- 
 tions on the preceding business day other than for " cash " 
 shall be " ex-dividend." The buyer of any shares during the 
 period for which the transfer books may be closed shall be 
 entitled to receive all interest, dividends, rights, and privileges, 
 except voting power, which may pertain to the same during 
 the period. 
 
 After the closing of the books the delivery on purchases 
 of " odd lots " of stocks cannot be made until the books 
 open. 
 
 In a case where personal liability is attached to a certificate, 
 the seller shall have the right to make delivery by transfer. 
 The right to require receipt or delivery by transfer shall not 
 obtain while the transfer books are closed. (See " Transfer 
 in Blank.") 
 
 Books Open. (See " Books Close.") Transfers of stocks 
 may again be made. 
 
 Book Value. The worth of any business or corporation, as 
 shown by its own books. Suppose a corporation of $100,000 
 capital stock, par value $100, shows, by its books, profits 
 which have not been divided, of $50,000. Taking for granted 
 that the books honestly represent the facts, then there is one 
 half, or 50%, as much profit as capital; therefore, adding 
 the 50% to the $100, par value of the stock, the " book value " 
 would be $150 per share. 
 
 Boom. An enormous advance in prices; everything going
 
 50 MONEY AND INVESTMENTS 
 
 upward midst tremendous enthusiasm, until unreasonable 
 and unnatural levels are reached. 
 
 Boomers. Those endeavouring to create a " boom," or 
 instrumental in causing one. 
 
 Boot. See " To Boot." 
 
 Borrowing Stock. A broker (or any one) borrows stock 
 when he has made a contract to deliver, and the stock which 
 he has sold, for any one of various reasons such as having 
 sold it " short " cannot be delivered at the time agreed. 
 The usual method of borrowing among stock exchange 
 brokers is as follows: 
 
 Sharp & Co. sell 1,000 shares of Western Union Telegraph 
 Co. stock at 90; delivery to be made the following day. 
 The customer for whom they have made the sale cannot deliver 
 it for some little time, possibly he has sold it " short." (See 
 " Selling Short.") Sharp & Co. ascertain that Brown & Co. 
 have 1,000 shares of the same stock, which they are carrying 
 for a customer; they are borrowing upon this stock at a bank 
 at the rate of, say, $70 a share, which is all the bank wishes to 
 loan upon the stock, at the reigning price of $90. In loaning 
 the stock to Sharp & Co., Brown & Co. would receive $90 a 
 share, which would, therefore, be equivalent to borrowing 
 $20 a share more upon the stock than they could in any other 
 way; giving Brown & Co. that much more available cash in 
 their business and for that reason they are willing to loan the 
 stock. The latter must pay Sharp & Co. interest on the 
 money, which usually is a little more favourable to them than 
 the ruling market price. This is called the " loaning rate on 
 stocks." The loaning rate varies greatly for any given stock 
 with the demand to borrow it. Sometimes no interest is 
 paid (the rate is quoted " flat ") on account of a great de- 
 mand; and again the call to borrow a certain stock may be 
 so great as to cause not only the elimination of the question 
 of interest, but the lender may be able to exact a premium 
 from the borrower. This premium is expressed in percentage 
 as 1-32% (per day). The lender of a stock is entitled to all 
 dividends declared upon it during the time of the loan. 
 
 Sharp & Co. would be obliged, each day, if there were any 
 change in the quotations of Western Union stock, to adjust 
 the difference with Brown & Co.; that is, we will suppose that 
 Western Union stock, on the day after the loan is made to 
 Sharp & Co., advances to 95; Sharp & Co. would be obliged 
 to pay Brown & Co. $5 a share more on the stock; perhaps, 
 however, it declined to 88. In that event Brown & Co. would 
 have to pay $2 per share to Sharp & Co. In other words, 
 the difference between the two firms must always be adjusted 
 in accordance with the price ruling. This protects the original
 
 MONEY AND INVESTMENTS 51 
 
 lender of the stock and enables him to buy the stock in, if 
 necessary, at any time, without loss, and does not make him 
 dependent upon Sharp & Co.'s ability to deliver the stock in 
 case called upon so to do by the lender. 
 
 Boston and Montana. Boston and Montana Consolidated 
 Copper & Silver Mining Co. (Controlled by Amalgamated 
 Copper Co.) 
 
 Boston Consolidated. Boston Consolidated Copper and Gold 
 Mining Co., Limited. 
 
 Boston Method of Figuring Interest. See " Interest." 
 
 Boston Shilling. See " Pine Tree Money." 
 
 Bottom. " The bottom has been reached; " meaning that 
 prices will not go lower, or that depressed business conditions 
 have reached their lowest ebb, and, in either case, an upward 
 tendency is next expected. 
 
 Bottom Has Dropped Out of. If the bottom drops out of a 
 pail of milk, it is about as bad a catastrophe as could happen 
 to the milk. When the " bottom drops out of the market," 
 a similar idea is conveyed regarding prices; namely, that they 
 have gone downward in about as bad a way as it is possible 
 to conceive, and that everything has a very discouraging 
 appearance. 
 
 Bottom Prices. The lowest prices. The expression " he 
 got in at the bottom " means that nobody obtained the 
 security at a less price than the person referred to. 
 
 Bottomry. A loan which has a vessel pledged as security 
 for its payment. 
 
 Bottomry Bond. The contract given securing of a vessel to 
 the lender as a pledge for the payment of the loan. (See 
 " Bottomry.") 
 
 Bourse. 1 The name applied to stock exchanges in Continen- 
 tal Europe. The Paris Bourse was founded in 1726. 
 
 B. Q. Chicago, Burlington & Quincy R. R. Co. 
 
 Bradstreet's. See " Commercial Agencies." 
 
 Brassage. (Read " Seigniorage.") " Brassage " differs 
 from " seigniorage " in the latter indicating the difference 
 between the commercial value of the metal in the coin, and 
 its face value, while " brassage " is a charge made for coining 
 bullion, usually based upon the approximate cost of ac- 
 complishing the same. 
 
 Break. " Break in the market: " a sudden and considerable 
 decline in prices. 
 
 1 Generally speaking, in Continental Europe, a " bourse " may mean a 
 market for the sale of securities or a market for the sale of specific kind of 
 merchandise, such as grains, cotton, etc.
 
 52 MONEY AND INVESTMENTS 
 
 Break Even. To close a transaction with neither profit nor 
 loss; to come out just even. 
 
 British Columbia. The British Columbia Copper Co., 
 Limited. 
 
 Broken Lot. Same as " odd lot " in reference to stocks, and 
 less than $10,000, par value, in bonds. 
 
 Broker. One who makes purchases and sales for others 
 his principals acts as a middleman, receiving a fixed fee 
 called "brokerage" (see next subject; also "Jobber") for 
 his services. Although many consider a " broker " as an 
 " agent," it must be understood that there is a distinction be- 
 tween the two. The " broker " endeavours to bring together 
 the two parties to the transactions, as, for instance, the 
 buyer and seller, and effect an agreement between them. The 
 best illustration would be in the case of an insurance agent and 
 broker. The latter is authorized to act by one or more com- 
 panies, while the former represents no company in particular, 
 but will usually obtain insurance with the company where he 
 can make the best trade, and thus acts in the capacity of 
 bringing the insurer and insured to an agreement. 1 Brokers 
 are of many kinds: stock, grain, cotton, oil, real estate, and 
 so on. 
 
 Brokerage. Practically the same as " commission," but 
 used to denote the fee charged by any kind of a " broker." 
 If you sell a hundred shares of some stock through a stock 
 broker, he will charge you a certain percentage, say %; that 
 is, 12 cents for each share, or a total for the hundred shares 
 of $12.50. This charge is called " brokerage." 
 
 Broker's Board. Same as a " Stock Exchange." 
 
 Broker's Note. A paper given in writing by a broker to the 
 party for whom he is acting, setting forth the terms of the 
 purchase, or sale, as the case may be. 
 
 Brown Brothers' Virginia Deferred Certificates. Since West 
 Virginia was set aside from Virginia as a separate State, it 
 has steadily refused to accept what is considered its just 
 proportion of the debt of the original State of Virginia. A 
 proposed plan of settlement has been issued looking toward 
 an adjustment of the debt, and a large majority of the holders 
 of the original certificates have deposited their evidences of 
 indebtedness with Messrs. Brown Brothers & Company of 
 New York, and the receipts given by this banking house to 
 the depositors bear the title of Virginia Debt Certificates. 
 
 B. R. T. Brooklyn Rapid Transit Co. 
 
 " B " Stock (or Shares). See " Preferred Shares (or Stock)." 
 
 Bucketed. When an order has gone through the machinery 
 1 "Essentials of Business Law," Burdick.
 
 MONEY AND INVESTMENTS 53 
 
 of a " bucket shop " and been accepted by the same, theoret- 
 ically executed, it has been " bucketed." No actual purchase 
 or sale takes place, the broker must pay losses if the customer 
 has guessed the right way, and vice versa if the opposite. 
 
 " Bucketed " is used to denote the handling by a legitimate 
 stock exchange broker of his customer's accounts on " bucket 
 shop " methods. In other words, he takes the opposite end of 
 the bet to his customer, and buys if his customer sells, and 
 sells if he buys. By this plan, however, securities are actually 
 bought and sold, to that extent differing from a real " bucket 
 shop." Such practice is not in good repute. 1 
 
 Bucket Shops. 2 (See " Margin," which read first.) " Bucket 
 shops " are run by irresponsible brokers, not members of any 
 stock exchange, and who do a marginal business upon one 
 dollar a share and upwards. 3 As a matter of fact, in the case 
 of a " bucket shop," the stock itself is usually not purchased 
 
 1 Inasmuch as legitimate stock exchange brokers have been known to 
 " bucket " their orders accepting the customer's loss or paying him the 
 profit upon the settlement of the account it may be sometimes desirable 
 for a customer to know as to whether his orders are actually being exe- 
 cuted. This may be done by his demanding the name of the broker on the 
 opposite side of the transaction; that is, the one to whom his security has 
 been sold or from whom it was purchased. The rules of the stock exchange 
 entitle him to this information. 
 
 2 " The origin of the term ' bucket shop ' is not now often referred to, 
 and there may be some people who do not know what it is. The old- 
 fashioned stock broker, member of the New York Stock Exchange, for 
 instance, would not take an order to buy or sell less than an even hundred 
 shares of stock on margin. He would refuse to deal in odd lots. So those 
 people whose capital did not admit of their furnishing the necessary margin 
 to trade in so large an amount were shut out from trading. Thus sprang 
 up a class of ' brokers ' not members of the exchange, yet calling them- 
 selves brokers, who made a practice of accepting from a number of different 
 customers orders for odd lots until the total amounted to a hundred or 
 some multiple of a hundred shares. Then they would give joint order 
 as one to some regular broker for execution, putting all the small orders 
 together to make one sufficiently large, as the staves of a bucket are put 
 together to make the bucket. Hence the nickname of these intermediate 
 ' brokers ' or jobbers grew to be ' bucket shop keepers.' In more recent 
 times the reputable ' broken lot ' brokers organized an exchange of their 
 own for the direct handling of these small trades, and the term ' bucket 
 shop,' accordingly, possesses a present significance less respectable than 
 that of its origin." Providence Journal. 
 
 3 The Constitution of the New York Stock Exchange prohibits its mem- 
 bers having any connection whatsoever with " bucket shops," and treats 
 upon the subject as follows: 
 
 " Any member of this Exchange who is interested in, or associated in 
 business with, or whose office is connected directly or indirectly by wire 
 or other method or contrivance with, any organization, firm, or individual 
 engaged in the business of dealing in differences or quotations on the 
 fluctuations in the market price of any commodity or security without a 
 bona-fide purchase or sale of said commodity or security in a regular 
 market or Exchange, shall on conviction thereof be deemed to have com- 
 mitted an act or acts detrimental to the interest and welfare of this Ex- 
 change."
 
 54 MONEY AND INVESTMENTS 
 
 or sold for the customer. If the order is actually executed 
 upon a bona fida exchange, then the " bucket shop " puts 
 in a contrary order for a like amount. For example, a 
 " bucket shop " would sell an amount equivalent to the 
 customer's purchase, or, likewise, purchase an equivalent 
 amount to his sale, thus in no event carrying stocks. It 
 amounts to the customer wagering his money upon a given 
 stock either going up or down, and the " bucket shop," 
 accepting his wager, gambles the other way; and, in the long 
 run, they, like most other gambling establishments, come out 
 winners. A specific example would be for a person having 
 about $10 to go into a place and buy, say, ten shares of stock, 
 with the anticipation of a rise. He will be charged the buying 
 and selling commission, and interest on the account, the same 
 as in a legitimate broker's office, although no stock will be 
 actually purchased or sold. If the stock goes down more 
 than his dollar margin, unless he puts up more money to 
 protect himself, he will be sold out and the transaction closed, 
 and he will have incurred a loss. If it goes up and he chooses 
 to sell, he will be paid the difference between the buying and 
 selling values of the stock, less the two commissions, and 
 interest on the account, plus his dollar per share originally 
 deposited. In this event the " bucket shop " is the loser for 
 the amount the stock has advanced less the two commissions 
 and interest, unless, by chance, they feared that the stock 
 might advance and to protect themselves had actually pur- 
 chased. In that case they, in turn, would have had to pay a 
 commission to a legitimate broker. Bear in mind one thing 
 all the time; that the quotations of the legitimate stock ex- 
 change are followed in the " bucket shops." Stock exchanges 
 have made strenuous efforts to prevent the installation of 
 " tickers " in concerns of this kind, for if it were not possible 
 for these establishments to get the stock exchange quotations, 
 it would be difficult for them to exist. 
 
 The curse of this sort of business is that it attracts men and 
 women of very small means, often office boys and the like. 
 It is one of the worst forms of stock gambling known and has 
 done untold injury. The majority of " bucket shops " will 
 advertise that stock can be actually delivered, but as nobody 
 calls for delivery, except in rare cases, they can afford to 
 purchase the stock through genuine brokers to fill the demand 
 of such rare occasions. 
 
 " Bucket shops " thrive best on a declining market, for it 
 is natural for the average person to buy stocks in anticipation 
 of their advance in value; or, in other words, the majority 
 of customers wager that stocks will go up. Therefore, a falling 
 market causes the " bucket shop " to win more of its wagers 
 than a rising market.
 
 MONEY AND INVESTMENTS 55 
 
 The magnitude and power of this unwholesome business, 
 centring in New York, is emphasized by the knowledge that 
 at times the daily transactions are almost as large as that 
 reported on the New York Exchange itself. The impression 
 is growing that a large percentage of this business is in the 
 control of a few unscrupulous men commanding enormous 
 financial resources. Under their management the tentacles 
 of this business are reaching out over the country in the shape 
 of branch offices, from which points orders are received at 
 the common centre. Suppose, for example, one of these 
 heavily financially backed concerns finds that it has " orders 
 to buy " a very large number of shares of a given stock. 
 Technically, they are " short " of that stock. It is perfectly 
 feasible for them to go into the market and offer a large 
 block of the same stock for sale, and break the price suffi- 
 ciently to wipe out all the margins on orders in hand. Strata- 
 gems of this kind must be done by the " bucket shop " 
 indirectly, as legitimate stock exchanges do not coun- 
 tenance members accepting orders directly from " bucket 
 shops." 
 
 Building and Loan Associations. A form of bank incor- 
 porated under the laws of many of our States which has 
 experienced a rapid growth. They are to encourage the 
 accumulation of money on the part of those of limited means, 
 for the erection of buildings, making improvements on lands, 
 payment of encumbrances thereon, and, in a general way, 
 to encourage real estate investments and the owning of homes 
 and the saving of money. One joins an institution of this 
 kind by becoming a subscriber to one or more shares, of an 
 ultimate value of generally $200; that is, obliging him- 
 self to pay a stated sum in fixed periodical instalments, say 
 monthly; upon the failing so to do he must suffer certain 
 prescribed penalties. He agrees to make these payments 
 until the shares reach the stated value, when they become, 
 as it were, fully paid; his proportion of the earnings of the 
 institution, going to his credit, helps bring his shares to the 
 " fully paid " requirements. A shareholder is entitled to 
 borrow money upon real estate from the " association," 
 when it has any on hand to loan, up to the face value 
 of the shares held. Not only must he pay the legal rate of 
 interest, but a slight premium besides. Formerly the loanable 
 money was offered to the shareholders at stated intervals, and 
 awarded each time to the best bidder, but now the plan of 
 fixing the premium has been more generally adopted. Some 
 of the " associations " will loan to members upon their shares 
 as collateral, up to a certain percentage (say 90%) of the 
 amount paid in. 
 
 After all the required payments have been made upon
 
 56 MONEY AND INVESTMENTS 
 
 shares, a subscriber may demand a return of his money, 
 plus his share of the earnings of the " association." 
 
 The magnitude of the money invested in this country in 
 institutions such as above, may be appreciated from the 
 following figures furnished by the Secretary of the United 
 League of Building and Loan Associations: Total assets 
 $600,342,586; membership, 1,631,046; these returns relating 
 to 5,265 associations. 
 
 There are various institutions such as Savings Fund and 
 Loan Associations, Mutual Loan Associations, Corporative 
 Savings and Loan Associations, Homestead Aid Associations, 
 Corporative Banks, etc., but for all practical purposes their 
 intents and aims are substantially the same as the " Building 
 and Loan Associations." 
 
 These associations are divided into what are called " local " 
 and " national." For obvious reasons it is better to invest 
 in those of the former class. 
 
 The first institution of this kind in the United States was 
 at Frankford, Penn., in 1831, although in England these 
 associations have been traced back to as early as 1789. 1 
 
 Associations of this type have proved a great blessing to the 
 wage earners of this country, and the blessings do not end 
 there; the community at large is a gainer in more ways than 
 one. It is conceivable that civil strife in this country may be 
 restrained from the very fact that such a large number of 
 people of limited means have become property owners. 
 
 Based on the estimates made by the Department of Com- 
 merce and Labour, it is fair to estimate that there must be 
 in the vicinity of 400,000 buildings and homes which have 
 been acquired by this means. In the local associations about 
 70% of the shareholders are working people. 
 
 Building and Mutual Loan Associations. See " Building and 
 Loan Associations." 
 
 Building Mortgage. See " Mechanic's Lien." 
 
 Bulge. A small but sudden advance in prices. 
 
 Bull. One who believes that conditions are ripe for an 
 advance in prices, or one who desires such an advance, and 
 talks " bullish " accordingly. One may believe that the price 
 of a certain security is about to advance, and, therefore, is 
 said to be a " bull " on that particular security, whereas, 
 he may not necessarily be a " bull " on others. 
 
 One writer defines a " bull " as " a man who has something 
 to sell . . . consequently he is anxious for prices to go up " 
 that he may do so at a good price. 
 
 Bull Clique. Those whose interests lie in the direction of an 
 advance in price of one or several securities, or market prices 
 
 1 Department of Commerce and Labour, Bulletin No. 55.
 
 MONEY AND INVESTMENTS 57 
 
 in general, and who unite in mutual efforts to obtain such a 
 result. A " bull clique " in Union Pacific, for instance, is a 
 combination formed to effect an advance in price of Union 
 Pacific Common Stock. (See " Clique.") 
 
 Bulling Prices (or the Market). Pushing prices upwards. 
 
 Bullion. Uncoined gold or silver, generally in the form 
 of bars, but sometimes in lumps or other masses. Although 
 the uncoined metal is usually understood, yet, in discussions 
 relating to the currency, the coined metal is signified as well. 
 For export purposes the former is generally used. 
 
 Bullion Point. This is occasionally used in the same sense 
 as the " gold import point " or the " gold export point." 
 
 Bullion Value. The commercial value of the precious metals 
 as distinguished from the face value of coined money. If a 
 gold five-dollar piece has been reduced in weight, by wear, 
 so as to contain but $4.75 worth of fine gold, the latter is its 
 " bullion value." 
 
 Bull Market. (See " Bull.") When so many are " bulls," 
 that their influence is predominant in the market, a " bull " 
 market is said to exist. 
 
 Bull Pool. See " Bull Clique." The difference between a 
 " pool " and " clique " is explained under the latter subject. 
 
 Bunco. To swindle or cheat. 
 
 Buoyant. Having the quality of rising. When the market 
 is " buoyant," it is rising rapidly, with leaps and bounds; 
 creating much enthusiasm among those benefited thereby. 
 
 Burlington. Chicago, Burlington & Quincy R. R. Co. 
 
 Business Is Business. Meaning that everything is fair in 
 business and that its conduct shall not be tried by the moral 
 code. It is to be regretted that there should have existed a 
 condition giving occasion for the coining of this phrase. 
 
 Business Paper. Often referred to as " business receivables," 
 or " trade paper." Notes, acceptances, etc., taken in the 
 course of one's business in exchange for goods delivered, 
 for instance, and not notes given in exchange for money with 
 which to do business. If West, a grocer, sells Clark fifty barrels 
 of flour and accepts the latter's note for the amount, such a 
 note is " business paper." If West had borrowed $10,000 
 in cash from Clark, giving Clark his note therefor, and 
 West wished this money to use in his business, such a note 
 would be known as " paper." " Paper " given by a dry goods 
 house, for instance, might be " business paper " or " mercan- 
 tile paper," according to whether it was given by the dry 
 goods house to a jobber for goods purchased of him, or was 
 given in the form of a note in direct exchange for money 
 borrowed to conduct the general business of the concern. As
 
 58 MONEY AND INVESTMENTS 
 
 a matter of fact, all classes of notes, acceptances, bills of 
 exchange, etc., irrespective of for what purpose given, are 
 referred to as " commercial paper " or, more briefly, " paper," 
 and the minute classification given above is not always ad- 
 hered to in common usage. 
 
 The foregoing terms used to designate different kinds of 
 " promises to pay " arise from usage. 
 
 Business Receivables. See " Business Paper." 
 
 Buy at the Market. An order to buy at the lowest price 
 at which the security can be obtained without any price 
 limit being set by the one giving the order. 
 
 Buy at the Opening. An order to purchase immediately 
 after the opening of the stock exchange and at the lowest 
 price possible. 
 
 Buyer's Option. A stock exchange term for a contract under 
 the terms of which the buyer of a security need not receive 
 delivery until the end of a specified time. He also has the 
 right to demand delivery any time within the period covered 
 by the contract, by giving one day's notice to the seller. 
 The understanding is briefly expressed as " buyer 4," " buyer 
 10," the figures indicating the number of days provided for in 
 the agreement. By the New York Stock Exchange rules 
 the time must be not less than four nor more than sixty 
 days. 
 
 Buyer the Year. This is explained under " buyer's option," 
 except that one year is the time allowed the purchaser to call 
 for delivery. 
 
 Buyer Three (or any number). See " Buyer's Option." 
 
 Buying Back. Same thing as " Short Covering." 
 
 Buying Down. See " Averaging Down." 
 
 Buying In. See " Short Covering," meaning the same, also 
 buying in " under the rule " (to which refer) and buying to 
 return borrowed stock. 
 
 Buying on a Scale. Buying at regular intervals as the mar- 
 ket changes. Example: A certain stock at 100, at 98, at 96, 
 and so on at every decline of 2%, purchasing a stated amount 
 each time. 
 
 Buying Order. An order given to a broker to buy a certain 
 security, either with or without limit as to price as the case 
 may be. An order to buy is good for the date for which it is 
 given only unless otherwise specified. Sometimes an order is 
 given " good until countermanded," or " good until can- 
 celled," by which the broker understands there is no definite 
 limit as to time; but brokers usually remind their customers 
 at frequent intervals regarding the orders to be sure that they 
 wish them to still remain in force.
 
 MONEY AND INVESTMENTS 59 
 
 Buying Outright. An absolute purchase for which full 
 payment is made. 
 
 Buying Up. See " Averaging Up." 
 
 B. V. These letters stand for " book value." (See that 
 subject.) 
 
 C. When printed upon the " tape," either " Class C " 
 bonds, " coupon," or " cash " (if preceded by a sale) is under- 
 stood. 
 
 C 
 
 Cable Companies Securities of. Since the laying of the 
 first submarine cable in the Atlantic Ocean, the world has 
 now been girdled with them. The large expense contingent 
 upon their laying, repairing, etc., has been considerably re- 
 duced, but the liability to breakage and the consequent 
 cessation of business is considerable. The ocean bed is uneven, 
 and there is necessarily a considerable wear and tear, to say 
 nothing of the dangers of ship anchors and icebergs. The 
 repairing of a break has been much simplified, as it is now 
 scientifically possible to calculate with great accuracy the 
 location of the break, and, by the aid of charts, to locate and 
 pick up the two ends. Still, there is an element of risk about 
 cable company investments; but, nevertheless, they seem 
 to be regarded as an established form for the employment of 
 money. 
 
 Cables. Cablegrams giving quotations in foreign markets. 
 These are referred to as " private cables," which distinguishes 
 those received by private firms, or individuals, from " public 
 cables," which are received by commercial organizations. 
 
 Cable Transfers. A method by which bankers in one 
 country give their customers immediate use of money in an- 
 other. A person in Boston wishing so to remit a sum of money 
 to a person in London, may go to a banker dealing in " foreign 
 exchange " and deposit the sum desired, together with an 
 amount sufficient to cover certain charges and expenses, and 
 the banker will cable his agent or " correspondent " in Lon- 
 don, authorizing the payment of the sum desired to the Lon- 
 doner, another cable message being sent the latter advising 
 him where he may call to get the money. The charge made 
 for a " cable transfer " depends upon the " rate of exchange," 
 and a newspaper quotation: " cable transfers 4.87^ " means 
 that for every " pound sterling " - English money the 
 Bostonian wishes to pay the Londoner, he must deposit 
 $4.87^ U. S. money, besides the expenses of cabling. 
 
 Call. A demand for the payment of money; a demand for 
 payments (generally in installments) of subscriptions to
 
 60 MONEY AND INVESTMENTS 
 
 stocks or bonds; an assessment for which one is legally liable; 
 a notice of intention to prepay a bond or warrant. 
 
 A " call " is a contract which gives its possessor the right 
 to demand, from the party signing the same, a certain amount 
 of stock (grain or other commodity) at a named price during 
 the time stated in the contract. (In London the privilege 
 conveyed in a " call " can only be exercised on the last day 
 of the time limit. In New York it may be exercised any time 
 within its life.) The party willing to execute such a contract, 
 in consideration of the sum received, believes that the security 
 will not be more than this sum above the price named in the 
 contract during its life (or at the maturity of the same), thus 
 making it no object for the owner of the " call " to demand 
 the security. 
 
 " Calls " are dealt in much more extensively in London 
 than in America. A " call " as executed in New York may 
 read as follows: 
 
 " For value received, the bearer may call on me on one day's 
 notice, except the last day, when notice is not required, 100 
 shares of the capital stock of the Arctic Electric Co. at $175 per 
 share any time within 30 days from date." 
 
 Then follows the signature, the time of expiration, and an 
 agreement that all dividends paid upon the stock in the 
 meantime shall accompany the stock in case of the rights of 
 the " call " being exerc'sed. (See also " Options.") 
 
 The word " call " is also used in reference to the calling off 
 upon produce exchange, " futures " in commodities, or, upon 
 a stock exchange, a list of securities. 
 
 Callable. This indicates the right on the part of the issuer 
 of a security to pay it off usually under certain conditions 
 previous to its actual date of maturity; " subject to call; " 
 " subject to redemption." 
 
 Called Bonds. Bonds called for payment or redemption. 
 In many issues of bonds the right is reserved to pay off all, 
 or a certain portion of the issue, under conditions and at such 
 times as may be specified in the bonds and deed of trust. 
 
 Bonds which are " callable," that is, subject to this right 
 of prepayment, are oftentimes considered undesirable, owing 
 to the fact that the notice of a bond being " called " may not 
 reach the attention of the holder, and, as a result, he may 
 lose interest by not discovering that it has ceased until the 
 time of presentation of the next coupon. It is important, 
 therefore, that the holder of a bond subject to redemption 
 previous to its actual maturity, shall be conversant with the 
 terms under which such bond may be " called," and ascer- 
 tain from time to time whether or not the " call " has actually 
 been issued. It is proper that the banking house selling such
 
 MONEY AND INVESTMENTS 61 
 
 a bond should itself keep track of this matter, and notify its 
 customer in case of a " call " being issued affecting any of his 
 securities, and many bankers try conscientiously to do this; 
 but in spite of their best efforts " calls " are apt to pass un- 
 noticed (and if so, no blame should be placed upon them), 
 so it is wise for each holder to protect himself in this regard. 
 
 Call Loan. See " Demand Loan." 
 
 Call Money. See " Demand Loan." 
 
 Call of More. As no one unfamiliar with the meaning of 
 " call," or " put-and-call," would be likely to wish an under- 
 standing of " call of more," it seems sufficient to quote Mr. 
 Higgins's explanation as given in his London published book, 
 " The Put-and-Call," although he uses rather technical 
 language: 
 
 " The premium paid for the right of calling or putting stock 
 at some future date, at a stipulated price, is sometimes in- 
 cluded in the price at which a transaction is done, for the 
 same date, in firm stock. Thus, a ' giver ' of option money 
 will buy a certain amount of stock firm for delivery, e. g. 
 two months ahead, at a figure sufficiently over the current 
 market price for that period to carry with it the option of 
 calling a like amount at the same price. This transaction in 
 options is known as buying stock ' call of more.' 
 
 " The ' put of more ' is the same kind of optional trans- 
 action, in the other direction. The giver sells stock to the 
 taker under the market price with the privilege of being able 
 to sell him another like quantity of the stock at the same price 
 at the end of the option period. In these cases, the difference 
 allowed between the market price and the price fixed upon is 
 regulated by the market value of the option in question at 
 the time of dealing. 
 
 " A stock may be bought call o' more or bought put o' 
 more: in the former case the buyer is ' giving option money/ 
 and in the latter he is ' taking option money.' In like manner 
 if A sells to B stock call o' more, the option to call rests with 
 B, and A is ' taking option money.' If A sells stock to B 
 put o' more, he is giving the option money and has the right 
 to put on B. 
 
 " The price given for the firm stock may carry the right to 
 buy twice, three times, or any number of times, the amount 
 of the firm stock dealt in; the options being termed ' call of 
 twice more,' ' call of three times more,' etc., or, in the selling 
 direction, ' put of twice more,' ' put of three times more,' 
 etc. . . . Such fancy options, however, are not very fre- 
 quently indulged in." 
 
 Call o' More. See " Call of More." 
 
 Calumet. Calumet & Hecla Mining Co. (Copper.)
 
 62 MONEY AND INVESTMENTS 
 
 Cambist. One who deals in " exchange; " a person posted 
 upon " foreign exchange " and the values of the moneys of 
 different countries. 
 
 Can. Pac. Canadian Pacific Railway Co. 
 
 Capel Court. This is explained under " Lombard Street." 
 
 Capital. As understood in commerce, " capital " is money, 
 or its equivalent which may be exchanged for money without 
 lessening the earning capacity of the enterprise in which it is 
 invested. Manufactured goods are " capital " in the hands 
 of the manufacturer. But in the language of the investment 
 dealer, " capital " represents all the money invested in an 
 industry, but more particularly that part represented by 
 stock issues. 1 
 
 Capital Account. The question often arises as to the proper 
 account to charge expenditures made upon a property; that 
 is, whether such expenditures properly should be paid for out 
 of the earnings of the company charged to " operating 
 expense " or whether they may be considered as actual 
 improvements, and, therefore, paid for from increased capi- 
 talization. If the latter case, it should be definitely ascer- 
 tained if such expenditures will increase the actual earning 
 capacity of the corporation. To exhaust this subject by 
 numerous illustrations which would be necessary, is not 
 feasible here. One example must suffice. If a railway re- 
 places a wooden station with a brick station, but thereby not 
 increasing the earning capacity of the road, such an expendi- 
 ture represents a " replacement " and should properly be 
 charged against the earnings of the property; but if the 
 same road builds a side-track into some manufacturing plant, 
 which results in increased business to the property, such an 
 expenditure is an " improvement " and may be properly 
 paid for by increased capitalization, although, of course, 
 many railroads would pay for such an item as this directly 
 out of the earnings, pursuing an ultra-conservative course. 
 
 Capitalist. One who possesses considerable means which 
 may be used in his own business or invested in the enterprises 
 of others. 
 
 Capitalization. For the purpose of this work, this subject 
 has reference to the stocks and bonds which a corporation has 
 outstanding. 
 
 Simplicity in " capitalization " is always to be commended, 
 and the simpler form the less likelihood there will be of the 
 
 1 Conant says, " Capital includes the whole aggregate of exchangeable 
 things capable of ministering to production or fulfilling the desires of 
 men." 
 
 Another writer puts it, " Capital is wealth which is devoted or intended 
 to be devoted to the production of fresh wealth." " Economic Method 
 and Economic Fallacies," W. W. Carlile.
 
 MONEY AND INVESTMENTS 63 
 
 need to call the " doctors of finance " in the shape of a " re- 
 organization committee." A simple " capitalization " is one 
 class of stock and perhaps a single issue of bonds, if desired - 
 secured by a " first mortgage." This does not argue that 
 there are not securities of corporations with nowhere near 
 this simple " capitalization," which are not sound, for there 
 are hundreds of such which are extremely safe, but these are 
 very largely the outgrowth of this resourceful and rapidly 
 growing country. Many of the older corporations did not 
 adequately provide for this growth in their first " capitaliza- 
 tion," and newer and more complex issues had to be brought 
 out to provide legitimate funds for the company's increased 
 demand for business. The advice at the beginning of this 
 paragraph is for new companies forming. " Capitalize " 
 simply, and look far enough ahead so that enough of all 
 issues may be authorized to meet any demand for increased 
 service. 1 
 
 Capitalization of Earnings. The issuing of securities based 
 upon a corporation's earning ability; the issuing of securities 
 upon which reasonable rates of interest or dividends can 
 probably be paid from earnings, rather than making such is- 
 sues equal in face value to the actual value of the property. 
 
 Capital Liabilities. Generally speaking, the total bond and 
 stock issues of a corporation. 
 
 Capital Stock. See " Stock." 
 
 Capping. In financial matters one in the employ of a 
 " bucket shop," who encourages business for his employers 
 by apparently placing orders with them and encouraging 
 others to do the same; his orders, of course, being entirely 
 fictitious and never put through the books of the concern. 
 
 Car and Foundry. American Car & Foundry Co. 
 
 Care of Securities. Every reasonable precaution should be 
 taken against the loss of a security, either by theft, fire, 
 or whatever the case may be, and no better precaution can 
 be taken than by the rental of a box in some Safe Deposit 
 Company. There is no recorded instance of an effort to 
 break into a modern safe deposit vault. The physical ob- 
 stacles offered by the construction are too great. There are 
 
 J One of our leading educators recently said: "There are usually two 
 foundations for the capitalization of a business corporation. The first is 
 the money actually paid for the property or plant; the second is the earn- 
 ing power of the plant and the organization. Both these foundations may 
 be real and solid at any given amount, but both are liable to grave changes. 
 Most plants deteriorate or waste, and constantly require partial replace- 
 ment. Earning power may be unexpectedly either increased or diminished 
 by natural causes, or by bad management or fraud. Injudicious or unfaith- 
 ful directors may fail to maintain the value of a plant, or may sell earning 
 power to other corporations or to partnerships or individuals."
 
 64 MONEY AND INVESTMENTS 
 
 a great many who think they cannot afford this; but in the 
 long run it is to prove a very cheap method of insurance. 
 The keeping of one's securities in the ordinary safe in the 
 house, store, or office, is practically no protection at all 
 against the present day scientific burglar. 
 
 Again, many safes do not give proper protection in case 
 of fire. The keeping of securities in concealed places, like in 
 some old stocking or under the bricks of the hearth, is like- 
 wise unsafe, especially in case of fire, and the urgent advice 
 of securing the rental of a safe deposit box is here repeated. 
 
 In any event, have a complete list of your securities and 
 keep the same in a different place from that in which the 
 securities themselves are kept in an entirely different 
 building so that if the securities are destroyed by fire, the 
 same fire will not be likely to destroy the list. This list 
 should be a fairly complete description so that in case of loss 
 the securities can be so completely described as to fully 
 identify them. It should give, in each case, the name of the 
 security, the number it bears, if any, the date of its issue, the 
 face value, the rate of interest, when due; and it will be valu- 
 able to take additional description, such as when interest is 
 payable, of whom bought, etc. All this information is valu- 
 able, as it may also save a trip to one's safe deposit vaults 
 to obtain information regarding some particular security, 
 which may be wanted for other reasons than in case of identi- 
 fication on account of loss. For instance: certain bonds may 
 be " called for payment " and it is often necessary to know 
 if one holds any of the numbers called. 
 
 There are small books issued, with ruled pages, with blank 
 spaces and printed headings, by the use of which an investor 
 will be guided in taking all the information necessary. In 
 event of loss of a security, notify immediately the corporation 
 issuing the same, also the banker from whom it was purchased, 
 giving in each case a complete description of the security. 
 
 If it is a municipal bond, notify the municipality and the 
 banker. 
 
 If it is a Government Bond, see that subject. 
 
 If it should be a mortgage upon real estate, bring the atten- 
 tion of your lawyer to it without loss of time. 
 
 (See " Bond of Indemnity.") 
 
 Car Lots. The daily record of grains received and in- 
 spected at Chicago. 
 
 Car Mile. The travel of a car one mile. It is the unit of a car 
 movement employed in all relations that have to do with 
 cost and service rendered. 
 
 Carry. To furnish the money. A man asks his broker to 
 " carry the bonds two days " for him. If he agrees, the
 
 MONEY AND INVESTMENTS 65 
 
 broker understands he will not be paid for the bonds until the 
 expiration of that time, but in the meantime he gets no addi- 
 tional " promise to pay " or security on the part of the cus- 
 tomer. In this case it is more or less of an accommodation 
 to the customer; it is simply a delayed delivery on a contract 
 to buy. In a " joint account " (see that subject) one of the 
 parties may agree to " carry " the bonds until sold, receiving 
 certain special compensation therefor, but having no other 
 security for furnishing the money than the bonds themselves. 
 
 " Carry " is a word very commonly used in financial matters 
 with many slightly different applications, but the above 
 should be sufficient to make its meaning understood, however 
 used. (See next subject.) 
 
 Carrying Charges. (See " Margin.") The interest charged 
 by brokers for the amount of money advanced by them to 
 customers in marginal transactions. Also a Chicago Board 
 of Trade term indicating storage rates, interest, and insurance 
 on grain or provisions. 
 
 Carrying-over Day. Same as " Contango Day." 
 
 Carry-over. This has reference to the arrangement (one 
 or all) for delayed deliveries as explained under " Contango." 
 
 Cartel. A term used in Germany with much the same sig- 
 nificance as our use of the word " trust," in relation to con- 
 trol of competition between rival firms, the limiting and 
 allotting production in harmony with the normal requirements 
 of the market, etc. 
 
 Car Trust. A corporation formed for the especial purpose 
 of purchasing railroad rolling stock and leasing the same to 
 operating companies. In effect, the rolling stock is actually 
 sold to the operating company, which pays for it by piece- 
 meal, in the form of a rental, the cars, etc., becoming its 
 property when final payment is made. 
 
 Securities are often issued by " car trusts " secured by the 
 equipment leased, the rentals as received going to reduce the 
 indebtedness. Precautions to be taken in such an invest- 
 ment are set forth under the last paragraph of " Equipment 
 Trust," all of which subject read. 
 
 Car Trust Certificates. See " Equipment Trust." 
 
 Cart-wheel. A United States silver dollar. 
 
 Cash. Delivery of the security sold before a certain fixed 
 hour upon the day the contract is made. 
 
 A sale for " cash " usually means for immediate delivery 
 and payment (stock exchange rules) or, better, simultaneous 
 delivery and payment, but among merchants payment in a 
 certain number of days (say ten) is reckoned as " cash." 
 
 To " cash " a piece of negotiable paper, as a check, is to 
 give the holder money for it.
 
 66 MONEY AND INVESTMENTS 
 
 " Cash " is the name of a coin in use in China, some of which 
 nearly every one must have seen, at least in the shape of a 
 curiosity. They are round pieces of metal nearly the size 
 of our old-fashioned cent, with a square hole in the centre, 
 which is to permit of their being carried on strings, from 
 which rises the expression, " a string of cash; " the number 
 being required to make a " string " varying from 500 to 1,000, 
 according to the locality. The value of these coins has 
 fluctuated greatly within recent years, due probably to the 
 fact that the mints run by the provincial rulers in China, 
 and under no imperial control, are turning them out in large 
 quantities and at large profits. 
 
 " In the United States, a mill is a financial fraction for 
 which there is no coin equivalent. In China the tael is a 
 financial unit for which there is no coin equivalent. There 
 are several other financial values for which there are no coin, 
 and only in copper are currency and coinage synonymous 
 terms. 
 
 " The word tael is used both as a measure of weight and as 
 a measure of value. As a weight measure the tael corresponds 
 to the American ounce, in that it is one-sixteenth part of a 
 Chinese pound or cattie. A cattie, however, is usually 1J 
 pounds, so a Chinese ounce or tael is different from an English 
 ounce. As a tael of currency the weight ranges from 540 
 to 583 grains. The tael of currency is decimally divided down 
 to the sixteenth place of decimals, each with its own name, 
 but usually only three places of decimals are used, and 10 
 cash = 1 candarin, 10 candarin = 1 mace, 10 mace = 1 tael; 
 thus Ts. 1.256 can be read 1 tael, 2 mace, 5 candarins, and 6 
 cash. 
 
 " Each province in China, also each city and many smaller 
 towns, have a different tael of value, as the tael is supposed 
 to be an ounce (Chinese) of silver, but there is no uniformity 
 as to how many grains constitute this ounce, and the fineness 
 of the silver also varies at each point. 
 
 " The money chiefly used at the foreign ports of China is 
 the Mexican silver dollar. There is an immense amount of 
 these coins in circulation. The notes issued by foreign banks 
 in China, such as the International Banking Corporation, 
 the Hongkong and Shanghai Bank, etc., for $5, $10, etc., all 
 read ' payable in local currency/ that is, Mexican dollars. 
 It seems strange that China should use money from Mexico 
 when she has money of her own, but the value of the money 
 in China varies so that the foreigners imported money for 
 their own use of which they know the value, and so this be- 
 came the currency of the ports. 
 
 " At one time there was an attempt to substitute an 
 American ' trade ' dollar, but the coin contained 420 grains
 
 MONEY AND INVESTMENTS 67 
 
 instead of the 417.8 grains of the Mexican. This was supposed 
 to gain the lead as currency on account of its superior weight 
 and hence value, but the actual result was that, silver being 
 at a premium, the Chinese melted these down as soon as 
 received, so this experiment was a failure. Similar experi- 
 ments with British and French trade dollars have also been 
 failures. 
 
 " Each province of China now issues silver dollars, but they 
 are not interchangeable, and hence only local. In fact, each 
 province charges a discount on money from any other prov- 
 ince, which is the reason the interchangeable Mexican dollar 
 is so popular. The Mexican dollar and the other coins are 
 widely counterfeited, so that all money received in China 
 has to be examined carefully. Compradors and native mer- 
 chants frequently put their own chop or stamp on these 
 dollars as a guarantee before passing them on." l 
 
 Cash Account. This is the account headed " Cash " in 
 bookkeeping, under which all cash items received shall be 
 placed upon the debit, or left-hand side, and all items of cash 
 paid out, upon the credit, or right-hand side. The amount of 
 cash on hand should always represent the difference between 
 the footings of these two sides. " Cash " includes metallic 
 money, bank bills, legal tender notes, checks, or other repre- 
 sentatives of money. As it is impossible to pay out more 
 cash than is received, it is clear that the credit side of the 
 account will never be greater than the debit side, although it 
 may equal it. 
 
 Cash Assets. Actual money on hand or within easy reach. 
 Property quickly convertible into money is often included. 
 
 Cash Book. One of the account books used in bookkeeping, 
 and one of original entry. In it are directly entered every 
 transaction involving receipts or expenditures of cash, with 
 a full explanation of each item. It is customary among 
 many bookkeepers to balance this book at the close of each 
 business day. The balance at such times should equal the 
 amount of actual cash on hand. 
 
 Cash Dividend. A dividend paid in money or its repre- 
 sentative, in centra-distinction to a " stock dividend," to 
 which refer. 
 
 Cash Grain. Grain for delivery at once. " Spot Grain " 
 has the same meaning. 
 
 Cashier. In banks or financial institutions, primarily the 
 one who has charge of the cash or securities. This title is 
 most commonly used in connection with national banks, 
 but seldom in the case of savings banks. The " cashier " of 
 a national bank is an extremely important man, as he is the 
 1 Daily Consular and Trade Reports February 7, 1907.
 
 68 MONEY AND INVESTMENTS 
 
 head executive officer, having direct charge of all the work 
 of the bank, and to him are responsible all the bank's em- 
 ployees. 
 
 He usually signs checks, statements, and various other 
 papers of the institution; buys and sells exchange to a very 
 large extent; he may discount paper and pass upon collateral 
 securities. He must have every detail of the bank's condition 
 at his fingers' ends, and be in a position to answer questions 
 upon almost any subject in connection with the bank's affairs 
 at any time. He acts as secretary whenever the directors' 
 meetings are held, and, in general, is the most important 
 active man in the institution. 
 
 Of course the customs of various banks differ. In some the 
 president, possibly the vice-president, may take very active 
 parts and take over more or less of the work usually done 
 by the cashier, but the above fairly describes a cashier's 
 duties and responsibilities. 
 
 Cashier's Check. A check drawn by a bank against itself, 
 and usually signed by its cashier if it has an officer with 
 such title payable when presented at the bank drawing the 
 same. Such a check is commonly used by a person whose own 
 check, for the purpose desired, would not be so readily ac- 
 cepted as the check of some known bank. A " cashier's 
 check " may be used by a person not having a bank account, 
 and, therefore, unable to draw a check of his own. Any such 
 person may obtain a " cashier's check " at a bank by paying 
 an equivalent in cash; the bank, possibly, making some slight 
 charge for the accommodation. This check is also used by 
 the bank itself in paying for securities, bills of exchange, in 
 discounting notes, and generally in payment for supplies, 
 expenses, etc., also for dividends to shareholders; but for 
 this purpose a special form may be used. A check drawn by 
 one bank against another in a distant place, in which it has 
 a deposit, is not a " cashier's check," but " New York funds " 
 (or money), " Boston funds," etc., depending upon the city 
 in which the latter bank is located. The charge in this case is 
 largely dependent upon the rate of " exchange " at the 
 time upon the point against which the check is drawn. 
 
 Cash Surrender Value. See " Surrender Value." 
 
 Castings. Copper, which, from impurities, is defective in 
 strength and electrical conductivity, but which can be used in 
 making castings for ordinary purposes where great strength 
 or electrical conductivity is not required. 
 
 Cats and Dogs. Low grade securities; those of uncertain 
 value; securities which do not belong in the investment class, 
 but are highly speculative. 
 
 Cattle Paper. A note that is secured by a mortgage on
 
 MONEY AND INVESTMENTS 69 
 
 stock cattle, or cattle in the feed lot; that is, cattle which are 
 being prepared for the market either by the producer or 
 breeder, or by the feeder who takes developed cattle and 
 fattens them. These notes are almost invariably secured by 
 a mortgage on the cattle, and are not usually " discounted " 
 (see that subject), but with interest running from date. A 
 chattel mortgage securing the note includes, in some cases, 
 the corn which is being fed to the cattle. Strictly speaking, 
 " cattle paper " would not include a note secured by a mort- 
 gage on dairy cows. These notes are mostly made by banks 
 situated in, or tributary to, the grazing section of the country. 
 
 Caveat. In the financial sense, a notice to stop payment. 
 
 C. B. The " ticker " abbreviation for " currency bonds; " 
 i. e. bonds payable in lawful money, but not specifically in 
 gold coin. 
 
 Cent. The smallest coin in value of the United States, con- 
 taining 45.60 grains of fine copper and 2.40 grains of tin and 
 zinc. Legal tender in amounts not exceeding 25 cents. 
 
 Cental. One hundred pounds weight, avoirdupois. 
 
 Centavos. 1 Subsidiary silver coins of the Philippine Islands 
 of the following denominations: 
 
 50 Centavos of the weight of 208 grains 
 20 " " " " " 83.10 " 
 10 " " 41.55 " 
 
 All the above to be, by weight, 900 parts of pure metal and 
 100 parts of copper alloy. One hundred centavos equal 1 
 peso, which in turn equals 50 cents in our money. One 
 centavo is equivalent to \ of our cent. 
 
 Minor coins of copper, metal, etc., of lesser denominations 
 than the above are also in circulation. 
 
 Centennial. Centennial Copper Mining Co. 
 
 Centime. The smallest French coin, the one hundredth 
 part of a franc, and equivalent to about one-fifth of a cent 
 in United States money. 
 
 1 In December, 1906, owing to the rise in the market price of silver, the 
 silver coins of the Philippines were changed. This was necessitated by 
 the fact that the pure metal in the previous standard was worth more in 
 the market than the face value of the coins, making it an object to melt up 
 the coins and sell the silver as bullion. As a result the subsidiary coinage 
 was changed, thus: 
 
 50 Centavos of the weight of 154 32 grains 
 20 61.728 " 
 10 " " " " " 30.864 " 
 
 All the above to be by weight 750 parts pure metal and 250 parts copper 
 alloy. 
 
 For the foregoing, I am indebted to Frank Mclntyre, Captain 19th U. S. 
 Infantry, Assistant to Chief of Bureau of Insular Affairs, Washington, D. C.
 
 70 MONEY AND INVESTMENTS 
 
 Central Reserve Banks. National banks located in New 
 York City, St. Louis, and Chicago. (See " Central Reserve 
 Cities.") 
 
 Central Reserve Cities. Certain of the largest cities in the 
 United States in which all national banks are obliged by 
 law to keep 25% of the total amount of the money on deposit 
 with them on hand, 1 which is called a " reserve." Such 
 banks may act as " reserve agents " for national banks lo- 
 cated in what are known as " reserve cities " or " undesig- 
 nated cities." On March 27, 1905, the " central reserve 
 cities " consisted of New York, Chicago, and St. Louis. 
 
 Certificates of Beneficial Interest. See " Beneficial Interest." 
 
 Certificate of Deposit. An acknowledgment in writing given 
 by a bank that it has received from the person named a stated 
 sum of money on deposit. 2 As a rule it draws interest, and 
 may be either made payable on demand or at a specified time. 
 If John Smith holds a- " certificate of deposit " he cannot 
 secure the money given over to the bank by drawing a check 
 against it, but, instead, must either present his " certificate of 
 deposit," or it may be presented by some one else after being 
 properly indorsed by John Smith. 
 
 Savings bank-books are to all intents and purposes certifi- 
 cates of this kind. 
 
 Some banks reserve the right in their " certificates of de- 
 posit " or bank-books, to demand a certain notice, say sixty 
 or ninety days, before payment. This right, however, is very 
 seldom exercised except in case of money stringency or im- 
 pending financial disaster. 
 
 Certificates of this nature may be used to transfer funds 
 from one point to another, the same as a money-order or a 
 cashier's check. The certificate may be issued directly to 
 the party depositing the money, and by him made payable by 
 indorsement to whomsoever he wishes, or may be drawn 
 directly to the party to whom it is wished to transfer the 
 money. It must be borne in mind, however, that whoever 
 receives the certificate must present it in person before he 
 can receive the money, or forward it properly indorsed for 
 collection. In case a partial payment is desired upon a 
 " certificate of deposit " the old one is cancelled, and a new 
 one issued for the balance due. 
 
 1 A bank's "five per cent, redemption fund" (see that subject), how- 
 ever, may be counted as a portion of this reserve, which must be in " lawful 
 money," i.e. gold coin, standard silver dollars, fractional silver, silver cer- 
 tificates, gold certificates, clearing-house certificates, United States Notes, 
 and Treasury Notes of 1890. 
 
 2 The Courts of California declare a " certificate of deposit " to be a 
 negotiable instrument and in substance and effect the same as a " promis- 
 sory note."
 
 CQ 
 
 2 
 
 W 
 Q 
 
 - 
 O 
 
 Q 
 
 tf 
 
 MONEY AND INVESTMENTS 71 
 
 A simple form of " certificate of deposit " is as follows: 
 DARTMOUTH TRUST COMPANY 
 
 No Boston, Mass. . . . 19 . . $ .... 
 
 This is to certify, That there has been deposited with this 
 
 Company Dollars 
 
 payable to or order 
 
 in current funds, with interest at the rate of . . . per cent, per 
 annum, upon surrender of this Certificate. 
 
 Countersigned DARTMOUTH TRUST COMPANY. 
 
 By 
 
 Teller. Treasurer. 
 
 A " certificate of deposit " may also be issued by, say, 
 some trust company as a receipt showing the deposit of 
 some security under a plan of reorganization or some such 
 matter. 
 
 Certificate of Incorporation. When it is desired to form an 
 incorporated company, a paper called a " certificate of in- 
 corporation," or one having a similar title, must be filed with 
 the Secretary of the State under which it is desired to in- 
 corporate. Such papers, in their requirements, vary in the 
 different States, but in general must give about such informa- 
 tion as follows: 
 
 Names of the officers and the majority of the directors, 
 name of the corporation and the purpose for which it is con- 
 stituted, the location of the principal place of business, the 
 kinds and amount of stock, the day of the first meeting, a 
 copy of the articles of agreement, etc. 
 
 Certificate of Indebtedness. Simply a floating indebtedness 
 in more or less of a fixed form. Let us take the example of 
 a corporation which wishes to borrow some large sum of 
 money a million dollars or more for some definite 
 period, say one year. It not being, perhaps, possible to make 
 one loan to cover this sum, the amount may be divided into 
 smaller notes of $5,000 or $10,000 denominations, and placed 
 among different holders. Such a security might bear the 
 title of " certificate of indebtedness." It is nothing more than 
 a " promissory note." In case of failure on the part of the 
 company to pay the same the holder has no recourse except 
 application for a receiver.
 
 72 MONEY AND INVESTMENTS 
 
 Certificate of Stock. See " Stock Certificate." 
 
 Certificate of Trustee. Explained under " Trustee." 
 
 Certification. See " Certified Check." 
 
 Certified. Any fact which has been vouched for in writing. 
 The expression is often seen, " the issue is (has been) certified 
 to by," and then naming some trust company. The meaning 
 of this is that the company which is named in the mortgage 
 as trustee is not supposed to allow the bonds to be issued 
 until all the provisions in the mortgage leading up to the 
 issue of the bonds have been fulfilled. There is, as a rule, a 
 printed form on each bond, to be properly signed by the 
 trust company as the last necessary act before the actual 
 delivery of the bond, and which makes it a binding obligation 
 upon the corporation issuing the same. This is only in the 
 case of a corporation issue and not necessary in relation to 
 a municipal bond. (See also " Certified Check.") 
 
 Certified Accountant. See " Certified Public Accountant." 
 
 Certified Check. A check across which some competent 
 bank officer has written, or stamped, 1 over his signature, 
 satisfactory evidence that the person having drawn the check 
 has sufficient funds on deposit at the bank to pay it when 
 presented. Such a check takes precedence over other checks, 
 not " certified," drawn by the same person, and at the time 
 of " certification " the amount of the check is deducted from 
 the funds to the credit of the depositor. " Certified checks " 
 are very much in use as safeguards, and in financial transac- 
 tions it is desirable, if a payment of a considerable sum is to 
 be made by check, to present a " certified " one. A " certified 
 check " may be returned tio the bank and cancelled if not used. 
 The certifying of a check is not obligatory upon a bank, but 
 an act of accommodation. After certification, a bank may be 
 held for payment (except in case of a " raised check "),but 
 no other parties thereto, unless the certification was obtained 
 by the one who drew it. 
 
 To obtain a check of this kind, draw, in favour of the party 
 to whom you wish to make payment, a check against your 
 bank in the ordinary form, and either present it in person or 
 by messenger to the bank, with the request for certification. 
 
 Many banks have pursued the policy of " over-certifying; " 
 that is, certifying a check for a greater amount of money than 
 the depositor has to his credit, as a matter of accommodation, 
 the understanding being that it is to be for a very brief period, 
 the depositor making good the deficit some time during the 
 
 1 There are various forms of wording used for the stamping on a check 
 for this purpose, such as, " Good when properly indorsed," " Good through 
 the Clearing-House," " Accepted," etc., to which, of course, must be added 
 the date and the official signature.
 
 MONEY AND INVESTMENTS 73 
 
 day. This is not strictly proper banking. In fact, it is pro- 
 hibited for national banks to " over-certify " a check. 
 
 Certified Public Accountant. One who has passed an 
 examination (in certain States) and received a certificate 
 authorizing him to use the title " Certified Public Accountant," 
 or the initials " C. P. A.," which signifies that he is qualified, 
 by the test of that State, to perform such duties as set forth 
 under the subject " Auditor." 
 
 In Great Britain " chartered accountant " has the same 
 meaning." 
 
 CH. The " ticker " abbreviation for " Stock Exchange 
 Clearing-House." 
 
 Change. Stock exchange is the meaning in this country. 
 
 Charged Down (or Charged Off). Reducing the " book 
 value " of a property in accordance with the market value at 
 the time is called " charging down; " for example, a banking 
 house owns $100,000 worth of bonds, which, since purchase, 
 have declined in salable or market value five per cent, below 
 the original cost. In order that the banking house may not 
 be deceiving itself in its bookkeeping, it reduces the value of 
 these bonds by $5,000, charging the amount of such re- 
 duction against any profits which it may have, and the $5,- 
 000 is the amount " charged off." This method of " char- 
 ging down " is pursued not only in the case of securities where 
 a loss is incurred, or merchandise owned, which may have 
 depreciated, but in the case of a manufacturing corporation 
 a certain proportion each year of the value of the machinery, 
 or, in fact, anything subject to wear and tear is " charged 
 down." 
 
 Charge Ticket. (See " Bank-Book.") Also a form or blank 
 used among " clearing-houses." 
 
 Charter. A governmental or State grant of certain powers 
 and privileges to a company at the time of its incorporation. 
 A railway company must obtain a charter before it can have 
 legal existence. 
 
 Also the engagement of a vessel to carry grain to a certain 
 point at a fixed rate. 
 
 Charter Bonds. United States Government bonds legally 
 required to be deposited with the Treasurer of the United 
 States before a certificate of authority will be issued for the 
 bank to begin business. 
 
 Chartered Accountant. The same as an " auditor," to which 
 refer; only a " chartered accountant " is one officially 
 authorized to do such work, and is an English title for one 
 who holds a charter from the " Institute of Chartered Ac- 
 countants."
 
 74 MONEY AND INVESTMENTS 
 
 Chartered Public Accountant. See " Chartered Accountant " 
 and " Auditor." 
 
 Charter Number. Each national bank, at the time of be- 
 ginning business, is assigned a certain number by the govern- 
 ment which is expected to appear on all its stationery, called 
 its " charter number." This number always appears on a 
 bank's circulating notes. 
 
 Chasing Eighths and Quarters. Used in reference to one 
 satisfied with small profits. 
 
 Chattel Mortgage. A mortgage on personal property, 
 movable goods, or live stock, and given to secure a debt or 
 promise in much the same manner as is a mortgage upon real 
 estate. A mortgage of this kind should be " recorded " the 
 same as a mortgage on real estate. (See " Mortgage " in 
 relation to fire insurance and recording.) 
 
 Chattels. Movable goods of all kinds; live stock, household 
 furniture, and property other than real. (See " Real Prop- 
 erty.") 
 
 Cheap Money. Low interest rates; i. e. money can be 
 hired at a low rental. 
 
 Check. 1 A written order by a person having money, or the 
 equivalent of money, in a banking institution for it to pay, 
 on demand, during banking hours, a stated sum to the person 
 named in the order, or to whomsoever that person may in 
 turn, by proper indorsement (see " Indorse "), direct it to 
 be paid. As strange as it may seem, there are a great many 
 people who know comparatively little about drawing a check, 
 and who do not take proper precaution in so doing. 
 
 The two common forms of checks are as follows: 
 
 Keesvitte, N. Y., Jan. 2, 1906. 
 $75.00. 
 
 The First National Bank 
 Pay to the order of Charles King 
 
 Seventy-five Dollars. 
 
 No. 611. Richard Ordway. 
 
 1 By statute a " check " is a " bill of exchange drawn on a bank and 
 payable on demand."
 
 MONEY AND INVESTMENTS 75 
 
 KeesviUe, N. Y., Jan. 2, 1906. 
 
 The First National Bank 
 
 Pay to the order of Frank Yeaton - or bearer 
 One hundred twenty-five -- . ^ Dollars. 
 No. 207. Richard Ordway. 
 
 The first form of check is practically the only one now in 
 use, for in the second case, the check is good in the hands of 
 Frank Yeaton, or in the hands of any one else, without 
 Yeaton's indorsement; therefore, care must be taken not to 
 lose it. A check of the same character may be drawn by 
 making it payable to " cash " or " currency," and using the 
 first form. To deposit a check drawn in this way the bank 
 should require the indorsement of the depositor, so, in case 
 Richard Ordway, the " maker " of it, is not good for the 
 amount, then the depositor who indorsed it can be held re- 
 sponsible. The first form of a check is only good in the hands 
 of Charles King, unless he signs his name upon the back, in 
 which event it is payable to any one holding the check, unless 
 it is suspected of being in the hands of a thief. A check, 
 however, made payable to " cash " or " bearer " is good in 
 the hands of any one, always excepting the thief, without 
 indorsement upon the back. In filling out the blanks, as in 
 the case of, " Pay to the order of Frank Yeaton, or bearer," 
 it is better to fill in all the remaining part of the blank with 
 a wavy line, so that no additional writing can be inserted; 
 the same, and more particularly so, in the blank in which the 
 amount is filled out. For instance, it would be very easy, 
 if a check were drawn for fifty dollars to insert " two hundred " 
 before it, making it " Two hundred fifty dollars," if there had 
 been sufficient room left without any wavy line being filled 
 in. The better way is to begin the writing of the amount, 
 and the name of the person to whom the check is payable, 
 as far to the left as possible, in the spaces left for their in- 
 sertion, filling up the remainder of the spaces with wavy ink 
 lines. 
 
 When a check, in the hands of a dishonest person, is in- 
 creased in amount, by changing or adding figures, it is said 
 to be " raised." In the corner of the check the amount should 
 be in figures and agree with the sum preceding the word 
 " dollars," which sum should always be in written words, not 
 figures. If the amount in figures does not agree with the
 
 76 MONEY AND INVESTMENTS 
 
 amount in writing, and the bank at which it is presented for 
 payment is unable to communicate with the person who wrote 
 the check to ascertain which amount is correct, it pays the 
 latter amount. (For information regarding " indorsing checks 
 far deposit," " in blank " and all facts relating to " indorsing," 
 see matter under " Indorse.") 
 
 It is a very common practice among people not familiar 
 with business affairs, to hold checks in their possession with- 
 out presenting for payment for a long period, thinking, possibly 
 there is no need of cashing them until the money is actually 
 needed. This is wrong for several reasons: First, it is an 
 annoyance to the person who drew the check, if it happens 
 that he desires to balance his bank-book in the meantime; 
 Second, in case of financial failure on the part of the person 
 who drew the check, after drawing of the same, the holder of 
 such a check would not have any claim for payment in case 
 other checks should have been presented and paid in the 
 meantime; that is, he would not have prior claim to such 
 checks, although his was drawn before those, for the law 
 would hold him negligent; Third, in case of the failure of the 
 bank itself, the holder who has delayed the presentation of a 
 check an unreasonable time will suffer the loss even if the 
 drawer of the check has funds to meet it in the bank at the 
 time of failure; Fourth, a most important reason, i. e. to 
 hold the " indorser " or " indorsers." A holder of a check 
 should present for payment or forward for collection without 
 loss of time; in no event beyond the second day after its re- 
 ceipt, and all who are parties to the collection thereto should 
 send it along on its course for collection the day received, 
 Sundays and holidays excepted. The only exception 
 thereto may be that of the case of the bank which receives 
 it for final collection which may postpone presentation 
 till the following business day, if received after banking 
 hours. 
 
 The law expects checks to go forward in their usual course 
 for collection without unnecessary delay, and any delay is 
 entirely at the holder's risk. Again, a bank may hesitate to 
 pay a check long since dated, on the supposition that it may 
 have been lost and the liability discharged by another check, 
 or in some other way. 
 
 Should there be checks outstanding and not presented for 
 payment at the time of the death of the one who drew them, 
 in most of our States such checks would cease to have value 
 and should not be cashed by the bank upon which drawn. 
 However, ignorance of the death of the depositor would, 
 protect the bank in case of cashing such checks. 
 
 Do not date a check so far ahead that it may be presented 
 for payment prior to its date, as such a check should not be
 
 MONEY AND INVESTMENTS 77 
 
 paid by the bank when so presented. In England it is illegal 
 to " post date " a check. 
 
 If a check comes into the holder's possession without being 
 dated, and the date of its execution is not known, he may 
 insert the date upon which it is received by him. 
 
 A bank is not bound to pay checks in the order in which 
 they are drawn, but may pay them in the order presented, 
 even although the aggregate amount of the checks outstand- 
 ing may exceed the depositor's account, and some of the earlier 
 drawn checks may happen to be presented after subsequently 
 drawn checks, and thus at a time when funds are depleted. 
 (See " No Funds.") 
 
 Cheeks should be numbered, likewise the " stub." (See 
 " Check-Book.") 
 
 Always sign a check as nearly as possible like the signature 
 as originally entered upon the signature book of the bank. 
 
 If, in drawing a check, an error is made, do not attempt to 
 correct it; remove the check from the book, destroy the check, 
 taking particular care to mutilate the signature if it has been 
 attached, and then, in large plain letters, write the word 
 " Void " across the stub. Emphasis is laid upon making no 
 attempt whatsoever at correction in a check. 
 
 If one wishes to draw a check for a sum less than $1.00, 
 some extra precaution should be taken so that the amount 
 which really represents cents shall not be changed, in the 
 hands of a dishonest person, to mean dollars. One good 
 method is to insert in the blank in that part of the check pre- 
 ceding the word " Dollars," " Only sixty cents," for example, 
 finishing out with a wavy line, and lining out " Dollars." It 
 would be a difficult matter to make " Only sixty cents " 
 read as " Sixty Dollars." Stamps are often used across the 
 face of a check, the words either being in ink or cut through 
 the check, showing that it must not be cashed in excess of a 
 stated amount, as, for instance, in the above case, " Not 
 Exceeding $1.00." 
 
 If, for any reason, the drawer of a check, after issuing same, 
 wishes to stop its payment, he has simply to notify the bank 
 to that effect, under which circumstances it is incumbent 
 upon the bank to refuse payment, letting the holder collect 
 his claim in any way he can. If notice is given in writing 
 to stop payment, a description of the check, such as date of 
 issue, number, to whom drawn, and amount, should be given. 
 
 Should a bank pay a check upon which an indorsement 
 has been forged and so make payment to an improper holder, 
 the bank must make the amount good to the real owner. 
 
 The check is always a good receipt as evidence of a pay- 
 ment, and, therefore, all checks should be preserved and prop- 
 ,erly filed as described under " Check-Book."
 
 78 MONEY AND INVESTMENTS 
 
 It is interesting to note that the Wall Street Journal states 
 that 95% of the current bank deposits are in checks and only 
 5% in money; that for the last fifty-two years the only bal- 
 ances paid in cash at the New York Clearing-House have 
 averaged 4.74% of the clearings. It would appear from these 
 statistics that at least 90% of the business of the country is 
 conducted by the use of bank credits. 
 
 Check-Book. 1 A depositor in a national bank, trust com- 
 pany, or any other " bank of deposit," is provided by the 
 bank with a book of checks, by which means the money de- 
 posited may be withdrawn. This book contains blanks which 
 the depositor fills out and signs, and which then become 
 orders upon the bank to pay a stated sum of money to some 
 person designated in the check, or to his order, the amount so 
 paid to be charged against the depositor's account. (For more 
 information regarding this subject read carefully the matter 
 under " Check.") 
 
 The depositor should also use this book as a method of 
 keeping track of all his transactions with the bank. The 
 check itself may be detached from what is called the " stub," 
 that is, the portion of the leaf which is bound into the book 
 permanently. On the stub he enters, in a blank to be found 
 for the purpose, practically a duplicate of what is filled out 
 upon the check itself. Each check should be numbered, as 
 well as the stub, the two always agreeing. On the stub, such 
 additional information is entered, as the purpose for which 
 the check was drawn, etc. 
 
 On the reverse side of the stub will be found a blank in 
 which should be entered all deposits; the date, the nature of 
 the deposit, and the amount. After the drawing of a number 
 of checks, depending upon the arrangement of the book, 
 which will be easily understood by examination, the total of 
 such checks is deducted from the sum on deposit, and the 
 amount left carried forward to the top of the back of the next 
 stub. This process being repeated from time to time enables 
 a depositor to easily determine just the sum of money in the 
 bank to his credit. As a matter of precaution, it is always 
 well to fill out the stub before drawing the check. This habit, 
 persistently adhered to, will prevent the possibility of a check 
 being drawn without any record being retained of it. 
 
 As checks are a good proof of payment it is most important 
 that they be kept in some manner for convenient reference 
 no slipshod method should be tolerated. A good way is to 
 paste each check to the edge of its corresponding stub after 
 the check-book has been exhausted and the checks returned. 
 
 1 In this connection, it would be well to turn to " Bank Account." and 
 " Bank-Book."
 
 MONEY AND INVESTMENTS 79 
 
 On the outside of the cover paste a slip of paper with the 
 information as to date of first and last checks drawn and 
 numbers contained therein. 
 
 Check Collections. See " Collections." 
 
 Checking Out. See " Overdraw." 
 
 Cheque. The English spelling for " check." 
 
 Cheque Bank. An English institution which formerly 
 issued checks to persons desiring to remit money to a distant 
 point. A postal money-order or express money-order in 
 this country serves the same purpose. 
 
 Further functions of this institution were as set forth by 
 one well-known financial writer as follows: 
 
 " The Cheque Bank proceeds on the new principle of 
 issuing cheques which can be filled up only to limited amounts, 
 as shown by printed and indelible perforated notices upon 
 the forms. These cheques, too, are only to be had in exchange 
 for the utmost sum for which they can be drawn, which sum 
 is retained as a deposit until each corresponding cheque has 
 been presented. It follows that each cheque, when duly 
 filled up and signed by the owner, is as good as a bank-note 
 issued against a documentary reserve." 1 
 
 Chicago Board of Trade. See " Board of Trade of the City 
 of Chicago." 
 
 Chicago Junction. Chicago Junction Railways & Union 
 Stock Yards Co. 
 
 China Money of. See " Tael " and last part of " Cash." 
 
 Chopped. The Mexican dollar, which is in current use in 
 China, before it is accepted by the people, must be stamped 
 or " chopped " by some well-known mercantile concern or 
 local governor, as a voucher for its weight and fineness. Many 
 of the United States trade dollars, which were returned for 
 redemption in 1887, bear these Chinese stamps. 2 
 
 C. I. F. Charges, insurance, and freight paid or included. 
 
 Cipher Code. A method used in telegraphing or cabling, 
 by which one word may be interpreted, by the use of a key, 
 to mean several words or an entire sentence, thus not only 
 reducing the cost of the message, but at the same time enabling 
 the contents of the message to be kept secret, supposing a 
 private cipher code to be used. There are, however, many 
 codes upon the market which are in general use: but the 
 sender of a message in such a code should refer to the name 
 of the code used as the first word in his message, unless it is 
 understood between the sender and the receiver the particular 
 cipher code from which the message was compiled. 
 
 1 " Money and the Mechanism of Exchange," Jevons. 
 
 2 Muhlman's " Monetary Systems of the World."
 
 80 MONEY AND INVESTMENTS 
 
 Circular. See " Prospectus." 
 
 Circular Letter of Credit. See " Letter of Credit." 
 
 Circulating Note. A bank-note or other paper money. 
 
 Circulation. See " National Bank Notes." 
 
 Circulation Per Capita in the United States. The actual 
 metallic and paper money in circulation, as shown by the 
 United States Treasury Department, beginning with the year 
 1800 is given a place here (ten year intervals only, however, 
 are selected). 
 
 1800 $4.99 1840 $10.91 1880 $19.41 
 
 1810 7.60 1850 12.02 1890 22.82 
 
 1820 6.96 1860 13.85 1900 26.94 
 
 1830 6.78 1870 17.50 1907 33.96 
 
 City Clearings. First understand the matter under " Clear- 
 ing-House." " City clearings " cover that territory which is 
 tributary to, or " clears " directly through, a given clearing- 
 house. 
 
 City Collections. A bank terms its " city collections " its 
 checks, etc., payable in the same city in which it is located. 
 
 City Item. First read " Item." This is used to designate a 
 check, draft, etc., drawn against a bank in a certain clearing- 
 house centre from one drawn against an out-of-town institu- 
 tion, the latter being referred to as an " out-of-town item." 
 
 C. L. Car-load lots. 
 
 Clean Bill of Exchange. (See " Documentary Bill.") One 
 unaccompanied by documents. Very commonly a draft 
 drawn by an exporter against funds to his credit in a bank 
 abroad, in which event he has chosen to collect his own bill 
 through some foreign banker. He may choose to make his 
 draft payable at " sight," or in thirty, sixty, or ninety days, 
 or may draw under a letter of credit in advance of the shipping 
 of the documents, which are to be sent later. 
 
 Clear. To free from encumbrance. Bonds, stocks, or any 
 securities, are " cleared " when the person who has contracted 
 to purchase them pays for and receives delivery of the same. 
 Or a broker, acting without sufficient capital, may purchase 
 $50,000 bonds from Scott, and sell them almost immediately 
 to Hall, making a profit or commission on the transaction. 
 He is not able to pay Scott for the bonds and he, therefore, 
 employs his bank, or possibly some other broker, to pay for 
 and receive the bonds, and then make delivery to Hall; the 
 difference between the purchasing and selling price, less the 
 clearing charges, to be paid to the broker. This is called 
 " clearing." At the time of purchasing bonds a broker may 
 say to the seller: " Jones & Co. will clear these bonds for me,"
 
 MONEY AND INVESTMENTS 81 
 
 meaning that the seller will make delivery of the bonds to 
 Jones & Co. for the broker's account; the broker in the 
 meantime instructing Jones & Co. as to the transaction. 
 
 Many firms make a specialty of " clearing " securities for 
 other brokers, the usual charge for this work being about 
 $2.00 for each 100 shares of stock or for each $10,000 in bonds. 
 
 The most common use of this term is in connection with the 
 " clearing-house " (to which refer) system by which " to 
 clear" is understood to pass through it; i.e. the collection 
 of a check or other item through the medium of the associa- 
 tion; or the general settlement for the day of a bank's accounts 
 in this manner. 
 
 Clearance (or Clearances). Meaning the same as " clear- 
 ings." 
 
 Clearers. An English term for the clerks who transact the 
 " clearing-house " business for their banks. 
 
 Clearing-House. 1 Let us take Boston 2 for example. A 
 given bank receives through its course of business each day 
 
 1 The Supreme Court of Pennsylvania has defined a clearing-house after 
 this manner: "It is an ingenious device to simplify and facilitate the 
 work of the banks in reaching an adjustment and payment of the daily 
 balances due to and from each other at one time and in one place on each 
 day. In practical operation it is a place where all the representatives of 
 the banks in a given city meet, and, under the supervision of a competent 
 committee or officer selected by the associated banks, settle their accounts 
 with each other and make or receive payment for balances and so ' clear ' 
 the transactions of the day for which the settlement is made." 
 
 The above is taken from James G. Cannon's most complete work on 
 clearing-houses, from which the writer has obtained much valuable as- 
 sistance, and to which the reader is referred for all information in relation 
 to the " clearing-house " plan, and to forms of printed blanks used by the 
 different associations. The writer is also greatly indebted to Charles A. 
 Ruggles, the very able manager of the Boston Clearing-House, for many 
 suggestions touching this subject. 
 
 Conant says, in "The Principles of Money and Banking ": "The clearing 
 system is a development of a principle of Roman commercial law know as 
 compensatio the setting off of a debt which one owes to another by a 
 claim against him. 
 
 " This system attained a high degree of perfection in the Middle Ages 
 at the fairs of Lyons. Under an ordinance of Louis XI. (March 8, 1463) 
 four fairs were authorized at stated intervals in each year, each of which 
 was followed by a day of settlement fixed at the fair next preceding. 
 Every banker came to these settlements prepared with a balance-sheet 
 of his debts and credits. Three steps were required in completing settle- 
 ments; first, the acceptance of bills by those upon whom they were drawn. 
 This was necessary, as Vigne points out, in order to determine what items 
 could actually be cleared. Then came the comparison of accounts and 
 finally the settlement in money, of which very little was ultimately re- 
 quired." 
 
 2 Although Boston has been chosen as an example to set forth the 
 clearing-house principle, it does not necessarily follow that the details are 
 alike in the different clearing-houses of the country or the world. The 
 principle, however, remains the same, there being no essential difference 
 in the accomplishment of the exchanges.
 
 82 MONEY AND INVESTMENTS 
 
 a great many checks, which are payable at various other 
 banks in the city. To collect all these checks by a process of 
 presentation at each bank would be a slow and tedious affair. 
 In order to simplify this process of collection, a u clearing- 
 house " is established a place where at a given hour of 
 each business day some one person from each of the banks 
 come together and there adjust the differences through the 
 medium of the " clearing-house." Each bank's representative 
 receives the checks against it, held by all the other banks, 
 the total of which shows what that bank owes the " clearing- 
 house." If the amount of the checks which this bank holds 
 against others is greater in sum than the total amount held 
 against itself, there is a balance due it from the " clearing- 
 house," and, therefore, it is called a " creditor bank," and will 
 be paid the sum due by the " clearing-house." If the aggre- 
 gate amount of what it owes is greater than the amount of 
 checks which such bank holds against the others, then it owes 
 the " clearing-house," and it is a " debtor bank," in which 
 event it must pay to the " clearing-house," the amount for 
 which it is debtor. It will be seen, therefore, at the close of 
 the " clearing-house " transactions for the day, that the total 
 amount of debits will just offset the credits; the " clearing- 
 house " merely acting as a medium for settlement. 
 
 An association of this kind is formed so that banks may 
 avoid not only the tedious collecting of checks, drafts, etc., 
 from bank to bank, but also the handling of such enormous 
 amounts of money such a cumbersome method would neces- 
 sitate, and the risk involved in so doing. 
 
 The value of the " clearing-house " plan may be appreciated 
 by the fact that the " clearings " (i. e. the amount of the 
 checks, drafts, etc., passing through the association) of New 
 York City alone are estimated to have averaged for the past 
 ten years over fifty-eight billions of dollars annually. Imagine 
 handling in actual money such vast sums. It is many times 
 more than the total money in circulation in the whole country. 
 Up to September 1, 1905, there has passed through the New 
 York Clearing-House since its inception in 1853 the enormous 
 total of $1,703,425,193,728.60. 
 
 A good illustration of the economy in the handling of money 
 is the case of a New York bank which recently " cleared " 
 checks to the amount of more than $18,000,000, yet when 
 the credits and debits were balanced the whole difference 
 was evened up by a payment of only 12 cents. 
 
 The expenses of the " clearing-house " are shared among 
 the banks, and a bank must be a member of the " clearing- 
 house association " to enjoy its full privileges. 
 
 Trust companies may or may not be members of the f 
 association, according to the particular " clearing-house/
 
 MONEY AND INVESTMENTS 83 
 
 and, in the latter event, they generally arrange to collect their 
 own checks; i. e. " clear," through some bank which is; 
 viz.: each will deposit its checks at some one given bank, 
 which will put them through the " clearing-house." 
 
 Checks received by a bank in favour of one of its depositors 
 drawn by another do not, of course, pass through the " clear- 
 ing-house." 
 
 The " clearing-house " idea was adopted in England toward 
 the end of the eighteenth century, and one was established 
 in New York October, 1853. 
 
 There are (January, 1907) 110 of these associations in the 
 United States, and new ones starting at frequent intervals. 
 
 (See also " Non-Member Bank.") 
 
 Clearing-House Agent. It is first necessary to understand 
 the matter under " Clearing-House." The particular bank 
 clearing for a non-member bank is the latter's " clearing- 
 house agent." 
 
 Clearing-House Balance. (First read " Clearing-House.") 
 The actual amount of money needed to settle the difference 
 between the banks upon any one day is referred to as the 
 " clearing-house balance." 
 
 This " clearing-house balance " namely the amount due 
 the " clearing-house " from a " debtor bank," or the amount 
 due from the " clearing-house " to a " creditor bank " is 
 settled in different ways, according to the custom of the 
 several " clearing-houses." First, it may be in part accom- 
 plished by the loaning of the balances between the banks 
 themselves, for an understanding of which, see " Clearing- 
 House Rates." 
 
 Second, settlement may be made by the manager of the 
 "clearing-house" drawing checks in favour of the "creditor 
 banks " against the " debtor banks." 
 
 Third, the use of " certificates," so-called, which are of 
 two kinds: 
 
 a. " Clearing-house loan certificates " (to which subject 
 refer). 
 
 b. " Clearing-house gold certificates " issued by the 
 clearing-house (or similar certificates issued by a United States 
 Sub-treasury), being receipts of denominations of $5,000 and 
 $10,000' against gold on deposit, and acceptable only between 
 members of the association. Gold equal in amounts to certif- 
 icates outstanding is held at all times. Also called " clearing- 
 house-certificates." 1 
 
 1 Formerly these certificates were issued against deposits other than 
 gold, but such is not now the case, as will be seen by the following excerpt 
 from a letter from Mr. James G. Cannon, author of " Clearing-Houses: " 
 
 " Certificates are never issued against silver. There have been times 
 in the past when they have been issued against legal tenders, but that waa
 
 84 MONEY AND INVESTMENTS 
 
 Fourth, by drawing a draft on a bank in another city. For 
 instance, settlements at the " clearing-house " in Rochester, 
 N. Y., might be effected by checks drawn on banks in New 
 York City. 
 
 Fifth, gold coin, gold certificates and legal tender notes; 
 but silver and silver certificates are only used under a mutual 
 agreement among the members to make payments in amounts 
 less than denominations of the gold coin or gold certificates. 
 
 Clearing-House Balances. By reading the last subject, it 
 will be seen that " balance " refers to a transaction between 
 the " clearing-house " and one bank. " Balances " has refer- 
 ence to the amount necessary to settle the differences between 
 all the banks " clearing " through a given association. 
 
 Clearing-House Certificates. See paragraph " b " under 
 " Clearing-House Balance." 
 
 Clearing-House Gold Certificates. Certificates issued against 
 a deposit of gold, as explained under " Clearing-House Bal- 
 ance," paragraph " b." 
 
 Clearing-House Loan Certificate. Issued by the " clearing- 
 house " (it would be well to read that subject) to some member 
 of the association, showing the deposit with the " clearing- 
 house " of approved securities, such certificates being negoti- 
 able only between members of the clearing-house association. 
 They are issued only during times of financial distress, and 
 up to only a certain percentage of the face value of the de- 
 posited securities, say 75%. 
 
 An instance was that of 1893 * when the scarcity of actual 
 money in Boston for the transaction of business was so great 
 that a form of money had tp be temporarily created. 2 
 
 The banks had plenty of good securities on hand, but it was 
 impossible to convert them into cash, as money was so scarce 
 
 a long while ago, and now their issue is only permitted against deposits of 
 gold.* 
 
 1 The N. Y. Clearing-House first issued certificates in 1860, also during 
 1861, 1862, 1863 and 1867; again in 1873, 1884, 1890 and 1893. 
 
 2 Cannon declares that these " certificates " are not in any sense to be 
 regarded as currency. They are not even seen by the business community 
 and do not pass from bank to bank, except in payment of " clearing-house 
 balances." 
 
 And that " the great value of clearing-house loan certificates consists 
 in the fact that they take the place of money in settlements of the clearing- 
 house, and hence save the use of so much actual cash." 
 
 But he shows that the Atlanta Clearing-House Association in 1893 and 
 likewise clearing associations in other Southern cities, issued these certifi- 
 cates in small denominations, as low as $1.00. The wording on the Atlanta 
 certificate being in part, " Will be received on deposit or in payment of 
 debts due any bank in said clearing-house." And, to quote Mr. Cannon, 
 " an implication that they were used in general circulation, which in- 
 deed, is true." This use as money, however, was entirely confined to the 
 South.
 
 MONEY AND INVESTMENTS 85 
 
 that there was no method of obtaining payment for the 
 securities in case of their sale, which, in any event, would 
 necessarily have been at a sacrifice. As the securities had a 
 value, and as " clearing-house loan certificates " would be 
 accepted among the members of the association in lieu of cash, 
 a temporary substitute was obtained, by such of the member 
 banks as desired, depositing their approved securities, accom- 
 panied by their own interest-bearing (7 3-10%) obligations, 
 and receiving in return certificates showing the deposits. Not 
 only did this furnish a substitute for money, but tided over 
 many weak banks which otherwise would have met disaster. 
 
 As the financial distress gradually is replaced by a feeling 
 of confidence, and money, which, for the time being, has been 
 hoarded by the general public, comes back into circulation, 
 " clearing-house loan certificates " are gradually retired, 
 and the deposited securities returned to their' proper owners. 
 
 The necessity for issues of certificates of this class in panicky 
 times may not occur in the future, for some bankers are of the 
 opinion that the Secretary of the Treasury's recent arrange- 
 ment of advancing money against engagements of gold by 
 importing banks would give such immediate use of gold in 
 this country, that importations of the metal would occur to 
 relieve the stress in preference to the issuing of " clearing- 
 house loan certificates." 
 
 There has been no necessity for these certificates in Europe 
 because of the " greater concentration of banking capital 
 there; " although from time to time the larger banks have 
 come to the assistance of the smaller ones. 
 
 Clearing-House Loans. See " Clearing-House Rates." 
 
 Clearing-House Rates. First read " Clearing-House." After 
 " clearing " some of the " creditor banks " will often desire 
 to loan all or part of the money due them in the clearing- 
 house settlement, of which opportunity to borrow other banks 
 may avail themselves. The rate of interest on loans made at 
 such time is called the " clearing-house rate " and the money 
 available for loaning in the hands of a " creditor bank " is 
 its " clearing-house balance." This is also sometimes referred 
 to as " balance between banks." 
 
 The custom prevails in Boston of making clearing-house 
 loans on " certificates of deposits." To illustrate: if the Corn 
 National Bank loans $100,000 to the Wheat National Bank, 
 it will receive the latter's certificate of deposit for the amount, 
 in lieu of a note. It is expected upon the following day that 
 this certificate may be charged back again to the borrowing 
 bank through the medium of the clearing-house. Such loans, 
 therefore, are commonly made from day to day only. 1 
 
 1 This custom of loaning money at the " clearing-house " between banks 
 seems to be purely a Boston practice. At the present time it is done to a
 
 86 MONEY AND INVESTMENTS 
 
 Clearing-House Settlement. When a bank's representative 
 has attended to his clearing-house duties for the day, and 
 payment has been made to, or received from, the " clearing- 
 house," the " clearing-house settlement " for that bank has 
 been effected. 
 
 It is the adjustment of one bank with all the other banks of 
 the association of the amounts due each other through the 
 medium of the " clearing-house," payment being received, 
 or made, in accordance with amounts due. 
 
 Clearing-House Sheet. (Read " Clearing-House.") The 
 sheet on which the total amount of checks, etc., which a 
 bank holds against all the other banks of the clearing-house, 
 or against those which clear through members of the associa- 
 tion, is entered, at the close of each business day. This sheet 
 is presented with the checks (which are exchanged with the 
 other banks) the following business day that being the 
 usual custom at the clearing-house. 
 
 Clearing-House Statement. See " Bank Statement." 
 
 Clearing-House Stocks. Stocks which may be " cleared " 
 through the " stock exchange clearing-house," to which 
 subject reference may be had. 
 
 Clearing-Matter. All the checks, drafts, etc., which a bank 
 presents at the " clearing-house." 
 
 Clearings. The amount of checks, drafts, etc., passing 
 through the process of collection during any given time. 
 (See " Clearing-House.") The sum total of the collections 
 as accomplished through the medium of the New York Clear- 
 ing-House Association for any one day are recognized as the 
 " clearings " for that city for that day. " Clearance " or 
 " clearances " may be used with this same meaning. 
 
 The manager of the New York Clearing-House Association 
 gives the clearings for the year ending December 31, 1906, for 
 New York City alone, as $104,675,828,656, and for the United 
 States as a whole, $159,808,640,986. This shows the impor- 
 tance of New York from the standpoint of its clearings. 
 London is the next city of importance in the world, and for 
 1905 the total of both " out-of-town " and " city clearings " 
 for London amounted to 12,711,334,000 ($61,859,706,911). 
 
 Clique. A number of persons whose interests lie in the 
 same direction, and who unite in their efforts to accomplish 
 a certain result. In stock exchange parlance, a " bear clique," 
 for instance, is a group, the members of which desire a decline 
 in prices and use their best efforts towards that end. 
 
 The difference between a " pool " (to which subject refer) 
 
 very much less extent than ten years ago. Some banks have made no 
 practice of it for several years, but still the custom exists.
 
 MONEY AND INVESTMENTS 87 
 
 and a " clique " is but slight. In the matter of a " pool " 
 there is generally some written or verbal agreement among its 
 members for the purpose of accomplishing certain results, 
 whereas, a " clique " is composed of persons whose interests 
 lie in the same direction, and who work to a common end 
 without any pre-arranged agreement. 
 
 Close Corporation. A stock company whose shares and 
 management are in the hands of a few persons, and the stock 
 of which is seldom, if ever, publicly offered. 
 
 Closed. The settlement of an account. In speculative 
 language, the expression is used, " the account is closed." 
 Suppose, for instance, the speculator has been buying and 
 selling Union Pacific stock, running a marginal account with 
 his broker (see " Margin ") and finally ends the transaction 
 by buying or selling, as the case may be, and receives from 
 the broker his profits, if any; then that account is closed. 
 
 Other meanings are transaction or trade completed and also- 
 " books close," which subject see. 
 
 Closed Mortgage. A mortgage under which no more in- 
 debtedness can be incurred; the amount of indebtedness 
 authorized under the terms of the mortgage has been reached. 
 
 Closed Out. All sold. 
 
 Close Money. Money rates fairly high, and loans not easily 
 obtained. 
 
 Close Out. Means to sell. 
 
 Close Prices. Changes in prices by small fractions; or a 
 difference between the bid and asked price of but, say, 1-8%. 
 
 Closing Prices. The quotation of the day's last sale of each 
 security. 
 
 Clover Leaf. The Toledo, St. Louis & Western R. R. Co. 
 The name " Clover Leaf " was suggested by some imaginary 
 resemblance of the three States in which this road is located 
 Ohio, Illinois and Indiana to a clover leaf. 
 
 CLT. The " ticker " abbreviation for " collateral trust." 
 
 CMP. The " ticker " abbreviation for " compromise." 
 
 CN. The " ticker " abbreviation for " consolidated " or 
 " consols." 
 
 Coalers. The railways which do most of the anthracite coal 
 transportation of the country; many of which have large coal 
 mining interests of their own. Some of the most prominent 
 of the coal roads are the Delaware, Lackawanna & Western, 
 Central R. R. of New Jersey, Lehigh Valley, Reading, etc. 
 (See " Hard Coalers " and " Soft Coalers.") 
 
 Coal Roads. See " Coalers."
 
 88 MONEY AND INVESTMENTS 
 
 C. 0. D. Cash (or collect) on delivery. To be more explicit, 
 the delivery of the goods will not be made except in exchange 
 for the amount due. 
 
 Code. See " Cipher Code." 
 
 Coffee. See " Futures " and " Spot," which methods of 
 trading are customary in " coffee." The trading unit is 250 
 bags, each weighing about 130 pounds. Fluctuations are re- 
 corded on the basis of l-20th of a cent per pound, which 
 equals five points, i. e. $16.25 on a 250 bag transaction. One 
 cent per pound equals $325 on the same amount. The 
 commission charged non-members of the Coffee Exchange of 
 the City of New York is $20 for "buying and selling" 
 250 bags, or, as it is termed, " $20 per contract." The charge 
 for members of the Exchange is $10 for the same transac- 
 tion. The " margin " required under the rules is 50 cents to 
 $2.00 per bag; the usual " margin " being $1.00. 
 
 Coin Certificates. Paper money specifically repayable in 
 coin, such as our " gold treasury certificates " and " silver 
 treasury certificates." 
 
 Coin Notes. " Treasury notes of Act of July 14, 1890 " 
 are sometimes called " coin notes." 
 
 Coins. Pieces of money of a fixed weight, stamped by the 
 authority of government, and employed as a circulating 
 medium; or, as Jevons defines them, " ingots of which the 
 weight and fineness are certified by the integrity of designs 
 impressed upon the surfaces of the metal." Their value may 
 be represented by the material of the coins, or may depend to 
 a greater or less extent on the credit of the State. 1 
 
 Col. or (Coll.). Collateral. 
 
 Collateral. Really " collateral security." This is a security 
 for the performance of agreements, or for the payment of 
 money, and is something deposited with the evidence of debt 
 to satisfy the claim of the lender in case of failure on the part 
 of the borrower to meet the indebtedness when due. For 
 example, Prescott & Co. desire to borrow $100,000, and to 
 facilitate the operation agree to deposit with the bank which 
 is to loan them the money, bonds or stocks of known value, 
 and acceptable to the bank, having a market value of, say, 
 $120,000; being salable at the time of loan for about $20 7 000 
 more than the amount borrowed. This $20,000 is called the 
 " margin." Suppose the market value of these securities 
 declines to $100,000. By agreement, the bank could demand 
 Prescott & Co. to either pay off part of the loan, or deposit 
 additional security equivalent to the decline in the market 
 value of the collateral. If this is not forthcoming the lender 
 
 1 1896 Report of the Director of the Mint.
 
 MONEY AND INVESTMENTS 89 
 
 has the right to make a public sale of the securities; it being 
 immaterial whether the loan is a " demand " or " time loan." 
 
 If, when the loan matures, Prescott & Co. are unable to pay 
 it, the bank would have the right to sell the collateral, and 
 from the proceeds first deduct the amount due for principal 
 and interest; the balance, if any, it would pay back to 
 Prescott & Co. In the case of a loan upon collateral security, 
 therefore, the value and character of the collateral is the first 
 consideration. A loan may be made with reasonable safety 
 to a firm of even comparatively unknown reputation, if it is 
 able to deposit security of established and well-known value, 
 whereas, in the case of loans made without collateral, the 
 financial standing and condition of the borrower must be the 
 main consideration. Twenty per cent, is about the usual 
 margin required. 
 
 Wool dealers often borrow money against wool, which, in 
 that case, is security; so, likewise, in other kinds of business, 
 similar loans are made. 
 
 Loans on " collateral " are usually made on " call," as 
 explained under " Demand Loan," but are, nevertheless, 
 frequently made on time, for thirty, sixty, or ninety days, 
 or even six months or a year. If they are made in this manner 
 the time is usually for six months or less. They may be either 
 " discounted " or made with interest payable at maturity, 
 as the case may be. The borrower usually has the privilege 
 of substituting collateral for that already pledged; that given 
 in exchange, however, must always be satisfactory to the 
 lender. In case of investment bankers, securities are changing 
 from time to time as they buy and sell, or in the case of a stock 
 broker who is buying and selling for his clients, the privilege 
 of exchanging collateral is very necessary. In such an ex- 
 change as this, the borrower usually hands in with his new 
 collateral an " Exchange of Collateral " slip, which describes 
 the new security pledged as well as that withdrawn. 
 
 By the above it will be seen that collateral loans may be 
 known as " demand collateral paper " or " time collateral 
 paper." 
 
 Form for a " Demand Collateral Note: " 
 
 9,000 Dolls Cts. SPRINGFIELD MASS., Jan. 3, 1906. 
 
 ON DEMAND, for value received, with interest at the rate of 5 per cent, 
 per annum I promise to pay to The Cattlemen's National Bank, or order, at 
 its Banking Rooms, Nine Thousand -ffa Dollars, I having deposited with 
 said Bank, as General Collateral Security for the payment of this and any 
 other liability, direct or indirect, of the undersigned to said Bank, now 
 contracted or hereafter to be contracted, the following property, viz.: 100 
 Shares Mountain Manufacturing Company Stock, with authority, on the 
 non-payment of any such liability, to sell and transfer, at any time or times, 
 said property, or any part thereof, at " Brokers' Board " or at public or 
 private sale, without notice; and the said Bank, or any of its officers,
 
 90 MONEY AND INVESTMENTS 
 
 may become purchasers at any such sale, if public, or at Brokers' Board; 
 and any property substituted for the above, or added thereto, shall be also 
 covered by this agreement. A margin satisfactory to the holder or holders 
 hereof to be kept good at all times, and this note shall be deemed to be due 
 and payable immediately, anything hereinbefore expressed to the con- 
 trary notwithstanding, on my failure to make such margin good upon 
 demand by the holder or holders hereof, and they may immediately re- 
 imburse themselves by sale of the security. 
 
 After deducting costs and expenses of collection and sale, the residue of 
 the proceeds of any such sale or sales may be applied to the payment of 
 any then existing liability of the undersigned to said Bank, whether then 
 due or not, returning the overplus to the undersigned. 
 
 FRANK CASTLEMAN. 
 Form for a " Time Collateral Note: " 
 
 9,000 Dolls Cts. SPRINGFIELD, MASS., Jan. 3, 1906. 
 
 Six MONTHS after date, for value received, I promise to pay to The Cattle- 
 men's National Bank, or order, at its Banking Rooms, Nine Thousand -ffo 
 Dollars, I having deposited with said Bank, as General Collateral Security 
 for the payment of this and any other liability, direct or indirect, of the 
 undersigned to said Bank, now contracted or hereafter to be contracted, 
 the following property, viz.: 100 Shares Mountain Manufacturing Com- 
 pany Stock, with authority, on the non-payment of any such liability, to 
 Bell and transfer, at any time, said property, or any part thereof, at Brokers' 
 Board or at public or private sale, without notice; and the said Bank, or 
 any of its officers, may become purchasers at any such sale, if public, or 
 at Brokers' Board ; and any property substituted for the above, or added 
 thereto, shall be also covered by this agreement. A margin satisfactory 
 to the holder hereof to be at all times kept good, in default of which after 
 demand, this obligation shall become due and payable on demand. 
 
 After deducting costs and expenses of collection and sale, the residue of 
 the proceeds of any such sale or sales may be applied to the payment of any 
 then existing liability of the undersigned to said Bank, whether then due 
 or not, returning the overplus to the undersigned. 
 
 FRANK CASTLEMAN. 
 
 Collateral and Participating Bond. A very uncommon issue. 
 The illustration given under " Participating Bond " will apply 
 in this case. 
 
 Collateral Income Bonds. An " income bond " secured by 
 collaterals. (See " Income Bonds.") 
 
 Collateral Loan. The obligation or promise to pay of an 
 individual, firm, or corporation, on demand or maturing in a 
 year or less time, and which individual, firm, or corporation 
 has deposited with the holder of the note, stocks, bonds, or 
 other securities, which, in case of the note not being paid when 
 due, may be sold by the holder of the note and so much of the 
 proceeds of the same as may be necessary to satisfy the debt 
 retained by the lender, and the balance, if any, returned to 
 the borrower. (See " Collateral.") 
 
 Collateral Mortgage Bond. (Read " Collateral Trust 
 Bonds.") A " collateral mortgage bond," technically, should 
 be secured by a deposit of bonds in turn secured by mortgage. 
 But this title has been much abused, and bonds issued with
 
 MONEY AND INVESTMENTS 01 
 
 such a title frequently are secured by stocks only, as was the 
 case recently with a large Western railway company (Holding 
 Company) which authorized an issue of $75,000,000 " col- 
 lateral mortgage gold bonds " secured by a pledge of nothing 
 but the stock of another railway company. 
 
 Collateral Note. A promissory note secured by stocks, 
 bonds, mortgages, or other securities. A " collateral note," 
 of course, may be given by an individual, firm, or corporation. 
 (See " Collateral.") It is quite a common form of borrowing 
 among many of the railway companies, as evidenced by the 
 Cincinnati, Hamilton & Dayton Railway Co. issuing, in 1905, 
 $15,000,000 4% " collateral notes." To secure these notes 
 there was deposited with the Central Trust Company of New 
 York, as trustee, the following securities, which had an 
 estimated market value, at the time, of $24,000,000. 
 
 $15,000,000 Cincinnati, Hamilton & Dayton 4% Consoli- 
 dated Mortgage Gold Bonds. 
 
 $6,700,000 Cincinnati, Hamilton & Dayton 5% Preferred 
 Stock. 
 
 $1,073,000 Cincinnati, Hamilton & Dayton 4% Preferred 
 Stock. 
 
 $375,000 bonds of constituent companies. 
 
 7,501 shares Southwestern Construction Company stock. 
 
 Ascertain the value of securities held by the trust company 
 as collateral security for notes of this description, and what 
 their nature is and how important to the company issuing 
 the " collateral notes." 
 
 Collateral Trust Bonds. Issued by a corporation, not secured 
 by a mortgage upon its own property, unless upon certain 
 real estate and subject to previous liens thereon, but secured 
 by depositing in trust securities of other companies. Such a 
 bond may, however, be indirectly a first mortgage through 
 mortgages which have been deposited as above indicated; 
 for instance, under the heading " Joint Bonds " is described 
 a bond issued against stock of the Chicago, Burlington & 
 Quincy Railroad Co. In this case, these " joint bonds " are 
 really " collateral trust bonds," and are in no sense a mort- 
 gage. Suppose, however, some of the first mortgage bonds of 
 the Chicago, Burlington & Quincy Railroad Co. had been 
 deposited; this " collateral trust," or " joint bond," would, 
 in that case, have been indirectly a first mortgage upon the 
 Chicago, Burlington & Quincy Railroad. 1 
 
 The value, as an investment, of such a bond as described 
 
 1 The Armstrong Committee, in its recommendations after investi- 
 gating the New York life insurance companies, expressed disapproval of 
 collateral trust bonds secured by stock collateral. " Collateral trust 
 bonds " at their best have many objectionable points, and cannot be 
 classed as conservative.
 
 92 MONEY AND INVESTMENTS 
 
 above, depends upon two things: first, the value of the 
 securities pledged for its payment, and their desirability if, 
 through default, they become the property of the bondholders; 
 second, the strength and ability to pay of the corporation 
 actually issuing the bond and what obligation, if any, such 
 corporation is under to pay in case of insecurity of the col- 
 lateral pledged. (See " Convertible Collateral Trust Bonds.") 
 
 Collection Charges. Banks belonging to the New York 
 Clearing-House Association have adopted certain rules and 
 regulations covering the collection of checks, etc. Such banks 
 are allowed to use their discretion as regards charges for 
 collection on the largest Eastern cities, and in transactions 
 with the City and State of New York and the government, 
 but the remainder of the United States is divided into two 
 sections, in which charges of 1-10 and of 1% are, respectively, 
 made. Collections on points east of the Mississippi River and 
 north of Tennessee (also including the State of Missouri) are 
 charged for at the rate of 1-10 of 1%. On all other points of 
 the United States (including Canada and the Provinces) a 
 charge of 1-4 of 1% is made. 
 
 Other large cities, of course, have their own customs. The 
 Chicago banks recently adopted a plan of charges for the 
 collection of out of town checks. This is modelled somewhat 
 after the St. Louis plan, and there is great similarity between 
 these and the New York method. The essential point is, that 
 the custom is becoming very general for banks to charge for 
 the collection of out of town checks. 
 
 Collection-Clerk. This employee of a bank is responsible 
 for such items as notes, time drafts, etc., that is, papers which 
 are payable " on time." Items which are payable " on 
 demand " do not as a rule come under his jurisdiction. 
 
 Collection Items. See " Collections." 
 
 Collection of Coupons. See " Coupons Collection of." 
 
 Collections. The " clearing-house " term indicating the 
 checks, drafts, etc., which a bank presents at the " clearing- 
 house," or which it has for collection. Also referred to as 
 " collection items." 
 
 Colon. Monetary unit of Costa Rica, equal to $0.465 United 
 States money. 
 
 Columbian Half Dollar. By an act of Congress, August 5, 
 1892, $2,501,052.50 of silver half dollars, of special design, 
 were minted in recognition of the Chicago World's Fair. 
 Weight, 192.9 grains; fineness, .900. Legal tender to the extent 
 of $10. 
 
 Columbian Quarter Dollar. By an act of Congress, March 
 3, 1893, $10,005.75 of silver twenty-five cent pieces, of special
 
 MONEY AND INVESTMENTS 93 
 
 design, were minted in recognition of the Chicago World's 
 Fair. Weight, 96.45; fineness, .900. Legal tender in amounts 
 not exceeding $10. 
 
 Combine. Practically the same thing as a " trust," or more 
 particularly a " pool." Also, a stock market term for a com- 
 bination of brokers or others for the accomplishment of a 
 certain object. 
 
 Commercial Agencies. In New York the head offices of the 
 two principal " commercial agencies " of this country; 
 namely, Bradstreet's and Dun's, are located. These agencies 
 furnish subscribers periodically with books in which may be 
 found the credit standing or rating of practically all the 
 business men, firms, etc., who would probably need credit, 
 not only throughout the United States, but in many other 
 parts of the world as well. These publications are of great 
 value to the banks, manufacturers, wholesalers, and others. 
 
 The amount of money loaned, or goods advanced, is gener- 
 ally dependent upon the rating of the borrower or purchaser 
 in one of the " commercial agencies." The agencies will 
 also furnish special reports to subscribers upon any person 
 in any part of the territory covered. Besides all this, they 
 furnish general information to the public regarding the 
 number of failures during a certain period, crop and business 
 conditions, etc. In fact, these agencies are to-day a great 
 factor in banking and mercantile life. 
 
 There are many other smaller agencies each of which makes 
 a specialty of some one industry. 
 
 The first mercantile agency was created in New York in 
 1841. 
 
 Commercial Banks. In several States, such as Kentucky 
 and Michigan, there are banks bearing the above title. They 
 are much the same as an ordinary " bank of deposit." The 
 intent is not so much for the deposit of savings, but more the 
 accepting of deposits subject to check to facilitate an exchange 
 of commodities; to be of benefit to the merchants and business 
 men in general. They carry on the usual business of banking 
 by discounting and negotiating notes, drafts, bills of ex- 
 change, and other evidences of debt; lending money on real 
 and personal security, etc. Their functions are very similar 
 to those of national banks, with the exception, among others, 
 of course, that they do not issue bank notes. 
 
 In a broad sense, national banks, and, in fact, all " banks 
 of deposit " are " commercial banks," but, as stated above, 
 in certain communities there are those specially designated 
 by that name. 
 
 Commercial Bar. Explained under " Assay Office Bar." 
 
 Commercial Bill. A draft, accompanied by a " bill of
 
 94 MONEY AND INVESTMENTS 
 
 lading " and a certificate of marine insurance, drawn by a 
 seller in one country against a buyer in another, on account 
 of goods sold the latter. These drafts are usually sold by the 
 " drawer " to some banking house dealing in foreign exchange, 
 as by so doing immediate use of the money can be obtained. 
 
 It is customary for the " drawer " of a " commercial bill " 
 to make it payable to himself, and then indorse it as need may 
 arise; unless he wishes to use the amount due him directly to 
 offset a foreign debt of his own, in which event he may draw the 
 bill in favour of the party abroad to whom the sum is due. 
 
 For the different kinds of " commercial bills " refer to 
 " Demand Bills " and " Time Bills." 
 
 Commercial Borrowers. Borrowers of money, as set forth 
 under " Commercial Paper." 
 
 Commercial Discounts. Notes given by those engaged in 
 commercial enterprises dry goods, hardware, etc., upon 
 which the interest is paid in advance " discounted " (see 
 matter under " Discount "). Sometimes the rate of " dis- 
 count " is meant by the term " commercial discount." 
 
 Also, the discount allowed by the seller of merchandise to 
 the purchaser on account of earlier payment than called for 
 in the bill. For instance, unless otherwise stipulated, the 
 wool dealer bills a sale of wool as " net sixty days, 1% ten 
 days," meaning that the bill is absolutely due and payable at 
 the end of sixty days, but that if the purchaser chooses to pay 
 it before the expiration of ten days he may deduct 1% from 
 the face of the bill. In the same way, in cotton yarn trans- 
 actions, the bills call for " net sixty days, 2% ten days," 
 and so on. 
 
 Commercial Letter of Credit. See last part of " Letter of 
 Credit." 
 
 Commercial Paper. This is a very general term and is 
 made in usage to cover many kinds of notes, acceptances, bills 
 of exchange, etc. It is the general term used by note brokers, 
 but they further distinguish between the various kinds of 
 " commercial paper " by referring to the same as " corpora- 
 tion paper," " business paper," " mercantile paper," etc., as 
 explained under the several subjects. 
 
 Commission. The charge made by any banker or broker 
 for buying or selling securities for some one else; the banker's, 
 broker's, or promoter's charge for services. When an agent or 
 broker sells or buys a security for another, acting as a " middle- 
 man," he receives a commission for his services. In other 
 words, he is " commissioned " to accomplish a certain act. 
 In the case of a merchant who owns goods and sells the same 
 to his customers, he makes a " profit," not a " commission; " 
 the distinction between a " profit " and a " commission "
 
 MONEY AND INVESTMENTS 95 
 
 being, that in the case of the former there is no " middleman; " 
 that is, the owner sells directly to the purchaser; the difference 
 between the buying and selling price being the " profit." 
 In the case of a " commission " when securities or commodi- 
 ties are passed, for instance, from the possession of the 
 owner, through an agent or broker, to a third party, who is 
 the buyer, the agent or broker receives a compensation for his 
 services, called a " commission." 
 
 New York Stock Exchange Rules for Commission Charges: 
 
 " All commissions shall be calculated upon the par value 
 of securities and the rates shall be as follows: 
 
 " On business for parties not members of the Exchange, 
 including joint account transactions in which a non-member 
 is interested, transactions for partners not members of the 
 Exchange, and for firms of which the Exchange member or 
 members are special partners only, the commission shall 
 be not less than one-eighth of one per cent. 
 
 " On business for members of the Exchange, the commission 
 shall be not less than one-thirty-second of one per cent., 
 except when a principal is given up, in which case the commis- 
 sion shall be not less than one-fiftieth of one per cent. 
 
 " On mining shares and subscription rights, such rates, 
 to members and non-members as may be determined, from 
 time to time, by the Committee on Commissions, with the 
 approval of the Governing Committee. 
 
 " Government and municipal securities are exempted 
 from the provisions of this article." 
 
 Transactions in bonds on the New York Stock Exchange 
 are made without regard to the " accrued interest " (see that 
 subject). On the Boston Stock Exchange, interest is added 
 to the price of the bond unless otherwise agreed upon or 
 bonds in default and income bonds. This results in the 
 quotations upon the two Exchanges varying, to a greater or 
 lesser degree, for the same bond, as it is natural that the 
 equivalent to the interest accrued should be added, ap- 
 proximately, to the New York quotation, so as to offset the 
 Boston price. 
 
 Commission Broker. An agent who buys and sells for 
 others for a commission. 
 
 Commission Buying. Buying of securities on the part of 
 investors and speculators through their brokers, to whom 
 commissions are paid; in contradistinction to buying by 
 bankers, brokers, and members of the stock exchange for 
 their own accounts. 
 
 Commission House. A firm dealing in securities only on a 
 commission basis, and which neither speculates on its own 
 account nor buys issues outright with the idea of selling in
 
 96 MONEY AND INVESTMENTS 
 
 smaller lots to their customers, as does, for instance, the 
 investment banker. 
 
 Commission House Paper. A note given or sold by a com- 
 mission house, such as one handling dry goods. 
 
 Commitments. By one's "commitments" is understood 
 his contracts or obligations. 
 
 Common Carrier. One who undertakes for hire or reward 
 to transport the goods of such as choose to employ him, 
 from place to place. All transportation companies engaged 
 in the express, freight, or passenger business are common 
 carriers. The " Rate Bill " which has recently passed 
 Congress includes under this heading " pipe-lines " for the 
 transportation of oil or other commodity except water or gas. 
 
 Common Stock. That part of the capitalization of a com- 
 pany upon which dividends may be paid only after satisfying 
 the requirements of the floating debt, bonds, and " preferred 
 stock," if any. It represents the speculative ownership in a 
 corporation, as a rule. At times, however, the earnings of the 
 companies are so large that the " common stock " receives 
 much larger dividends than the preferred, and sells at much 
 higher prices. When the earnings of a company very largely 
 increase or there are indications of some profitable " deal," 
 the " common stock " is apt to reflect it by a rise in price 
 greater than the other securities of the same company. 
 
 In some corporations after the " common stock " has 
 received a certain rate of dividend, there is a division of all 
 other earnings between the preferred and " common stocks/' 
 or some other similar plan is adopted. This goes to show that 
 a " common stock " is not necessarily entitled to all earnings 
 after payment of the preferred dividend. 
 
 There are many " common stocks," paying no dividends, 
 which sell at seemingly unreasonably high prices. This, 
 among other reasons, is because it is expected that dividends 
 will sooner or later be paid, or that the stock may some time 
 be bought for the purpose of control, and, consequently, is 
 valuable on account of its voting power. 
 
 Although " common stocks " usually carry with them 
 voting power, yet there are examples of corporations where 
 the control goes to the preferred holders, although representing 
 a par value far less in amount than the common. 
 
 A " common stock " which has a " cumulative " preferred 
 stock preceding it, is not so valuable from a dividend stand- 
 point as if the preferred is " non-cumulative " (see the sub- 
 jects in quotations), for unless the earnings of a company are 
 so large as to make dividends upon both classes of stock 
 almost assured, the " cumulative " feature may, at some future 
 time, act to the detriment of the common.
 
 MONEY AND INVESTMENTS 97 
 
 Community of Interests. When large interests in one cor- 
 poration are so interwoven with those of another that it is 
 desirable, for the common good, that the properties shall be 
 operated in the mutual interests of all concerned, the " com- 
 munity of interest " idea is in effect. It is something more 
 than a mere agreement between two or more parties to operate 
 in the interests of one another; it is where the invested inter- 
 ests are such that not to do so would be detrimental. 
 
 Ripley says the " community of interest " basis of consolida- 
 tion has not been industrially applied, except possibly in the 
 Standard Oil Co., after the dissolution of its trust in 1892. 
 
 Comparisons. When a stocl exchange broker compares 
 his sales and purchases with other brokers to determine that 
 no misunderstandings exist, " comparisons " have been 
 effected. (See next subject.) 
 
 Comparison Slip (or Ticket.) The slip of paper which one 
 broker exchanges with another showing the transaction 
 between them, the slip being in duplicate, one being returned 
 to the seller duly signed by the buyer, if found correct. (See 
 " Comparisons.") 
 
 Composition. An agreement whereby a creditor accepts 
 part payment in lieu of an entire debt due. 
 
 Compound Interest. See " Simple Interest." 
 
 Compound Option. See " Call-of-more," " Put-of-more," 
 " Spread," and " Straddle," any of which are meant. 
 
 Comptroller. An officer who performs certain duties in 
 examining the accounts or taking charge of the financial 
 affairs of a State, municipality, or corporation. 
 
 Comptroller of the Currency. " There shall be in the De- 
 partment of the Treasury a bureau charged with the execution 
 of all laws passed by Congress relating to the issue and regu- 
 lation of a national currency secured by United States bonds, 
 the chief officer of which bureau shall be called the Comp- 
 troller of the Currency, and shall perform his duties under the 
 general direction of the Secretary of the Treasury." J He 
 has, in effect, control of all national banks. 
 
 Comptroller's Call. See " National Bank Call." 
 
 Con. (or Consol.) . Consolidated. 
 
 Conant. The Philippine " pesos " are unofficially called 
 " Conants " in honour of Charles A. Conant, who served as a 
 commissioner on the currency of those islands. 
 
 Concealed Wealth. A recently coined Wall Street phrase in- 
 dicating the value of a property greater than appears by its 
 published statements, and which accounts for certain stocks 
 
 1 National Bank Act.
 
 98 MONEY AND INVESTMENTS 
 
 selling at figures seemingly very high, judged only from their 
 dividend paying records. 
 
 Conditional Indorsement. An instrument upon which the 
 indorser attaches some condition along with his indorsement 
 as to his liability. 
 
 Conducting Transportation. Those studying the earnings 
 of a railroad company will often find the " operating ex- 
 penses " subdivided under various headings, including the 
 above, which should consist of the following as prescribed by 
 the Interstate Commerce Commission: Fuel, water supply, oil, 
 tallow, waste, and other supplies for locomotives, switchmen, 
 flagmen, watchmen, engine and roundhouse men, telegraph 
 expenses, train service supplies and expenses, station service 
 and supplies, loss and damage, injuries to persons, clearing 
 wrecks, operating marine equipment if any advertising, 
 outside agencies, commissions, stock yards and elevators, rent 
 for tracks, yards and terminals, rents of buildings and other 
 property, payments for switching charges, car mileage and 
 hire of equipment greater than receipts therefor, besides 
 superintendence, stationery, printing, and other expenses 
 in connection therewith. 
 
 The Wall Street Journal compiled the cost of " conducting 
 transportation " for the fiscal year ending 1906, for fourteen 
 important lines of road. The percentage of this cost to the 
 gross earnings ranged all the way from 29.3% to 42.4%, the 
 average being 36%, which is, perhaps, as fair a figure as any 
 to arrive at of this percentage cost. 
 
 Confidence Game. Swindling. (See " Gold Brick.") 
 
 Confirm. " To confirm " is to reduce to writing an order or 
 agreement previously given or made verbally. 
 
 Conservator. One appointed by a court to manage the 
 property of a lunatic, idiot, or other person incapable of 
 managing his affairs. 
 
 Consideration. Something given, as money or property, in 
 return for a promise, as, in a note, or, as one writer puts it: 
 " that it consists in a benefit to the promisor or a detriment to 
 the promisee." 1 
 
 Consignee. The one to whom goods are shipped; the re- 
 ceiver of them. 
 
 Consignor. The one who ships goods. The opposite to the 
 " consignee," who receives them. 
 
 Consol Certificates. Issued by the National City Bank of 
 New York to represent ownerships in the " Consols " (to which 
 refer) of Great Britain and Ireland, and which are traded in 
 
 1 F. M. Burdick.
 
 MONEY AND INVESTMENTS 99 
 
 here in America in lieu of the original " consols." This method 
 greatly simplifies such transactions. 
 
 Consolidated Annuities. Three per cent, consolidated an- 
 nuities. See " Consols." (The rate is now 2%.) 
 
 Consolidated Bonds. See " Consolidated Mortgage Bond " 
 and " Consols." 
 
 Consolidated Exchange. * " The Consolidated Stock and 
 Petroleum Exchange of New York," its proper title, is in New 
 York City and a distinct association from the " New York 
 Stock Exchange." On the " Consolidated Exchange," many 
 securities not " listed " on the large stock exchange are traded 
 in, as well as grains, etc., but transactions are in lesser volume, 
 and at a reduced commission; i. e. 1-16% instead of 1-8%. 
 
 Also, the securities which are dealt in on the larger exchange, 
 are very extensively bought and sold upon the " Consolidated 
 Exchange," but the business is mostly in fractional lots; i. e. 
 less than one hundred shares. The smaller exchange has in 
 the neighbourhood of 1,500 members. Seats sell around 
 $2,000 each. Transactions probably do not exceed much 
 over 10% of those on the New York Stock Exchange. 
 
 Consolidated First Mortgage. As commonly used in relation 
 to bond issues, it has the same meaning as " first and consoli- 
 dated mortgage." 
 
 Consolidated Mortgage Bond. Theoretically the name of a 
 corporation bond secured by a mortgage on the entire property 
 formed by the consolidation of several smaller properties. 
 Such a mortgage may be a first mortgage upon the property 
 so consolidated, or it may be subject to earlier mortgages 
 issued by one or more of the several companies consolidated. 
 In the latter event, it would not only be a " consolidated 
 mortgage bond," but, likewise, a " general mortgage bond." 
 (See " General Mortgage Bonds.") The name " consolidated 
 mortgage " is used to distinguish such an issue, in the case 
 of a railway company, from " divisional bonds; " that is, 
 mortgages upon the separate properties consolidated. 
 
 In practice, the names given to different bond issues, 
 railway issues especially, are very often technically incorrect, 
 and very frequently a " consolidated mortgage bond " differs 
 materially from this definition. 
 
 A very common use of the term is for an issue created to 
 take the place of refund other issues having a prior lien 
 to it, but which are not yet due; the new debt being intended 
 to eventually consolidate the funded indebtedness of the 
 company. In an event such as this, the new issue is usually 
 
 1 Any one wishing to study more fully into the interesting methods of 
 conducting the business of this exchange, will find an excellent treatment 
 of it in " The A B C of Stock Speculation," by Nelson.
 
 100 MONEY AND INVESTMENTS 
 
 large enough to retire the prior indebtedness and furnish 
 funds for needed improvements. An equal amount of the 
 consolidated issue is always left in the hands of the trustee 
 to take the place of the underlying bonds as they mature, and 
 it is also proper to allow for an increased issue of the con- 
 solidated bonds from time to time for further improvements, 
 a restriction being generally inserted in the trust deed that 
 bonds so issued shall be up to only a certain percentage of the 
 actual cost of the improvements. 
 
 Consols. The name applied to a large part of the Govern- 
 ment securities of Great Britain; that portion which is known 
 as the " Three Per Cent. Consolidated Annuities " or " Consoli- 
 dated Threes." The Government retains the right to pay the 
 principal at its pleasure. x The rate has now been reduced to 
 2$% on these, and they are, consequently, known as " 2% 
 Consols," also called " Goschens." 
 
 The two per cent, bonds of the United States Government 
 redeemable after 1930 are known as the " Two Per Cent. 
 Consols." 
 
 Any bond issue which has taken the place of various pre- 
 vious issues, of different rates, maturities, etc., so that the 
 indebtedness has become consolidated into a uniform issue 
 of bonds may be known as " Consols," i. e. " consolidated 
 bonds." 
 
 Consols Account Day. See " Consols Settlement." 
 
 Consols Contango Day. See " Consols Settlement." 
 
 Consols for Account. A purchase of the Government se- 
 curities of Great Britain known as " consols " for delivery 
 upon the next settling-day. There is only one settlement a 
 month for " consols," and this is entirely distinct from the 
 ordinary settling-days. (See " Fortnightly Settling-Days. ") 
 It is generally within the first week of the month. Purchases 
 of this kind are known as " for account " and quotations 
 differ from those purchased " for money." (See the following 
 subject.) 
 
 Consols for Money. (Read last subject.) This is a pur- 
 chase of " consols " for cash; immediate delivery. 
 
 Consols Making-up Day. See " Consols Settlement." 
 
 Consols Settlement. Explained under " Consols for Ac- 
 count." This settlement consists of a " contango day," 
 " making-up day," and " account day." 
 
 Construction Account. " Construction account " is treated 
 
 1 " By 25 Geo. II. the balance of annuities granted by 8 Geo. I. was 
 carried to a three per cent, stock, formed in 1731, and they were (in 1752) 
 consolidated into one stock the new stock is still called ' three per cent, 
 consols.' The word consols is a contraction for consolidated." " History 
 and Principles of Banking," GUbart.
 
 MONEY AND INVESTMENTS 101 
 
 as an asset; " capital account " as a liability. Many corpora- 
 tions expend money and incur indebtedness which they 
 charge to " construction account," with the idea of eventually 
 issuing new capital in the way of stock or bonds, and, from the 
 proceeds of such issue, replenish their cash for money ex- 
 pended or use the proceeds to pay the indebtedness incurred 
 for the items charged to " construction account." (See also 
 " Capital Account.") 
 
 Construction Company. A corporation a firm, individual, 
 or an association of individuals, etc., may perform all the 
 functions of a " construction company " - which constructs 
 some public work such as a steam or electric railroad. For 
 the purposes of this book, ordinary contractors are not in- 
 cluded. The " construction company " here referred to is one 
 which agrees to turn over the completed property in exchange 
 for all, or a part of, the company's securities. This ensures a 
 sale of stocks or bonds, etc., sufficient to pay for the con- 
 struction. It offers, at times, opportunities for those in con- 
 trol of the " construction company " to obtain securities at 
 low prices, if there is a wide margin of profit between the 
 actual cost of the construction and the face value of the 
 securities taken in payment. It, likewise, affords a chance 
 for a company to issue " watered securities," i. e. securities 
 exceeding in their face value the actual value of the property 
 which they represent, provided that the officers in charge of 
 the affairs of the company are substantially the same as those 
 of the " construction company," as is sometimes the case. 
 
 Constructive Mileage. Allowance by a main line of railway 
 to a branch or connecting line of a greater proportion of the 
 earnings on freight originating on the smaller, and destined 
 to some through point on the main line, than a mileage pro- 
 portion of such earnings would give it. For example: the 
 main line, 90 miles long, allows the branch line, ten miles 
 long, earning at the rate of two miles for each mile the 
 freight is actually carried by the branch. The branch would 
 not receive one-tenth but two-elevenths of the earnings. 
 
 Contango. If a London broker makes a sale of a certain 
 stock, deliverable at some future day in practice upon the 
 '' Account-day " or " Pay-day " - and before such date re- 
 quests a further delay in delivery, or borrows the stock else- 
 where to make delivery the necessity for which might 
 arise from the stock being scarce or oversold the charge 
 which the purchaser makes for granting him the extension, 
 or the charge made by the lender of the stock, is called " back- 
 wardation," or "back." If, however, the situation is just 
 the reverse and the purchaser of stock requests a delay in de- 
 livery, the charge made for such an accommodation is called
 
 102 MONEY AND INVESTMENTS 
 
 a " contango." " Backwardation " is paid by the " bear," 
 and " contango " by the " bull." 
 
 Contango Day. (Read last subject.) This is the day on 
 which " contangos " are arranged. It is the first of the 
 " Fortnightly Settling-days." Also called " Continuation 
 Day," " Making-up Day," and " Carrying-over Day." On 
 this day the settling price is fixed by the London Stock Ex- 
 change, upon which all accounts are based and made up. 
 The rate of interest, which is called " contango," is also fixed. 
 
 Continental. All Europe, exclusive of the British and other 
 Isles. 
 
 Continental paper money, issued by authority of the 
 Continental Congress during the Revolutionary War, and 
 used to defray the greater part of the expenses of that war. 
 An enormous amount of it was put out, the sum total being 
 about $360,000,000. The market became so glutted with it 
 that it depreciated tremendously, and finally became almost 
 worthless, one instance being reported where $1,000 in this 
 currency was given in exchange for $1.00 in silver. This 
 explains our common expression " don't care a continental." 
 
 Continental Bill. A "bill of exchange " payable on the 
 continental part of Europe. This term is used to distinguish 
 such from those payable in England, which are termed 
 " sterling bills." 
 
 Continental Bourses. The European stock exchanges other 
 than those in the British Isles. (Also read " Bourse.") 
 
 Continental Markets. Berlin, Antwerp, and Paris. 
 
 Contingent Fund. Money set aside to be drawn upon only 
 in case of certain emergencies. 
 
 Contingent Profit. A conditional profit. A lawyer occa- 
 sionally conducts a case upon a " contingent profit " or fee, 
 his payment for services being entirely dependent upon his 
 winning the case. 
 
 Contingent Rights Stock. An English term. This stock 
 shares dividends on the " ordinary stock " (see " Preferred 
 Shares ") after the latter has received a certain rate. 
 
 Continuation Day. The first of the " Fortnightly Settling- 
 days. (See that subject and also " Contango Day.") For 
 many securities the second " settling-day " is the " continua- 
 tion day." 
 
 Continued Bond. Same as " extended bond." 
 
 Contract Grade. Chicago Board of Trade term indicating 
 the grade which is required on contracts for future delivery. 
 
 Control. See " Controlling Interest." 
 
 Controller. See " Comptroller."
 
 MONEY AND INVESTMENTS 103 
 
 Controlling Interest. When one person, or a number to- 
 gether for their mutual benefit, obtain, by ownership or by 
 proxies (see " Proxy "), their right to cast the votes for a 
 majority of the shares of stock in any corporation, such 
 person or persons are said to have a " controlling interest." 
 
 Conv. Convertible. 
 
 Convertible Bond. A bond, which, at the option of the 
 holder, is convertible, under certain conditions, into other 
 securities issued, usually, by the same corporation. 
 
 As a rule bonds are convertible into stock. One of the best 
 illustrations is a " convertible bond " which was issued in 1901 
 by the United Fruit Company. These bonds became con- 
 vertible into the stock of the company at par, at the option 
 of the holder, after Jan. 1, 1903. The bonds bear 5% interest. 
 The stock of the company, at this time of writing, pays a 
 greater rate of interest than the bonds, and is quoted at a 
 price above par. The result is that the bonds, which in them- 
 selves would not sell at a much higher price than their face 
 value were it not for the convertible feature, follow very nearly 
 the price of the stock. It would not necessarily follow, how- 
 ever, that if the stock fell below its face value, the bonds 
 would do likewise. 
 
 A great many holders of the bonds have taken advantage 
 of the convertible feature and have exchanged the same for 
 company's stock, thus getting a greater rate of interest. 
 
 The attractive feature about these bonds to the original 
 purchaser was that they were considered much safer than the 
 stock, and at the time of issue the stock was not selling above 
 its face value. The purchaser of the bonds, therefore, felt 
 reasonably secure of his money in any event; his interest 
 would rank ahead of dividends.* But in case the stock should 
 advance in price, he would then reap a profit from the con- 
 vertible privilege; in other words, he probably had nothing to 
 lose, and, possibly, much to gain by buying such a security. 
 It is the lottery or speculative feature which gives such in- 
 vestments their popularity. This plan of financiering caters 
 to the speculative spirit and is scarcely a high-class method. 
 In case the stock is " converted " the annual interest charge 
 becomes contingent instead of fixed. 
 
 Convertible Collateral Trust Bonds. This issue is endowed 
 with practically the same features as a " collateral trust bond," 
 to which subject the reader is referred. The main difference, 
 however, is that the former is secured by collaterals, which 
 may be exchanged from time to time for other collaterals, 
 with the consent, for instance, of the trustee. The con- 
 vertible feature is not a bad one as it sometimes enables 
 the issuing company to take advantage of an increase
 
 104 MONEY AND INVESTMENTS 
 
 in the market value of possibly all or part of the collateral 
 securities, and paying off part, or possibly all, of the issue, 
 the proviso almost always being inserted that the issuing 
 company may redeem the issue in part or entire under such 
 conditions. Should none of the issue be paid off, or a pro- 
 portionate amount not paid off to offset the collaterals with- 
 drawn, the trustee would demand other satisfactory collaterals 
 to fill the deficiency. There are other similar good features of 
 minor note attached to the convertible bond, and, upon the 
 whole, as between the two issues, the convertible one is the 
 more preferable, other conditions being equal. 
 
 Convertible Debenture. The only difference between a 
 " convertible debenture " and a " convertible bond " is 
 as to the way the loan is secured, which will be clearly under- 
 stood by turning to the subject " Debenture Bond." A good 
 illustration of such an issue is that of the American Tele- 
 phone and Telegraph Co., " Convertible Debenture " 4's, to 
 which there is attached the lottery feature of convertibility 
 into stock after three years and before the expiration of 
 twelve years at stipulated prices. 
 
 Convertible Income Bonds. See " Income Bonds." 
 
 Convertible Paper Money. Paper money which the holder 
 has the right to present at any time for redemption at a parity 
 in metallic money. This is distinguished from " inconvertible 
 paper money," which subject see. 
 
 Convertibles. Securities which, at the option of the holder, 
 are convertible, under certain conditions, into some other 
 security, issued, usually, by the same corporation. For ex- 
 amples see " Convertible Bond," " Convertible Collateral 
 Trust Bonds," and " Convertible Debenture." 
 
 Convt. Convertible. 
 
 Cooked. A matter or account has been " cooked " when pur- 
 posely made to deceive. 
 
 Co-operative Banks. For all practical purposes these are 
 about the same as " building and loan associations," to which 
 refer. One conspicuous difference exists, however, namely: 
 the right of a member of the former to withdraw the accumu- 
 lations upon his unpledged shares, by giving due notice, say 
 thirty days, and upon certain other conditions. 
 
 Copper (or Coppers). " Copper " is used in various ways; 
 with an " s " in reference to shares of stock of the various 
 copper companies, and without the " s " to indicate 
 the product of the mine. " Copper the metal " is a 
 common expression as distinguished from " copper the 
 stock." 
 
 The United States dominates the copper industry of the
 
 MONEY AND INVESTMENTS 105 
 
 world. In 1855 our output was only about 3,000 tons, and 
 ten years earlier we produced the insignificant amount of 
 100 tons. 1 Our 1905 output was approximately 402,637 tons, 
 the money value of which, based on an average price of 15.70 
 cents per pound, was $144,599,380. The estimated production 
 for 1906 was about 413,834 tons. Including what we have 
 from adjoining countries, north and south, we handle about 
 two-thirds of the world's production. 
 
 Our pennies are often referred to as " coppers." 
 
 Copper a Tip. Acting contrary to the " tip," or information 
 received. 
 
 Copper Coins. See " Cent." 
 
 Copper Range. Copper Range Consolidated Co. 
 
 Coppers. All stocks of the copper mining companies. Also 
 our pennies. 
 
 Copper Warrants. A term used in England to denote re- 
 ceipts for copper placed in the public storehouses. We have 
 nothing corresponding to these receipts in this country. 
 " Copper warrants " are sometimes sold and delivered at the 
 sale, and the copper is taken out of store and used, but it is a 
 very common practice for contracts to be made for the future 
 sale or delivery of these warrants. Sometimes a contract for 
 future delivery is bought by a manufacturer, who has taken 
 an order for manufactured goods, also for future delivery, and 
 for which he has yet to supply himself with refined copper. 
 At times " copper warrants " are sold by others engaged in 
 trade to protect themselves in a like manner. They are also 
 often bought and sold in mere speculation. 
 
 Corn. This is explained under " Grain," except that the 
 trading unit for future delivery is 5,000 bushel lots and the 
 " margin " about 3 cents per bushel, the commission being 
 the same as on other grains. 
 
 Corner. A control of a commodity or security for the 
 purpose of raising prices. A " corner in wheat " occurs when 
 one person, or a group, secretly buys practically all the 
 wheat in the market, and others, who have made contracts 
 to deliver wheat on the supposition that it could be bought 
 in time to comply with their contracts, and not knowing of 
 the secret buying for control, suddenly find that in order to 
 meet their agreements they are obliged to pay such prices 
 as those in control demand. A witness in court once de- 
 scribed a " corner " as "a ... combination to prevent 
 people short of stocks from buying them." 
 
 " Corners " have often proved dangerous to those attempt- 
 
 1 Statistics from here on furnished by D. Houston & Co., metal brokers, 
 New York City. The weights are long tons of 2,240 pounds each.
 
 106 MONEY AND INVESTMENTS 
 
 ing the same, and very frequently they reap financial disaster 
 for their pains. 
 
 Corporation. * A charter may be obtained from the legisla- 
 ture of a State, or from such officers as may be authorized 
 to grant charters, or, even under certain conditions, from 
 Congress. This charter is an instrument which states the 
 privileges, etc., which the body incorporated thereunder en- 
 joys. The different ownerships in the business to be con- 
 ducted under this charter are represented by shares of stock, 
 and the owners thereof are known as stockholders. Very 
 large enterprises, such as railroads, etc., are generally con- 
 ducted in an incorporated form, as such large amounts of 
 capital are wanted, necessitating so many subscribers, that a 
 partnership agreement would be unwieldy. And, also, owing 
 to the desire which would arise from the multiplicity of owner- 
 ship for transference or sale of the same to other parties. 
 A corporation is more permanent in its character than a 
 partnership, or a business conducted by an individual. 
 
 There are many enterprises, very largely of a public nature, 
 such as gas, electric lighting, street railways, etc., which must 
 lawfully be conducted by incorporated companies, so that 
 there may be more or less State control of the same. Still 
 another reason in favour of incorporating is that the owners 
 of the shares are limited in their liability for the debts of the 
 corporation, whereas, if the business were conducted as a 
 firm, each partner is liable for all the partnership debts. 
 
 Although formerly corporations were usually created to 
 conduct the larger enterprises, to-day their use has been 
 extended to almost every conceivable business or industry. It 
 might be found difficult to secure money to " finance " many 
 such if it were not possible to obtain many stockholders for 
 small amounts. 
 
 For the benefit of those who desire such information, some 
 of the essential points to consider in forming an incorporated 
 company are as follows: 
 
 The majority of companies may incorporate under the laws 
 of some other State, if so desired, than that in which business 
 is actually conducted; except in case where certain privileges 
 are derived from the State in which the enterprise is carried on. 
 This has resulted in almost countless instances of the selection 
 of that State which conveys the greatest privileges in a charter. 
 There are many which have enacted laws especially to en- 
 courage this sort of thing, thereby deriving a large revenue 
 from the same. Some one has facetiously referred to New 
 Jersey, West Virginia, and Maine, as the " Incubators of 
 
 1 A corporation has been legally defined as " an invisible, intangible 
 person existing only in contemplation of law."
 
 MONEY AND INVESTMENTS 107 
 
 Trusts," as those three " charter bartering States " are, 
 perhaps, most liberal in the scope of the charters granted. 
 They convey rights upon corporations to do things in other 
 States often forbidden by the laws of those States. 
 
 Wherever a company is incorporated, it is necessary to file 
 with the Secretary of State, or some other properly designated 
 officer, a " certificate of incorporation " (see that subject) 
 following the form as furnished by the State in question. (In 
 many instances, such as railroads, etc., it may be necessary 
 to obtain a special legislative act.) Accompanying the cer- 
 tificate of incorporation, a copy of the constitution and by- 
 laws is usually required. 
 
 When companies organize under a different State than that 
 in which they operate, it is necessary to name a resident 
 " attorney in fact " to whom is delegated the usual powers 
 of such attorneys. 
 
 Some of the States require the principal office of any 
 company incorporated therein to be located somewhere within 
 its borders, where books, like the stock and transfer books, 
 shall be kept. 
 
 It is not the intention here to suggest anything as to the 
 actual formation of the company itself, the holding of meet- 
 ings, electing directors, adopting of the constitution and by- 
 laws, and so on; for competent legal advice should always be 
 obtained in that direction. In fact, so far as that goes, it is 
 very essential that an incorporation of any kind should not 
 only be conducted under a careful supervision of counsel, but 
 under very painstaking and competent counsel. 1 (See also 
 " Corporation Trust Companies.") 
 
 Corporation Bonds. A bond issued by an incorporated 
 company, the ownership of which is represented by shares of 
 stock; a bond of a joint-stock company. Bonds issued by 
 governments, States, or any territorial subdivision thereof, 
 although corporation bonds in one sense are not so known 
 in the banking world, but are known as " government bonds," 
 " State bonds," and " municipal bonds." Occasionally an 
 exception is made, as " corporation stock 2 of the City of 
 New York," meaning New York City bonds. Investment 
 bonds are in general covered by two classes, " corporation " 
 and " municipal." (Read " Bond.") 
 
 The former are, usually, secured by a mortgage upon all, or 
 a portion, of the property of the company obligating 
 itself to pay the same. They can be issued only by per- 
 
 1 The East India Co. incorporated in 1600 is about the earliest example 
 of a large modern corporation. 
 
 In England the word " company " is used as the equivalent to our 
 " corporation," the latter term having reference to a municipal body only. 
 
 : In Great Britain this is also a common name for municipal securities.
 
 108 MONEY AND INVESTMENTS 
 
 mission and under the direction of the company's share- 
 holders. 
 
 It is customary to protect the rights of bondholders by 
 selecting some trustee usually a trust company to hold 
 the mortgage against the property, and to carry out certain 
 acts necessary to the issue. (See " Trustee.") 
 
 A bond of this class states on its face many of the rights, 
 both of the issuing company and the holder, and refers to the 
 deed of trust in further accordance with which the issue is 
 created. (See " Deed of Trust.") 
 
 Corporation Paper. Notes, acceptances, etc., held against 
 incorporated companies. " Mill paper " may be " corporation 
 paper," but all " corporation paper " is not necessarily " mill 
 paper." 
 
 Corporation Securities. Except in very special cases this is 
 a common title for stocks, bonds, etc., issued by incorporated 
 companies, such as railways, electric light, gas, water, etc., 
 but occasionally some such expression as " corporation stock 
 of the City of New York " will refer to the municipal obligation 
 of the same. 
 
 Corporation Trust Companies. If the reader will first turn 
 to the subject " Corporation," it will be found that a good 
 many companies are incorporated under States other than 
 that in which they transact business, which have enacted 
 statutes to encourage incorporating under their laws. These 
 States have located in some one of their principal cities a 
 trust company known by the above title, at which place many 
 means are afforded for the greater facilitating the complying 
 with the necessary laws of such States. These trust companies 
 have rooms where meetings may be held; furnish blank forms 
 of various kinds, and some one connected therewith is selected 
 as the resident director of the company, and so on. 1 
 
 Corresponding Clerk. This employee of a bank is one to 
 whom the items for collection out of town are turned over. 
 
 1 The Wall Street Journal, in its issue of April 21, 1906, refers to these 
 companies as follows: 
 
 " Under the guidance of the Corporation Trust Company, or any of the 
 numerous promoting counsel, a wayfaring man cannot miss the path lead- 
 ing straight to the labyrinths of high finance. These gentlemen have 
 printed forms all prepared and will give you on short notice a corporation 
 born full-fledged, capital, dummy directors and all, without even a per- 
 sonal visit to New Jersey. One ' dummy ' may, as in one instance I learned 
 of recently, act for 100 or more corporations. These automatons are 
 mummies as well as dummies. No discretion or responsibility is expected 
 or required. As soon as the fee is paid to the Secretary of State the incor- 
 poration, ' equivalent to a special act of the legislature,' becomes operative. 
 
 " This fee, in order to encourage these promotions, is, compared with 
 the privileges and opportunities conferred, but nominal. In consequence, 
 all sorts of wildcat schemes receive charters to do as they please and no 
 questions asked."
 
 MONEY AND INVESTMENTS 109 
 
 He must keep a record of everything of this nature sent by 
 mail or express, and see that they are forwarded to the proper 
 points for payment, whether they are demand or time items. 
 He has charge of all coupons payable out of town and has 
 a very large correspondence relating to all such matters. 
 
 Cotton. " Future " and " spot " transactions occur in 
 cotton trading, which are explained under those subjects. 
 The buying or selling unit is 100 bales, or 50,000 Ibs. The 
 average weight of a contract bale is, therefore, 500 Ibs. Fluc- 
 tuations are recorded in " points; " a cent is divided into 100 
 " points." If cotton declines 50 " points " it declines cent 
 per pound, or $2.50 on each bale, equal to $250 on the 100 
 bales. The commission charged non-members of the New York 
 Cotton Exchange is $7.50 for buying and $7.50 for selling 
 100 bales, or $15 for the " round turn," as it is called. The 
 commission charged members is $7.50 for the " round turn." 
 The margin demanded by brokers depends largely upon 
 the character and standing of the customers; also somewhat 
 upon the price of cotton. One-half cent per pound is about the 
 usual margin, namely, $250 on each 100 bales. 
 
 Cotton Bill. A " bill of exchange " drawn against a ship- 
 ment of cotton. (See " Exchange.") 
 
 Cotton-Carrying Roads. The important railways of the 
 South, or which extend into that section, and which carry the 
 bulk of the cotton product, such, for instance, as the Central 
 of Georgia Railway, Nashville, Chattanooga & St. Louis 
 Railway, Missouri, Kansas & Texas Railway, St. Louis South- 
 western Railway, St. Louis & San Francisco Railroad, Sea- 
 board Air Line Railway, Southern Railway, Illinois Central 
 Railroad, Louisville & Nashville Railroad, Atlantic Coast 
 Line, Mobile & Ohio Railroad, Rock Island Co., etc. 
 
 Cotton Port Receipts. The weekly net receipts of cotton 
 at the principal Southern ports, such as Galveston, New Or- 
 leans, Mobile, Savannah, Charleston, Wilmington, etc. 
 
 Cotton Ports. Galveston, New Orleans, Mobile, Savannah, 
 Charleston, Wilmington, etc. 
 
 Cotton Roads. See " Cotton-Carrying Roads." 
 
 Council Bills. See " Council Drafts." 
 
 Council Drafts. Also termed " council bills," " India 
 council bills," " India council drafts," etc. These are issued 
 in London and payable in India in " rupees," the money in 
 current use in the latter country. The financial affairs of 
 that country are managed in London by what is known as the 
 " India Council," which offers for sale Wednesday of each 
 week to the highest bidders a certain amount of " council 
 bills," which are purchased by those desiring to make re-
 
 110 MONEY AND INVESTMENTS 
 
 mittances to Calcutta and other points in India. The London 
 papers give the prices at which these bills are sold, distin- 
 guishing between those which are sold for remittance by mail, 
 and for what are known as " telegraphic transfers; " namely, 
 where immediate use is wished for the money in India the 
 latter usually selling at a slight advance over the former. 
 The reports always show the amounts disposed of, and the 
 minimum rates obtained. 
 
 Any sales made between the regular Wednesday meetings 
 are referred to as " specials." India payments in London 
 must be made in gold, whereas London payments in India 
 must be made in " rupees." All this is made possible by means 
 of the " India Council." 
 
 Country Banks. As referred to among the national banks, 
 those located in neither a " reserve " nor a " central reserve 
 city " (refer to those subjects) and which need maintain a 
 " reserve " (see footnote to " Central Reserve Cities ") of 
 only 15% of their net deposits, only two-fifths of which must 
 be in their own vaults. The balance may be deposited with 
 a bank in either a " reserve " or " central reserve city " with 
 the approval of the Comptroller of the Currency. " Country 
 banks " are not allowed to hold the " reserve " of any other 
 national bank. 
 
 Country Checks. Much the same thing as " out-of-town 
 checks," except that the term is more specifically applied to 
 checks against banks more remote from the particular clearing- 
 house. 
 
 Coupon. Interest coupons are small certificates attached 
 to that part of the bond representing the principal sum, each 
 coupon representing the interest upon the bond for a certain 
 period, there being attached to each bond a sufficient number 
 of these coupons to represent the interest for the entire length 
 of time which the bond may be outstanding before maturity. 
 These coupons, or certificates, are cut off as they severally 
 become due, and presented at the place designated for pay- 
 ment. 
 
 Do not detach coupons from a bond other than the next 
 one maturing. Many investors have the habit of visiting at 
 infrequent intervals their safe deposit vaults or " places of 
 concealment," in which they keep their securities, and cutting 
 from their bonds, at such periodical visits, the two or more 
 next maturing coupons, which they will keep at home in some 
 place subject to possible loss or destruction. That in itself is 
 sufficient reason for not doing this. There is a true happening 
 of a woman who had quite a collection of such coupons on a 
 shelf in some room in her house. The windows being left open 
 one day, a sudden draft swept the bits of paper out of doors,
 
 MONEY AND INVESTMENTS 111 
 
 and, although every effort was made to find them, there were 
 a few never recovered. 
 
 Another objection to this plan is that if, for any reason, a 
 bond, with the coupons so detached, is sold, it necessitates 
 delivering it with the cut unmatured coupons pinned thereon, 
 which is more or less objectionable for many reasons. 
 
 Where it is intended to send bonds to London for sale, from 
 which coupons not due have been detached, they should be 
 re-attached by means of gummed paper, and not pinned to 
 the bonds. 
 
 Coupon Bonds. Any bonds which have attached interest 
 notes or coupons which may be presented for payment at 
 stated intervals as the interest becomes due, and which notes 
 or coupons are made payable to bearer. (See " Coupon.") 
 
 Coupon-Clerk. Some large banks have the work so sub- 
 divided that a special clerk known as a " coupon-clerk " 
 attends to the collection of bonds and coupons, whether such 
 are among the bank's deposits or left by its customers for 
 collection. If there is a " corresponding clerk " in the bank, 
 the " coupon-clerk " would turn over to him bonds or coupons 
 payable out of town. The " coupon-clerk " has minor duties 
 to perform, but those already mentioned are the principal 
 ones. 
 
 Coupon Notes. A " coupon note " would seem to be an 
 ordinary promissory note having a long enough time to run 
 to call for different interest payments, the interest being 
 represented by attached tickets or coupons, which must be 
 presented, from time to time, in order to collect the interest. 
 In most circumstances these notes would naturally be made 
 payable to bearer, passing from hand to hand without in- 
 dorsements, but this is not necessarily so, as the note may be 
 drawn payable to some person or order, in which event it 
 passes by indorsement; this, however, not affecting the 
 coupons, which are good in the hands of any bona fide holder 
 without indorsement. The notes accompanying a great many 
 of the Western farm mortgages are in coupon form. 
 
 " Coupon notes " comprise those having a comparatively 
 short time to run, say five years or less, but when issued by a 
 corporation, in what way they technically differ from a 
 " debenture," it is difficult to say, unless the fact that the 
 latter has a longer life explains it. 
 
 Municipalities desiring to borrow money for a relatively 
 short time, yet longer than six months, often issue " coupon 
 notes." This has also been a favourite form of security issued 
 by many corporations of late which have borrowed large 
 sums for short periods. 
 
 Coupon Off. Same as " Ex-Coupon."
 
 112 MONEY AND INVESTMENTS 
 
 Coupons, Collection of. Coupons are almost always made 
 payable to " bearer," that is, like a ten dollar bill, good in the 
 hands of any one, therefore, care should be taken in trans- 
 mitting them from one point to another. The simplest method 
 on the part of an individual to collect the money due upon 
 the coupon is to take it, about a week previous to its maturity, 
 to his local bank, requesting the bank to attend to the col- 
 lection for him. Banks have the safest and most thorough 
 systems for coupon collecting. 
 
 If the owner of the coupon demands a receipt from the 
 bank at such a time, the bank should be careful to give a 
 receipt describing the coupon and stating that the same is 
 taken for " collection only," unless the bank makes a charge 
 for the collection, in which event it is fair that it should as- 
 sume the responsibility for the safety of the coupon, and 
 the return of the funds collected. Care should be taken, 
 however, not to give a receipt which would in any way 
 guarantee the payment of the coupon. 
 
 If it is necessary or more desirable to send coupons to some 
 distant point and not through the local bank, registered mail 
 is the usual method, although express companies are oc- 
 casionally used for this purpose. 
 
 Be sure to cut off from all bonds the proper coupons for 
 the next interest period. It is surprising how often investors 
 detach coupons due the wrong year or the wrong month in the 
 same year. 
 
 Course of Exchange. Same as " Rate of Exchange." 
 
 Cours Force. A French term having reference to the 
 forced circulation of " irredeemable paper money." 
 
 Cours Le*gal. The French term for the legal tender quality 
 of metallic money. 
 
 Covering. See " Short Covering," meaning the same. 
 
 C. P. A. Certified Public Accountant. 
 
 Cr. " Credit." 
 
 Credit. (From the Latin credere, to believe.) Delivery of 
 goods in confidence of future payment; deferring a payment. 
 This is nothing more nor less than confidence which one has 
 inspired among others as to his honesty and intent to meet 
 his obligations, with every human probability of his doing so. 
 It enables him to borrow money on his simple written prom- 
 ise to pay; to obtain goods to be paid for later; and is the 
 foundation of all business. "Credit," said Daniel Webster, 
 " is the vital air of the whole system of modern 
 business." 
 
 Lyman J. Gage declared that, " next to production and 
 the means of transportation, credit (through which the
 
 MONEY AND INVESTMENTS 113 
 
 products of industry are exchanged) is the most important 
 operating factor in our business life." 
 
 Conant believes one of the simplest definitions of " credit " 
 to be that of Devas; i. e. " Agreed postponement of pay- 
 ments in currency." He considers, however, this definition 
 of Tucker's the best: " The transfer of something valuable 
 to another, whether money, goods, or services, in the con- 
 fidence that he will be both willing and able, at a future day, 
 to pay its equivalent." 
 
 Conant also declares that the fundamental elements of 
 " credit " are confidence and time. 
 
 In bookkeeping the credit side of an account is that on 
 which is entered the credit for money received, or its equiva- 
 lent. For instance, A owes B $15. That fact is entered 
 upon the " debit " side of B's books as a charge against A. 
 But A makes a payment of $10; this fact is entered upon 
 the " credit " (right-hand) side of B's account, showing a 
 credit to A of the amount. 
 
 Credit Currency. Currency issued by a bank, the security 
 for which is only the general assets of the institution. The 
 notes of the Bank of France are so secured and are strictly 
 speaking " credit currency," whereas notes of the Bank of 
 England are substantially " gold certificates," as against all 
 additional notes above a certain fixed amount there is a 
 deposit of gold coin and bullion. United States " gold " and 
 " silver certificates " are in no sense " credit currency," as 
 each one represents a like sum of gold or silver deposited to 
 secure it. They are the nearest approach to real money with- 
 out being actual money that exists. 
 
 Credit Insurance. There are companies which will insure a 
 manufacturer, or wholesaler, against loss arising from selling 
 goods on credit. The usual method is for the wholesaler to 
 show his average loss for the past five years, and for the 
 company to insure him for annual losses in excess of that 
 amount. He, very likely, will be required to sell to retailers 
 of a certain commercial rating (see " Commercial Agencies "), 
 and the premium charged may depend upon the grade of 
 rating allowed. The amount of credit allowed to any one 
 purchaser is dependent upon the size of the policy, and the 
 rating of the debtor. 
 
 Credit Lyonnaise. One of the French banks, corresponding 
 to the joint-stock banks in London. It holds the same re- 
 lation to the Bank of France as do the English banks to the 
 Bank of England. The head office is in Lyons, but its prin- 
 cipal business and most important position are in Paris. 
 
 Creditor. One to whom a sum of money or other thing is 
 due; one who has a just claim for money. In the case of a
 
 114 MONEY AND INVESTMENTS 
 
 failure of a business those to whom money is owed by the firm 
 are its " creditors." 
 
 Creditor Bank. See " Clearing-House." 
 
 Cremation Certificate. A signed statement by certain per- 
 sons especially selected or appointed, or a certain committee 
 authorized so to do, that they have witnessed the burning 
 (total destruction by fire) of the securities or papers named 
 in the certificate. 
 
 Crops. See " Movement of the Crops." 
 
 Crore. See " Rupee." 
 
 Cross. See " Mark Signature." 
 
 Crossed Check. An English custom. When the maker of 
 an ordinary check draws bars, i. e. parallel lines, across its 
 face it is understood that the person to whom it is payable 
 cannot collect it directly of the bank upon which it is drawn, 
 but must do so through some other bank or banking house. 
 By this plan the payee will be obliged to seek a bank at which 
 he is known and which will accept his indorsement as satis- 
 factory evidence of the maker's credit. 
 
 When the two bars have " & Co.," between them, the 
 check is said to be " crossed in blank," and may be presented 
 at any bank other than the one on which it is drawn, but 
 when the maker wishes it presented at some particular bank, 
 he stamps across its face the name of such bank, and the 
 check is then " specialized." 
 
 The above method is a safeguard against checks being 
 cashed when in the hands of illegal holders. 
 
 Crossed in Blank. See " Crossed Check." 
 
 Cross Exchange. See " Triangular Operation." 
 
 Crossing Stocks. The same as " cross trade," to which 
 refer. 
 
 Cross Trade. An order received to buy and an order to 
 sell the same stock at the same price by a broker, in which 
 event he might let one order offset the other and not fill them 
 upon the exchange at all. It is contrary to the rules, however. 
 
 Suppose Jones & Co. receive an order to sell 100 shares of 
 a given stock at 90; at the same time they receive an order 
 for the purchase of a like amount of the same stock at the 
 same price. All transactions by a member of the stock ex- 
 change, in what are known as stock exchange securities, 
 must be made on the floor of the exchange, and the quota- 
 tions made. It would be perfectly proper for Jones & Co. 
 to " match up," as it were, the purchase of this stock against 
 its sale, provided that there was no other like amount of the 
 same stock offered at a lesser, or bid for at a higher, price on 
 stock exchange than 90. In actual practice, the broker goes
 
 MONEY AND INVESTMENTS 115 
 
 to that part of the exchange where the particular stock is 
 dealt in, and declares to the other brokers that " I will take 
 to myself 100 shares of - stock at 90, if there are no ob- 
 jections." Then if no bids or offers are made as above sug- 
 gested, the final results would be that the 100 shares belonging 
 to Jones & Co.'s customer who gave the selling order, would 
 be transferred into the hands of the other client who had given 
 the purchasing order, each paying Jones & Co. a commission, 
 the matter being actually consummated on the floor of the 
 stock exchange, and the prices made public through the 
 usual channels. This is commonly called " crossing stocks." 
 (See also " Matched Orders.") 
 
 Crown. An English coin equal to five of their shillings or 
 $1.216 in United States money. Also the monetary units of 
 Austria-Hungary, Denmark, Norway, and Sweden, the first 
 being equal to $0.203, the other three $0.268 in United States 
 money. 
 
 CT. The " ticker " abbreviation for " certificates." 
 Cum Dividend. The English equivalent of the American 
 term " dividend on." 
 
 Cum Rights. Inclusive of " rights." 
 Cum Rts. " Cum rights," i. e. inclusive of " rights." 
 Cumulative. This, as a rule, has reference to " preferred " 
 shares of stock. Unpaid dividends upon such stocks accumu- 
 late from year to year, and must be paid before the common or 
 other stocks which come after can receive anything. A 
 " cumulative " issue often acts to the detriment of the com- 
 mon shares, as it naturally lessens the chances of dividends 
 upon them. 
 
 A good illustration is that of the Rutland Railroad Company 
 preferred and common stocks. The former is 7% cumulative, 
 and the amount of unpaid dividends now due on this stock 
 (October, 1906 *) and which have accumulated through failure 
 from year to year to meet the 7% requirements, amount to 
 166%. Unless, therefore, some readjustment of the finan- 
 cial plan can be made the common stock has a very question- 
 able value, for if no dividends can be paid upon it until the 
 back dividends accumulated upon the preferred have been 
 made up, there seems little hope for the common from a 
 dividend standpoint. 
 
 Cumulative Income Bonds. See " Income Bonds." 
 Cumulative Preferred Stock. See " Cumulative." 
 Curb. Securities which are not traded in upon the large 
 stock exchanges, or new securities which have not as yet been 
 listed upon such exchanges, are handled in what is known 
 
 1 United States Investor, Oct. 6, 1906.
 
 116 MONEY AND INVESTMENTS 
 
 as the " curb " market. In New York, the trading in 
 such securities actually takes place on Broad Street opposite 
 the Mills Building, where gathers daily from 10 A.M. to 3 P.M. 
 a noisy crowd of brokers. The name " curb," therefore, has 
 real application under the circumstances. Many years ago, 
 before the establishment of stock exchanges, practically all 
 trading was upon the " curb; " that is, on some understood 
 place in the street, as in the case in New York. In Boston 
 a " curb " market has recently been established upon Ex- 
 change Place. A " curb " market existed in London in 
 'Change Alley for nearly a century. A " curb " market existed 
 in Paris in 1720, for at the time of the " Mississippi Bubble " 
 it was necessary to rope off the Rue Quincompoix for pro- 
 tection against the general public. 
 
 Any security may be dealt in upon the " curb." Such a 
 high-priced stock as Standard Oil, as well as the most specula- 
 tive class of investments, exchange hands in this way. In 
 New York, dealings upon the " curb " have become so 
 extensive that many of the regular stock exchange houses 
 conduct a " curb " department. There are very few houses 
 which will permit marginal transactions except in the very 
 best " curb " securities. Commissions for " curb " transac- 
 tions differ in various cities, in some cases being about the 
 same as the stock exchange commissions in that city, and in 
 another instance ranging from 1-16 of 1% per share down, 
 there being no fixed rate. 
 
 The reason nowadays for the existence of " curb markets " 
 in the open rather than in some building, is that if the latter 
 plan were pursued there would, in truth, exist another ex- 
 change, and it would not be permissible for a member of the 
 regular exchange of the same city to be represented thereon, 
 as he frequently now is upon the " curb." 
 
 Curb Broker (or Curbstone Broker). One who, usually, 
 not being a member of the stock exchange, transacts business 
 upon the " curb " (see " Curb ") or by going from office to office. 
 
 Currency. " The power of passing from hand to hand; " 
 money. As one writer says: " that while money is currency, 
 currency is not necessarily money; " this presupposes a very 
 technical definition for " money." For our purpose, a defini- 
 tion of " currency " will do, that calls it: whatever is in 
 common use among persons serving them as money to buy 
 commodities or pay debts. 
 
 Currency Act. See " Financial Bill." 
 
 Currency Bond. A bond not specifically payable in gold 
 coin, but in any lawful money. 
 
 Currency Certificate. Another term for " Legal tender 
 certificates."
 
 MONEY AND INVESTMENTS 117 
 
 Current 1 Account. An account not closed, but showing 
 transactions from time to time. 
 
 Current Assets. "Shifting and changeable assets" 2 such 
 as cash on deposit and on hand, loans, accounts and bills 
 receivable, etc. 
 
 Current Liabilities. Amounts owed subject to constant 
 change, such as accounts payable, loans payable, bills payable, 
 interest and dividends accrued towards the next payments, 
 pay rolls, etc. Floating indebtedness of all kinds comes under 
 this heading. 
 
 Current Prices. Present prevailing prices. 
 
 Curtailing a Note. If a note falls due and the borrower 
 wishes to extend it for a lesser amount by making a partial 
 payment upon the same, or gives a new note for the reduced 
 sum after making such a payment, the process is called " cur- 
 tailing." Making partial payments upon a " demand note " 
 from time to time would be to the same effect. 
 
 Cutting a Melon. See " Melon." 
 
 CV. The " ticker " abbreviation for " convertible." 
 
 CY. The " ticker " abbreviation for " currency." 
 
 D 
 
 d. Penny (pence.) 
 
 D. The " ticker abbreviation for " debenture " or " divi- 
 sion." 
 
 d/a. Stands for " documents for acceptance," to which 
 subject refer. 
 
 Daily Balances. Trust companies, as a rule, and sometimes 
 other banking institutions, allow interest to their depositors 
 upon " daily balances " of over a certain amount, say $300 
 or more. This means that at the close of each business day, 
 the total amount which each depositor has had to his credit 
 unchanged for the last preceding twenty-four hours is ascer- 
 tained, and if equal to or over the $300, or whatever the 
 agreed sum may be, then interest is allowed for the day upon 
 such amount, but only on sums divisible by $100; that is, 
 no interest would be allowed for the fractional amounts 
 greater than the even hundreds. 3 If, however, the deposit 
 
 1 This word is from the Latin verb " currere," to run. 
 
 2 T. F. Woodlock. 
 
 5 This last, however, is subject to some flexibility, To illustrate: if 
 the amount of the daily balance is $625, the institution would figure it as 
 an even $600. On $699 it might figure it as $700. Some minimum amount, 
 as. say, $90, in each $100 may be taken and any over $690 and less than 
 $700. for instance, would be figured as the latter amount. It is also some-
 
 118 MONEY AND INVESTMENTS 
 
 is less than the agreed sum, no interest is allowed for that day. 
 By this method, a depositor is encouraged to keep his deposit 
 equal to, or greater than, the sum specified, and, furthermore, 
 a lesser sum is not supposed to be profitable enough to a 
 banking institution to warrant the payment of any interest 
 upon it. 
 
 Daly- West. The Daly- West Mining Co. (gold). In 1902 
 it absorbed the Quincy Mining Co. 
 
 Date of Bonds. Care should always be taken to avoid 
 dating an issue of bonds upon Sunday. A New Jersey city 
 issued recently $50,000 worth of bonds dated on Sunday. 
 New ones had to be created to replace them. 
 
 Dating (Dating a Bill). A commercial term. A purchaser 
 of goods persuades the seller to date the bill a certain length 
 of time ahead of the actual shipment, say thirty days, and 
 then, if he is accustomed to a certain other definite length of 
 time to pay in, the time does not begin until the expiration 
 of the thirty days. By this plan an extra credit time is 
 obtained. 
 
 Day Book. This is one of the account books used in single 
 entry bookkeeping, another name for which is " blotter." 
 (Refer to that subject.) 
 
 Days of Grace. Generally three extra days given by the 
 " grace " of the payee (see " Payee ") in which a note or 
 other paper may be paid after its maturity. Formerly no 
 interest was charged for the three days, later, interest was 
 charged, but now the custom of allowing " days of grace " 
 has practically ceased. If the laws of a State provide for 
 " days of grace " and the same are demanded, then it is 
 understood that interest may be added for the time. Neither 
 party can make or obtain payment before the expiration of 
 the time except at the pleasure of the other. " Grace " 
 prevails throughout Great Britain, but does not exist upon 
 the Continent. 
 
 Day-to-Day Loan. A loan of money for over night, and, 
 possibly, renewed from day to day. 
 
 In New York the following custom prevails: 
 
 If a call for payment or a renewal is wished, notice to that 
 effect must be given by one party to the other between the 
 hours of 11 A.M. and 1 P.M. daily. In the event of no such 
 notice being received by either party the loan continues until 
 the next day, the lender notifying the borrower what the rate 
 will be for the succeeding twenty-four hours. It is fully under- 
 times left to the judgment of the one in charge of that work of the institu- 
 tion, to take into consideration the activity of the account. If it should be 
 inactive and running a balance of, say $650, he might add, at the end of 
 the interest period, a few hundred dollars to the amount on which he 
 figures the interest.
 
 MONEY AND INVESTMENTS 119 
 
 stood that no demand for payment of a " day-to-day loan " 
 will be made after 1 P. M. Loans made on Friday are carried 
 over till Monday. 
 
 D. C. 3.653. " District of Columbia bonds " bearing 
 3.65% interest. (See subject in quotations.) 
 
 DE. The " ticker " abbreviation for " deferred." 
 
 Dead Assets. Valueless or non-income-producing property 
 
 Dead Luck. A man who has lost all financial means; a 
 non-income-bearing, valueless, or defaulted security. 
 
 Deal. A transaction made without general public knowl- 
 edge; a scheme for profit; a secret financial arrangement for 
 the advantage of those engaged in it, as a " railway deal." 
 " There is a deal on in Grand Pacific." By this is meant that 
 those controlling the affairs of that company are making secret 
 arrangements, or plans, the result of which will probably 
 cause its stock to advance in price, or return other profits to 
 those engineering the " deal." A " deal " is sometimes the 
 taking advantage of forthcoming events at the expense of the 
 stockholders. 
 
 Dear. Money had a " tendency to be dear; " meaning that 
 there was a tendency towards an advance in interest rates at 
 which money could be borrowed. 
 
 Dear Money. High interest rates; money difficult to borrow 
 and then only at a high rental. 
 
 Debasement of Currency. A reduction in its quality; an 
 impairment of its worth or purity; a degradation of gold or 
 silver by the use of an alloy. 
 
 De Beers. The De Beers Consolidated Mines, Limited. A 
 diamond mine of South Africa, whose securities are largely 
 dealt in upon the London Stock Exchange. 
 
 Debenture. " Debenture bond " (which subject see) is the 
 security usually understood by this term. Throughout the 
 Dominion of Canada, however, as well as Great Britain and 
 her colonial possessions in general, the term " debenture " 
 is used in speaking of municipal obligations, such as we refer 
 to as " bonds." Canada being more or less influenced by its 
 dealings with the United States, uses the expression " munici- 
 pal bond " almost as much as " municipal debenture," 
 although, in speaking on the subject generally, they make a 
 distinction by using the word " debenture " to indicate a 
 municipal issue as against the word " bond " for a corporation 
 security. In Great Britain, the word " debenture " is often 
 used to distinguish " debenture " issues of railroads where 
 there is no " trust deed " securing the same. 
 
 Debenture Bond. An evidence of indebtedness issued by a 
 corporation having precedence over its preferred and common
 
 120 MONEY AND INVESTMENTS 
 
 stocks. It is commonly nothing more than a note, very likely 
 in coupon form, and not secured by mortgage. 
 
 A so-called " debenture bond " does sometimes carry a lien 
 of some sort upon the property of the company, but the writer 
 is of the opinion that " debenture " is not the proper title 
 for a bond so secured, but " mortgage debenture " should be 
 used. Certainly in this country in the earlier days of banking 
 a " debenture bond " was one unsecured by mortgage; not 
 so in England, however. 
 
 Provision is often made that no mortgage indebtedness shall 
 be created during the life of a " debenture " issue which shall 
 not equally secure the latter. This is a very desirable feature 
 and enhances its value. 
 
 Technically, when a railway or other corporation deposits 
 stocks and mortgage bonds in a trust company and issues 
 another bond against them, a " debenture mortgage " is the 
 result, but by custom such bonds are often called " collateral 
 trust." 
 
 There are issues bearing the name of " debenture mortgage 
 bonds " which are actually secured by junior liens directly 
 upon the property, as in the case of the Wabash Railroad 
 Company, which has such an issue, divided into two classes: 
 Series A and B, commonly called " debenture A " and " de- 
 benture B " bonds; the former having preference for interest 
 only over series B. Interest on either issue is not payable 
 unless earned, and is non-cumulative. 
 
 The desirability of a " debenture bond " as an investment 
 depends largely upon the financial status of the corporation 
 by which it is issued, and upon the amount of indebtedness 
 having a prior claim. No foreclosure can be accomplished in 
 case of default; the holder is simply a noteholder and must 
 take what he can get after all prior claims are satisfied. 
 
 Debenture Income Bonds. See " Income Bonds." 
 
 Debenture Mortgage. There was a very general custom 
 some years ago on the part of " farm mortgage companies " 
 of issuing what were known as " debentures." The farm 
 mortgage company would deposit, say, $110,000, par value, 
 of mortgages upon real estate, with some trust company, 
 and issue against them $100,000 worth in " debentures " 
 bearing a lesser rate of interest than the mortgages. There 
 was supposed to be less risk to the investor in buying one of 
 these " debentures " than in purchasing any specific mortgage. 
 This class of securities should be called " debenture mort- 
 gages." Comparatively few such investments, however, are 
 being dealt in at present. 
 
 Debenture Mortgage Bonds. See " Debenture Bond." 
 
 Debenture Shares (or Stock). The English equivalent of the
 
 MONEY AND INVESTMENTS 121 
 
 American term "debenture" or "debenture bonds," except 
 that in Great Britain such a security is generally secured by 
 a mortgage or by the hypothecation of specific securities. 
 This, however, is not always the case, and when not so, it as- 
 sumes more the form of our American " debenture." The En- 
 glish " debentures " rank ahead of the " preference " and 
 " ordinary shares." Gabbott * says that " Debenture stock is 
 the absorption of mortgage debts; it is the first charge on a 
 company. The interest is at a fixed rate, and the claims on 
 a company as binding as a mortgage." (" Irredeemable 
 Debentures " may be read in this connection.) 
 
 Debit. To make a charge against; to charge a person with 
 goods sold. In bookkeeping the debit side of an account is 
 that on which is entered the charge for money or its equivalent 
 delivered; for instance, if A owes B $15 it would stand on 
 the debit (left-hand) side of B's books as a charge against A. 
 
 Debtee. One to whom a debt is due; a creditor. 
 
 Debtor. A person who owes another either money or its 
 equivalent. A person running an account at a grocery store 
 becomes its debtor for the amount owed. An insolvent debtor 
 is one who has not sufficient money or property to pay all 
 debts. 
 
 Debtor Bank. See " Clearing-House." 
 
 Debt Per Capita. On June 30, 1906, the per capita debt of 
 the United States was $11.41. 
 
 Deed. A document in writing (generally a printed form to 
 be filled out in writing is used) rendered authentic by the seal 
 of the party whose intention it is supposed to declare; in 
 practice, a document used for the purpose of transferring the 
 title of real property from one to another. In law a " deed " 
 is any instrument bearing a seal. 
 
 " Deeds " conveying real estate are commonly of two kinds. 
 First, a " quit-claim deed," by which the one giving it in no 
 way holds himself responsible for any defects in the title; 
 that is to say, he merely transfers his own rights and interests 
 therein, whatever they may be, and if the title is imperfect 
 the one accepting the deed can recover nothing. Second, a 
 " warranty deed." This differs from the last named in the 
 party giving the deed guaranteeing the property conveyed 
 to be free from any defects of title, and under this the acceptor 
 of the deed is entitled to recover should a defect subsequently 
 be discovered. 
 
 Deed of Trust. See " Trust Deed." 
 
 Defaced Coin. Metallic money which has been tampered 
 with; cut, stamped, injured, or changed in any way. 
 
 1 " How to Invest Money," E. R. Gabbott.
 
 122 MONEY AND INVESTMENTS 
 
 b 
 
 Default. A failure to meet an obligation or promise. If, 
 at the time due the interest upon a bond is not paid it is said 
 to be in " default." 
 
 Defaulted Bonds. See last subject. 
 
 Deferred Annuity. A fixed sum of money payable yearly, 
 but the payment of which does not begin until the expiration 
 of a certain time or after the happening of some event, as the 
 death of a person. 
 
 Deferred Bonds. The holder of such a security receives a 
 gradually increasing rate of interest up to a fixed rate, after 
 which time the rate of interest is supposed to be uniform. 
 Or bonds upon which the interest is deferred until some 
 future date. 
 
 Deferred Dividend. By reading " deferred stock " one 
 meaning of this may be found. Life insurance companies 
 term " deferred dividends " those which are not distributed 
 among the policy-holders yearly, but retained by the com- 
 pany and paid to the holders at greater intervals, say twenty 
 years. (See " Tontine Insurance.") 
 
 Deferred Ordinary Shares (or Stock). The English equiva- 
 lent of the American term " common stock," but only a 
 certain part of such issue. (See " Preferred Shares.") 
 
 Deferred Shares (or Stock). Shares in a corporation, the 
 holder of which is not entitled to receive dividends until the 
 expiration of a fixed time or until some specific event has 
 taken place. (For an explanation of the English use of this 
 term see " Preferred Shares.") 
 
 Deficit. When the losses of a business are greater than the 
 gain or profit, or when an industry costs more to operate than 
 its receipts, it is said to have made a " deficit." To say a 
 business has " earned a deficit " simply means that it has been 
 run at a loss. 
 
 Del Credere. A commission charged by a broker or factor 
 who guarantees the solvency of the customer for whom he 
 transacts business. Also the obligation itself so incurred. 
 
 Delinquent Tax Certificates. These were formerly a not 
 uncommon form of investment in the West, as well as in some 
 other sections of the country, but their desirability is ques- 
 tionable, as there are many objections. It may be a long term 
 of years, according to the State in which the property is 
 located, before one may know, without question, as to the 
 actual outcome, and the money may be, therefore, tied up for 
 that length of time. There is also a possibility of a law suit 
 to defend the title. The rates of interest are usually very high, 
 but should be in order to offset the bother and uncertainty 
 incident to an investment of this class. The laws relating to
 
 MONEY AND INVESTMENTS 123 
 
 tax certificates vary greatly in the different States, but some 
 idea of their general characteristics may be obtained by using 
 two Western States as examples. 
 
 Colorado. Tax certificates are issued by the County Treas- 
 urer for lands sold for unpaid taxes. They are a first lien on 
 the property, but the land may be redeemed from the lien at 
 any time within three years after the date of sale or thereafter 
 at any time before the execution of the deed to the purchaser. 
 To effect such redemption the owner of the land must pay the 
 County Treasurer for the benefit of the holder of the tax 
 certificate the amount for which the land was sold, with 
 interest thereon from the date of sale at the rate per cent, per 
 annum bid by the purchaser at such sale not to exceed the 
 rate of 24% per annum for the first six months, 18% per 
 annum for the subsequent six months and the remaining 
 period the rate of 12% per annum, together with the amount 
 of all taxes accruing on such real estate after the sale paid 
 by the purchaser and indorsed on his certificate of purchase 
 with the interest thereon at the rate of 12% per annum, 
 provided, that from the time when the purchaser is entitled 
 to a deed such taxes shall bear interest at 8% per annum 
 and no more up to the time of applying for such deed. If no 
 redemption is made within the three years the holder of the 
 tax certificate is entitled to a treasurer's tax deed upon 
 giving certain notices. This deed cannot be attacked in court 
 for irregularities after five years after the execution and 
 delivery thereof, except the owner be a minor, or insane, or 
 an idiot residing in the United States, in which case he shall 
 have a year after disability is removed to bring such action. 
 
 Such tax certificates are assignable by indorsement. 
 
 Wyoming. Redemption may be made in three years after 
 sale by payment of amount of sale and 15% on same, with 
 10% interest per annum on whole amount and subsequent 
 taxes, and 10% per annum thereon. Tax deed in three years. 
 
 Deliveries. Deliveries of securities upon the New York 
 Stock Exchange must be made not later than 2.15 P. M. on 
 the day sold, if for " cash " or if sold in the " regular way " 
 then before 2.15 P. M. on the following business day. On 
 half-holidays which the exchange observes, cash sales require 
 delivery not later than 11.30 A. M. 
 
 In case of failure to make deliveries as above, the un- 
 delivered portion may be bought in " under the rule." (See 
 the various subjects quoted; also " Bids and Offers " and 
 " Transfer in Blank.") If delivery is offered after hours the 
 buyer may refuse it until the following business day, but the 
 seller has no right to demand interest for the extended time. 
 
 Delivery Day. Among those trading in grain, for future 
 delivery, the first trading or business day of the month is so
 
 124 MONEY AND INVESTMENTS 
 
 known. The " seller's option " feature, however, permits of 
 delivery on any business day of the month for which the sale 
 was made. All contracts for future delivery are " seller's 
 option " (see that subject). 
 
 Delivery Price. See " Stock Exchange Clearing-House." 
 
 Demand Bills. Bills of exchange (see "Exchange") pay- 
 able on demand; on presentation. Practically the same as a 
 " sight bill." For exception see that subject. 
 
 Demand Collateral Paper. See " Collateral." 
 
 Demand Draft. See " Draft." 
 
 Demand Exchange. See " Demand Bills." 
 
 Demand Loan. A form of note or promise to pay, the 
 borrower having the right to pay off the loan at any time 
 presumably not the same day it is made and likewise the 
 lender the right to demand payment, Sundays and legal 
 holidays being excepted in each case. 
 
 In New York the custom prevails for parties to demand 
 loans either wishing to make or receive payment, to give notice 
 to that effect before one o'clock p. M., and for payment to be 
 made before 2.15 P. M. that same day. It is not customary to 
 call loans there on Saturday, Friday loans carrying over until 
 Monday. In that State any rate of interest is permitted on 
 collateral call loans of $5,000 or upwards. 
 
 Unless written otherwise in the note, a " demand note " 
 bears legal interest after demand for payment has been made; 
 it is payable on presentation without " grace." The laws 
 differ in various States as to the length of time an indorser is 
 held on a " demand note," but generally for a limited time only. 
 
 Rate of interest may be stated in a note of this nature, but 
 it is quite customary for borrowers of " call money " (as it is 
 otherwise known) to have no stipulated agreement as to the 
 rate with the lender, his charge for interest varying from 
 time to time in accordance with the money market. In case 
 of any change it is customary for the holder of the note to 
 notify the borrower of the rise or fall of interest upon the 
 loan; such action being referred to as " marking up rates," 
 or " marking down rates." At times the rate of interest may 
 seem excessive to the borrowing party and he may prefer to 
 exercise his right to pay the loan off, either with cash on hand 
 or by borrowing elsewhere. In the latter event, it is known 
 as " shifting loans." 
 
 " Demand," or as they are more commonly termed, " call 
 loans," are at present mostly made by bankers and brokers 
 borrowing on collateral securities, and are not so much in 
 vogue among other classes of borrowers. 1 
 
 1 Conant, Bolles, and others, raise the question as to whether, in times 
 when banks may suddenly be called upon to return large amounts of money
 
 MONEY AND INVESTMENTS 125 
 
 Demand Sterling. Demand exchange on London. (See 
 " Exchange.") 
 
 Demurrage. When any vehicle of transportation, such as a 
 car or vessel, is detained beyond the time allowed, either for 
 loading or unloading, a per diem charge called " demurrage " 
 is made. 
 
 Denationalizing the Currency. If the Government should 
 withdraw its issue of " greenbacks " and place the issuing of 
 paper money more in the control of the banks, that would be 
 a step toward " denationalizing the " currency." 
 
 Denomination. The face value of a bond. Most bonds are 
 issued in the " denomination " of $1,000, although the $500 
 and $100 " denominations " are not uncommon, and bonds 
 of almost every conceivable " denomination " have been 
 placed upon the market from 50 cents up to $1,000 and oc- 
 casionally for a greater sum than the last named; especially 
 is this so in the case of registered bonds. Our Government 
 bonds are sometimes issued in $50,000 pieces. 
 
 Deposit. The person who places money or titles to 
 money securities, or anything of value, in the safe-keeping 
 of a bank, other corporation, or individual, makes a " deposit," 
 and in the act of so doing he " deposits." 
 
 Some essential points regarding making deposits in a bank 
 or trust company should be referred to. In the first place, in 
 sending by mail, write a full description of the checks, etc., 
 enclosed; that is, the amount of each and the banks upon 
 which they are drawn, and, if money is sent, describe it in 
 detail. Keep a copy of the letter. 
 
 If a deposit is made directly at the institution, a deposit 
 slip or ticket may be obtained, and the blanks should be filled 
 out giving the same general information as suggested above. 
 In the case of a deposit of coupons, envelopes to contain them 
 
 to their depositors, " call loans " on collateral security are as available as 
 quick assets as what is termed " commercial paper." The banker or broker 
 depends very much upon the sale of the security behind his loan for the 
 ultimate payment of the same, and in times of great financial distress it 
 may be very difficult to realize on anything but the very highest grade stocks 
 and bonds, and not always upon them. An instance pertinent to this ques- 
 tion arose during the financial troubles of '93. A national bank suddenly 
 Called upon a banker for the repayment of a large " call loan " which he 
 had been carrying with the institution. He confessed his utter inability 
 to pay it. The cashier threatened him with the sale of his collateral if pay- 
 ment were not immediately forthcoming, to which the banker very honestly 
 made the following reply: " Very good, I shall be delighted to have you 
 effect the sale of the same, and will gladly pay you a commission for so 
 doing. I have been using every effort to sell the securities myself for a 
 week without success." The banker truly represented the conditions at 
 the time, and it is needless to say that no further pressure was brought 
 upon him for the repayment of his loan. The bank was obliged to obtain 
 money from other sources.
 
 126 MONEY AND INVESTMENTS 
 
 will usually be furnished by the bank, with printed blanks 
 upon the outside to be filled in by the depositor, and the 
 amount as shown by the envelopes entered upon the deposit 
 ticket. 
 
 A word in regard to indorsing checks for deposit. The 
 simplest form to follow is: " Pay to the order of the Ninth 
 National Bank of Portland " (for example) and then the 
 depositor signing his name immediately below. (For further 
 information upon this subject see " Indorse " and " How to 
 Open a Savings Bank Account.") 
 
 This subject needs no further treatment, except to remind 
 those carrying a deposit " subject to check " that they are 
 prone to consider all checks and other items which they may 
 deposit in their bank as cash, and proceed at once to check 
 against them. As a matter of fact, although banks make a 
 habit of crediting checks at once to the depositor, they may 
 not themselves get the benefit of the money for some days, 
 and, to that extent, the depositor obtains previous use of 
 the money. Suppose, however, some of these checks or other 
 items which may have been immediately credited to his 
 account are uncollectable by the bank. They will be returned 
 and charged against the depositor's account; and so it is a 
 thing to bear in mind on the part of those who may be checking 
 their accounts down to the low point, that occasionally some 
 check, etc., may be returned unpaid, and an " overdraft " 
 possibly result. 
 
 Deposit Book. See " Bank-Book." 
 
 Deposit Certificate of. See " Certificate of Deposit." 
 
 Depositor. One who places money in a bank; that is, makes 
 a deposit, is the usual meaning in banking affairs; but a 
 depositor may be one who commits securities, valuable papers, 
 or anything, to the care of another. 
 
 Depository of Public Moneys. See " United States De- 
 pository." 
 
 Deposits (" Bank Statement "). Deposits as referred to 
 under " Bank Statement " are somewhat difficult to define 
 from the fact that money itself to the full amount of the de- 
 posits is not necessarily understood, for the reason that a 
 man with a deposit of $50,000 may borrow from the same 
 bank $25,000, which, instead of being paid to him in cash, will 
 be credited to his account, swelling it to $75,000. One-third 
 of this amount, therefore, certainly is not cash, and the 
 increase in the deposit does not increase the bank's money 
 holdings. This explains why an increase in deposits follows 
 an expansion of loans. Such matters are all based on credit 
 and a due appreciation of its importance in connection with
 
 MONEY AND INVESTMENTS 127 
 
 financial and business affairs should be kept constantly in 
 mind. 
 
 The deposits of the associated banks of New York are 
 divided so as to show separately the amount to the credit of 
 the Government, and is itemized as " United States Deposits " 
 (for an understanding of which turn to " United States De- 
 pository "), and enables one to estimate the "reserve" re- 
 quirements, as explained under the subject " Reserve." 
 
 When not divided as above " deposits " would include 
 .everything to the credit (less debits) of individuals, firms, 
 corporations, other banks, and the Government; in fact 
 everything to the credit of others, and which may be with- 
 drawn. 
 
 Deposit Ticket or Slip. Blanks provided by banks and filled 
 out by those wishing to make deposits subject to check. The 
 depositor writes in his name, date, amount of deposit; giving 
 a list of the kind of money, checks, etc., deposited. This is 
 handed, or sent, to the bank with the deposit and bank-book. 
 
 Depreciated Currency. When it takes more than a like 
 amount, face value, of any kind of money to have the same 
 purchasing power as gold coin, the former is a " depreciated 
 currency." The paper money of the Confederate States had 
 greatly depreciated towards the end of the Civil War. 
 
 Depreciation. In making up a statement of earnings of a 
 business or corporation it is very easy to deceive oneself by 
 not taking into proper consideration the falling off in value 
 of the property on account of the wear and tear; machinery 
 becoming antiquated; reduction of the life of the property, 
 as in the case of a mine, etc. In examining the statement of 
 earnings furnished by a company in which a person is con- 
 sidering investing money this matter of " depreciation " 
 should be seriously considered. It differs, of course, in dif- 
 ferent industries, but it is safe to say that the depreciation in 
 what is called an industrial property is considerable. Some 
 manufacturing concerns make a point to set aside each year 
 from their profits a sum equal to 10% of the cost value of all 
 the machinery and 6% of the cost value of the buildings. 
 The question of charging off real estate depends upon the 
 location, etc. In street railways the depreciation is very 
 large. This does not appear at first, and in new roads the net 
 earnings are given as much larger than they will appear later 
 on unless there is an increase in business. The wear and tear 
 to electric plants is considerable. In many classes of business 
 which have been running years, so that the depreciation is 
 constantly apparent, calling for repairs to the machinery, 
 etc., it may be a sufficient safeguard to charge all such repairs, 
 replacements and the like to operating expenses and create
 
 128 MONEY AND INVESTMENTS 
 
 no special fund to cover it, but it must be certain that such 
 repairs and replacements are equal to the actual depreciation. 
 If some method is not adopted to set aside from earnings each 
 year a sum to offset the depreciation of the property, the 
 share and bondholders of such a corporation will eventually 
 find that they have had their investment gradually returned 
 to them in the shape of dividends and interest, representing 
 a piecemeal payment of their principal sum rather than 
 actual profits of the corporation. Bear in mind that it is 
 always easy for any corporation, by a method of bookkeeping, 
 to show fictitious earnings, and it is to safeguard this very 
 thing that a competent " expert accountant " should, in the 
 majority of cases, verify the earnings of a corporation before 
 the investor may safely purchase its securities. 
 
 A distinction is made between " depreciation " and loss 
 resulting from " wear and tear," on the ground that no 
 matter if a plant is continually kept in the most thorough repair, 
 the time is bound to come when, on account of newer mechan- 
 ical devices and inventions, it will have to sooner or later be 
 entirely replaced. A piece of machinery, even in the best of 
 repair, may be suddenly thrown out and replaced by a different 
 one. The former is but little more than old junk; the cost of 
 the new is what must be provided for by a " depreciation 
 account." 
 
 Greene 1 in reference to the depreciation of street railway 
 property declares that " In the cases of companies freshly 
 established and operating in large cities, it may be assumed, 
 for the purpose of a rough calculation, that the roadbed will 
 require a complete renewal in ten or twelve years, the overhead 
 construction (if the trolley is used) within fifteen years, the 
 electric station and buildings in from twenty-five to fifty years, 
 the car bodies in twelve or fifteen years, and the motor trucks 
 ten or twelve years, with the steam machinery in fifteen years. 
 These averages of life should, of course, be extended in cases 
 where circumstances would make such a test too severe, as 
 for instance, in interurban lines using the turnpikes." 
 
 Derogation. As used in relation to securities, it means a 
 subtraction from or alteration of a contract for the sale of the 
 same. 
 
 Destroyed Securities. See " Care of Securities " and 
 " Bond of Indemnity." 
 
 Detroit United. Detroit United Railway Co. (Street Rail- 
 way.) 
 
 Differential. A rate less than the regular or tariff rate 
 allowed to a road disadvantageously situated, by a competitor 
 in order to equalize conditions and avoid rate wars. 
 
 1 Corporation Finance.
 
 MONEY AND INVESTMENTS 129 
 
 Digested Securities. See " Undigested Securities." 
 
 Dime. A small silver coin of the United States of the value 
 of one-tenth of a dollar, or ten cents, containing 34.722 grains 
 of fine silver, and 3.858 of alloy. Legal tender in amounts 
 not exceeding $10. 
 
 Dinar. The monetary unit of Servia, the same as that of 
 the " Latin Union," and equivalent to $0.193 United States 
 money. 
 
 Direct Exchange. " Exchange " between points in two 
 different countries (or two points in the same country) without 
 the intervention of a third, as in the case of " triangular 
 operation." 
 
 Direct Obligation. The obligation to pay on the part of the 
 person, corporation, etc., named. As an example, take the 
 Baltimore & Ohio R. R. Co., Southwestern Division bonds. 
 These are really a first mortgage upon certain portions of the 
 railroad property, but, in case of financial disaster to the road, 
 if there were not sufficient value in such property as the mort- 
 gage covers, the Baltimore & Ohio R. R. Co. itself would be 
 responsible for the payment of the difference. Again, if the 
 earnings of the property covered by the mortgage are not 
 sufficient to protect the interest and principal of the bonds, as 
 due, the Baltimore & Ohio R. R. Co. is liable for any deficiency. 
 
 Dis. Short for " discount." 
 
 Disagio. See " Agio." 
 
 Discharge of Mortgage. See " Release of Mortgage." 
 
 Discount. The percentage or price of a security below its 
 par or face value. Taking the face value as $100, a share of 
 stock selling at 95 would be selling at 5%, or $5 per share, 
 " discount." The par value of various securities differs, 
 however (see " Par "), therefore, it does not argue that be- 
 cause a share of stock is quoted at 95 it is selling at a " dis- 
 count," for, if by chance the face value of that share happens 
 to be $50, it would really be selling not at a " discount," but 
 at a premium of 90%. There are exceptions to this, however, 
 for which see reference to stock exchange rules under 
 " Par." 
 
 For another meaning of " discount," see " Disagio," as 
 described under " Agio." 
 
 Paper money is at a " discount " when, in order to obtain 
 one dollar in gold, it is necessary to give more than one dollar 
 in paper money. During war times, in the early '60's, it took 
 $1.25 in paper money to obtain $1.00 in gold. 
 
 A note is " discounted " when the interest upon the same 
 is deducted by the lender from the amount loaned; that is, 
 the borrower pays the interest in advance. This amount of
 
 130 MONEY AND INVESTMENTS 
 
 interest retained by the lender is called the " discount," or 
 " bank discount." The amount of money which the lender 
 obtains, that is, the face of the note less the " discount," is 
 called the " proceeds," or " net avails." 
 
 By this method, he does not receive a sum of money equal to 
 the face of the note, because the lender has deducted the 
 interest. There is another plan which may be best explained 
 by an example: Carlton wishes to borrow $10,000 for six 
 months at his bank; he wishes the full amount. The bank 
 proceeds in this way: Interest is figured on the $10,000 
 for six months at the agreed rate, say 5% per annum. This 
 would amount to $300. Then the interest for the same length 
 of time is figured again at the same rate on $300, amounting 
 to $9. These two interest amounts are added to the $10,000, 
 equalling $10,309. The borrower signs a note for that amount 
 and in return receives $10,000. When the note becomes due, 
 he pays $10,309. Therefore, the amount of " discount," or 
 interest deducted by the bank, amounts to $309. 
 
 There is another method of figuring this, which is more 
 favourable to the borrower than the above. It is to find the 
 interest, i. e. the " discount," on $1 for the time and rate, 
 which, in this case would be 2 cents. Deducting this from 
 $1 you get $.975 as the " proceeds " of $1 after deducting 
 the " discount." As $10,000 is the amount of money which 
 Carlton desires, you divide $10,000 by $.975, the " proceeds " 
 of $1, and get a result of $10,256.41, which is the amount 
 discounted at 5% for six months, which will produce $10,000, 
 the required amount. It will be seen that this method favours 
 the borrower to the extent of $52.59 in this particular 
 case. 
 
 Another question which often arises having a bearing upon 
 this subject is best explained by an example: Wilson holds 
 a ninety-day note for $1,000, dated June 5th, " with interest " 
 at 5%; namely, interest payable at maturity, not deducted, 
 as in the case of " discount." On August 5th he has sudden 
 call for the money and goes to his bank and " discounts " 
 the note for the balance of the time which it has to run. 
 The " proceeds " is figured after this fashion: Wilson is 
 entitled to the interest on the note for the time he has held it, 
 which fact must not be lost sight of. The face of this note 
 then is really $1,000, plus the amount of interest from date 
 of issue to date of maturity; that is, ninety days, which at 
 5% would be $12.33 (New York method see "Interest"), 
 making a total face, for the purpose of figuring the discount, 
 of $1,012.33. It is now necessary to ascertain when the note 
 matures. If it had read due in " three months after date," 
 September 5th would have been the date of maturity, but as 
 it is due " ninety days after date " you proceed in this way:
 
 MONEY AND INVESTMENTS 131 
 
 90 days from June 5th, -f- 5 90 = 95 
 Less days in June 30 
 
 65 
 " " " July 31 
 
 34 
 
 " " " August 31 
 
 " " " 
 
 September 
 
 making the note due September 3d and not the 5th, as would 
 have been the case had the note read due in " three months 
 after date." Note this distinction, as it is continually arising. 
 The note, therefore, matures September 3d. " Discount " 
 must be figured, then, from August 5th to September 3d, as 
 follows: 
 
 Number of days in August = 31 
 Less days passed in August 5 
 
 26 
 Add number of days in Sept. 3 
 
 29 
 
 The " discount " will be figured on $1,012.33 at 5% for 
 twenty-nine days, which amounts to $3.97. Wilson will 
 receive, therefore, $1,012.33 less this last amount, or $1,008.36. 
 The main point here is that to figure the " discount " on a 
 note after its date and during its life, which note was made 
 payable " with interest," the amount of interest is added to 
 the face of the note and upon that sum the " discount " is 
 figured for the unmatured time. 
 
 In Great Britain and Continental Europe, the term " dis- 
 count " is very generally used as the equivalent of our " time 
 money." 
 
 (See " Bank Discount " and " True Discount.") 
 
 Many things are " discounted " in the stock market and in 
 general business-dealings. When something expected to take 
 place in the future is reckoned upon in advance, and acted 
 upon accordingly, the event is " discounted." As an example: 
 Suppose, previous to a presidential election, stocks are selling 
 at comparatively low figures, and it is thought that the election 
 of a certain one of the candidates would be beneficial to general 
 prosperity, and that if such an election should be realized 
 stocks would consequently advance in price. This fact is 
 " discounted " when the belief of the election is so certain 
 that the advance in stocks takes place some time previous to 
 the actual election. 
 
 Discount Clerk. A clerk only especially employed by the
 
 132 MONEY AND INVESTMENTS 
 
 larger banking institutions. He attends to all " discounted " 
 paper; figures and makes payment to the borrower after 
 acceptance by the bank; keeps record of bills receivable; 
 is the custodian of the same, and obtains and keeps track of 
 much information very necessary to the officers of a bank in 
 relation to its loans. 
 
 Discount Day. Some stated day of the week upon which 
 a bank " discounts " bills or notes. 
 
 Discounted. In the sense of anticipating an event. (See 
 last paragraph of " Discount.") 
 
 Discount Rate. (First read " Discount.") The " dis- 
 count rate " or the rate of discount is the rate of interest 
 deducted in advance from the face of a promissory note. In 
 other words, if the " discount rate " is 5%, the face of the 
 note $1,000, the time which it has to run six months, 2%, 
 or $25, is deducted from the face of the note, the bearer re- 
 ceiving, therefore, but $975. When the loan matures, how- 
 ever, $1,000 must be repaid. 
 
 Discount Rates. The rates at which first-class paper is 
 being " discounted." (See " Discount " and " Bank of 
 England Discount Rate.") 
 
 Discretionary Accounts. Accounts in which the buying and 
 selling, the price, and the choice of the stock are left entirely 
 to the broker. Beware of them! Look out for advertisements 
 of such! They ask the gullible public to send in its money; 
 that the advertisers know just what the market is going to do, 
 and if money is sent to them and left entirely to their dis- 
 cretion as to its expenditure, untold wealth will roll in to the 
 senders. 
 
 The quickest way to force the utter absurdity of such 
 statements upon the minds of those who are hunting for op- 
 portunities to separate themselves with great rapidity from 
 their money, is to make known the fact that no stock exchange 
 member is allowed to advertise the taking of such accounts. 
 
 Discretionary Order. The nature of such an order is ex- 
 plained by the last subject. One given a legitimate broker is 
 usually, and always should be, accepted with hesitation. 
 It is not good policy to either give or receive " discretionary 
 orders " as it places too much responsibility upon the broker. 
 
 Discretionary Pool. For all practical purposes the same 
 thing as a " blind pool; " at least, the one in control is allowed 
 entire freedom to do as he sees fit with the interests of all. 
 
 Dishonour. A failure to pay as agreed; a refusal to accept 
 a draft or a bill of exchange. 
 
 Dishonour, Notice of. See " Notice of Dishonour." 
 
 Distillers. Distiller Securities Corporation.
 
 MONEY AND INVESTMENTS 133 
 
 District of Columbia Bonds. The bonds of the District of 
 Columbia bear 3.65%, for the payment of which principal 
 and interest taxes are levied upon the property within said 
 District. But the faith of the United States is also pledged 
 for the payment of these securities, so they are considered 
 United States Government bonds. 
 
 Div. Division or dividend. 
 
 Dividend. This is the proportion of the earnings of a cor- 
 poration received by the owners of its stock, and represents 
 to them their profits in the enterprise. These profits are dis- 
 tributed in proportion to the par value of the stock. Suppose 
 that a corporation with $100,000 capital enjoyed prosperous 
 business and at the end of six months or a year had earned 
 $15,000 in the way of profits. The directors of the corporation 
 meet and decide that they will divide among the stockholders 
 $10,000. Each holder of one share of stock (supposing the 
 par value of such share to be $100) receives $10, which would 
 be called a " dividend of 10%; " this would leave $5,000 still 
 in the business of the corporation, which it had not divided 
 among the stockholders. This could be treated in two ways; 
 left on the books as " undivided profits," that is, profits which 
 might be divided at some later time, or even possibly the 
 following year, provided the earnings of that year did not come 
 up to the expectations; or it could be treated as a surplus fund 
 and called " surplus." 
 
 By this latter method it would be almost equivalent to an 
 increase in the capital stock, and would represent, in this 
 case, 5% of such capital; each owner, therefore, would have 
 the right to value his stock for that much more accordingly. 
 Of course, the distinction between " undivided profits " and 
 " surplus " is largely a matter of bookkeeping, but when put 
 under the latter heading it gives rather a better impression, 
 and lets the corporation enjoy a somewhat better standing 
 than as if classed under " undivided profits; " for under the 
 heading of " surplus " it indicates to the public at large an 
 inclination on the part of the corporation to build up its 
 capital rather than to divide up all its earnings. 
 
 When the creditors of a bankrupt receive payments they 
 are called " dividends; " payments made from time to time 
 to the depositors of a bank in liquidation, or to the share- 
 holders of the same, are " dividends." There are a great 
 many applications of this word. 
 
 The " dividends " of the earnings of any corporation are 
 usually declared or paid at stated intervals; for instance, the 
 first of January and the first of July of each year. If no 
 " dividend " should be declared during the July period, 
 with no intent of declaring any before the next fixed date,
 
 134 
 
 which would be January, the July " dividend " would be 
 said to have been " passed," or in other words, the company 
 had " passed its dividend." 
 
 Unless otherwise stated by the corporation declaring it, a 
 dividend is presumed to be and should be paid from net 
 earnings or profits. 
 
 Dividend Balance. The earnings of. a corporation after de- 
 ducting operating expenses of every kind, taxes, insurance, 
 any expenditures charged against operating, interest on float- 
 ing and bonded debt, and amount set aside for sinking fund. 
 In other words, the earnings of a corporation which are avail- 
 able for dividends. 
 
 Dividend, Extra. The majority of corporations have estab- 
 lished fixed rates of dividends upon their stocks. These are 
 known as " regular dividends." Anything over and above 
 this rate may be styled an " extra dividend." 
 
 Dividend in Liquidation. When a business or industry of 
 any kind is being wound up, closed out, " liquidated," and 
 money paid from time to time to those to whom it is due, 
 the creditors, stockholders, owners of the business, depositors 
 (in case of a bank), etc., these payments are called " divi- 
 dends in (process of) liquidation." 
 
 Dividend Off. The sale of a stock with the agreement 
 that the dividend about to be paid shall not go to the buyer; 
 or that the buyer of a stock is not entitled to the next dividend 
 paid. 
 
 When a company declares a dividend, it usually fixes a day 
 upon which its transfer books shall be closed. From this 
 time, until the books are again opened, no transfers can be 
 effected. (See " Books Close.") 
 
 Dividend On. The sale of a stock with the agreement that 
 the dividend about to be paid shall go to the buyer; or that 
 the buyer of a stock is entitled to the next dividend paid. 
 
 Dividend, Stock. See " Stock Dividend." 
 
 Dividend Warrant. An order for the payment of a dividend 
 to a shareholder is what is commonly understood, although 
 there have been other applications of the term. In England 
 a " dividend warrant " is a check for the payment of the 
 dividend. 
 
 Divisional (or Division) Bond. A railway issue secured by 
 a mortgage upon a division and not upon the entire property, 
 but, as a rule, the direct obligation of the railway company 
 itself. A " divisional bond," however, may cover a property 
 afterwards taken into a consolidation. In that sense the 
 term is merely used to distinguish such a bond issue from one 
 upon the consolidated property, and would not, in that case,
 
 MONEY AND INVESTMENTS 135 
 
 probably bear the promise to pay of the latter. (See " Con- 
 solidated Mortgage Bond.") A " divisional bond " may bear 
 the guaranty of the parent company, but an investor should 
 not allow himself to feel secure merely on that alone, but 
 should always consider the actual value of the property 
 mortgaged; in other words, should judge the " divisional 
 bond " purely upon its own merits, irrespective of the guar- 
 anty. Should the " division " not prove valuable to the 
 main line, the guaranty might turn out to be worthless when 
 demand for payment should be made of the " parent com- 
 pany " as has frequently proved to be the case. 
 
 Divisional Mortgage. See last subject. 
 
 Dls. The sign adopted in Mexico for our American " dollar." 
 
 D. M. J. S. December, March, June, and September; 
 interest or dividends payable quarterly beginning with 
 December. 
 
 Documentary Acceptances. See " Acceptance " and " Doc- 
 umentary Bill. 
 
 Documentary (or Documental) Bill. A " bill of exchange " 
 (to which refer) accompanied by a " bill of lading," insurance 
 policy, and invoice covering the shipment of goods, and which 
 papers show the security which is behind the bill of exchange. 
 In the case of a shipment of cotton or grain, certificates of 
 inspection may be among the papers. (See " Documentary 
 Commercial Bill.") 
 
 Documentary Commercial Bill. Some financiers distinguish 
 between this subject and a " documentary bill " (to which 
 refer) by considering the former as being used in case of a 
 shipment of merchandise, manufacture, or produce, and the 
 latter in the event of other property, such, for example, as 
 securities; but custom would seem to designate a bill drawn 
 against the shipment of stocks, bonds, etc., as a " security 
 bill." " Documentary bills " of all kinds and " documentary 
 commercial bills " are usually classed under the one heading 
 of " Documentary Bills." 
 
 Documentary Rates. The rates of " exchange " charged 
 by exchange dealers for " commercial " and " banker's bills." 
 (See subjects in quotations.) 
 
 Documents. Papers accompanying a bill of exchange 
 against a shipment of merchandise, and include, usually, the 
 invoice, insurance certificate, and bill of lading. All or any 
 of the following may also be included: certificate of in- 
 spection, certificate of origin, consular certificate, and letter 
 of hypothecation. 
 
 Documents for Acceptance. Used in connection with the 
 " documentary bill " of exchange, indicating that the bill
 
 136 MONEY AND INVESTMENTS 
 
 of lading, etc., must be delivered immediately upon the 
 " acceptance " of the draft, by which it is understood that 
 the " acceptor " will pay the draft when due. 
 
 Documents for Payment. Used in connection with the 
 " documentary bill " of exchange, indicating that the bill of 
 lading, etc., must not be delivered until after the payment 
 of the draft. 
 
 Dollar. This is the unit of value not only of the United 
 States, but of several other countries. 
 
 The United States " dollar " * must contain 25.8 grains of 
 standard gold, .900 fine; the amount of fine goldlDeing 23.22 
 grains, the remainder of the weight being an alloy of copper. 
 Although the gold dollar is actually the unit and standard of 
 value, its coinage was discontinued under authority of the 
 Act of September 26, 1890, and the only coined dollar which 
 we have in general circulation at present is of silver, con- 
 taing 412 grains of standard silver, .900 fine, or 371 grains 
 of fine silver, the balance, 41 grains, being a copper alloy. 
 
 The dollar of British Honduras, Liberia, and Columbia is 
 of equal value to our own; that of the British possessions in 
 North America, except Newfoundland, the same, the latter 
 being equal to $1.014 United States money. In Hong-Kong 
 there are various dollars in circulation, the Hong-Kong 
 dollar, so called, and the British dollar, both equal April 1, 
 1906 to $.515; also Mexican dollars, equal to $0.519 United 
 States money. These being silver dollars, however, their 
 value in our coinage fluctuates with the market price of 
 silver. 
 
 Dollar Bond. Read " Dollar Stock," substituting " bond " 
 for " stock." 
 
 Dollar Credits. (See " Circular Letter of Credit.") 
 " Credits " for use in countries where the dollar is the mone- 
 tary unit. 
 
 Dollar Exchange. " Exchange " drawn payable in dollars. 
 
 Dollar Stock. The English term for a stock of a face value 
 of so many dollars, American stocks, distinguished from 
 stocks representing " pounds sterling," etc. 
 
 Domestic Exchange. (See " Exchange.") Quotations of 
 " domestic exchange " are almost always in cents per $1,000. 
 " New York exchange at Chicago 40 c. premium " indicates 
 that $1,000 in New York exchange will cost $1,000.40 at 
 Chicago. Sometimes quotations are in cents per $100, as in 
 case of exchange between New York and San Francisco. 
 
 1 Thomas Jefferson is responsible for the selection of the " dollar " as 
 our unit; in fact, for our present system of coinage which succeeded the 
 English pounds, shillings, etc. See Life of Thomas Jefferson by John 
 T. Morse, Jr.
 
 MONEY AND INVESTMENTS 137 
 
 Domestic Traveler's Letters of Credit. See " Letter of 
 
 Credit." 
 
 Domiliciated. Any instrument, such as a note or draft, 
 which calls for payment at some distant point from that in 
 which it is drawn, is said to be " domiciliated " in its place 
 of payment. 
 
 Double-Eagle. The twenty dollar gold coin of the United 
 States, containing 464.40 grains of fine gold, and 51.60 grains 
 of alloy. Ending June 30, 1904, these had been coined to the 
 amount of $1,850,281,960. 
 
 Double Entry Bookkeeping. By " double entry " the ledger 
 accounts show at least two entries, one to the debit side of 
 some account and the other to the credit of some other ac- 
 count. In other words, the accounts are of two kinds, per- 
 sonal accounts with the parties with whom transactions are 
 had, and book accounts, in which the commodities or securi- 
 ties dealt in are made the subjects of separate accounts, and 
 these have a credit and debit side, as in the case of the personal 
 accounts. 
 
 A greater number of books is required by this system than 
 by " single entry bookkeeping " (to which subject refer), but 
 they may vary, according to the custom of the individual 
 bookkeeper. Such books are used as Stock Book, Cash Book, 
 Bill Book, Sales Book, Invoice Book, Journal and Ledger. 
 
 Double Liability. (See " Non- Assessable.") Corporations 
 in which shareholders can be lawfully held individually re- 
 sponsible, not one for the other, but equally and ratably, 
 for all obligations of the corporation, to an amount equal to 
 the face value of such shares; this in addition to the amount 
 already invested therein. The shareholders of a corporation 
 of this nature, with a capital stock of $100,000, can be held 
 liable, as above, for an additional $100,000. All our national 
 banks, except two, 1 and certain other banking institutions 
 chartered under many of the States are examples. 
 
 1 Section 5151 of the Revised Statutes of the United States in relation 
 to personal liability of shareholders reads, in part, as follows: . . . "except 
 that shareholders of any banking association now existing under State laws 
 having not less than five millions of dollars of capital actually paid in and 
 a surplus of twenty per centum on hand, both to be determined by the 
 Comptroller of the Currency, shall be liable only to the amount invested 
 in their shares; and such surplus of twenty per centum shall be kept un- 
 diminished, and be in addition to the surplus provided for in this Title." 
 
 By this it would seem that the shareholders of the American Exchange 
 National Bank and the National Bank of Commerce, both of New York 
 City, are entitled to this exemption from " double liability " as when these 
 banks were converted into national from State institutions, they met this 
 part of the requirement of the act. Nevertheless, the Congressional Globe 
 of April 26, 1864, in giving the discussion in Congress upon this act, shows 
 that Senator Sherman said that it would " exempt the Bank of Commerce 
 and no other bank."
 
 138 MONEY AND INVESTMENTS 
 
 A stockholder in an insolvent institution of this kind might 
 not be called upon for the full amount of his liability, it all 
 depending upon the magnitude of the losses of the institution. 
 Very frequently no additional sum is called for at all, but part 
 of the original investment may be returned the stockholder 
 in the shape of cash. In the former case he pays an " assess- 
 ment; " in the latter case, he receives a " dividend in liqui- 
 dation." 
 
 A recent United States Supreme Court decision is of interest 
 as touching this subject. It establishes the fact that statutes 
 of limitation by which a debtor would be cleared under State 
 laws, in a certain number of years, do not affect the liability 
 of stockholders of national banks, which are chartered under 
 federal laws. 
 
 Double-Name Paper. Same as " Two-Name Paper." 
 
 Double Option. By this is meant a " straddle," a " put of 
 more," or a " call of more," to which subjects refer. 
 
 Double Standard. This is "bimetallism" (to which refer) 
 with the free coinage part omitted. 
 
 Double Taxation. What better illustration of double taxa- 
 tion can be given than the following: 
 
 Suppose I own a hotel property in Chicago. My place of 
 residence is in some other State, where I pay taxes on my 
 personal property. For my own reasons I have chosen to 
 form a corporation for the purpose of capitalizing the property 
 at exactly its cost to me, which we will call $100,QOO. I issue 
 $50,000 in stock and $50,000 in bonds. Every one of these 
 bonds belong to me, and every share of the stock except the 
 few shares which may be required to qualify the other direct- 
 ors. To all intents and purposes I own, through the stock 
 and bonds, the entire property. Now, by the double taxation 
 method in the State in which I reside, these securities are 
 taxable. Therefore, by my ownership of the hotel property 
 being represented by stock and bonds, I am obliged to pay 
 taxes upon it in the State in which I live. I must also pay 
 taxes on the real estate itself in Chicago. Now let us suppose 
 that I had not chosen to capitalize this property, but merely 
 owned it as one owns any piece of real estate. In such an 
 event I should not be obliged to pay taxes upon it in my 
 State of residence, but only in Chicago. Does not this, al- 
 though an extreme example, set forth the injustice of double 
 taxation? It makes no difference whether one person owns 
 the entire property, or practically so, or whether it is divided 
 among numerous owners. The result would be just the same 
 if their ownership were represented in stock and bonds 
 in the one case, or by joint ownership of the real estate in 
 the other. (See " Non-Taxable Investments.")
 
 MONEY AND INVESTMENTS 139 
 
 Double Up. An example would be: First, the owner of a 
 stock sees the price decline and thinks it will go still lower; 
 he sells out; takes his loss; and goes " short " (see " Selling 
 Short ") for a like number of shares with the hope of getting 
 even again. Second, a loss is incurred; the loser speculates 
 again; this time for twice the number of shares, with the 
 hope of getting back his loss and a profit besides. 
 
 d/p. Stands for "Documents for Payment," to which 
 subject refer. 
 
 Dr. " Debit." or " Debtor." 
 
 Drachma. The monetary unit of Greece, being equal to the 
 French " franc," or $0.193 United States money. 
 
 Draft. An order in writing from one person to another to 
 pay to the order of a third person a stated sum of money. 
 The difference between a draft and a check, generally speaking, 
 is that the former is an order given by one person instructing 
 another to pay money to a third; or, in any event, it is an order 
 upon a person for money and not, usually, upon a bank, as in 
 the case of a check, the latter being an order against one's own 
 funds; a draft an order against another party for money due. 
 
 FORM OF DRAFT 
 
 Buffalo, N. Y., Jan. 1, 1907. 
 $500. 
 
 At sight Pay to the 
 
 Order of The Electric National Bank 
 
 Five Hundred T Q s g Dollars 
 
 Value received and charge the same to the account of 
 To Charles Bean : 
 
 George Adams. 
 No. 
 
 Bean owes Adams $500. Adams wants to collect the money. 
 He gives his bank a written order against Bean for the sum, 
 as in the example above. Adams, who writes the order, is 
 called the" drawer," Bean the " drawee," and the bank the 
 " payee." If, when the draft is presented to Bean for pay- 
 ment, it reading, for example, " ten days after sight," 
 he writes the word " accepted " across the face of the draft, 
 together with the date and his signature, Bean is called the 
 " acceptor." By doing this Bean has made the draft his
 
 140 MONEY AND INVESTMENTS 
 
 own written promise to pay, or practically the same as a note. 
 This is called an " acceptance." 
 
 Very frequently drafts are drawn payable to the order of 
 the " drawer." In the case above the word " myself " would 
 take the place of " Electric National Bank." Now, however, 
 as this draft has been made payable to Adams the 
 " drawer " he must indorse it before it is negotiable. 
 He may make it payable by indorsement to whomsoever he 
 pleases, and to give it the same effect as the above form, he 
 would indorse it in this manner: " Pay to the order of the 
 Electric National Bank," followed by his signature. It will 
 also be noticed that the form given is for a draft payable 
 " at sight," as explained further on. A " time draft " would 
 read, for instance, " Sixty days after date, pay to the order 
 of," etc., or " Sixty days after sight, pay to the order of," etc., 
 the latter meaning sixty days after presentation for " accept- 
 ance." 
 
 Drafts are of two kinds: " Sight " (or demand) and " time." 
 If the former, they are payable on presentation, unless 
 " grace " is allowed, when they must be presented for " accept- 
 ance." (See that subject.) If " time," they are presented 
 for " acceptance " to the party against whom drawn. A 
 notice must always be left in case of his absence. 
 
 The payment of a " draft " is regulated by the laws of the 
 State where payable. 
 
 Drafts may pass from hand to hand by indorsement, like 
 a note. (Read also " Commercial Bill.") A " bill of ex- 
 change " (which see) is often referred to as a " draft." 
 
 Drainage Bonds. In some Western States the laws provide 
 for the issuing, generally by districts territorially formed 
 for the purpose, of bonds to raise money for the proper drain- 
 age of such districts, which bonds are payable from taxes 
 levied on all the taxable property in the district. This is a 
 form of municipal bond, and they are usually known as 
 " drainage district bonds." A town, city, or county may issue 
 bonds for drainage purposes, however. 
 
 Drawee. The one against whom a " draft " (or " bill of 
 exchange ") is made; the one named in it as the party ex- 
 pected to meet its payment. 
 
 Drawer. The maker of a draft, bill of exchange, or other 
 similar paper; the one signing a paper calling for payment 
 on the part of another; the one who " draws " or requests in 
 writing the payment of money. 
 
 Drawn Bond. Drawn by lot for payment. (See " Called 
 Bonds.") 
 
 Drive. A sudden and determined effort to force prices down. 
 
 Drop. A sudden fall in prices.
 
 MONEY AND INVESTMENTS 141 
 
 Dual Monetary Unit (or Standard). See " Double Stand- 
 ard." 
 
 Ducats. Slang for " money." 
 
 " Ducat " was the name of a gold coin used at one time in 
 various European countries. Perhaps we are more familiar with 
 it as part of the old Spanish currency, as we frequently meet 
 the expression " ducats of gold " in reading of the Spanish 
 explorers. Prescott, in his " Conquest of Mexico," states that 
 the gold " ducat " at the close of the fifteenth century was 
 equivalent to $8.75 in our money, but other writers state that 
 the " ducat " as commonly in use in the different European 
 countries varied but little, being worth from $2.27 to $2.32. 
 The Century Dictionary and Encyclopedia says that the 
 " ducat " was also an Austrian weight for gold, the unit sup- 
 posed to have been derived from the Jews. Various authori- 
 ties determined it to be 3.490896 grams. 
 
 Due-Bill. A non-interest-bearing written agreement to 
 deliver the dividend on stock sold. 
 
 A written acknowledgment of indebtedness, which is neither 
 made payable to order, nor transferable by indorsement. 
 
 Guaranty issued by a bank in place of a certified check. 
 
 The Comptroller of Currency has referred to " clearing- 
 house loan certificates " as " due-bills." 
 
 Due from (Reserve) Agents. This term is frequently used 
 to denote the amount of money which a bank has on deposit 
 with its " reserve agent." This will be better understood 
 by reading " New York Excess." 
 
 Due from Banks other than Reserve Agents. When this 
 appears in a " bank statement," it has the same meaning as 
 given under " Due from Others." 
 
 Due from Others. The " bank statements " of some of the 
 cities give an item with the above heading, which indicates 
 money on deposit with other banks than " reserve agents," 
 as referred to in the preceding subject; and also all checks, 
 etc., in the hands of other banks in the process of collection. 
 
 Due to (Other) Banks. The " bank statement" is fre- 
 quently tabulated in such form as to sub-divide the deposits. 
 " Due to banks," therefore, indicates the deposits held by the 
 banks, included in the statement, to the credit of other banks 
 and trust companies, not members of the clearing-house 
 association, among which would be naturally many country 
 banks carrying deposits in either the " reserve " or " central 
 reserve centres." This subdivision of deposits does not 
 appear in the New York Bank Statement, as it is all covered 
 by one heading, " Deposits." 
 
 Dull. The market is " dull " when very little business is 
 being transacted.
 
 142 MONEY AND INVESTMENTS 
 
 Dummy. This word is used in connection with director, 
 stockholder, etc., as " dummy director," and indicates one 
 who really acts for another, but by so doing relieves the other 
 of liability; or who is merely placed in office to fill the number 
 required by law. A " dummy " usually has little financial 
 means, or has little or no interest in the corporation which he 
 is serving. He may be elected for a brief time, to be later 
 succeeded by one personally interested. 
 
 Dump. " A lot of stock was dumped upon the market," 
 meaning that a great deal was sold for the purpose of getting 
 rid of it; that is, the stock was undesirable, either on account 
 of high price existing or for other reasons. " Dumping " 
 stock has reference not so much to disposing of an undesirable 
 investment, but in offering the same in large amounts, not 
 in small amounts from time to time. You dump a lot of 
 earth when you tip up the cart and let it all go at once. 
 
 Dun's. See " Commercial Agencies." 
 
 Duster. If, in boring for an oil well, no oil is found, only a 
 dry hole, it is called a " duster." 
 
 D. & J. December and June; interest or dividend pay- 
 ments semi-annually beginning with December. 
 
 E 
 
 E. The " ticker " abbreviation for East or Eastern. 
 Eagle. A gold coin of the United States of the value of 
 
 $10, containing 232.20 grains of fine gold, and 25.80 grains 
 of alloy. Up to June 30, 1904, these had been coined to the 
 amount of $378,877,070. 
 
 Ear-Marked. This word as used in London in reference to 
 gold means that it is held in the vaults of the Bank of England 
 on behalf of those possessing it and is not the property of the 
 Bank. When gold is " ear-marked " it cannot be used by 
 the Bank of England for any purpose whatsoever. The Bank 
 of England has merely the safe custody of it. 
 
 The object of " ear-marking " gold in the Bank of England 
 on account of the Indian Government is to enable Government 
 notes to be issued in India secured upon the gold " ear- 
 marked " in London. The National Bank of Egypt has fol- 
 lowed a similar procedure and has issued notes in Egypt 
 against gold " ear-marked " in the Bank of England as 
 security for those notes. 1 By this it will be understood that 
 the use of the term in general indicates money reserved for a 
 specific purpose. 
 
 1 The author is indebted to George Paish, of London, editor of The 
 Statist, for the foregoing information.
 
 MONEY AND INVESTMENTS 143 
 
 Earnest. Money paid by the buyer to the seller to bind the 
 trade. 
 
 Earnings. See " Gross Earnings," " Net Earnings," 
 " Operating Expenses." 
 
 Eased Off. Declined in price. 
 
 Easy Money. A term used to express the fact that those 
 seeking to borrow money may do so at low rates of interest 
 and without much difficulty. In other words, when the supply 
 of loanable money exceeds, or is fully equal to, the demand. 
 
 Edison. Among the Boston quotations, Edison Electric 
 Illuminating Co. of Boston is understood; in Los Angeles, 
 The Edison Electric Co. of Los Angeles; in Brooklyn, The 
 Edison Electric Illuminating Co. of that city, and so on ac- 
 cording to location. 
 
 E. E. These letters stand for " errors excepted," and have 
 practically the same significance as " E. & O. E." 
 
 El. Elevated or Electric. 
 
 Elastic Currency. (See " National Bank Notes.") A kind 
 of money that will expand in emergencies, and contract when 
 not needed. 
 
 Secretary of the Treasury Shaw said: " The only elastic 
 currency known to man is one based on credit circula- 
 tion." 1 
 
 Electric Light Company Securities. When electric lighting 
 was first introduced, it resulted in depreciation in the market 
 price of gas company securities. It has been found, however, 
 that gas and electric light companies can work harmoniously 
 together, there being separate fields for them to cover, but 
 the superiority of electric lighting over gas is bound to create 
 for it a permanent demand. It is not uncommon now for a 
 man living in a small country town to be supplied with 
 electricity and for him to gaze in wonder at the still prevalent 
 gas posts in many of our large cities. It is less detrimental 
 to the health to use than gas, and it is not injurious to wall 
 and ceiling decorations. Its safety over the use of lamps is 
 favourable to its increased use. 
 
 Now that it has proven possible to transmit electrical power 
 long distances at small loss, the investor must not only con- 
 sider the likelihood of competition from a local plant, but from 
 some plant located in another town or city in the same section, 
 and, therefore, for this and many other reasons, it is desirable 
 that rates charged locally shall be reasonable and satisfactory 
 to the consumers, so that there will be less temptation for an 
 outsider to invade the territory. There may be some exclusive 
 clause of the franchise which will protect the local company 
 
 1 Speech before the Missouri Society in New York City, Jan. 31, 1907.
 
 144 MONEY AND INVESTMENTS 
 
 from an invasion of this kind, but all these matters are to be 
 considered. 
 
 Find out how long the franchise has to run. If it is a bond 
 being considered, the franchise should always outlive it. (In 
 this connection it would be well to turn to the subject " Fran- 
 chise.") Consider the earnings, which should give net re- 
 sults of at least twice the amount required to pay the annual 
 interest charge, and provide a moderate sinking fund. A 
 sinking fund which will redeem two or three per cent, of the 
 issue annually is desirable if the plant is located in the smaller 
 cities or towns. In the larger cities, which are considered to be 
 growing communities, a sinking fund may not be so necessary, 
 provided the bond issue does not exceed 60 or 70% of the 
 replacement value of the property. In smaller places, 50% 
 of the replacement value of the property is large enough for 
 a bond issue. The wear and tear on electric lighting properties 
 is considerable, and it should be well understood by the 
 intending investor that proper sums are being set aside yearly 
 to cover this depreciation; and this should be from the very 
 starting of the plant, because, when everything is new, this 
 wear and tear is not apparent, except to a small degree, but 
 the ratio of this increase is quite rapid as the property grows 
 older. Consequently, this should be anticipated in the be- 
 ginning. It is very essential that an electric light plant should 
 be maintained in a high physical condition, which mainte- 
 nance should be paid for from its earnings without any increase 
 of indebtedness, and it is that against which the investor 
 must guard. 
 
 Electric light plants in small towns are not desirable sources 
 for investment, and are worth considering at all only when 
 low priced water-power is obtainable, and in this connection 
 it is wise for the investor to read what is given under " Power 
 Company Bonds," as relates to the sufficiency of the power. 
 
 Electric light properties may be easily duplicated, unless the 
 wires are in underground conduits and thus occupy a strategic 
 position something like a gas company. It is well to ascertain 
 whether or no the municipality has any right of purchase at 
 some future time, which might work to the disadvantage of a 
 security holder. The amount of business tributary to the 
 company is naturally important, and especially important 
 is the question of the contract, if any, with the municipality, 
 to furnish the public lighting. If this contract exists, unless 
 it is a reasonable contract and runs as long, at least, as the 
 bond issue, it should not be considered at all by the purchaser 
 of bonds, and should seldom be considered by the investor 
 in the stocks of such a company. At its expiration it might 
 not be renewed, or, if renewed, upon less favourable conditions. 
 It is well for the intending purchaser of securities of a property
 
 MONEY AND INVESTMENTS 145 
 
 of this kind, unless with the above exceptions, to eliminate 
 the earnings from the city contract entirely in studying the 
 company's statement of earnings. (Read also the subject 
 " Gas Company Bonds.") 
 
 As a whole, electric light securities have proved very satis- 
 factory and comparatively little loss has been incurred. It is 
 reasonable to suppose that with all the modern improvements, 
 and the present well-known methods of handling this business, 
 that with ordinary precaution on the part of the investor, safe 
 investments in properties of this kind may be readily made. 
 
 Electric Railway Securities. When it became possible to 
 economically apply electric power to the street railway service, 
 the first step was naturally the conversion of the horse pro- 
 pelled cars to those driven by electricity, and this change has 
 very generally taken place throughout the country. While 
 there were roads to be so converted, there was not so much 
 attention paid to constructing new lines. Of late years, how- 
 ever, this field has been extensively exploited, and, perhaps, 
 in some instances, too much so. Although a vast number of 
 roads have been honestly built and capitalized, there have 
 been construction companies and promoters who were so 
 anxious to profit from the building of electric roads, that some 
 ill-advised properties have been financed. This is especially 
 true in the smaller towns and sparsely settled sections. This 
 zeal for construction is bound, in such cases, to result in some 
 re-organizations. In many instances, the impending disaster 
 may be averted by the consolidation with, or the sale of the 
 property to, a connecting line of greater importance, which 
 can, with its own power and equipment, more economically 
 conduct the smaller line. 
 
 Whereas, as stated above, there have been some ill-advised 
 roads constructed, roads built where there is little business, 
 little to support them, or, as we might say, where the nickels 
 do not exist in sufficient quantities, this is not the whole 
 trouble. Recent construction shows a great contrast to 
 earlier methods. The latter allowed the use of too light 
 rails and much equipment which is now out of date, and the 
 construction was almost exclusively upon the highways. 
 Modern methods take all these matters into consideration. 
 The physical condition, such as grades, curves, general con- 
 struction, etc., are all important. In New England, the hilly 
 character of the country with the sharp and frequent curves 
 makes it unsafe to run heavy cars at express speed. The 
 privilege of constructing over a private right of way is fre- 
 quently difficult to obtain. The cost for the removal of snow 
 in roads running upon the highway is far greater than if 
 operated over a private right of way. In many sections of the
 
 146 MONEY AND INVESTMENTS 
 
 country, where it is possible to build long stretches of road, 
 practically without curves and appreciable grades, all con- 
 ditions incident to a low operating cost are favourable. 
 
 High rate of speed over privately owned rights of way is, 
 where the natural conditions are favourable, resulting in the 
 carrying of through passengers for long hauls, and the trans- 
 portation of freight to very profitable ends. It is continually 
 bringing electric railways into stronger competition with the 
 steam roads. The introduction of dining, sleeping, and 
 drawing-room cars is making one system of transportation 
 more like the other. The filling in of small links of road here 
 and there is furnishing the means for long distance service, 
 and, withal, the electric railway situation is constantly shaping 
 itself upon a permanent basis and upon different lines, capable 
 of a reasonable certainty as to results. 
 
 The modern inter-urban electric railway, which has the best 
 chance for a successful future, is the one which operates over 
 a private right of way, and approximates in its character the 
 construction and equipment of the standard steam railroads. 
 
 The inter-urban electric has a distinct function, and it is 
 predicted that the ultimate outcome will be that these roads 
 will do most of the short haul passenger business, and leave 
 to the steam roads the long haul and freight. And, further- 
 more, that many electric roads feeding into, or parallel with, 
 the steam roads will eventually be absorbed by the latter. 
 
 It is a peculiar fact, and recognized by many, that the 
 inter-urban road parallelling the steam road does not result in 
 a reduction of the passenger business of the latter, but seems 
 to create a new business for itself. In other words, it is 
 recognized that the " trolley lines " " breed" business. 
 
 Much information and experience have been gained of late, 
 and the roads now being constructed are on a different scale 
 and less likely to come to grief than the earlier ones. Judging 
 by this, it is reasonable to suppose that new properties, built 
 according to modern methods, and serving populous com- 
 munities, will prove desirable and profitable investments. 
 
 The question of equipping steam railroads with electrical 
 power has received consideration, as is evidenced by steps 
 taken in that direction by the New York Central & Hudson 
 River, and the New York, New Haven & Hartford, and other 
 railroad companies. 
 
 Some of the things to consider in the selecting of a street 
 railway security have already been set forth, to which may be 
 added: 
 
 The length of franchise, which, in the case of a bond, or 
 other security having a definite maturity, should always 
 outlive it. (See " Franchise.") The earnings should be given 
 careful consideration. Proper charges should be made each
 
 MONEY AND INVESTMENTS 147 
 
 year for improvements, and assurance had that the road is 
 being maintained in a high state of physical condition from 
 its earnings, and that no new indebtedness is being created 
 to pay for what is strictly wear and tear. (In this connection 
 it may be well for the reader to consider the matter under 
 " Depreciation.") When a property of this kind is first con- 
 structed it is usually in a high state of efficiency, and the road 
 and equipment do not begin to show visible increased cost of 
 maintenance for the first few years, thus permitting it to be 
 operated at a lower cost than later on when the wear and 
 tear will become more apparent and replacements necessary. 
 A road giving service where the riding is more or less for 
 pleasure, rather than for necessity, is also likely to show 
 unduly large earnings at first, owing to the novelty afforded 
 the patrons. Thus, the earnings of a new road should be 
 studied from this point of view. 
 
 The power is all-important, whether it be purchased or 
 furnished from the road's own plant. The question is: If 
 furnished by water-power, is the power sufficient for service 
 at all times of the year, and has provision for the future been 
 taken into consideration? 
 
 In all such matters the opinion of a well-established expert 
 engineer should be furnished, and his report should not only 
 cover the physical condition of the property, but should enter 
 with care into the business tributary to the road. In con- 
 sidering this, the reader is asked to turn to the subject " Audi- 
 tor," which treats further upon this matter. 
 
 The net earnings of a company ought to be, at least, double 
 the interest charges; the mortgage ought not to exceed 75% 
 of the replacement value of the property; a sinking fund is 
 advisable, which it is well should become operative at an 
 early date after the issuance of the bonds. 
 
 Electrolytic Copper. That which is purified by suspending 
 it in an acid solution and by an electrical current disinte- 
 grating it and re-depositing it upon a plate without the 
 impurities. This copper has high electrical conductivity, 
 sometimes 102% of that attributed to chemically pure copper. 
 It is not quite as strong as the best " Lake copper." 
 
 Elevator Certificates. Same as " Elevator Receipts." 
 
 Elevator Receipts. (See " Warehouse Receipts.") Prac- 
 tically the same thing, only issued by warehouses for the 
 storage of grain, called grain elevators, evidencing the storage 
 therein of a certain quantity of grain. 
 
 Elm River. Elm River Copper Co. 
 
 Emergency Currency. A form of money created to fill the 
 needs of a sudden demand, and for a brief period only; a 
 form which can be put out and withdrawn with equal rapidity;
 
 148 MONEY AND INVESTMENTS 
 
 money which can be easily retired when the emergency for 
 which it was created has passed. During the Civil War the 
 Federal Government issued some short time one or two 
 years notes bearing interest, which, by some writers, are 
 considered " emergency currency." The Imperial Bank of 
 Germany is authorized to issue an emergency circulation to 
 any extent it pleases in excess both of its authorized circula- 
 tion, provided it holds in cash (See " Bank of Germany ") 
 one-third of the total issue of such notes; but it must pay 
 the Government an annual tax of 5% upon such excess of 
 notes. 
 
 Employees Liability Insurance. See " Liability Insurance." 
 
 Endorse. See " Indorse." 
 
 Endowment Life Insurance. See " Life Insurance." 
 
 Enforced Liquidation. See " Liquidation." 
 
 Engagements. " His engagements amount to $50,000," 
 meaning his promises to pay or contracts to deliver call for 
 that amount, or value. 
 
 Engineer's Certificate. This is a statement over the signa- 
 ture of an engineer as regards the physical condition of a 
 railroad or other property. This is further explained under 
 the next subject, but the wording of such a certificate should 
 be in form so as to show beyond perad venture that exhaustive 
 examination has been made and that all construction was 
 proper; that power, for example, is sufficient for the present 
 needs, and likely to do so for reasonable future requirements; 
 that, if a water-power enters into the proposition, the supply 
 of water is sufficient at all times, and, if not, that proper pro- 
 vision has been made for auxiliary power by the use of coal, 
 for example; and so on. In fact, on an " engineer's report " 
 depends so much that too great pains cannot be exercised in 
 studying into such a report and ascertaining if all reasonable 
 care and precautions have been taken. Let the engineer be 
 one of good repute and standing, and let his report be sufficient 
 to set forth in detail all necessary information. 
 
 It has become the custom for railway and other public 
 service corporations to allow for an extension of the property 
 by a further issue of bonds up to a certain rate of the actual 
 cost for such an extension, all based upon " engineer's certif- 
 icates." It is, therefore, of extreme importance that these 
 certificates should properly show the expenditure of this 
 money. It is not a bad idea that an affidavit, signed by the 
 president and treasurer of the company, should go with 
 such reports, showing them to be true. 
 
 Engineer's Report. A report by one who by previous educa- 
 tion and experience is competent to investigate the physical
 
 MONEY AND INVESTMENTS 149 
 
 condition of a railroad, electric light, or such a property as 
 he may be employed to report upon. 
 
 In purchasing at first hand from a corporation desiring to 
 sell its obligations, it is customary to employ an expert 
 engineer to report upon the physical condition of the property 
 belonging to the corporation. Let us take, for example, a 
 street railway whose bonds have been offered to a banker for 
 purchase, and who has contracted for them subject to the 
 usual conditions as to finding everything as represented. 
 Among other experts, a competent engineer is employed to 
 thoroughly examine the machinery, road-bed, ties, rails, 
 overhead construction, rolling stock, etc., to find if it is 
 thoroughly up-to-date and capable of fulfilling the demands 
 likely to be placed upon it. In this regard, let the investor, 
 among others, bear this point in mind: that the most favour- 
 able report from the best engineer in the country certifying to 
 the conditions of this street railway does not argue that its 
 bonds will prove to be a safe investment, because no matter 
 how good a road is from a physical standpoint, there must be 
 sufficient business to warrant its existence, and to provide 
 for its proper maintenance as well as to safeguard the interest 
 and principal of the bonds. It is better to have, perhaps, a 
 poorly constructed road running through a section furnishing 
 an enormous amount of business, which will provide earnings 
 to not only safeguard the bonds, but enable the road to be 
 later brought up to a proper physical condition, than it is to 
 have the best road which engineers can construct running 
 through a country with inadequate business tributary to it. 
 See also last subject. 
 
 English Money Table : 
 
 4 farthings = 1 penny 
 12 pence = 1 shilling = 48 farthings 
 
 20 shillings 1 pound or sovereign = 240 pence = 960 farthings 
 
 21 shillings = 1 guinea 
 
 Envelope. United States Envelope Co. 
 Equipment. This is a railroad term and refers to all rolling 
 stock; its locomotives, cars, snow-plows, hand-cars, etc. 
 Equipment Bonds. See " Equipment Trust." 
 Equipment Certificates. See " Equipment Trust." 
 Equipment Notes. See " Equipment Trust." 
 Equipment Trust. It is a common practice among railways, 
 in buying cars, locomotives, etc., to mortgage the same and 
 sell securities secured by this mortgage to raise money for the 
 payment of the equipment. These obligations are known as 
 " equipment bonds," " equipment notes," " car trust certif- 
 icates," " equipment trust certificates," etc.
 
 150 MONEY AND INVESTMENTS 
 
 A typical example is that of the Southern Railway which 
 issued June 1, 1904, 4J% Equipment Trust Gold Certificates. 
 One hundred and twenty passenger and freight locomotives 
 and 2,500 cars were mortgaged to secure these certificates. 
 They are the direct obligation of the Southern Railway Co., 
 in addition to being secured by a first mortgage upon the 
 equipment named, no part of which should be released until 
 the entire issue is paid. 
 
 The safety of such issue depends largely upon what propor- 
 tion the issue bears to the actual cost of the equipment, and 
 whether or not it is to be paid off fast enough to prevent the 
 equipment mortgaged depreciating in value below the amount 
 of the certificates outstanding; that is, equipment of this kind 
 wears out very fast, and the certificates should, therefore, 
 mature with that idea in view. (See also " Car Trust.") 
 
 This form of short time obligation has been looked upon 
 favourably from the investment standpoint. It is stated by 
 one financial writer that no default in this country has ever 
 yet occurred in these securities. They have commonly been 
 issued up to about 80% of the cash value of the equipment, 
 and in serial form, payable about 10% annually. 
 
 Equity. The common meaning in reference to investments 
 is the value in the property over and above its indebtedness; 
 for instance, to the stockholders of a railroad belongs its 
 " equity." In the case of a mortgage upon real estate, the 
 value of the property above the mortgage would be the 
 " equity." 
 
 Erie. Erie Railroad Company. Formerly the New York, 
 Lake Erie & Western R. R. Co. 
 
 Erratic. A very uncertain condition of prices; first up and 
 then down. Under these conditions the stock market is said 
 to be " erratic." 
 
 Escrow. The common use in banking; anything is placed 
 " in escrow " when, by mutual agreement between two parties, 
 it is placed in the hands of a third party, to be held until the 
 fulfilment of some condition, when it shall be delivered or 
 returned in accordance with the agreement. 
 
 Even. A " broker is " even " on a stock when he has con- 
 tracted to receive and deliver equal amounts of the same 
 stock with another broker; that is, inasmuch as he has sold, 
 for example, one hundred shares of Union Pacific to Robinson, 
 and later in the same day has bought the same number of 
 shares from him, there is no necessity of either making a 
 delivery. A settlement for the difference in prices only is 
 called for. This term is much in use in connection with " stock 
 exchange clearing-house " matters, as is explained under that 
 subject.
 
 MONEY- AND INVESTMENTS 151 
 
 In London, this term is used when a stock is carried over 
 as explained under " Contango " - without any charge being 
 made for the accommodation. This indicates that the bulls 
 and bears about balance each other. 
 
 Evening Up. When those who are " long " of the market 
 are selling out, i. e. " liquidating," at the same time that the 
 " shorts " are purchasing to cover their contracts, so that 
 both processes are going on simultaneously, it is called 
 " evening up." (See subjects in quotations.) 
 
 Even Lots. A number of shares of stocks evenly divisible 
 by 100, as 700, 900, etc., share lots. 
 
 Even Up. To get back a loss. 
 
 Ex. Literally " out of," but as used in finance, meaning 
 " without," " Ex-dividend " is equivalent to " without 
 dividend." 
 
 Ex-All. Meaning that a security is sold with all rights, such 
 as dividend due, privilege to subscribe to new shares, and all 
 such advantages, are reserved to the seller. 
 
 Excess Reserve. Meaning the same as " surplus reserve." 
 
 Exchange. Simply expressed, it is this: White owes Black 
 $100. Black likewise owes White $100. They meet and 
 present bills against each other for the amounts. Each re- 
 ceipts his bill and hands it to the other, the two debts offsetting. 
 No money has changed hands. This is the simplest form of 
 " exchange," but upon it is based its whole intricate and com- 
 plicated system. A " bill of exchange " is one of the earliest 
 forms of credit. 
 
 " Exchange " is a method of effecting payments at distant 
 points without the actual shipment of money or bullion. 
 When these points are in different countries, it is " foreign 
 exchange " and the instrument by which the payment is 
 effected is called a " bill of exchange." Between two points 
 of the same country this method of transferring the equiva- 
 lent of money is called " domestic exchange " in America 
 and " inland exchange " in Great Britain. 1 
 
 In the United States the term " domestic exchange " is not 
 
 'Conant states that "the term 'bills of exchange' is still widely used 
 in Great Britain for Inland bills." 
 
 The terms " inland exchange " and " foreign exchange " have a different 
 meaning from a legal standpoint under our State laws, as, for example, 
 the Statutes of Michigan define an " inland bill of exchange " as one which 
 on its face purports to be both drawn and payable within that State. 
 Any other bill is considered a " foreign bill " so long as drawn without the 
 State whether in this country or abroad. Example: One drawn in Detroit 
 and payable in Grand Rapids is an "inland bill; " one drawn in Detroit 
 and payable in Chicago, or drawn in Chicago and payable in Detroit, or 
 in the same manner between New York and Paris, is, in each instance, a 
 " foreign bill " from this standpoint.
 
 152 
 
 commonly used to designate what are strictly such trans- 
 actions. We are more apt to say, " New York Funds," 
 " Chicago Funds," or " check " or " draft on New York," etc. 
 
 A. K. Fiske very clearly describes a " bill of exchange " in 
 this way: " The New York exporter, when he sends a cargo 
 of wheat or cotton to England, draws a bill of exchange, which 
 is in effect a draft payable to himself for the amount due, upon 
 his consignee or upon a banker with whom that consignee has 
 the necessary credit and upon whom the America exporter 
 is instructed to draw for his payment." 
 
 If Allen in New York buys $1,000 worth of wool of Wright, 
 in London, and the latter ships the wool and writes an order 
 on Allen for the $1,000, this order or " bill of exchange " is 
 deposited by Wright with his London bankers, and is known 
 as " New York Exchange; " that is, it is good when presented 
 in New York for $1,000, providing, of course, Allen can pay 
 the same when presented. Now, instead of actually sending 
 the order to New York and collecting the money for shipment 
 to Wright, the common procedure is as follows: Some other 
 London merchant, say Russell, becomes indebted to a New 
 York merchant for $1,000; the former not wishing to go to 
 the expense of shipping money to New York, applies, we will 
 say for simplicity's sake, to the same bankers with which 
 Wright deposited his order upon Allen; they sell an order 
 against their New York agents for $1,000, to whom, in the 
 meantime, the order upon Allen & Company had been sent 
 for collection, the amount being collected and held by the 
 New York agents to the credit of the London bankers. Rus- 
 sell forwards an order, representing the " New York Ex- 
 change," to the merchant in that city to whom he is indebted; 
 this merchant presents the order to the New York agents of 
 the London bankers and obtains payment. It will be seen, 
 therefore, that one debt is made to offset another, and no 
 money, in this case, has actually been transferred. This is 
 the business of " exchange," so-called. The bankers buying 
 and selling the same charge a reasonable profit for their 
 services. 
 
 Such " exchange " as above is known as " foreign exchange," 
 and quotations appear in the newspapers of the United States 
 as " Sterling (or ' Sterling exchange ') 4.87^," meaning that 
 " exchange " on London could be bought in this country at 
 the rate of $4.87^ for each " pound sterling " English money. 
 Or " Sterling at Berlin 20.44," or " at Paris 25.15^," which 
 indicates that London " exchange " was selling at 20.44 marks 
 German money and 25 francs 15^ centimes French money, 
 at those points respectively. 
 
 Formerly, orders in the form of a " bill of exchange " were 
 used, but in present practice the buyer of a " bill of exchange "
 
 MONEY AND INVESTMENTS 153 
 
 simply gets a check on the banker's agent at the foreign point 
 desired. 
 
 In some cases, especially in a settlement of debts between 
 North and South American points, " exchange " is not bought 
 directly upon the city owed, but upon London. A New York 
 merchant pays a Brazilian merchant by buying a " bill of 
 exchange " on London, which is acceptable to the merchant 
 in Brazil, London being the common financial centre for much 
 international business. 
 
 In a similar way, there may be a common financial centre 
 for domestic points. New York is the best example in our 
 country. 
 
 This same business is going on between cities in the same 
 country, as, for instance, between New York and San Fran- 
 cisco. The expense of shipping money back and forth between 
 such distant points is considerable, hence the debts of the 
 merchants between the two cities are adjusted, as far as 
 possible, by the buying and selling of " exchange," the same 
 as between two points in different countries. 
 
 " Exchange " is at a discount or premium according to 
 whether there is too much or too little to supply the demand. 
 This establishes the " rate of exchange." The shipment of 
 gold from one country to another is the final adjustment of 
 this " exchange " business. When debts accruing in one 
 country against merchants in another are so great that there 
 are not enough " bills of exchange," then gold, the usual form 
 of export money, is shipped to adjust the difference. 
 
 The price of " exchange " may also be affected by the supply 
 of gold (bullion) available for the debtor country to ship in 
 case of need. The likelihood of there being a scarcity of gold 
 would cause " exchange " to go to a greater premium than would 
 result from a scarcity of actual exchange, with a good available 
 gold supply at the debtor point. (See " International Move- 
 ment of Gold.") " Domestic exchange " can always be 
 figured in one currency, but " foreign exchange " has to be 
 calculated in the currencies of the two different countries. 
 In the case of buying a " bill " on an international " ex- 
 change " point, as in the South American example, three 
 currencies have to be taken into account. 
 
 " Foreign exchange " is always computed on gold as a basis; 
 viz., that gold of equal weight and fineness is of equal value 
 the world over. " Foreign exchange " is drawn in the cur- 
 rency of the country where payable, and paid for in the 
 currency of the country cf issue. 
 
 Under the subjects " Balance of Trade " and " Letter of 
 Credit " more information may be found bearing upon this 
 subject. Refer also to " Cable Transfers " and " Demand 
 Bills."
 
 154 MONEY AND INVESTMENTS 
 
 Exchanges. A " clearing-house " (which see) expression 
 indicating the amount of checks, drafts, etc., settled through 
 its medium. Same thing as " clearings." Also the English 
 equivalent of our " exchange " as we use it in foreign " ex- 
 change," for example. They use the plural, we the singular. 
 
 Exchanges for Clearing-House. When this appears in a 
 " bank statement " " clearings " are what is understood. 
 
 Exchequer Bill. In time of sudden emergency, when money 
 is needed for a temporary purpose, the British Government is 
 authorized to issue negotiable, interest bearing, coupon bills 
 of credit, due in five years; the interest being fixed each year 
 but never to exceed 5% per annum. This is a form of in- 
 debtedness for short time borrowing. 
 
 These had their origin in 1696, but have been gradually 
 superseded by " Exchequer Bonds " and " Treasury Bills." 
 
 Exchequer Bonds. In England, very much the same as 
 " exchequer bills." They have 'a definite time to run, how- 
 ever, not exceeding six years, with interest at not greater 
 than 5% per annum; the rate being fixed for the full period 
 at the time of issue. This is a form of indebtedness for short 
 time borrowing and is not confined to Great Britain. There 
 they were first introduced in 1853. 
 
 Ex-Coupon. Without interest; coupon already due, or 
 about to become due, detached. 
 
 Ex D. " Ex-dividend," i. e. exclusive of dividend. 
 
 Ex-Dividend. See " Dividend Off," meaning the same. 
 
 Executor (or Executrix). The person named in a will as 
 the one to see that its provisions are carried into effect. 
 
 Exhaust Price. (It is necessary to first understand " Mar- 
 gin.") A fall in prices to a point where margins are wiped 
 ou t exhausted and when brokers may be compelled to 
 sell out the securities for self-protection, unless additional 
 margins are furnished. 
 
 Ex-Interest. Without interest; coupon for interest just due 
 and detached. 
 
 This term is particularly used in reference to " registered 
 bonds," which, inasmuch as the interest is forwarded to the 
 holder by check, are, to a certain extent, treated more or less 
 from the standpoint of shares of stock. When the checks for 
 interest are sent out to registered bondholders, they go for- 
 ward to holders of record as of a certain date. Any sale of 
 such a bond upon or immediately after a certain date, or, in 
 other words, the closing of the books, would be sold " ex- 
 interest; " that is, the interest check would go to the previous 
 holder and the purchaser makes his transaction upon that 
 understanding. There is at times a difference in the quota-
 
 MONEY AND INVESTMENTS 155 
 
 tions between the registered and coupon bonds of the same 
 issue, equal to the amount of the coupon. A registered 6% 
 bond, for example, on which 2% (four months) interest has 
 accumulated, might be quoted at 106, which would be the 
 equivalent of the same bond in coupon form selling at '104 
 " and interest." Registered bonds selling " ex-interest " are 
 at that time quoted about equally in price, as 104 " ex- 
 interest " and 104 " and interest " are equal one to the other. 
 A better understanding of this may be had from reading 
 " Registered Bond " and " Books Close." 
 
 Ex-New. A stock so quoted does not carry the privilege of 
 " rights," that is, it is " ex-rights." (See those subjects.) 
 Expert Accountant. See " Auditor." 
 Export Point of Gold. See " Gold Export Point." 
 Express Company Securities. Frank Haigh Dixon, professor 
 of economics at Dartmouth College, in his article " Publicity 
 for Express Companies," l says, in substance, that the yearly 
 receipts from this large transportation agency are nearly 
 $75,000,000. 2 There are six large companies, and a few of 
 lesser magnitude. The four largest are the Adams, American, 
 United States, and the Wells-Fargo. The first three named 
 are organized under a New York law, granting them the right 
 to issue transferable shares representing beneficial interests 
 in the company, but every owner incurs all the liability of a 
 partner. This is a fact to be considered in purchasing they- 
 shares. The Wells-Fargo is a Colorado corporation. Of the 
 lesser companies, there are the Southern Express, the Pacific 
 Express, the National, and two Canadian companies, besides 
 numerous others organized by the railroads themselves, such 
 as those operating over the Denver and Rio Grande, Great 
 Northern, and Northern Pacific Lines. Besides all the above, 
 there are, of course, many local companies doing a city or a 
 city and suburban business. 
 
 It is understood that the interests of the larger corporations 
 are so interwoven one with the other, and that they are all 
 on such good terms with the railroads, that competition is 
 almost unheard of, and, as matters are at present, it does not 
 seem necessary to consider this factor in connection with the 
 large companies. One point deserving of consideration, how- 
 ever, is the very remote possibility of the United States 
 Government starting what would be termed a " parcels post." 
 The inauguration of such a system would probably create an 
 effective competition with the express companies. 3 The 
 
 1 Atlantic Monthly, July, 1905. 
 
 1 The Wall Street Journal now sets this figure at nearly $10,000,000 
 greater. 
 
 3 The writer is of the opinion that some competition with the express
 
 156 MONEY AND INVESTMENTS 
 
 dividend records have been good and, on the whole, express 
 company securities stand well in the investment list. 
 
 These corporations have heretofore effectually concealed 
 much information from the public, as they have not been 
 accustomed to make reports themselves, nor have they been 
 required so to do by the Government, but the recent enactment 
 of the Railroad Rate Law classes express companies as " com- 
 mon carriers," and brings them under the control of the 
 Interstate Commerce Commission, and especially gives the 
 Commission the power to demand annual reports. 
 
 Express Money-Orders. Another method of remitting 
 money by mail, and very similar to the " postal money- 
 orders," but differing in these respects: 
 
 Express money-orders need no written application; they 
 are payable upon presentation without the necessity of a 
 duplicate being forwarded by the issuing office; are payable 
 at all offices of the company, not at some special office, as by 
 the Government method; may pass from hand to hand by 
 continual indorsement (not being limited in number) and 
 remain valid if not presented within one year. Rates run 
 about as follows: 
 
 Not over $ 2.50 3c. Over $30.00 to $40.00 15c. 
 
 Over $ 2.50 to $ 5.00 5c. Over 40.00 to 50.00 18c. 
 
 Over 5.00 to 10.00 8c. Over 50.00 to 60.00 20c. 
 
 Over 10.00 to 20.00 lOc. Over 60.00 to 75.00 25c. 
 
 Over 20.00 to 30.00 12c. Over 75.00 to 100.00 30c. 
 
 For sums over $100, charges are based upon above rates. Example: 
 $300, 3 x 30c. = 90c. $350, 3 X 30c. -f the charge for $50 = $1.10. 
 
 Ex R. " Ex-rights," i. e. exclusive of " rights." 
 
 Ex-Rights. (First read " Rights.") The sale of a stock 
 upon which the privilege attached to its " rights " has been 
 exercised or reserved. In any event, the purchaser obtains 
 no privilege of that nature, and so understands it when 
 making a purchase " ex-rights." 
 
 EXT. The " ticker " abbreviation for " extended " or " ex- 
 tension." 
 
 Extended Bonds. A bond of which the payment of the 
 principal is put off to some future date; the issue not being 
 replaced by other bonds, but the same ones being left in the 
 hands of investors, the security behind the bonds remains the 
 
 companies may result from the hauling of freight and express by street 
 railway companies, but that there is a possibility that even after such a 
 limited competition might become established, the express carrying 
 privilege on the street railways may be passed into the control of the larger 
 express companies, the same way that they have absorbed it among the 
 railroads.
 
 MONEY AND INVESTMENTS 157 
 
 same. In such an event, it is customary to attach sufficient 
 new coupons to cover the interest for the time extended, or 
 new bonds, coupons and all, may be given in exchange for the 
 old. Most issues of this nature are extended at a lesser rate 
 of interest than borne by the original ones. " Extended 
 bonds " have stamped or printed thereon the essential facts of 
 the extension, and, if there are old coupons which can be used, 
 they are stamped or printed so as to show the lesser rate of 
 interest. 
 
 Extended Insurance. This is an option under a life insur- 
 ance policy which has " lapsed " (see " Lapse ") by which the 
 insured obtains insurance for the face of the original policy 
 for a specific length of time, without the payment of further 
 premiums. Insurance of this kind is sometimes taken in 
 place of a " cash surrender value " or " paid-up value." 
 
 Extension Bonds. Secured by a first mortgage 1 upon an 
 extension of a railroad system, and usually guaranteed by 
 the company proper. Besides being a first mortgage upon 
 the extension, such a bond is often a " second " or " junior " 
 mortgage upon other property. In the case of the " Pacific 
 Extension 4's " of the St. Paul, Minneapolis & Manitoba 
 Railway Company, the bonds are secured by a first mortgage 
 on all the company's lines in Idaho and Washington and by 
 a second mortgage upon its lines in Montana. 
 
 Whereas, this class of investment is dependent somewhat 
 upon the amount of the issue in proportion to the proper cost 
 of the extension, and the need of such extension to the larger 
 road, yet the standing of the latter and the value of its 
 guaranty are largely to be considered. 
 
 Extension of Mortgage. When a mortgage on real estate 
 falls due, it may be agreeable to both the borrower and the 
 lender to extend it. An overdue mortgage is perfectly good 
 and no signing of papers or any legal act is necessary in con- 
 nection therewith to make the claim of the holder of the 
 mortgage good if he is willing to postpone payment. It is 
 very customary, however, to fill out, sign and record, what 
 is known as an " extension of mortgage," for by so doing if 
 there is an agreement for the extension for a definite time, it 
 will prevent the lender from demanding payment previous 
 to that time, and is, therefore, a protection to the borrower. 
 
 External Bonds (or Loan). An issue of government bonds 
 sold abroad, as designated from money borrowed at home. 
 
 Extra. See " Dividend, Extra." 
 
 E. & 0. E. These letters stand for " errors and omissions 
 
 1 " Extension bonds " may not be secured by a first mortgage, but if so 
 would certainly be an exception to the rule.
 
 158 MONEY AND INVESTMENTS 
 
 excepted," and often appear on a statement of an account, 
 so as to relieve the accountant from any personal liability 
 for mistakes. 
 
 F 
 
 Face Value. The value of a security, regardless of any 
 coupons, as appears in the security itself; the principal. 
 (See " Par Value.") 
 
 Facilitating Process. See footnote to " International Move- 
 ment of Gold," page 218. 
 
 Factor. A " factor " is ordinarily a commission merchant, 
 differing from the common broker by having in his possession 
 the goods which he offers for sale, although he may exhibit 
 samples only. He is usually compensated in the way of a 
 commission, but sometimes in other ways. Usually a broker 
 or an ordinary agent trades in something not in his possession, 
 delivery to be made either through him or directly between 
 the parties between whom he is negotiating after the sale is 
 effected. In the event of his advancing money on goods placed 
 in his possession for selling, he has a legal claim to that extent 
 upon the goods or proceeds after sale. 
 
 Failure. Bankruptcy, insolvency, or inability to meet one's 
 engagements. 
 
 Falling. " Falling market; " prices declining. 
 
 False Certification. Same as " over-certification." 
 
 Fancy Options. " Puts-and-calls " and " spreads " at 
 prices considerably at variance with current market quota- 
 tions. 
 
 Fancy Price. A price too high for the time; not consistent 
 with existing conditions or with prices of similar or other 
 securities. 
 
 Fancy Stocks. High priced stocks which are looked upon as 
 safe and desirable investments are what the investment 
 banker understands by this term, but the stock exchange man 
 thinks of a stock high in price and the quotations of which 
 fluctuate widely as the result of manipulation. 
 
 F. and A. Interest or dividends payable semi-annually, 
 February and August. 
 
 Farm Loans (or Mortgages). Loans secured by mortgages 
 on farm properties. 
 
 The fact that in many sections of the country the lands in 
 the agricultural districts are steadily rising in value has 
 attracted many people towards them for investment purposes. 
 With the exception of a few localities, especially in the East, 
 where lands are either " run out " or of a poor quality, or
 
 MONEY AND INVESTMENTS 159 
 
 where prices have risen to a point beyond the earning capacity 
 of the land, the history of farm values, in spite of the tre- 
 mendously increased area under cultivation, has been one of 
 fairly steady advance, always excepting, of course, periods of 
 depression. 
 
 This condition of affairs is likely to continue in many sec- 
 tions of the country until prices there reach a point where 
 capital invested ceases to bring satisfactory returns. 
 
 It is true that there have been many losses in farm mort- 
 gages, but such losses may generally be attributed to a desire 
 for excessive interest rates, improper judgment of the local 
 conditions, dishonest or too greedy agents through whom the 
 business has been accomplished, who have been willing to 
 recommend too large loans for the sake of the increased com- 
 mission, or to the failure on the part of the one holding the 
 mortgage, and who has been obliged to foreclose the property, 
 to wait for a favourable time to sell. 
 
 The question of the agent suggests, however, that few 
 investors are so situated that they can make personal examina- 
 tion of farms located at a distance, upon which they may 
 have an opportunity to make a loan. This necessitates the 
 selection of some one with an unbiased opinion in whom con- 
 fidence may be placed, and there is, perhaps, no grade of 
 investments which calls for a more careful selection of those 
 with whom the business is done, than in the purchasing of 
 farm mortgages. 
 
 The subject of farm mortgages is very deep and one ex- 
 tremely difficult to cover with any general rules. What ap- 
 plies as a conservative selection of a mortgage on farm lands 
 in New England, might not apply at all in Kansas. In general, 
 however, the nature of the soil must be considered, whether 
 the location obtains sufficient moisture from natural causes; 
 if not, what the irrigation rights are, if any. If it is a Western 
 farm and dependent upon irrigation, the investor must ascer- 
 tain whether or no the farm has the right to a sufficient amount 
 of water at a reasonable price at all times. There are many 
 farms located at the extreme lower end of irrigating canals, 
 which, at times, may suffer from a deficiency of water supply 
 The climate, the class of crops raised, quality and depth of 
 soil, the nearness to a market, churches and schools, trans- 
 portation facilities, the sufficiency of farm tools necessary to 
 properly carry on agriculture by modern methods, whether 
 or no such farming tools are covered by a " chattel mort- 
 gage," the record which the farmer has made for some years 
 back as a producer and saver, the reason for his needing the 
 money and this last is a very necessary feature to consider, 
 for, if the money is going for betterment of the property or 
 for partial payment thereon, that is one thing, if it is to be used
 
 160 MONEY AND INVESTMENTS 
 
 for some outside purpose, it should not be encouraged. In 
 lack of personal knowledge of the character of the proposed 
 mortgagor, inquiry should be carefully made among his 
 neighbours and tradesmen, if possible. The probable ready 
 market value of similar lands in the same locality should be 
 ascertained; not their salable value during boom times, 
 but during dull times as well, and upon the latter figures the 
 probable market value of the farm ascertained, and a mort- 
 gage not more than fifty to sixty per cent, of the value made 
 thereon, including, of course, a fair valuation for the buildings 
 and improvements. Although buildings may add materially 
 to the value of the farm, yet that is not where the earning 
 capacity of the property lies. Therefore, in a security of this 
 kind, the buildings should not be taken at more than 25% 
 of the whole property. It is desirable that the borrower should 
 be married and an occupant of the property. Unimproved 
 land is doubtful security, and loans upon it should be made 
 not only with great caution, but at a very low percentage of a 
 conservative market value. 
 
 It is supposed that the lender will follow out carefully the 
 usual rules for making a " mortgage," as described under the 
 subject in quotations. 
 
 What one Western writer has said is of interest here: 
 
 " The farmer uses money in his business precisely as does 
 the merchant, and his mortgage is no more to be considered as 
 an evidence of lack of prosperity than the note of the mer- 
 chant, given in exchange for goods. The farmer in the Corn 
 Belt has been able to make legitimate profits during the past 
 ten years on account of the steady rise in land value. From 
 his income he makes a partial payment on lands which he 
 wishes to acquire, and gives a mortgage to pay for the balance. 
 This has been his savings bank and it cannot be denied by 
 those familiar with the conditions that it is a good one. We 
 are still an agricultural nation and land is the foundation of 
 our national prosperity. When agriculture prospers, other 
 industries also prosper." 
 
 Farm loans are practically free from market fluctuations, 
 and are influenced but little, if any, by political changes, 
 added to which they pay a liberal rate of interest. 
 
 Farthing. The smallest English coin, being one-fourth of 
 their penny, and equivalent to about one-half a cent in United 
 States money. 
 
 Fd. (or Fdg.). Funding. 
 
 Federal. Federal Mining & Smelting Co. (Silver and 
 lead.) 
 
 Fee. To " owe in fee " is to have absolute possession of. 
 
 Feeder. A branch, tributary, or smaller connecting trans-
 
 MONEY AND INVESTMENTS 161 
 
 portation company, which originates or collects, freight, 
 passengers, etc., and " feeds " its business into a larger 
 company. Branch lines of a railroad are called its " feed- 
 ers." 
 
 Fee Simple. A landed estate belonging to the owner and 
 his heirs and assigns for ever. 
 
 Feverish. When prices are very changeable, up and down; 
 conditions unsettled; worriment discernible on the faces of 
 those transacting the business; a general uncertainty as to 
 what will happen next. 
 
 Fiat Money. Money which a government declares shall be 
 accepted as legal tender at its face value; money issued by a 
 government which is supposed to have the power to enforce 
 its acceptance, within its own dominions, in payment of debts. 
 As generally understood " fiat money " has no real value, or 
 at least lesser value than its face. In the latter case, the 
 difference between the real and face value is " fiat money." 
 
 Fiduciary. " Fiduciary institutions: " trust companies, 
 banks, etc. " Fiduciary capacity " has relation to some 
 financial trust. 
 
 Finance. To " finance " an enterprise is to raise the neces- 
 sary money for its needs. 
 
 Finance Bills. " Bills of exchange " (which must first be 
 understood) on foreign countries issued by American bankers 
 against credits or loans granted them by bankers in other 
 countries, and not against shipments of goods. The terms 
 on which the credits are granted, and whether or not it is 
 necessary to pledge bonds, stocks, or other collateral, as 
 security, is a matter for arrangement between the different 
 parties. 
 
 Finance Committee. See " Savings Bank." 
 
 Finance Company. In the United States, the " holding 
 company " (to which refer) is commonly known as a " finance 
 company," but the meaning in England is totally different. 
 There the term has reference to companies dealing in corpora- 
 tion securities. 
 
 Financial Bill. On the 14th of March, 1900, there was ap- 
 proved an Act of Congress to define and fix the standard of 
 value, to maintain the parity of all forms of money issued or 
 coined by the United States, to refund the public* debt, and 
 for other purposes, which is commonly known as the " Finan- 
 cial Bill." It is also referred to as the " Gold Standard Act " 
 and " Currency Act." The essence of this bill, in addition to 
 what the reader will find under " Gold Reserve," was to define 
 and fix the standard of value as follows: 
 
 ' That the dollar consisting of twenty-five and eight-
 
 162 MONEY AND INVESTMENTS 
 
 tenths grains of gold nine-tenths fine, as established by 
 section thirty-five hundred and eleven of the Revised Statutes 
 of the United States, shall be the standard unit of value, and 
 all forms of money issued or coined by the United States shall 
 be maintained at a parity of value with this standard, and it 
 shall be the duty of the Secretary of the Treasury to maintain 
 such parity." 
 
 Financial Year. Sometimes used in the place of " fiscal 
 year," to which refer. 
 
 Fine Bars. Gold or silver bars containing 99% of pure 
 metal are generally so considered. 
 
 Fine Gold. Gold which is free from impurities; pure. The 
 mint value in England of an ounce of " fine gold " is 84s. 11.45d, 
 which equals our own mint price of $20.672. 
 
 Fineness. See " Standard of Weight and Fineness." 
 
 Fire Insurance. Any explanation or definition covering the 
 subject of fire insurance is unnecessary here, but a few sug- 
 gestions to those taking out insurance of this class may be 
 pertinent. 
 
 Familiarize yourself with the laws of the State under which 
 you are insuring, so that you may have some reasonable idea 
 as to your rights. In New Hampshire and a few other States, 
 for instance, the " valued policy," so called, is in effect, which 
 amounts to this: that you are entitled to collect the amount 
 of the loss on buildings in event of total destruction by fire, 
 no matter what amount of insurance is placed thereon; that 
 is, it is incumbent upon the company not to insure buildings 
 for more than they are worth. In most States the insured 
 cannot collect, in case of loss, greater than the actual damage, 
 no matter how much in excess of the value of the property the 
 insurance had been placed. 
 
 Do not keep your insurance policy in the same building that 
 is covered by such a policy. 
 
 In insuring furniture or personal property in general, take 
 an accurate list of the same with the probable value of each 
 article, and keep this list in some place safe from fire. Some 
 persons are so particular that all articles of furniture or 
 property which would be covered by a policy of this kind, are 
 invariably purchased accompanied by bills showing their cost, 
 such bills being properly filed away to be produced in case of 
 any dispute arising over the adjustment of a claim. 
 
 There are cases of insurance upon buildings where the in- 
 sured would not care to include insurance upon the founda- 
 tion; that is, in case of destruction of the building, the 
 foundation might be left intact or slightly damaged, which 
 would give the right to the insurance company to deduct the 
 value of the same at the time of adjustment. The character
 
 MONEY AND INVESTMENTS 163 
 
 of the foundation may be such that it would be practically 
 impervious to fire, or the character of the building may be 
 such that if once destroyed there would be no desire to 
 rebuild, and, therefore, the foundation would be of no value 
 to the insured. In such cases, the item of foundation may be 
 specifically omitted from the policy. 
 
 Read your policy and carefully carry out the conditions 
 enumerated therein. Note date of expiration, for it is con- 
 ceivable that your agent may not advise you when the policy 
 does expire, and, therefore, your property may be unprotected. 
 Always pay premiums promptly. Do not try to mislead the 
 agent by concealing information or misstating facts. Be sure 
 that your policy contains the clause that other insurance is 
 permitted. 
 
 In an insurance policy covering furniture or movable goods, 
 if any change in the location of the articles insured is to be 
 made, notification must be sent to the insurance agent. 
 
 Any premises intended for occupancy should not be allowed 
 to remain vacant longer than provided for in the policy, with- 
 out obtaining permission from the agent. 
 
 Ascertain that your policy contains a clause granting pro- 
 tection in case loss or damage results from lightning. 
 
 In case of loss, notify the agent at once. 
 
 In case your property is mortgaged, the policy should bear 
 an indorsement somewhat as follows: 
 
 " Payable in case of loss to , mortgagee, as his in- 
 terest may appear." 
 
 Insurance for a short period, such as a year, is more ex- 
 pensive in the long run than for some term like three years. 
 
 Fireworks. Tremendous speculation; rapid advance in 
 prices. 
 
 Firm. Strong; tending upwards; not declining. The 
 stock market is said to be " firm " when there is no tendency 
 towards a decline in prices; a condition of stability existing. 
 Money is " firm " when interest rates for loans are higher than 
 the average. Prices are " firm " when inclined to rise, or at 
 least, remaining stationary. (See " Offered Firm.") 
 
 A partnership of two or more persons for the carrying on of 
 any business, as distinguished from an incorporated com- 
 pany. An agreement, generally to exist for a specified time, 
 is drawn up and signed by the several partners, setting forth 
 the rights of each. This is called a " partnership agreement." 
 (See also " Special Partner.") 
 
 Finn Bid. See " Offered Firm." 
 
 First and Consolidated Mortgage. See " First Consolidated 
 Mortgage." 
 
 First and General Mortgage Bonds. This indicates an issue
 
 164 MONEY AND INVESTMENTS 
 
 secured by a " general mortgage " (to which refer) on all the 
 property and by a " first mortgage " on a part of it. 
 
 First and Refunding Mortgage Bond. It might be well to 
 read the matter under " First Refunding Mortgage Bond," 
 by an understanding of which a " first and refunding issue " 
 may be readily comprehended. An issue such as the last 
 mentioned should be one which has extended a genuine first 
 mortgage upon the whole property which it covers, but it 
 may be such an issue as described in the case of the Old Colony 
 Street Railway bonds under the subject of " First Refund- 
 ing Mortgage Bond." The and therefore, inserted between 
 " first " and " refunding " leaves a very uncertain meaning 
 as to what such an issue really is, and it is essential that an 
 investor should ascertain exactly the terms of the mortgage 
 itself. 
 
 First Consolidated Mortgage. Read " Consolidated Mort- 
 gage Bond." A " first consolidated mortgage " issue would 
 generally indicate what would be literally understood by 
 such combination of words; viz.: a consolidated mortgage 
 issue and the first one of such placed upon the property. But 
 a " first and consolidated mortgage " would be quite a dif- 
 ferent thing. It would indicate not only a " consolidated 
 mortgage " issue upon the property, but a " first mortgage " 
 upon some parts; that is, upon such parts as have not been 
 previously mortgaged. 
 
 First General Mortgage Bonds. (Read " General Mortgage 
 Bonds.") This is not only an issue secured by a " general 
 mortgage," but the first one of that nature placed upon the 
 property. 
 
 First Lien. See " First Mortgage," meaning the same in 
 reference to bonds. 
 
 First Lien and General Mortgage. This is taken as an 
 example of an issue of bonds bearing, apparently, two names. 
 It is impossible to take the amount of room necessary to 
 describe every possible combination of names of this kind 
 which may be used in the designation of a mortgage. The 
 Norfolk and Western Railway Co. has an issue of 4% bonds 
 bearing the above title. It is a " first lien; " that is, a " first 
 mortgage," on approximately 200 miles of road, but upon 1,592 
 miles of the railroad there are other mortgages which would 
 come ahead of this particular mortgage, and, therefore, upon 
 that portion of the road it is a " general mortgage," so-called. 
 It will be seen that the part of the road upon which the issue 
 is a " first mortgage " is comparatively small. 
 
 First Mortgage. (Read " Mortgage.") There are sometimes 
 several mortgages placed upon the same property. The one
 
 MONEY AND INVESTMENTS 165 
 
 having the prior claim to or preference over the others is 
 known as the " first mortgage." This will be better under- 
 stood by reading the next subject and also the matter under 
 " Second Mortgage." 
 
 First Mortgage Bond. A promise to pay in the form of a 
 bond and secured by a first mortgage. (See " Mortgage.") 
 It has first claim on the property of the corporation, as well 
 as upon the earnings. A bond of this kind is so well under- 
 stood, that little more need be said of it here. A word of 
 warning, however, may be wise: do not think that a " first 
 mortgage bond " is always secured by a first mortgage on 
 all the property of the corporation. A company, at the time 
 of the issuing of such a bond, may be a comparatively small 
 affair, but later grow into much prominence by the absorbing 
 of other properties. On most, and possibly all, of the absorbed 
 properties there may have already been mortgages existing, 
 and, therefore, the " first mortgage bond " of the original 
 company may be but one of several such on the combined 
 companies, although enjoying the credit attached to bearing 
 the name of the parent company. 
 
 One note of caution may be sounded here; namely, not to 
 lay too much stress upon the fact that a bond is a first mort- 
 gage, because if it is a first mortgage it does not imply that 
 it is a good mortgage; in other words, good security for the 
 debt. A first mortgage on some property may be far inferior 
 to a second or third mortgage on another. The first mortgage 
 part merely indicates that it is better secured than any other 
 indebtedness upon the same property. 
 
 First Mortgage Trust Bond. This is a form of a " collateral 
 trust bond " (to which subject the reader is referred), and by 
 which it will be seen that under certain conditions a bond of 
 this nature may be indirectly a first mortgage. A " first 
 mortgage trust bond " is, therefore, one secured by a deposit 
 of other bonds which are in themselves secured by a first 
 mortgage. An issue of this nature is that of the Louisville 
 & Nashville Railroad Co., which is secured by a deposit of the 
 first mortgage 5% bonds of the Birmingham Mineral R. R. 
 Co., and the first mortgage 6% bonds of the Owensboro & 
 Nashville Ry. Co. 
 
 First of Exchange. See " Set of Exchange." 
 First Preference Shares. The English term equivalent to 
 our " first preferred stock." 
 
 First Preferred Stock. See " Preferred Stock." 
 First Refunding Mortgage Bond. Do not confuse this with 
 a " refunding first mortgage bond." Note that there is quite 
 a difference whether the word first qualifies " refunding " or
 
 166 MONEY AND INVESTMENTS 
 
 " mortgage." A " refunding first mortgage bond " takes the 
 place of a " first mortgage " issue, which has been outstanding 
 and which the company desires to extend, not pay off. The 
 new (or refunding) issue is a first mortgage pure and simple, 
 as was the original one. But not necessarily so an issue in 
 which the word first precedes " refunding." In this case, there 
 may be no first mortgage securing it, but may simply be the 
 first " refunding " issue which the company has put out, and, 
 in that sense, the adjective applies to " refunding " only. 
 But usually the issue is a first mortgage on a small part of the 
 property, although not upon the whole. An actual example 
 would be the case of the Old Colony Street Railway Co. which 
 had outstanding April 1, 1905, $1,777,000 " first refunding 
 mortgage bonds," so-called, but secured by a first mortgage 
 on a power station and only 41^ miles of track out of a total 
 mileage of 367; against the balance other mortgage bonds 
 amounting to $4,667,000 held prior claims. 
 
 It is, of course, contemplated that this " first refunding 
 mortgage " issue shall, at some future time, become a first 
 mortgage on all the property, by the retiring of the $4,667,000 
 bonds as they become due, and replacing them with an equal 
 amount of the " first refunding mortgage " issue. 
 
 Firsts. First mortgage bonds. 
 
 First Teller. Another name for a " paying teller." 
 
 First Trust Mortgage. This is an example of the wilful 
 misusing of the title of a bond, and was so used by a banking 
 house to designate an issue, the proper title to which was 
 " First Mortgage and Collateral Trust." Evidently there was 
 a dislike to the " collateral trust " idea, and, therefore, " trust 
 mortgage " was used in lieu thereof. " Trust mortgage " is 
 a very vague wording and hardly proper under the circum- 
 stances. 
 
 The attention of the reader is again called to the necessity 
 of not only a careful consideration of the exact and proper title 
 of any security, but is advised to possess himself of informa- 
 tion giving the exact status of such security in relation to 
 other obligations of the same company; and is likewise 
 strenuously advised to read with great care all the printed 
 matter appearing upon the face of a bond, or its coupons, 
 and to pursue a like course in relation to every security to be 
 purchased or loaned upon. 
 
 First United States Bank. It was due to the efforts of 
 Alexander Hamilton, the first Secretary of the Treasury, that 
 a charter from Congress, in 1791, was granted authorizing a 
 United States Bank for the purpose of regulating the currency, 
 taking public money on deposit and acting as official agent of 
 the government. The capital was $10,000,000, one-fifth of
 
 MONEY AND INVESTMENTS 167 
 
 which was held by the Government; the balance by the public 
 at home and abroad. The voting power, however, was so 
 restricted that the foreign holders, who were really in the 
 majority, were unable to exercise control, as they were not 
 allowed to vote by proxy. The Secretary of the Treasury had 
 the right of inspection; its notes were made receivable for 
 public dues, provided they were kept repayable in coin. It 
 was permitted to have branches, which were established in 
 most of the important cities, the main office being in Phila- 
 delphia. It was a very successful institution. Its charter 
 was for but twenty years, a question of its constitutionality 
 had been raised, and the subject of its renewal aroused political 
 opposition. The renewal was defeated and the bank liqui- 
 dated, each $400 share returning to its holder $434. At one 
 time, it had deposits of about $8,500,000 and circulation of 
 about $4,500,000. 
 
 Fiscal Year. Any yearly period, regardless of the calendar 
 year, at the end of which any firm, corporation, or munici- 
 pality may close its books in order to determine its financial 
 condition. 
 
 Fish Scales. See " Five-Cent Silver Piece." 
 
 Fitchburg. Fitchburg R. R. Co., leased to the Boston & 
 Maine R. R. Co. 
 
 Five-Cent Silver Piece. A small coin of the United States, 
 the minting of which was discontinued by Act of February 
 12, 1873. Legal tender in amounts not exceeding $10. This 
 coin is called the " half-dime," and in some sections of the 
 country they have been nicknamed " fish scales." 
 
 Silver half-dimes were the first coins turned out by the 
 United States Mint October, 1792. 
 
 Five Per Cent. Redemption Fund. Every national bank is 
 required by law to keep on deposit, at all times, in the Treas- 
 ury of the United States, in lawful money of the United States, 
 a sum equal to five per cent, of the bank's circulation (see 
 " National Bank Notes "), to be held and used for the re- 
 demption of such circulation, which sum shall be counted as 
 a part of the bank's lawful reserve. There are further pro- 
 visions as to the canceling of national bank notes when pre- 
 sented for payment; notifying the banks as to the depletion 
 of the fund on account thereof and other necessary require- 
 ments. 
 
 This fund provides for the immediate redemption of the 
 notes of a failed bank, but when so depleted must be repaid 
 out of the assets of the bank when realized upon. 
 
 Five Ports. New York, Boston, Philadelphia, Baltimore 
 and New Orleans.
 
 168 MONEY AND INVESTMENTS 
 
 Five Twenties. Bonds due in twenty years, but subject to 
 redemption after five years from date of issue, at the pleasure 
 of the issuer. 
 
 Fixed. Established; settled; unchanged. " Fixed earn- 
 ings; " earnings which have continued for a sufficiently long 
 time to warrant the belief that they will remain permanent. 
 
 Fixed Charges. The " fixed charges " of a corporation are 
 generally conceded to be the interest upon its bonds and 
 floating debt, sinking fund, if any although the latter may 
 be shown under a separate heading rentals, taxes, and in- 
 surance. (Railroad companies include insurance under 
 " General expenses.") 
 
 Sometimes these three latter items are given under a sepa- 
 rate heading and not included in " fixed charges," but unless 
 they are included in the operating expenses of the company, 
 they should be included in the " fixed charges." 
 
 Some very prominent " accountants " call " fixed charges: " 
 " bond interest, taxes, and rentals," but there seems no rea- 
 son why " sinking fund " and fire insurance, on permanent 
 property at least, should not also be included. Many circular 
 descriptions of bond and stock issues recognize " bond 
 interest " only as " fixed charges," but this is more or less 
 deceptive. 
 
 There is good authority for believing that in good times the 
 " fixed charges " of a corporation should not exceed much, if 
 any, 50% of the net earnings; this in order to provide for the 
 decreased earnings of bad times. 
 
 Flat. Without interest. (See " Accrued Interest.") 
 
 Flaxseed. This is dealt in upon the Chicago Board of Trade 
 the samfe as grain and other commodities. The common 
 trading unit is 1,000 bushels. The rate of commission charged 
 for the purchase or sale or for the purchase and sale in 1,000 
 or 5,000 bushel lots, or multiples thereof, is \ of a cent per 
 bushel. The usual " margin " required is 10 cents per bushel. 
 
 Fleece. This expression arises from the use of the word 
 " lamb." To " fleece " one, means to take advantage of his 
 ignorance, resulting in his financial loss and the gain of the 
 one doing the " fleecing." When a lot of unsuspicious in- 
 vestors, or, more properly speaking, speculators, rush into the 
 market and buy a certain stock at high prices, and after- 
 wards find that large stockholders in that corporation, well 
 posted upon its financial condition, had sold the stock at 
 what they knew to be very high prices and far above its 
 actual worth, these speculators are said to have been 
 " fleeced," although, probably, no actually unlawful act 
 had been done by the ones selling out. The losers by such
 
 MONEY AND INVESTMENTS 169 
 
 a transaction as this are called " lambs." A lamb is a symbol 
 of innocence, an.d the unwary one caught napping is such. 
 
 Flier. A purchase or sale by a speculator with the ex- 
 pectation of an early profit; something bought with the 
 gambler's spirit, with an understanding that the chance for 
 profit is very speculative. 
 
 Float. To " float " a company means to sell its stock or 
 securities; thus raising needed money for capital, etc. 
 
 Floating Debt. All notes or forms of indebtedness calling 
 for payment within a comparatively short time, as distin- 
 guished from bonds or other fixed forms of indebtedness. 
 
 Floating Stock (or other Securities). Available for purchase 
 or speculation. This designates such from that which is 
 locked up in the hands of investors, and so not offered upon 
 the market. 
 
 Floor. The " floor " of an exchange; the place where the 
 trading is done. 
 
 Floor Broker. Same thing as a " two-dollar man." 
 
 Floor Traders. Those upon the floor of the stock exchange 
 who buy and sell securities for their own account, being 
 members, of course, of the exchange. They are sometimes 
 called " room traders." 
 
 Florin. The monetary unit of the Netherlands, equal to 
 $.402 United States money. (See also " Guilder.") 
 
 Also a silver coin of Great Britain, equal in value to two 
 English shillings and about $.486 United States money. 
 
 Flower Stocks. Stocks of the Brooklyn Rapid Transit Co., 
 People's Light & Coke Gas Co. of Chicago, etc., and other 
 corporations in which the banking house of Flower & Co. of 
 New York has an influencing interest. 
 
 Fit. Flat; without interest. 
 
 Fluctuations. A rising and falling in prices. " Fluctua- 
 tions were narrow; " this indicates that the changes in prices 
 by advancing or declining were very slight. 
 
 Flurry. An incipient panic; excitement; alarm; the finan- 
 cial sky suddenly overcast; securities falling quickly in price 
 and money rates advancing. Such an occurrence, when of 
 short duration, and producing no lasting effect on the finan- 
 cial world; the cause for alarm suddenly removed, and con- 
 ditions soon restored to approximately what they were 
 previous to the excitement, is a " flurry," but if the down- 
 ward tendency should not be allayed, and matters should go 
 from bad to worse, a " panic " might result. 
 
 F. M. A. N. February, May, August, and November;
 
 170 MONEY AND INVESTMENTS 
 
 interest or dividends payable quarterly beginning with 
 February. 
 
 F.O.B. These letters stand for" free on board." "F.O.B. 
 Detroit," meaning that the shipper in Detroit will make no 
 extra charge for delivering the goods on to the vessel or car. 
 
 For a Turn. A speculative phrase; a quick transaction for 
 small gain (or loss). 
 
 Forced Circulation. Money which is not worth its face 
 value, and which is by law forced into use and made accept- 
 able " legal tender " in payment of debts. (See " Legal 
 Tender.") 
 
 Forced Liquidation. A stock exchange phrase meaning that 
 the owners of stock are obliged to convert the same into cash 
 in order to obtain necessary funds. 
 
 Forced Sale. A sale of a debtor's property which the 
 creditor compels. A sale of this kind often brings a lesser 
 price than the owner might realize by a more delayed method. 
 The amount which property brings at such a sale is called its 
 " forced sale value." The sale of mortgaged property to 
 effect foreclosure to protect the debt which it secures is a 
 " forced sale." 
 
 Forcing. An attempt to obtain an unnatural level of prices 
 by artificial means. 
 
 Foreclosure. A method of enforcing payment of a debt 
 secured by mortgage by taking and selling the property which 
 it covers. This is done when the " mortgagor " has failed to 
 pay the interest or principal of the debt which the mortgage 
 secures, or to perform some other condition set out in the 
 instrument. In most States, the property is sold under a 
 power to sell contained in the mortgage itself, but in some 
 States, where this is prohibited, an order to sell must be 
 obtained from the court. The proceeds are applied to the 
 indebtedness secured by the mortgage, other liens, and 
 " foreclosure " expenses. Any balance must be returned to 
 the property owner the " mortgagor." 
 
 Foreclosure Value. In buying bonds of any corporation 
 one of the things always to be considered is what the value of 
 the property would be in case the bonds should not be paid, 
 and the holders should have to " foreclose " and take pos- 
 session of the property. Of course, this same fact is to be 
 considered in regard to a mortgage of any kind. The value 
 of such property, or the probable price at which it can be 
 sold, is called its " foreclosure value." If the mortgage on 
 a property is $100,000, and the holders are obliged to " fore- 
 close," and should afterwards sell the property for $50,000,
 
 MONEY AND INVESTMENTS 171 
 
 the " foreclosure value " would be the last mentioned sum, 
 representing a loss to the holders of half their investment. 
 
 Foreign Bill. In general this refers to " foreign exchange," 
 as explained under " Exchange; " but legally in this country, 
 a " foreign bill " is any " bill of exchange " drawn outside of 
 the State in which it is made payable. For example: One 
 drawn in San Francisco and payable in Sacramento is an 
 " inland bill," but one drawn in San Francisco and payable 
 in Salt Lake City, or drawn in Salt Lake City and payable 
 in San Francisco, is, in each instance, a " foreign bill " from 
 this standpoint. 
 
 Foreign Collections. A bank terms its " foreign collections " 
 its checks, etc., which are not payable in the city in which it 
 is located. 
 
 Foreign Department Boston Clearing-House Association. 
 Assuming that the reader has an understanding of the general 
 workings of the " clearing-house " (to which refer) plan, the 
 subject heading here may be explained as follows: 
 
 " Foreign " in " clearing-house " language means, " out of 
 town." That is to say, " foreign " checks are checks drawn 
 upon out-of-town banking institutions, not members of a 
 given " clearing-house." 
 
 The Boston Clearing-House has devised a plan by which 
 its members can, through the agency of the " clearing-house," 
 collect out-of-town checks, etc., on New England points, 
 and not drawn on their own correspondents. These would 
 naturally be collected directly from the correspondent. 
 
 The checks are sorted out by each Boston bank in such a 
 way that there will be a package for each out-of-town bank, 
 a list of the checks in each package being attached to the 
 same. These packages are sorted by States, and then the 
 towns in each State are sorted alphabetically, and taken, 
 during the first half of the afternoon of each clearing day, to 
 the " clearing-house," where they are placed upon certain 
 desks, at which are tw r enty clerks who in turn sort out the 
 packages by banks, by which method those on each New 
 England bank are brought together. The packages which are 
 to be presented to a given bank are listed upon a letter which 
 accompanies the package. As there are 622 out-of-town 
 banks in New England, to which collections are sent, the 
 packages averaged for the year ending March 31, 1906, 
 6,070 daily. 
 
 The out-of-town banks settle with the clearing-house 
 manager and he, in turn, makes a settlement with each mem- 
 ber of the association. 
 
 To quote Mr. James C. Hallock:
 
 172 MONEY AND INVESTMENTS 
 
 " To clear his debits and credits, the clearing-house acts as 
 a member of itself, having a desk and number like any mem- 
 ber. The banks charge it with the out-of-town checks left 
 for collection, and it charges them with the checks drawn on 
 them and remitted to the manager, also with the New York 
 exchange and currency. The one side balances the other, 
 upon proper adjustments for errors, omissions, and delayed 
 remittances. 
 
 " The settlement is through the regular morning clearing 
 on the second business day after the checks to be collected 
 are delivered at the clearing-house and mailed to the country 
 banks. 
 
 " To keep the accounts straight, check tickets are used. 
 The manager checks the amount of each package by the foot- 
 ing on the stub he retains of the slip which accompanied it. 
 He checks the amount of each letter by the footing on its 
 stub which he retains. He checks his receipt for collections 
 by the credit ticket each bank presents, giving the whole 
 amount of checks it claims to have delivered, and the amount 
 on each State. Thus extraordinary accuracy is attained with 
 ease." 
 
 The total clearings in the foreign department for the year 
 ending March 31, 1906, were $618,335,000. 
 
 Foreign Exchange. See " Exchange." 
 
 Foreign Exchange Finance Bills. See " Finance Bills." 
 
 Foreign Loans. Explained under " Sterling Loan." 
 
 Foreign Rails. The English term for all foreign railroad 
 securities, although the London stock broker is usually a 
 little more explicit, using the term " Cuban Rails " for rail- 
 road securities of Cuba; " American Rails " for our own; 
 and so on. 
 
 Foreign Traveler's Letter of Credit. See " Letter of Credit." 
 
 Forfeit. A deposit made, for instance, by John Smith to 
 insure his fulfilling his part of a contract entered into with 
 Charles Jones; this deposit to become the property of Jones 
 in case of Smith's failing to carry out his agreement. (See 
 also " Sealed Bid.") 
 
 Forged Bonds. Recently (during the winter of 1905-1906) 
 there has been a considerable agitation on the subject of forged 
 municipal bonds, and numerous instances have occurred caus- 
 ing serious loss and inconvenience. There are several ways in 
 which this sort of forgery can be accomplished. As a munic- 
 ipal bond is not customarily executed upon protective paper, 
 such as must be used for securities to be listed upon most stock 
 exchanges, many being lithographed and perhaps only printed, 
 any ordinary printing establishment being employed for the
 
 MONEY AND INVESTMENTS 173 
 
 purpose, there is very little standing in the way of the repro- 
 duction of the actual form of the bond itself, the signature of 
 the coupon being almost invariably a facsimile of that of the 
 official required to sign the same, and not a pen and ink sig- 
 nature. Again, a good many smaller municipalities may 
 leave the furnishing of the form of bond entirely to the banker, 
 who may, with ease, have more bonds printed than required. 
 Now, as to the attaching of the signature and seal. The latter 
 is of no great difficulty, as a reproduction of the seal can 
 most generally be made without much trouble. The signa- 
 ture, or several such, upon the face of the bond may be easily 
 accomplished, as there is not great need of a careful imitation 
 of the genuine. Bonds are not like a check, and the signa- 
 tures ordinarily do not have to pass the scrutiny of some one 
 familiar with the handwriting of the proper signers. 
 
 It will be seen that all the above is easily within the ability 
 of a fairly clever dishonest person. When the first coupons 
 mature, however, if collected through some other source than 
 the party who forged them, the forgery will be detected; but, 
 in the meantime, dishonest ends may have been accomplished. 
 
 There is one way which the purchaser of a municipal bond 
 may reasonably satisfy himself as to the genuineness of the 
 signatures. When the bonds are taken up and paid for by the 
 banking house originally purchasing them, they should be 
 accompanied by a paper, known as a " signature certificate," 
 upon which should be the pen and ink signatures of each 
 official required to sign the bonds, which signatures should be 
 attested as genuine before some bank official in the city or 
 town from whence the bonds emanated or by a notary public 
 located therein. This " signature certificate," when care- 
 fully compared with the signatures upon the bonds, will prove 
 pretty conclusively as to whether or no they are spurious. 
 Bonds which have been outstanding for some years, and 
 upon which it is reasonable to suppose that the coupons have 
 been collected from time to time, would hardly require the 
 taking of such precautions as above suggested, as it would be 
 a reasonable certainty that forgery would have been long 
 before detected. This all, therefore, applies to bonds of com- 
 paratively recent issue, or what may be termed " new issues." 
 
 The proper remedy for all this is for the several States to 
 enact laws, as has already to a limited extent been done in at 
 least one of our States, which should provide for the examina- 
 tion of each issue as to its legal status by the attorney-general, 
 or some proper authority, and thereafter should bear a cer- 
 tificate to the effect that each bond had been so approved. 
 Or, at least, laws should be passed whereby each bond issued 
 by a municipality in any given State should be examined 
 and found genuine by the proper State official and attested
 
 174 MONEY AND INVESTMENTS 
 
 to that effect and sealed accordingly. Whereas, such bonds, 
 perhaps, would not be entirely beyond forgery, it would make 
 such an act difficult. This having them countersigned, as it 
 were, is worth attention, as it brings into play the same pre- 
 caution as taken by many banks and corporations in counter- 
 signing all checks. 
 
 The question may be raised: Why does not the same ar- 
 gument apply to corporation bonds? It will be observed 
 that corporation bonds bear a certificate of the trustee, which 
 is a safeguard somewhat similar to that suggested above. 
 The purchaser of bonds of any kind should examine them 
 very carefully to see that all signatures are attached, or seals 
 placed thereon, if any are required, and that any certificates, 
 such as a trustee's certificate, are signed. It is not uncommon 
 to "find that some bonds have passed through the hands of the 
 most careful bankers with some of the above essentials 
 omitted. 
 
 For Money. For cash. This will be understood by re- 
 ferring to " Consols for Money." 
 
 For the Account. An English term indicating a purchase 
 of securities for delivery on an " account-day," as the " fort- 
 nightly settling-days," to which refer. A security bought for 
 immediate delivery is known as " for money." 
 
 For the Opening. The sale of a stock for delivery after the 
 opening of a company's transfer books. (See " Books Close.") 
 This must not be confused with " at the opening," which 
 is explained under that heading. 
 
 Fortnightly Settlement. See " Fortnightly Settling-Days." 
 
 Fortnightly Settling-Days. The four days in London (" ac- 
 count-days "), occurring approximately every two weeks, 
 upon which securities contracted for sale during the pre- 
 ceding fortnight are delivered and paid for, as well as all 
 differences settled. These days are set by the London Stock 
 Exchange Committee some time ahead and so arranged as not 
 to cover a Saturday, Sunday, or a holiday. The term " fort- 
 nightly settlement," as commonly used in London, is some- 
 what misleading, as that city " settles " twenty-four times a 
 year, or twice a month. " Fortnightly settlements " would 
 strictly call for twenty-six settlements. Twenty-eight days, 
 therefore, must be distributed over the twenty-four settle- 
 ments. This is accomplished by allotting nineteen-day ac- 
 counts, and once in a while a twenty-day account occurs. 
 
 Although there are really four days in the settlement, 
 by general custom the last day is referred to as the third day, 
 and so backward in reverse order, so that really the first day of 
 the settlement is not called the first day at all. This may be
 
 MONEY AND INVESTMENTS 175 
 
 explained from the fact that the first day is really " carry-over 
 (or ' contango ') day " in mines, and the second " carry-over 
 day " for the rest of the market. The settlement was originally 
 of three days, when the first day was " carry-over day " for 
 everything. After the settlement was changed to four days, 
 by preceding it with another " carry-over day " for mines, 
 the " carry-over day " for the rest of the market was still 
 referred to as the first day. The two " carry-over days " are 
 followed by what is known as" ticket-day," and the last day 
 of the settlement is " pay-day." (These subjects will be found 
 explained under their separate headings.) Should the days 
 be so set that the " contango day " for mining securities 
 would, in the ordinary course, fall on a Saturday, " mining 
 contango day " would be the last preceding business day. 
 
 Forward Movement. An advance in prices. 
 
 Founder's Shares. Much the same as " promoter's shares," 
 but as this is more particularly an English term, and they are 
 now seldom, if ever, issued, no more space need be given the 
 subject. 
 
 Fourpence, Fourpenny Piece, or Fourpenny Bit. A silver 
 coin of Great Britain, equal in value to about 8 cents United 
 States money. Also called " groat " and " joe." 
 
 Four Ports. New York, Boston, Philadelphia, and Balti- 
 more. 
 
 Fractional Currency. Money of lesser denominations than 
 $1. Coins are all we now have in general use of this kind of 
 money, but not so formerly, as is explained under " Sus- 
 pension of Specie Payment." 
 
 Fractional Lots. The usual units for transactions upon the 
 stock exchanges are based upon 100 shares of stock or $10,000, 
 par value, in bonds. Transactions for lesser amounts are 
 known as " fractional lots," or " odd lots." On many ex- 
 changes lesser amounts, say 50 shares of stock or $5,000, par 
 value, in bonds, are the units. 
 
 Franc. The unit of money of the " Latin Union " France, 
 Switzerland, etc., as the dollar is for the United States 
 and Canada, and equal to $.193 United States money. 
 
 In quotations of foreign exchange " francs " indicate 
 exchange on Paris. 
 
 France, Government Bonds of. See " Rentes." 
 
 France, Offering American Securities for Sale. The Daily 
 Consular Report of June 8, 1907, gives the following extract 
 from the law of Jan. 30, 1907, which is of interest to those 
 contemplating offering American securities in France: 
 
 " Prior to all measures of publicity the parties issuing, ex- 
 hibiting, introducing, or offering for sale such securities shall
 
 176 MONEY AND INVESTMENTS 
 
 cause to be inserted and published in a bulletin supplement 
 to the Journal Officiel, the form of which will be determined 
 by decree, a notice containing the following announcements: 
 
 " First, the denomination or title of the society (or com- 
 pany). Second, citation of the legislation (French or foreign) 
 under which the corporation is organized. Third, the location 
 of its central office. Fourth, the object of the enterprise. 
 Fifth, the period of time for which the company is authorized. 
 Sixth, the amount of its capital, and the amount assessed and 
 paid or remaining to be paid in, on each class of securities. 
 Seventh, the last balance sheet, duly certified as being a true 
 copy, or a statement to the fact that one has not yet been 
 issued. 
 
 " There shall be also indicated the amount of obligations 
 which have been already issued by the company, with enu- 
 meration of the guarantees which are attached thereto. 
 
 " There must be furthermore stated the stipulated benefits 
 which accrue to the profit of the organizers, administrators, 
 and managers of the company. 
 
 " The issuers, exhibitors, introducers, and those who offer 
 for sale such securities shall be domiciled in France; they shall 
 be required to sign the above specified notice with their name 
 and address." 
 
 Franchise. A particular privilege granted generally to an 
 incorporated body. It is necessary, for instance, for a street 
 railway company to obtain a "franchise; " that is, a privilege to 
 operate and do business, before constructing its road. A 
 franchise may be perpetual; that is, granted for all time, but 
 very frequently it is limited in its duration. 
 
 Great care should always be taken by a purchaser of a bond 
 to be sure that the franchise covering the property bonded 
 does not expire before the date of the maturity of the bond. 
 In buying stock in a corporation, which, for all practical 
 purposes, has no date of maturity, the length of the franchise 
 should be taken into consideration, for if at its expiration it 
 cannot be renewed, or renewal obtained only under arduous 
 conditions imposed upon the corporation, it might not be 
 desirable to be among its stockholders. The value of a ter- 
 minable " franchise " is questionable. In these days of the 
 agitation for " municipal ownership " this franchise question 
 is a very serious one, and time should be allowed to investi- 
 gate thoroughly, and the future read with all the care possible. 
 
 Franc Loan. An issue of bonds, or similar securities, the 
 principal and interest of which are payable in " francs," i.e. 
 French money. 
 
 Francs. See " Franc." 
 
 Franklin. Franklin Mining Co. (Copper.)
 
 MONEY AND INVESTMENTS 177 
 
 Fraternal Insurance. See " Assessment and Fraternal In- 
 surance." 
 
 Free Credit. See " Open Account." 
 
 Free Silver. This term as commonly understood in reference 
 to the coinage question, means the right on the part of any 
 person to deposit " standard silver bullion " at any of the 
 United States mints in any amount, and have the same coined 
 at the Government's expense; the depositor receiving in 
 return for his bullion silver coins containing in total the same 
 weight of fine silver as brought by the depositor. 
 
 Free Tontine Insurance. See " Tontine Insurance." 
 
 Freight Density. The same as ton miles per mile of line. 
 It measures the general volume or density of business 
 done. 
 
 To find the " freight density," as it is called, of a railroad, 
 divide the total number of tons (for a given period) carried 
 one mile (or the " ton mileage ") by the number of miles of line 
 operated. Example: Take a railroad 100 miles long. Sup- 
 pose, to make it as simple as possible, that all freight carried 
 was for half its length, and that in a year 1,000,000 tons were 
 hauled the 50 miles. This would give 50,000,000 tons hauled 
 one mile; i.e. 1,000,000 tons hauled 50 miles is the same 
 as 50,000,000 tons hauled one mile. Dividing this " ton 
 mileage " by 100 the number of miles of line operated 
 we get 500,000, which is the number of " tons carried one 
 mile per mile of line." 1 (See " Ton Mile " and " Ton Mile 
 Cost.") 
 
 Freight Miles. Same as " ton miles." This is explained 
 under " Freight Density." 
 
 Frisco. Saint Louis and San Francisco Railroad Co. 
 
 Frozen Out. Used in reference to a broker closing out a 
 marginal account when the " exhaust price " has been 
 reached. (See " Exhaust Price.") If one should lose his 
 position as officer or director in a corporation, by a prear- 
 ranged plan on the part of others holding the control, the 
 expression " frozen out " might be applied. 
 
 Frs. The sign used in the French monetary system for 
 " francs," as $ is for our dollar. 
 
 Fruit. United Fruit Co. 
 
 Full Stock. This term is used to distinguish shares of a 
 par value of $100 from shares of a lesser par value, say $25, 
 which, for example, would be called " quarter stock." 
 
 Fully Paid (Full Paid). No more due; no further payment 
 
 1 Statistics of Railways in the United States, 1904. Interstate Commerce 
 Commission.
 
 178 MONEY AND INVESTMENTS 
 
 may legally be demanded. A stock is " fully paid " when 
 it has been issued in exchange for its face value in cash, or its 
 equivalent; issued in exchange for its value in property. 
 In many States it is unlawful to issue stock in all, or at least 
 in certain classes of, corporations except as " fully paid." 
 This law is sometimes circumvented by property, which is 
 desired by a certain corporation, being purchased in the name 
 of some disinterested person, and by him sold to the corpora- 
 tion at a great advance in price, the corporation paying him 
 in stock, equivalent in its face value to the price at which 
 the property is taken by the corporation. This stock is after- 
 wards distributed in accordance with the previous arrange- 
 ment made. This is a questionable proceeding, but is a practice 
 which has been largely entered into, particularly in recent 
 years. (See " Non-assessable.") 
 
 Funded Debt. The bonded, or other debt, of a more or less 
 permanent nature. 
 
 Funding. Converting debts not bonded of various 
 amounts and maturities, or a debt now or soon due, into a 
 unified form, usually with a fixed rate of interest, maturity, 
 etc. As an example, imagine a city to have outstanding 
 debts in the form of notes which fall due from time to time, 
 and which the city has to renew or extend, and which it ap- 
 pears unable, from its resources, to pay off for a term of 
 years. By the method of renewing, from time to time, ex- 
 cessive rates of interest are often paid, and, in the long run, 
 it is an expensive way of borrowing. By the issuing of bonds, 
 at a favourable opportunity, money may be obtained at a 
 lower rate of interest, and a saving made to the city. The 
 selling of bonds in this case to pay off the notes is called 
 " funding." Unless the expenses incurred in the process of 
 " funding " are included as part of the new issue, the latter 
 sold at a discount, or a premium (or bonus) paid to retire the 
 former debt, the " funding " issue should be equal in amount 
 to the indebtedness " funded." The habit is to issue bonds 
 to " fund " a debt, but issuing stock or any more or less per- 
 manent kind of security to provide for floating indebtedness 
 is, to all intents and purposes, " funding." 
 
 Funding and Real Estate Mortgage Bonds. A good example 
 of an issue of this kind is that of the Western Union Telegraph 
 Co., which has an authorized issue of $20,000,000, dated 
 May 1, 1900. These are secured by a first mortgage upon the 
 company's real estate in New York and Chicago, together 
 with all buildings, fixtures, and telegraphic equipment thereon. 
 The company agrees that no future lien shall be created upon 
 any of its real and personal property within the United States 
 having priority over these bonds, or create any mortgage
 
 MONEY AND INVESTMENTS 179 
 
 without recording a prior lien as security for the payment of 
 the principal and interest of these bonds. 
 
 The object of a loan of this kind is when a relatively small 
 issue is to be made to save the trouble and expense of mort- 
 gaging all the property of a company by selecting certain 
 parcels of real estate sufficient to properly secure the issue. 
 
 Funds. (See " Cashier's Check.") By the term " funds " 
 is generally understood cash or money, checks, drafts, or any 
 such instruments which can readily be converted into money. 1 
 
 Futures. (Explained under " Grain.") There was a 
 United States Supreme Court decision in the Chicago Board 
 of Trade case, in which Judge Oh>er Wendell Holmes con- 
 cluded with the statement that transactions in " futures " 
 differ from mere gambling contracts. He said in part: 
 
 " People will endeavour to forecast the future and make 
 agreements according to their prophecy. Speculation of this 
 kind by competent men is the self-adjustment of society to 
 the probability." 
 
 F. & A. Interest or dividends payable semi-annually, 
 February and August. 
 
 G 
 
 g. Gold. 
 
 Garnishment (Garaishee). A method of attaching property 
 or credits belonging to a debtor, but held for or owed to him 
 by another. For example, suppose Robinson owes Brown 
 $40, which the latter has not been able to collect. By a legal 
 process, he attaches Robinson's bank account to the amount 
 of the debt, or, as it is called, " garnishees " the account. In 
 Massachusetts this process is called " trusteeing." 
 
 Gas Company Bonds. 2 Issue secured by first mortgages, or 
 " junior mortgages " properly protected, upon gas works 
 have proven a satisfactory class of investment. The per- 
 centage of loss has been remarkably small; the failures of gas 
 companies have been comparatively few. It was thought 
 that the advent of electrical lighting would injure existing 
 gas companies, but improved methods of manufacture have 
 enabled them to reduce rates and remain prosperous. 
 
 1 F. A. Cleveland describes " funds " as " any and all things which may 
 be accumulated and which may be currently used in a community in ex- 
 change for goods or properties of others." 
 
 * For the idea of the use of gas as an illuminant, the world is indebted to 
 William Murdoch, a Scottish engineer. F. A. Winsor, a German by birth, 
 carried out, however, the first street lighting, which occurred at Pall Mall, 
 where gas lamps were used Jan. 28, 1807. In 1810 a gas company was 
 formed. In 1813 Westminster Bridge was permanently lighted by gas 
 lamps, and in 1816 the general use of gas was adopted in London.
 
 180 MONEY AND INVESTMENTS 
 
 By substituting gas for the low candle power of coal a 
 household fuel has come into use in the form of gas stoves. 
 These are a source of great income to the gas companies. 
 Sir George Livesy estimates that there are over 550,000 in use 
 in London alone. 
 
 In many instances the combination of the two forms of 
 lighting under one company has been successful. 
 
 The usual care should be given in the selecting of gas com- 
 pany securities for investment. Net earning should be not 
 less than twice the interest charges; the mortgage ought not 
 to much exceed 50 or 60% of the replacement value of the 
 property; the franchise must outlive the bond issue; a 
 reasonable sinking fund is desirable; competition must, of 
 course, be considered; the city or town contract ' for lighting 
 should be at a satisfactory rate so that there is likelihood of its 
 being renewed from time to time, and rates to all customers 
 must be reasonable compared with similar conditions else- 
 where. 2 
 
 Natural gas propositions should be approached with cau- 
 tion. Many of them are proving short-lived. 
 
 The following quotation from a Boston newspaper is of in- 
 terest: " American experience does not greatly encourage 
 this policy (municipal ownership) and yet, were it submitted 
 to a majority vote in many municipalities, adoption would 
 probably follow. Only twenty gas systems in municipalities 
 of the United States are to-day publicly owned, as against 
 nine hundred and fifty-six in private hands. Electric lighting, 
 for some reason, has been a much more favoured municipal 
 enterprise, the figures standing one hundred and ninety-three 
 public systems to eleven hundred and ninety private, in places 
 having a population of more than three thousand, for which 
 these figures are all prepared. Certain things the community 
 can doubtless do better in its public capacity, and this is 
 roughly indicated by the decisions which Americans have 
 made." 
 
 GB. The " ticker " abbreviation for " gold bonds." 
 
 Gen. (or Gen'l). General general mortgage. 
 
 General and First Mortgage Bonds. See " General First 
 Mortgage Bonds." 
 
 General Contango Day. See " Fortnightly Settling-Days. " 
 
 General Expenses. This is one of the subdivisions of the 
 
 1 Under " Electric Light Company Securities " will be found further 
 information relating to city contracts, which applies with equal force here. 
 
 2 The tendency of gas companies is to reduce the price, as is shown by the 
 fact that in 1886 the average price paid by the consumers of Massachusetts 
 was $1.72, from which time there has been a steady decline down to the 
 present time, when it is but little in excess of $1.00.
 
 MONEY AND INVESTMENTS 181 
 
 form prescribed by the Inter-State Commerce Commission, 
 for the classification of the operating expenses of a railroad. 
 It includes the salaries paid clerks and attendants and general 
 officers, insurance, legal expenses, general office expenses 
 and supplies, stationery and printing properly belonging to the 
 same, and other expenses. 
 
 General First Mortgage Bonds. It is difficult to understand 
 why the word " first " should appear in such a title as the 
 above, as it is used. In practice, such an issue is either not 
 secured by a " first mortgage " at all, but is just a plain 
 " general mortgage " (see " General Mortgage Bond ") or 
 is, at the best, a " first mortgage " on but an insignificant 
 part of the property, in which case, " general AND first mort- 
 gage " would be the proper title. To be sure, a " general 
 first mortgage " may become a FIRST lien after the earlier 
 lien issues have been paid. 
 
 General Fund. Money not appropriated for some particular 
 purpose, but which may be used for general and miscellaneous 
 expenses. 
 
 General Indorsement. The same as " Indorsement in 
 Blank." 
 
 General Mortgage Bonds. This title has taken the place of 
 the old, but now disliked, " blanket mortgage." Secured 
 by a mortgage upon the property of a corporation and sub- 
 ject to earlier mortgages placed upon parts or all of its prop- 
 erty. This is a very common method of borrowing money on 
 the part of railway companies, and has been necessitated in 
 this country by its remarkable growth and development. 
 The railroads, which at the time of their early construction 
 provided inadequately for the enormous demands upon their 
 capacity for handling traffic, as since developed, issued bonds 
 covering the property at the time of its construction, many of 
 which have not yet matured. The enormous increase in busi- 
 ness of such a railway has demanded tremendous enlarge- 
 ments to its road and equipment, and, as the value of such 
 property is largely in excess of the original mortgage or 
 mortgages placed upon it, a " general mortgage," so-called, 
 is issued, representing, in part, the value of the property in 
 excess of the earlier mortgages. When such a " general 
 mortgage " is issued, it is usually made large enough not only 
 to provide for the needs of the company at the time of its 
 issue and possibly for future extensions under proper re- 
 strictions, but to set aside in the hands of the trustee of the 
 mortgage sufficient bonds to be later disposed of to replace the 
 earlier mortgages as they fall due. This automatically re- 
 sults in a " general mortgage " eventually becoming a " first 
 mortgage."
 
 182 MONEY AND INVESTMENTS 
 
 The investment value of the above depends upon the stand- 
 ing of the company, its net earnings available for interest 
 charges upon the issue, etc., the amount of underlying liens, 
 and, in short, what equity there is in the property above the 
 general mortgage issue. In this connection read also " Con- 
 solidated Mortgage Bond." 
 
 George Smith's Money. A condition existed in the early days 
 in the West, when many of the then recently created Terri- 
 tories were suffering from a deficiency in metallic money, and 
 the lack of a proper system of " banks of issue." In 1839 
 two Scotchmen, George Smith and Alexander Mitchell, 
 created a new form of money in Wisconsin by obtaining from 
 the legislature of that Territory a charter for a Marine and 
 Fire Insurance Company, under which charter, although it 
 contained a special restriction against banking privileges, 
 notwithstanding, the company advertised to " receive money 
 on deposit and transact other moneyed operations." " Cer- 
 tificates of deposit " were consequently issued in sums ranging 
 from $1 up to $10, and were much in the form of bank bills. 
 As there was a great popular need for something of this 
 nature in the form of money, these certificates were soon in 
 circulation through many of the adjoining Territories. They 
 were redeemed in specie at the central office at Milwaukee 
 and at agencies in other Western cities in New York exchange, 
 at the then current rate. 
 
 The " George Smith money " was a good money, and was 
 freely accepted through that section of the country so long as 
 any of it was outstanding. It was always promptly paid upon 
 presentation. 
 
 Gilt-edged. Highest grade; most conservative class of 
 investments; those in which loss to the owner is least likely 
 to occur. One writer indefinitely defines " gilt-edged " secu- 
 rities as " those suitable for the investment of trust funds." 
 
 Give Up. To disclose the name of one's customer. 
 
 GM. The " ticker " abbreviation for " general mortgage." 
 
 GNT. The "ticker" abbreviation for " land grant," as 
 " land grant bonds." 
 
 Gold Banks. Associations may be organized under the 
 National Banking Act for the purpose of issuing bank notes 
 payable in gold. (See " Circulation.") Such banks are known 
 as " National Gold Banks," or " Gold Banks," and to take out 
 such circulation must deposit with the Treasurer of the United 
 States, in the same manner as prescribed for the taking out 
 of ordinary circulation, United States bonds bearing interest 
 but payable in gold, 1 but not exceeding eighty per cent, of 
 
 1 While the 2% Consols of 1930 are the only bonds which are payable
 
 MONEY AND; INVESTMENTS iss 
 
 the par value of the bonds deposited. These notes are payable 
 upon presentation at the bank of issue in gold coin of the 
 United States and shall be so redeemable. 
 
 While Section 5185 of the United States Revised Statutes, 
 authorizing the organization of " gold banks " has not ac- 
 tually been repealed, practically this result was obtained, 
 however, by the Act of Feb. 14, 1880, authorizing the conver- 
 sion of " gold banks " into " currency banks." As a result, 
 there are, to-day, no " gold banks " in existence. 
 
 Gold Bars. 1 Bars of pure gold. (Refer to " Assay Office 
 Bar.") 
 
 Gold Basis. A country is on a " gold basis " when values 
 are measured in gold; gold is the monetary standard. (See 
 " Standard of Value.") 
 
 Gold Bonds. In America bonds payable in United States 
 gold coin of the present standard of weight and fineness. 
 
 Gold Brick. Any unsound dishonest scheme or investment 
 made to have all the appearances of honesty and soundness. 
 
 Gold Certificates. As a matter of convenience to the public, 
 the United States Government has authorized the Secretary 
 of the Treasury to receive deposits of gold coin and bullion in 
 sums not less than $20, and issue certificates therefor in de- 
 nominations not less than $10. Inasmuch as these certificates 
 are receipts for gold, they are redeemable in gold coin by the 
 Treasurer and by all Assistant Treasurers of the United States. 
 The law provides that " the Secretary of the Treasury shall 
 suspend the issue of gold certificates whenever the amount of 
 gold coin and gold bullion in the Treasury, reserved for the 
 redemption of United States notes, falls below one hundred 
 millions of dollars." The Secretary is also empowered, in 
 his discretion, to suspend such issue whenever and so long as 
 the aggregate amount of United States notes and silver 
 certificates in the general fund of the Treasury shall exceed 
 $60,000,000; he must also see that at least one-fourth of all 
 certificates outstanding shall be in denominations of $50 or 
 less. 2 
 
 On Feb. 28, 1905, the face value of these certificates out- 
 standing amounted to $528,149,969. 
 
 They were not legal tender, but receivable for customs, 
 
 principal and interest in gold, yet, since the Act of March 14, 1900, pro- 
 vided that the Secretary of the Treasury shall maintain all forms of United 
 States money at a parity of value with gold, it seems that all United States 
 bonds would do for the purpose. 
 
 1 Prescott, in his " Conquest of Mexico," speaks of the ancient Aztecs 
 using gold " cast into bars " as part of the regular tribute of the Southern 
 provinces of the empire. 
 
 1 Act of March 14, 1900, as amended March 4, 1907.
 
 184 MONEY AND INVESTMENTS 
 
 taxes, and all public dues.* They may be used as part of a 
 national bank's " reserve." 
 
 Gold Coinage. The United States Government provides for 
 free and unlimited coinage of gold; that is to say, gold bullion 
 of standard quality may be deposited at the mints in any 
 amount and coined for the benefit of the depositor, without 
 any charge being made for the coinage. If the bullion is not 
 standard a charge is made for parting, or refining, or for copper 
 alloy, as the case may be. 
 
 Although the mints may lawfully refuse to receive for 
 coinage purposes gold bullion of less value than $100, in prac- 
 tice they do not do so. 
 
 Gold Coin of the United States. " Is legal tender at its nom- 
 inal or face value for all debts, public and private, when 
 not below the standard weight and limit of tolerance pre- 
 scribed by law; and when below such standard and limit of 
 tolerance it is legal tender in proportion to its weight." 
 
 Gold coin is issued by the Treasurer of the United States 
 and all the Assistant Treasurers in redemption of Treasury 
 Notes of 1890, United States Notes, and Gold Certificates. 
 
 Gold Comer. Described under " Black Friday." 
 
 Gold Exchange. The " Gold Exchange " grew out of specu- 
 lation in gold during the Civil War, and was organized in 1864. 
 It was here, i. e. the " Gold Room," as it was called, that the 
 bull movement in gold was manipulated which resulted in the 
 memorable collapse known as " Black Friday," to which 
 refer. 
 
 Gold Exchange Standard. The monetary system under 
 which silver and minor coins form the chief part of the circu- 
 lation, but are kept at a fixed value in gold by government 
 control of their quantity and by the sale of drafts on a gold 
 exchange fund at par, subject to the usual charges for gold 
 exchange. 1 
 
 The Philippine Islands and Mexico are examples of the 
 adoption of this monetary system. 
 
 Gold Export Point. Whenever the prices of foreign " ex- 
 change " reaches the point where it is cheaper to buy gold 
 bullion, and ship same, to adjust a debt due than to buy 
 " exchange," the " gold export point " is reached. Considera- 
 tion is taken of cost of bullion, expressage, insurance, loss of 
 interest during transit, etc. When rates are rising toward 
 the export point they are referred to as " unfavourable." 
 
 The London Economist has for years been quoting the 
 
 1 The author is indebted to Mr. Charles A. Conant, the able author of 
 many financial publications, for furnishing this definition of " Gold Ex- 
 change Standard."
 
 MONEY AND INVESTMENTS 185 
 
 " gold export point " at $4.89, and the " gold import point " 
 at $4.827, but recently the reduced cost of freight and insur- 
 ance, together with the shorter time consumed in transmis- 
 sion, have tended to bring the two points nearer together, 
 and so, generally speaking, the " gold export point " is now 
 considered to be $4.884 and the " gold import point," figuring 
 interest at 6%, as $4.833. 
 
 Gold Export and Imports. See " International Movement 
 of Gold." 
 
 Gold Import Point. 1 Read " Gold Export Point," by which 
 it will be seen that what conditions make for such a point in one 
 country as against another, will naturally result in the " im- 
 port point " in the other. When the price of London ex- 
 change, for example, falls to about $4.833 this point is con- 
 sidered to be reached. As it tends in this direction it is called 
 " favourable." Nevertheless, on Dec. 29, 1906, " sight 
 exchange " on London fell to the extremely low price of 
 $4.8265.75; but no gold was imported. This was due to the 
 fact that the Bank of England discount rate was ruling 6%, 
 and the bankers did not wish to force an increase in the rate, 
 which would have been the natural result of exporting gold 
 from that country to America. 
 
 Gold Inflation. There is a theory that a relation exists be- 
 tween the supply of gold and the prices of commodities. Prof. 
 Cairnes claimed that the rise in prices was the gradual result of 
 the gold discoveries in Australia and California. 
 
 The space at the author's disposal will not permit of a 
 covering of the ground here. Those desiring to thoroughly 
 cover the subject cannot do better than to refer to Conant's 
 " Principles of Money and Banking," in which he treats most 
 exhaustively upon the matter. 
 
 Gold Movement. See " International Movement of Gold." 
 
 Gold Note. Another very common term for " gold certifi- 
 cate." It is also used in reference to any promissory note 
 which calls for payment in gold. 
 
 Gold Point. By this may be understood either the " gold 
 import point " or the " gold export point " to which subjects 
 reference may be had. 
 
 Gold Product of the United States. The Secretary of the 
 Treasury gives the estimated product of this country for the 
 calendar year 1904 as $80,464,700, and for 1905, as esti- 
 mated by the mint, it was $88,180,700, and for 1906, $96,- 
 101,000. 
 
 1 Since the Secretary of the Treasury has established the precedent as 
 explained under the first foot-note to " International Movement of Gold " 
 this changes the " import point."
 
 186 MONEY AND INVESTMENTS 
 
 Gold Product of the World. From the time of the discovery 
 of America to 1520, Dr. Adolph Soetbeer estimates the average 
 annual product of gold as only $3,855,000. At no time did the 
 average output exceed $16,500,000 until the decade ending 
 1850, during which time the average was $36,393,000. Be- 
 ginning with 1851, the average did not drop below $100,000,- 
 000 except from 1881 to 1885, during which time it was 
 $99,116,000. In 1896 it exceeded $200,000,000 and in 1905 
 reached the amount of $376,289,200. 1 The estimated total 
 world's product from 1493 to 1905 inclusive is $11,673,855, 800. 
 The above averages, unless otherwise stated, are based upon 
 5, 10, or 20 year periods. 
 
 Gold Reserve. In order that the paper money of a nation 
 may pass among its people at its face value, the belief must 
 prevail that the government will, upon request, redeem the 
 paper in full in coin. By an act of the Congress of the United 
 States in the year 1900, the duty was imposed upon the Secre- 
 tary of the Treasury of maintaining at an equal value all forms 
 of governmental money and redeeming the Government's 
 legal-tender notes at par. In order to do this he shall keep a 
 "gold reserve" of $150,000,000 for the only purpose of re- 
 deeming, on presentation, the United States notes and 
 Sherman notes. Upon the reserve falling below $100,000,000 
 he shall sell United States Government bonds to replenish it. 
 Gold Standard Act. See " Financial Bill." 
 Gold Standard of Value. See " Standard of Value." 
 Gold Treasury Certificates. See " Gold Certificates." 
 Good Delivery. The rules of the stock exchanges provide 
 certain regulations regarding the signing of stock certificates on 
 the back for transfer, and other regulations regarding similar 
 matters and actual physical condition of securities. For a 
 security to be " good delivery " all these regulations must be 
 complied with. 
 
 Good until Cancelled. An order to buy or sell, and which 
 remains good until countermanded by the one giving the 
 same. It is frequently abbreviated by the letters " G. T. C.," 
 i. e. " good till cancelled." It is the same thing as an " open 
 order," so called. 
 
 Good-Will. When this term is used in reference to a business 
 or industry, it indicates the business already established. 
 It is the material value of a business as a profit-producing 
 enterprise, either realized or prospective. 
 
 Some writers define this subject as the bonded debt of a 
 plant less its valuation at forced sale. Others, as the ad- 
 
 1 Estimated by the United States Mint.
 
 MONEY AND INVESTMENTS 187 
 
 vantage or benefit which is acquired by an establishment, 
 beyond the mere value of the capital, funds, or property 
 employed therein. 
 
 Buildings, machinery, etc., may be almost valueless for 
 any other purpose than for the particular product they are 
 turning out, and, consequently, the indebtedness against such 
 a property is, to quite an extent, dependent upon its success. 
 " Good-will " varies much in different industries. In a case 
 where there is more or less of a monopoly it may be very 
 valuable, or where the character of the goods manufactured 
 enjoys such an established reputation and demand that there 
 is little danger of competition. But long consideration should 
 be taken of this item in the assets of a corporation in determin- 
 ing the amount of indebtedness which may be placed upon the 
 same. It is better financiering to value the " good-will " 
 only in reference to the issue of stock, and then conserva- 
 tively. 
 
 Goschens. See first part of " Consols." 
 
 Go Short. See " Selling Short," meaning the same. 
 
 Gould Lines (or Stocks). Stocks of corporations in which 
 George J. Gould, son of the famous Jay Gould, has a pre- 
 dominating influence; notably, Western Union Telegraph 
 Co., Missouri Pacific, Texas & Pacific, Denver & Rio Grande, 
 Rio Grande Western, Wabash, St. Louis Southwestern, West- 
 ern Pacific, Western Maryland, Wheeling & Lake Erie, and 
 the Central Branch Railway Companies. 
 
 Gourde. The monetary unit of Haiti, equivalent to $.965 
 United States money. 
 
 Government Assay Bar. See " Assay Office Bar." 
 
 Government Bond Interest Anticipated. There have been 
 numerous instances when the Secretary of the Treasury has 
 afforded relief to a stringent money market by the payment 
 of interest on United States Government bonds some time 
 previous to its actually being due. This occurred Dec. 15, 
 1905, after which date coupons due Jan. 1, 1906, were paid 
 on presentation, and checks mailed to registered holders. 
 The amount due was $4,200,000, which was expected to give 
 some assistance, for money rates were extremely high at the 
 time. 
 
 Government Bonds. Formerly we understood these to be 
 the interest bearing obligations of the United States of America, 
 but now that New York has become such an international 
 money centre, and Americans, like the English, have begun to 
 deal in foreign securities, many of the other government issues 
 Germany, Japan, Great Britain, etc., are largely held 
 here.
 
 188 MONEY AND INVESTMENTS 
 
 A brief sketch of the United States Government's debt from 
 its earliest creation may not be amiss. 
 
 Naturally, the first indebtedness was caused by the Ameri- 
 can Revolutionary War, and, thanks to the far-sightedness 
 of Alexander Hamilton, the debt was properly financed and 
 never repudiated. The new Government of the United States, 
 after the close of the war, found itself burdened with a total 
 debt of $72,775,895. Fluctuations of the debt have been as 
 follows: 
 
 Jan. 1, 1791 $75,463,476.52 
 
 Jan. 1, 1804 86,427,120.88 
 
 Jan. 1, 1812 45,209,737.90 
 
 Then followed the war with Great Britain, and, as a result, 
 the debt increased in 1816 to $127,334,933.74. In 1835 the 
 country was practically out of debt, then another war, 
 namely, with Mexico, resulted in a debt being created, which 
 was: 
 
 July 1, 1849 $63,061,858.69 
 
 July 1, 1857 28,699,831.85 
 
 The expense of the Indian War increased this debt, until 
 it reached in 1861$90,580,873.72. Then followed the Civil War, 
 which resulted in the enormous total interest bearing debt 
 Aug. 31, 1865, of $2,381,530,294.96. From this point the 
 debt was gradually reduced, so that on July 1, 1893, there 
 were only $585,073,100 bonds drawing interest, outstanding. 
 During the Cleveland administration, bonds to the amount 
 of $262,315,400 were issued, in order to keep the currency of 
 the country upon a gold basis. During the war with Spain 
 $198,792,660 additional were issued, but after this war a 
 slight reduction was made in the debt from surplus revenues, 
 and on July 1, 1905, the total interest bearing debt of this 
 government was only $895,158,340, which compares very 
 favourably with the debts of other nations. 
 
 There are some very salient features about the credit of the 
 United States, which is the highest of any nation on earth. 
 In the first place, our Government bonds sell at a higher price, 
 or, in other words, at a lower interest return, than the bonds 
 of any other nation. There are over $600,000,000 outstanding 
 bearing only 2% interest, being the lowest rate of any national 
 issue. This is due to several reasons, viz.: the existing belief 
 in the ability of the Government to meet its obligations; the 
 fact that it maintains the standard of gold payments, and, 
 added to this, the non-taxable features of the bonds, for they 
 cannot be taxed by either Government, State, or other munic- 
 ipality of the Union, and, besides, carry the privilege
 
 MONEY AND INVESTMENTS 189 
 
 of deposit with the government by national banks to secure 
 circulation; that is, the issuing of national bank notes. 
 
 Government bonds are issued in two forms, coupon and 
 registered. (See " Coupon Bonds " and " Registered Bond.") 
 The former may be converted into registered bonds of the 
 same loan, but there is no law authorizing the conversion 
 of registered into coupon bonds. Coupon bonds, for exchange 
 into registered, should be addressed to the " Secretary of the 
 Treasury, Division of Loans and Currency." The Depart- 
 ment makes no charge for conversion. 
 
 In case of loss of registered bonds, notify the Secretary of 
 the Treasury without loss of time in order that a " caveat " 
 may be entered to prevent the transfer of the missing bonds 
 on the department's books. Thoroughly describe each bond, 
 giving its number, the face value, act under which issued, rate 
 per cent., etc., all of which is another argument for retaining 
 a careful description of one's securities. The Treasury De- 
 partment will not stop payment on lost coupon bonds, or 
 coupons themselves, and all such will be paid to the party 
 presenting them to the department; no attention whatsoever 
 being paid to notices to the contrary from the legitimate 
 owners. 
 
 There are many regulations in which the investor or dealer 
 in Government bonds should be versed; such, for instance, as 
 relating to relief in cases of destroyed or defaced bonds and 
 destroyed coupons, transfer of bonds, assignment of bonds, 
 and of the same by attorneys, etc., all of which are set forth 
 very specifically in a book entitled " Regulations of the 
 Treasury Department in Relation to United States Bonds," 
 which it is advisable to apply for, as only the most essential 
 points are touched upon in the treatment of the subject 
 herein. 
 
 The issue of Government bonds bearing interest and out- 
 standing to-day are as follows: 
 
 Panama Canal Bonds bearing 2% interest, redeemable 
 Aug. 1, 1916, but due Aug. 1, 1936, interest payable quarterly, 
 beginning with February 1st. 
 
 Consols of 1930 bearing 2% interest, redeemable after April 
 1, 1930, interest payable quarterly, beginning with January 1. 
 
 Loan of 1908-1918, bearing 3% interest, redeemable after 
 Aug. 1, 1908, interest payable quarterly, beginning with 
 February 1. 
 
 Loan of 1925, bearing 4% interest, redeemable after Feb. 
 1, 1925, interest payable quarterly, beginning with Febru- 
 ary 1. 
 
 The "transfer books" are closed during the month im- 
 mediately preceding dates of interest payments, with the
 
 190 MONEY AND INVESTMENTS 
 
 exception of the 4% loans of 1925, in which case the books 
 close on the 15th day of the month preceding interest pay- 
 ment. Bonds not received for transfer prior to, or upon, the 
 day fixed for the closing of the books will not be transferred 
 until after the reopening of the same, and, consequently, 
 the interest for that quarter will be paid to the parties whose 
 names appear in the old bonds. 
 
 There are many large banks and banking houses which 
 make a specialty of dealing in Government bonds. Trans- 
 actions are not in as great a volume upon the stock exchanges 
 as through direct dealings with bankers, such as the above, 
 and prices at which purchases or sales are made without the 
 exchange may vary slightly from the stock exchange quota- 
 tions at the time. 
 
 Much information may be obtained in relation to Govern- 
 ment bonds from those making a specialty of dealing in them, 
 who, in some cases, have issued books full of data upon the 
 subject. 
 
 On Oct. 31, 1905, the national banks of the United States 
 held as security for circulation about 98% of all the 2% con- 
 sols of 1930, and a total of United States Government bonds 
 of all kinds of $493,912,790. This does not include the large 
 amount held by the national banks for other purposes. 
 
 The Supreme Court of the United States handed down a 
 decision in 1906 to the effect that interest upon United States 
 Government bonds is taxable, whether the bonds are owned 
 by an individual or corporation, and whether the interest 
 is held in the form of draft, check, or money. 
 
 Government securities may be considered among the 
 luxuries of investments. Those of our own country and 
 Great Britain rank the highest. Probably nothing safer can 
 be found, if the low interest return is no objection. They 
 always afford a ready market, and are in constant demand 
 among banking institutions, insurance companies, trustees, 
 etc. The market value is, of course, influenced by political 
 and industrial conditions, so likewise of other investments. 
 Government securities are constantly fluctuating, but the 
 price variations are of no great moment. At least, it is fair 
 to assume that even in a great crisis the fluctuations would 
 probably be less than the average of other securities. Al- 
 though Government bonds are not the most profitable outlet 
 for money, it is unquestionably a fact that some investors 
 would, in the long run, be better off with the low rate of 
 interest afforded by them, than results from their tak- 
 ing a greater risk by seeking in other directions for higher 
 rates. 
 
 The writer does not undertake to treat of this subject 
 beyond the two nations above referred to. It is impossible
 
 MONEY AND INVESTMENTS 191 
 
 to treat of the Government securities throughout the world. 
 Investment in French " rentes/ 7 German and Japanese bonds, 
 and in those of many other nations, is unquestionably safe; 
 but many South American countries should, to illustrate, 
 be approached with caution. 1 
 
 Government Depository. See " United States Depository." 
 
 Government Note. Government paper money. 
 
 Governments. " United States Government bonds." (See 
 " Government bonds.") 
 
 Grab. A definition for the slang meaning of this word has 
 been recently given in the New York State legislature by one 
 of the State Senators, who said: "It is giving great power 
 for nothing, sneaking bills through which have a hidden 
 purpose." 
 
 Grace. See " Days of Grace." 
 
 Grade. The per cent, of grade means so many feet vertically 
 in 100 feet horizontal. A 5% grade, for instance, means a rise 
 of 5 feet in each 100 feet of horizontal distance travelled. 
 A mile representing 5,280 feet, a 1% grade means a rise of 52.8 
 feet in that distance; a 4% grade means a rise of 211.2 feet 
 in a mile. 
 
 Graft. This is not a new thing; it has existed time out of 
 mind. " Graft " is an old word which has recently been 
 given a new meaning to meet the American demand for time- 
 saving, by expressing much in little. It denotes dishonesty 
 in business; corruption among public officials, or the abuse 
 of any trust to a dishonest money-making end. Technically 
 it does not mean putting the hand in the safe and deliberately 
 stealing; but the abuse of opportunities possessed over one's 
 fellows to make money. Selling one's vote or influence, 
 bribery, etc., are examples. 
 
 Grain. In buying or selling wheat, corn, etc., there are a 
 few essential points to understand although entering into 
 detail upon this subject is not within the scope of this work. 
 Trading in grain is not a common field for the investment of 
 funds on the part of such as it is the intention of this book to 
 assist. 
 
 Chicago is the leading grain and provision speculative 
 market in the world, and, on account of its being such a large 
 distributing market, is very apt to dominate prices. Short 
 or abundant crops of course naturally affect the price of 
 
 ^'Memoranda Concerning United States Bonds," Fisk & Robinson. 
 "Government Bonds," National City Bank, New York. "The American 
 Statesman Series." "Regulations of the Treasury Department in Rela- 
 tion to United States Bonds." Annual reports of the Secretaries of the 
 Treasury, etc.
 
 192 MONEY AND INVESTMENTS 
 
 grain. In dealing in grain, one usually speculates in what are 
 called " futures; " that is, if you should buy grain in Febru- 
 ary, you would very likely buy May grain, but if you should 
 retain your grain and not sell it until the first day of May, 
 it would become " cash " or " seller the month " grain, sub- 
 ject, of course, to what charges may be imposed for storage, 
 etc., after delivery. Literally speaking, when in February 
 you buy what is known as May grain, you buy it for May 
 delivery. Such transactions are called " futures." If, on the 
 first day of May, to carry out this same example, you still 
 wish to hold your investment, you sell for May delivery (or 
 " cash " grain, if delivery has been made) and purchase the 
 same amount of either June or July grain; that is, you 
 transfer it to some other month. This is known as " switch- 
 ing." 
 
 About three to five cents per bushel is the usual " margin " 
 required on such transactions in grain for future delivery 
 (see "Margin"), though, of course, the speculator will be 
 called upon to increase this amount if the market is in an 
 unsteady condition. 
 
 The usual trading unit in grain is 5,000 bushels. The com- 
 mission for the purchase or sale, or for the purchase and sale 
 is | cent per bushel. 
 
 Grain Bill. A " bill of exchange " (see that subject) drawn 
 against a shipment of grain. 
 
 Grain Pit. See " Pit." 
 
 Grain Roads. The railway companies, particularly of the 
 West and Middle West, which derive large earnings from the 
 transportation of agricultural products; such as the Chicago 
 & Northwestern Railway, Chicago, Burlington & Quincy 
 R. R., etc. 
 
 Granby. The Granby Consolidated Mining, Smelting & 
 Power Co., Limited. (Copper.) 
 
 Granger (or Granger Road). See " Grain Roads." 
 
 Great Holidays. " Legal holidays " observed in all the 
 States, as Sunday, Fourth of July, and Christmas. 
 
 Great Western. Chicago Great Western Railway Co. Fre- 
 quently known as the " Maple Leaf." 
 
 Greenbacks. These are the same as " United States notes." 
 
 Greene. The Greene Consolidated Copper Co. There is also 
 the Greene Consolidated Gold Co. 
 
 Greene-Cananea. Greene Cananea Copper Co., a virtual 
 consolidation of the Greene Consolidated Copper Co., and the 
 Cananea Central Copper Co. 
 
 Gresham's Law. Jevons, in his " Money and the Mechan-
 
 MONEY AND INVESTMENTS 193 
 
 ism of Exchange," briefly explains the law, the truth of which 
 Sir Thomas Gresham perceived three centuries ago, as " bad 
 money drives out good money, but good money cannot drive 
 out bad money." Jevons goes on to say further that " the 
 people, as a general rule, do not reject the better, but pass 
 from hand to hand indifferently the heavy and the light coins, 
 because their only use for the coin is as a medium of exchange. 
 It is those who are going to melt, export, hoard, or dissolve 
 the coins of the realm, or convert them into jewelry and gold 
 leaf, who carefully select for their purposes the new heavy 
 coins." 
 
 Groat. See " Fourpence." 
 
 Gross. Including everything no deduction being made. 
 This is more specifically set forth under the next sub- 
 ject. 
 
 Gross Earnings. The total amount of income received by a 
 corporation during any stated period from the operation of 
 its legitimate business. In some cases the income derived 
 from rentals or securities owned of other corporations, 
 in which possibly some of the surplus money of the 
 company may be invested, is included in gross earnings. 
 Strictly speaking, however, such items as this latter should 
 come under a separate heading. 
 
 Ground Floor (Price). A price less than which no 
 one obtained the security. A term often used to designate 
 the price at which the originators of a financial proposition, 
 such as a syndicate, obtained a participation or interest 
 therein, as distinguished from the price at which the same 
 securities were later sold to the public at large. 
 
 " He got in on the ground floor," meaning that he was a 
 participant in the original syndicate. 
 
 G. T. C. Good till cancelled. 
 
 GTD. The " ticker " abbreviation for " guaranteed." 
 
 Guanajuato. The Guanajuato Consolidated Mining and 
 Milling Co. (Gold.) 
 
 Guarantee. An undertaking that the engagement or 
 promise of another shall be performed. The 4% bonds of the 
 Ogdensburg & Lake Champlain R. R. Co. are guaranteed 
 by the Rutland R. R. Co., which means that the latter promises 
 their payment in case the former, for any reason, does not 
 fulfill its obligation. 
 
 An issue of bonds may be guaranteed in several ways: 
 First, the principal of the bond may be guaranteed only; 
 second, the interest only; third, guaranteed both principal 
 and interest. These are the three principal forms. 
 
 The word " guarantee " is often used in the same sense as
 
 194 MONEY AND INVESTMENTS 
 
 " guaranty," but in such cases the latter is more correct. 
 " Guarantee " may also be used to designate the party for 
 whom the " guaranty " is made. In the above case the 
 Ogdensburg & Lake Champlain R. R. Co. is the " guarantee." 
 Also read next subject and " guaranty." 
 
 Guaranteed Bonds. (What is set forth under the next 
 subject may be read in this connection.) The main point 
 is not to judge a bond on its guaranty alone, but look upon it 
 as the obligation of the issuing company without considering 
 the guaranteeing company, and if that does not prove the 
 mortgaged property of sufficient value to the guarantor to 
 make the guaranty worth while, then it is no proper outlet 
 for hard-earned savings. Naturally, the investor must 
 examine into such matters as the " form of guaranty " (see 
 that subject, and " Guaranteed by Indorsement "); the terms 
 and conditions upon which it was given; whether the principal 
 and interest are both guaranteed, etc. 
 
 Guaranteed by Indorsement. This is a term very frequently 
 used. There is a distinction between " guaranteed by indorse- 
 ment " and " guaranteed." An issue of bonds, for instance, has 
 been " guaranteed " by a company other than the one issuing the 
 same; these bonds may have been guaranteed after their issue, 
 and the fact of such guarantee may not appear on the bonds. 
 In case of an issue " guaranteed by indorsement " each bond 
 bears upon it the statement that it is " guaranteed " by the 
 corporation in question, and the signature of the proper officer 
 of such corporation appears in the statement setting forth 
 the " guarantee." 
 
 Guaranteed Stocks. Shares issued by one corporation for 
 the payment of the principal, or dividends on, one or 
 more other corporations have legally assumed responsibility. 
 Stocks may be guaranteed as to dividends only, or as to both 
 principal and dividends. Such stocks are a very favourite form 
 of investment, especially guaranteed railway company shares. 
 A great many of the large railway systems comprise smaller 
 properties which have been leased for a term of years, 
 sometimes the length of such lease, for all practical purposes, 
 being in perpetuity, the smaller property being leased to the 
 parent company in consideration of a fixed rental, from which 
 sum are distributed dividends to the shareholders. In the 
 case of a leased line to any one of the well established railway 
 properties of the country, there can be little question as to 
 the safety of the investment. In the case of a guaranteed 
 stock the main points necessary to consider are the ability to 
 pay on the part of the lessor company and the value of 
 such leased line to that company. Of course, it is well to 
 ascertain the validity of the contract between the two com-
 
 MONEY AND INVESTMENTS 195 
 
 panies, but under the present ability of expert lawyers to 
 raise legal quibbles over fine points, there seems little reason 
 to suppose that any rich and powerful railway company 
 could not find a means to invalidate any lease which it thought 
 profitable to get rid of, and, therefore, the safety of guaran- 
 teed stocks, like many other investments, among other things, 
 depends upon the probable intention on the part of the 
 guarantor to fulfil the obligation. This latter point, however, 
 need not always be given very serious consideration, because, as 
 stated above, stocks bearing the guaranty of our well-estab- 
 lished railway properties, as a class, certainly present a mini- 
 mum of risk to the investor, and it is not well to doubt the 
 intention to pay on the part of the present and future managers 
 of such corporations. 
 
 Many of our guaranteed stocks may legally be purchased by 
 savings banks of our Eastern States, and, consequently, com- 
 mand prices which reduce the interest return to within the 
 neighbourhood of 4%. A great many of them are non-taxable 
 when held by citizens of the State in w r hich the roads are 
 located, and, withal, there are so many good features about 
 guaranteed railway stocks that they must be considered as 
 one of our most conservative forms of investment. There 
 are numerous stocks of this class in w r hich the guaranty ex- 
 pires in a comparatively few years. The price at which such 
 stocks sell should be based upon their being worth not over 
 $100 a share at the time of the expiration of the lease or 
 guaranty. In other words, they should be figured for their 
 interest return as a bond which has a fixed date of maturity, 
 unless there is every reason to suppose that, at the expira- 
 tion of the lease, it will be renewed upon as favourable terms 
 as at present existing. There are some guaranteed railroad 
 shares which now pay dividends at the rate of 6% or over per 
 annum, the leases of which expire at no distant date, and of 
 which, owing to the ability of the lessor company to be in 
 position to dictate terms, it is fair to assume that no re- 
 newal will be made which will warrant better than 4% div- 
 idends in the future. 
 
 There are some large railway corporations which are bur- 
 dened with the leases of a great many smaller companies, which 
 latter do not return sufficient earnings to warrant the pay- 
 ment of the rental. It is probable that a great many such 
 leases would not be made to-day on the same terms as origi- 
 nally. In some instances they resulted from insiders buying 
 up stocks of small independent companies, selling at low 
 figures, and, after obtaining the control, leasing them to 
 connecting railway lines for a term of years at a high rental. 
 This kind of financiering proved very profitable from the 
 increase brought about in the market price of the shares.
 
 196 MONEY AND INVESTMENTS 
 
 The moral side of such an action we will not discuss, but it all 
 has a bearing upon the renewal of such leases after they 
 expire. 
 
 " Guaranteed stocks," other than railway issues, must 
 depend for their safety entirely upon the value of the guaran- 
 tee and the necessity of the guaranteed company to the 
 parent company. 
 
 Guarantor. One who promises that the engagement of 
 another shall be performed. See " Guarantee " in that 
 case the Rutland R. R. Co. is the " guarantor." 
 
 Guaranty. In financial matters, " guaranty," or " form of 
 guaranty," usually means the printed or written form, 
 properly signed, upon a security, whereby some party, not 
 originally issuing the security, promises its payment; that 
 is, guarantees the same. 
 
 A " guaranty " may not appear upon the bond or stock 
 itself, as explained under " Guaranteed by Indorsement." 
 The form of " guaranty " either appearing upon the security, 
 or set forth in some separate contract, must have careful 
 consideration on the part of the investor. For instance, in 
 the case of a bond, the form of " guaranty " should be such 
 that the guaranteeing company must live up to its guarantee, 
 if necessary to do so, BY PAYING THE SUM CALLED FOR INTO 
 
 THE HANDS OF THE TRUSTEE OF THE MORTGAGE, SO that the 
 
 coupons will be paid as presented and properly cancelled 
 by the trustee. This is to prevent the guaranteeing company 
 from purchasing the coupons and holding them as a claim 
 against the mortgaged property. A simple wording of a 
 " guaranty " of this kind is as follows: " For value received 
 the Ohio & Florida Railway Co. guarantees and assures the 
 payment of the principal and interest of the foregoing bond 
 at the office of the Penn Trust Co., in the city of Philadelphia, 
 Pa., as and when same respectively come due." 
 
 The form above is that part of the form of " guaranty " 
 which compels the guaranteeing company to pay the interest 
 and principal of the bond at the office of the trust company, 
 which is the point it is intended to emphasize here. 
 
 Also ^ see that the property guaranteed is of sufficient 
 value in earning capacity and otherwise to the guaran- 
 teeing company so that there may never in the future be 
 occasion for the latter to try to evade its liability. In 
 other words, do not purchase a guaranteed security merely 
 because it bears the " guaranty " of some other strong cor- 
 poration. Ignore such " guaranty " for the time being, and 
 consider the value of the property independently and its 
 value to the guaranteeing company. Exceptions undoubtedly 
 may be taken to this last, as in the case of some of our well
 
 MONEY AND INVESTMENTS 197 
 
 thought of railroad companies, but, in a general way, this 
 suggestion is worth considering. 
 
 Guardian. One legally intrusted with the care of the per- 
 son, and management of property, of a minor, imbecile, or 
 other person incapable of managing his/ affairs. Usually ap- 
 pointed by the court, but may sometimes be appointed under 
 a will. 
 
 Guilder. The old name for the monetary unit of value in 
 The Netherlands; a coin equal to $.402 United States money. 
 Also called " Gulden," but properly now " Florin." 
 
 Gulden. See " Guilder." 
 
 Guinea. An old English piece of money which has not 
 been coined since 1813, equal to 21 English shillings or about 
 $5.10 United States money. 
 
 Gunning (for) a Stock. At times, when a banking house is 
 known to be carrying an excessive amount of some stock, 
 another broker or a combination may use every means 
 to depress its price, and produce a sudden " break," thus 
 being able himself to buy at lower prices. The 'reverse of the 
 operation may be undertaken to compel those " Short " to 
 " cover." 
 
 Gusher. A self-flowing oil well, and one which produces 
 large quantities. 
 
 H 
 
 Half-Crown. A silver coin of Great Britain, equal in value 
 to about $.608 United States money. 
 
 Half-Dime. See " Five-Cent Silver Piece." 
 
 Half-Dollar. A silver coin of the United States containing 
 173.61 grains of fine silver and 19.29 of alloy. " Legal tender " 
 in amounts not in excess of $10. 
 
 Half-Eagle. A gold coin of the United States of the value 
 of $5, containing 116.10 grains of fine gold, and 12.90 grains 
 of alloy. 
 
 Halfpenny. A small coin of Great Britain, equal to about 
 one cent United States money. 
 
 Half-Sovereign. A gold coin of Great Britain, equal in 
 value to 10 shillings, or one-half the English " pound ster- 
 ling," and to $2.433 United States money. 
 
 Half-Stock. Shares with a par value of $50; two shares 
 to equal one with a par value of $100. Pennsylvania R. R. 
 Co., Reading Company, etc. 
 
 Hammered. In America, this is used to express a marked
 
 198 MONEY AND INVESTMENTS 
 
 forcing down of prices, as, for example, " prices were ham- 
 mered to-day." 
 
 Hammond's Time. " At fourteen minutes after two p. M., 
 (on the New York Stock Exchange) the words Hammond's 
 Time will be printed on the tape, and, shortly after, the lever 
 of the instrument will give fifteen distinct beats. 
 
 " At the end of fifteen beats it is 2h. 15m. p. M., and the 
 close of the recognized settlement time for transactions of the 
 Exchange." 1 
 
 This is frequently referred to as " time," but the full name 
 is derived from a watchmaker by the name of Hammond 
 who furnishes official time to the Stock Exchange. 
 
 Hard Coalers. Railroad companies, the earnings of which 
 are very largely dependent upon the transportation of anthra- 
 cite coal, including such roads as the Reading, the Delaware, 
 Lackawanna & Western, the Lehigh Valley, etc. 
 
 Harden. To advance in price. " The market hardened; " 
 a general advance in prices. 
 
 Hard Money. Metallic money; not paper money. 
 
 Hard Spot in the Market. Good strength caused by strong 
 and active buying. 
 
 Harriman Interests (or Lines). E. H. Harriman practically 
 controls the Union Pacific, Southern Pacific, and the San 
 Pedro, Los Angeles and Salt Lake R. R. Companies. He has a 
 very large influence, amounting virtually to control, in the Illi- 
 nois Central, Baltimore & Ohio, and the St. Joseph and Grand 
 Island Railway Companies. Besides all these, he has a large 
 influence in such roads as the Atchison, Topeka & Santa 
 Fe*, the New York Central & Hudson River, the Chicago, 
 Milwaukee & St. Paul, and the Chicago & Alton Railway 
 Companies. 
 
 Hawaiian Island Bonds. Issued under authority of Congress, 
 but the obligation of the Hawaiian Islands, and not of the 
 United States Government. The Congress has exempted from 
 taxation the " Fire Claim 4's," so-called, which were issued to 
 reimburse the owners of property destroyed at the time of 
 the bubonic plague at Hawaii. The question has been raised, 
 however, whether the rest of the Hawaiian issues are tax- 
 exempt in the United States. A legal opinion has been 
 rendered which indicates that such is probably the case. 
 
 Hawley Lines (or Roads). What are commonly known as 
 the " Hawley Lines " include but two roads, the Minneap- 
 olis & St. Louis R. R. Co., and the Iowa Central Ry. Co., 
 
 1 " The Ticker Book and Manual of the Tape," by S. 8. Fontaine and 
 R. L. Neville.
 
 MONEY AND INVESTMENTS 199 
 
 but the Hawley interests are more extensive, and reach other 
 properties, among which may be mentioned the Toledo, St. 
 Louis & Western R. R. Co. 
 
 Heavy. " The market was heavy on profit taking; " 
 meaning that prices had advanced sufficiently to tempt people 
 to sell their securities; enough to cause a decline in prices, 
 for, in order to find a market for the amount of securities of- 
 fered, lower prices had to be made to induce purchasing. 
 On account of this lowering in prices the market is called 
 " heavy." 
 
 Hedge. To buy or sell in order to lessen an anticipated loss. 
 An illustration would be in the case of one's having purchased 
 1,000 shares of stock in anticipation of a rise, instead of which 
 the stock actually declines, with indications of still greater 
 decline. The owner of the thousand shares of stock sells all 
 his holdings and then goes " short " (see " Selling Short ") 
 another thousand shares, hoping thereby to profit sufficiently 
 to make up his loss already sustained and possibly something 
 besides. 
 
 High Finance. A typical example of what is understood 
 by this term would be: such jugglery with other people's 
 money as has been disclosed in the recent life insurance 
 company scandals. 
 
 A writer, referring to a prominent man who has become rich 
 through rather unsavoury methods, says: " After his first 
 coup he forsakes for ever the cold arithmetic of commerce for 
 the rule of guess, dream, hope, and ' I will,' which constitute 
 the mathematics of ' high finance.' ' 
 
 Another writer remarks: " High finance and low morality 
 go together." 
 
 Hill Roads. James G. Hill has a predominating influence in 
 the management of the Great Northern Railway Co., and the 
 Northern Pacific Railway Co. These two control the Chicago, 
 Burlington & Quincy R. R. 
 
 Hoarding Money. To hide it in secret places. 
 
 Hocking Valley. The Hocking Valley Railway Co. Suc- 
 cessor to the Columbus, Hocking Valley & Toledo Railway Co. 
 
 Holder in Due Course. The holder of an instrument other 
 than the one to whom it was originally given, when obtained 
 in the due course of business and in a legal way. The rights 
 of a " holder in due course " are quite complex, but, in brief, 
 such a holder of an instrument possesses the same free from 
 any defect of title of prior parties, and holds the same free 
 from defences available for such parties among themselves, 
 and may enforce payment of the instrument for the full 
 amount thereof against all parties liable thereon.
 
 200 MONEY ANt) INVESTMENTS 
 
 The Statutes of Michigan say that: " A holder in due course 
 is a holder who has taken the instrument under the following 
 conditions: 
 
 " First, That it is complete and regular upon its face. 
 
 " Second, That he became the holder of it before it was 
 overdue, and without notice that it had been previously dis- 
 honoured, if such was the fact. 
 
 " Third, That he took it in good faith and for value. 
 
 " Fourth, That at the time it was negotiated to him he had 
 no notice of any infirmity in the instrument or defect in the 
 title of the person negotiating it." 1 
 
 Holding Company. Formed for the especial purpose of 
 holding or owning the shares of another company or other 
 companies; an arrangement whereby financial combinations 
 may indirectly control operating companies through owner- 
 ship of their capital stocks. A good example is that of the 
 Amalgamated Copper Co., which is a " finance company," 
 so-called, controlling the stocks of certain operating copper 
 companies. 
 
 This is generally done to circumvent the law, and thus 
 bring about indirectly the virtual consolidation of two or 
 more companies, when to do so directly would be illegal; or 
 where it may be impossible to bring about an actual consoli- 
 dation by the acquisition of all the outstanding stock. 2 The 
 " sub-companies " 3 as the several corporations thus brought 
 together are termed maintain their individual existence 
 as before, but the officials managing the same are appointed 
 by the " holding company." This latter is incorporated under 
 the laws of some such State as New Jersey, Maine, or West 
 Virginia, which has enacted laws to attract such corpora- 
 tions. The Northern Securities Corporation, brought into 
 existence under the laws of the first named State, is one of the 
 most colossal examples of the kind yet attempted. In this 
 case it was desired to consolidate certain railways; the laws 
 of some of the States, crossed by the roads, prohibited the 
 consolidation of parallel or competing lines. It was held that 
 these were such, and, therefore, to get around this, another 
 corporation was formed in New Jersey and its shares issued 
 in exchange for the shares of the railways in question. How- 
 ever, this has been held to be illegal by the Supreme Court of 
 
 1 Act 265, P. A. 1905. 
 
 2 The " holding company " might succeed in acquiring the total capitali- 
 zation of another corporation, dissolve it, and take actual possession of the 
 property represented. It is possible also for a " holding company " to 
 acquire possession of an unincorporated business, but it is almost entirely 
 for the acquisition of stocks of other companies that a " holding company" 
 is created. 
 
 3 Subsidiary companies.
 
 MONEY AND INVESTMENTS 201 
 
 the United States, and the stocks so taken in exchange have 
 been ordered distributed among whom the Court, in its 
 decision, conceives to be the proper owners. (See foot-note to 
 " Merger/') 
 
 A " holding company " may or may not result in good. In 
 general, the principle is wrong, as it naturally results in stock 
 watering, and concentrates control. It brings about un- 
 healthful stock gambling and stifles competition. Efforts 
 have been made in at least one State Legislature to limit to a 
 comparatively small sum the amount of the capital stock of 
 one company which may be held by another, thus preventing 
 the obtaining of control in this way. 
 
 Holding the Market. This is done by buying, as offered, 
 enough of the security in question to prevent its decline in 
 price. 
 
 Home Rails. Used in Great Britain to denote securities of 
 railways in the British Isles, but, in general, would indicate 
 the railway securities of the country wherein the term is 
 used. 
 
 Honour. To pay. A draft is " honoured " when it is paid 
 upon presentation, if it is a " sight draft," and " honoured " 
 when " accepted " if a " time draft." 
 
 House of Issue. A banking house which has the selling of a 
 given issue of securities. 
 
 How to Keep a Bank (or Trust Company) Account. See 
 " Bank Account." 
 
 How to Open a Savings Bank Account. Although require- 
 ments of banks in the various sections of the country differ 
 somewhat as to receiving deposits, yet the mode of procedure 
 as stipulated by one of the large metropolitan institutions is 
 complete enough to cover, in a general way, all cases. 
 
 On entering the bank, the intending depositor will be asked 
 by an employee whether a new deposit is contemplated, as 
 upon the latter depends the colour of the printed blank which 
 he will take and make entry of the amount thereon. This 
 slip, together with your money, you will take to the " receiving 
 teller's " window, being careful not to fold either the slip or 
 the bank bills, if any. The latter should be laid out flat, all 
 facing one way. If you deposit checks, write your name on 
 the back of each, regarding which see " Indorse " and " In- 
 dorse for Deposit." Remember that the bank does not agree 
 to accept checks, and accepts them only for collection for the 
 account of the depositor. It is better for the depositor to 
 have his checks converted into cash before entering the 
 bank. 
 
 The " receiving teller " will ask you to sign your name in
 
 202 MONEY AND INVESTMENTS 
 
 what is known as a " signature book," and will ask certain 
 questions, such as your address, name of father and mother, 
 and date of birth. He will also hand you a card, upon which 
 you will also sign your name, this card containing blanks to 
 be filled out with similar information to that which was 
 entered in the " signature book." Some banks require other 
 information than the above, such as place of residence, post- 
 office address, occupation, name of husband or wife, if married, 
 etc. 
 
 The teller will then enter the amount of your deposit in 
 what is called a " pass-book " or " deposit-book," and hand 
 the same to you. See that his entry agrees with the amount 
 of your deposit, and the matter is closed so far as making a 
 new deposit is concerned. 
 
 In making additional deposits, and stating your intent so 
 to do to the employee above referred to, he will take a different 
 blank (ticket), and enter thereon the number of your pass- 
 book, your name as it appears on such book, your present 
 address, and the amount of your deposit. Again, you should 
 be careful not to fold the bills or ticket, laying the former out 
 straight and all facing one way. The ticket, your money, 
 and your pass-book, you will take to the receiving teller, who 
 will make the entry in your book and return the same to you. 
 Again, and at all times, verify the amount of his entry. If 
 you are to deposit checks, the same instructions as already 
 given in relation to them applies. 
 
 In case deposits are to be made by mail, write a letter 
 giving the same information as provided in the deposit ticket, 
 enclose with your " pass-book " and deposit, and send, prefer- 
 ably, by registered mail. 
 
 At all times sign your name exactly as appears on the 
 " signature book " in the bank. If it is given there as " Maria 
 Jones," do not sign your letter otherwise, as, for instance, 
 " Mrs. James T. Jones." Be explicit in giving the proper 
 address for the return of the " pass-book." 
 
 As to withdrawals: You will present your " pass-book " at 
 the " paying teller's " window, who will identify you by your 
 signature, which he will verify with the one upon the signa- 
 ture card. If the amount exceeds $100, he will ask you ques- 
 tions, and your replies must agree with the information entered 
 on the card as regards your father's name, mother's name, 
 etc. You will sign a receipt for the money, the withdrawal of 
 which will be entered upon your " pass-book " and then you 
 will depart. 
 
 If it is desirable to withdraw money by mail, you will find 
 at the back of most " pass-books " a form of order which you 
 may copy and fill out and forward to the bank, accom-
 
 MONEY AND INVESTMENTS 203 
 
 parried by your " pass-book," at all times following instruc- 
 tions regarding signature and precise address, as suggested 
 above. 
 
 Whether making deposits or withdrawals, one should 
 acquaint himself with the rule of the particular bank with 
 which he is doing business in relation to when deposits begin 
 to draw interest or when interest may be sacrificed by a too 
 early withdrawal. In some savings banks deposits begin to 
 draw interest only from some stated day each three months; 
 in others, every month, and so on. Therefore, any money 
 deposited on the 25th day of January might not begin to draw 
 interest until the first day of April. In making withdrawals, 
 interest may be sacrificed. That is to say, any money with- 
 drawn previous to a certain date in accordance with the 
 above illustration we will suppose it to be withdrawn some- 
 time previous to the first of April interest would be lost on 
 that amount of money from the first of January up to the date 
 of withdrawal. 
 
 Most institutions require that the money shall have been 
 on deposit a certain length of time, say three months, in order 
 to be entitled to any interest whatsoever. 
 
 Parents occasionally wish to make a deposit in the name of 
 a young child. The best way to do this so that the money can 
 be withdrawn without trouble is to have the deposit made in 
 the names of both the child and one of the parents, as follows: 
 " John Black or Clara Black; " this will permit John, the 
 father, withdrawing the money at any time. 1 
 
 1 In many of our cities there is a mixed foreign population, and savings 
 banks so located have to consider this fact, which is best set forth by a letter 
 from W. S. Tibbets, of Somersworth, N. H. : 
 
 " I am afraid the present custom of this bank in regard to deposits and 
 withdrawals will not be representative of the State banks, as we have so 
 mixed a population. I try to make the act as simple as is consistent with 
 safety. After talking pigeon English with John Jones of Russia, Sweden, 
 Turkey, Armenia, Italy, Greece, or Canada, and coming to the conclusion 
 that he has some money that he wishes to place in the bank, I take what we 
 call a signature book headed ' I hereby agree to the by-laws of the Somers- 
 worth Savings Bank.' I enter in this the number of the deposit book I 
 intend to issue; then pass him the book and request him to sign his name 
 after the number, and then to write the town or city where he lives on the 
 same line; then select a card and enter his name and town; then pass him 
 the card and request him to write in the answers to the questions. While 
 he is doing that I make out a ledger card and deposit book numbered the 
 same; pass him the deposit book; place the ledger card and identifi- 
 cation or index card in a drawer to be checked back and accounted for after 
 business hours. 
 
 " When we receive the deposit by mail, which is a frequent occurrence 
 now, I enter the name and address 'by W. S. Tibbets, Treas.,' on the 
 signature book, and after the name I write ' by mail.' Then enclose the 
 card with the deposit book by registered mail, requesting him to sign his 
 name and fill out the questions and return card by mail to bank. Until 
 the card is returned we keep a blank card with name and number.
 
 204 MONEY AND INVESTMENTS 
 
 How to Open a Trust Company Account. See " Trust Com- 
 pany Account." 
 
 Humbolt. Humbolt Copper Mining Co. 
 
 Hung Up. To own anything undesirable; something which 
 either cannot be disposed of at all, or without loss. 
 
 Hypothecate. To place on deposit collateral security; 
 stocks, bonds, etc., as a pledge for a loan. 
 
 Ice. American Ice Co. 
 
 Illinois Central. Illinois Central R. R. Co. 
 
 Immediate Shipment. A Chicago Board of Trade term, 
 calling for shipment within three business days. 
 
 IMP. The " ticker " abbreviation for " improvement." 
 
 Imperial Bank of Germany. See " Bank of Germany." 
 
 Import Point of Gold. See " Gold Import Point." 
 
 Improvement. See " Betterment." 
 
 Improvement Bond. See next subject. 
 
 Improvement Mortgage Bonds. A " junior mortgage " is 
 usually understood. An " improvement mortgage " secures 
 an issue of bonds necessitated in order to provide funds for 
 improvements, additions, betterments, etc., to a property. 
 As in the case of a " general mortgage bond," it is customary 
 to make the authorized issue large enough to also provide 
 for future improvements when needed, and to replace earlier 
 mortgage bonds as they mature or can be paid off. Their 
 investment value depends not only upon the credit standing 
 of the company, but upon the amount of bonds whose claims 
 must be satisfied first, the character of the improvements for 
 which issued, etc. Consider them from the standpoint of 
 at least a " second " and probably a " third mortgage bond." 
 
 An issue of this class is that of the Denver and Rio Grande 
 R. R. Co. Gold 5's, brought out to provide means for laying a 
 third rail to broaden the narrow-gauge road to standard gauge 
 and for other improvements. 
 
 " Street improvement," and " public improvement " bonds, 
 among the municipal issues, are often referred to as " im- 
 provement bonds." 
 
 " In case the person cannot write his name I write it for him ' by W. S. 
 Tibbets, Treas.,' and let him make a cross over it. 
 
 " In case of deposits by an executor, administrator, guardian, or one 
 person for another, after he enters the name in the signature book he writes 
 ' by ' and affixes his signature, and then fills out the card for the other 
 person."
 
 MONEY AND INVESTMENTS 205 
 
 IN. The " ticker " abbreviation for " income." 
 
 Inactive Account. A bank account against which very few 
 checks are drawn and at infrequent intervals, and to the credit 
 of which deposits are not often made; or an account with a 
 broker which shows infrequent purchases and sales on the 
 part of the customer. 
 
 Inactive Market. When sales are growing less in volume 
 and transactions are few and for small amounts. 
 
 Inactive Stocks or Bonds. Securities which are bought and 
 sold only at infrequent intervals; seldom quoted; difficult 
 for the public at large to ascertain the market value of. 
 There are brokers, or bankers, in nearly every important city 
 who make a business of dealing in inactive securities in 
 general, or are specialists in regard to certain ones. (See 
 " Active Stocks or Bonds.") 
 
 In and Out. A speculation of short duration, as a purchase 
 of a certain stock followed by a quick sale of the same. 
 
 In-Clearer. The English term for a bank clerk who enters 
 in the bank's clearing books at the " clearing-house " the 
 items against his bank as received, and who determines the 
 " clearing-house balance " for his bank. This term dis- 
 tinguishes him from the " out-clearer," who is the clerk at the 
 bank making similar records of items against other banks for 
 collection. (See subjects in quotations.) 
 
 Income. The income of an individual is generally supposed 
 to be the money returned to him yearly from his investments; 
 the interest return from his stocks, bonds, mortgages, real 
 estate, etc. Of course, the meaning can be extended to in- 
 clude profits from a business, or gains of all kinds, and such 
 is the usual dictionary meaning; but in finance there has been 
 a general tendency to mean only the return from money in- 
 vested outside of one's direct business, if he has any. The 
 income from a stock arises from profits of the corporation, 
 and is divided among the stockholders in the form of divi- 
 dends, and may vary from time to time. 
 
 The income from bonds and mortgages is generally a fixed 
 amount and is called interest. 1 
 
 1 Edwin A. Howes, Jr., raises this point, which is well to bear in mind: 
 " Income of property consists of the proceeds of what the property pro- 
 duces, the profit which comes from its use in business, or what is paid for 
 its use by another than its owner. Principal, or capital, is the property 
 itself. The absolute owner of the property is likely to treat as income, not 
 only the earnings of the principal property, but all increase which conies 
 from an increase in the value of the property itself, treating as principal 
 what he paid for the property, and as income all excess over the original 
 investment. A person entitled to the use or income of property, or a 
 trustee whose duty it is to pay income to one person or set of persons, hold-
 
 206 MONEY AND INVESTMENTS 
 
 Income Basis (or Return). See " Net Return upon the 
 Investment." 
 
 Income Bonds. There is very little difference between an 
 " income bond " and " preferred stock," except that upon 
 the former the interest is expected to be paid if earned. The 
 management may decide otherwise, however. Such a bond 
 is usually secured by a pledge of the net earnings of the cor- 
 poration after payment of interest and sinking fund, if any, 
 upon all indebtedness having a prior claim. An " income 
 bond " may be " cumulative; " that is, if the earnings in any 
 one year do not suffice to pay the interest, the sum lacking is 
 carried forward into following years until paid in full. Also 
 called " Preferred Bonds," or " Preference Income Bonds," 
 if having some preference rights over other issues. They are 
 sometimes redeemed by " sinking funds " and in some 
 instances acquire mortgage rights if interest is unpaid, or if 
 principal is unpaid at maturity. In the case of there being 
 no mortgage rights, " income bonds " are often known as 
 " debenture incomes." If they carry the convertible feature, 
 as set forth under " Convertible Bond," they are termed 
 " convertible incomes." 
 
 A bond issue of this nature may have a detrimental effect 
 upon the value of all stocks of a company, as it lessens the 
 likelihood of dividends upon the same. 
 
 This is not a desirable class of securities. Too much depends 
 upon the board of directors. 
 
 Inconvertible Paper Money. Money for which there has not 
 been provided satisfactory, if any, arrangements for its con- 
 version into standard money. This is also referred to as 
 " irredeemable paper money." 
 
 Incorporate. See " Corporation." 
 
 Indenture. This is generally understood to be a contract, 
 an agreement under seal, or a deed between two or several 
 parties. The name arises from a custom of drawing a deed 
 with the edge indented for identification and greater security. 
 Blackstone says: " If a deed be made by more parties than 
 one, there ought to be regularly as many copies of it as there 
 are parties, and each should be cut or indented ... on the 
 top or side, to tally or correspond with the others; which deed, 
 so made, is called an indenture." l 
 
 Independent Telephone Companies. See " Telephone Securi- 
 ties." 
 
 ing the principal for others, must be more careful to distinguish between 
 real income and increase which comes from an increase in the value of the 
 property." The American Law Relating to Income and Principal. 
 1 Blackstone's Commentaries.
 
 MONEY AND INVESTMENTS 207 
 
 India Council Bills. See " Council Drafts." 
 India Council Drafts. See " Council Drafts." 
 India, Money of. See " Rupee." 
 India Rupee Paper. See " Rupee Paper." 
 Indirect Exchange. Same process as explained under 
 " Triangular Operation." 
 
 Individual Deposits. The " bank statement " is frequently 
 tabulated in such form as to subdivide the deposits. " In- 
 dividual deposits," therefore, would have reference to all 
 deposits other than by banks and trust companies, United 
 States Government, or from the banks' agents. It would 
 include deposits of firms, individuals, corporations in general, 
 private bankers, etc. 
 
 Indorse. The person to whom a check, note, or draft is 
 made payable is called the " payee." If the payee wishes to 
 make the check (note or draft) good in the hands of some one 
 else, he writes his name across the back of the check, in ac- 
 cordance with the wording as filled in upon the face. This is 
 called " indorsing." For instance, a check made payable to 
 John J. Smith upon the face, should be signed by him across 
 the back, " John J. Smith," not " John Smith." If it is an 
 error and his name should really be John Smith without the 
 middle letter " J," and it is not convenient to get a new check 
 issued in correct form, he may sign his correct name also 
 under " John J. Smith," thus signing both, although, of 
 course, this latter method may not be asked for by the party 
 about to receive the check. He should demand this, for, when 
 he in turn indorses it, he guarantees all previous indorsements 
 and, in case the check proves worthless and recourse is taken 
 against John Smith, it may simplify matters that Smith be 
 given no opportunity to set up the defence that it was not 
 his legal signature. Again, if a check should be drawn to 
 Mrs. John Smith she should indorse it that way, ancf then 
 under it her legal name, Susan Smith. 
 
 If a check is presented for payment and there is no money 
 on deposit to meet the same, the check having passed through 
 the hands of several different people, each in turn indorsing 
 it, the last holder, who presents it to the bank for payment, 
 may fall back upon any previous indorser he sees fit. It is not 
 necessary for him to take legal action against the last signer, 
 and so on back in reverse order of the indorsements. In in- 
 dorsing a check remember that unless the indorser adds the 
 words " without recourse " he may be held liable for the 
 amount of the check. This, as set forth under " Without 
 Recourse," does not imply that the condition may be generally 
 made use of. (See that subject, as well as " Check.")
 
 208 MONEY AND INVESTMENTS 
 
 All that is said above in regard to a " check " applies with 
 equal force to notes, and all such papers that pass by " in- 
 dorsement." 
 
 When one or more persons " indorse " a note, thus becoming 
 liable for its payment, in the case of failure on the part of the 
 " maker " to meet it, they assume liability for the note only 
 as originally made and no holder can recover from the " in- 
 dorsers," provided the former allows any change in the note's 
 original terms. For instance, suppose a note falls due and 
 the holder renews it; that is extends the time of payment 
 without permission of the indorser; by this act the latter 
 would be relieved of all liability. A holder of a note with 
 indorsements must present it for payment upon the day of 
 its maturity, for failure so to do relieves the indorsers of all 
 liability. Although the holder of a note may have received 
 collaterals from the maker, he is under no obligation to pro- 
 ceed on the collateral before suing the indorser. 
 
 In " indorsing " a check, hold it face upwards, and observe 
 the left-hand end as it then lies; turn it over and make the 
 " indorsement " on the back across that end. This is not 
 obligatory, but makes it much more convenient for the 
 handling by bank clerks, and others. 
 
 In indorsing a check, note, etc., making it payable to John 
 Smith, for instance, use the wording: " Pay to John Smith." 
 This will enable John Smith to again " indorse " it and pass 
 it on from hand to hand, that is, make it negotiable. 
 
 Occasion sometimes arises when one person wishes to 
 deposit a check to the credit of another, the check being 
 payable to the latter, but it not being convenient to get his 
 indorsement. To illustrate: A banking house James 
 Crow & Co. may wish to pay Paul Jones $1,000 on account 
 of collections made, or for other reasons. Instead of sending 
 the check to Paul Jones, they may have received instructions 
 to dep'osit it in his bank to his credit. The question is, how 
 to " indorse " the check for him so that the bank will accept 
 it without his personal indorsement. The following is a com- 
 plete wording that banks may require: " Pay to the order of 
 
 Bank, for the credit of Paul Jones, by James Crow & 
 
 Co., Attorney." In practice, however, banks usually take 
 checks with the simple indorsement, " Paul Jones, by James 
 Crow & Co.," but the former is technically correct; and, in 
 such a case, the bank does not require that James Crow & Co. 
 shall hold the actual power of attorney for indorsement, but 
 they accept them as attorneys for the occasion without any 
 evidence of authority, but this is done at the risk of the bank. 
 
 On any checks issued by the United States Treasury at 
 Washington, the last indorsement, that is, the indorsement of 
 the one presenting for collection, must be in hand-writing, as
 
 MONEY AND INVESTMENTS 209 
 
 a stamped indorsement, such as is frequently used, is not then 
 permissible. 
 
 An indorsement in law is considered a written contract, the 
 terms of which, though commonly omitted for the sake of 
 convenience, are, nevertheless, definite and fixed; none the 
 less understood because not expressed in words. Although 
 this is almost a universal rule, there are a few States which 
 regard the signature of an indorser simply as evidence of his 
 having entered into a contract, and will accept testimony as 
 to any verbal agreements which may modify the implied 
 contract. 1 
 
 Indorsed Bonds. The New York Stock Exchange rules pro- 
 vide that " Coupon Bonds issued to Bearer, having an in- 
 dorsement upon them not properly pertaining to them as a 
 security, must be sold specifically as ' Indorsed Bonds/ and 
 are not a delivery, except as ' Indorsed Bonds.' ' 
 
 An example of a bond which comes under this heading is 
 one upon which some person's name has been indelibly writ- 
 ten. 
 
 An instance is related of the treasurer of a savings institu- 
 tion who, in his spare moments, wrote across each of their 
 bonds words to the effect that it was the property of the 
 institution in question. In making a sale, through a stock 
 exchange member, of bonds of a New England railroad, being 
 part of an issue seldom traded in, and consequently offered 
 at very infrequent intervals upon the market, the treasurer 
 of this institution found himself in trouble when he came to 
 make delivery, as the broker would not accept bonds with 
 the institution's name indorsed upon them. The natural 
 course would have been to purchase other like bonds in the 
 open market in order to make the delivery good, the loss, 
 if any, in the transaction, to be borne by the institution. In 
 this case, however, the bonds were of such a rare issue that 
 this was impossible and a compromise had to be effected with 
 the purchasing party by selling the bonds at a lesser price 
 as " indorsed bonds." 
 
 In reply to the query why the railroad company would not 
 issue new securities in their place, it may be said from the 
 standpoint of the company that the bonds were perfectly 
 good. They might have been converted into " registered 
 bonds " if privilege of registration had existed. The broker 
 might not have accepted registered bonds, however. 
 
 It is a safe plan never to deface a security in any way. If 
 
 1 Those desiring to follow this subject further may refer to " Joint In- 
 dorsemement," " Absolute Indorsement," " Conditional Indorsement," 
 "Restrictive Indorsement," "Indorsement in Full," "Indorsement in 
 Blank," " Qualified Indorsement," "Joint Indorsement," " Without Re- 
 course," and "Protest."
 
 210 MONEY AND INVESTMENTS 
 
 any memorandum or other writing is necessary, write it on 
 a separate piece of paper and attach it to the security. 
 
 Indorsed Paper. See " Two-name Paper." 
 
 Indorsee. The party indorsing a paper, by such act, must 
 assign or transfer certain rights therein to another called the 
 " indorsee," i. e. the person to whom a check, note, etc., is 
 indorsed, or made payable by assignment; the one who 
 acquires the rights conveyed by the indorsing of any negoti- 
 able instrument. If a check is made payable to Henry Poor, 
 and he writes across the back, " Pay to the order of Paul 
 Jones," and then signs his own name below, Paul Jones acquires 
 the right to collect the check and becomes the " indorsee." 
 
 Indorse for Deposit. Supposing the reader to have already 
 familiarized himself with the matter under " Indorse," it is 
 only necessary to add here the simple bank rules for indorsing 
 checks, etc., for deposit. The simplest form is: " Pay to the 
 Fisherman's National Bank or order " for example; and then 
 the depositor signs his name immediately below. (The 
 reader's attention is particularly called to the next to the last 
 paragraph under " Indorse.") 
 
 Indorsement. The indorsees act of writing, or the writing 
 itself. (See " Indorser.") 
 
 Indorsement in Blank. An instrument with simply the 
 name of the indorser written upon its back. This makes it 
 good in the hands of any legitimate holder. The holder of 
 such a paper may make it payable to himself or to whomso- 
 ever he chooses by writing the name directly above the in- 
 dorsement. 
 
 Indorsement in Full. An instrument with not only the 
 name of the indorser written upon its back, but following 
 directly under the name of the party to whom it is indorsed 
 for payment. 
 
 Indorser. A person who indorses a check, note, etc.; that 
 is, writes his name across the back and by this act becomes 
 liable for its payment. (See " Without Recourse," and 
 " Indorse.") 
 
 Indorser for Value. The opposite to an " accommodation 
 indorser " (see " Accommodation Paper "); one who receives 
 consideration for his indorsement. 
 
 Industrial Insurance. This differs in no essential particular 
 from the ordinary life insurance. It consists of insurance for 
 small amounts among those who cannot, or do not wish to, 
 afford so large a policy as, say $1,000, and who prefer to pay 
 the premium weekly in small sums. This method of insurance 
 is expensive the cost being nearly double that of the 
 ordinary kind and is open to the criticism, by many, of
 
 MONEY AND INVESTMENTS 211 
 
 encouraging the placing of insurance upon the lives of chil- 
 dren and infants, which, among the very poor, especially, is 
 obviously objectionable. At the same time, it is not fair to 
 condemn in its entirety this form of insurance, for there must 
 be many cases where a burial fund is provided, which is of 
 great help and comfort to the parents. 
 
 Industrials. See " Industrial Securities." 
 
 Industrial Securities. Securities issued by manufacturing 
 companies. There has, perhaps, been no class of securities 
 which has attracted greater attention the last few years than 
 " industrials," so-called, and there is no class, perhaps, less 
 established in the minds of the public as to its permanent 
 value, as is evidenced by the fact that stocks and bonds of 
 such corporations can be purchased at prices to pay very 
 large returns upon the money. One of the largest of the 
 " industrials " is the United States Steel Corporation, whose 
 securities at this moment of writing April 6, 1907 even 
 with the tremendous earnings which the property enjoys, are 
 selling as follows: 
 
 5% bonds selling at 99, paying the investor 5%-f-. 
 
 7% preferred stock selling at 101, paying the investor 7% . 
 
 The larger " industrials " result from the consolidation of 
 several concerns which had previously been in the same line 
 of manufacturing; theoretically, so that the business of the 
 whole may be administered to the best advantage of all; 
 deliverance from competitive sacrifices, with the large profits 
 which concentrated management assures. Bonds have not 
 as yet been issued upon " industrial " properties, in propor- 
 tion to their total valuation,to such an extent as upon railways. 
 This, perhaps, arises from the uncertainty as to the foreclosure 
 value of an " industrial " property. There is no great value 
 attached to such a plant for right of way or for franchise, as 
 in the case of a railway, nor do such plants, as a rule, occupy 
 strategic positions which give them great added value. The 
 value of these concerns depends very largely upon their 
 successful conduct, and, in case of the sale at foreclosure of a 
 manufacturing plant, it frequently brings but a small price 
 because its buildings and machinery have a comparatively 
 low value unless in successful operation. 
 
 The assets of the new " industrials," against which stocks 
 and bonds may be issued, should be carefully considered. 
 The plant and machinery may be almost valueless for any 
 other purpose. Good-will and patents are also often reckoned 
 as assets, but such have very little value except so long as the 
 corporation is prosperous. The good-will of a bankrupt com- 
 pany would sell for but very little money at foreclosure. One
 
 212 MONEY AND INVESTMENTS 
 
 corporation has eliminated the good-will from its accounts, 
 thereby reducing its total assets about $5,000,000. (See 
 " Good-will.") 
 
 The " industrials " are very largely speculative investments, 
 and until they have been through a long period of business 
 depression, as have already our railroads, it will be impossible 
 to determine their permanent investment value. They yield 
 more than railroad securities as the risk is greater. The hard 
 times of the middle " nineties " resulted in a large percentage 
 of the railway mileage of this country going into the hands of 
 receivers and through a process of reorganization, which, in 
 most cases, was radical enough, when followed by the period 
 of expansion and industrial activity, to place them upon a 
 permanent footing. The " industrials " must, therefore, 
 sooner or later go through a similar period before the necessity 
 of reorganization can be ascertained. Those that weather such 
 storms in financial safety may then, as a class, be selected as 
 good investments and should, after such a period, sell at 
 prices commensurate with that belief. 
 
 It will be seen that the real value of an " industrial " very 
 largely depends upon the permanent successful conduct of its 
 business and a definite understanding of its earning capacity. 
 The class of commodities produced deserves serious considera- 
 tion; that is, the value of such a product to the community 
 at large and the necessity for the continued operation of the 
 plant, and to what extent, either through control of raw 
 materials, or otherwise, the company can control its particular 
 line of business. 
 
 To go into the matter further requires a knowledge of 
 whether or no a reduction of expenses has been accom- 
 plished by consolidation, and an increase of earnings effected 
 for a like reason. Is the company carrying a " floating in- 
 debtedness; " and, if so, the reason therefor? Are proper 
 charges being made for depreciation and altogether a con- 
 servative system of bookkeeping being pursued so that the 
 dividends are warranted? It is very easy to be misled by the 
 manner in which the books of any corporation are kept, but 
 the keeping of the books of an industrial concern offers especial 
 opportunities for deceiving the public. Corporations of this 
 kind should not, on the average, from year to year, divide 
 among their stockholders more than about one half the net 
 earnings; the balance going into permanent improvements, 
 or reserved as surplus. 
 
 The dividend record should be studied for as far back as 
 possible. A good record in this way is an argument in favour 
 of bond security. In considering stocks beware of " over- 
 capitalization." 
 
 The fact, also, that orders are in hand for the full capacity
 
 MONEY AND INVESTMENTS 213 
 
 of the plant for months ahead should not be given too serious 
 consideration, for past experience has shown that in times of 
 sudden widespread financial and business disaster, consumers 
 have had no scruples about cancelling contracts, and it has 
 not in the past proved worth the while to try to enforce the 
 same to any great extent. 
 
 The preferred stock in " industrials " has usually equalled 
 the value of the property above the bonds, if any, plus the 
 necessary working capital, leaving the common stock to obtain 
 its value from economies in operation expected to result from 
 centralized management. 
 
 For many reasons " industrial " shares and bonds are more 
 subject to manipulating than most railway securities. 
 
 The enormous capitalization of some of the corporations is 
 often lost sight of in considering the earnings. That is to say, 
 what at first thought may seem enormous profits and argue 
 remarkable financial prosperity, may not, on more careful 
 investigation, seem so large when the percentage of such 
 earnings to the total capitalization is taken into consideration. 
 
 The magnitude of the industrial capitalization may be 
 appreciated from a recent tabulation showing that 43% of 
 the capital listed on the New York Stock Exchange is " in- 
 dustrial securities," the latter amounting to $4,002,000,000, 
 as against railroads, $5,300,000,000.* 
 
 In Exchange. See " Payable in Exchange." 
 
 Inflate. Prices are " inflated " when securities are selling 
 for much more than they are intrinsically worth. To " inflate: " 
 to swell up; to puff up with gas like a balloon; there is no 
 solid substance inside and when the gas is let out the thing 
 will collapse. The same practical end is apt to result from an 
 " inflated " market. 
 
 In Funds. Having money for the purpose required. 
 
 Inheritance Tax. A State tax imposed upon property in- 
 herited, not a tax collectible from year to year like city taxes, 
 but collectible only once at the time of the inheritance of 
 the property and payable to the State only. 
 
 In those States which have established an " inheritance 
 tax," executors and administrators should, upon assuming 
 the duties of their office, look into this matter immediately, 
 and the statutes should be carefully studied or competent 
 legal advice taken regarding the matter. Taxes of this 
 nature are of two kinds: the " direct inheritance " and the 
 " collateral inheritance tax." 
 
 The first is a tax upon property descending directly to a 
 child or other lineal descendant or to very near relations, such 
 as a mother, father, husband, brother, or wife. 
 1 Boston Herald, October 23, 1906.
 
 214 MONEY AND INVESTMENTS 
 
 The second taxes all inheritances other than those above. 
 
 The " collateral inheritance tax " is in force in most of our 
 States, and the " direct inheritance tax " is in force in England 
 and is being rapidly adopted in this country. 
 
 In most cases, legacies to charitable, educational, or re- 
 ligious institutions within the State imposing the tax are 
 exempted. This tax is usually a graduated one, increasing 
 with the amount of property inherited and with the distance 
 in relationship. 
 
 The foregoing must not be taken as the actual law of any 
 State, but only an example of the general intent of such 
 laws. 
 
 Inland Exchange. See " Exchange." 
 
 Inner Belt. See " Belt Lines." 
 
 Inside Broker. See " London Stock Exchange Transac- 
 tions." 
 
 Insider. Perhaps a good definition of the word " insider " 
 may be obtained by reading the subject matter under the 
 heading " Fleece." The " insiders " are those who have 
 knowledge of the financial and business affairs of a corpora- 
 tion, or of any enterprise, and are in a position, therefore, to 
 act in an intelligent manner regarding the securities of such 
 corporation. Another, perhaps very common meaning of 
 " insider," is one who participates in the financial scheme, or 
 plan, of an issue of securities, and, as a consequence, obtains 
 special profits not obtainable by others. 
 
 Inside Tip. Information given in a secretive way by one 
 having to do with the control or management of a corpora- 
 tion, purporting to show the true condition of the securities 
 of the concern in question. 
 
 In Sight. Grain, coffee, cotton, or any commodity available 
 for immediate use. 
 
 Insolvency. The inability to pay one's debts as they become 
 due. 
 
 Insolvent. One is insolvent when he has not sufficient 
 money or property to pay all debts. 
 
 Inspector of Finance. Same as Bank Commissioner. 
 
 Inst. Instalment. 
 
 Instalment. Securities are often sold conditionally upon 
 certain proportion of the purchase price being paid at the time 
 of purchase, and the balance being made payable in certain 
 amounts at stated intervals, until the full amount is paid. 
 Such payments are called " instalments." 
 
 Insufficient Fluids. When stamped upon a check returned 
 from the bank at which it is payable it indicates that the
 
 MONEY AND INVESTMENTS 215 
 
 " drawer " has some but not sufficient money to his credit 
 to meet its payment. 
 
 Int. Short for " interest." 
 
 Interborough. Interborough Rapid Transit Co. (Subway 
 System of New York City.) 
 
 Intercepting Sewer Bonds. In some cities where the cost of 
 the sewers is borne by the owners of the abutting property 
 especially benefited by each particular sewer, there is a certain 
 proportion of the whole system for which it is deemed proper 
 that the municipality at large should be responsible, and, in 
 such cases, the town or city itself may issue bonds for such a 
 purpose bearing the above title. 
 
 Interchangeable Bonds. After understanding the difference 
 between a " registered " and a " coupon bond " by referring 
 to those subjects, it will be clear that " interchangeable bonds " 
 are those which are changeable from " coupon " to " regis- 
 tered," and back again from " registered " to " coupon," at 
 the request of the holder. Many issues, the bonds of which 
 have once been converted into a registered form, may not 
 again be issued as " coupon bonds." 
 
 Interest. The charge made and which the borrower pays 
 for the use of money, 1 usually expressed in percentage based 
 on a year, i. e. if $3 is paid for the use of $100 for six 
 months, it is an equivalent to $6 for one year, and is ex- 
 pressed as " 6 per cent.," or "6%." Money, like any other 
 commodity, has a value and payment must be made for its 
 rental, or use. 
 
 The matter of figuring interest is an arithmetical one hardly 
 necessary to treat of here, but there are several methods of 
 computing the time for which interest is figured, which it is 
 well to understand. 
 
 First, the New York Method, which is undoubtedly the 
 correct one. The time is computed by taking the actual 
 number of days elapsed; that is, suppose a note to be dated 
 March 1st; the interest on the same to be computed to July 
 7th; there would be 31 days in March, 30 days in April, 31 
 days in May, 30 days in June and 6 days in July, a total of 
 128 days. After obtaining this result, an interest table is used 
 based on there being 365 days in the year; or, in other words, 
 the yearly interest rate divided by 365 gives the rate for one 
 day. Now this differs from the Boston Method (as it is termed 
 in that city) which calls for the use of an interest table based 
 on there being but 360 days in the year, from the fact that the 
 time elapsed is computed as so many months and days, each 
 and every month being accepted as 30 days; 12 times 
 
 1 For the purpose of this definition it is not necessary to distinguish 
 between capital and money.
 
 216 MONEY AND INVESTMENTS 
 
 30 equalling 360. One month, therefore, is figured as* 
 1-12 the yearly rate. Supposing this to be 6%; then 
 the interest for one month would be ^ of 1%. From July 
 5th to September 7th would be reckoned as 2 months and 
 2 days. 
 
 The difference between the New York and Boston methods 
 may be shown in a practical way by computing the in- 
 terest on, say, $100 for 6 months at 6% per annum. 
 By the former method, supposing the months to be August 
 to January inclusive, the elapsed time would be 184 days, 
 and the result $3.025. But by the Boston method, which 
 would reckon the elapsed time as 6 months, irrespective of 
 what months, the result would be $3. Again supposing 
 the months to be January to June inclusive, and the year not 
 a " leap year," then the elapsed time would be 181 days or 
 1 days less than one half a year by the New York method, 
 but a full half year by the Boston method. 
 
 There is a third plan which has not been as yet definitely 
 named, and is not in general use. A sort of combination of 
 the two foregoing. The actual time elapsed is computed by 
 the New York method, the number of days obtained divided 
 by 30, and the 360-day table, as called for in the Boston 
 method, used. 
 
 The different methods of computing interest on bonds, 1 
 notes, and other securities, will often account for a vari- 
 ation on the part of two different people figuring the same 
 transaction in accordance witn the customs in the two dif- 
 ferent cities in which the figures are computed. 
 
 It is worthy of note that not until the year 1546 was the 
 taking of interest for the use of money legalized in England. 
 The rate was fixed at 10%. 
 
 Another use for the word " interest " is in connection with 
 one's ownership in a property. Again, for the speculative 
 side of the market, such as the " long " interest, meaning those 
 long of stock, as explained under " Long." 
 
 Remember these facts: midnight ends the legal day, and 
 any loan of money through the midnight hour calls for one 
 day's interest; for illustration, a loan at 5 P. M. on July 5th 
 and repaid early in the morning on July 6th, would be reck- 
 oned as one day. This will also make clear that in computing 
 the number of days for which interest runs, the day on which 
 the loan is made is not included in the computation. From 
 July 7th to July 14th is seven days, because seven midnights 
 have passed. July 7th is not included in the reckoning; other- 
 wise it would be eight days. 
 
 1 In such a case as a bond or other indebtedness having fixed maturity 
 date of coupons, the Boston method is the more correct.
 
 MONEY AND INVESTMENTS 217 
 
 Interest Accrued. See " Accrued Interest." 
 
 Interest Added. See " Accrued Interest." 
 
 Interest-Bearing. Securities which bear interest. 
 
 Interest on Daily Balances. See " Daily Balances." 
 
 Interest Payable Annually. See " Annual Interest." 
 
 Interest Payable Quarterly. See " Quarterly Interest." 
 
 Interest Payable Semi-Annually. See " Semi- Annual In- 
 terest." 
 
 Interest to Follow. Payable at maturity. A most common 
 use of this term is in connection with money borrowed for a 
 comparatively short time, generally not exceeding six months. 
 Suppose, for example, that A borrows $10,000 of B at 5%, 
 " interest to follow," the note payable six months from its 
 date. It would mean that B would not receive interest on 
 the loan until the expiration of the six months. (See " Dis- 
 count.") 
 
 Interest Warrant. See next to last paragraph of " War- 
 rant." 
 
 Interim Certificate. A temporary certificate issued to the 
 purchaser of a given security until the properly engraved, 
 lithographed or printed security can be issued to take its 
 place. They are often issued by the corporation itself but 
 more frequently by some trust company. 
 
 Interior Banks. Probably a correct definition of " interior 
 banks " is: all banks of this country located without the City 
 of New York. That there is some hesitation on the part of 
 those best posted on such matters, is evidenced by this quota- 
 tation from a letter bearing upon the subject from Mr. F. A. 
 Vanderlip: " The term is, of course, very evidently not a 
 well-considered one, and it may seem a little incongruous to 
 suggest that a bank located on the New England seaboard 
 should be called an ' interior bank.' It seems to me the term 
 is understood in financial circles to mean those banks which 
 treat New York as a ' reserve centre,' and that necessarily 
 includes all other banks of the country. The banks of the 
 other two ' central reserve cities ' are really ' interior banks ' 
 in this sense also." 
 
 Interior Cotton Receipts. The weekly gross receipts of 
 cotton at the principal interior cities, such as Houston, 
 Tex., Memphis, Tenn., Augusta, Ga., St. Louis, Mo., Cin- 
 cinnati, O., etc. 
 
 Internal Loan. An issue of bonds placed among investors 
 in the country by which issued. 
 
 International Checks. These are for the convenience of 
 travellers who desire something more in the nature of actual 
 bank notes than " letters of credit." They are issued in sums
 
 218 MONEY AND INVESTMENTS 
 
 of 5, 10 and 20; * identify the holder by his signature; 
 are accepted by the agents of the issuing banker without 
 regard to the rate of exchange, the check stating on its face 
 its value in the currencies of the important countries of 
 Europe. In case of loss the check is of no value to other than 
 the person in whose name issued. The charge made for these 
 is about % of the face value. 
 
 International Exchange. See " Exchange." 
 
 International Movement of Gold. This is too intricate and 
 complex a subject of which to attempt an exhaustive ex- 
 planation within the necessary limitations of this work. Some 
 of the more important influences which have a direct bearing 
 upon the exports and imports of the yellow metal, so that 
 some general idea may be had as to the causes for its move- 
 ment, will be given. A knowledge of the principles of foreign 
 exchange (see " Exchange ") is necessary to an understanding 
 of the gold movement, for one is very closely related to the 
 other. 
 
 In the first place, the actual transportation of the metal 
 is accomplished in this way: Specie in general is almost 
 always shipped on a through bill of lading to London the 
 principal world's market for gold and consists either of 
 small bars of gold packed in kegs, or gold coin in similar 
 packages. The present rate of freight from New York to 
 London is {% on silver, and 5-32% on gold. The insurance 
 would be placed by the shipper with any of the large insurance 
 companies, whose current rate is l-20th of 1%. At such times 
 gold is not valued as coin but as bullion. As coin itself is 
 subject to abrasion and, consequently, light weight, the 
 shipper prefers bullion. This may be obtained in bars from 
 the " Assay Office " at a small premium, and packed in saw- 
 dust to prevent abrasion. It now becomes a mere commodity 
 and the premium, packing, cartage, expressage, loss of interest 
 on the money involved during transit, and insurance, must all 
 be added to the cost. 2 
 
 1 Express companies have made a specialty of issuing " travellers' 
 checks " in denominations of $10 and upwards. These have become so well 
 known that they are accepted by steamship companies, hotels, etc., as 
 readily as actual money. These are of great service here in this country, 
 and are in constant use among commercial travellers. 
 
 2 Between London and New York this is estimated at about 3-8 %, or a 
 little less than 2 cents per pound sterling. 
 
 The Secretary of the Treasury, in 1906, established the precedent of 
 increasing the Government's deposits in banks (see " United States De- 
 pository ") to the amount which they have engaged gold for import 
 (covered not by deposits of United States Government bonds, but by what 
 are known as " savings bank bonds " permissible for the investment 
 of funds of Massachusetts or New York savings banks accepting them 
 at 90% of their face value) as soon as the engagements have been made.
 
 MONEY AND INVESTMENTS 219 
 
 With the above facts in hand it is easy for the exporter to 
 figure into the transaction the price obtainable abroad and 
 thus determine whether or no he can ship at a profit. 
 
 In the next place, why is gold shipped? The common 
 belief that it is to settle the balance between countries arising 
 from exchange of commodities between them is only partly 
 true. There is more than this so-called " balance of trade " 
 entering into the matter. Take our own country, for instance: 
 We must settle with foreigners for not only the commodities 
 imported 1 but for earnings on foreign capital invested here as 
 well as liquidation of the principal; for the expenses incurred 
 by Americans travelling in foreign lands; for foreign securities 
 sold in American markets; remittances sent home by immi- 
 grants; and for transportation of American freight in vessels 
 sailing under flags of other nations. The opposite side of the 
 account is the money which immigrants bring in; payment 
 for our exports; expenditures by foreign ships when in 
 our harbours; charges of American vessels for carrying 
 foreign merchandise; travelling expenses incurred in this 
 country by tourists from abroad; investments in United 
 States by foreigners, and interest, dividends and principal 
 payments on such of their securities as are owned by ourselves. 
 
 Once in so often a balance of all these accounts must neces- 
 sarily be struck, and gold shipped by the debtor to the creditor 
 nation. But a settlement in this way may be postponed be- 
 yond its natural time. Gold shipments are regulated by the 
 rates of exchange, which, in turn, are affected by the rates for 
 money. Since we are now so closely connected in monetary 
 matters, one nation with another, each will take advantage 
 of higher interest rates prevailing in the other and lend its 
 money there. The rate of exchange, which may have been at 
 
 This changes the " gold import point," for not only the loss of interest in 
 transit need not be considered, but an immediate use of the money may be 
 obtained; thus the interest thereon may also be deducted from the cost of 
 importation. This leaves the cost of packing, cartage, insurance and 
 freight, and the cost of the metal, less the item of interest, as the only things 
 to be considered. 
 
 This " facilitating process," as it is called, is of vast importance to the 
 United States, as it practically eliminates geography from the question. 
 Gold in almost any part of the world can be readily made available in this 
 market, and it is bound to increase the importance of New York as a mone- 
 tary centre; in addition to which, it would have a tendency to maintain 
 more equable rates of interest. 
 
 The action of the Secretary above referred to, indicates the strong call 
 which the United States made for gold during 1906. This was partly 
 brought about by the San Francisco disaster, and the fact that the New 
 York trust companies were called upon to keep cash reserves for the first 
 time. The London Statist estimates that we absorbed one-half the world's 
 output of gold for the year 1906. 
 
 1 On account of probable undervaluation of imports, published statis- 
 tics are likely not to be exact.
 
 220 MONEY AND INVESTMENTS 
 
 a point where gold shipments were likely to occur, will be 
 suddenly changed by the creditor nation lending its balances 
 at the prevailing rate in preference to calling its funds home. 
 This will reduce the rate of exchange. Just as soon as the 
 rates for money decline exchange will go up. 
 
 A shipment of gold has a natural tendency to strengthen 
 money rates, and is, therefore, always dreaded by Wall and 
 State Streets. The reverse brings lower rates and ease of 
 mind. 
 
 Unless there is some such influence at work as the above, 
 it is obvious that the rate of exchange may advance until the 
 shipment of bullion is more advantageous and gold exports 
 follow. 
 
 Then there is the complex system of one country paying 
 its debts to another through the medium of a third. Gold 
 was shipped from Australia to pay for food stuffs purchased 
 in Argentina for the English soldiers in the Boer war. The 
 Sydney Mint now sends much gold to San Francisco in pay- 
 ment for American products shipped to Europe. 
 
 Great efforts are at times made to attract imports. It is 
 not uncommon for Germany, for example, to mark up dis- 
 counts as a bid for gold, or the Bank of England to pursue 
 the same tactics to prevent its export. 
 
 The Bank of France, however, has another method, namely, 
 that of purchasing gold on its own account and charging ex- 
 porters a premium for the same. This plan necessitates less 
 frequent changing of the discount rate. 
 
 It is usual to expect Europe to ship us gold in the autumn 
 when payments are due for our cotton and grain, and for us 
 to reciprocate in the spring when we are more likely to be in 
 its debt. 
 
 Gold is almost the last article exported. We exchange all 
 other products for it. It must be borne in mind, however, 
 that we produce it, as well as corn, cotton, etc., and in the 
 natural course are bound to export it from time to time. (See 
 " Balance of Trade," " Bank of England," " Gold Import 
 Point," and " Gold Export Point.") 
 
 International Postal Money-Orders. See " Postal Money- 
 Orders." 
 
 International Securities. Securities dealt in upon both the 
 London and New York stock exchanges. 
 
 Inter-Relation of Interests. At times, the control by a 
 certain group of men of the stock of one or more railway 
 companies, and control on the part of these railways or other 
 companies is so far-reaching, and the operating of such roads 
 so largely dominated or influenced by the group of men men- 
 tioned, that competition, which otherwise might exist between
 
 MONEY AND INVESTMENTS 221 
 
 such roads, disappears, on account of the " inter-relation of 
 interests " existing. Or two railway companies may either 
 by direct ownership, or through the control of their own 
 large stockholders, own together the controlling interest in a 
 third railway, which, on account of this common ownership, 
 may be operated to the common benefit of the two owning 
 roads. There exists here an " inter-relation of interests." 
 
 Intersecting Street Improvement Bonds. If the reader will 
 first read the subject " Street Improvement Bonds " and then 
 read what is given under " Intercepting Sewer Bonds," it will 
 be understood that " intersecting street improvement bonds " 
 are bonds issued by the municipality itself to defray its pro- 
 portion of the street improvement expense not properly 
 chargeable against the abutting property. 
 
 Intestate. Dying without leaving a will. 
 
 In the Red. See " Profit and Loss." 
 
 In the Street. See " Street." 
 
 Into Sight. First read " Visible Supply." " Into Sight " 
 refers to the quantity which has been added to the " visible 
 supply." 
 
 Inventory. A schedule of property owned, with the market 
 value of each article or parcel. An inventory of a dry goods 
 business would be a schedule giving goods on hand not sold, 
 store and office fixtures and furniture of all kinds, real estate, 
 if any, delivery wagons, etc.; in fact everything except cash 
 on hand or due. 
 
 Inverted Pyramid. Condition of insecurity. (See " Pyra- 
 miding.") 
 
 Investment. The purchase of real property, stocks, or some 
 evidence of indebtedness, with the purpose of obtaining an 
 interest return upon the money; any increase in value of the 
 principal being but a secondary consideration, but the safety 
 of the principal a first consideration. Refer to " Speculation," 
 from which investment differs. As one writer expresses it, 
 " Planting good seed in fertile soil, is investment; betting on 
 how many potatoes the seed will produce to a hill, is specula- 
 tion." 
 
 In its exact sense " investment " is concisely defined by 
 Sprague: 1 " Investment implies divesting one's self of the 
 possession and control of one's assets and granting such 
 possession and control to another." Also: " The essence of 
 strict investment is ... a share of the gain not dependent 
 on the fortunes of the handler." 
 
 Investment Banker (or Broker). A dealer in investment 
 securities. He buys for his own account in large amounts, 
 
 1 " The Accountancy of Investment," Charles E. Sprague.
 
 222 MONEY AND INVESTMENTS 
 
 and then resells (retails) to his customers, the difference be- 
 tween the buying and selling prices being his principal profit. 
 He also gains or loses on the interest which the investments 
 pay him while under his ownership in accordance with the 
 prevailing rates for money, for he customarily is a large 
 borrower, using his securities as " collateral." 
 
 Investment Board. See " Savings Bank." 
 
 Invisible Supply. The amount of grain, or other product, 
 in the possession of the farmers, etc., and which has not yet 
 reached the elevators or large centres, as is explained under 
 " Visible Supply." 
 
 Invoice. An account, descriptive of goods sold, with prices, 
 etc., furnished the buyer by the seller. 
 
 Involuntary Bankruptcy. See " Bankrupt." 
 I. O. U. These letters stand for " I owe you," and, as 
 generally used, are merely an acknowledgment of debt in the 
 form of a memorandum, as: " I. O. U. $10," followed by the 
 signature of the person giving it. When it contains a formal 
 promise to pay upon a specified time it becomes a " promis- 
 sory note." 
 
 Iowa Central. Iowa Central Railway Co. 
 Irish Dividend. An assessment; the stockholder is called 
 upon to make a payment instead of receiving one; a humour- 
 ous term for an assessment. 
 
 Iron Production. The Wall Street Journal gives the follow- 
 ing statistics which are a value in showing the tremendous 
 strides which this country has made in the production of 
 iron: 
 
 Year Production 
 
 1905 22,992,380 tons 
 
 1900 13,790,000 
 
 1895 9,446,300 
 
 1890 . 9,202,700 
 
 1885 4,044,500 
 
 1880 3,835,200 
 
 1875 2,023,700 
 
 1870 1,665,200 
 
 1865 831,000 
 
 1860 821,000 
 
 Irredeemable Debentures. In Great Britain, for example, 
 there have been issued many railroad company " debentures " 
 (see " Debenture Bond ") which have no fixed dates of 
 maturity, as in the case of our bond issues, but which are 
 irredeemable; perpetual; more like a stock. 
 
 The English railroads labour under this disadvantage: 
 many of these " irredeemable debentures " bear a high rate of 
 Interest, which is a perpetual charge upon the companies.
 
 MONEY AND INVESTMENTS 223 
 
 It would be of great advantage to them if, in times when low 
 interest rates were prevailing, these issues might be converted 
 or " refunded," as we say, into lower interest-bearing securi- 
 ties, and thus an interest saving for all time to come be ac- 
 complished. The irredeemable feature prevents this, however. 
 
 Irredeemable Paper Money. See " Inconvertible Paper 
 Money." 
 
 Irregular. Many variations in prices; some securities 
 advancing, others declining. 
 
 Irrevocable. Something which must remain in force; cannot 
 be recalled. An irrevocable " power of attorney " (see the 
 subject in quotations), for illustration, is one which is not sub- 
 ject to recall or cancellation. 
 
 Irrigation Bonds. In many sections of the West, in order to 
 successfully carry on agriculture, artificial irrigation must be 
 maintained. Companies are sometimes formed which under- 
 take this work, and which issue bonds for the purpose of 
 raising money towards defraying the cost. Again, sections 
 of a State may be set aside in the form of a district, called an 
 " irrigation district," which may be authorized to issue bonds 
 for irrigation purposes, and which are payable from taxes 
 levied upon all the taxable property in this district. This is a 
 form of municipal bond, and, likewise, is somewhat of the 
 nature of a " special assessment bond." 
 
 Matters to be considered before investing money in bonds of 
 this kind, whether issued by company or district, are: First, 
 the general character of the section benefited; whether by 
 the artificial application of water a fertile and productive 
 agricultural section is produced. Next, the water supply; 
 its permanency, sufficiency, and the legal right to use the re- 
 quired amount. Again, the class of settlers or farmers dwelling 
 in the irrigated section. Of course the near location of a 
 market and transportation facilities are also important. 
 
 I. S. C. Interstate Commerce. 
 
 Isle Royale. The Isle Royale Copper Co. 
 
 Issue House. See " House of Issue." 
 
 Issue Par. The price at which a security is first sold, or 
 issued, regardless of its actual face value. 
 
 Issue Price. The price at which an issue of securities is 
 offered to the public. In the case where an issue had been 
 previously underwritten, " issue price " is used in contrast to 
 " underwriting price," the difference in the two prices repre- 
 senting the underwriter's profit, from which certain commis- 
 sions or other expenses may be deducted. 
 
 Item. Each check or draft, etc., which a bank presents at
 
 224 MONEY AND INVESTMENTS 
 
 the " clearing-house " is referred to as an " item." Cannon 
 states, " The word is frequently employed in combination 
 with a qualifying term, as, for example, ' collection items/ 
 out-of-town items,' ' city items,' etc." 
 
 Jacking Up. See " Jackscrewing." 
 
 Jackscrewing. Fortunately an uncommon term. It is a 
 pity that the financial writers of newspapers cannot find more 
 fitting words to express their meaning. " Jackscrewing " 
 means putting great power, as it were, beneath the market 
 and forcing prices up to unnatural levels. The comparison 
 to the great power of the builders' " jack," by the use of which 
 enormous buildings can be lifted, or forced upwards, explains 
 the application. 
 
 Jail Bonds. A form of municipal indebtedness created for 
 the purpose of building or enlarging a jail and, usually, a 
 county obligation. 
 
 J. A. J. 0. January, April, July, October; interest or 
 dividends payable quarterly, beginning with January. 
 
 J. and D. Interest or dividends payable semi-annually, 
 June and December. 
 
 J. and J. Interest or dividends payable semi-annually, 
 January and July. 
 
 Jeweller's Bar. For use in the manufacture of jewelry, 
 etc., fine gold is cast in the form of small ingots or bars, valued 
 at about $100 and upwards. 
 
 Jobber. An English term referring to a London Stock Ex- 
 change member, who deals only between other members of 
 the Exchange, and is distinguished from the broker, who, 
 although also a member of the Exchange, executes orders for 
 the general public. The broker, however, deals directly with 
 the " jobber " (it being contrary to custom for the brokers 
 to negotiate with eachother), who, at request, submits a buying 
 and selling price on each security, the broker having the 
 privilege of making a transaction either way in accordance 
 to the desire of his customer. The " jobber," of course, buys 
 for his own account and may properly be termed a " middle- 
 man." 
 
 The use of word " stock-jobber " in London dates back to 
 1688. 
 
 Jobber of Exchange. One who sells " exchange " to banks 
 and other dealers in " foreign exchange," who resell to their 
 own clients. The " jobber " might be termed the wholesaler
 
 MONEY AND INVESTMENTS 225 
 
 of " exchange," and those with whom he deals, the re- 
 tailers. 
 
 Jobber's Turn. A London Stock Exchange term. (See 
 " Jobber.") The " turn " is the profit which the " jobber " 
 makes on a transaction with a " broker," but it is understood 
 that one party to the transaction is the " broker " and the 
 other party another " jobber." When trading between 
 brokers, that is, buying from one broker, for instance, and 
 selling to another, he really makes two " turns." 
 
 Joe. See " Fourpence." 
 
 Joint Account. Two or more persons having mutual or 
 " joint " interest in a venture or enterprise. A simple ex- 
 ample: Two bankers buy $100,000 bonds at 98 " on joint 
 account." These bonds are sold at 100. There is, therefore, 
 $2,000 to divide between the two bankers, each being first 
 allowed to charge up all his expenses incurred in the trans- 
 action. The conditions of each " joint account " may vary 
 greatly. One banker may " carry " all the bonds and be 
 allowed a special profit for so doing; or, each may be allowed 
 a commission for all bonds which he sells; or other conditions 
 depending upon the details of each individual transaction. 
 
 A " joint account " in " exchange " has reference to a 
 division between the banker drawing the " exchange " and 
 the one expected to honour it, of the profits arising from loaning 
 the proceeds in the latter's market at the prevailing (high) 
 rates of interest. (See " Sterling Loan.") 
 
 Joint and Several Note. In a note of this kind any one of the 
 signers can be held responsible for the entire amount of the 
 note in case of inability to pay on the part of the other, or 
 they can all be held equally if each is financially able to meet 
 his proportion. In other words, they are liable for its payment 
 all together, and liable for its payment individually. (See 
 " Joint Note.") 
 
 An ordinary promissory note beginning " I promise to pay," 
 and then signed by each of the parties, or by a firm, as " Good 
 & Company," is a " joint and several note; " also one reading, 
 " We jointly and severally promise to pay," signed as above. 
 
 Some States make all obligations of two or more persons 
 " joint and several " unless the instrument expressly provides 
 that the obligation shall be " joint " only. 
 
 Joint Bonds. There are not many such bonds in existence. 
 The best example is the " joint bond " issued by the Northern 
 Pacific and Great Northern Railroad Companies. The ma- 
 jority of the stock of the Chicago, Burlington & Quincy 
 Railroad Co. was purchased in the interests of both the Great 
 Northern and Northern Pacific Railroads, and a " joint 
 bond," so-called, issued, being the direct obligation of both
 
 226 MONEY AND INVESTMENTS 
 
 the companies in question, secured by a deposit of the 
 Chicago, Burlington & Quincy stock at $200 per share, and 
 guaranteed by the two first named railroads above. The 
 Chicago, Burlington & Quincy Railroad Co. already has its 
 own bonded debt. This security is in reality a " collateral 
 trust " issue and is so called on the bond; a " joint collateral 
 trust." 
 
 Joint Collateral Trust Bonds. See last subject. 
 
 Joint Indorsement. Sometimes a note is made payable 
 to two or more persons, not partners. Their indorsement in 
 such a case is " joint." 
 
 Joint Mortgage. This is explained under " Joint Bonds; " 
 that is to say, such a bond as there described would be a 
 " joint mortgage bond " if secured by a mortgage on the 
 property of the Chicago, Burlington & Quincy R. R. Co., and 
 guaranteed by the Great Northern and Northern Pacific Rail- 
 road Companies. 
 
 Joint Note. First read " Joint and Several Note." A 
 " joint note " is one signed by two or more persons, but the 
 wording of which begins " We promise to pay " - the words 
 " joint and several " must not be inserted. In case the note 
 is not paid at maturity, the holder must get judgment against 
 all the signers, and take out a " joint " execution against them 
 all; but then he can proceed to satisfy the judgment out of 
 the property of any one of the signers. The ordinary note of 
 a firm, as Small & Bigelow, is a " joint note," as well as a note 
 signed by two or more individuals. 
 
 Joint-Stock Bank. This is a term used in Great Britain 
 rather than America, and refers to the incorporated banks; 
 that is, banks whose ownership is represented by shares of 
 stock, much the same as our " national banks." It is used to 
 designate the incorporated banks from the Bank of England 
 and from private bankers. The " joint-stock banks " all 
 keep their " reserves " with the Bank of England. The 
 English " joint-stock bank " came into existence during the 
 fourth decade of the nineteenth century. 
 
 In a treatise upon the Athenian revenue published by 
 Xenophon will be found the first suggestion for the creation 
 of a " joint-stock bank." 
 
 Joint-Stock Company. A company whose ownership is 
 represented by shares of stock. Although this term is occa- 
 sionally used in America, it is much more common in Great 
 Britain. This term is also subject to two interpretations. 
 In the first place, the ordinary corporation with shares of 
 stock, or, as defined by the General Corporation Laws of West 
 Virginia, " the words joint-stock company include every 
 corporation having a joint-stock or capital divided into
 
 MONEY AND INVESTMENTS 227 
 
 shares owned by the stockholders respectively." And then 
 another class, which is really an exaggerated form of partner- 
 ship, the participants in which do not own shares of stock, 
 but certificates showing their joint interest in the concern 
 or company. Holders of this form of a certificate are per- 
 sonally liable for the debts of a concern the same as in a part- 
 nership, and they have not the limited liability of the share- 
 holders of the ordinary corporation with which we are so 
 familiar. A partnership of this kind does not end by the 
 death of a member, nor has each certificate owner the right 
 to transact business for the concern as in an ordinary partner- 
 ship. This class of " joint-stock companies " is not very 
 common in America, but a good example is that of some of 
 our large express companies, such as the Adams, American, 
 and United States, which are organized under a New York 
 law, by which they have the right to issue transferable shares 
 representing beneficial interests in the companies. 
 
 J. O. J. A. July, October, January, and April; interest or 
 dividends payable quarterly beginning with July. 
 
 Journal. Those keeping a record of their transactions with 
 others use an account book termed a " journal," in which is 
 entered the daily record of all transactions, which are not 
 cash, which latter, of course, are entered in the " Cash Book." 
 The chief uses of a journal are for entries in closing or balancing 
 accounts, charging off profits -or losses, and making entries of 
 correction. In double entry bookkeeping, entries are so 
 made that not only the accounts to which these items are 
 afterwards to be posted in the ledger will show, but whether 
 to the debit or credit of such account. 
 
 J. S. D. M. June, September, December, March; interest 
 or dividends payable quarterly, beginning with June. 
 
 Judgment Bond. Issued in satisfaction of a debt adjudged 
 legal by a decision of the court. Such bonds, presupposing an 
 ability to pay, are considered safe; the courts recognizing 
 no right of the issuing party to avoid payment unless the exis- 
 tence of fraud in obtaining the judgment can be demon- 
 strated. 
 
 Judgment Debt. An indebtedness which has been legalized 
 by action of a court. 
 
 Judgment Note. When a debtor wishes to avoid having a 
 law suit brought against him, he may be willing to acknowl- 
 edge the debt by giving a " judgment note," which is simply 
 an ordinary promissory note containing a power of attorney 
 to appear and confess judgment for him. 
 
 Junior Bonds or Securities. Bonds over which another issue 
 has precedence, and which, in case of foreclosure, would have 
 prior claim upon the property.
 
 228 
 
 MONEY AND INVESTMENTS 
 
 Junior Lien. See " Junior Mortgage." 
 
 Junior Mortgage. A mortgage over which some other 
 mortgage would take precedence in the case of foreclosure. 
 " Junior mortgages " would have reference to all but the 
 " first mortgage." 
 
 J. & D. Interest or dividends payable semi-annually; 
 June and December. 
 
 J. & J. Interest or dividends payable semi-annually, 
 January and July. 
 
 / 
 
 K 
 
 Kaffir Circus. The name given to that particular part of 
 the London Stock Exchange in which the jobbers and brokers 
 who deal in " Kaffirs " stand. (See next subject.) 
 
 Kaffirs. Mining securities of the Johannesburg District of 
 South Africa. 
 
 Kangaroos. A term for the securities (mining, etc.) of 
 West Australia, dealt in upon the London Stock Exchange. 
 
 Katy. Missouri, Kansas, and Texas Railway Co. 
 
 Keep Alive. Not cancelled, but still drawing interest. If 
 a company buys in some of its own bonds for its " sinking 
 fund " account, and continues to pay interest on them as if 
 in the hands of an outside party, the bonds are said to be 
 " kept alive." 
 
 Killing. To make a " killing " is to profit handsomely. 
 
 Kiting, Kite Flying, or Kiting Checks. This is a method of 
 sustaining a fictitious balance in a bank by the use of accom- 
 modation paper, and all depends upon the custom which 
 banks pursue of giving the depositor credit for checks of 
 other people as soon as deposited, and without waiting until 
 the same have been collected. As an example, Green and 
 Brown agree to exchange checks for $1,000 each. Each wants 
 immediate use of all or part of that sum. Each, accordingly, 
 gives the other his check for $1,000, which is properly de- 
 posited in his respective bank. They go on the principle that 
 the checks will not be collected before the following day, 
 each expecting to make the amount good at his own bank 
 before it is collected. 
 
 This same method may be adopted by a man having two 
 different bank accounts, depositing in one account a check 
 against the other, expecting to make it good at the latter 
 bank the following day. 
 
 Kiting Stocks. Pushing the prices of stocks to high levels 
 not warranted by the established earning powers of proper- 
 ties; trying to establish new high records in prices.
 
 MONEY AND INVESTMENTS 229 
 
 Kitty. The Missouri, Kansas and Texas Railway Co. 
 
 Knocked Down. The declaration on the part of an auc- 
 tioneer that a sale has been effected; i. &. " sold," is equivalent 
 to the above. 
 
 Kontingent. See " Bank of Germany." 
 
 Kopeck. A Russian silver " kopeck " is one-hundredth 
 part of their " ruble," and is equal to about one-half cent 
 United States money. The copper " kopeck " is estimated at 
 $.0075 in our money. 
 
 Kran. The monetary unit of Persia, and equivalent to 
 about $.081 United States money. 
 
 Krone. The monetary unit of Austria-Hungary, and 
 equivalent to $.203 United States money. Also the monetary 
 unit of Norway, Sweden, and Denmark, being equivalent 
 to $.268 United States money. 
 
 Ks. The sign used in the Austria-Hungary monetary system 
 for the " crown," as $ is for our dollar. 
 
 K. T. Missouri, Kansas & Texas Railway Company. 
 
 L. Abbreviation for Elevated Railway. 
 
 Lac (or Lakh). One hundred thousand " rupees." (See 
 that subject.) 
 
 Lackawanna. Delaware, Lackawanna & Western R. R. Co. 
 
 Lafayette Dollar. United States silver dollars, of special 
 design, minted during 1900 in recognition of the unveiling of 
 the statue of Lafayette, at Washington, D. C. Total amount 
 coined $50,026; weight, 412^ grains; fineness, .900. 
 
 Lake Copper. Copper mined in the vicinity of Lake 
 Superior. It is found pure in the rock. Ordinarily the best 
 qualities are tougher and stronger than any copper made from 
 ore and give an electrical conductivity of about 100% of that 
 attributed to chemically pure copper. 
 
 Lake Shore. Lake Shore & Michigan Southern Ry. Co. Con- 
 trolled by the New York Central & Hudson River R. R. Co. 
 
 Lakh. See " Lac." 
 
 Lamb. See " Fleece." 
 
 Lame Duck. A person, usually a speculator, temporarily 
 financially embarrassed. 
 
 Land Grant Bonds. These are not very common to-day, 
 but were formerly issued by railway companies which pledged, 
 as security for same, lands granted them by the Government, 
 and usually redeemed from the proceeds of their sale.
 
 230 MONEY AND INVESTMENTS 
 
 Land Grant Certificates. See " Land Grant Bonds," which 
 do not differ materially in the form of security pledged for 
 their payment. 
 
 Lapse. A life insurance policy " lapses " when the holder 
 fails to pay a premium due, by which he loses his rights under 
 the original contract. But he is generally given a " paid-up " 
 policy or " extended insurance " policy at his option. 
 
 Lard. The trading unit is 250 tierces, weighing 340 Ibs. 
 each. The commission charged for the purchase or sale, or for 
 the purchase and sale of lard in 250 tierce lots, or multiples 
 thereof, is 6 cents per tierce. The usual " margin " required 
 is ^ cent per pound. 
 
 Latin Union. This consists of France, Belgium, Italy, 
 Greece, and Switzerland, which have adopted a common 
 monetary unit, viz., the " franc; " the gold " franc " being 
 equal to 19.3 cents United States money. In Italy the unit 
 is called " lira," but has the same value as the " franc; " 
 and in Greece the " drachma." 
 
 Laundry (or Laundry Business). This has reference to 
 " washing," so-called. (See " Wash Sales.") 
 
 Law, John. A Scotch financier and an advocate of 
 paper currency. In May, 1716, he founded in Paris, France's 
 first banking institution, the Banque G6nerale, and issued 
 paper currency in accordance with his views. These notes 
 were accepted in payment of taxes, and soon were at a pre- 
 mium. In 1717 the French Government gave him control 
 of Louisiana for the purposes of trade and colonization, and 
 the Compagnie d'Occident was formed accordingly. It was 
 commonly called the " Mississippi Company/' but afterwards 
 became known as the " Mississippi Scheme," or " Bubble." 
 Later, the East India, China, and Africa companies were 
 absorbed, and the company took over the control of the Mint, 
 besides the powers of " Receivers-General," thus becoming 
 of vast importance in foreign commercial affairs, as well as 
 home financial matters. The Banque Ge"nerale, in 1718, was 
 changed to Banque Royale. In 1720, Law became Controller- 
 General of Finance, and the company and bank became one. 
 Prosperous conditions only continued for a short time, how- 
 ever, from the fact that there was an over-issue of paper 
 money and the Government became antagonistic to Law's 
 scheme, so in May, 1720, after a tremendous speculative 
 craze, a complete collapse occurred and Law left the country. 
 
 Lawful Money. Money which the Government declares to be 
 legal tender (see " Legal Tender ") in payment of obligations; 
 money which the creditor may not refuse in the payment of 
 a debt except where otherwise expressly stipulated in the 
 contract.
 
 MONEY AND INVESTMENTS 231 
 
 The " Opinions of the Attorney General of the United 
 States " gives the following: " The term ' lawful money ' 
 is understood to apply to every form of money which is en- 
 dowed by law with the legal tender quality." 
 
 Under the revised statutes of the United States, neither 
 gold certificates, silver certificates, nor national bank notes 
 are endowed with legal tender properties. 
 
 Clearing-house certificates, representing specie or lawful 
 money specially deposited for the purpose, of any clearing- 
 house national bank shall be deemed to be lawful money in 
 the possession of any association belonging to such clearing- 
 house, holding and owning such certificate, for the purposes 
 of " reserve." 
 
 The term " lawful money," when applied to what are 
 known as " gold banks," " shall be construed to mean gold 
 or silver coin of the United States." 
 
 Lawful Money Bonds. Bond payable in " lawful money " 
 (see that subject) of the United States. 
 
 L. C. L. Less than car-load lots. 
 
 Ld. gt. Land Grant. 
 
 Lead. National Lead Co. 
 
 Ledger. Among the books kept by firms, corporations, etc., 
 transacting business with others, is an account book termed 
 a " ledger," in which is entered a record of all transactions, 
 either money or otherwise, so that upon one side shall be 
 everything to the credit of a certain account, and, upon the 
 other, everything against it. This is accomplished by " post- 
 ing " carrying from one book of accounts to another 
 from the " journal " and " cash book " in double entry book- 
 keeping, and from the " day book " and " cash book," if such 
 books are used, in single entry bookkeeping. 
 
 Legal Holidays. A day, other than Sunday, which, so far 
 as business of many kinds is concerned, has lawfully the 
 same status as that day. Upon a " legal holiday " notes may 
 not be collected. Banks and all public offices are closed. 
 Practically no business is carried on except that of public 
 service corporations or for the pleasure and entertainment 
 of the masses. In every State when a " legal holiday " falls 
 on Sunday the next day is set aside in its stead, except in 
 Louisiana, which observes the same day, and Washington, 
 which observes the day preceding. Sunday, Christmas, and 
 July 4th are legal holidays in every State of the Union, but 
 not necessarily so the other holidays. Each State makes its 
 own separate laws in relation to such days. In many States 
 notes or other negotiable paper due on a " legal holiday " are 
 payable the day following. In New York, for illustration, if 
 negotiable paper falls due on July 4th, and it so happens that
 
 232 MONEY AND INVESTMENTS 
 
 that day is a Saturday, then it should be presented for pay- 
 ment Monday, the 6th. 
 
 In the lack of absolute knowledge on such point it is de- 
 sirable to look it up, for, in some States, it is payable the 
 day before. 
 
 Legal Investments for Savings Banks. Expressions like 
 " legal for Massachusetts savings banks," or " legal for New 
 York savings banks," have appeared so many times in circu- 
 lars of bond houses in connection with this, that, and the 
 other bond, that it seems almost as if every one who has had 
 occasion to look at such circulars, must either have accepted 
 these phrases without attaching any particular meaning to 
 them, or must have a clear understanding of what is 
 meant. 
 
 This information is given in connection with describing 
 an issue of bonds for two purposes: First, to notify a bank 
 official that the bonds can be purchased by his bank in strict 
 compliance with the law; Second, to give the bond recom- 
 mendation to a private investor from the fact of its being legal 
 for savings banks to purchase. The laws of the majority of 
 States regulate specifically in what bonds, stocks, etc., a 
 savings bank may invest the money of its depositors. Limi- 
 tations placed upon such investments differ in the various 
 States, but, at the time of writing, the order in which the larger 
 Eastern States may be classed, beginning with the State which 
 most strictly limits its investments, and, therefore, whose 
 investments would, as a rule, be accepted as the safest, is as 
 follows: New York, Massachusetts, Connecticut, Vermont, 
 Maine, New Hampshire; there is practically no limitation 
 upon the investments of Rhode Island savings banks, and 
 comparatively little upon New Jersey, Pennsylvania, and 
 Maryland. 
 
 Legality of Securities. See " Attorney's Opinion." 
 
 Legal Name of a Woman. See " Woman's Signature." 
 
 Legal Opinion. See " Attorney's Opinion." 
 
 Legal Rate of Interest. A fixed rate, established by State 
 law, greater than which no charge may be made for the use of 
 money. An interest charge exceeding the legal rate is called 
 " usury " and may be penalized by the courts. In some 
 States no attempt is made to interfere between the lender and 
 borrower establishing any agreed rate of interest, the legal 
 rate in such cases being simply to prevent creditors exacting 
 unfair rates from the debtors. 
 
 No national bank is allowed to charge interest in excess 
 of the legal rate of the State in which located. In absence 
 of such State limitation, a national bank may charge a maxi- 
 mum rate of 7%.
 
 MONEY AND INVESTMENTS 233 
 
 In New York State any rate of interest is legally permitted 
 on "collateral call loan" of $5,000 or upwards, but in that 
 State, as elsewhere, the regular legal rate is often successfully 
 evaded by charging the borrowers a commission in addition to 
 the interest rate. 
 
 That there has long been an effort to prevent, by legisla- 
 tion, an excessive interest charge is shown by the fact that 
 during the reign of Henry VIII. all interest above 10% was 
 declared unlawful. During the reign of James I. this rate 
 was reduced to 8% and during Queen Anne's time to 5%.* 
 
 Legal Requirement. As used in reference to the bank 
 "reservs" it is explained under that subject. 
 
 Legal Reserve. As used in the " Bank Statement," this 
 has reference to the required " reserve," as explained under 
 the first part of that subject. It is the amount of lawful 
 money which a national bank must hold at all times on hand 
 ( or partly in the keeping of its " rese ve agent " ) to meet the 
 demands of its depositors. 
 
 Legals. Meaning the same as " Legal Tenders." 
 
 In some sections of the country, the securities which are 
 legalized investments for the savings banks to buy are referred 
 to by the dealer as " legals." (See " Legal Investments for 
 Savings Banks.") 
 
 Legal Tender. Money which may be legally used in the 
 payment of a debt, and which the creditor must accept. The 
 laws of the United States specifically state the legal tender 
 qualities of all forms of money in this country, as follows : 
 
 "Gold coins, standard silver dollars, subsidiary silver, minor 
 coins, United States notes, and Treasury notes of 1890 have 
 the legal tender quality as follows : Gold coin is legal tender 
 for its nominal value when not below the limit of tolerance in 
 weight ; when below that limit it is legal tender in proportion 
 to its weight ; standard silver dollars and Treasury notes 
 of 1890 are legal tender for all debts, public and private, ex- 
 cept where otherwise expressly stipulated in the contract ; 
 subsidiary silver is legal tender to the extent of $10, minor 
 coins to the extent of 25 cents, and United States notes for 
 all debts, public and private, except duties on imports and 
 interest on the public debt. Gold certificates, silver certificates, 
 and national bank notes are non-legal tender money. Both 
 kinds of certificates, however, are receivable for all public 
 dues ; and national bank notes are receivable for all public 
 dues except duties on imports, and may be paid out for all 
 salaries, demands, etc., owing by the Government within the 
 United States, except interest on the public debt and in the 
 redemption of the national currency." 
 
 l " Wealth of Nations," Adam Smith.
 
 234 MONEY AND INVESTMENTS 
 
 Foreign coins are not legal tender in the United States. 
 
 Before the Civil War, gold and silver coins were the only 
 recognized legal tender money in this country. 
 
 During Massachusetts' Colonial days, when other money 
 became scarce, wampum was made a " legal tender " up to 
 a limited amount and at a fixed rate. In the same manner, 
 tobacco was used in Virginia, and tobacco and Indian corn 
 in Maryland. 1 
 
 " Cours legal " is the French term for " legal tender." 
 
 Legal Tender Bonds. Bonds payable in any " legal tender " 
 (see that subject) money of the United States. 
 
 Legal Tender Certificate. A Government receipt formerly 
 issued in exchange for " legal tender notes " deposited in a 
 " sub-treasury," and only negotiable among members of the 
 " clearing-house association " in the city where issued. It 
 was necessary that it bear the indorsements both of the bank 
 to which issued and the bank presenting it for redemption. 
 Also called " currency certificate." They are no longer used. 
 
 Legal Tender Note. (Read " Legal Tender.") Paper money, 
 which, by law, is " legal tender." It must be borne in mind, 
 however, that, whereas, silver and gold are receivable in 
 every section of the world at their known intrinsic value, a 
 " legal tender note " of the United States, for instance, would 
 not be accepted in sections of the world where the inhabitants 
 were ignorant of the ability to pay on the part of the issuer. 
 
 Legal Trust. See " Trust." 
 
 Lei. The monetary unit of Roumania; being the same as 
 the French " franc " or $.193 United States money. 
 
 Lending Stocks. See " Borrowing Stocks." 
 
 Letter of Advice. This is a written notice used in " ex- 
 change " (to which refer) transactions, and sent from the one 
 drawing the " bill " to the one expected to pay it. 
 
 Letter of Credit. (A fuller understanding of this may be 
 had by first reading " Exchange.") A method by which 
 persons travelling can obtain money at different points, thus 
 making it unnecessary to carry a large sum at the outset. 
 The method of procuring a " letter of credit " is to go to some 
 bank, or banking house, making a practice of selling the 
 same, and deposit money, or approved securities, sufficient 
 to cover the credit desired, in addition to which will be paid a 
 small charge for the accommodation. The customer receives 
 a written order which is good when presented at certain banks 
 or banking houses, in such cities as the traveller intends to 
 visit, for payment to him of sums of money not greater in the 
 aggregate than the face value of the " letter of credit." They 
 
 1 " Money and the Mechanism of Exchange," Jevons.
 
 MONEY AND INVESTMENTS 235 
 
 are good at all important points throughout the world. When 
 a stranger wishes to buy a credit, it is desirable to bring a 
 letter of introduction from a bank bearing not only the sig- 
 nature of some officer of the bank, but the signature of the 
 bearer as well, or to arrange some other method of satisfactory 
 introduction. The holder of one of these " circular," or 
 " traveller's letters of credit " is identified by his signature. 
 The credit will be issued in favour of two or more persons if 
 desired. 
 
 Such orders, when used by travellers in the same country as 
 that in which they are issued, are called " domestic traveller's 
 letters of credit," but for use without the country issuing, 
 " foreign traveller's letters of credit." 
 
 Foreign credits enable the holders to obtain the money cur- 
 rent in each country where presented. 
 
 There are also " commercial letters of credit," which are 
 likewise " foreign " and " domestic," according to the place 
 in which desired. These are issued, if " foreign," payable 
 in the money current in the country where desired for use, 
 francs, marks, guilders, etc., and afford the merchant or 
 manufacturer facility and protection in paying for purchases 
 made abroad. They are issued on account of the importer and 
 in favour of the shipper, seller, or manufacturer, in foreign 
 countries. 
 
 For example: If a merchant in Boston buys merchandise 
 in Constantinople, he may obtain a " commercial letter of 
 credit " for the sum desired, which he forwards to the seller 
 in Constantinople, and that person, upon presentation in his 
 city to the banking house designated in the " letter of credit," 
 and properly identifying himself, may obtain the sum desired, 
 but generally only upon presentation with the " letter of 
 credit " the documents showing actual shipment of the goods. 
 
 The issuer of the " letter of credit " naturally instructs his 
 correspondent, that the latter may be properly advised. 
 
 Letters Testamentary. An instrument issued by a court 
 authorizing the executor under a will to perform the duties 
 of his office. 
 
 Levee Bonds. Particularly issued in the South by Levee 
 Districts; that is, municipal subdivisions, the taxable property 
 therein being assessed for the principal and interest of the 
 debts. These bonds are issued to defray the expenses of build- 
 ing and maintaining levees for the reclamation or protection 
 of land which would otherwise be submerged by water all 
 or part of the time. Investors should look into one of these 
 issues very carefully before purchasing. The wealth of the 
 taxable property in the district, the necessity of the levee and 
 the probable permanency of the work, are deserving of
 
 236 MONEY AND INVESTMENTS 
 
 thoughtful consideration. A levee which is so situated and 
 constructed that it is apt to be easily washed away is by no 
 means a good foundation for investment. Some of these 
 issues have proven quite satisfactory; as a class they yield a 
 high return upon the investment. 
 
 Level Premium. A premium determined at the time of 
 taking out a life insurance policy, by which the rate of pre- 
 mium is fixed at the same amount per annum, based upon 
 the age of the insured. 
 
 Liabilities. All debts or obligations of any kind to pay 
 money, or its equivalent, are called " liabilities; " something 
 owed. 
 
 Capital stock, accounts payable, funded and floating in- 
 debtedness, surplus, losses, etc., all appear under this heading. 
 
 Liability Insurance. This is a subject to be considered by 
 the investor regarding certain classes of securities. A street 
 railway may be earning enough to pay the interest on its 
 bonds and also good dividends upon its stock; in other words, 
 may be looked upon as a corporation in good financial stand- 
 ing. At the same time, a serious accident may occur, causing 
 a loss of the lives of many passengers and the injury of many 
 others, the blame for which may rest upon the railway com- 
 pany, necessitating large payments in the way of damages. 
 It is possible that the amount of money required for this 
 purpose may not only be equal to the earnings of the railway 
 for a long time to come, but actually cause financial disaster 
 to the company. 1 There are companies which will insure a 
 railway to a limited extent, against loss resulting from acci- 
 dent. The expense of such insurance, however, is so great 
 that comparatively few companies can afford it. The majority 
 of railroads are such large corporations that the loss resulting 
 from any one accident would hardly be serious enough to 
 embarrass the road, so that in this connection the investor, 
 as a rule, need only consider the smaller road. In the latter 
 case, therefore, in lack of the existence of liability insurance, 
 the investor must take into consideration the physical con- 
 dition, grades, curves, construction, etc., of the property. 
 In such sections of the country where it is possible to build 
 long stretches of road practically without curves and appre- 
 ciable grades, the danger of accidents is slight. Bad curves 
 
 1 As a general proposition, unless there is special State legislation to 
 the contrary, a claim for damages is subservient to a mortgage. This has 
 been shown by a recent decision of the Supreme Court confirming a de- 
 cision of the District Court in a Montana case; the Court holding that the 
 section of the statutes of that State which provided that a personal injury 
 claim had a prior right over a mortgage applies only to railroads of com- 
 merce and not street railroads, there having been special legislation in re- 
 fird to the former; the case in question being a claim against the Great 
 alls Street Railway Co.
 
 MONEY AND INVESTMENTS 237 
 
 and hills, therefore, are very important things to consider in a 
 street railway property, for not only do they count in con- 
 sidering the risk of an accident, but the cost of operation in 
 such a country is far greater than in one with more favourable 
 conditions. 
 
 Gas and electric light companies do not offer a great risk of 
 accident to the public for which such companies can be held 
 responsible; at least, the loss resulting from any one such 
 accident would probably be a comparatively small matter, 
 and the investor, as a rule, need not consider " liability in- 
 surance " in looking into that class of investment. As a matter 
 of fact " liability insurance " is quite generally carried by 
 gas and electric light companies. 
 
 For liability in event of accident or damage in relation 
 to vessel property, refer to " Steamship Company Bonds." 
 
 Many corporations carry what is known as " Employees 
 Liability Insurance," which insures, in a very satisfactory 
 way, against loss to the company on account of accident to 
 its employees resulting from its own negligence. This class of 
 insurance is not very expensive and is advisable. 
 
 Liability of Shareholders. Refer to " Double Liability " 
 and " Non-assessable." 
 
 Lien. A claim against the property which the possessor 
 may retain until the satisfaction of some demand or a debt 
 due him. A mortgage is a " lien." " Liens," however, vary 
 in their character. One may hold the first " lien " against 
 a property which would be equal to holding the first mort- 
 gage; in other words, nobody has a prior claim against it. 
 A " second lien " would be equal to a second mortgage and so 
 on. This word " lien " has been used in such ways as to 
 confuse the investor. There was an issue of bonds brought 
 out by one of our large railroad companies some years ago, 
 which were called " prior liens," and many investors assumed 
 that these were secured by a mortgage prior to any other, 
 while, as a matter of fact, this was not the case, there having 
 been another issue brought out previous to these, and there 
 was also an issue which came after the " prior liens." The 
 " prior liens," so-called, did take precedence over some 
 other obligation, but there was still an obligation preceding 
 them. Many investors who bought these bonds without this 
 understanding lost money thereby. 
 
 Life Annuity. A fixed sum of money payable yearly to and 
 during the life of the person or persons entitled to receive the 
 same. 
 
 Life Insurance. Something about life insurance may not 
 be amiss, although it is impossible to allow much space for 
 the discussion of the kind of insurance most desirable or
 
 238 MONEY AND INVESTMENTS 
 
 what class of people ought to be insured, etc. The one point 
 most necessary to be considered, however, is the company or 
 companies in which to insure. Give this salient fact careful 
 consideration, namely, do not be influenced too strongly by 
 the rate of dividends earned by any one company and such 
 like inducements brought to one's attention by the average 
 insurance agent, but look into the plan which a company 
 pursues in the investment of its funds, for upon their safe 
 investment must the insured depend for the ultimate payment 
 of his policy. Much has been publicly printed of late regarding 
 the handling of investments on the part of large insurance 
 companies with much truth, but these companies are solvent, 
 and insurance in them is safer than ever before. It is always 
 possible for any person contemplating insurance to obtain 
 a list of the investments of companies under consideration, 
 and, in lack of sufficient knowledge regarding them, to dis- 
 cuss the list with some competent financial advisor, who, at 
 the same time, may be able to give desired information regard- 
 ing the character of the men in control of the company. 
 
 " Life insurance " is nothing more nor less than depositing 
 one's money in a savings bank, to which is attached the 
 gambling feature of the company that the insured will live be- 
 yond a certain period, and the policy holder accepting the 
 wager, and betting that he will not. If there were any way of 
 ascertaining the absolute certainty of living beyond the esti- 
 mate placed by the insurance companies, " straight life in- 
 surance " would be useless. For the privilege of betting that 
 you will not live beyond a certain time, and upon the winning 
 of which bet your estate collects the amount of the wager, 
 you are asked to pay an excessive charge. The cost of life 
 insurance,' at this time of writing 1906 is far greater 
 than it should be, and is necessitated particularly by the 
 cost of soliciting life insurance through the medium of agents. 
 If all agency work could be done away with the cost would 
 be much lessened. Some persons consider that it is against 
 public policy to solicit life insurance, but it is the result of 
 undue competition in business. One of the old life insurance 
 companies in England never has had an agent, and is to-day 
 a prosperous company. It is very likely true, as the insurance 
 people claim, that the rates of that company are no lower 
 than obtainable elsewhere, because the new business secured 
 is not great enough to give it the benefit of a large influx of 
 new lives. That would change, nevertheless, if all companies 
 did away with the agency feature. However, it would be 
 somewhat of a radical revolution to expect such a change in 
 the conduct of this business, and it is fair to say that the very 
 large majority of life insurance companies in America are 
 sound, and that a policy taken in the same, even at the
 
 MONEY AND INVESTMENTS 239 
 
 present excessive cost, is not only safe, but, for a great many 
 people, very desirable. In this connection it may be stated 
 that a recent law has been passed in New York State which 
 compels companies doing business therein to limit their 
 expense account. This will correct, to quite an extent, the 
 excessive cost referred to. 
 
 It is not the object here to discourage life insurance; far 
 from it. Rather to encourage it; but there are many instances 
 when it is unadvisable, or at least unnecessary, and possibly 
 a better investment of one's funds might be made. 
 
 While the cheapest kind of companies to insure in are the 
 " assessment and fraternal insurance " companies, they have 
 not proved the most satisfactory, as is set forth under the 
 subject in quotations. The cheapest kind of insurance is 
 " term insurance," so called; that is, the insured receives the 
 face of his policy only in case of death before the expiration 
 of the agreed time; for, in this class, the only expenses which 
 the companies need to figure into the premiums are those 
 resulting from death losses and managerial expenses. But, 
 as policies of this kind are usually taken out to cover some 
 particular risk, they are not commonly of long duration. 
 For the benefit of one's family, a " term insurance " policy 
 with renewable features is an inexpensive and desirable form. 
 The " level premium " plan is the best for a man upon a salary 
 or with a certain yearly income, and in which there is little 
 likelihood of any increase. It is more expensive than " term 
 insurance " at the start, but not so later on. 
 
 " Endowment insurance " is well worth consideration for 
 those who can afford the increased cost; as it not only carries 
 the feature of the payment of its face value in case of death, 
 but returns the same sum at the end of the endowment period. 
 To that extent it is much like a savings bank. " Endowment 
 insurance " encourages an enforced saving, and, when the 
 policies have been properly selected, has proved very beneficial 
 in many cases. 
 
 From the standpoint of an investment alone life insurance 
 is absolutely valueless. Savings banks pay better rates of 
 interest. There must be other reasons for insuring than the 
 investment feature to make it worth the while. The interest 
 earned may be a secondary consideration, but must never be 
 a first. 
 
 Too great weight should not be attached to inducements 
 frequently advanced by the agent, such as the amount of 
 money which his company will loan upon a policy; its " cash 
 surrender value," etc. The value of such privileges depends 
 entirely upon the person, whether or no he is likely to abuse 
 the same. Some men actually need the incentive which the 
 lack of these privileges would compel in order to encourage
 
 240 MONEY AND INVESTMENTS 
 
 the savings necessary to meet premium payments. Looking 
 at it from the standpoint of one's family, an insurance policy 
 which neither permits one to borrow nor obtain a " cash 
 surrender value " upon it, is probably, in many instances, the 
 most desirable. 
 
 Lift Prices. " Prices were lifted; " forced up unnaturally. 
 
 Limelight. In the light of a searching public investigation. 
 
 Limit. A price which a broker must not go beyond in 
 executing an order for his customer. " His limit to buy was 
 63." The broker had no right to fill the order at a price in 
 excess of 63. The word " limit " might also be used in re- 
 stricting the amount to be purchased or sold. 
 
 Limited (or Limited Company). Limited liability. " Lim- 
 ited " signifies that by law the shareholders are exempt from 
 personal liability beyond the amount already invested. (See 
 " Double Liability.") 
 
 Limited Legal Tender. (First read " Legal Tender.") 
 Money which has " legal tender " qualities only to a certain 
 amount. Example: Our twenty-five cent silver pieces may 
 be used in the settlement of a debt up to $10; i. e. they are 
 " legal tender " only to the amount of $10 in any one payment. 
 
 Limited Partnership. Burdick, in his " Essentials of Busi- 
 ness Law," says that the idea of a " limited partnership " 
 was borrowed from the French, and first introduced in this 
 country in 1822 by the Legislature of New York. 
 
 Such partnership must consist of at least one member fully 
 liable for all debts of the firm and who is likewise a manager 
 of the business. In addition there are one or more " special 
 partners " taking no active management of the business, and 
 who are limited for the indebtedness of the firm up to only 
 the amount contributed to capital. 
 
 Limping Standard. A country which at one time em- 
 ployed the double standard of gold and silver, but has sus- 
 pended the free coinage of silver in order to keep its silver 
 coins at par with gold, is considered to have a " limping 
 standard " (Etalon Boiteaux), because silver limps along 
 behind gold without being subject to free coinage. Countries 
 which are not practically upon the " gold standard " are 
 not usually classified as under the " limping standard-" If 
 their coins are not at par with gold, they are treated as on the 
 " silver standard." 1 
 
 Line. "He carries a good line of- stock;" "line" 
 here meaning special kind. " Line " is also used to denote a 
 certain amount of securities carried more or less continually 
 
 1 1 am indebted to Mr. Charles A. Conant for assistance in framing this 
 definition.
 
 MONEY AND INVESTMENTS 241 
 
 as " a line of 10,000 shares." A " line " of road indicates a 
 railroad. 
 
 Linseed Oil. American Linseed Co. 
 
 Liquid Assets. Money, or property of all kinds, which may 
 be readily converted into money. 1 
 
 Liquidated Damages. Damages fixed upon in advance by 
 the parties to a contract as the amount which shall be re- 
 coverable upon a breach of the contract. 
 
 Liquidating Market. As commonly understood, a market 
 in which a great many are selling securities; taking their 
 profits, as it were, naturally resulting in declining prices. Or 
 the " short interests " may be forced to " cover." Such a 
 market is naturally the result of an excessive buying or 
 " short selling." 
 
 Liquidation. This is used in two ways. In one case, it means 
 the winding up of a business, the converting of its assets into 
 cash, etc.; in the other, it is used in reference to the stock 
 exchange when holders of stock are selling, converting the 
 same into money. 
 
 " Liquidation of speculative accounts " indicates that those 
 who were speculating decided to close out their accounts. 
 
 " Liquidation " in either of the above examples may be 
 " voluntary " or " forced." 
 
 When a speculator who has been " long " sells out at a loss, 
 he has " liquidated." 
 
 Liquid Resources. See " Liquid Assets." 
 
 Lira. An Italian silver coin equal in value to the French 
 franc, or $.193 in United States money. 
 
 List. " Sold the list generally." An expression used in 
 reference to general transactions in many different securities 
 listed upon the stock exchange; a general selling of most 
 listed securities rather than the transactions of the day being 
 confined to a few different ones. The " list " refers to the 
 securities which may be dealt in upon the stock exchange, and 
 a list of which is established in each exchange. 
 
 The corresponding term for the London Stock Exchange is 
 " official list." 
 
 Listed (or Listed Securities). Each stock exchange has 
 certain rules which must be complied with before a security 
 may be traded in thereon. There must be submitted to 
 certain officers of an exchange a description of the security in 
 such a tangible form that any one may satisfy himself as to 
 every detail and particular of the property represented. 
 
 1 W. W. Carlile thinks that " liquidity " as applied to assets " can mean 
 nothing else but the possession of a value that is not liable to fluctuate." 
 " Economic Method and Economic Fallacies."
 
 242 MONEY AND INVESTMENTS 
 
 Furthermore, at regular intervals there must be furnished a 
 statement of the financial condition and earnings of each 
 company whose securities have been listed. In the New York 
 Stock Exchange there is a "Stock List Committee," which 
 receives and considers all applications for placing securities 
 upon the " list " of the exchange, and makes report and 
 recommendation thereon to the " Governing Committee," 
 giving full statement of earning, organization, capitalization, 
 resources and indebtedness. This committee has charge of 
 the arrangement and revision of the regular " list " of securi- 
 ties. " Listed " securities, therefore, have, to a certain extent, 
 the approval of the exchange, and it is understood that the 
 corporations which they represent are furnishing to the ex- 
 change sworn statements of their financial condition and 
 earnings as required. 
 
 The investor or speculator must not be deluded, however, 
 into believing that just because a security is " listed " upon an 
 exchange, it follows that it is any better than some other 
 security not so favoured. " Listing " simply means that facts 
 and figures in relation to the security are given more or less 
 publicity; that is, are available to the public; but the stock 
 exchange in no way stand sponsor for the intrinsic merits 
 of any security " listed " thereon. 
 
 Listed Department. " Listed " securities as distinguished 
 from " unlisted." (See those subjects.) 
 
 Little. Common stock. (See next two subjects for ex- 
 amples.) 
 
 Little Npr. (Nipper). Northern Pacific R. R. Co. common 
 stock. 
 
 Little Union. Union Pacific Railway Co. common stock. 
 
 Live Assets. Investments upon which interest has been or 
 is expected to be paid as due, or income-producing property. 
 
 LL. The " ticker " abbreviation for " leased lines." 
 
 Loading. A term used in life insurance company offices. 
 A life insurance premium may be divided into three parts. 
 The " actuary " figures what sum is necessary to cover the 
 mortality losses and the amount necessary for " reserve." 
 In addition to these two factors, must be considered the 
 amount to cover the expenses of the company. This is the 
 " loading; " being that part of the premium which can 
 properly be applied to the company's expenses. 
 
 Load Up. To purchase a great deal of anything. You load 
 up with a certain stock when you buy nearly or fully up to 
 your capacity. " He is loaded." This may mean the same as 
 the last or may mean that he has too much of an undesirable 
 security, of which it is impossible to dispose, except at a loss.
 
 MONEY AND INVESTMENTS 243 
 
 Loan and Trust Company. See " Trust Company." 
 
 Loan Certificate. A short term for " Clearing-House Loan 
 Certificate." 
 
 Loan Crowd. Those brokers who have stocks to lend or who 
 wish to borrow them. Refer to " Borrowing Stock." 
 
 Loaned Stock. See " Borrowing Stock." 
 
 Loaning Rate on Stocks. See " Borrowing Stocks." 
 
 Local Check. Although " local check " in clearing-house 
 parlance would naturally indicate a check on some bank be- 
 longing to the clearing-house association, in some instances, 
 it is used in the same sense as an " out-of-town check," or a 
 check on some country bank. 
 
 Locked Up. Money is said to be " locked up " when it is 
 not available for immediate use. Money that is " locked up " 
 is not necessarily ill-invested, as it may be in such form that 
 it is not adapted to other uses. 
 
 When, however, money is said to be " tied up," it conveys 
 an idea of insecurity, as that of a depositor in a bank in 
 process of forced liquidation. 
 
 Locomotive. American Locomotive Co. 
 
 Lombard Street. 1 Lombard Street as used with us has much 
 the same general significance as our own term " Wall Street " 
 (which read), but to quote the words of a well-known London 
 man of finance: 
 
 " The terms in London, which most nearly correspond to 
 ' Wall Street ' in New York, would be ' Capel Court ' and 
 ' Throgmorton Street/ ' Lombard Street ' and ' Threadneedle 
 Street/ referring more particularly to the banking element of 
 our city, whereas the Stock Exchange and its associations 
 are more correctly described by the former." 
 
 Bagehot, writing of Lombard Street in 1873, said " that it 
 is by far the greatest combination of economical power and 
 economical delicacy that the world has ever seen. . . . 
 Money is economical power." 
 
 One English financier W. R. Lawson says of Lombard 
 Street:" . . . meaning thereby the clearing banks of London, 
 the discount houses, the bill brokers, and all the moneyed 
 interests." 
 
 London Equivalent. Read " New York Equivalent," 
 which applies here, transposing the two cities. 
 
 London Money. Rates asked for " call " and " time " 
 money in that city. 
 
 1 This Street received its name from the Lombards Italian merchants 
 from the republics of Genoa, Lucca, Florence and Venice who carried 
 on the business of banking, and who, previous to the expulsion of the Jews, 
 settled in England.
 
 244 MONEY AND INVESTMENTS 
 
 London Orders. London time is five hours later in the day 
 than New York " standard time." That is to say, the sun rises 
 about five hours earlier at London than it does at New York. 
 
 The London stock exchange opens at 11 o'clock A. M., 
 London time, and closes at 4 p. M., except that it remains 
 open one half hour longer on " account days." London re- 
 ceives the first New York quotations just after 3 o'clock in the 
 afternoon, and, when the New York Stock Exchange opens, 
 the day's business is nearly finished in London, as 10 A.M. in 
 the former equals 3 P. M. in London. Therefore, New York 
 receives the entire day's London quotations during the fore- 
 noon, and the majority of them before the opening of its own 
 exchange. 
 
 The commission for buying or selling American stocks in 
 London is at the rate of about $12.50 per 100 shares or 6d. 
 per share. This is also the commission charged for the pur- 
 chase of " options." 
 
 American securities are paid for in London in pounds ster- 
 ling, regardless of the rate of exchange, at an unchangeable 
 fixed rate: $5 to 1. Example: 100 shares at $50 would 
 amount to $5,000, the London payment being 100 pounds 
 sterling. An American order sent during the afternoon or 
 evening is understood to be " good in London " until 2 P. M. 
 (about 9 A. M. New York time) the following day, unless 
 otherwise stated, permitting the receipt of an answer before 
 the opening in New York. Likewise, orders sent during the 
 day are understood to be " good in London " the balance of 
 that day. 
 
 The London variations in prices are allowed by " six- 
 teenths," whereas on the New York Exchange they must not 
 be at lesser intervals than " eighths." 
 
 Stock deliveries in London are usually made in certificates 
 of ten shares each. 
 
 Arrangements for shipping securities sold, or receiving 
 securities purchased, on the London Stock Exchange, are best 
 arranged for through a banking house, charges being made for 
 shipping expenses, insurance, and interest on the money in- 
 volved while the securities are in transit. 
 
 London Quotations. These differ from ours, as we give the 
 number of shares, etc., traded in, and the prices realized, but 
 in London only the bid and asked prices are given. (See 
 " New York Equivalent.") 
 
 The stock exchange quotations are given in fractions of one 
 pound in this manner: 
 
 Shillings Pence 
 1-32 =0 7* 
 
 1-16 =1 3 
 
 3-32 = 1 10* 
 
 7-8 =17 6 And so on.
 
 MONEY AND INVESTMENTS 245 
 
 London Settlement. See " Fortnightly Settling-Days." 
 
 London Stock Exchange Transactions. A brief sketch of how 
 " bargains," as the English call them, are transacted upon the 
 London Stock Exchange may be of interest. 
 
 In the first place, in London there are two classes of brokers: 
 The " outside broker," who may or may not be a responsible 
 party, the term including what we know as " bucket shop 
 brokers," " curb brokers," or, in fact, any broker not an 
 accredited member of the exchange. The " inside broker " 
 who belongs to the stock exchange, members of which are not 
 allowed to advertise for business. 
 
 Let us suppose that an order is given one's broker to buy 
 and sell a security. He goes to the stock exchange. If the 
 security happens to be one of the English railway shares he 
 goes to what is known as the " Home Railway Market; " 
 which is a particular part of the exchange where securities 
 of that class are dealt in, not making it necessary to wander 
 all over the building to find some one who deals in the security 
 sought. The broker goes to the " dealer " or " jobber," 
 meaning one and the same, who correspond much to the whole- 
 sale merchants in commerce. The broker will ask the jobber 
 to name a price on the security, without telling whether a 
 purchase or sale is desired. The jobber may refuse to make 
 him a price if he sees fit, but if a price is named he is bound by 
 the rules of the stock exchange to buy or sell the security 
 referred to at the option of the broker. Thus two prices are 
 always named by the jobber, one at which he will sell and the 
 other at which he will buy, which explains why the news- 
 papers give two quotations, as, for instance, 128^ 129, 
 meaning that the lesser price is the one at which the jobber 
 will buy, and the higher, at which he will sell. The half of one 
 per cent, represents the jobber's profit and is called the 
 " jobber's turn." As he has to buy or sell at his own risk 
 close one transaction before closing the other he naturally 
 demands a larger percentage than would our American broker, 
 who buys and sells on orders. The London jobber, after 
 naming a price at which he will sell a stock, must take his 
 chances upon buying from another jobber at a price which 
 will show him a profit. When the newspapers give but one 
 price, that is termed the " middle price," by which it is under- 
 stood that the buying or selling prices must be respectively a 
 little more than or a little less than the price given if a trans- 
 action is desired. 
 
 After the " bargain " is completed, the broker will wish to 
 know when payment is to be effected. If the customer desires 
 to pay cash for a purchase, that may be done at once, or, if 
 not, he may wish to carry it forward to the next settlement, 
 which is the usual custom. Purchases for cash call for slightly
 
 246 MONEY AND INVESTMENTS 
 
 higher prices than the current quotations, hence it is rather 
 better to buy for the settlement. This method of completing 
 transactions is explained under " Fortnightly Settling- 
 Days." 1 (See also " London Orders.") 
 
 " Bargains in Bonds and Debentures include the accrued 
 interest in the price, except in the case of British and Colonial 
 Treasury and Exchequer Notes or Bills, Rupee Paper, Indian 
 Railway Debentures, and certain Securities of a like char- 
 acter, which are dealt in so that the accrued interest up to the 
 day for which the Bargain is done is paid by the Buyer." 2 
 
 Long. To be " long " of a security means to own more 
 than you have contracts to deliver. If a person owns 100 
 shares of Union Pacific stock more than he has sold, he is 
 " long " on that stock. The word is used to denote ownership 
 merely as the opposite of the word " short," which is fully 
 explained under the heading " Selling Short." One often 
 reads such a sentence as: " Much long stock came out," 
 meaning there was plenty offered for sale, and holders were 
 taking their profits. When " bulls " have been buying they 
 are " long." Those who are " long " have bought in expecta- 
 tion of an advance in price. 
 
 Long Account. (First read " Long.") This refers to the 
 purchases of all those who have bought a certain security, or 
 it may refer to purchases in general without regard to any 
 particular security. The " long account " naturally includes 
 the " bulls." 
 
 Long Bills. " Time bills " of " exchange " for, say, 60 or 
 90 days, or some other long period. (See subjects in quota- 
 tions.") 
 
 Long Interest. (First read " Long.") All those who are 
 " long " of any or all securities. 
 
 Long Island. Long Island R. R. Co. Controlled by the 
 Pennsylvania R. R. Co., through an ownership of the majority 
 of its stock. 
 
 Long Market. An overbought condition existing; too 
 many have been executing contracts for purchase, the result 
 of which will naturally be a decline in prices. 
 
 Long Pull. A purchase of a security with the expectation 
 of holding it for a considerable duration of time; or " selling 
 short," anticipating that that position will have to be main- 
 tained for a long period. 
 
 Long Rate. (As used in fire insurance.) A rate is based on 
 a year's period of time. A long rate is so called when the 
 
 1 For much of the above information I am indebted to W. W. Wall's 
 excellent book " British Railway Finance." 
 
 2 Rules and Regulations of the London Stock Exchange 1906.
 
 MONEY AND INVESTMENTS 247 
 
 period is more than one year, as for three years it is twice the 
 annual rate and for five years three times the annual rate. 
 
 Long Side. " Too much pressure on the long side." By an 
 understanding of " long," it will be seen that the foregoing 
 expression has reference to the fact that there has been too 
 great a buying of securities, and a desire to dispose of the same 
 becomes apparent, resulting in a tendency to a decline in 
 prices. An overbought market would have the same mean- 
 ing. 
 
 Long Sterling. " Time bills " of " exchange " on London 
 for, say, 60 or 90 days, or some other long period. (See sub- 
 jects in quotations.) 
 
 Long Stock. See " Long." 
 
 Loss. When a security is sold for less than cost or de- 
 preciates in value below cost; when a business at the end of a 
 stated period has incurred a cost of operating greater than the 
 receipts, the business has been run at a " loss." 
 
 Lost Stock Certificates, Bonds, Etc. See " Care of Securi- 
 ties." 
 
 Lottery Bonds. Bonds which may be drawn by lot at some 
 date earlier than the actual maturity specified in the face of 
 the security, or such securities as referred to in " Premium 
 Bonds " might be considered as " lottery bonds." 
 
 Louis. A " gold Louis " (" Louis d'or ") is the French 
 twenty-franc piece. It was first coined in 1640 during the 
 reign of Louis XIII. The modern twenty-franc piece is called 
 a " Napoleon." 
 
 Louisiana Purchase Exposition Dollar. United States gold 
 dollars of special design minted during 1902 and 1903 in 
 recognition of the St. Louis World's Fair, total amount coined, 
 $250,258 of standard weight and fineness. 
 
 Louisville and Nashville. Louisville & Nashville R. R. Co. 
 
 L. s. d. The signs used in Great Britain for " pounds," 
 " shillings," and " pence." 
 
 Lying Down. A refusal to meet one's agreements or con- 
 tracts. 
 
 M 
 
 Mackay. Mackay Companies. A " voluntary associa- 
 tion " owning the Commercial Cable Co., and other similar 
 properties. 
 
 Maine. Boston & Maine R. R. Co. 
 
 Maine Central. Maine Central R. R. Co. 
 
 Maintenance of Equipment. A heading of an account as
 
 248 MONEY AND INVESTMENTS 
 
 exhibited in the operating statement of the earnings of a 
 railroad and should include, as determined by the Interstate 
 Commerce Commission, all renewals and repairs to rolling 
 stock, marine equipment if any, as well as shop machinery, 
 tools, etc., superintendence, stationery, printing, and other 
 expenses incurred in relation thereto. 
 
 Maintenance of Way and Structure. This heading is often 
 seen under the " Operating Expenses " of a railroad company 
 and, as classified by the Interstate Commerce Commission, 
 includes the following: Repairs of roadway, renewals of rails 
 and ties, repairs and renewals of bridges, culverts, fences, 
 road crossings, signs, cattle guards, buildings and fixtures, 
 docks, wharves and telegraph, stationery and printing in 
 connection with the foregoing; also minor expenses referred 
 to as " Other Expenses," which go to preserve a good physical 
 condition of the line of road. 
 
 Maker. The person who signs a note, draft, etc. 
 
 Making-Up Day. The first of the " fortnightly settling- 
 days," which subject see, as well as " Contango Day." 
 
 Making-Up Price. To understand this, it is necessary 
 to read "-Stock Exchange Clearing-House." " Making-up 
 price " is, with us, what is referred to under that heading as 
 the " delivery price." 
 
 In London this term has reference to the price at which a 
 security is carried over to the next settlement, as explained 
 under " Contango." The price at which some one else who is 
 willing to furnish the stock, for example, sells it to him, for 
 immediate delivery, and buys it in again for the next 
 (new) account, is the " making-up price." 
 
 The " making-up prices " are fixed at the hour of noon, on 
 what is known as "Contango Day " (to which subject refer), 
 by an official of the London Stock Exchange. 
 
 On the following day, which is " Ticket-Day," " making-up 
 prices " are again fixed by which all unsettled bargains 
 on the following day " Account-day " for securities 
 which pass " by delivery," as it is called, shall be brought 
 down and temporarily adjusted. This also applies to securi- 
 ties which pass by " deed of transfer," except bargains in 
 securities subject to arrangement by the " Settlement Depart- 
 ment," which are temporarily adjusted at the " making-up 
 price " of the Contango Day. 
 
 M and N. Interest or dividends payable semi-annually, 
 May and November. 
 
 M and S. Interest or dividends payable semi-annually, 
 March and September. 
 
 M. A. N. F. May, August, November, February; interest 
 or dividends payable quarterly, beginning with May.
 
 MONEY AND INVESTMENTS 249 
 
 Manhattan. Manhattan Ry. Co., of New York City. 
 Leased to the Interborough Rapid Transit Co. 
 
 Manifest. The invoice of a ship's cargo, and the names of 
 the party, or parties, to whom it is destined. 
 
 Manipulation. Putting up prices by virtue of ability to do 
 so; tempting the public by the " insider" to the end that 
 shares may become the property of the unwary ones who 
 fancy they are becoming partners with the " insider." The 
 art consists of making others think they are getting your 
 money while in reality you are getting theirs. In the " manip- 
 ulation " of the stock market, prices may be made to change, 
 not in the direction in which a legitimate investor would 
 naturally expect, judging from existing conditions, but in the 
 direction in which it will best serve the interests of a particular 
 person or group of persons. The market is then said to be 
 " manipulated." 
 
 Business prosperity and low money rates favour the "manip- 
 ulator." 
 
 Dow says: " Generally speaking, manipulation in a new 
 property is for the purpose of selling; in an established prop- 
 erty, bull manipulation is usually discounting some favourable 
 news which insiders are holding back. Bear manipulation 
 . . . discounting something which is unfavourable. 
 
 " In a broad sense, trading on the Stock Exchange repre- 
 sents the operation of supply and demand as applied to 
 securities. Ordinarily, however, a comparatively small part 
 of the business is done by investors. The larger part is the 
 outcome of professional trading and o"f the manipulation 
 that is carried on by large interests to accomplish desired 
 results." 
 
 In the words of Nelson, " He will issue buying and selling 
 orders in the same stock at the same time, and cover his 
 tracks with the skill of an Indian." 
 
 " Wash sales " and " matched orders " are some of the 
 artifices which the manipulator makes use of. 
 
 Manual Exchange. In relation to investments, the actual 
 exchange of one security for another. A practical illustration 
 would be the case of a city, limited by law to a certain in- 
 debtedness; such limitation practically having been reached, 
 and an issue of the bonds maturing which the city wishes to 
 replace (refund) by another issue. To sell the new issue and 
 with the proceeds take up the old, might, for the time being, 
 result in the city's exceeding its debt limitations, thereby 
 invalidating the new issue of bonds. In order to overcome 
 this point, the new bonds must be exchanged for the old, 
 proper affidavit being taken certifying to the fact. By this 
 method the two issues are not outstanding at the same time,
 
 250 MONEY AND INVESTMENTS 
 
 and a " manual exchange " of the securities has been ac- 
 complished. 
 
 Manufacturing Aid Bonds. See " Railroad Aid Bonds." 
 
 Maple Leaf. Chicago Great Western Railway Company. 
 
 Margin. " Buying stocks upon a margin," a much used 
 expression and a much abused custom. One of the dictionary 
 meanings for " margin " is an edge or border, and from that 
 has arisen its use in stock exchange transactions, meaning 
 the difference between the actual amount of money paid for a 
 given security and the amount which the broker is willing to 
 furnish to his customer towards " carrying " it. To be more 
 explicit, let us take an example: A man with about a thousand 
 dollars desires to purchase as much of a certain stock, selling, 
 say, at $100 a share, as possible. If he were to buy the stock 
 outright and receive delivery of a certificate he could only 
 buy ten shares, but by going to a broker who does a " mar- 
 ginal business," so-called, he can largely increase the number 
 of shares purchased. The broker would probably buy one 
 share of stock for each $10 offered by the customer. A 
 thousand dollars, therefore, would furnish sufficient margin 
 for the purchase of one hundred shares. The actual trans- 
 action in a legitimate broker's office is, that he purchases 
 one hundred snares of stock, we will say, at $100 a share; 
 charging the client the regular commission for buying. The 
 stock is delivered to the broker made out in his name, not in 
 the client's, or " transferred in blank," and it is held as col- 
 lateral security, so to speak, for the loan, which is really 
 what it amounts to. It is understood that the customer will 
 furnish more money in case of a market decline in the price, 
 so that the difference of $10 per share between the market 
 value of the stock and the amount loaned thereon to the 
 client by the broker shall always be approximately main- 
 tained. If the stock declines five points, for example, the 
 broker would naturally call upon the client for a further deposit 
 of five dollars per share, or $500. If the money is not forth- 
 coming, the broker would avail himself of his privilege of 
 selling the stock before the margin was entirely exhausted. 
 The transaction would be closed with the client, as follows: 
 
 Original cost of stock plus buying commission $10,012.50, 
 selling stock at, say, 95, less selling commission of $12.50 
 $9,487.50. Loss in transaction, $525, which would leave to 
 be returned to the client out of his margin of $1,000 - 
 $475, less also the amount of interest charged by the broker 
 upon the money furnished during the transaction. 
 
 Had the stock advanced in price and been sold at a profit, 
 there would have been no calling for a further deposit of cash 
 from the customer, and all would have ended happily.
 
 MONEY AND INVESTMENTS 251 
 
 The idea of buying upon a " margin " is, that with a given 
 amount of money a greater number of shares of stock can be 
 purchased than as if bought outright; therefore, if the stock 
 advances, there is a greater profit. The unfortunate side is, 
 however, that if the stock declines the loss is also proportion- 
 ately large. 
 
 This is one of the features of so-called stock gambling, and 
 where it hits the hardest is on the part of persons who have not 
 sufficient reserve capital to take up and pay for the stock in 
 case of a decline, and when it might seem desirable to take the 
 stock outright by paying the broker the entire amount of the 
 loan, and thus wait for a more favourable time when it might, 
 again, be sold at cost or possibly a profit. Take it when a 
 stock has rapidly declined in price on account of some political 
 unrest, or for a cause of lesser moment, when the decline is 
 really no reflection whatsoever upon the intrinsic value of the 
 security; it is in such cases where there is no reserve capital 
 that " margins " are actually " wiped out," as the expression 
 goes, and the speculator is perhaps seriously distressed. 
 
 There is " marginal buying " on the part of people of large 
 means who are at any moment prepared to take up and pay 
 for the securities in case of necessity, but whose money, per- 
 haps, at the time of wishing to make a purchase in the stock 
 market may be well and desirably invested in securities, which, 
 in turn, are in the safe deposit box. The man of means, buy- 
 ing stocks at this time, very likely expects to buy for an 
 anticipated quick rise in the stock market, and would make a 
 " marginal " purchase temporarily rather than dispose of 
 well-thought-of investments already owned. Such men, in 
 case of necessity, can sell these securities and take up and pay 
 for the stock " margined," or use them for increased " mar- 
 gins," and it is only this class of people who can safely carry 
 stocks in this way. 
 
 It is this sort of business which has been the cause of many 
 stock exchange failures. When a brokerage house is carrying 
 a large amount of securities for its customers on " margins," 
 some sudden panic seizes the market and the stocks fall 
 in value so quickly that it is impossible for the broker 
 to sell before the " margins " are wiped out. 1 For in- 
 stance, supposing a large amount of stock is " margined " 
 at 10%. Panic seizes the stock exchange and there is 
 
 1 A broker selling out his customer must proceed with caution, first de- 
 manding more margin, and, if that is not forthcoming, being careful to 
 give due oral or written notice before selling the securities. The law calls 
 for a strict accounting in such proceedings. 
 
 A recent New York decision of the Court of Appeals has decided that a 
 stock broker must give a customer formal notice of the time and place of 
 the sale of stock held on " margin " for such client, or he cannot recover 
 any loss which he may sustain in the transaction.
 
 252 MONEY AND INVESTMENTS 
 
 practically no chance to dispose of the stock before it 
 has fallen, say, 20%. This rapid decline not only uses up 
 the 10% , deposited by the customers, but the broker 
 has lost 10% unless he in turn can collect it from his clients. 
 The inability to so collect, or to get his clients to put up 
 further " margins," may result in disaster to the broker. In 
 such cases as this the customer loses all the money he has 
 deposited as a " margin." It must be remembered that the 
 broker, in turn, is probably borrowing large sums to obtain 
 sufficient funds to handle such quantities of stocks as a 
 " marginal business " requires. The lenders call upon the 
 broker for more " margin; " the broker upon his clients; the 
 clients cannot produce it; the broker in turn is unable and 
 failure results. (See also " Bucket Shops.") 
 
 Whereas $10 is the amount of " margin " per share referred 
 to above, and is probably the average amount required, the 
 figure is a very movable one. Some brokers require a larger 
 figure than others; stock selling around $200 would probably 
 call for $20 per share; the usual intent being to maintain not 
 less than 10% of the market value. Some stocks the better 
 class of brokers would refuse to " margin " at all, and stock 
 selling at a low figure, say around $20 per share, would be 
 " half paid for " if " margined " at $10. That figure is 
 obviously too high at such a time. Not only is the amount of 
 " margin " demanded dependent upon the grade of the 
 security, but its marketability. The privilege of calling for a 
 greater " margin " is always reserved to the broker. 
 
 The charge made by brokers for carrying marginal accounts 
 varies greatly, depending upon what interest they, in turn, 
 have to pay on their own loans. Perhaps 4% to 5% is the 
 average rate, but it depends very much upon the security. 
 Naturally, taking an extreme case, 5% would ordinarily be 
 too great a rate to charge for carrying government bonds. 
 The rate depends upon whether the account is active or 
 inactive. Where a man is trading from day to day and the 
 broker is getting the benefit of the commissions, the inclina- 
 tion would be to charge a lesser rate of interest than on an 
 inactive account, where a purchase or sale may not occur for 
 a month at a time. In some instances accounts of people in 
 not very good standing, or who deal in very speculative 
 securities, 6% may be the minimum. In any event the 
 " carrying " charges, in the long run, are quite profitable to 
 the broker, as he intends to charge about 1% more to his 
 customer than he, in turn, has to pay for the accommodation. 
 In the event of higher money rates, he naturally advances the 
 rate to the customer. Most stock exchanges do not allow the 
 charging of a lesser rate than the average which the broker 
 himself is obliged to pay on all his loans. As an offset to the
 
 MONEY AND INVESTMENTS 253 
 
 carrying charges the customer is always credited with divi- 
 dends declared or interest paid upon the securities purchased. 
 
 The rules of the London Stock Exchange do not permit of 
 dealings on " margin." 
 
 Mark. (Reichs-mark.) The German monetary unit of 
 value, equal to $.238 United States money; also a Finnish 
 coin equivalent to $.193 our money. 
 
 On the New York stock exchange $1.00 is reckoned as the 
 equivalent of 4 German marks, although there is an actual 
 difference of $.048, which must be considered in quoting 
 securities affected thereby. 
 
 Marked Check. It is not uncommon for a depositor to have 
 an agreement with his bank that every check drawn by him 
 shall bear a certain private mark, supposedly known only to 
 himself and the bank, as a safeguard against forgery; no 
 checks to be honoured by the bank unless bearing this 
 mark. 
 
 This is not entirely advisable, however, as an intending 
 forger once learning of such a mark can with greater ease than 
 otherwise effect a forgery. 
 
 Market. In general the meaning is the predominating feel- 
 ing as to values. We say the market is high or low, by which 
 we mean the price, or rate of, purchase. When, however, we 
 use the expression, " sell in the market," we mean more the 
 place of sale, without reference to the rate or price; but, to 
 " sell at the market," means to sell at the best price obtain- 
 able, and, in that instance, would have reference to the rate, 
 or price, rather than the place. 
 
 In speaking of the " money market," the prevailing rates 
 at which money can be borrowed is understood. If the 
 " market is bad," it means that prices are low and purchasers 
 not easy to find. The word " market " is in such constant use 
 in talking financially, that almost an endless list of expressions 
 could be cited, making use of the word, but its general applica- 
 tion and meaning is as set forth above, from an understanding 
 of which it should be easy to interpret its meaning however 
 used. 
 
 Market Off. " The market on TJ. P. is off five points the 
 last hour: " indicating that the price declined to that extent 
 within the hour. 
 
 Market Orders. Orders to buy or sell at the best obtainable 
 prices after receipt of the orders. 
 
 Market Prices. Prices which are actually being realized; 
 prices which are current at the time and obtainable, or 
 approximately so. 
 
 Market Value. The " market value " of a security at any
 
 254 MONEY AND INVESTMENTS 
 
 given time is the price which it will (probably) bring if sold, 
 or the price at which a security can (probably) be bought. 
 
 Marking Down Rates. Lenders of " call money " notify the 
 borrowers of a decrease in interest rate. 
 
 Marking Time. A waiting, hesitating condition of the 
 market. 
 
 Marking Up Rates. A notice to the borrowers of " call 
 money " of an increase in the interest rates charged thereon. 
 
 Marks. In quotations of foreign exchange (see " Ex- 
 change ") " marks " is the common term used to designate 
 exchange on Berlin, the same as we say " francs," referring 
 to exchange on Paris. 
 
 Mark Signature. The general custom is, when it is necessary 
 for a person unable to write to sign his name to any legal in- 
 strument, that he must make a cross mark and then 
 some other person, who saw him do so, must write his name 
 for him near it, in his presence and in this manner: 
 
 his 
 
 PAUL X JONES 
 mark 
 
 and then sign his own name as a witness. 
 
 In California it is necessary to have an additional witness, 
 and they must make and sign a statement in form substan- 
 tially as follows: 
 
 Paul Jones being unable to write, he made "| 
 his mark in our presence, and Richard Black I p v T 
 wrote Paul Jones' name at his request and in f rAUL * JO1 ES> 
 his presence. J 
 
 RICHARD BLACK. 
 
 PETER SMITH. 
 
 MAT. The " ticker " abbreviation for " matured." 
 Matched Orders. These are used to " manipulate " the 
 market as by giving orders to buy and to sell the same stock 
 at the same price an artificial activity is given, and likewise 
 changes in prices effected. 
 
 Maundy Money (or Maundy Coins). Special pieces of me- 
 tallic money of small denominations struck off yearly in Great 
 Britain and distributed by the Almoner of the English 
 Sovereign to certain people who, on Maundy Thursday (the 
 day before Good Friday), attend service in the Chapel Royal, 
 at Whitehall. 1 
 
 Mayflower. Mayflower Mining Co. (Copper and gold.) 
 Mechanic's Lien. A lien on real property (see " Lien ") 
 1 Century Dictionary and Cyclopedia.
 
 MONEY AND INVESTMENTS 255 
 
 which the law allows to mechanics and labourers for work 
 done, or to those supplying materials, in the construction of 
 buildings or improvements to real property. A lien of this 
 kind should always be recorded in the Register of Deeds' 
 office the same as a mortgage. In buying property, or taking 
 a mortgage on the same, the non-existence of " mechanics' 
 liens " is one of the things to be ascertained. In some States, 
 such liens as the above would precede any claim of the con- 
 tractor; mothers, just the re verse. A mortgage put^on a prop- 
 erty under improvement " building mortgage," so called 
 - would, in many States, have prior claim to any " me- 
 chanics' liens " afterwards recorded. 
 
 In most States, these liens can be enforced against the 
 property by the unpaid employees of a builder or contractor 
 even though the owner has paid the builder or contractor in 
 full. Consequently, all building contracts should provide 
 that the last payment be retained until the time for filing 
 " mechanics' liens " (usually thirty days) has expired, as, 
 otherwise, the owner may be compelled to pay the em- 
 ployees after paying the employer. 
 
 Meet. To fulfil one's promise or agreement when it matures. 
 White's note for $1,000 falls due Jan. 1st; he " meets " it by 
 paying it. 
 
 Melon. " Cutting a melon; " a division of extraordinary 
 profits; the declaring of a stock dividend; any unusual profits 
 received by the stockholders of a corporation. The " cutting 
 of a melon " and getting a view of its delectable contents is a 
 moment of great happiness to the little Southern negro; this 
 suggests the use of the term to express a like amount of finan- 
 cial happiness caused by profits or dividends out of the 
 ordinary. 
 
 Mercantile Agencies. Firms or corporations whose business 
 it is to furnish information as to the financial standing, 
 general business integrity, and credit ratings of individuals, 
 firms, and corporations. (See " Commercial Agencies.") 
 
 Mercantile Bills. The same thing as " inland " or " do- 
 mestic exchange," which will be found explained under 
 " Exchange." 
 
 Mercantile Marine. The International Mercantile Marine 
 Co. (Steamships.) 
 
 Mercantile Paper (or Loans). Notes, bills of exchange, 
 drafts, or any negotiable paper, given by those engaged in the 
 actual purchase or sale of goods, such as a dry goods mer- 
 chant, for instance. A note given by a street railway com- 
 pany would not be considered " mercantile paper." All the 
 above, however comes under the general term of " commer- 
 cial paper."
 
 256 MONEY AND INVESTMENTS 
 
 Merchandising Customers' Accounts. This is a plan adopted 
 by some of the large department stores which, in general, 
 permits a customer to deposit any sum of money with the 
 store, which money draws interest at, say, 4% per annum for 
 every day it is on deposit. In some cases, interest is com- 
 pounded every three months. The customer may withdraw, 
 by check, all or any part of this money at any time, but the 
 main object is that it permits the customer to purchase goods 
 to a value not exceeding the amount which he has on deposit, 
 such purchases being charged against money to his credit. 
 Stores doing this sort of business claim to be able to sell goods 
 at a lower price than would be the case if credit were given. 
 From the customer's standpoint it permits him to buy goods 
 without paying cash each time, and it is especially helpful if 
 he makes purchases from a distance. 
 
 Mergenthaler. Mergenthaler Linotype Co. (Type-setting 
 machines.) 
 
 Merger. 1 A consolidation; an amalgamation; a combina- 
 tion of two or more corporations under one management. 
 The old meaning in law was a merging or drowning of a less 
 estate into a greater. One of the most notable examples 
 of its financial meaning is the International Mercantile Marine 
 Company, which now controls so many of the large trans- 
 Atlantic lines. 
 
 Metallic Standard. (It is necessary to first comprehend the 
 matter under " Standard of Value.") The use of either one 
 metal alone or of two metals together, as a standard, in a 
 monetary system. 
 
 Metropolitan. Metropolitan Street Railway Co., of New 
 York City. 
 
 Mex. Mexico; Mexican money. 
 
 Mex. Cent. Mexican Central Railway Co., Limited. 
 
 Mexican Central. Mexican Central Railway Co., Lim- 
 ited. 
 
 Mexican Coinage Laws. In accordance with authority 
 granted him by the Mexican Congress, President Diaz pro- 
 mulgated the new monetary law prepared by the Ministry of 
 Finance, which became operative May 1, 1905. The following 
 translation of this new law has been furnished the author by 
 the officials of the United States Mint. 
 
 1 " The practical difference between this form of merger and a holding 
 company appears principally in those cases where the holding company 
 owns not all but only a part of the capital stock of its constituent corpora- 
 tions. Where, as in the case of the United States Steel Corporation or the 
 American Agricultural Chemical Company, the entire ownership of the 
 stock of the constituent companies occurs, the holding company becomes 
 truly a legal fiction." " Trusts, Pools and Corporations," by Ripley.
 
 MONEY AND INVESTMENTS 257 
 
 " Article 1. The theoretic unit of the monetary system of 
 the United Mexican States is represented by 75 centigrams 
 of pure gold, and is called ' peso.' 
 
 " The silver ' peso ' heretofore coined, containing twenty- 
 four grams and four thousand three hundred and eighty-eight 
 tenths milligrams of pure silver (24.4388) will have, under the 
 conditions laid down by this law, a legal value equivalent to the 
 aforesaid 75 centigrams of pure gold." 
 
 Article 2 gives the denominations and is translated as 
 follows: 
 
 " Article 2. The ' peso ' is divided into 100 centavos, and 
 the coins that are to be struck shall represent the following 
 values: 
 
 " Gold coins 10 pesos, 5 pesos. 
 
 " Silver coins 1 peso, 50 centavos, 20 centavos, 10 centavos- 
 
 " Nickel coins 5 centavos. 
 
 " Bronze coins 2 centavos, 1 centavo." 
 
 The Daily Consular Report of Aug. 7, 1905, contained the 
 following: 
 
 " Consul Canada, of Veracruz, reports that . . . the new 
 Mexican peso will henceforth be the fixed standard of cur- 
 rency, and the value of all foreign coins must be expressed in 
 equivalents of the same. In quoting the values of foreign 
 coins the following arbitrary signs have been adopted for 
 expressing the units of such legal currency: $, signifies stand- 
 ard Mexican peso; Dls., American dollar; , British pound 
 sterling; Frs., French francs; Ms., German marks; P., 
 Spanish peseta; Ks., Austrian crowns. 
 
 " The foregoing signs are obligatory in all business trans- 
 actions. The phrase ' peso oro,' which formerly signified an 
 American dollar, must not be used to designate that coin, but 
 instead of it the word ' dollar.' Exchange formerly quoted at 
 per cent, of the value of the Mexican silver peso must now 
 be expressed in decimal parts of the value of the new Mexican 
 standard peso. Whenever the standard value of a foreign coin 
 is less than that of the Mexican 3 points decimal will be used 
 in expressing the value in Mexican currency, and on the con- 
 trary 4 points decimal may be used." 
 
 Mexican Dollars. (The Mexican dollar is also called a 
 " peso.") An owner of the United States silver dollar, although 
 there is not a gold dollar's worth of silver in it, knows that it 
 can be exchanged for a gold dollar at the Treasury at any 
 time. In other words, this country is upon a " gold stand- 
 ard." Mexico has recently adopted a sort of tentative " gold 
 standard " (see that subject) whereby it will redeem its silver 
 dollars in gold at the ratio of two of the former to one of the 
 latter. Recently the price of silver has so advanced that the
 
 258 MONEY AND INVESTMENTS 
 
 value of pure silver in a dollar slightly exceeds one-half the 
 value of the gold dollar, therefore, putting at least a tem- 
 porary stop to such redemptions. The United States Mint at 
 Philadelphia is at this time coining gold for Mexico. 
 
 Mexican dollars are used in many of the Eastern countries 
 as a common form of money, and, in consquence, are used by 
 bankers and shipped to the Orient in settlements of debts 
 due in place of gold. The quotations of Mexican dollars ap- 
 pear in the newspapers and are apt to vary slightly from day 
 to day. The Mexican silver dollar weighs about one ounce, 
 but an ounce of silver in bullion form is quoted, for ex- 
 ample, " Bar silver, 66." Mexican dollars at the same time 
 being quoted at 51^, there being a difference of 15^ between 
 the two quotations. As the latter are not pure silver, allow- 
 ance has to be made for the alloy. 
 
 Mexico is the largest producer of silver in the world, and 
 views with much satisfaction an increase in the price of 
 silver, as that country coins silver dollars especially for ex- 
 port. (See also last subject.) 
 
 Michigan. Michigan Copper Mining Co. 
 
 Middleman. One who negotiates between two parties, 
 receiving a compensation for his service. Not one who buys 
 and sells on his own account, but, in a general sense, one who 
 finds a customer to purchase wares belonging to another. 
 " Middlemen " may be divided into three classes: " Agents," 
 " brokers," and " factors." Among the first named may be 
 included real estate agents, insurance agents, book agents, 
 etc. Among the second, stock, cotton, wool, ship brokers, 
 etc. The " factor " is not much used in this country, although 
 " cotton brokers " are sometimes called " factors." One who 
 collects rents for another may be a " factor," or one who 
 makes a business of selling goods on a commission for the 
 manufacturer, selling the same, usually, upon samples, and 
 so on. 
 
 Middle Price. This is used in Great Britain, and will be 
 understood by reading " jobber," as it is the price half way 
 between the buying and selling prices which he makes on a 
 security. (See " London Stock Exchange Transactions.") 
 
 Midland (or Midland Route). In America " Midland " 
 usually refers to the Colorado Midland Railway, but abroad 
 the Midland Railway of Great Britain is understood. 
 
 Milking. To squeeze all possible profits out of a transaction; 
 also, by " manipulation," to profit at the expense of 
 others. 
 
 Milling. The operation of putting the series of small cross 
 
 1 Century Dictionary and Cyclopedia.
 
 MONEY AND INVESTMENTS 259 
 
 ridges and furrows on the edge of a coin, 1 and done to prevent 
 cutting away any of the edge. 
 
 Mill Paper. See " Corporation Paper." 
 
 Milreis. (Commonly called " reis.") The monetary unit 
 of Brazil equal to $.546 and of Portugal equal to $1.08 
 United States money. 
 
 Mining Contango Day. See " Fortnightly Settling-Days. " 
 
 Mining Securities. See Chapter II at the beginning of the 
 book. 
 
 Minor Coins. Coins used to make small change, struck from 
 metals other than gold or silver, and in small denominations. 
 Our five cent nickel and one cent pieces are examples. 
 
 Mint. 1 One writer defines a " mint " as " giving official 
 stamp and guarantee " to a government's coin, or a coin 
 factory. The " mint " receives gold and silver bullion for 
 coinage and performs other services for the people in con- 
 nection therewith, as is more fully explained under " Assay 
 Office." Coinage mints are now located in Philadelphia, 
 San Francisco, New Orleans, and Denver. 
 
 The first Mint in the world was established in the City of 
 Mexico in 1537. 
 
 Mint Mark. Our coins, except those struck at Philadelphia, 
 bear a mark to show at what mint they were coined, as " S " 
 for San Francisco. 
 
 Mint Office Checks. Checks drawn on the Assistant Treas- 
 urer at New York by the Superintendents of the United States 
 Mint at San Francisco and the Assay Office at New York, and 
 the assayers in charge of the Assay Offices of the United 
 States at Seattle, Helena, and Boise, respectively, in pay- 
 ment for gold bullion deposited. 
 
 Large depositors at the offices named generally prefer to 
 receive payment by check instead of in coin. 
 
 Mint Par. The " mint par " of an English " pound ster- 
 ling," for illustration, as expressed in our system of coinage, 
 is its intrinsic worth, or actual equivalent, in the gold coins 
 of this country; i. e. $4.866^. 
 
 Mint Price. See " Bar Gold." 
 
 Mint Remedy. See " Remedy Allowance " and " Toler- 
 ance." 
 
 Mississippi Scheme (or Company). See " Law, John." 
 
 Mixed Collateral. When a loan is secured by more than one 
 kind of collateral (see "Collateral Loan"), as, for example, 
 
 1 On April 2, 1792, President George Washington attached his signature 
 to an Act establishing the National Mint, which Act was mainly the result 
 of the efforts of Robert' Morris, aided by Thomas Jefferson and Alexander 
 Hamilton.
 
 260 MONEY AND INVESTMENTS 
 
 part railway stocks and part mining stocks, the collateral 
 is called " mixed." A loan secured in this way is known as a 
 " mixed (collateral) loan." 
 
 M. J. S. D. March, June, September, and December; 
 interest or dividends payable quarterly, beginning with March. 
 
 Mk. Frequently used as the sign of the German " mark." 
 
 ML. The " ticker " abbreviation for " main line." 
 
 Mohawk. Mohawk Mining Co. (Copper.) 
 
 Monetary Standard. See " Standard of Value." 
 
 Monetary Unit. See " Unit of Value." 
 
 Money 1 . In a broad sense, any article of value recognized 
 as a medium of exchange, but, for convenience' sake, stamped 
 metal or paper notes issued by or under the authority of a 
 Government. Money is merely a measure and standard of 
 value. 
 
 Chevalier said in 1854 that metallic money is the only true 
 money. 
 
 He defines money as " a certain commodity out of which 
 we create an instrument that serves, in exchanges, as a 
 common measure of value, because it is with it that, in trans- 
 actions, all other commodities are compared. But it is not 
 merely a measure; it figures in exchanges in another capa- 
 city, that of a material recompense or equivalent. . . . 
 The definition of the word ' money ' which I have given, 
 namely, that it is at once a measure and an equivalent, is that 
 which is acknowledged by all ... authorities." 
 
 Gen. Walker declared that any commodity could become 
 money as soon as it acquired a requisite degree of accepta- 
 bility. 
 
 When we say that " money is easy " we mean that interest 
 
 1 In different ages many commodities have served the purpose of money, 
 " tin was used in ancient Syracuse and Britain ; iron, in Sparta ; cattle, 
 in Rome and Germany ; platinum, in Russia ; lead, in Burmah ; nails, in 
 Scotland ; silk, in China ; cubes of pressed tea, in Tartary ; salt, in Abys- 
 sinia ; slaves, amongst the Anglo-Saxons ; tobacco, in the early settlements 
 of Virginia ; codfish, in Newfoundland ; bullets and wampum, in Massa- 
 chusetts ; logwood, in Campeachy ; sugar, in the West Indies . soap, in 
 Mexico. Money of leather and wood was in circulation in the early days of 
 Rome." " History of the U. S. Mint and Coinage," George G. Evans. 
 ^ In 1612 money of brass was coined in America. Coined money came 
 into use in Rome during the reign of Servius Tullius, 578-534 B. c. 
 
 "In Tennessee, between 1790 and 1798, land was used as a kind of 
 currency ; prices were set in it, and it was transferred in payment of goods 
 and services." Sumner's " Life of Andrew Jackson." 
 
 Prescott, in his "Conquest of Mexico," states that the money in use 
 among the ancient Aztecs consisted of transparent quills filled with gold 
 dust ; bits of tin, cut in the form of a T ; and of bags of cocoa, containing a 
 specified number of grains. 
 
 Some shell money is still in use among a few of the primitive African 
 tribes.
 
 MONEY AND INVESTMENTS 261 
 
 rates are low, and that the borrower is easily accommo- 
 dated. 
 
 Money Circulation. At this time of writing, Feb. 1, 1907, 
 our " money circulation " is equal to $33.96 per capita, with an 
 estimated mainland population of 85,484,000. The Treasury 
 Department estimates that to maintain the present per 
 capita circulation the increase in population of the country 
 makes it necessary to add about $50,000,000 to the monetary 
 stock each year. 
 
 Money Market. By this is understood not only the interest 
 and " discount " rates quoted by those having money to 
 lend, such as the banks, trust companies, etc., but those actu- 
 ally engaged in the business of lending it. 
 
 Money of Account. A denomination of money used to 
 reckon in, but not actually coined. The gold dollar of New- 
 foundland may be considered as such, as it is not coined; 
 the $2 gold piece and silver and copper coin of lesser denomi- 
 nations than the dollar are the current pieces. 
 Money-Orders. See " Postal Money-Orders." 
 Money Pools. See footnote to the subject " Pool." 
 Money Rates. This is a heading or term often met with in 
 financial articles, and indicates the interest or " discount " 
 rates quoted by those having money to lend. The price 
 charged for money loaned. 
 
 Money to Move the Crops. See " Movement of the Crops." 
 Money, World's Stock of. See " World's Stock of Money." 
 Monometallism. Coinage which calls for the use of one 
 metal only as a standard of value; a system of coinage by 
 which only gold, or some other kind of metallic coins, are 
 recognized as " legal tender." For example, about the year 
 1851 when the gold mines of California and Australia pro- 
 duced gold in large quantities, Belgium demonetized gold and 
 became silver " monometallic." (See " Bimetallism.") 
 
 Monon. Chicago, Indianapolis & Louisville Ry. Co. (Con- 
 trolled jointly by the Louisville & Nashville and Southern 
 Ry. Companies.) 
 
 Monopoly. There are many different views as to the true 
 meaning of this word. One prominent writer defines it as 
 " a grant by the government for the sole buying, working, 
 making or using of anything." Another and probably 
 much nearer the truth " where within a certain territory 
 all sales of a certain article, or the doing of a certain act, is in 
 the control of a single person, or combination." 
 
 Prof. Ripley says: " If the tendency towards com- 
 bination means anything, it means the substitution of cen- 
 tralized and consolidated management for the rivalry of
 
 262 MONEY AND INVESTMENTS 
 
 independent concerns; and this may fairly be termed mon- 
 opoly." 
 
 The Standard Oil Co. is a good illustration. 
 
 Some " franchises " are more monopolistic in character 
 than others. A street railway or dock franchise more so than 
 the franchise of a water, gas, or electric lighting company. 
 
 Montreal & Boston. Montreal and Boston Consolidated 
 Mining & Smelting Co. (Copper.) 
 
 Mop. Missouri Pacific Railway Company. 
 
 Mo. Pac. (or Mopac.). Missouri Pacific Railway Co. 
 
 Moratorium. The law regards this as a legalized delay of 
 a payment due. During the Russo-Turkish War, Russia 
 established a " moratorium " by which the payment of 
 private debts was suspended for a fixed period. A legislative 
 act may legalize suspension of payment on the part of a 
 Government bank. 
 
 Morgan Interests. Certain corporations partially or en- 
 tirely in the control of the firm of J. P. Morgan & Co., con- 
 sisting in part of the Reading, the Central Railway of New 
 Jersey, Atlantic Coast Line, the Louisville & Nashville, 
 Northern Pacific, Great Northern, Chicago, Burlington & 
 Quincy, and the Southern Railway Companies. Also the 
 United States Steel Corporation and General Electric Com- 
 pany. 
 
 Mortgage. 1 An instrument signed, sealed, and given by 
 the borrower (or " mortgagor ") to the lender (or " mort- 
 gagee "), or to a third party who holds it as trustee for 
 the lender, by which the latter has the right to possess 
 himself, by following proper formalities, of property de- 
 scribed in the instrument, in case the borrower does not meet 
 his indebtedness as set forth in the conditions agreed to at the 
 time of creating the debt. In general, a " mortgage " is, 
 to all intents and purposes, a legal transfer of title to property 
 to take effect only in case the money is not paid to secure 
 which the transaction was given. It is a method of securing 
 to the lender certain property, in case of failure to pay on the 
 part of the borrower. A wife must also sign and acknowledge 
 the instrument. 
 
 A " mortgage " may be given to secure the performance of 
 other conditions than the payment of a debt, and sometimes is. 
 
 The word " mortgage " is used to mean either the act of 
 
 1 " Many of these documents, preserved in the British Museum, are 
 records of deeds and the partition of real estate, but a few involve loans 
 of silver at interest, and these become more numerous in the reigns of 
 Nebuchadnezzar and Nabopolassar (625-604 B.C.). Loans secured by 
 mortgage on land and guarantee bonds are among the curious commercial 
 documents of these early times." " The Principles of Money and Bank- 
 ing," Charles A. Conant.
 
 MONEY AND INVESTMENTS 263 
 
 " mortgaging " or the instrument by which it is effected, 
 called the " mortgage-deed." (See " Extension of Mortgage.") 
 
 Proper caution should always be taken to ascertain that 
 the title, or legal ownership, to the property to be mortgaged 
 is in the party giving the property as security for the debt, and 
 for this purpose a lawyer is usually engaged. There are, 
 however, " land title companies," also called " title guarantee 
 companies," and " title insurance companies," which make 
 a business of looking up titles and usually guaranteeing their 
 validity. A paper is sometimes given showing the records of 
 the successive ownerships of the property and of any incum- 
 brances thereon, which is called an " abstract of title," or a 
 " search." 
 
 If a mortgage is to cover buildings or property subject to 
 destruction by fire, the lender should ascertain that there is 
 sufficient insurance for his protection and that the insurance 
 policy (or policies) are indorsed by the agent or company 
 
 somewhat as follows: " Payable in case of loss to , 
 
 mortgagee, as his interest may appear." 
 
 After the mortgage has been delivered to the lender of the 
 money, that is to say, the " mortgagee," he should promptly 
 send it to be " recorded " in what is called the Registry of 
 Deeds Office at the county seat. This is to prevent a dishonest 
 " mortgagor " giving a subsequent mortgage upon the prop- 
 erty, and which might be recorded ahead of the first one 
 given. 
 
 Mortgage Bond. A promise to pay in the form of a bond and 
 secured by a mortgage on property. 
 
 Mortgage Collateral Trust Bonds. See first paragraph of 
 " Collateral Trust Bonds." 
 
 Mortgage Debenture. This is explained under " Debenture 
 Bond." 
 
 Mortgage-Deed. See " Mortgage." 
 
 Mortgagee. The individual, firm, or corporation, to whom 
 property is mortgaged; the one holding the mortgage; in 
 other words, the lender of money. 
 
 Mortgage Sale. The sale of property mortgaged as se- 
 curity for the payment of a debt or the fulfilment of a contract, 
 as explained under " Foreclosure." 
 
 Mortgagor. (The proper spelling of this should be " mort- 
 gageor," but by custom the " e " has been dropped.) The 
 person, firm, or corporation which signs or gives a mortgage 
 against property; the one who grants the estate as security 
 for debt; in other words, the borrower of the money. The 
 man who mortgages his house and land as security for $10,000 
 is the " mortgagor."
 
 264 MONEY AND INVESTMENTS 
 
 Movement of Gold. See " International Movement of 
 Gold." 
 
 Movement of the Crops. New York is our great money 
 centre, and where country banks may keep one-half their 
 lawful reserves. In addition, when money cannot be profitably 
 employed elsewhere, it still further accumulates there as in- 
 terior banks are allowed interest upon their New York de- 
 posits. 
 
 When the South prepares to harvest its cotton crop and 
 the West its grains, a feeling of anxiety pervades the money 
 market, for then the country banks will need to recall their 
 New York balances to afford the planter and farmer the neces- 
 sary accommodation to carry him through the harvesting and 
 crop moving period, or to furnish the middleman the means 
 to purchase the produce. During these periods the available 
 supply of money for Wall Street affairs is sometimes so severely 
 curtailed that interest rates advance sharply and possibly the 
 stock market is affected. There is a gradual return flow of 
 money during the winter and spring. 
 
 The call of the harvest for currency begins to make itself 
 first felt in July in the southwestern reserve cities, for then 
 the winter wheat begins to ripen. The country banks in 
 Oklahoma and adjacent territory, as well as the Kansas 
 City and St. Louis banks, experience the demand, not only 
 for small money with which to pay the harvesters, but for 
 loans from the middleman. As the stock of money in that 
 section is depleted Chicago, New York, and the Eastern money 
 centres are then, in turn, called upon. " Then, as the season 
 progresses, and crops in various sections of the country are 
 harvested, a flow of currency from the East to the South, 
 to the West and to the Northwest sets in and does not cease 
 until the cotton, corn, and wheat of the country are all mar- 
 keted and the farmers' work for the season is over." * 
 
 Foreign countries, of course, experience this same harvest 
 demand for money. In Austria, the Austro-Hungarian Bank 
 is called upon to largely increase its note issues during the 
 month of October, which in that country is the harvest 
 month. Germany likewise feels the call during September. 
 
 The size of the harvest and the prices obtainable are very 
 important factors. Their influences are felt throughout the 
 land and abroad. The available supply of grains and cotton 
 for foreign shipment may be of great importance to Europe 
 and Asia. Good crops and good prices, so that the surplus 
 may be shipped, mean large earnings to many railroads. 
 These earnings for the crop year of 1906 are estimated at 
 
 1 Report of the Special Currency Committee of the Chamber of Commerce 
 of the State of New York.
 
 MONEY AND INVESTMENTS 265 
 
 $524,764,025. 1 Crop statistics are studied with great interest 
 by all speculators in " granger " road securities. Business 
 throughout the land is to a great extent influenced by the 
 yearly product of the agricultural sections. Do not forget 
 that the United States is still, to a large extent, a farming 
 country nearly fifty per cent, of the people being engaged 
 in agricultural pursuits and that what affects the farmer 
 affects us all. 
 
 The crops are one of the most important of all the business 
 barometers, as by them future conditions may be to quite 
 an extent predicted. 
 
 MTG. The " ticker " abbreviation for " mortgage." 
 
 Municipal Bond. Any legally authorized bond issued by 
 village, township, city, county, State, or any territorial 
 subdivision of the same, the payment of which must be ac- 
 complished through the collection of taxes, assessed upon the 
 property embraced in the division or subdivision issuing the 
 bond. 
 
 Read the matter under " Attorney's Opinion " and apply 
 in the purchase of a bond of this class. Other facts to be 
 ascertained are: The " net indebtedness " 2 considering 
 this from the standpoint of its ratio to the " assessed valua- 
 tion " - what revenue producing property is owned, whether 
 or no there is a sound " sinking fund " plan or other method 
 established for the ultimate payment, rather than " refund- 
 ing " the indebtedness, the past financial standing of the 
 municipality, and the length of time since there has been 
 if ever default in its obligations. If there has been one, 
 the reason of it should be ascertained and judgment taken 
 accordingly. Then one should consider the character of the 
 population, and the class of citizens administering public 
 offices, and who are likely to do so in the future. There is good 
 reason for not buying bonds of a city cursed with frequent 
 strikes, and dependent upon one class of industry. A city 
 wholly dependent upon the lumber business is not a good 
 risk, for example. Is the community experiencing a " boom? " 
 If so, be sure that its debts are not being contracted along the 
 same lines. Also consider the surrounding country and its 
 resources, and the likelihood of the muncipality in question 
 growing or losing in population. There are so many things 
 to be considered in selecting a bond of a municipality whose 
 credit is unknown to the purchaser, that but a general idea 
 can be given here. The circulars of bond houses set forth 
 with much exactness most things necessary to know. They 
 
 1 Figures furnished the writer by G. J. Grammer, at the time, Vice-Presi- 
 dent in charge of traffic of the New York Central Lines. 
 
 2 All subjects in quotation marks will be found explained under their 
 separate headings.
 
 266 
 
 MONEY AND INVESTMENTS 
 
 should be studied with care, and thoughtful inquiry made 
 of business conditions and resources of the place under 
 consideration. 
 
 If the reader is entirely inexperienced in the purchase of 
 this class of securities, then the perusal also of such subjects 
 as " Legal Investment for Savings Banks," " Bond Values 
 Tables," and " Net Return upon the Investment " is advised. 
 
 Upon the whole, municipal bonds are about as good a 
 field for the safe investment of funds as any. The percentage 
 of loss within the last twenty-five years has been but small. 
 For this, credit is due the dealers in such securities who have 
 been largely instrumental in improving the laws regulating 
 their issuance in many of the States, and who have forced 
 the municipalities to live up to them, and who have offered 
 but little encouragement for too excessive debt creating 
 even where legally permissable. 
 
 Mutilated Currency, Redemption of. Those desiring to 
 have currency redeemed which has been mutilated are ad- 
 vised to write to the United States Treasury Department for 
 instructions, as there are certain rules and conditions with 
 which it is necessary to comply, and which can be had in 
 printed form. 
 
 Mutual Savings Bank. A savings institution, all the profits 
 of which belong to the depositors; mutual ownership. Most 
 savings banks are of this kind, and are without capital stock. 
 However, there are in Pennsylvania, for example, savings 
 banks of both kinds, those with and those without capital 
 stock. 
 
 Savings banks with capital stock are known as " stock 
 savings banks," and the stockholders of such institutions 
 derive their profits after the payment of the interest to the 
 depositors. 
 
 The management of savings banks having capital stock is 
 vested in a board of directors and officers, the same as any 
 other corporation, but a " mutual savings bank " is managed 
 by what is known as a board of trustees, formed by its organ- 
 izers at the time of its creation, and having the power among 
 themselves to fill vacancies. 
 
 M. & N. Interest or dividends payable semi-annually, 
 May and November. 
 
 M. & S. Interest or dividends payable semi-annually, 
 March and September. 
 
 N 
 
 N. The " ticker " abbreviation for " new " or " North." 
 Named Cities. Some of the States, having passed laws
 
 MONEY AND INVESTMENTS 267 
 
 restricting the investments of their savings banks, permit 
 the purchase of bonds of cities in excess of a given popula- 
 tion within a certain limitation of debt. That is, the 
 bonds of any city within those States fulfilling the gen- 
 eral requirements are considered legal savings banks in- 
 vestments. There are, however, certain cities having a net 
 indebtedness in excess of the prescribed limit, but whose 
 bonds are considered desirable investments. These cities, 
 therefore, are specifically named, and do not come in under 
 the general debt limitation. Such cities are referred to by 
 the investment dealer as " named cities." 
 
 Napoleon. A name for the modern French gold twenty- 
 franc piece, worth approximately $3.86 in United States 
 money. It is a reproduction of a coin minted during the 
 time of Napoleon Bonaparte. 
 
 Narrow Market. When there are extremely few transactions 
 upon the stock exchange. This may be used, of course, to 
 express the market in other commodities than stocks. A 
 wool merchant might say that there was a very " narrow 
 market " in his line of business, which would indicate that 
 there was very little wool selling. 
 
 National Bank. 1 Incorporated under a charter granted by 
 the United States Government, by which it is given authority 
 to receive money on deposit subject to check, make loans, 
 collect drafts, issue national bank bills which is a form of 
 currency, or money and do the general business required 
 of a bank which accepts what are known as business deposits. 
 Discounting and negotiating promissory notes, bills of ex- 
 change, and other forms of indebtedness, buying and selling 
 exchange, making collateral loans, etc., are among the im- 
 portant functions of such an institution. In a limited way, it 
 may purchase and hold real estate. As a rule, no interest is 
 allowed on deposits, but, of course, may be by special agree- 
 ment. 
 
 Formerly the amount which a national bank might loan 
 to any one person, company, or firm, was limited to a sum 
 equal to 10% of the paid up capital stock of the bank. In 
 1906 this was changed by an Act of Congress, increasing this 
 limit to 10% of the capital and surplus, but in no event to 
 exceed 30% of the capital. 
 
 1 The query is often raised as to the right of a shareholder of a national 
 bank to inspect its books and records. The United States Supreme Court 
 has rendered a decision in effect that the right of inspection rests upon the 
 primary proposition that the stockholders of a corporation own the prop- 
 erty and that its officers are their agents, and, therefore, that a share- 
 holder, with proper motives, may be permitted to inspect the books of such 
 an association upon demand, and can enforce his right in the State 
 Courts.
 
 268 MONEY AND INVESTMENTS 
 
 National banks are not permitted to have branches, which 
 not only accounts, in a large measure, for the difference be- 
 tween the United States and Canadian banking systems, 
 but for the large number of small banks which we have scat- 
 tered throughout this country. 
 
 No bank in the United States, except one chartered as above, 
 is permitted to have as a part of its name the word " National," 
 and every such bank, likewise, must have the word " Na- 
 tional " as part of its name. 1 This is a protection to the 
 public, and enables every one to be assured that such an 
 institution is safe-guarded by national restrictions. 
 
 On Nov. 12, 1906, there were 6,199 national banks in exist- 
 ence; total resources, $8,213,878,296.68; paid up capital 
 stock, $847,514,653; surplus fund, $504,548,213.62. 
 
 The history of the national banking system has been 
 marked by very few failures, from 1863 to Oct. 31, 1905, only 
 5% of the total number of such associations having been 
 closed as the result of insolvency. In nearly every case it was 
 due to fraudulent management, or violations of the national 
 banking laws. 
 
 Other subjects which have a direct bearing upon national 
 banks, and to which the reader is referred, are: " Double 
 Liability," " Gold Banks," and the following six subjects. 
 
 National Bank Call. Every national bank is required to 
 render a report of its financial condition to the Comptroller 
 of the Currency at least five times a year. The Comptroller 
 issues " calls " for these reports without previous notice and 
 may do so at any time. The condition of the banks on some 
 given day previous to the issue of the " call," and not after, 
 is secured. He may also " call " for a special report when- 
 ever he sees fit. 
 
 National Bank Circulation. See National Bank Notes. 
 
 National Bank Depository. See " United States Depository." 
 
 National Bank Examiner. The Comptroller of the Cur- 
 rency, with the approval of the Secretary of the Treasury, 
 appoints a suitable person, or persons, to make an examination 
 into the affairs of every national bank, who shall have power 
 to make a thorough examination into all the affairs of the 
 bank, and shall make a full and detailed report of the con- 
 dition to the Comptroller. 
 
 1 " There has been but one exception to this rule, that having been made 
 in connection with the conversion, in 1864, of The Bank of North America, 
 Philadelphia. This was the first organized bank in the United States, and 
 the first which had any direct relation to the Government of the United 
 States. When conversion was effected, favourable consideration was given 
 to the request of the directors and other officers to become a national Dank 
 without change of title." Letter received by the writer from the Comptroller 
 of the Currency, dated May 7, 1906,
 
 MONEY AND INVESTMENTS 269 
 
 National Bank Loans. Among the various restrictions sur- 
 rounding the subject, there is one fact always to be borne 
 in mind by all parties in relation to such a transaction, viz., 
 that national banks are, by law, prohibited from loaning to 
 any one person, firm, or corporation, more than one-tenth 
 of its (the bank's) actually paid in capital stock and surplus, 
 but in no event to exceed 30% of the capital. The discount 
 of bills of exchange drawn against existing actual values, 
 and the discount of commercial or business paper actually 
 owned by the person negotiating the same, not to be con- 
 sidered in the amount of such a loan. 
 
 National Bank Notes. 1 In order to increase the amount of 
 money available for use, and at the same time produce what 
 is known as an " elastic currency, " that is, a form of money 
 which can be increased or diminished within certain limita- 
 tions, as the exigencies demand, national banks are author- 
 ized to take out " circulation; " to issue what are known as 
 " national bank notes," being one of the most common types 
 of paper money in use in the United States. There must, 
 however, be certain security behind these notes, other than 
 the promises of the banks to pay, in order to protect the holder 
 of such money, and thus make him willing to accept it at its 
 face value without hesitation. The law requires that a bank, 
 for instance, wishing to issue $100,000 in bank bills, must 
 first secure $100,000 United States bonds. (No bank can 
 issue " circulation " greater than its fully paid up capital 
 stock.) Any unmatured interest-bearing United States bonds 
 may be used, provided they are in registered form. " Circula- 
 tion " may be taken out against these bonds to the extent 
 of their full face value, and, in the case cited, $100,000 in na- 
 tional bank notes may be issued by the bank. 2 Should the 
 market value of the deposited bonds fall below par, the 
 Comptroller may demand legal tenders, or enough more bonds, 
 to fully protect the notes issued. The United States' " prom- 
 ise to pay," therefore, is back of the bank notes, in addition to 
 the assets of the bank issuing the same; strengthened 
 by the lawful money reserve (see " Reserve ") and the 
 
 'Cleveland defines a "National Bank Note" as: "A promise of a 
 national bank to pay to the holder, or bearer, on presentation, the amount 
 named in the bill in legal-tender money of the United States i.e. in gold, 
 silver coins, or greenbacks. This makes the bank-note indirectly con- 
 vertible into gold at the option of the one owning or holding it." 
 
 2 In October, 1906, the Secretary of the Treasury announced that he 
 would accept approved securities meaning in general thereby, railroad 
 bonds which are legal investments for savings banks in Massachusetts or 
 New York other than Government Bonds, for United States deposits, 
 to the amount of $18,000,000 with the understanding that the United States 
 Bonds thus relieved should be used as a basis for increased circulation. 
 Any bank taking out such circulation was required to retire the same be- 
 tween March 15th and August 10th, 1907.
 
 270 MONEY AND INVESTMENTS 
 
 5% redemption fund. (See " Five Per Cent. Redemption 
 Fund.") 
 
 This has provided us with a safe and sound currency, 
 circulating throughout the country without discount or dis- 
 trust. It is immaterial in what part of the country the issuing 
 bank is located, whether it is solvent or has gone into the 
 hands of a receiver, the United States is virtually behind the 
 notes, and pledged to redeem them. 
 
 The Government does not allow a greater reduction in the 
 total amount of " national bank notes " outstanding than 
 $9,000,000 in any one month. This does not apply in the 
 case of bonds called for redemption, for notes secured by such 
 bonds may be retired. This provides against too great a 
 contraction in the currency. It further provides that every 
 bank must deposit with the Treasurer of the United States a 
 certain amount of bonds, but not less than $50,000, according 
 to the amount of its capital stock. It is optional with the 
 bank as to the issuing of circulation against him, however. 
 The Chemical National Bank of New York has never issued 
 circulating notes. 
 
 " National bank notes " shall be received at par in all 
 parts of the United States in payment of taxes, excises, public 
 lands, and all other dues to the United States, except duties 
 on imports; and also for all salaries and other debts and 
 demands owing by the United States to individuals, corpora- 
 tions, and associations within the United States except in- 
 terest on the public debt, and in redemption of the national 
 currency. They are not " legal tender," and must not be 
 counted in the " reserve " of a national bank. All national 
 banks must receive notes of other national banks at par. 
 These notes are redeemable in lawful money of the United 
 States by the Treasurer, but not by the Assistant Treasurers. 
 
 On Jan. 5, 1907, the outstanding circulation amounted 
 to $596,361,164. Of this amount $549,174,179 was secured 
 by United States bonds, and the remainder by a deposit of 
 " lawful money." 
 
 The Comptroller of the Currency gives the following method 
 of ascertaining profit on circulation, taking the 2% Consols 
 as an example: 
 
 " In calculating the profit the interest on the bonds is added 
 to the interest received on the circulation loaned at 6 per cent., 
 giving the total receipts on an investment in $100,000 worth of 
 bonds as $8,000. From the gross receipts are deducted the 
 taxes on circulation, average expenses incident to cost of 
 plates, redemption charges, etc., and the amount set aside 
 as a sinking fund to provide for the premium paid for the 
 bonds, the difference being the net receipts. Assuming that 
 the amount invested $100,000 worth of bonds was
 
 MONEY AND INVESTMENTS 271 
 
 loaned at 6 per cent., the profit on the issue of circulating 
 notes will represent the difference between the interest on the 
 amount invested in bonds and the net receipts from the 
 interest on bonds purchased and the amount received by 
 loaning the circulating notes." 
 
 National Bank Report. See " National Bank Call." 
 
 National Debt. In this country, all outstanding obligations 
 of every kind of the United States Government; not only 
 the bonds of the Government, but such other indebtedness 
 as paper money, which the Government promises to pay, less 
 the amount of gold in the Treasury available for the payment 
 of the same. (See " United States Public Debt.") 
 
 National Gold Banks. See " Gold Banks." 
 
 National Weather Bulletin. This is issued by the United 
 States Weather Bureau of the Department of Agriculture, 
 weekly, from April first to the close of September. From 
 October to March inclusive it is issued monthly. It was 
 formerly known as the " Weather-Crop Bulletin," but early in 
 1906 was changed to the above title. 
 
 The Bulletin no longer gives information regarding crops, 
 as formerly, but devotes its attention to meteorological con- 
 ditions. 
 
 NB. The " ticker " abbreviation for " new bonds." 
 
 Negotiable. A security which can be transferred from one 
 person to another either by directly passing from hand to 
 hand, as in the case of money, coupon bonds, a check made 
 payable to " bearer " or " cash," etc., or by indorsement, as 
 in the case of a note, check, or draft, payable to the order of 
 a person, etc. 
 
 An instrument or security which cannot be passed from hand 
 to hand or is not good in the hands of any holder except the 
 one to whom it was originally issued, unless by the consent 
 of the person or corporation issuing the same, is " non-negoti- 
 able." A mileage book, issued by a railway company, in the 
 name of John Smith, is for his special use alone, he having no 
 right to sell or transfer it to any other person. It is, therefore, 
 " non-negotiable." Many railroad tickets, made out in the 
 names of the holders and sold at a discount price, are " non- 
 negotiable." The ordinary railroad ticket, bought at the regular 
 rate, is " negotiable," so is the theatre ticket, but a return 
 check given to the person who leaves the theatre during the 
 performance, permitting him to re-enter, is not supposed to 
 be " negotiable." A note made payable to William Black with 
 the words " or order " omitted would not be " negotiable," be- 
 cause William Black would not have the right to transfer his 
 rights to any one else. To him and him only was the note 
 made payable.
 
 272 MONEY AND INVESTMENTS 
 
 From the standpoint of finance, the formal requisites of 
 negotiable paper are concisely put by Francis M. Burdick as 
 follows: 
 
 " (a) It must be in writing and signed; (b) it must contain 
 an unconditional order or promise to pay a certain sum of 
 money; (c) it must be payable at a determinate time; (d) 
 it must be payable to order or to bearer; (e) a bill of 
 exchange (including check) must name or indicate the 
 drawer." 
 
 Negotiable Instrument. See " Negotiable." 
 
 Negotiable Paper. See " Negotiable." 
 
 Negotiable Securities. First read " Negotiable," after an 
 understanding of which " negotiable securities " may be 
 defined by stating that they are all forms of commercial paper, 
 bills of exchange, drafts, municipal, Government and corpo- 
 ration bonds, and, in fact, anything that may be termed an 
 investment security which has the requisite attributes of 
 negotiability. 
 
 Negotiate. To sell, dispose of, transfer, barter, accomplish 
 a transaction. To " negotiate a loan; " to make a loan, bor- 
 row money. 
 
 An instrument is " negotiated " when it is transferred from 
 one party to another in such a manner as to constitute the 
 person to whom transfer is made the holder thereof. 
 
 Net. A thing is said to be " net " when all possible deduc- 
 tions have been made from its totality, and it is at its lowest 
 terms. This is more specifically set forth under " Net Earn- 
 ings." 
 
 Net Avails. As used in the discounting of a note, it is the 
 amount which the borrower obtains after deducting the " dis- 
 count." (See " Discount.") 
 
 Net Cash. Cash (payment) on delivery, as distinguished 
 from " cash," which in the mercantile world is often taken to 
 mean payment in a short time, generally ten days. " Net 
 cash " permits of no discount being taken from the face of the 
 bill, as is often allowed when goods are sold for " cash." If 
 the term were used, " net cash ten days," it would be under- 
 stood that the payment was to be made within ten days, but 
 no discount was to be taken from the bill. 
 
 Net Debt. See " Net Indebtedness." 
 
 Net Deposits. The " net deposits " of a national bank 
 upon which to figure the " reserve " (see that subject) re- 
 quirements, is obtained by deducting the checks which a 
 bank holds drawn against other banks in the same place, ex- 
 changes for clearing-house and national bank notes. 
 
 Net Deposits of National Banks. The total deposits in all
 
 MONEY AND INVESTMENTS 273 
 
 these banks, less the deposits of one bank in another, and 
 any other duplications, so that no deposit will be counted 
 more than once. 
 
 Net Earnings. The divisible income applicable to interest 
 upon indebtedness of all classes, sinking fund, and dividends 
 upon stock of a corporation or business industry for any stated 
 period of time. The method of bookkeeping differs in various 
 corporations, and unless specially noted, so that the investor 
 may not be deceived, such items as taxes and insurance should 
 be deducted before the amount of " net earnings " is derived. 
 It is generally conceded proper to deduct such items and give 
 the " net earnings " as a divisible income as noted above. 
 
 Net Income. After all costs of operating and fixed charges 
 of every kind have been deducted from the earnings of a cor- 
 poration, the balance, which is the amount available for 
 dividends, may be called " net income." 
 
 Net Increase. " The net increase in bank note circulation 
 last week was $668,308; " meaning, that there was $668,308 
 more circulation taken out than retired. 
 
 Net Indebtedness. The laws of Massachusetts, relating to 
 the investment of savings bank deposits, give a very good 
 definition of this term as follows: 
 
 " The words ' net indebtedness ' shall mean the indebted- 
 ness of a county, city, town or district, omitting debts created 
 for supplying the inhabitants with water and other debts 
 exempted from the operation of the law limiting their indebt- 
 edness, and deducting the amount of sinking fund available 
 for the payment of the indebtedness included." 
 
 Of course, this would not apply in all cases, although the 
 usual meaning, in reference to a municipality, is the deducting 
 of the amount of water indebtedness, if any, and sinking fund. 
 In the case of a State, as a rule, the sinking fund is about all 
 that can be deducted to determine the " net indebtedness." 
 The net debt of a corporation would be the total debt less 
 " sinking fund " or money on hand specially set aside for 
 the payment of same. In bookkeeping it would be considered 
 the difference between the assets and liabilities. 
 
 Net Price. The lowest price; the price less all discounts or 
 other allowances. 
 
 Net Profits. This is used rather more in a commercial 
 sense than " net earnings; " the latter being applied in refer- 
 ence to railroads, telephone companies, etc. " Profits " 
 have more the reference to the gain arising from dealing in 
 commodities, and is the gain in any business undertaking 
 of the above nature after taking into consideration the 
 capital invested in such an undertaking, all its expenses in- 
 curred in management, and losses sustained, if any.
 
 274 MONEY AND INVESTMENTS 
 
 Again " net profits " and " net earnings " (see that subject) 
 may be used to mean one and the same thing. Or, in some 
 instances, both terms may be used in the same system of 
 bookkeeping, as, for instance, " net profits " to mean the 
 earnings of the business before any losses for bad debts or 
 such like have been deducted, and " net earnings " after 
 such deduction. 
 
 Net Return upon the Investment. The proportional rate 
 which the income upon any investment bears to the total cost, 
 interest excepted, of that investment, taking into consideration 
 the time which the investment may be outstanding before being 
 paid off. 
 
 Stocks, as a rule, have no definite date of maturity, although 
 there are exceptions to this; therefore, stocks are usually 
 figured as perpetual. Bonds and most other classes of in- 
 vestments have a fixed time to run. In the former case, a 
 simple illustration would be that of a stock selling at $200 per 
 share, and paying dividends at the rate of 8% per annum; 
 in which event the ratio of the dividend, $8, to the total 
 cost, $200, would be 4, or, in other words, the net return to the 
 investor would be 4%. If the stock sold at $100 per share 
 and paid $4 per annum in dividends, the net return would be 
 4%. 
 
 In the case of bonds having a fixed date of maturity, the 
 problem is somewhat more complicated, and special tables 
 are in use to which investors usually turn to ascertain what 
 the net return is upon an investment of that kind. It will do 
 to take as an example a bond bearing 5% interest, and which 
 has exactly ten years to run before maturity. If it is sold at 
 $108.18, that is to say, $1,081.80 for each one thousand dollar 
 bond, the net return to the investor would be 4% per annum, 
 which is 4% for each of the ten years, and is 4% upon the 
 entire sum $1,081.80 invested. 
 
 This brings up the point that, although to use the above 
 example the bond costs $1,081.80, at the end of ten years, 
 when it matures, the holder will only receive $1,000. In the 
 meantime he will have received $50 yearly in interest. All 
 of this $50, therefore, should not be considered as income, 
 for a sufficient amount of it should be set aside each year to 
 liquidate the $81.80 premium paid for the bond. 
 
 Some such expression as this is often seen: " Yielding 4% 
 for the first ten years and 5% for all the time thereafter which 
 the bond may run." This means that the municipality or 
 corporation issuing the bond has the right to pay it off any 
 time after ten years, but may not absolutely be obliged to do 
 so until some later date, say twenty years. These are called 
 10-20 year bonds, or 10-20's, meaning that they are absc 
 lutely due in twenty years, but optional on the part of the
 
 MONEY AND INVESTMENTS 275 
 
 issuing party to pay any time between ten and twenty years. 
 It is not safe on the part of the seller of this bond to estimate 
 that it will run longer than ten years. The greater the length 
 of time which any form of indebtedness, with a fixed rate 
 of interest, and selling at a premium, may be outstanding, 
 the greater the percentage in interest return to the holder, 
 at a given price; therefore, in the case of this 10-20 year bond, 
 the seller figures the net return on the basis of its' being out- 
 standing ten years only, and, in the case cited, returning 4% 
 to the investor. But should it run twelve years, for instance, 
 before being paid off, the net return to the investor would be 
 5% per annum for the two additional years; or, in other 
 words, the full rate of interest which the bond bears. 
 
 The shorter the length of time which a bond has to run 
 when selling at a discount, the greater the interest return to 
 the investor, prices being equal; just the opposite from a bond 
 selling at a premium. 
 
 In the selling of bonds and figuring the interest return, 
 or yield, the following rule must always be observed, if the 
 issue is " optional," so-called, as in the case of the 10-20 year 
 bond just mentioned. 
 
 Rule For Computing the Interest Yield Upon Optional Bonds 
 
 For bonds selling at a premium, the interest return 
 must be computed upon the shortest possible time 
 which the security may be outstanding. For bonds 
 selling at a discount, the interest return must be com- 
 puted upon the basis of the greatest possible length of 
 time which they may be outstanding. 
 
 In buying an issue of " serial bonds " (see that subject) 
 many bidders make the mistake of averaging the life of the 
 issue, and then, by the use of a table of bond values, basing 
 the bids upon this average maturity; whereas, a separate 
 bid should be computed for each maturity and then an 
 average price taken. If bonds are bought by the first method 
 and retailed by maturities, either a loss will result, or a lesser 
 profit than expected. 
 
 How to compute the average life, or maturity, of a lot of 
 bonds falling due at different intervals, is best explained 
 by the following example. 
 
 To find, on March 1, 1907, the average maturity of 
 
 $ 5,000 (par value) due July 1, 1910 
 
 8,000 " " " " 1, 1912 
 
 10,000 " " " " 1, 1915 
 
 7,000 " " " 1, 1920
 
 276 MONEY AND INVESTMENTS 
 
 From March 1, 1907, to July 1, 1910 is 3J years. Likewise, 
 for the subsequent periods the time is 5 years, 8J years, 13 j 
 years. 
 
 Three ciphers may be struck out of each of the par value 
 amounts, and we have the following: 
 
 5 x 3| = 16$ 
 
 8x 5i = 42J 
 
 10 X 8J = 83i- 
 
 7x 134 = 93; 
 
 Adding = 30 236 
 
 Dividing the footing of the right-hand column by the footing 
 of the left-hand, the average maturity is obtained; namely, 
 7 87-100 years. 
 
 The reader will do well to familiarize himself with the matter 
 under " Bond Values Tables." 
 
 Net Surplus. The profits which are left after paying all 
 the expenses of operating, taxes, insurance, interest on debts 
 of all kinds, sinking fund, if any, and dividends. As distin- 
 guished from " surplus," the latter would be before making 
 deductions for dividends; " net surplus," after deducting 
 dividends. Some writers figure that preferred dividends 
 should be deducted before arriving at the " net surplus," 
 but not dividends on the common stock. 
 
 Net Worth. The difference between what a concern owns 
 and what is due to it, and what it owes to others, is the " net 
 worth; " the excess of its assets over its liabilities. 
 
 New. A Chicago Board of Trade term, which has reference 
 to new grain, and is inserted in each certificate of inspection 
 of a newly harvested crop of oats until the fifteenth day of 
 August; of rye, until the first day of September; of wheat, 
 until the first day of November; and of barley until the first 
 day of May, of each year. 
 
 New Account. " For the new account; " for the next ac- 
 count; that is, in London, transactions which are not con- 
 summated on the " fortnightly settling-days " would be 
 understood, by this term, to go forward into the next " fort- 
 nightly settlement." 
 
 Newfoundland Government Cash Notes. Issued by that 
 Government in making payments on account of public works 
 in the outlying districts of the island. Their circulation is 
 limited, and they are not re-issued when once deposited in 
 the Bank of Montreal, at St. John's, Newfoundland, where 
 they are redeemable. They are in denominations of $5, $1, 
 80 cents, 50 cents, and 40 cents, payable to bearer. 1 
 
 1 Information furnished by the Bank of Montreal, Canada.
 
 MONEY AND INVESTMENTS 277 
 
 New Haven. New York, New Haven & Hartford R. R. Co. 
 
 New Jersey Collateral Inheritance Tax. v As so many com- 
 panies have been incorporated under the laws of New Jersey, 
 all executors or administrators of estates of non-residents of 
 New Jersey should bear in mind that there is a " collateral 
 inheritance tax " levied on that part of the decedent's estate 
 which goes by will or by intestate laws to any one not a parent, 
 brother, sister, husband or wife or direct descendant of the 
 decedent. This applies to the stocks of New Jersey corpora- 
 tions, which pass from a decedent non-resident, and relates 
 only to the stock of the value of $500 or over. 1 This value 
 applying to each lot and not to the amount of the estate. 
 
 New Reserve. Under the subject " Reserve " it will be 
 seen that in 1902 the Secretary of the Treasury made a ruling 
 permitting national banks to forego the necessity of main- 
 taining a 25% " reserve " against deposits of public money 
 secured by Government bonds. " New Reserve," therefore, 
 means the amount of " reserve " held by one bank, or the 
 banks collectively, after taking advantage of the Secretary's 
 ruling, and the legal requirement is, therefore, of all de- 
 posits, minus \ of the United States deposits. " Old reserve " 
 would be against all deposits, including that of the Govern- 
 ment, and would call for \ of the total deposits. In the New 
 York Clearing-House " new reserve " is referred to as " re- 
 serve on deposits other than the United States." " Old re- 
 serve " is referred to as " reserve on all deposits." 
 
 New York Balances. " Clearing-House Balances " for New 
 York City. 
 
 New York balance note that the " s " on the last word 
 is omitted refers to the amount on deposit, in New York, 
 to the credit of a bank or other corporation, firm, or individual 
 located elsewhere. 
 
 New York Consolidated Stock and Petroleum Exchange. 
 See " Consolidated Exchange." 
 
 New York Consolidated Stock Exchange. See " Consolidated 
 Exchange." 
 
 New York Cotton Exchange. Where speculation or trading 
 in cotton goes on in New York. Founded in 1870 and the 
 largest of its kind in this country. 
 
 New York Equivalent. The price at which a security in 
 New York equals the London quotation, taking into con- 
 sideration cost of shipment, rate of exchange, loss of interest 
 and incidentals. This is so accurately understood that tables 
 are used by which the " New York equivalent " of a London 
 
 1 Chapter 210 of the Laws of 1894, as amended by Chapter 62 of the 
 Laws of 1898, Chapter 217 of the Laws of 1902, and Chapters 227 and 228 
 of the Laws of 1906.
 
 278 MONEY AND INVESTMENTS 
 
 quotation can be quickly ascertained, whatever the rate of 
 exchange. All London quotations of securities dealt in in 
 America must be reduced to their " New York equivalent " 
 to be of any comparative value in this country. This has more 
 particular reference to what are known as " international 
 securities." (See also " New York Stock Exchange Usage.") 
 
 New York Excess. New York being a " central reserve 
 city " banks there act as depositories for national banks of 
 other cities. Those being located in what are known as 
 " reserve cities " must maintain a " reserve " of 25% of their 
 net deposits, but they are permitted to deposit one half of this 
 25% with a bank in a " central reserve city," after having the 
 same approved by the Comptroller of the Currency as their 
 " reserve agent." " New York Excess," therefore, means the 
 amount of money on deposit with a " reserve agent " there in 
 excess of the one half referred to. 
 
 New York Exchange, Funds, or Money. (See " Exchange.") 
 In addition to what is given under " Exchange " upon this 
 subject, it would be well for the reader to understand that 
 New York, being the great financial centre of this country, it 
 is through that centre that payments are being continually 
 made, and there is, therefore, constantly a transmitting of 
 funds to and from that point to all other points of the country, 
 the lines along which the streams of money flow in and out 
 radiating like the spokes of a wheel. A check on New York is 
 acceptable at all points, and, for this reason, New York Ex- 
 change is seldom at a discount. If it is desirable to use a check 
 in making a payment between two country points, the best 
 form of check to send is a check on a New York bank, as that 
 will be most useful to the recipient. 
 
 New York Exchange Was Par at Chicago. When such a 
 statement as this is made, it means that the demand at Chicago 
 for exchange on New York, i. e. " New York funds," was just 
 about equal to the supply; the Chicago banks carrying de- 
 posits in New York City were perfectly willing to exchange, 
 without charge, checks against those accounts for cash or 
 checks on local banks. 
 
 New York Method of Figuring Interest. See " Interest." 
 
 New York Produce Exchange. This corresponds to the 
 Chicago Board of Trade, and it is where transactions in grain, 
 pork, lard, etc., take place. 
 
 Since April 15, 1907, trading in certain mining, industrial, 
 and miscellaneous securities has taken place on this exchange, 
 but no security listed upon the New York Stock Exchange 
 is included in the " list." 
 
 New York Stock Exchange. (See " Stock Exchange.") 
 This is a voluntary association, not corporation.
 
 MONEY AND INVESTMENTS 279 
 
 New York Stock Exchange Commission Charges. See 
 
 " Commission." 
 
 New York Stock Exchange Usage. In all transactions upon 
 the New York Stock Exchange where the face value of a 
 security is expressed in English pounds sterling, the trans- 
 actions are figured at $5.00, equivalent to one pound sterling, 
 without regard to the " rate of exchange " or the actual 
 equivalent in dollars and cents to the pound sterling. In all 
 such transactions, an allowance has to be made for the actual 
 difference arising from the " usage." (See also " New York 
 Equivalent.") 
 
 In the same manner, on the London Exchange, United 
 States securities are reckoned at the rate of $5.00 to the 
 pound, Dutch at 12 guilders, French and Italian at 25 francs 
 and 25 lire respectively, and German at 20 marks. 
 
 New 2's. United States Government 2% bonds redeemable 
 after 1930, and known as " Consols." (See " Government 
 Bonds.") 
 
 New a's. United States Government 3% bonds redeemable 
 after August 1, 1908, and known as " Loan of 1908-1918." 
 (See " Government Bonds.") 
 
 NF. The " ticker " abbreviation for " non-fundable." 
 These letters, when stamped upon a check, stand for " no 
 funds." (See that subject.) 
 
 N. F. M. A. November, February, May, and August; 
 interest or dividends payable quarterly beginning with 
 November. 
 
 Nickel. A small coin of the United States of the value of 5 
 cents, containing 57.87 grains of fine copper and 19.29 grains 
 of nickel. " Legal tender " to the extent of 25 cents. 
 
 Nickel Coins. See last subject. 
 
 Nickel Plate. The New York, Chicago & St. Louis 
 R. R. Co. 
 
 Ninety Day Bill. A bill of exchange (see " Exchange ") 
 may be drawn payable in ninety days after date, but it is more 
 customary to draw them payable ninety days " after sight; " 
 that is, after presentation. If in the latter form and drawn on 
 England, roughly speaking, ten days may be reckoned as the 
 time elapsed after drawing before presentation, and as the 
 three days " grace " is allowed there on time bills, it would 
 make a total of approximately one hundred and three days 
 before actual maturity. 
 
 Bills of this kind are called " Nineties." 
 
 No Account. Stamped across a check to show that the 
 " drawer " has no account at the bank against which it was 
 drawn.
 
 280 MONEY AND INVESTMENTS 
 
 No Funds. When stamped upon a check returned from the 
 bank at which it is payable it indicates that the " drawer " 
 had no money to his credit to meet its payment. The letters 
 N. F. are often used to indicate the same thing. 
 
 Nominal Assets. Although by this is especially understood 
 property of uncertain, undetermined, or of no value, yet it is 
 also extended to mean assets (property) of all kinds, belonging 
 to a person, firm, or corporation. (See " Assets.") 
 
 Nominal Exchange. This takes no account of " balance of 
 trade," and such transactions between countries; but is ex- 
 change based only upon the comparative market values of the 
 currencies of the different countries. 
 
 Nominal Par. The actual face value of a security. See 
 " Par." 
 
 Nominal Price. A market quotation which is not based on 
 an actual transaction, but rather indicates the probable price 
 which might be obtained at the time. 
 
 Nominal Rates. See " Posted Rates." 
 
 Non-Assented. Securities, the holders of which have not 
 agreed to a certain plan, as one of " reorganization," for 
 illustration. (See " Assented Stocks.") 
 
 Non- Assessable. Stock, the owners of which cannot legally 
 be compelled to make additional payments upon the same, 
 in case of failure of the corporation, or for any other reason. 
 National bank stocks are " assessable " 1 (See " Double 
 Liability "); that is, the owners can be forced to make addi- 
 tional payments in case of failure. It often states on a stock 
 certificate that it is " non-assessable," if such is the case. 
 The State laws under which the corporation is chartered may 
 have much to do with the assessability or non-assessability of 
 the stock. Assessments may be made, in case it can be proved 
 that a certain stock had not been " fully paid " when originally 
 issued, and the existence of fraud demonstrated; provided, 
 of course, that the laws demanded the issuance of " fully paid " 
 stock. 
 
 In case of the shares of a transportation company, the holder 
 of which may be liable for " assessment," considerable risk 
 may attend the owning of the same. Some large accident 
 might involve the company in such "a loss for damages, as to 
 call for an " assessment." This liability should always be 
 given proper thought in buying any stock. No stock carries 
 more than " double liability." Never " indorse in blank " 
 a stock subject to assessment, but have it transferred to the 
 purchasing party. (See "Transfer in Blank.") 
 
 Non-Clearing-House Stocks. This is fully explained under 
 
 1 For exceptions see foot-note under " Double Liability."
 
 MONEY AND INVESTMENTS 281 
 
 " Stock Exchange Clearing-House." Stocks which are not 
 active, and which are not " cleared " is understood. 
 
 Non-Contingent Preference Stock. Described under " Pre- 
 ferred Shares." 
 
 Non-Cumulative. First read matter under " Cumulative." 
 In the case of a " non-cumulative " stock, if a dividend is not 
 paid at its regular fixed period, there is no obligation on the 
 part of the corporation to make the amount up at any succeed- 
 ing time; for instance, a given stock is known as " a 7% non- 
 cumulative," and during the year 1904 it paid dividends at 
 the rate only of 3%, the holder of that stock has no right to 
 expect the additional 4% to be paid him at any future time. 
 
 All shares are " non-cumulative " unless otherwise stated. 
 If the entire stock issue of a company is simply one class of 
 " common " there would be no object in injecting the " non- 
 cumulative " feature. 
 
 Non-Interest-Bearing. Securities which do not earn (pay) 
 interest. 
 
 Non-Ledger Assets. Property owned but not appearing on 
 the books of a business; concealed assets or profits. 
 
 Non-Member Banks. Those not belonging to the Clearing- 
 House Association, but which " clear " through some bank 
 which is. (See " Clearing-House Agent.") " Non-members " 
 are subject to certain rules and restrictions of the clearing- 
 house, such as making a weekly statement, which is published 
 the same as the member banks. (See second paragraph of 
 " Bank Statement.") Trust companies in New York are re- 
 quired to make a statement of their condition, so the state- 
 ment of the " non-member banks " covers banks only. 
 
 Non-Member Bank Statement. See second paragraph of 
 " Bank Statement." 
 
 Non-Negotiable. See " Negotiable." 
 
 Non-Participating Policy. This kind of a life insurance 
 policy is one under which the holder has no right to share in 
 the surplus earnings of the company, as explained under 
 " Participating Policy." 
 
 Non-Taxable Investments. Investments which are not 
 subject to taxation. United States Government bonds are 
 non-taxable in all parts of this country, not being subject to 
 either Government or municipal taxation. 
 
 The State laws vary greatly as to the taxation of other 
 securities; in some States there exist what is known as 
 " double taxation; " that is, suppose John Smith owns a piece 
 of real estate upon which he is taxed at a valuation of $10,000; 
 he gives a mortgage on the same property to Richard Jones 
 for $7,000; this mortgage is taxed for that amount, making
 
 282 MONEY AND INVESTMENTS 
 
 a total taxation upon the same property of $17,000; $7,000 
 of it is taxed twice. 
 
 An example of non-taxable securities is best given by 
 selecting the Commonwealth of Massachusetts, which provides 
 that such investments as bonds and mortgages secured entirely 
 by real estate situated within the Commonwealth, stocks of 
 all Massachusetts corporations, besides certain other securi- 
 ties especially exempted by law, are non-taxable when held 
 within the Commonwealth. 
 
 No Protest. These words are sometimes marked upon a note 
 or draft, and convey to the party entrusted to collect it the 
 instructions not to " protest " (see that subject) if payment 
 is refused. 
 
 North Butte. North Butte Mining Co. (Copper.) 
 
 Northwestern. Chicago & Northwestern Railway Co. 
 
 Northwesterly Receipts. Usually designates receipts of hard 
 spring wheat of Minnesota and the Dakotas, at Duluth and 
 Minneapolis. 
 
 Not a Delivery. Same as " Not a Good Delivery." (See 
 " Good Delivery.") 
 
 Notary Public. One who receives a commission from the 
 State and is empowered to take acknowledgments, deposi- 
 tions, administer oaths, protest negotiable instruments, etc. 
 
 Note. A written promise to pay a specified sum of money at 
 some future time. The various kinds of notes, " demand " 
 " time," etc., will be found explained under the several 
 subjects. 1 
 
 The requirements of a note are: that the amount for 
 which it is drawn shall be clearly stated; that it shall be made 
 payable at some determinable time; and that it shall be signed 
 and dated. If the words " with interest " are inserted with- 
 out mentioning the rate, then the legal rate of the State in 
 which it is made prevails. 
 
 A note in the hands of any " holder in due course " (see 
 that subject) may be voidable for either of the following rea- 
 sons: if altered by the holder, or signed by a minor; and may 
 be voidable when in the hands of the party to whom first given 
 for the following reasons: dated and issued 2 on Sunday; if 
 the maker was under the influence of liquor; or his signature 
 to the note obtained by fraud. 
 
 In case a note is destroyed, lost, or stolen, the holder can 
 legally collect from the maker. 
 
 If there is a disagreement between the words and the 
 
 1 See also " Value Received," " Discount," " Interest to Follow," " On 
 or Before/' " Indorse," and " Collateral Loan." 
 
 2 As a matter of precaution it is better not even to date a note on Sunday, 
 although it is not voidable in any State on account thereof.
 
 MONEY AND INVESTMENTS 283 
 
 figures for the amount for which a note is drawn, the former 
 governs, the same as in a check. 
 
 Always present a note on the exact day it is due and at the 
 place specified for payment. When no place is named, it may 
 be presented at the maker's place of business or residence. 
 The reason for presenting a note on the day of its maturity 
 is to hold indorsers or guarantors, if any. The liability of the 
 maker is not lessened by a delay in presentation. 
 
 In purchasing a note which has been running some time, 
 be sure to ascertain if any payments have been made upon it, 
 as neglect to indorse the same upon the note may have 
 occurred. Direct application to the maker for this informa- 
 tion may be made if advisable. All partial payments on 
 notes should be carefully entered upon the back of the same, 
 giving the amount and date of payment. No signature is 
 necessary. It is well to prefix the words " Received on the 
 within note," " Received on this note," or some such form. 
 
 Should payment of a note not be made when due, notice must 
 immediately be sent to the indorsers or guarantors, unless 
 some clause is inserted whereby the indorsers or guarantors 
 waive this right of notice. 
 
 The purchase of overdue notes is an unsafe proceeding. 
 (See also " Protest.") 
 
 Notes falling due on Sunday, or a legal holiday, in most 
 States are payable on the next business day. As this varies 
 in different States it is advisable to look it up in absence of 
 certain knowledge. 
 
 If days of grace are recognized and the last day of grace 
 falls on Sunday or a legal holiday, the instrument is payable 
 on the day preceding. 
 
 SIMPLE FORM OF TIME NOTE: 1 
 
 Boston, Mass., Jan. 1, 1907 
 
 4 
 
 Five months after date we promise to pay 
 
 to the order of Robinson Brothers 
 
 Three hundred fifty & ffi o Dottars 
 
 Payable at Tidewater National Bank, Jacksonville, Fla. 
 
 Value received 
 
 No. T)UP. Brown & White. 
 
 1 If the note is to be made payable " on demand " these words may be 
 inserted in the place of " after date." The form of note given above is
 
 284 MONEY AND INVESTMENTS 
 
 " Note " often is applied to money, as " bank-note," 
 " United States note," " Bank of England note," etc. 
 
 Note Broker. One who deals in " commercial paper " or 
 short-time evidences of indebtedness of a similar nature; the 
 " middleman " through whom one party borrows money from 
 another by negotiating his notes. The " note broker " either 
 charges a commission for his services, or buys the note bearing 
 (or discounted at) one rate of interest and sells at a lesser; the 
 difference of interest for the time the note has to run being his 
 profit. 
 
 Note of Hand. Same as " note." 
 
 Note Panic. In this connection " note " refers to paper 
 money. A " note panic " results from the holders of a bank's 
 notes losing confidence in the ability of the bank to redeem 
 them at par. An illustration is that of the Bank of Eng- 
 land, which has had several such troublesome experiences. 
 During one of these " panics," when the holders of the bank's 
 notes lost their heads and a " run " on the bank resulted, 
 payment was made in such small money as shillings and six- 
 pence in order to gain time. 
 
 Notes Payable. All written agreements in every form which 
 a person has entered into, and which are held by others, and 
 which bind such a person to pay sums of money at some 
 future time either on demand or a fixed date. Examples: 
 notes, acceptances, etc. All written evidences of indebtedness 
 held against a concern are the " notes payable " of that con- 
 cern. (See " Bills Payable.") 
 
 Notes Receivable. All written agreements in every form 
 which one person holds against others, and which bind them 
 to pay him money at some future time either on demand 
 or a fixed date. Example: drafts, notes, or acceptances. 
 
 Note Teller. An employee only required in the larger bank- 
 ing institutions. He is the one who attends to the collection 
 of notes due the bank, and attends to the collection of notes 
 or drafts belonging to the bank's customers, and entrusted 
 to it for collection. Also called the " Third Teller." 
 
 Notice of Dishonour. If any negotiable paper, such as a 
 draft, is not paid at maturity, a written notice to that effect 
 from the holder to the " drawer " or " indorser " is a " notice 
 of dishonour." l 
 
 when the interest is deducted in advance; that is, at the time of making 
 " discounted." If a form of note is wanted with interest payable at ma- 
 turity, words may be inserted after the word " dollars," as: " with interest 
 at5%." 
 
 1 Francis M. Burdick says: "A protest ... is necessary only in the 
 case of a foreign bill of exchange; but a notice of dishonour is just as neces- 
 sary in the case of an inland bill, of a check, or of a promissory note as in 
 the case of a foreign bill. A protest is in writing, and attested by the
 
 MONEY AND INVESTMENTS 285 
 
 Notice of Protest. See " Protest." 
 
 Noting a Bill. The writing upon a " bill of exchange," or 
 other negotiable paper, which has not been paid or " ac- 
 cepted," words to the effect that it has been dishonoured. 
 After this it may be " protested." 
 
 Not Subject to Previous Redemption (or Call.) A security 
 which the issuer has no right to pay off previous to the date 
 of maturity specified therein. 
 
 NS. The " ticker " abbreviation for " new series." 
 
 N. & M. November and May; interest or dividend payable 
 semi-annually beginning with November. 
 
 
 
 O. The " ticker " abbreviation for offered, when accom- 
 panied by figures, as " UPO. 150," means that Union Pacific 
 common stock was offered at $150 per share. Frequently 
 such a combination as this is seen: " UP. 150, O. 150" which 
 indicates that Union Pacific was sold at 150 and more was 
 afterwards offered at same price, but no bidder or purchaser 
 materialized. 
 
 Oats. This is explained under " Grain," except that the 
 trading unit is 5,000 bushel lots and the " margin " about 
 3 cents per bushel, the commission being the same as any 
 other grains. 
 
 Oats Pit. See " Pit." 
 
 OB. The " ticker " abbreviation for " opening of books." 
 (This is explained under " Books Open.") 
 
 Obligation. This is a term for indebtedness, and has a very 
 general use. Bonds of municipalities, corporations, or of any 
 nature, may be referred to as " obligations; " so may an in- 
 debtedness of any form. (See " Direct Obligation.") 
 
 Odd Lots (or Odd-Share Lots). See " Fractional Lots." 
 
 Off. Lower prices. Also used to denote " without," as 
 " dividend off," meaning " without dividend." 
 
 Off Coast. Vessels in port awaiting orders to discharge 
 cargoes or to proceed to some other port. 
 
 Offer. A bid; an offer to buy. (See also " Bids and 
 Offers.") 
 
 notary's signature and seal. A notice of dishonour may be in writing or 
 oral, and may be given personally or sent through the mails. It may be 
 quite informal. Any notice is sufficient which fairly identifies the in- 
 strument and indicates that it has been dishonoured. Of course, it is safer 
 to have the notice in writing, in order to avoid any dispute about its terms."
 
 286 MONEY AND INVESTMENTS 
 
 Offered Down. Offered (an offer to sell) at less than the 
 last quotation of the same security. 
 
 Offered Firm. There is a distinction between " offered firm " 
 and " subject to sale " (the meaning of the latter is set forth 
 under the subject of that heading), but in the case of " offered 
 firm " one offers to sell another certain securities, or anything 
 else for that matter, giving definite time for the acceptance of 
 the offer. Or, one may make an offer, that is, a bid, that in 
 turn will be good for a definite time; in which event it is 
 known as a " firm bid." Anything may be " offered firm for 
 three days," by which the intending purchaser has that length 
 of time to decide in; or a bid may be made " firm " for that 
 length of time, and is known as " firm bid for three days." 
 
 Official List. The London term which is the equivalent to 
 our " List," to which refer. 
 
 Official Minimum. The " discount " rate of some of the 
 large foreign banks, such as the Bank of England, is known as 
 the " official minimum." (See " Bank of England Discount 
 Rate." 
 
 Official Time. See " Hammond's Time." 
 
 Offset. Sometimes notes bear the words " without offset," 
 meaning that if the person holding the note meets with 
 financial disaster he cannot use the note as an " offset " 
 against any sum which he may happen to owe the person who 
 signed the note. 
 
 Dictionary meaning: To set one account against another; 
 to make the account of one party pay the demand of another; 
 a sum, account, or value set off against another sum or ac- 
 count as an equivalent. 
 
 O. J. A. J. October, January, April and July; interest or 
 dividends payable quarterly beginning with October. 
 
 O. K. (or O. Ked). When marked upon a paper it signifies 
 that it is correct to the satisfaction of the person who placed 
 the letters thereon. He is said to have " O. Ked " it. 
 
 Old Dominion. Old Dominion Mining Co. (Copper.) 
 
 Old Lady of Threadneedle Street. Bank of England. 
 
 Old Line Insurance. Life insurance upon which the premium 
 is fixed (see " Level Premium "); not changing from year to 
 year, but determined once for all by the age of the insured 
 when he makes his first payment, and which maintains a 
 yearly increasing reserve, something like a sinking fund, to 
 meet the claims at a given time. 
 
 Old Reserve. This is explained under " New Reserve." 
 
 On Account. A partial payment of an amount due is a 
 payment " on account." 
 
 On a Scale. See "Buying on a Scale " and "Selling on a Scale."
 
 MONEY AND INVESTMENTS 287 
 
 On Call. This will be understood by reading " Demand 
 Note." It has reference to money or anything " subject to 
 call; " subject to demand for immediate delivery or pay- 
 ment. 
 
 On 'Change. On the stock exchange, or on any other kind 
 of an exchange. 
 
 One-Name Bill. A bill of exchange (see " Exchange ") 
 which has only one signature and is without indorsements, 
 and has not been " accepted." 
 
 One-Name Paper. Same as " Single-Name Paper." 
 
 On or Before. This expression is used in reference to a form 
 of borrowing where an agreement exists between the lender 
 and the borrower that the note shall run for a definite period, 
 and that the lender shall not have the right to ask for a 
 previous payment, but the borrower may have the right, if he 
 so elects, to pay the note off "on or before " the maturity 
 date mentioned in the note. 
 
 On Passage. Grain, or any commodity, en route upon the 
 ocean between any two ports. 
 
 On Sale. Offered for sale. 
 
 On the Canal (on Canal). Grain which is at the time in 
 transit on the Erie Canal. 
 
 On the Lake (on Lake). Grain, or any commodity, en 
 route upon the Great Lakes. 
 
 On the Track (on Track). Grain, or any commodity, in 
 railroad cars. 
 
 Open Account. The credit which one banker enjoys with 
 another and against which he draws in " exchange." 
 
 Open Credit. See " Open Account." 
 
 Opening Prices. The quotation of the day's first sale of each 
 security. 
 
 Open Market. Where any or all may buy and sell. A stock 
 exchange limited to the trading of its members is not an 
 " open market." 
 
 Open Mortgage. A mortgage under which more indebted- 
 ness can be incurred; the amount of indebtedness authorized 
 under the terms of the mortgage has not been reached. The 
 opposite of " Closed Mortgage." 
 
 Open Order. Meaning the same as " Good Until Can- 
 celled." 
 
 Operating Companies. Broadly speaking, any company 
 which is actually in possession of, and operating its own busi- 
 ness, but in investment matters it has a more restricted sense. 
 It refers to a company which is owned or controlled by another, 
 but which latter, i. e. the " controlling company," only
 
 288 MONEY AND INVESTMENTS 
 
 indirectly conducts the management of the former, which, by 
 its own officials, under general instructions from the con- 
 trolling company, actually manages its operation. 
 
 Operating Expenses. The cost of every kind of operating 
 any corporation or business industry for any given period of 
 time. It is sometimes not customary to include taxes, in- 
 surance, etc., as an operating charge, but unless a distinct 
 separation is made of these items, so that the information 
 shall not be kept from the investor, it is proper that they 
 should be included either in " operating expenses " or " fixed 
 charges." Woodlock says that taxes properly belong under 
 the latter. 
 
 The Interstate Commerce Commission has prescribed for 
 railroad companies the following classification for " operating 
 expenses: " (1) Maintenance of Way and Structures, (2) 
 Maintenance of Equipment, (3) Conducting Transportation, 
 (4) General Expenses, all of which will be found explained 
 under the several headings. 
 
 Operating Surplus. This is the profit remaining after taking 
 into consideration all costs of every nature of operating any 
 corporation or business industry for a given period of time. 
 Whether or no taxes and insurance should be deducted before 
 arriving at the amount of the " operating surplus " depends 
 upon the system of bookkeeping; but unless they are deducted 
 a distinct separation should be made so that those interested 
 should not be misled. Interest on capital, indebtedness, etc., 
 should not be deducted before determining the " operating 
 surplus." 
 
 Operators. Those who trade very heavily in the stock ex- 
 change or who are large buyers and sellers of securities on their 
 own account, and whose actions more or less influence the 
 trend of prices, are referred to as " operators." One who 
 makes a profession of speculating may be considered under 
 this heading. 
 
 0. P. Money. Money belonging to other people. 
 
 Optional After (or Optional Bonds). See " Net Return 
 Upon the Investment." 
 
 Optional Bonds (or Other Securities). Bonds in which the 
 right is reserved by the issuer to pay off at an earlier date than 
 the actual date of maturity. A bond due in twenty years, 
 but subject to redemption after ten years, is of this class, and 
 would be termed a 10/20. 
 
 Option Day. The day on which options, that is, " puts," 
 " calls," etc., must be declared, in accordance with London 
 Stock Exchange rules, and which coincides with " contango 
 day." (See that subject.)
 
 MONEY AND INVESTMENTS 289 
 
 Option Money. A payment to secure an option. See next 
 subject. 
 
 Options. By " options " is understood either a " call," 
 a " put," a " spread," or a " put-and-call." " Options," in 
 reference to dealings in securities, mean the privilege of 
 buying or selling, or a combination of buying and selling, a 
 certain amount of securities at the expiration of, or within a 
 given period, at prices determined at the time of the execution 
 of the contract. In order to possess any of these rights, one 
 must pay some other party a sum of money sufficient to 
 induce him to take the risk of signing such a contract. 
 
 The price paid for an " option " is termed the " premium." 
 
 Orders. County, city, State, etc. (See " Warrant.") Any 
 written instructions to pay money, as " checks," " bills of 
 exchange," etc. 
 
 An " order " to buy or sell is given a broker. (See also the 
 following subjects: " Stop Loss Orders," " Buying Order," 
 " Selling Order," " Postal Money-Orders " and " Express 
 Money-Orders.") 
 
 Ordinary Shares (or Stock). The term used in England as 
 the equivalent of the American " common stock," but 
 which the English often divide into two classes known as 
 " preferred shares " and " deferred shares." (See those 
 subjects.) 
 
 Osceola. Osceola Consolidated Mining Co. (Copper.) 
 
 0. T. On track. (See " On the Track.") 
 
 Out-Clearer. This is explained under " In-Clearer." 
 
 Outer Belt. See " Belt Lines." 
 
 Outlawed. An obligation, which, on account of the time 
 elapsed since it was incurred, or since any payment of either 
 principal or interest has been made thereon, cannot legally be 
 collected, is said to be " outlawed." That is to say, the 
 statutes of limitations provide in each State the length of time 
 during which legal action may be taken to collect a claim; 
 neglecting so to do within the time fixed deprives one of his 
 right to collect. A recent court decision of interest to the 
 holders of national bank stocks is given under the last para- 
 graph of the subject " Double Liability." 
 
 Out-of-Town Checks. A check drawn on a bank situated 
 without the city in which a certain clearing-house is located, 
 is an " out-of-town check " to that clearing-house. That is to 
 say, it is a check that cannot be collected through the ordinary 
 machinery of that clearing-house,- but must be sent away for 
 collection. 
 
 Out-of-Town Clearings. In England, each country bank 
 has a running account with some London bank, and all the
 
 290 MONEY AND INVESTMENTS 
 
 city banks daily settle transactions with each other through 
 the clearing-house. Therefore, the payment from any part 
 of the country to any other part can be accomplished through 
 London. 1 By this, supposing the reader to be familiar with 
 the subject " Clearing-House," " out-of-town clearings " may 
 be understood. 
 
 The " out-of-town clearing " system is also explained under 
 " Foreign Department Boston Clearing-House Association." 
 
 Out-of-Town Item. This will be found explained under 
 " City Item." 
 
 Outside Bank. A bank not belonging to any " clearing- 
 house," and which does not " clear " through any other bank 
 which is. (See " Clearing-House Agent.") 
 
 Outside Broker. One not belonging to an exchange, as, for 
 illustration, a " curb broker," to which refer. 
 
 Outside Market. This refers to dealings outside of the 
 regular exchange. 
 
 Outsider. Used in contradistinction to " insider," to which 
 subject refer. The " outsider " is the occasional speculator 
 or investor; one who does not make a profession of the same, 
 and also who is not in a position to be in possession of " inside 
 information," as it is called, regarding the affairs of the cor- 
 poration in which he may happen to be investing. 
 
 Outside Stocks and Bonds (Securities). Those not dealt in 
 upon the regular exchanges. 
 
 Outstanding Issue. The total amount of stock, bonds, or 
 whatever the security may be, which a company has already 
 placed upon the market. A company, for example, may be 
 legally authorized to issue $5,000,000 in first mortgage bonds; 
 suppose it should have issued but $2,000,000 of these, leaving 
 $3,000,000 yet to be issued. $2,000,000 would be the amount 
 " outstanding." 
 
 Over. This is a term used in Great Britain, and means 
 1-32 of 1% more, or above, a price. To illustrate, " over ," 
 would equal 5-32. 
 
 Overbought Market. When so many have been buying 
 securities that the amount which they have on hand is so 
 great that it is not easy to sell, the demand for the time being 
 having greatly lessened, the market is said to have been 
 " overbought," and it is natural to expect a fall in 
 prices. 
 
 Overcapitalized. A company with more securities out- 
 standing than it is able to return interest or dividends upon. 
 (See "Capitalization.") Meade 2 defines overcapitalization 
 
 1 " Money and the Mechanism of Exchange," W. Stanley Jevons. 
 8 "Trust Finance," E. S. Meade.
 
 MONEY AND INVESTMENTS 291 
 
 " as that condition in which the par value of the securities 
 of a company exceeds their actual value based on profits." 
 
 Over-Certification. (See " Certified Check,") Certifying a 
 check to an amount greater than the deposit standing to the 
 credit of the party drawing the check. This is prohibited by 
 law, but very largely done, nevertheless. 
 
 Overchecked. See " Overdraw." 
 
 Overdraft. See " Overdraw." 
 
 Overdraw. 1 To " overdraw " one's account. A person 
 having money in a bank " subject to check, " that is, subject 
 to his written order called a " check," may issue such orders 
 on the bank to pay this money out in such sums and at such 
 times as may suit his convenience. This is called " checking 
 out," and may continue so long as he does not draw issue, 
 give out checks in total amount greater than the sum 
 which he has on deposit. But in case he does exceed this 
 amount, then his account is " overdrawn; " that is, he has 
 " drawn " checks exceeding, or " over," his deposit. The 
 amount of such overdrawn checks is called an " overdraft." 
 Theoretically, a bank ought not to pay any " overdraft " 
 checks, although in practice it is often done, but only when the 
 bank has every confidence in its depositor making the sum 
 good, and in supposition that his " overdraft " was accidental 
 and not intended; or in case a previous arrangement had been 
 made with the bank to allow for such " overdraft," the bank 
 feeling secure in doing so. When an " overdraft "check is 
 presented to a bank for payment, and the bank does not wish 
 to pay it, nor yet refuse so to do, the depositor drawing the 
 check is notified of the " overdraft," if possible, and the check 
 held without action in the meantime. This is an act of 
 courtesy on the part of the bank and gives the depositor a 
 chance to straighten the matter out without injury to his 
 business reputation. 
 
 " Overdrafts " are undesirable, and should be discouraged. 
 
 Overissue. When a corporation issues more of a security 
 than it is legally permitted to, it has made an " overissue." 
 
 Overlying Mortgage. A mortgage to which some one, or 
 more, other mortgages have prior claims; the opposite to 
 " underlie," to which refer. (See " Junior Mortgage.") 
 
 Overnight Loan. A loan of money to be repaid the following 
 day. 
 
 1 The New York Courts have recently decided that a bank is not liable 
 for a clerk's blunder for damages to a depositor. In the particular case 
 upon which the decision was rendered, the plaintiff had a check returned, 
 indorsed "not sufficient funds." Owing to a bookkeeper's mistake money 
 belonging to the plaintiff had been credited to another account. The 
 plaintiff claimed that the action of the bank injured him in a business way. 
 The jury brought in a verdict for the defendant.
 
 292 MONEY AND INVESTMENTS 
 
 Oversold. The market is " oversold " when more securities 
 have been contracted for delivery than the sellers are able to 
 purchase at advantageous prices, resulting in a rising market; 
 too many people have " gone short." (See " Selling Short.") 
 
 Over the Counter. Sales of securities directly by bankers 
 without the medium of the stock exchanges; outside sales, 
 as they are called, of all kinds. Used particularly in speaking 
 of bonds. 
 
 0. & A. October and April; interest or dividend payable 
 semi-annually beginning with October. 
 
 P. The sign used in the Spanish monetary system for the 
 " peseta," as $ is for our dollar. 
 
 Pac. Pacific. 
 
 p. a. c. These letters stand for " put-and-call." (See 
 " Straddle.") 
 
 Pacific Coast. The Pacific Coast Co. Successor to The 
 Oregon Improvement Co. 
 
 Pacific Mail. Pacific Mail Steamship Co. 
 
 Pacific Railroads. Used in two senses. First, the railroad 
 companies with Pacific as part of their names; i. e. Union 
 Pacific, Southern Pacific, Northern Pacific, Canadian Pacific, 
 Western Pacific, and Central Pacific. Second, the roads 
 reaching across the country to the Pacific Ocean; i. e. the 
 first four mentioned, and the Northern Pacific, the Great 
 Northern, and the Atchison, Topeka & Santa F6. The 
 Chicago, Milwaukee & St. Paul Railway is reaching towards 
 the Pacific also. 
 
 Pacifies. Railway companies with " Pacific " as part of 
 their names, and whose securities are listed upon the New York 
 Stock Exchange. 
 
 Paid-Up Stock. Same as " fully paid stock." (See " Fully 
 Paid.") 
 
 Paid-Up Value. A life insurance term describing the sum of 
 insurance, which, without further payment of premiums, 
 should be given the insured in case of cessation on the part of 
 the latter in payment of premiums after a fixed time. In 
 other words, it is the value which a policy would have after a 
 given time, as set forth in the policy, should the insured, from 
 inability or otherwise, discontinue payment of premiums 
 previous to the time originally contemplated in the policy. 
 Many modern policies state therein the sums which would be 
 the " paid-up value " of the same at different intervals.
 
 MONEY AND INVESTMENTS 293 
 
 Panama 2's. United States Government bonds redeemable 
 after August 1, 1916, but due August 1, 1936, and known as 
 the Panama Canal Bonds. (See " Government Bonds.") 
 
 Pan Handle. Pittsburgh, Cincinnati, Chicago & St. Louis 
 Railway Company. Controlled by the Pennsylvania Railroad 
 Company. 
 
 Panic. A " panic " in a theatre is the result of some fright 
 that induces many people to lose their heads, and rush fran- 
 tically to the exits to escape, having no regard for the weak and 
 helpless or the wiser counsels of the saner-minded, who would, 
 perhaps, accomplish the same escape from the impending 
 danger by slower and more systematic methods. At such 
 times, much unnecessary suffering results, caused by the very 
 human desire of self-preservation. 
 
 In a " stock exchange panic," or " money panic," or what- 
 ever the case may be, the procedure and results in a financial 
 way are about the same. People sell who need not have done 
 so; sales are made which afterwards prove to have been 
 needless; unnecessary losses result; the large majority try 
 to do the same thing at once. There are so many more sellers 
 than buyers so many more people than theatre exits that 
 securities are sold at any prices obtainable. Failures result; 
 prices drop to an unnatural level; all confidence is lost, and 
 financial self-preservation is the predominating factor. 
 
 Panics are usually preceded by a period of over-speculation, 
 inflation and straining of credit. 
 
 Paper. See " Business Paper." 
 
 Paper Money. Something accepted in substitute of metallic 
 money; money founded on credit; a simple promise to pay 
 bearer in coin on demand; a non-interest-bearing note de- 
 pendent for payment upon the ability of the issuer to meet the 
 same. Treasury Notes of 1890, gold 1 and silver certificates, 
 United States Notes, etc., issued in this country, are examples. 
 The annual cost of maintenance of the paper currency issued 
 by the Government averages about two-tenths of one per cent, 
 of the amount outstanding. 2 
 
 Paper currency of all denominations and kinds outstanding 
 in the United States October 31, 1906, as furnished by the 
 Treasury Department, was $347,681,016, less $1,000,000 
 unknown, destroyed. 
 
 The first paper money issued by the United States Govern- 
 ment was authorized by Acts passed in 1861, but this kind of 
 
 1 Conant declares that these certificates " are not paper money in the 
 usual sense because they represent gold coin of full value, instead of prom- 
 ises to pay which there may not be the ability to fulfil." And he is right, 
 for, as Fiske says, " paper money is not real money and will not continue 
 current when the credit on which it was based is gone." 
 
 1 Report of the Secretary of the Treasury for 1905.
 
 294 MONEY AND INVESTMENTS 
 
 money was first issued in America when attempted by the 
 Colonies (Massachusetts first) as early as 1690. Paper money 
 is said to have been first issued in China about 1,000 years 
 before Christ. 1 (See " Convertible Paper Money " and 
 " Inconvertible Money.") 
 
 Paper Profits. Profits supposed to exist, but not yet 
 realized. A purchaser of a certain stock at $90 per share may 
 estimate that he has made a profit of $10 per share upon its 
 advancing to $100, but he cannot be certain of the fact until 
 the stock has been sold. He has only a " paper," or supposed 
 profit, until such time. 
 
 Par. State of equality; equal value; equivalence without 
 discount or premium. 
 
 The usual meaning of " par " is 100; that is, a share of 
 stock, for example, which bears on its face the statement that 
 it represents a value of $100. In practice " par " is used in a 
 broader sense, for the " par value " differs in various securi- 
 ties. Bonds are in denominations, varying from fifty cents 
 (as were once issued by a Western City) to very large 
 amounts. Pennsylvania Railroad stock represents shares of 
 $50 each; the Grand Trunk Railway Co. of Canada, 100 
 ($486.66); many manufacturing stocks are for $1,000 a 
 share; some bank shares likewise; many mining stocks repre- 
 sent shares of ten cents, twenty-five cents, one dollar, etc. 
 So " par," as used in the financial world, really means the 
 actual face value of any security, without regard to its de- 
 nomination. This is often confusing to an investor, from the 
 fact that a stock may be quoted at " ninety," which has a 
 " par value " of fifty, and which is, therefore, quoted at forty 
 dollars premium, whereas the investor, not knowing its " par 
 value," may think it below " par; " really, the stock is quoted 
 at 80% above " par," for if its parity were changed to 100 
 (or two shares made into one) its quotation of 90 would equal 
 180. This often misleads the unposted into buying a stock 
 (" because it is cheap ") thinking it is selling at a discount, 
 when it really is at a high premium. A certain one of our 
 copper stocks some years ago, with a " par value " of $25 was 
 selling at $150, and looked much cheaper to investors (or 
 speculators) at that price than at 600, which, in percentage, 
 was its real selling price. Many a purchaser of that stock 
 would have hesitated if he had realized that it had already 
 advanced five hundred per cent, in the market and was 
 selling at six times its original capitalization. A capital of 
 $5,000,000 becomes quoted at $30,000,000 in this way. Mining 
 stocks are often issued in shares of low denominations to per- 
 mit of just this deceiving of the unwary. 
 
 In buying a security, ascertain the actual par value in dollars 
 
 1 " The Work of Wall Street," by S. S. Pratt.
 
 MONEY AND INVESTMENTS 295 
 
 and cents and then calculate its selling price on the basis of a par 
 value of $100. This will show the ratio between the original 
 capitalization of the security and the quoted market value 
 of the entire issue of such security. 
 
 Another important matter to remember is the difference 
 between the rules of the different stock exchanges in relation 
 to " par." The following will give an idea as to this: 
 
 On the New York Stock Exchange, Pennsylvania stock of a 
 par value of 50 is quoted on the basis of its having a par value 
 of $100; that is, two shares are quoted for one, and all trans- 
 actions upon that Exchange, in such cases, are made on the 
 basis of par value of the stock either being 100 or a sufficient 
 number of shares put together to equal 100. Upon the Boston 
 Stock Exchange no such rule exists and quotations are based 
 upon the par value without any regard to whether it is $100, 
 more, or less. 
 
 Parent Company. A corporation controlling or owning other 
 companies. The United States Steel Corporation is a " parent 
 company." The Carnegie Company, the Federal Steel Com- 
 pany, etc., integral parts of the larger corporation, are " sub- 
 sidiary companies." 
 
 Paris Bourse. The Paris Stock Exchange. The full title is 
 " The Company of the Paris Bank, Exchange, Trade, and 
 Finance Brokers." 
 
 Paris Money. Rates asked for " call " and " time " money 
 at that point. 
 
 Paris Private Discounts. The rate at which firms or in- 
 dividuals of known good financial standing can borrow in 
 Paris, i. e. the rate at which their paper will be discounted. 
 
 Parity. Equal to; a similarity existing. The equivalent in 
 price of the same security quoted in different markets after 
 making allowance for different methods of quoting or other 
 factors. 
 
 Parity of Silver. On the present standard U. S. ratio of 
 gold to silver (1 to 15.988) pure silver must be commercially 
 worth $1 .2929 per fine ounce to be at a par with gold. $1 .2929 
 is, therefore, called the " parity." 
 
 Par of Exchange. The relative value of the money in one 
 country to that of another, taking gold bullion of an agreed 
 " fineness " as a basis upon which to figure. As between this 
 country and Great Britain, $4.866-|- is taken as the " par of 
 exchange," by which is understood that the English " pound 
 sterling " is the equivalent of $4.866-f- in United States gold 
 coin. In other words, that the bullion value of our gold dollar 
 and the English gold " pound " is as $1. to $4.866-j-. 
 
 Par of Sterling Exchange. The equivalent of the pound 
 sterling (1) in United States money is $4.866+ ($4.867).
 
 296 MONEY AND INVESTMENTS 
 
 Parrot. Parrot Silver & Copper Co. 
 
 Participating Bond. One which, while secured by a mort- 
 gage on a specific property, provides that the holder shall 
 share in the profits accruing to the issuing corporation through 
 ownership of the shares in other corporations, and which may 
 or may not be additionally secured by the deposit of such 
 securities. A good illustration is that of the Oregon Short 
 Line 4% Participating Gold Bonds, which were issued in 1902. 
 These were a direct obligation of the Oregon Short Line 
 Railroad Company, but were additionally secured by the 
 deposit of the stock of the Northern Securities Co., par for 
 par, to the amount of the bonds issued. The bonds themselves 
 were to receive 4% per annum from August 1, 1902, until 
 February 1, 1904, on which date, and on the first day of 
 February of each subsequent year, they were to receive, in 
 addition to the regular payment of 4% per annum, a pro 
 rata share of any amount received by the company the 
 previous year as dividends exceeding 4% on the bonds out- 
 standing on the collateral deposited with the trustee as 
 security against these bonds. This issue has been called for 
 payment. 
 
 Participating Policy. A participating life insurance policy 
 is one under which the holder shares in any surplus earnings 
 of the company, receiving them in the form of cash dividends, 
 or in additional insurance, at the option of the insured. 
 
 Parti-Mortgage Receipt. A certificate issued by a company 
 holding the papers in a mortgage showing the holders' pro- 
 portionate ownership in the loan which the mortgage secures. 
 This is done when a mortgage-note is of such large amount 
 that to find one purchaser for the whole would be difficult or 
 impossible. 
 
 Parting. The separation from bullion of any silver which it 
 may contain, so that the gold and silver may be obtained in 
 the form of separate bars. 
 
 Partnership. See " Firm." 
 
 Partnership Agreement. See " Firm." 
 
 Part-Paid Stock. Stock which the owners, as shown upon 
 the stock books of the company, are liable for further pay- 
 ments; or stock upon which the subscribers have not paid 
 their subscriptions in full. 
 
 Par Value. See " Par." 
 
 Pass a Dividend. A dividend is passed when it is not paid at 
 the regular expected time; when a corporation ceases paying* 
 dividends, without a formal vote so to do. 
 
 Pass-Book. See " Bank-book." 
 
 Passenger Density. The total number of passengers which a
 
 MONEY AND INVESTMENTS 297 
 
 railroad carries one mile divided by the number of miles of 
 line operated. (See " Freight Density.") The Interstate 
 Commerce Commission concisely expresses the " passenger 
 density " as the " passengers carried one mile per mile of line." 
 
 Passenger-Mile. The movement of one passenger one mile. 
 It is taken as the unit of cost and service in passenger trans- 
 portation. (See " Ton-Mile.) 
 
 Passenger-Mile Cost. This is the cost of carrying one pa- 
 senger one mile. (See " Ton-Mile Cost.") 
 
 Paul. Chicago, Milwaukee & St. Paul Ry. Co. 
 
 Pawn. In Great Britain the word is used as the equivalent 
 of our depositing collateral as security for a loan: they 
 " pawn " the security; we " pledge " it. We apply the word 
 " pawn " only in the sense of a transaction with a " pawn- 
 broker." 
 
 Payable in Exchange. If a draft or other instrument is made 
 " payable in exchange " it means that it calls for payment in 
 funds of the place where issued; that is to say, if a man in 
 New Orleans draws a draft on New York " payable in ex- 
 change " it means that the one against whom it was drawn 
 in New York must pay it with a check (exchange) on New 
 Orleans, in other words in New Orleans " funds." (See 
 " Cashier's Check.") 
 
 Payable in Gold. Bonds, notes, etc., in which the borrower 
 agrees to pay the principal or interest, or both, as the case may 
 be, in gold. In this country, the wording of such a promise 
 usually reads " payable in gold coin of the United States of 
 the present standard of weight and fineness." Such wording 
 is desirable, as it provides that the borrower shall pay in 
 coined gold of the United States, fulfilling the requirements of 
 the standard coining laws as at present enacted, eliminating 
 the danger arising from any future laws passed of lesser con- 
 servative nature during the life of the investment. (See 
 " Standard of Weight and Fineness.") 
 
 Payable in Lawful Money. Bonds, notes, or other evidences 
 of indebtedness, in which the borrower agrees to pay principal, 
 or interest, or both, as the case may be, in " lawful money " 
 of the United States; money which the Government declares 
 to be " legal tender " (to which subject refer). 
 
 Payable Only through the Clearing-House. After the 
 reader has familiarized himself with " Clearing-House Loan 
 Certificates," and the reasons for their issuance, it will be 
 understood that the banks in times of financial distress have 
 need to hold on to some actual cash. As a result, in such 
 instances, checks are sometimes accepted in lieu of cash, such 
 checks being stamped: " Payable only through the Clearing- 
 House," " Through the Clearing-House," or with words
 
 298 MONEY AND INVESTMENTS 
 
 having similar import. Banks being legally required to pay 
 checks on demand in money which is " legal tender," it is but 
 a matter of accommodation for a person to accept a check 
 stamped as above, but by so doing he satisfies the law as 
 regards " legal tender " payments; although, by insisting, he 
 could compel the bank to pay him the cash, and for such 
 emergencies some money must be actually retained in the 
 vaults of the institution. 
 
 If the reader will understand by referring to " Clearing- 
 House," the methods by which the differences between banks 
 are there adjusted, it will be seen that by pursuing the method 
 of not paying the check at the time of presentation, but by 
 postponing its payment until the " clearing-house " hour of 
 the following business day, that the money necessary to effect 
 its settlement at least once would not be called for, and that 
 possibly no money at all would be needed. The differences 
 between the banks ultimately adjust themselves through the 
 machinery of the clearing-house. 
 
 Payable to Bearer. A negotiable instrument, such as a 
 check, may be drawn so as to be good in the hands of the 
 bearer without regard to the person so long as the bearer is a 
 bona fide holder. Such checks may be passed from hand to 
 hand without indorsement. (For further information on this 
 subject refer to " Check; " also see next subject.) 
 
 Payable to Order. A negotiable instrument such as a check 
 is drawn payable to some person or to the order of such person; 
 that is, for example: " Pay to the order of Thomas West,'' 
 or " Pay to Thomas West or order." Such an instrument 
 must be " indorsed " (see " Indorse ") to be good in the 
 hands of other than Thomas West. (For further information 
 see " Check.") 
 
 In order that an instrument may be negotiable it must be 
 made " to order " or " to bearer; " that is, if drawn payable 
 simply to Henry Adams, he has no right to transfer it, and it 
 is payable to him only. Other words of similar import may be 
 used, but they must be the equivalent of " to order," or " to 
 bearer " to convey the power of negotiability. 
 
 Payable with Exchange. When a draft has appended the 
 words " with exchange " or " payable with exchange " the 
 person paying the same is understood to pay the cost of the 
 collection as well as the amount of the face of the draft. 
 
 Pay-Day. The last of the " Fortnightly Settling-Days " of 
 the London Stock Exchange. (See the subject in quotations.) 
 Also called " Account-Day " and " Settlement-Day." This 
 is the settling-day proper; when the accounts are settled 
 between the brokers and bankers for securities purchased, 
 and delivery is made of the same; or, providing delivery is
 
 MONEY AND INVESTMENTS 299 
 
 not made, but the securities are carried over to the next 
 " settlement," the differences required to balance accounts 
 are adjusted. In short, transactions are brought either to a 
 final adjustment or so settled as to carry them forward to the 
 next fortnightly account. 
 
 Payee. The person (firm or corporation) to whom a note, 
 draft, etc., is made payable. In the case of a note, the 
 " payee " is the one to whom the promise to pay is made. 
 (See " Draft.") 
 
 Payer. The person (firm or corporation) who pays a draft, 
 note, or similar paper. 
 
 Paying Teller. See " Teller." Also called the " First 
 Teller." 
 
 Payment Bill. Same as a " Bill for Payment." 
 
 Payment Stopped. See " Stop Payment." 
 
 Pegged. A security is " pegged " when one or more persons 
 so control the buying or selling that they are able to prevent 
 the prices rising or falling below a certain fixed point. The 
 ABC of Wall Street says: " A stationary market, neither 
 declining nor advancing, and held by buying or selling orders, 
 is said to be pegged." 
 
 Pence. The plural of " penny." 
 
 Pennsylvania Interests. Certain corporations directly or 
 indirectly in the control or partial control of the Pennsyl- 
 vania R. R. Co., or its subsidiary companies, some of which 
 are the Baltimore & Ohio, the Long Island, the Norfolk & 
 Western, the Pittsburg, Cincinnati, Chicago, & St. Louis, and 
 the Cleveland & Pittsburg R. R. Companies. The Pennsyl- 
 vania R. R. Co. has already sold a portion of its Baltimore & 
 Ohio and Norfolk & Western holdings, and it is thus showing 
 a policy of severing its interest in other or competing 
 lines. 
 
 Penny. A coin of Great Britain equal to l-12th of an Eng- 
 lish shilling, or about two cents United States money. We 
 also call our own one cent piece by the same name. 
 
 Per. The Latin for by, as " per annum," meaning " by the 
 year," etc. 
 
 Per Capita Circulation. See " Money Circulation." 
 
 Per Capita Debt. On June 30, 1906, the per capita debt of 
 the United States was $11.41. 
 
 Per Cent. (Per Centum). Meaning, literally, by the hundred, 
 but used, in practice, as the equivalent of " hundredth." 6% 
 means six one-hundredths or $6.00 on the $100. 
 
 Per Cent. Grade. See " Grade." 
 
 Per Pro (or Per Procuration). A signature by an agent
 
 300 MONEY AND INVESTMENTS 
 
 having limited authority usually contained in a power of 
 attorney. A letter signed, 
 
 Per pro White & Co., 
 
 Charles Blacl^ 
 or 
 
 James White & Co., 
 
 per pro Charles Black, 
 
 is an example. The latter is the more correct method of 
 signing, although the former is in more common use among 
 merchants. This phrase is sometimes still further abbreviated 
 as " p. p." 
 
 A signature of this kind is considered of itself an announce- 
 ment of limited authority, a statement of the limitations of 
 which will be furnished on request. Persons accepting in- 
 struments signed in this manner without investigating the 
 authority of the agent signing them do so at the risk of after- 
 wards discovering that the agent has exceeded his authority. 1 
 
 Personal Check. A check drawn by a depositor, as distin- 
 guished from a check drawn by a bank. Sometimes used to 
 indicate a check drawn against a " country bank." 
 
 Personal Property. All movable property; horses, tools, 
 furniture, " chattels " of all kinds (crops of annual planting, 
 such as potatoes, are usually treated as " personal property," 
 but would pass with the sale of the land if growing thereon), 
 securities, etc., as distinguished from " real property," to 
 which refer. 
 
 Personal Security. Any property such as described under 
 " personal property " when given to secure the payment of a 
 debt, or the fulfilment of a promise. 
 
 Peseta. The monetary unit of Spain, and equivalent to the 
 French " franc," or $.193 United States money. 
 
 Peso. The gold " peso " is the unit of value of the Philippine 
 Islands, and contains 12 9-10 grains of gold, 9-10 fine. Silver 
 " pesos," of the weight of 416 grains and of the standard, by 
 weight, of 900 parts pure metal and 100 parts copper alloy, 2 
 have been coined for current use, exchangeable on the basis 
 of the " gold exchange standard " to which subject refer 
 
 1 " A signature by procuration operates as notice that the agent has but 
 a limited authority to sign and the principal is bound only in case the agent 
 in so signing acted within the actual limits of his authority." Revised 
 Laws of Massachusetts, Chapter 73, Section 38. 
 
 2 In December, 1906, owing to the rise in the market price of silver, the 
 silver peso was changed so as to contain 800 parts of pure metal and 200 
 parts of copper alloy, and of the weight of 308.64 grains. This was neces- 
 sitated from the fact that the pure metal under the previous standard was 
 worth more in the market than the face value of the coin, making it an 
 object, therefore, to melt up the coins and sell the silver as bullion.
 
 MONEY AND INVESTMENTS 301 
 
 at the rate of two silver " pesos " for one United States gold 
 dollar. They are legal tender for all debts, public and private, 
 unless otherwise specifically provided in the contract (except 
 such as were contracted prior to December 31, 1903) in the 
 Philippine Islands. Subsidiary silver coins are legal tender 
 there to the amount of $10. (See " Centavos.") 
 
 " Peso " is also the monetary unit of the Argentine Repub- 
 lic, being equivalent to $.965 United States money. Also 
 Guatemala, Honduras, Nicaragua, and Salvador, being in 
 each case equivalent to $.478 United States money. 1 Of 
 Chile, being equal to $.365, and of Uruguay, being equal to 
 $1.034 United States money. 
 
 The Mexican dollar is also called a " peso." 
 
 Petty Cash Book. In bookkeeping, a book in which small 
 items of cash expenditures, postage stamps, telegrams, and 
 the like, for example, are entered, to be later summed up and 
 entered in another book as one item. 
 
 Pf. (or Pfd.). Preferred. 
 
 Pfennig. One one-hundredth of the German " mark," 
 which is their monetary unit. The pfennig is equivalent to 
 nearly one-fourth of a United States cent. 
 
 Philippine Bonds. The bond issues of the Philippine Islands 
 have been by authority of Congress. The United States, how- 
 ever, is not legally responsible for their payment, they being 
 obligations of the Philippine Islands only. By an Act of Con- 
 gress these bonds are exempt from taxation throughout the 
 United States. 
 
 Phcenix. Phcenix Consolidated Copper Co. 
 
 Piaster. The unit of the Turkish monetary system, and 
 equivalent to $.044 United States money. The Egyptian 
 " piaster " is one-hundredth part of their pound, and is 
 equal to $.04943 United States money. 
 
 Pie. See India Money Table under " Rupee." 
 
 Pig Iron. This is the iron as it is extracted from the ore. 
 As it comes from the blast-furnaces it is run into moulds in 
 sand, which produces small masses of convenient size for 
 commercial use. 
 
 Piker. One who trades in very small lots of securities. 
 
 Pinch. " Money pinch; " a sudden rise in money rates; 
 difficult to borrow, and then only at high rates. A " pinch " 
 rather implies a short duration of such conditions, however, 
 and not very serious. 
 
 1 These last four countries are on a silver basis. Therefore, the value 
 as given here, which is taken from the Circular issued by the Director of 
 the Mint, April 1, 1906, is subject to fluctuation with the market price 
 of silver.
 
 302 MONEY AND INVESTMENTS 
 
 Pinched Out. A vein of gold, for illustration, is " pinched 
 out " when it narrows up to a non-paying degree or disappears 
 entirely. 
 
 Pine Tree Money. During the last half of the 17th century 
 silver coins of the denomination of a shilling and under were 
 coined in Massachusetts, having upon their face a device of a 
 pine tree. At first the larger denominations were referred to 
 as the " Boston Shilling " or the " Bay Shilling," and later 
 were known as the " Pine Tree Shilling." 
 
 Pine Tree Shilling. See " Pine Tree Money." 
 
 Pinholed. Certificate of stock having had a memorandum 
 (or many of them) pinned to it. The more holes the greater 
 the number of times it has probably passed from hand to hand. 
 
 Pipe-Lines. A system of piping, mostly underground, 
 through which oil is pumped in order to transfer it from the 
 producing region to the storage-tanks at either a distributing 
 market or a refinery. Some of the " pipe-line " systems cover 
 hundreds of miles of territory, and permit the transportation 
 of oil at a low cost. The " Rate Bill," which has recently 
 passed Congress, includes such " pipe-lines " as these under 
 the heading of " Common Carrier." 
 
 Pit. In the Chicago Board of Trade there are four portions 
 of the building, which are set aside exclusively for dealing in: 
 First, grain; second, wheat; third, oats; fourth, provisions. 
 These are called the " Pits." Each one is in charge of an 
 official of the Board of Trade, who notes the changes of 
 prices as they occur, and who also notes all transactions which 
 are settled on the basis of the official price at the hour in which 
 they occur. The " Pit " is equivalent to the " Post " in the 
 New York Stock Exchange. 
 
 Pit Traders. These are to the Chicago Board of Trade what 
 the " room traders " are to the stock exchanges; i. e. brokers 
 who trade in grain, provisions, etc., for their own accounts, 
 and who do so upon the " Board of Trade." 
 
 Place. To place an issue of bonds is to find a market for it; 
 to sell it. 
 
 Plain Bond. A bond not secured by mortgage; practically 
 the same thing as a " debenture bond " or a " certificate of 
 indebtedness." It would not be supposed to have a " sinking 
 fund." 
 
 Plant. All the fixed part of a concern (manufacturing, 
 transportation, etc.) except its land; the buildings, machinery, 
 etc. 
 
 Plugged. A Chicago Board of Trade term indicating a 
 certain attempt at deception in the sale of grain. 
 
 Plum. " The stockholders received a plum." This is
 
 MONEY AND INVESTMENTS 303 
 
 about the same idea as " cutting a melon; " an extra, un- 
 expected, or unusually large profit. 
 
 Plunge. To speculate in a reckless manner. 
 
 Plunger. A reckless speculator; one who takes big risks 
 for big gain. 
 
 P. Mail. Pacific Mail Steamship Co. 
 
 Point. One per cent. A security rises three points when it 
 advances three per cent, in price. 
 
 In coffee trading, fluctuations are recorded on the basis of 
 1-20% per pound, equalling one " point." In the same way, 
 in cotton a cent is divided into 100 " points " and a decline 
 of of a cent per pound is equivalent to 25 " points " or $1.25 
 on each bale. 
 
 Pointer. In financial slang, this means the same as a " tip." 
 (See that subject.) 
 
 Pool. A number of persons uniting or joining their interests 
 for the purpose of buying or selling and increasing or depress- 
 ing the price of one or more securities, and who agrees to 
 divide the loss or profit. It is probable that " pools " have a 
 greater direct influence upon the stock market in general than 
 any other single factor. A " clique " is much the same 
 thing. 1 (See " Clique.") 
 
 Also, an agreement among competitors fixing a monopolistic 
 price, with a division of the territory, insuring practically 
 complete monopoly in certain sections for each party to the 
 agreement; an agreement among competitors so as to limit 
 production, prevent competition by the control of both mar- 
 kets that of the raw as well as the finished product an 
 agreed selling price for the output, and a division of the 
 selling territory, while outwardly keeping up the appearance 
 of active rivals. In a few words, a means to prevent competi- 
 tion, and a division of the business for mutual profit. 
 
 Another form of " pool " is an agreement between two or 
 more railways as to a division of earnings, so that they can 
 resist the temptations of the big shippers, and be insured a 
 fair share of the transportation business at stable rates, which 
 will apply without partiality to all patrons. 2 
 
 P. 0. R. Express or freight payable to the transportation 
 
 1 A recent decision in the suit of Franklin, Scott & Co., stock brokers, 
 against certain others, participants in a " pool," obligates any member 
 of a " pool " for the full liability of whatever the " pool's " losses may be, 
 irrespective of whatever his interest in the " pool " may be. 
 
 2 Johnson in his " American Railway Transportation " says, " The 
 pools were agreements among railroads whereby their competitive 
 traffic or the receipts from that traffic were divided among the companies 
 according to stipulated ratios. Arrangements for the division of the busi- 
 ness were called traffic pools, those for the distribution of the receipts 
 money pools."
 
 304 MONEY AND INVESTMENTS 
 
 company on receipt of the goods by them. The opposite to 
 " collect." 
 
 Pork. The trading unit for pork is 250 barrels. The rate of 
 commission charged on the Chicago Board of Trade for the 
 purchase or sale, or for the purchase and sale of mess pork, 
 in lots of 250 barrels, or multiples thereof, is 5 cents per barrel. 
 
 The usual " margin " required is $1 per barrel. 
 
 Port of . Bonds. Two notable examples are issues 
 
 by the Port of Portland, Oregon, and the Port of New Orleans, 
 La. A description of the former will suffice. It embraces the 
 city and much adjacent territory; has its own officials, and 
 creates its own indebtedness, for which payment all the 
 taxable property in this distinct municipality is held. The 
 object for which it was created was for the purpose of ob- 
 taining suitable ways for navigation at Portland, and between 
 that city and the sea. 
 
 Post. In most stock exchanges there are set aside certain 
 places (posts set on the floor) where some of the most active 
 and important securities dealt in upon the exchange are bought 
 and sold. Such designated spots are known as the " Sugar 
 Post," for example, where transactions in the shares of the 
 American Sugar Refining Co. are carried on. These corre- 
 spond to the " Wheat Pit," " Oats Pit," " Provision Pit," etc., 
 of the Chicago Board of Trade. 
 
 In bookkeeping to " post " is to make entries in the ledger 
 from accounts previously entered in other books, such as the 
 journal or cash book. When an account has been " posted " 
 in the ledger, it will show a true state of its condition. 
 
 Postal. Postal Telegraph-Cable Co. 
 
 Postal Money-Orders. The following is from the printed 
 regulations as issued by the United States Post-Office De- 
 partment: 
 
 Application. The process of obtaining a money-order 
 is to fill in a simple form, called an " application," which form 
 is furnished free of charge, and to present such application 
 at the money-order branch of the post-office, where, upon 
 payment of the sum to be sent and of the small fee exacted, 
 a money-order will be drawn for any desired amount (but no 
 single order for more than $100), payable at any money-order 
 office in the United States designated by the applicant. When 
 a larger sum than $100 is to be sent additional orders may be 
 obtained. 
 
 At all of the larger post-offices, those of the first, second, and 
 third classes, and at many of the smaller ones, International 
 money-orders may also be obtained, payable in almost any 
 part of the world. 
 
 Identification. The person who presents an order for
 
 MONEY AND INVESTMENTS 305 
 
 payment must be prepared to prove his identity. In case of 
 payment to the wrong person, the Department will see that the 
 amount is made good to the owner, provided the wrong 
 payment was not brought about through fault on the part of 
 remitter, payee, or indorsee. 
 
 Power of Attorney. A money-order may be paid upon a 
 written order or power of attorney from the payee, as well as 
 upon his indorsement. 
 
 Indorsements. More than one indorsement on a money-order 
 is prohibited by law. One or more additional names, however, 
 may be written upon the back of orders for purpose of identi- 
 fication of payee, or guaranty of genuineness of signature of 
 the payee or indorsee. But if the holder is the second or any 
 subsequent indorsee, to obtain the amount he must surrender 
 the order and make application for a duplicate or a warrant to 
 be issued in place thereof by the Department. The stamp 
 impressions which banks ordinarily place upon money-orders 
 left with or sent to them for collection are not regarded as 
 indorsements transferring ownership of the orders or within 
 the meaning of the statute which prohibits more than one 
 indorsement. 
 
 Repayment. A domestic order may be repaid at the office 
 of issue within one year from the last day of the month of its 
 issue. 
 
 Invalid Orders. An order which has not been paid or repaid 
 within one year from the last day of the month of its issue 
 is invalid and not payable. The owner, however, may obtain 
 payment of the amount thereof by making application, 
 through the postmaster at any money-order office, to the 
 Department, for a warrant for the said amount. The invalid 
 order, if in the owner's possession, must be forwarded with the 
 application. 
 
 Lost Orders. In all cases of lost orders, the remitter, payee, 
 or indorsee may make application, through either the office 
 at which the original was issued or the office on which the 
 original was drawn, for a duplicate to be issued in lieu thereof. 
 
 No charge is made for the issue of a duplicate order, nor for 
 the issue of a warrant for the amount of an invalid order. 
 
 Fees. For domestic money orders 3 cents to 30 cents, and 
 these rates apply to orders payable in Canada, Cuba, New- 
 foundland, the Philippines, Tutuila, and at the U. S. Postal 
 Agency at Shanghai (China) ; for international money-orders, 
 8 to 50 cents, except to the 18 following countries: Apia, 
 Cape Colony, France, Germany, Great Britain, Greece, Hon- 
 duras (British), Republic of Honduras, Hongkong, Italy, 
 New South Wales, Portugal, Queensland, Russia, Salvador, 
 South Australia, Tasmania, Victoria, to which countries the fee 
 is from 10 cents to $1.
 
 306 MONEY AND INVESTMENTS 
 
 Postal Savings Banks. A good illustration of the postal 
 savings bank is a system in vogue in the Philippines. It is set 
 forth by an Act passed by the Philippine Commission on May 
 24, 1906, and under which many banks have been established. 
 It seems that these institutions are divided into three classes. 
 At those of the first class, deposits are received and withdraw- 
 als permitted to any amount not exceeding, of course, the 
 amount of deposit. In the case of the second and third 
 classes, a limitation is placed on amounts which it is permis- 
 sible to deposit or to withdraw at any one time; and also 
 upon the aggregate deposits which may be made during any one 
 month to the credit of any single account. Banks of the third 
 class receive deposits only in the form of postal savings bank 
 stamps; while in the first and second classes both currency 
 and stamps are received on deposit. 
 
 In the event of credits or withdrawals on the part of chari- 
 table or benevolent associations, the maximum amount per- 
 mitted is double that of other depositors. 
 
 These postal savings bank stamps, so called, are on sale at 
 all such banks in the Islands, and are in denominations of 5, 
 10, and 20 centavos (one centavo equals about one-half of our 
 cent). The purchasers of these stamps are furnished, without 
 charge, cards arranged with ten or twenty spaces each, bearing 
 a distinctive number and of three different colours; this last 
 for the three denominations of stamps which are to be pasted 
 thereon. When these stamp cards are filled out, they may be 
 deposited in any postal savings bank in the Islands in lieu 
 of money equivalent to their face value. When such stamps 
 are deposited, they are cancelled and an entry is made to the 
 depositor's credit, but if cancelled they are redeemable at 
 face value in postage stamps. One advantage is that one 
 may make deposits to the credit of, or withdrawals from, 
 his account at any of the postal savings banks in the Islands. 
 Deposits in postal savings banks are not subject to taxation 
 in the Philippines, either by provincial, municipal or Insular 
 Government. 
 
 From the foregoing an idea of the principle of this system 
 of savings may be gathered. The plan is not a new one, 
 the British Post Office Savings Bank system having been 
 started in September, 1861, for the general purpose of en- 
 couraging savings on the part of the poor. From its very in- 
 ception it appears to have been popular, for, in the first year 
 there were 453,634 depositors, with over $6,000,000 deposited. 
 This system has grown, until, at the beginning of the calendar 
 year 1906 the deposits had reached the immense total of 
 $740,248,862. At present, the management of this Savings 
 Bank System results in a small loss to the Government, but
 
 MONEY AND INVESTMENTS 307 
 
 it is expected that before long the system will pay its 
 way. 1 
 
 Post-Bills. Issued by the Bank of England for not less than 
 10, drawn payable seven days after sight, and " accepted " 
 at the time of issue. These first came into use Dec. 14, 1738, 
 the intent being to foil the highway robbers, as the interval be- 
 fore payment would be due might give time to stop pay- 
 ment. 2 
 
 Post Dated Check. One dated ahead. No bank should pay 
 a check earlier than the date entered upon it. 
 
 Posted Rates. Bankers dealing in foreign exchange post a 
 daily table of rates (or prices) for exchange, which is for use 
 of the general public, but may differ from " actual rates," 
 which are private terms made to brokers or other buyers for 
 large sums and somewhat less than the " posted rates." 
 " Posted rates " are sometimes referred to as " nominal rates/' 
 
 Post-Office. A nickname for People's Gas Light & Coke 
 Co.; the " ticker " abbreviation being " P. O." 
 
 Pound. The English 3 unit of value (formerly the shilling 
 was the unit) equal to $4.866| in United States money; the 
 sign for it being . The adding of the word " sterling " to 
 " pound," is to designate a pound in money from a pound 
 in weight. Also the monetary unit of Egypt, equivalent to 
 $4.943, and written thus: E. 
 
 Pound Sterling. See " Pound." 
 
 Power Company Bonds. Within the last few years this 
 class of bonds has come into considerable prominence. The 
 ability to economically transmit electrical energy a great 
 distance to generate power is the underlying factor in this 
 industry. With a good water-power, and a demand for power 
 at satisfactory prices within a reasonable distance of the 
 property, there should be little question as to the success of 
 these companies as a class. A low cost of operating has re- 
 sulted in large profits in many instances. Far-seeing finan- 
 ciers look forward to a time when either the price or scarcity 
 of coal will create a tremendous demand for electricity 
 generated by water-power, and there is a growing belief that 
 the better selected and located of such powers will become 
 very valuable. The rapid inroads upon Niagara Falls for such 
 a purpose, and the enormous amounts of money which have 
 already been spent there in development of power companies, 
 is an indication of this belief. 
 
 1 This information upon the British Post Office Savings Bank System 
 was furnished the author by Albert Halstead, United States Consul, at 
 Birmingham, England. 
 
 J J. W. Gilbart. 
 
 * Gold is believed to have been first coined in England in 1344.
 
 308 MONEY AND INVESTMENTS 
 
 In selecting power company bonds as an investment, the 
 usual facts as regards class of men behind the enterprise, 
 management, contracts for business, etc., should be taken into 
 consideration. But the main facts to consider are: The suffi- 
 ciency of water-power for all time to come, and a plentiful 
 water supply throughout the year; the location of the plant 
 itself near enough to industries of a stable character to 
 create a permanent demand for the electricity generated; 
 the likelihood of competition from other water-powers in the 
 same section; if the water-power is not owned, the right to 
 operate same must endure for a longer period than the life 
 of the bond issue; and, finally, the climatic conditions under 
 which power is generated and distributed, and the cost of fuel 
 in that particular section, should be carefully studied. 
 
 To illustrate with regard to this last: In California, the 
 price of coal is high, likewise fuel oil, except in sections fa- 
 vourably located as regards the oil wells. That State is practi- 
 cally free from thunder and lightning, and many of the plants 
 are situated in sections of almost perpetual summer, all of 
 which is conducive to cheap maintenance. 
 
 In some of the mining regions of Mexico most of the fuel is 
 brought on the backs of donkeys, making the cost of generating 
 steam power very great (about $200 per horse-power per 
 year). Many water-power companies can sell power very 
 profitably at $25 per horse-power. 
 
 It does not follow that the conditions mentioned in the last 
 two paragraphs are essential to the successful conduct of such 
 a company, but are some of the things favourable to success. 
 
 Other facts conducive to economical management in the 
 operating of enterprises of this nature are, that they are 
 naturally free from the dangers of anti-trust legislation, 
 labour disputes, devastating fires, catastrophies, such as 
 wholesale railroad accidents, and abnormal rises in the cost 
 of raw materials, some, or all, of which factors may have to 
 be considered in other industries. 
 
 Inasmuch as " power bonds " are a somewhat new security 
 upon the market the investor has been able to obtain profitable 
 interest returns by purchasing them, but there is very little 
 question as to the extremely safe character of many of these 
 issues. 
 
 Power of Attorney. In financial matters, a written or printed 
 paper signed and witnessed or acknowledged before a justice 
 of the peace given by one person to another, whereby the 
 latter receives authority to sign a paper or document, etc., 
 in the former's name and stead, such signature having the 
 same force and value as if signed by the person delegating the 
 authority. " Powers of attorney " are much used in the 
 transfer of stock certificates.
 
 MONEY AND INVESTMENTS 309 
 
 It is necessary that a " power of attorney," in order to 
 confer any authority upon a person, must specify the powers 
 conferred. The language used may be, and frequently is, 
 general and somewhat vague, in which case, it is a question 
 of construction of the instrument whether any particular 
 power has been conferred, but a " power of attorney " in 
 order to constitute a person an attorney to perform any 
 particular act must have some language specifying the powers 
 conferred and which the attorney may exercise on behalf of 
 his principal. 
 
 A common form of " Power of Attorney " used in the 
 transfer of stocks: 
 
 all itn fji> ti)tsr 
 
 T# A T - - 
 
 for value received, have bargained, sold, assigned and transferred, and by 
 these presents do bargain, sett, assign and transfer unto . 
 
 Shares of the STOCK of the 
 
 standing in name on the books of the said. 
 
 represented by certificate Xo 
 
 And do hereby constitute and appoint 
 
 true and lawful attorney, IRREVOCABLY, for and 
 
 in name and stead but to use, to sell, assign, transfer, 
 
 and make over all or any part of the said and for that purpose to 
 
 make and execute all necessary acts of assignment and transfer thereof, and 
 to substitute one or more persons with like full power, hereby ratifying and 
 
 confirming all that said attorney _or 
 
 . substitute or substitutes shall lawfully do by virtue hereof. 
 
 In Witness whereof, have hereunto set. 
 
 hand and seal at the 
 
 day of .190. 
 
 Signed, Sealed and Delivered in the presence of
 
 310 MONEY AND INVESTMENTS 
 
 Power of Sale. A clause inserted in a mortgage note or in 
 any other form of indebtedness which gives the lender the 
 right to sell the property securing the debt, if not paid as 
 specified. Wills sometimes give " power of sale " to executors, 
 that property may be converted into cash. 
 
 P. P. These letters are in place of " pro procuration," to 
 which refer. 
 
 PR. The " ticker " abbreviation for " preferred." 
 
 Pref. Preferred. 
 
 Preference Bonds. Practically the same as " income 
 bonds." 
 
 Preference Income Bonds. See " Income Bonds." 
 
 Preference Shares. The term used in England as the 
 equivalent of the American " preferred stock." 
 
 Preferred Creditor. One who is legally entitled to an ad- 
 vantage over other creditors; entitled to payment of his claim 
 in full before other creditors, not preferred, are paid anything. 
 
 Preferred Ordinary Stock. This will be understood by 
 reading " Preferred Shares (or Stock)." 
 
 Preferred Shares (or Stock). In Great Britain " ordinary 
 stock," so-called, is equivalent to our " common stock." 
 When, however, the " ordinary stock " is divided in two 
 parts, the first half is referred to as " preferred " and the 
 second half .as " deferred; " also mentioned as " B " and " A " 
 stocks respectively. As a rule, the former not only ranks 
 ahead of the latter as far as the dividend is concerned, but 
 shares equally with it in the case of any winding up of the 
 company. 
 
 When a dividend is declared, it is the common practice to 
 declare it on the " ordinary stock," and then to state the 
 relative amounts for the two classes. 
 
 These stocks are not, as a rule, " cumulative." Those which 
 are " cumulative " are known as " non-contingent preference 
 stocks." 
 
 " Preferred stock," in England, is not the equivalent of 
 the American " preferred stock," for explanation of which 
 see next subject; "preference shares" being the English 
 equivalent. 
 
 Preferred Stock. A stock which has a claim upon the prop- 
 erty and earnings of a corporation prior to some other stock; 
 that is, it comes after the bonds and floating debt, if any, 
 but ranks ahead of what is known as " common stock." 
 When a " preferred stock " is created, it naturally follows 
 that it precedes another issue, called " common stock." 
 The first mentioned stock is about what its name indicates, 
 it has preference over the common. The form of this pref-
 
 MONEY AND INVESTMENTS 311 
 
 erence differs in various corporations, but, as a rule, in case 
 of the winding up of the corporation, the preferred stock- 
 holders have the right to be paid out of the assets before the 
 common stockholders receive anything. The conditions as 
 to the payment of dividends on " preferred stocks " also vary. 
 In some cases, a dividend must be paid if earned; in other 
 cases, it must be paid before any dividend upon the " common 
 stock." It may be "cumulative" (see "Cumulative") or, 
 after the common stock has received an equal amount, both 
 may share alike and so on. The most common way, however, 
 is to give the " preferred stock " the first claim upon dividends 
 up to a certain per cent. The best example of this is in the 
 case of the American Sugar Refining preferred stock, which is 
 entitled to receive 7% per annum before the common 
 receives any. In this case, the earnings of the company are 
 so large that the common stock, in actual practice, receives a 
 higher rate of dividend than the " preferred," and sells in the 
 market at a higher price. Most common stocks, however, 
 sell at a lesser price than the preferred. 
 
 There are numerous cases of " first " and " second pre- 
 ferred " issues, the nature of their preference being somewhat 
 different from each other, but both have preference over the 
 common shares. Sometimes " class A " and " class B " pre- 
 ferred stocks are issued, being simply another nomenclature 
 for " first " and " second preferred." 
 
 Preferred shareholders, usually, but not always, have the 
 right to vote at stockholders' meetings. In some instances 
 the voting right per share is greater on the preferred than upon 
 the common stock. 
 
 Prem. Short for " premium." 
 
 Premium. The percentage or price of a security in excess 
 of its par or face value. Taking the face value as $100, a share 
 of stock selling at 105 would be selling at 5%, or $5 per share, 
 premium. The par values of various securities differ, how- 
 ever (see " Par"), therefore it does not argue that if a share 
 of stock is quoted at 150 it is selling at a premium, for if, by 
 chance, the face value of that share happens to be $500, it 
 would really be selling, not at a premium at all, but at a 
 material discount. There are exceptions to this, for which 
 see reference to the stock exchange rules under " Par." 
 
 Premium has other meanings, for which see " Agio " and 
 " Bonus," by the use of either of which a premium may be 
 understood. Gold is at a premium when in order to obtain a 
 dollar in gold it is necessary to give more than a dollar in 
 some other money; at least, gold would be selling at a pre- 
 mium in relation to that particular money. During 1893 
 there was a " premium on currency; " currency was so scarce 
 that in order to obtain enough for most pressing needs, cer-
 
 312 MONEY AND INVESTMENTS 
 
 tified checks were given at the rate of $104 Jor $100 in 
 currency. Currency was at 4% " premium." 
 
 The yearly payments upon life insurance policies are known 
 as " premiums." 
 
 The price paid for an " option " (see " Options ") is called 
 " premium." 
 
 Premium Bonds. The City of New Orleans has bonds out- 
 standing known by the above title. It seems that they are 
 of a small denomination and the interest upon them is not 
 paid until they are drawn for redemption by lot; then the 
 principal, together with simple interest from July, 1875, is 
 paid the holder. There are also prizes which amount to about 
 $100,000, which are likewise annually distributed among 
 those whose bonds are redeemed. These prizes, or premiums, 
 range from $20 to $5,000. The United States Government 
 has recently looked upon this as a lottery scheme, and has 
 issued an order barring such bonds from the mail. 
 
 Premium of Exchange. See " Exchange." 
 
 Presentment. See " Protest." 
 
 Present Standard of Weight and Fineness. See " Payable 
 in Gold." 
 
 Price. 1 The money equivalent or value of anything. 
 
 Prices. The financial writer, in order to avoid reiteration 
 in referring to the advance or fall of prices, uses a countless 
 number of words to denote such changes, among which are the 
 following: 
 
 Denoting an advance: up, crossed, rise, forged ahead, up- 
 wards, boomed, sky-rocketed, jumped, put up, tended up- 
 ward, bid up, uplift, improved, rally, move forward. 
 
 Denoting a fall: reversion, set back, lost, fell back, got 
 down, declined, fell, dropped, slid off, slid down, depressed, 
 worked back, worked off, off, yielded, reacted, eased, eased off, 
 softened, shaded, retreated, settled, dipped, tumbled. 
 
 Primary Points. Large Western cities such as Chicago, 
 Minneapolis, etc., where grain is received directly from the 
 country districts. 
 
 Primary Receipts. The aggregate receipts of grain each 
 day at all " primary points." 
 
 Primary Shipments. The aggregate daily grain shipments 
 from all " primary points " to the points of consumption. 
 
 1 Chevalier says: " The price of a certain thing is its value in relation 
 to a substance specially designated, that is to say, to the material of which 
 money is made. Thus, whilst in ordinary language we often confound these 
 two words, value and price, and use them as synonymous terms, they 
 have in reality a distinct meaning. Both have a relative sense; but value 
 is a more general and indeterminate expression, or to use a better word, 
 more vague; price is more special, and has a meaning perfectly precise."
 
 MONEY AND INVESTMENTS 313 
 
 Prime. First class; good. 
 
 Prime Investments. Those which are considered sound, 
 conservative, and safe. 
 
 Principal. The principal of a bond, or any other security, 
 is its face value; that is, the amount regardless of interest or 
 premium, which the investor is entitled to receive at the 
 maturity of the obligation; the sum on which the charge 
 for interest is reckoned. " Par value " denotes the " prin- 
 cipal " of a share of stock. 
 
 Also the customer of a broker. (Read footnote to " In- 
 come.") 
 
 Prior Lien. See " Lien." 
 
 Prior Lien Bonds. If a bond bearing this title is honestly 
 what the name would indicate it to be, it should take pre- 
 cedence over any other mortgages (or bonds) against the 
 property; that is, it should technically be prior to any other 
 indebtedness. The juggling with security names, with the 
 evident intent of misleading the investor, however, has re- 
 sulted in " prior lien bonds " being issued which may be 
 prior in their rights to some other indebtedness of the com- 
 pany, but an investigation shows that there are other mort- 
 gages prior to the one in question. Therefore, it behoves 
 one in purchasing a " prior lien bond " to ascertain just ex- 
 actly what its claim is upon the property. 
 
 Prior Redemption. See " Called Bonds." 
 
 Private Bankers. Those receiving deposits and carrying on 
 the general business of banking, but not incorporated, and so 
 not under State or Government control, as national or State 
 banks. A large part of the buying and selling of investment 
 securities is in the hands of the " private bankers." 
 
 Private Discounts at Berlin (or other points). The rate at 
 which firms or individua s of known good financial standing 
 can borrow at the point named; i. e. the rate at which their 
 paper will be discounted, but which rate is distinguished from 
 the Bank of Germany rate. " Private discounts " abroad 
 are other rates than those of the Government controlled 
 banks. 
 
 Private Wire Houses. Those having telegraph wires or 
 telephones for their own exclusive use, and which connect 
 them with their branches in other places, or with certain 
 other houses in the large centres. 
 
 Privilege. See " Options," meaning the same 
 
 Privilege of Registration. Many bonds are issued in coupon 
 form, but with the right reserved to the holder to have the 
 same registered either as to principal or interest, or both, as 
 the case may be, but the holder of the bond is not obliged to
 
 314 MONEY AND INVESTMENTS 
 
 exercise this privilege unless he so desires. (See "Registered 
 Bond.") 
 
 Proceeds. As used in the discounting of a note, it is the 
 amount which the borrower obtains after deducting the 
 " discount." (See " Discount.") 
 
 Professional. There seems to be some doubt, even upon 
 the part of the best financial writers of our leading newspapers, 
 as to just what a " professional " speculator is, as is evidenced 
 by the following: 
 
 " Professional is really nothing more nor less than ' ha- 
 bitual.' 
 
 " Apparently there is a certain section of the ' public ' which 
 speculates practically all the time, or almost all of the time, 
 . . . while the rest of the ' public ' speculates only at inter- 
 vals more or less rare. Possibly at times the word ' profes- 
 sional ' is used to designate something more in the way of a 
 promoter or a speculative banker, or some other part of 
 purely Wall Street machinery. But in the general sense of 
 the word, it probably means simply that portion of the 
 community which habitually speculates." (See also " Tra- 
 ders.") 
 
 Professional Traders. See " Traders." 
 
 Profit. When a security is sold for more than cost, or 
 appreciates in value above cost; when a business at the end 
 of a stated period has earned more money than the cost of 
 operating, it is said to have been " run at a profit." (See 
 " Net Profits.") 
 
 Profit and Loss. The bookkeeping term used as a heading 
 under which are entered the profits and losses of a concern, 
 and would be on the credit or debit side of the account ac- 
 cordingly. Formerly it was customary, and is now with some 
 bookkeepers, to make an entry of a loss in red ink, from whence 
 arose the term " in the red," always indicating a loss. The 
 modern system of bookkeeping calls for the use of as little red 
 ink as possible, and to quite an extent the use of red ink 
 has been discontinued for a loss entry. The abbreviation 
 " P. & L." stands for " profit and loss." 
 
 Promissory Note. A written promise on the part of one 
 person to pay another or order a stated sum of money at some 
 future time. (See " Note.") 
 
 Promoter. 1 One who finds the bankers, or moneyed men 
 to finance; that is, furnish, through their clients or otherwise, 
 the necessary capital to organize and set in motion a corpora- 
 
 1 A bill introduced in the New York Legislature denned a " promoter " 
 as being every person, by whatever name, who brings together the persons 
 to become interested in the enterprise, aids in securing subscriptions, and 
 sets in motion machinery which leads to the promotion of a corporation.
 
 MONEY AND INVESTMENTS 315 
 
 tion or industry; the " middleman," as it were, between the 
 corporation needing the capital, and those whose business it is 
 to place the corporation's securities upon the market; in other 
 words, sell them to their clients. 
 
 The " promoter " does not attempt to sell securities directly 
 to the investor, but rather wholesales them to those who do, 
 such as bankers, etc. 
 
 Perhaps no better illustration of the work performed by a 
 " promoter " can be given than that of E. S. Meade in his 
 " Trust Finance " as follows: " The promoter performs an 
 indispensable function in the community by discovering, 
 formulating, and assembling the business propositions by 
 whose development the wealth of society is increased. He 
 acts as the middleman or intermediary between the man with 
 money to invest in securities and the man with undeveloped 
 property to sell for money. In the present scheme of pro- 
 duction, the resource and the money are useless apart. Let 
 them be brought together, and wealth is the result." 
 
 A " promoter " is one who often makes it his occupation 
 to hunt up corporations which desire to issue securities, and 
 bring such securities to the attention of some banker, and, in 
 case of the issue being found satisfactory and accepted by 
 the latter, the " promoter " receives a commission or fee for 
 his services. It may almost be said that he is a manufacturer 
 of stocks and bonds. A " promoter " must not be confused 
 with a banker, although the latter may, at times, be a " pro- 
 moter," for he may occasionally originate the idea, for in- 
 stance, of building a new railroad, and carry through all the 
 details of its coming into existence; create the securities and 
 wholesale them in part or entire among other bankers. In 
 such a case, he is a " promoter " of that particular enter- 
 prise. 1 
 
 The honest and enterprising " promoter " has been one of 
 the most useful agents in the development of this great 
 country. 
 
 Promoter's Shares (or Stock). An English term but little 
 used in America; stock issued with limited privileges in pay- 
 ment for services rendered by those instrumental in organiz- 
 ing or financing a corporation. 
 
 Prompt Shipment. A Chicago Board of Trade term calling 
 for shipment within ten business days. 
 
 Proprietary Shipment. " Controlling company " is the 
 usual term, and is explained under " Operating Company." 
 
 Pro Rata Rate. (As used in insurance.) A rate is based on 
 a year's period of time. A " pro rata rate " is the proportion 
 
 1 Some wit once said that a " promoter " would furnish the ocean if 
 some one else would furnish the ships.
 
 316 MONEY AND INVESTMENTS 
 
 of the yearly rate which the period of time that policy is in 
 force bears to one year. 
 
 Prospectus. l A description, generally printed, but some- 
 times typewritten, setting forth the plan of some enterprise 
 about to be undertaken. It differs from a " circular " in its 
 use among bankers as being more a detailed description of 
 some issue of securities and of the property covered by them, 
 and for distribution among what are known as " under- 
 writers " or the few who are invited to share, to a certain 
 extent, in the profits resulting from the sale of the issue when 
 offered to the public at some later time. The description of 
 the same securities and property, when offered for general 
 sale to the public, would be called a " circular," although 
 perhaps this fine distinction in the meaning of the two words 
 is not always strictly followed. The two words are used to a 
 certain extent interchangeably. 
 
 Protest. A formal declaration that negotiable paper has 
 been dishonoured. 
 
 It is customary to send to " protest " a note, draft, or check, 
 which is not paid upon proper presentation, unless instructions 
 to the contrary are understood by the bank. That is, it is 
 customary whether the paper is " foreign " (see " Foreign Bill ") 
 or " domestic." It should, however, always be done in the 
 former case. This means that the paper is formally again 
 presented to the one responsible for its payment by a notary 
 public, who, on the same day, makes a note on the paper 
 itself to the effect that it is dishonoured. 
 
 He then makes out a certificate of " protest; " attaches 
 the dishonoured paper, or copy thereof, sets forth the time 
 of and place where presented, the fact that he has presented 
 it, and the reasons for protesting. Then he affixes his signa- 
 ture and seal. 
 
 Some of the larger banking institutions employ clerks who 
 are notaries, and presentation by such takes the place of the 
 employment of an outside notary. 
 
 If, upon presentation by the notary, payment is then re- 
 fused, written " notice of protest," as it is called, should be 
 
 1 A legislative act, which failed of passage, described a " prospectus " 
 as being any announcement, circular, advertisement, or notice of every 
 kind on behalf of any corporation, organized or to be organized, or in behalf 
 of any person interested in the formation of such corporation, with a view 
 of obtaining subscriptions to, or the purchase of, the securities of such 
 corporation. 
 
 The State of New York has passed an Act, popularly known as the 
 " False Prospectus Act," which prohibits the making or publishing of false 
 or exaggerated statements of publications of or concerning the affairs, 
 pecuniary condition, or property of any corporation, joint-stock association, 
 copartnership, or individual, with the idea of giving misleading information 
 as to the apparent value of the security or property.
 
 MONEY AND INVESTMENTS 317 
 
 promptly delivered or mailed not only to the last indorser 
 upon the paper, but preferably also to all preceding indorsers. 
 To hold preceding indorsers it is desirable that each subse- 
 quent indorser should send them like notice, unless this was 
 done by the one who " protested " it. In practice, it is not 
 supposed that the holder at the time of " protest " has the 
 post-office addresses of all preceding indorsers, so it is custom- 
 ary for him to make out the notice of protest to each of the 
 indorsers and mail them all to the last indorser, letting the 
 latter mail them all, with the exception of his own, to the 
 next preceding indorser, and so on down the line. 
 
 A sight draft, upon which " grace " is allowed, will not be 
 " protested " until the expiration of the same. A draft read- 
 ing, for instance, " 10 days' sight " will be presented for 
 "acceptance" (see " Draft"), and if it is a "foreign bill," 
 and acceptance is refused, will then be presented by a notary, 
 and if still refused, protested for non-acceptance. 
 
 A note must be presented upon the date due in order to 
 hold the indorsers. When the depositor of a bank includes in 
 his deposit a check or draft bearing only his indorsement 
 upon which payment is refused it is not customary to " pro- 
 test " it, as it is sufficient to return the instrument to the de- 
 positor, and charge the amount to his account, thus saving 
 " protest " expenses. 
 
 Should a person primarily liable on an instrument be dead 
 when the proper time for presentment falls due, and no place 
 of payment is specified, the paper should be presented to the 
 deceased's personal representative, if there be such, and if 
 with the exercise of reasonable diligence he can be found. 
 
 The fees charged by the notary for " protest " must be paid 
 either by the indorser or maker of the paper. The holder of 
 the note is charged with the fees in case of total inability to 
 make collection. On some paper, where there are no in- 
 dorsements, it may not be desirable to allow the same to go 
 to " protest," and the words " waive protest," or similar ones 
 of same intent, may accompany the instrument on a separate 
 slip of paper which is detached before presentation. 
 
 Or an indorser may write above his signature " protest 
 waived," in which event it would be unnecessary to " protest " 
 in order to hold him. 
 
 The law generally considers that a notice of " protest " 
 mailed at the proper time at the general post-office is sufficient 
 notice to the indorsers or makers. 
 
 The reason for protesting is that in order to hold parties 
 to an instrument it must be presented for payment upon the 
 proper date and at the proper place, and law demands the 
 certificate of a notary public to that effect as evidence. 
 
 This is true, however, only of what are known as " foreign
 
 318 MONEY AND INVESTMENTS 
 
 bills; " that is, a check, draft, or note, drawn outside the 
 State from that in which it is presented for payment. Custom- 
 arily, however, most instruments of this kind, whether " for- 
 eign bills " or not are " protested," as it is good evidence in 
 case of legal action. 
 
 Naturally, the laws of the different States are somewhat at 
 variance regarding the necessity for " protesting " different 
 classes of paper. Some States may hold that it is not neces- 
 sary to " protest " a note to hold either indorsers or maker; 
 that it is merely good evidence that the same has been pre- 
 sented to do so. But, in any event, information given above 
 would be likely to err on the safe side. 
 
 Protested for Non- Acceptance. See " Protest." 
 
 Protest Waived. See " Protest." 
 
 Provisional Certificates. This is an English term for our 
 " interim certificates." 
 
 Provision Pit. See "Pit." 
 
 Proxy. In incorporated companies the business is delegated 
 to officers who are elected at a meeting held by the various 
 stockholders, and each holder of stock is entitled to one vote 
 for each share which he owns. At times he may not deem 
 it necessary, or may find it impossible, to attend the meeting, 
 and, in order that he may not lose his vote, he may authorize 
 some other person to vote his stock for him. This authority 
 is called a " proxy," and is represented in writing by a paper 
 properly signed and witnessed, which confers to such other 
 person the right to vote for the person giving the " proxy." 
 
 Since there have been so many instances of continued con- 
 trol (unsatisfactory) of corporations by the aid of proxies, it 
 behoves all persons to give this method of delegating their 
 voting rights careful thought. 
 
 This is common form of a " proxy: " 
 
 Know all men by these Presents, That the undersigned, Stock- 
 holder in the_ 
 
 do hereby appoint true and lawful 
 
 Attorney, with power of substitution, for and in , to vote at 
 
 the meeting of the stockholders in said to be held at 
 
 , or at any adjournment thereof, 
 
 with all the powers should possess if personally pres- 
 ent, hereby revoking all previous proxies. 
 
 190 
 
 Witness
 
 MONEY AND INVESTMENTS 319 
 
 Public. All investors or speculators not in the business of 
 buying and selling securities for others, or who do not make 
 speculation a business. " The investing public; " those upon 
 whom the banker and broker depend for their patronage. 
 
 Public Accountant. The same as an " auditor," to which 
 refer. 
 
 Public Debt. See " United States Public Debt." 
 
 Public Depository. Any banking institution lawfully 
 selected to accept deposits of public money. The institution 
 (one or more) in which the funds of a State are deposited is 
 of this class. 
 
 Public Deposits. As used in the Bank of England weekly 
 statements; Government deposits. 
 
 Public Funds. In reality, bonds issued by a Government 
 (and the Government debt is so termed in Great Britain), but 
 by usage in America also bonds of States, cities, counties, 
 towns, etc. 
 
 Public Loan. Interest-bearing Government indebtedness. 
 
 Public Service Corporation. Railway, street railway, gas, 
 telephone, electric light, water companies, etc. 
 
 Public Utilities Companies. Same as last subject. 
 
 Pullman. The Pullman Co., formerly the Pullman Palace 
 Car Co. 
 
 PUR. The " ticker " abbreviation for " purchasing receipt." 
 
 Purchased Line (or Lines) Mortgage. A railroad may pur- 
 chase all, or the controlling interest in, one or more other lines 
 of railroad, which roads in themselves, perhaps, were not of 
 very high standing until purchased by the company first men- 
 tioned. There may be some reason why the purchasing com- 
 pany cannot issue more bonds of its own for the needs of the 
 purchased line (or lines) and, therefore, may issue a mortgage 
 directly upon the purchased line (or lines) itself, but the mort- 
 gage may bear the name of the owning railroad, but, in case 
 of default in the interest or principal the owner could only 
 look to the property actually mortgaged for his protection. 
 Of course, the terms of such mortgages vary greatly, but, as a 
 rule, a " purchased line mortgage " is only a mortgage upon 
 the line actually purchased and not any obligation of the 
 parent company, unless guaranteed by the same. 
 
 Purchase Money Bonds. Bonds commonly given by one 
 corporation in exchange for the stock of some other corpora- 
 tion purchased by the former. An example is that of the 
 Kings County Electric Light & Power Co., of Brooklyn, 
 N. Y., which bought the entire capital stock of the Edison 
 Electric Illuminating Co. In paying for this stock, the former 
 company issued " purchase money bonds " in exchange.
 
 320 MONEY AND INVESTMENTS 
 
 These bonds are secured by deposit of the Edison Company's 
 shares with the trustee, and by a lien upon the properties of 
 the Kings County Company, subject to an issue of $2,500,000 
 first mortgage 5s. The " purchase money bonds " are ad- 
 ditionally secured by deposit with the trustee of a cash guaran- 
 tee fund of $1,000,000. 
 
 Purchasing Receipt. A temporary receipt, issued to the 
 purchaser of a security, to be taken up later by the permanent 
 security when issued. Often referred to as a " temporary 
 receipt/' to which subject refer. 
 
 Put. A " put " is a contract which gives its possessor the 
 right to deliver, to the party signing the same, a certain 
 amount of stock (grain or other commodity) at a named price 
 during the time stated in the contract. (In London the 
 privilege conveyed in a " put " can only be exercised on the 
 last day of the time limit; in New York it may be exercised 
 any time within its life.) The party willing to execute such 
 a contract, in consideration of the sum received, believes that 
 the security will not be more than this sum below the price 
 named in the " put " during its life (or at the maturity of the 
 same), thus making it no object for the owner of the " put " 
 to deliver the security. 
 
 " Puts " are dealt in more extensively in London than in 
 America. A " put," as executed in New York, may read as 
 follows: " For value received, the bearer may deliver me on 
 one day's notice, except last day when notice is not required, 
 100 shares of the capital stock of the Arctic Electric Co. at 
 $175 per share any time within 30 days from date." Then 
 follows the signature, time of expiration, and an agreement 
 that all dividends paid upon the stock in the meantime shall 
 accompany the stock in case of the rights of the " put " being 
 exercised. 
 
 Put-and-Call. See " Straddle," meaning the same. 
 
 Put o' More. Same as " Put of More." 
 
 Put of More. See " Call of More." 
 
 Puts and Calls. See the two separate subjects, " Puts " 
 and " Calls." 
 
 Put under Cover. A " bucket shop " term indicating that 
 the " bucket shop " has actually purchased or sold a given 
 security as a matter of protection. (See " Bucket Shop.") 
 
 Pyramiding. When the uninitiated reads in his newspapers 
 that " they are pyramiding the stock market " it is not sur- 
 prising that he doesn't understand, because it would seem that 
 no more substantial structure is known to engineers than a 
 pyramid. As a matter of fact, its use in stock market phrase- 
 ology refers to a dangerous condition of affairs. To understand
 
 MONEY AND INVESTMENTS 321 
 
 its true meaning it is well for the reader to be possessed of a 
 knowledge of marginal transactions (for which see " Margin"). 
 In the boom days of the West, in some of the rapidly growing 
 larger cities, the value of real estate was advancing by leaps 
 and bounds, producing a very unnatural condition of affairs 
 financially, resulting, for instance, in a man purchasing a 
 piece of land for $5,000, mortgaging it for $3,000; the value 
 of the land would advance so rapidly that, in an almost in- 
 credibly short time, a new mortgage could be placed on it for, 
 say, $5,000; the land then being valued at $8,000 or $9,000. 
 The difference between the amounts of the two mortgages, 
 namely, $2,000, being used by the owner of the land for living 
 expenses. When a financial collapse came, the investor who 
 last made a mortgage upon the land had to take it to secure his 
 debt and the land owner had nothing. There was what is 
 known as " pyramiding " going on. The same thing takes 
 place in the stock market when one is buying on a " margin," 
 and the stock market advance is so fast in price, that he can 
 buy additional stock with the increased margin. In case of a 
 sudden drop in prices the person so " pyramiding " his stock 
 is found underneath the cUbris, unless he has sufficient out- 
 side resources to protect himself. " Pyramiding " is not the 
 proper title at all; an " inverted pyramid " is what is really 
 understood, and an inverted pyramid is a very dangerous 
 proposition. The following quotation from a newspaper shows 
 the true applications: 
 
 " An inverted pyramid is not a nice thing to sit under lest 
 some pressure on the base, now the top, cause it to topple." 
 
 " Pyramiding the market " is like building a structure with 
 an enormous top resting on a very insecure foundation. 
 
 Pyx Coins. Coins retained for testing as explained under 
 " Trial of the Pyx." 
 
 P. & L. Profit and Loss. 
 
 Q. Chicago, Burlington & Quincy Railway Co. 
 
 Qualified Acceptance. See " Acceptance." 
 
 Qualified Indorsement. An indorsement with the addition 
 of the words " without recourse " (as explained under that 
 subject) is a " qualified " one. Further negotiation is not 
 prevented by indorsement of this kind, but the indorser is 
 relieved from all liability for payment. 
 
 Quarter. There are 8 bushels, or 480 pounds, in a " quar- 
 ter " of wheat. Also, a silver coin of the United States, con- 
 taining 86.805 grains of fine silver and 9.645 grains of alloy,
 
 322 MONEY AND INVESTMENTS 
 
 equivalent to one-quarter of a dollar, or 25 cents. " Legal 
 tender " in amounts not to exceed $10 in any one payment. 
 
 Quarter Days. January 1st, April 1st, July 1st, and October 
 1st. 
 
 Quarter Eagle. A gold coin of the United States of the 
 value of $2.50, containing 58.05 grains of fine gold. 
 
 Quarterly Disbursements. Although interest, dividends, 
 etc., are falling due daily, yet the great majority of payments 
 of this kind occur about January and July 1st of each year, 
 with the other " quarter " months April and October 1st 
 following close behind. The vast sums of money which are 
 needed for payments " disbursements " at such times 
 compel the banking institutions to accumulate funds to meet 
 the same. These institutions are less willing to make loans 
 just previous to the " quarter days " and money rates are apt 
 to advance; money commands a higher rate of interest. 
 Borrowers of money recognize this fact and generally try to 
 provide in advance for funds to tide over such times. When 
 the " quarter days " arrive, and the banks, trust companies, 
 etc., pay out the money called for by dividends, interest due, 
 etc., the " quarterly disbursements " are made, and frequently 
 many draw sighs of relief if the critical point is weathered 
 with no money pinch resulting. 
 
 Quarterly Interest. Interest payable four times a year. If 
 interest on a bond is payable January 1st, the three next cor- 
 responding quarterly periods would be April, July, and October 
 1st. The interest on all United States Government bonds is 
 payable quarterly, but not on the majority of investments. 
 
 Quarterly Settlement-Days. In the United States, January, 
 April, July, and October 1st. Upon these days, the majority 
 of interest payments fall due, as well as many bonds and 
 other obligations, necessitating large disbursements of money. 
 
 Quarterly Settlements. See " Quarterly Disbursements." 
 
 Quarter Stock. Shares of the par value of $25 each. Many 
 copper stocks have such a face value. 
 
 Quasi-Municipal. A municipal corporation established by 
 law, without the franchises of such a corporation generally. 
 
 The laws of the State of Maine specifically refer to a " quasi- 
 municipal " corporation in regulating the investments which 
 a savings bank may make. Mr. F. E. Timberlake, the bank 
 examiner of that State, interprets a " quasi-municipal cor- 
 poration " as follows: " The legislature intended by that 
 term to cover municipal corporations created for a special 
 purpose, not having general municipal powers like towns and 
 cities. It applies to Water Districts, like Augusta Water Dis- 
 trict, and Gardiner Water District."
 
 MONEY AND INVESTMENTS 323 
 
 Queen and Crescent Route. The Cincinnati, New Orleans 
 and Texas Pacific Railway Company. (Lessee of the Cin- 
 cinnati Southern Railway Company.) 
 
 Quick Assets. Anything that can be readily converted into 
 cash without the necessity of taking a prohibitive loss. 
 Government bonds are always considered a " quick asset; " 
 perhaps the quickest of assets in this country, as in the most 
 distressing money market conditions they are supposed to be 
 convertible into cash at a less sacrifice than any other security 
 under like conditions. 
 
 Quick Shipment. A Chicago Board of Trade term calling 
 for shipment within five business days. 
 
 Quid. In Great Britain this is a slang term for a " pound 
 sterling." 
 
 Quincy. Quincy Mining Co. (Copper.) 
 
 Quit-Claim Deed. See " Deed." 
 
 Qu. Jan. (or Qu. Feb., etc.). Quarterly beginning with 
 January, or with whatever month is named. 
 
 Quotations. Prices at which commodities or securities are 
 sold, or prices offered or bid for the same, or prices at which 
 they are offered for sale. In the case of stock exchange " quo- 
 tations " it means the prices at which securities are sold on the 
 stock exchange, or the " bid " or " asked " price of the same. 
 " Quotations " of stock exchange transactions are reported 
 in such abbreviated form, that a few suggestions in that 
 regard may not come amiss. All stocks are " common 
 stocks " when not otherwise designated. " U. P." means 
 Union Pacific Railway common stock; if the " preferred " 
 is meant, " U. P. Pref." will be the reading. " 10 Sugar 120 " 
 is equivalent to 10 shares American Sugar Refining Company 
 common stock at $120 per share. 
 
 R 
 
 Ragged Bond. When unmatured coupons have been cut 
 from a bond and attached to it again by a pin, or some such 
 method, the security is termed a " ragged bond." 
 
 Rag Money. " Paper money." 
 
 Raid. A sudden fall in prices brought about by the efforts 
 of one or more persons desiring to attain that end. 
 
 Railroad Aid Bonds. Issued by municipalities to raise funds 
 in order to give financial assistance to a railroad. This is 
 nothing more nor less than a " subsidy " (refer to that sub- 
 ject) except that, in order to give the assistance, the munici- 
 pality finds it necessary to borrow the funds. A great many
 
 324 MONEY AND INVESTMENTS 
 
 bonds of this nature were issued by the Southern and Central 
 States during the period immediately following the Civil War, 
 and a great many of these issues have been repudiated. 
 " Railroad aid bonds " are a questionable investment, as well 
 as bonds issued in aid of any special enterprise, although per- 
 haps " railroad aid bonds " have stood the test better than 
 similar issues marketed to give assistance to manufacturing 
 concerns. This recent decision in one of the Western courts, 
 bearing upon an issue of " manufacturing aid bonds," is 
 pertinent to the subject: 
 
 " The benefit resulting to the local public of a town by the 
 establishment of manufactories is not different in kind from 
 the benefit to such public arising from the establishment and 
 operation of grocery stores. The manufacturer, the merchant, 
 the mechanic, and the labourer are equal promoters of the public 
 good and equally entitled to public aid. No line can be drawn 
 in favour of one of them to the exclusion of the others, and a 
 recognition of the right thus to distribute money procured by 
 taxation would subject the municipalities to importunities 
 and impositions innumerable." 
 
 A great many of the most reputable bond houses have con- 
 sistently refused to handle any bonds issued in aid of railway 
 or other private enterprises. 
 
 Railroad Equipment Companies. Corporations which manu- 
 facture rolling stock and other equipment for the railroads. 
 Some of the most important are the American Locomotive 
 Co., the American Car & Foundry Co., the Pressed Steel 
 Car Co., and the Railway Steel-Spring Co. 
 
 Railroad Securities. 1 Probably the best indication of exist- 
 ing business conditions is the railroad earnings; they reflect 
 good and bad periods with wonderful precision. They are 
 transporters, not producers of wealth. The prices of railroad 
 stocks and bonds follow very closely, in the long run, the 
 course of their earnings. 
 
 Without railways, the wheels of progress in this country 
 would come almost to a standstill. There is hardly any 
 industry, outside of agriculture, which means so much to the 
 country as the great distributing arteries, the railways. The 
 conservative savings bank laws relating to investments in the 
 
 1 If one is to become a considerable investor or dealer in railroad securi- 
 ties, an enormous amount of information is necessary, which can but be 
 hinted at here. There are many books which bear upon the subject, such 
 as, " The Anatomy of a Railroad Report " by Woodlock, " British Railway 
 Finance," by Wall, " American Railway Transportation," by Johnson, 
 " Poor's Manual of Railroads," " The Manual of Statistics Stock Exchange 
 Hand-Book," " Moody's Manual of Railroads and Corporation Securities," 
 and " White & Kemble's Atlas and Digest of Railroad Mortgages." For 
 weekly or daily publications, the Commercial and Financial Chronicle 
 and the Watt Street Journal will prove of great assistance.
 
 MONEY AND INVESTMENTS 325 
 
 various States are being constantly amended to permit of 
 the purchase of additional railway issues, recognizing the 
 soundness of this class of securities. As soon as an issue 
 becomes known as a legal investment for savings banks, say, 
 in New York, Connecticut, or Massachusetts, such an issue 
 advances in price, making the net return to the investor 
 much less than previously. There are many high grade 
 railway issues, now not accepted under the law by the savings 
 banks of the large Eastern States, which, perforce, must 
 become so in the not very distant future, and a careful selec- 
 tion of such issues to-day may offer a reasonable chance for an 
 enhancement in the value of the principal, in the case of a 
 long-time bond. 
 
 The thought of any serious competition to the large trunk 
 lines, on account of the building of new through routes, may 
 practically be eliminated. The cost, in the present rapidly 
 increasing density of population, of obtaining right of way 
 for the construction of any through line and for the obtaining 
 of suitable terminals (In this connection read footnote to 
 " Terminal Company Bonds.") in the large cities would 
 absolutely prohibit the completion of such a route. It 
 would be unable to return sufficient interest upon the invest- 
 ment, owing to its extraordinary cost, to make it attractive. 
 Therefore, the railroad building of the country, from now on, 
 must be very largely limited to the building in the more 
 sparsely settled sections and to branch lines, or feeders, to 
 the large roads already in existence. 
 
 In a word, the best rate of interest return, safety con- 
 sidered, probably obtainable, to-day, in practically almost 
 unlimited amounts, must be in the better grade railroad 
 bonds, and, unless these roads be in the future selfishly 
 managed or overburdened with indebtedness from poor 
 financiering, there seems no reasonable doubt as to the 
 permanent solvency of the large majority of such corpora- 
 tions. The investor, however, must be brought face to 
 face with the intricate problem of the proper selection of a 
 railroad bond, and, to that end, must not be misled by a title 
 which a railroad issue may bear, leading one to think that it 
 occupies a position, as regards claim upon the assets of the 
 property, closer than is absolutely the fact. Study carefully 
 each bond issue; find out just how it is secured; consider the 
 earning ability and physical condition of the road and confine 
 yourself as nearly as possible to the issues which are not pre- 
 ceded by earlier mortgages; otherwise, be sure that there is 
 an ample margin of security and earning capacity over the 
 above such earlier mortgages to protect the later one issued 
 and under consideration. Such bond issues as prior liens, 
 first consolidated, general mortgage, consolidated mortgage,
 
 326 MONEY AND INVESTMENTS 
 
 etc., may all be misleading, and the real status of such a 
 mortgage should be clearly understood before purchase is 
 made. 
 
 The tremendous expenditure by the American railroads of 
 to-day for improvements is necessitating an abnormal increase 
 in the capital account, i. e. new securities. The question may 
 well be asked if the net earnings will permanently increase in 
 proportion to the increased capitalization. Such has not been 
 the case in Great Britain, and many wise financiers, as well as 
 practical railroad men, believe that we have reached our limit 
 in the increase of per cent, of net earnings to capitalization in 
 this country. This argues for the conservative investor to 
 select those securities which have the earliest claims upon 
 assets and earnings, i. e. " first mortgage bonds," to illus- 
 trate, " preferred " rather than " common " stocks, etc. 
 
 In selecting a railroad bond, first or junior issue, the selling 
 price of the stock is a good guide. If it is, and has been for 
 some years, quoted at a good premium, and can show a good 
 record for dividends paid, it argues for safety in the bonded 
 capitalization. 
 
 One very important fact to ascertain in the investigating 
 of any railroad company, is whether or no it is keeping up its 
 physical condition and making proper expenditures for the 
 same directly from earnings. The tendency of recent years is 
 to run much heavier rolling stock and larger train loads, 
 calling for heavier rails, more substantial bridges, and a 
 reduction of sharp grades and curves, all of which many of our 
 better roads have accomplished. The statement has been 
 made that a road which has not spent at least $10,000 per 
 mile for such purpose within the past ten years is behind the 
 times. Roads which have been able to accomplish this with- 
 out increasing their indebtedness on account thereof should 
 be considered, everything else being equal, sound financially. 
 
 Compare cost of operating any road under consideration 
 with that of other companies similarly located, and form, 
 thereby, an opinion as to whether or not the particular road 
 is being economically managed. 
 
 The management of a railroad property, its control, class 
 of business tributary to it, its competition, or the likelihood 
 of competition, the importance of its terminals, must all 
 be carefully investigated. The large agricultural business 
 tributary to the Union Pacific system, or the numerous coal 
 fields which pay tribute to the coal-carrying roads, are factors 
 of undeniable strength. Some short railroad which may in 
 itself originate a vast freight tonnage, like one occupying 
 a strategic position in a mining district of practically a 
 permanent character, may be a very sound proposition, 
 although but a small one.
 
 MONEY AND INVESTMENTS 327 
 
 Ascertain if the freight rates, expecially if it is a railroad 
 not doing an interstate business, and so not amenable to the 
 railway rate law, are excessive. A road may have such a 
 monopoly that it may be charging exorbitant rates and 
 tempt competition. For a permanent, prosperous condition 
 of any railroad so situated, fair passenger and freight rates are 
 essential. 
 
 Some roads may be so clearly dependent upon agricultural 
 products that a crop failure would be disastrous. A road to 
 be a one-crop or a one-industry road must be based on the 
 traffic of an industry of a fairly permanent character. 
 
 The earnings of a railroad under construction are worthy of 
 careful study. For the purpose of illustration, here is a rail- 
 road half built; it is operating, but at the same time the 
 remaining half is under construction. By force of circum- 
 stances most of the material used for this purpose is hauled 
 over that part of the line in operation. The transportation 
 of this is not in any sense a proper earning for the road, al- 
 though many roads take credit for such a haul. There is no 
 objection to having the figures show; that is, the actual cost 
 of hauling such freight, and the earnings from so doing, and 
 possibly it may be legitimate to charge against the construction 
 of the new part of the road the cost of this haul, but it is 
 decidedly improper to allow any earnings upon this haul to 
 be used as an argument for the sale of the bonds by the swelling 
 of the gross and net income of the property, as the transpor- 
 tation of this freight cannot be a permanent factor. This 
 illegitimate and improper method of bookkeeping has been 
 adopted at times in the past, and has been unfair to the 
 investor. 
 
 Railroad managers have of late given much attention to the 
 investment basis of their companies. It is becoming more the 
 custom not to pay, or increase, dividends, until the per- 
 manency of the rate is reasonably assured. The paying for 
 improvements out of earnings is a very good feature, and is so 
 universal that it is estimated that our whole railroad mileage 
 earns double what it distributes in the way of dividends. 
 
 We differ somewhat from the English in our way of esti- 
 mating the intrinsic value of a railroad issue, and this is partly 
 due to their custom of placing irredeemable debentures, 
 while we put out bonds with a definite date of maturity. 
 Even, although in practice our issues are not paid when due, 
 but refunded, we, nevertheless, consider what the value of 
 the property will be at the loan's maturity. In England, the 
 irredeemable feature eliminates that factor and results in a 
 careful analysis of the road's earning power, so that the in- 
 terest rate may be permanent, as in the case of a stock. And, 
 perhaps, they are following the truer course, for the value of
 
 328 MONEY AND INVESTMENTS 
 
 a railroad if it cannot earn its charges under good management 
 and normal conditions, is doubtful leaving out of con- 
 sideration the possibility that some other company may buy 
 it. It is said that about 93% of the railroad capitalization is 
 invested in immovable property. 
 
 It is becoming the generally accepted opinion among 
 financiers that the value of a railroad should be determined 
 by its present and future net income. 
 
 The amount of money invested in railroads is enormous. 
 Wharton Barker estimates the present capitalization as about 
 $13,800,000,000, but of this he figures almost $8,000,000,000 
 as fictitious capital on which " the railroads take from the 
 people each year for dividends . . . the great sum of $350,- 
 000,000." l 
 
 Rails. The expression is often used, for instance, " Rails 
 are strong; " meaning railway stocks are advancing in price. 2 
 
 Railway Trust Bond. Another name for a " collateral trust 
 bond." 
 
 Rail, Weight of. It is customary to speak of a 50, 60, or 
 90, etc., pound rail. This means the weight of the rail per 
 yard; that is, a " 90 Ib. rail " weighs 90 pounds for each three 
 feet in length. 
 
 Raised Check. See " Check." 
 
 Rally. A term used in the stock market to express a rise in 
 the price of stocks after a sudden decline. 
 
 Rand. From Witwatersrand, meaning White Water Range. 
 As used in relation to mining and investment matters, it has 
 reference to that part of South Africa in which -is located the 
 important gold mines of that section of the world. In some- 
 what the same sense as the expression " Wall Street," " Rand " 
 has rather a broader meaning than a mere territorial one, in 
 that it goes a bit further so as to include the mines themselves 
 and, in some instances, the people associated in their manage- 
 ment. 
 
 Ran Off. Prices declined. 
 
 Rapid Transit. A short name for Brooklyn Rapid Transit 
 Co. 
 
 Rate of Exchange. Supposing that the reader understands 
 " exchange," then the " rate of exchange " indicates price 
 of the money of one country as reckoned in that of another. 
 
 Rating. This may be understood by reading " Mercantile 
 Agency." " Rating " is the financial standing or credit of a 
 person, firm, or corporation. 
 
 1 North American Review, Oct. 19, 1906. 
 
 2 This term perhaps first originated in about 1838 when " Yankee rails " 
 were first traded in upon the London market.
 
 MONEY AND INVESTMENTS 329 
 
 RE. The " ticker " abbreviation for " real estate." 
 
 React. Prices may " react " after an advance. To " re- 
 act " means a change in the direction of prices from the up- 
 ward tendency which had been existing up to the time of such 
 reaction. 
 
 Reading. Reading Co. (Railroad and Coal.) 
 
 Readjustment. By reading the subject " Reorganization " 
 it will be seen that that refers to a rearrangement of the 
 capitalization of a company which had been unable to meet 
 its obligations, so that under the new plan better results may 
 be looked for. Proceedings of this nature are generally forced 
 upon the company by its creditors, or security holders, and 
 the property put through " foreclosure proceedings." A 
 " readjustment " is virtually the same thing; cause and 
 effect being the same, but a voluntary proceeding on the part 
 of the security holders, and customarily without foreclosure. 
 
 Ready Money. At hand for immediate use. 
 
 Real Estate Mortgage. Mortgage upon real estate, and 
 given to secure a debt or promise. If a mortgage is given 
 upon land it usually covers all improvements, such as build- 
 ings, etc., upon the same. (For further information see 
 " Mortgage " and " Real Estate Mortgage Bonds.") 
 
 Real Estate Mortgage Bonds. Naturally, any bonds secured 
 by a mortgage upon real estate would come under this title. 
 An example of such a bond issued by a corporation is that of 
 tne Western Union Telegraph Co., which has a " funding and 
 real estate mortgage " issue, bearing 4^% interest, due May, 
 1950. In practice such a bond may be issued by a corporation 
 at a time when a comparatively small amount of money is 
 needed, when it would not be necessary for its proper security 
 to mortgage other property of the corporation, there being 
 sufficient real estate, such as, for example, lands, and build- 
 ings thereon, which in itself would be ample security for the 
 bond issue. Such property may be mortgaged to especially 
 secure a real estate issue and thus raise the needed money, and 
 leave a large part of the balance of the corporation's property 
 free from that particular encumbrance. 
 
 Real Estate Trust. Common in Massachusetts. A voluntary 
 association not an incorporated company managed by 
 trustees in whom is vested the ownership of real estate held 
 for investment purposes, for the benefit of a number of people 
 jointly. Real estate cannot be held in Massachusetts by an 
 incorporated company organized under its general laws for 
 investment purposes; only for business needs. Certificates 
 showing ownership are usually issued to the investors by the 
 trustees. 
 
 Realize. To convert into cash; sell; take one's profits.
 
 330 MONEY AND INVESTMENTS 
 
 Those who are " short " (see " Selling Short ") may buy in 
 " cover " in order to obtain their profits or meet their con- 
 tracts. 
 
 " There was a good deal of realizing to-day; " meaning that 
 there had been much selling of securities with the idea of 
 taking advantage of the opportunity to make profits. 
 
 Real Money. Financiers use this term to designate metallic 
 money gold or silver, according to the " standard " of the 
 particular country from, usually, paper money, which 
 is called " representative money." The latter has no real 
 value, but only represents money which has, and which it 
 promises to give in exchange when demanded. 
 
 Real Property. Land and buildings, including everything, 
 such as minerals, etc., below the surface, and the air or space 
 above; also, all crops, as grass, trees, etc., which are not con- 
 sidered as of annual planting. The right to use other land, 
 as by a right of way, also comes under this head. 
 
 Real Valuation. See " Assessed Valuation." 
 
 Rebate. Paying back. Example: If one borrows money 
 and pays interest for six months in advance, and then at the 
 end of three months by the consent of the lender pays 
 the debt and receives back the interest for the remaining three 
 months, the lender " rebates " the interest. 
 
 A " rebate " on the part of a " common carrier " is a return 
 of money to the shipper, or the granting to him of some 
 privilege, so that he may receive, in effect, a more favourable 
 shipping rate than the regular tariff. 
 
 Recede. " A receding market; " slow but steady shrinkage 
 in prices. 
 
 Receiver. One appointed by a court to take the custody, 
 management, or disposal of property in controversy, pending 
 litigation. One appointed to close up the affairs of an in- 
 solvent concern, by dividing the assets among those entitled 
 to receive same. 
 
 Receivers' Certificates. A form of indebtedness issued by 
 authority of the court against property under the manage- 
 ment of a receiver, for the purpose of borrowing money. 
 These certificates take precedence over all other indebtedness 
 of the company, even over a first mortgage, except money 
 due for wages and other necessary operating expenses, and 
 must be first paid. " Receivers' certificates " are usually 
 sanctioned by the court only to defray necessary expenses for 
 the continued operation of a corporation, the ceasing of which 
 would be a public calamity; such as a railroad, lighting plant, 
 etc. 
 
 Receiving Teller. See " Teller." Also called the " Second 
 Teller."
 
 MONEY AND INVESTMENTS 331 
 
 Reconstruction. This term is used in Great Britain as the 
 equivalent of our " reorganization." 
 
 Recourse. Literally: running back; a return. To have 
 " recourse " is to have legal right to demand payment. The 
 holder of a check which is not paid when presented at the 
 bank would have " recourse " against the indorsers; that is, 
 could demand payment from any of them. 
 
 Recovery. An advance, after a decline in prices. 
 
 Red. " In the Red." (See " Profit and Loss.") 
 
 Redeemable. Same as " callable." 
 
 Redemption Agent. Same as " clearing-house agent." 
 
 Redemption Bonds. Issued to redeem pay off other 
 bonds which are due or which the company or municipality 
 has the right to prepay before maturity. Same as " Refunding 
 Bond." 
 
 Redemption Fund. If the reader will turn to the subject 
 " Financial Bill " he will find therein referred to the Act of 
 Congress of March 14, 1900, otherwise known as the " Gold 
 Standard Act." This Act further provides as follows: 
 
 " Sec. 2. That United States notes, and Treasury notes 
 issued under the Act of July fourteenth, eighteen hundred and 
 ninety, when presented to the Treasury for redemption, shall 
 be redeemed in gold coin of the standard fixed in the first 
 section of this Act, and in order to secure the prompt and 
 certain redemption of such notes as herein provided it shall 
 be the duty of the Secretary of the Treasury to set apart in 
 the Treasury a reserve fund of one hundred and fifty million 
 dollars in gold coin and bullion, which fund shall be used for 
 such redemption purposes only, and whenever and as often 
 as any of said notes shall be redeemed from said fund it shall 
 be the duty of the Secretary of the Treasury to use said notes 
 so redeemed to restore and maintain such reserve fund in 
 the manner following, to wit: First, by exchanging the notes 
 so redeemed for any gold coin in the general fund of the 
 Treasury; second, by accepting deposits of gold coin at the 
 Treasury or at any sub-treasury in exchange for the United 
 States notes so redeemed; third, by procuring gold coin by the 
 use of said notes, in accordance with the provisions of section 
 thirty-seven hundred of the Revised Statutes of the United 
 States." 
 
 If the Secretary of the Treasury is unable to restore or 
 maintain the reserve fund by the foregoing methods, and the 
 amount of the gold coin and bullion shall fall below $100,000,- 
 000, then he is authorized to restore the same by issuing 
 United States bonds therefor, but to sell the same only in 
 exchange for gold.
 
 332 MONEY AND INVESTMENTS 
 
 Re-Discounts. It being understood that when a note is 
 " discounted " that the interest upon the same is deducted 
 by the lender from the amount loaned, it must be clear that 
 " re-discounting " is the act on the part of the holder of a 
 " discounted note " of negotiating the same; that is, he 
 again " discounts " it; i. e. " re-discounts " it. Of course 
 he must indorse if drawn so as to require it. 
 
 This is a very common practice among banks which have 
 not sufficient cash available for their needs and, for the 
 purpose of obtaining the same, " re-discount " notes which 
 they hold. 
 
 The method of borrowing between banks may not be 
 strictly a " re-discount." The country bank, for illustration, 
 may simply make an over-draft on its city depository. Or 
 it may take " discounted paper " of its own and deposit it as 
 collateral with its city depository together with its own note 
 as an evidence of indebtedness. Still another way is to bor- 
 row on its own " certificate of deposit." 
 
 Refining. The elimination from bullion of all base metals. 
 
 Refunding. Issuing a new lot of bonds to take the place of 
 those falling due, and which for inability, or other reasons, 
 the corporation or municipality is not to pay off in cash. 
 Suppose, for example, a city has some bonds maturing which 
 were previously issued for " Water Works; " the city brings 
 out a new issue to replace it; this new issue ought to be called 
 " Refunding Water," it may, however, be called simply 
 " Refunding." 
 
 It is always advisable to ascertain the nature of the debt 
 being " refunded " and to assure oneself that it was originally 
 contracted for a proper purpose. This is one reason why it is 
 well that the name be specifically set forth in the bond, as 
 above suggested. It is desirable that the attorney examining 
 into the legality of a " refunding " issue should likewise 
 investigate the legal status of the old debt. 
 
 Refunding First Mortgage Bond. See " First Refunding 
 Mortgage Bond." The two titles are quite distinct in their 
 meaning. 
 
 REG. The " ticker " and general abbreviation for " regis- 
 tered." 
 
 Registered Bond. (Read first " Coupon Bond.") " Regis- 
 tered bonds " are of two forms: First, registered as to princi- 
 pal and interest both; second, registered as to principal alone. 
 
 A " registered bond " has the name of the owner filled out 
 on its face, but cannot be transferred from one person to an- 
 other without indorsement upon the back by the party in 
 whose name it is registered and sending to some designated 
 office or municipality for transfer; the same as a share of
 
 MONEY AND INVESTMENTS 333 
 
 stock. A new bond will be issued to the holder and made out 
 in his or her name. There is no objection to a " transfer in 
 blank " (to which subject refer) and passing the bond from 
 hand to hand, by which plan any holder may fill in his or 
 any name upon the back in the transfer blank and forward to 
 be transferred at his leisure. But as the ownership of a bond 
 is, as far as the corporation or municipality is concerned, 
 the last registered holder thereof, it is to such holders that 
 checks for interest are mailed, and in accepting a " registered 
 bond " " transferred in blank " a transfer of the same should 
 be made upon the books in time to permit the rightful owner 
 to receive the next maturing interest. 
 
 In the first case above mentioned the bond bears no interest 
 coupons, but the interest is mailed, as it matures, directly 
 to the holder, in the form of a check, but the principal sum 
 must be collected by proper indorsement upon the back and 
 presentation to the proper authority. 
 
 In the second case: a bond registered as to principal only. 
 There are coupons attached, the same as in the ordinary 
 " coupon bond," which are collected in the usual manner of 
 coupons, but the principal sum of the bond itself is registered, 
 and to be collected must be indorsed and forwarded to the 
 proper authority. 
 
 The reason for registration is primarily for safety, for 
 should there occur a theft or loss a " registered bond " can 
 be of no value to any one else. There is much inconvenience 
 about a " registered bond " in case of its sale. Most bonds 
 are in coupon form. 
 
 Registered Coupon Bond. A bond described under " regis- 
 tered bond." The principal alone is registered, the coupons 
 being payable to bearer, and the interest collected by de- 
 taching and presenting the same for payment. The interest 
 on the ordinary " registered bond " is remitted to the regis- 
 tered holder by check. 
 
 Registered Letters (and Parcels). Inasmuch as the ship- 
 ment of coupons, investment securities, or other valuable 
 papers is a very common factor, it seems desirable that no 
 mistake should be made in the use of the mails in that way. 
 An extract from the post-office laws touching upon that sub- 
 ject here follows: 
 
 " Registered mails reach every post-office in the world. 
 
 " In case of loss, the sender or owner of a registered article 
 prepaid at the letter rate of postage, mailed at, and addressed 
 to, a United States post-office, is indemnified for its value up 
 to $25. 
 
 " No indemnity is paid by the United States for the loss in 
 the mails of registered letters or parcels addressed to any for- 
 eign country.
 
 334 MONEY AND INVESTMENTS 
 
 " The registry fee is 8 cents for each separate letter or 
 parcel, in addition to the postage, both to be fully prepaid 
 with postage stamps attached to the letter or parcel. 
 
 " Letters and parcels (except Parcels-Post packages for 
 Great Britain and Barbadoes) addressed to foreign countries, 
 if admissible to the Postal Union mails, may be registered 
 under the same conditions as those addressed to domestic 
 destinations. The registry fee in every case is eight (8) cents 
 in addition to law ul postage, and both must be fully prepaid. 
 
 " Any piece of mailable matter may be registered at any 
 post-office or station thereof, and by any rural free delivery 
 carrier. In residential districts of cities, letters and packages 
 of first class matter that are not cumbersome on account of 
 sizes, shape, or weight can be registered by letter carriers at 
 the house door as safely as if brought to the post-office. 
 
 "In order to have a letter or parcel registered, it is neces- 
 sary merely to have it properly prepared, addressed, and 
 stamped, and the name and address of the sender written, 
 stamped, or printed on it. It should be handed to the post- 
 master, clerk, or carrier, who will write out a registration re- 
 ceipt for the sender. 
 
 " Letters or parcels intended to be sent in the registered 
 mails should not be placed in street letter boxes or in the 
 ordinary mail drops at the post-office. They must be pre- 
 sented to the postmaster, registry clerk, or carrier. 
 
 " A receipt is given to the sender for every piece registered. 
 
 " A second receipt from the addressee or his authorized 
 agent, acknowledging delivery, is returned to the sender in 
 every case without extra charge. This receipt is, under the 
 law, prima facie evidence of delivery. 
 
 " If the article is addressed to a foreign country no receipt 
 from the addressee is returned to the sender unless the words 
 ' Return Receipt Demanded ' are written, stamped or printed 
 across the face of the letter or parcel. 
 
 " In case of loss of a registered letter (or package prepaid at 
 the letter rate) the sender should make application for in- 
 demnity to the postmaster at the office where the piece was 
 mailed. The postmaster will furnish a blank form for that 
 purpose. 
 
 " Registered mail is deliverable only to the addressee or 
 upon his written order, or to the person in whose care it is 
 addressed. The sender may, however, restrict delivery to 
 the addressee in person by indorsing upon the envelope or 
 wrapper the words ' Deliver to addressee only.' The words 
 ' Personal ' or ' Private ' do not so restrict delivery. Persons 
 applying for registered mail, if unknown, will be required to 
 prove their identity. 
 
 " Registered mail will be forwarded upon the written or
 
 MONEY AND INVESTMENTS 335 
 
 telegraphic order of the addressee first-class matter im- 
 mediately and without extra charge; other matter upon 
 prepayment of the postage chargeable by law for forwarding. 
 No additional registry fee is chargeable for forwarding or 
 returning registered matter. 
 
 " When the sender of registered mail desires to reclaim or 
 recall it, at any time before its delivery, application for this 
 purpose must be made to the mailing postmaster." 
 
 Registered Stock. This differs from the ordinary stock, as 
 a certificate of the former cannot be transferred without the 
 signature of the owner (or one authorized to sign for him) 
 being placed upon the books of the company, in which it 
 represents ownership, and the delivery of the certificate. 
 
 Regular (or Regular Way). According to the New York 
 Stock Exchange Rules, delivery of the security before a 
 certain fixed hour (2.15 P. M.) upon the first business day 
 following the making of the contract. Regular sales made on 
 Friday, however, go over until Monday before delivery. 
 
 Regular Dividend. See " Dividend, Extra." 
 
 Reich-Marks. As referred to in " foreign exchange " 
 transactions, exchange on Germany is understood. (See 
 " Mark.") 
 
 Reis. See " Milreis." 
 
 Reischbank. See " Bank of Germany." 
 
 Release of Mortgage. When the holder of a mortgage has 
 received payment for the debt, or satisfaction of the other 
 obligations or conditions which the mortgage was given to 
 secure, it is not sufficient that he should simply relinquish 
 possession of the papers evidencing the security, but must 
 execute and sign a " release of mortgage," as it is called, which 
 the debtor mortgagor sends to the office of Register of 
 Deeds and has recorded. This shows a discharge of the obliga- 
 tion and that the property is no longer encumbered with the 
 mortgage. 
 
 Blank forms of release may be obtained at many stationers 
 for the particular State in which they are desired for use. 
 
 Remainder-Man. The one to whom an estate goes after a 
 certain estate is determined. 
 
 Re-margin. To give more " margin." (See that subject.) 
 
 Remedy Allowance. This is a variation allowed to the 
 English mint from the specified standard of weight and fine- 
 ness. As an example, the standard of fineness of the English 
 sovereign is ll-12th fine gold and l-12th alloy; with a total 
 weight of 123.27447 imperial grains. A variation from this 
 is allowed of .20 imperial grains. That is, the weight of fine 
 gold in the English sovereign must not vary more than
 
 336 MONEY AND INVESTMENTS 
 
 2-10th of a grain from ll-12th of the total weight above 
 given. 
 
 In America, we call this legal variation which is allowed 
 by our coinage laws, the " Remedy of the Mint." 
 
 Remedy of the Mint. See last subject. 
 
 Remit. To transmit money or its equivalent. A " remit- 
 tance " is the act of transmitting money bills or the like 
 to some person at a distance. 
 
 Remittance of Money. See " Shipment of Money." 
 
 Renewal. A " renewal of a loan " is to extend it after it 
 matures. 
 
 Renewal Bonds. Created to extend an issue due; same as 
 " refunding bonds." 
 
 Rent-Charge Stocks. An English term much the same in 
 meaning as our guaranteed (leased lines) railroad stocks. 
 
 Rentes. Usually the Government bonds of France. The 
 total debt of France amounted, in 1905, to $5 878,822,695, 
 of which $5,005,246,780 was held principally by the industrial 
 classes. 1 It was the largest of existing debts, with Russia next. 
 
 Reorganization. Rearrangement of the financial plan or 
 capitalization of a corporation which has been unable to meet 
 its obligations at maturity, so that interest and dividends 
 may be earned and paid. New management may be needed 
 and possible changes in the physical condition of the property. 
 (See " Readjustment.") 
 
 Reorganization Committee. By reading the last subject it 
 will be understood that the working out of a new system 
 of. capitalization for a corporation in financial difficulties must 
 be placed in the hands of some persons competent to deal 
 with the same. It is the custom for the security holders to 
 select a number of men for this purpose, which are known as 
 the " reorganization committee," and who are often given 
 broad powers, the securities being deposited with some trust 
 company under a plan of reorganization, which may be called 
 a bondholders' or stockholders' agreement, or designated 
 by some such title. 
 
 Representative Money. Explained under " Real Money." 
 
 Repudiate. To refuse to pay a debt; to dishonour one's 
 obligation or promise. 
 
 Required Reserve. (As used in the " Bank Statement.") 
 See " Reserve." 
 
 Reserve. All national banks in New York, Chicago, and 
 St. Louis which are known as " central reserve cities " 
 are required, by law, to have on hand at all times in lawful 
 
 1 J. Martin Miller, United States Consul at Rheims.
 
 MONEY AND INVESTMENTS 337 
 
 money of the United States an amount equal at least to 25% 
 of the aggregate of their deposits in all respects. This is 
 called " reserve." 1 National banks in thirty-nine other 
 prominent cities, which are known as " reserve cities," while 
 compelled to maintain this 25%, are permitted to deposit 
 one-half of the amount with national banks in the " central 
 reserve cities." All national banks in the United States, 
 other than those located in " central reserve cities " or " re- 
 serve cities," but known as country banks, must maintain 
 a " reserve" of 15% of their deposits; but of this amount 
 they may keep three-fifths on deposit in either the " reserve " 
 or " central reserve cities." 
 
 On Sept. 29, 1902, the Secretary of the Treasury made a 
 ruling permitting national banks to forego the necessity 
 of maintaining a 25% " reserve " against deposits of public 
 money secured by Government bonds. (See " United States 
 Depository.") As a result, the weekly statement of the New 
 York Clearing-House Association banks now shows this 25% 
 figured both ways: the public money considered as any other 
 deposit, and, again, in accordance with the Department ruling. 
 The banks have, nevertheless, maintained " reserves " against 
 Government deposits to this day. 
 
 The " reserve " of the Bank of England is explained under 
 the last part of " Bank of England Statement." 
 
 The difficulty of making clear this term as used among those 
 in the business of life insurance is demonstrated by the follow- 
 ing extract from a letter from a well-known life insurance 
 official: " It is not as easy as one might think to give a 
 definition of the word ' reserve,' as used in the life offices, 
 that will be immediately recognized by the layman. Even 
 actuaries, when they come to an analysis, dispute on the 
 definition." 
 
 The writer has obtained no less than seven distinct and 
 varying definitions for this term, two of which are given 
 below: 
 
 " A sinking fund computed each year to be held in possession 
 by the life insurance company in well invested assets at a 
 given rate of interest to make good, with expected premiums, 
 each contract at maturity." 
 
 " The reserve is the excess amount charged in the early 
 years of ' level premium policies ' to offset the failure to in- 
 crease the premium during the later years. This reserve is 
 invested by the company, and the proceeds from it make up 
 the deficiencies in the later premium payments." 2 
 
 Reserve Agent. A bank located in either a " central re- 
 serve city " or a " reserve city," which, with the approval 
 
 1 See footnote to " Central Reserve Cities." 
 1 World's Work, April, 1906.
 
 338 MONEY AND INVESTMENTS 
 
 of the Comptroller of the Currency, may be selected as a 
 depository in which banks in other cities may keep a portion 
 of their " reserve." 
 
 Banks in " central reserve cities " may act as " reserve 
 agents " for banks located in either " reserve " or " undesig- 
 nated cities; " banks located in " reserve cities " only for 
 those in " undesignated cities." (Refer to the subjects in 
 quotations.) 
 
 Reserve Banks. National banks located in " reserve 
 cities." (See subject in quotations; also " Central Reserve 
 Banks.") 
 
 Reserve Cities. Certain large cities in the United States 
 in which the national banks shall at all times have on hand, 
 in " lawful money " of the United States, an amount equal 
 to at least twenty-five per centum of the aggregate amount 
 of its deposits in all respects." 1 All such banks, with the 
 exception of " National Gold Banks," may keep one-half of 
 their lawful money reserve in cash deposits in a bank in a 
 " central reserve city " which has the approval of the Comp- 
 troller of the Currency as their reserve agent. 
 
 " Reserve cities " are for the purpose of furnishing large 
 centres in which country banks may deposit part of their 
 funds for the convenience of being able to draw checks on a 
 larger money centre and on Jan. 2, 1907, were as follows: 
 
 Boston, Albany, Brooklyn, Philadelphia, Pittsburg, Balti- 
 more, Washington, D. C., Savannah, New Orleans, Louisville, 
 Dallas, Forth Worth, Houston, Galveston, Waco, San An- 
 tonio, Seattle, Cincinnati, Cleveland, Columbus, Indianapolis, 
 Detroit, Milwaukee, Cedar Rapids, Des Moines, Dubuque, St. 
 Paul, Minneapolis, Kansas City, Kan., Wichita, Kansas City, 
 Mo., St. Joseph, Lincoln, Omaha, Denver, Salt Lake City, 
 San Francisco, Los Angeles, Portland, Ore. 2 
 
 Banks in these cities may be selected as " reserve agents " 
 for " country banks." 
 
 Reserve Excess. Meaning the same as " Surplus Reserve." 
 
 Reserve Fund. The English equivalent of our " surplus." 
 
 Reserve Held. As used in the " bank statement " this 
 indicates the amount of " reserve " (see that subject) as 
 actually held by the banks, without regard to the legal re- 
 quirements. 
 
 Reserve on all Deposits. This is explained under " New 
 Reserve." 
 
 Reserve on Deposits Other Than United States. This is 
 explained under " New Reserve." 
 
 1 See footnote to " Central Reserve Cities." 
 
 2 Above list furnished by the Treasury Department in Washington.
 
 MONEY AND INVESTMENTS 339 
 
 Resources. Property of all kinds; everything owned; cash 
 on hand, notes and bills receivable, merchandise; in fact 
 everything that one possesses, including what is due him. 
 
 Respondentia. A loan on the cargo of a vessel, payment 
 being contingent on the safe arrival of the cargo at the port of 
 destination the effect of such condition being to except 
 the contract from the common usury laws. 
 
 Rest. Surplus or undivided profits; the accumulated and 
 undivided profits of the " Bank of England " are its " rest." 
 With us " surplus " is the term commonly used. 
 
 Restrictive Indorsement. Sometimes the indorser of an in- 
 strument may wish to prevent its further negotiability, and 
 attaches some words to his indorsement to that effect. This 
 is a " restrictive indorsement." Examples, " For collection " 
 or " for account of," or " pay to James Frazer only." 
 
 Resumption of Specie Payment. First, read " Suspension 
 of Specie Payment." On Jan. 14, 1875, what was known as 
 the Resumption Act was approved, by which the Secretary 
 of the Treasury was directed to make provision for the re- 
 demption of United States notes, or " greenbacks," in coin, 
 beginning with Jan. 1st, 1879, and further authorized him 
 to use surplus revenues, as well as to sell bonds at not less 
 than par in coin, for that purpose. 
 
 Retreating Market. Prices declining. 
 
 Return. We speak in this country of the " Bank State- 
 ment." Abroad " return " is used as the equivalent to our 
 " statement." For example, " Return of the Bank of Eng- 
 land." 
 
 Revenue Bonds. A temporary debt created for the purpose 
 of raising funds for current expenses, and in anticipation of 
 the collection of taxes. Such a debt, however, is usually in 
 the form of notes. 
 
 Rhode Island. Rhode Island Copper Co. There are also 
 the R. I. Perkins Horse Shoe Co., and the R. I. Securities Co. 
 (street railways.) 
 
 Ribs. Refer to " Short Ribs." 
 
 Rich Man's Panic. The meaning of the word " panic " 
 being understood, which will be found explained under that 
 subject, it will be an easy matter to comprehend that " rich 
 men's panics " are sudden declines in stock market values 
 brought about by the wealthy speculators and operators 
 suddenly trying to convert their holdings into cash, resulting 
 in injury to themselves rather than to the small speculator or 
 trader. 
 
 Rigged. A term which has about the same meaning as " ma- 
 nipulated." When the stock market has been " rigged" it is
 
 340 MONEY AND INVESTMENTS 
 
 understood that events have been made to transpire in 
 accordance with the wishes of those powerful enough to 
 effect such results. A trap is rigged to catch the unwary 
 animal; the market is rigged to catch the unwary speculator 
 or investor. 
 
 Right Price. First understand " Options." In London it is 
 usual to refer to the ordinary market price for a forward bar- 
 gain in firm stocks as the " right price " for the period in 
 question. 1 
 
 Rights. When a corporation has occasion to bring out a 
 new stock issue, the privilege may be given to the stockhold- 
 ers, as of record at the time, to subscribe for the new stock at 
 a price less than the existing market quotations of the old 
 stock. The number of shares of new stock to which one may 
 subscribe depends upon the number of original shares which 
 he owns. The privilege to subscribe for each new share is one 
 " right." It is used in the plural when two or more shares 
 may be subscribed for. Such a privilege generally has a 
 value the value largely depending, of course, upon the 
 price at which the original stock is selling in the market 
 and if the stockholder does not wish to avail himself of it, 
 he can usually sell the " right " to subscribe in his stead to 
 some other party. " Rights " are dealt in much the same 
 as other securities. They may apply to other securities than 
 shares of stock. (See " Arbitrage.") 
 
 The commission charged by the New York brokers for the 
 purchase and sale of " rights " is the same as the amount he 
 would receive for buying or selling the number of shares called 
 for under the " rights." 
 
 When a stockholder receives " rights " he should not con- 
 sider them as dividends, even although they have a value, 
 for it is usual for the old shares to decline in the market about 
 the equivalent of the value of the " rights." 
 
 Ring. As used in reference to speculation, it is practically 
 the same as " clique." 
 
 Rio Tinto. Rio Tinto Co., Ltd. A copper mine located in 
 Spain; largely an English and French owned corporation. 
 The stock is extensively handled in London. 
 
 Rock Island. The Rock Island Co., a " holding company " 
 (see that subject) owning the entire capital stock of the 
 Chicago, Rock Island and Pacific R. R. Co. Through the 
 latter it controls the Chicago, Rock Island and Pacific Railway 
 Co., and the St. Louis and San Francisco R. R. Co., and has 
 one-half interest in the capital stocks of the Houston and 
 Texas Central R. R. Co., Houston, East and West Texas 
 Ry. Co., and Houston and Shreveport R. R. Co. 
 
 1 Leonard R. Higgins.
 
 MONEY AND INVESTMENTS 341 
 
 Rolling Stock. Locomotives, cars, hand cars, snow plows; 
 in fact all such equipment of a steam, electric, or other rail- 
 way. 
 
 Room Shorts. (See " Selling Short.") Members of the 
 stock exchange and who do the actual trading thereon; that 
 is, " board men," who have been " selling short." 
 
 Room Traders. See " Traders." 
 
 Round Transaction (or Trade). A complete transaction; 
 i. e. buying what has been sold, to make good one's contracts, 
 or selling what has been bought. A purchase of 100 shares 
 of Union Pacific followed by its sale is a " round transaction." 
 
 Round Turn. Explained under " Cotton." 
 
 Royal Blue Line. The Baltimore and Ohio R. R. Co. 
 
 Royal Exchange. Where transactions in foreign exchange 
 occur in London. 
 
 Rs. The sign for the " rupees " of India, as $ is for our dollar. 
 (See also " Rupee.") 
 
 Rubber. United States Rubber Co. 
 
 Rubber Goods. Rubber Goods Manufacturing Co. 
 
 Ruble. The unit of money in Russia, and equal to 51 \ 
 cents in United States money. 
 
 Run. 1 " Run on a bank." A prevailing belief that a bank is 
 insolvent, or in a condition likely to make it difficult for the 
 depositors to secure their money on demand, often causes a 
 sudden panicky rush among the bank's depositors for the 
 purpose of withdrawing what is due them. This is referred to 
 as a " run " and sometimes brings financial disaster to the 
 bank, or at other times a prompt payment of all claims may 
 restore confidence, stopping the " run." 
 
 Runner. A bank's " runner " is its messenger. 
 
 Runner's Exchange. To comprehend this, an understanding 
 of the matter under " Clearing-House " is first necessary. The 
 " runner's exchange " is an adjunct of the Philadelphia 
 Clearing-House. It is a secondary exchange, as it were, which 
 
 1 James William Gilbart, writing in 1834, said: " In the year 1667 
 occurred the first ' run ' of which we have any account in the history of 
 banking. The business of the new-fashioned bankers had increased so fast, 
 and they had become so numerous, that their trade was supposed to be at 
 its height in this year; when, during the time that a treaty of peace was 
 under consideration, the Dutch fleet sailed up the Thames, blew up the 
 fort of Sheerness, set fire to Chatham, and burned four ships of the line. 
 This disaster occasioned great alarm in London, particularly among those 
 who had money in their banker's hands, as it was imagined that the king 
 would not be able to repay the bankers the money they had lent him. To 
 quiet the fears of the people, the king issued a proclamation, declaring that 
 the payments to the bankers should be made at the Exchequer the same 
 as usual."
 
 342 MONEY AND INVESTMENTS 
 
 takes place later than the regular morning " clearing." It 
 includes items due that day and received in the morning 
 mail, which are made payable at the banks, and saves the 
 necessity of the " runner's " going from bank to bank, which, 
 in Philadelphia, is a laborious task, owing to the widely 
 distributed territory which they cover. 
 
 Inasmuch as the regular " clearing " for the day takes 
 place at an early hour in the morning, covering only items 
 for the previous day, the " runner's exchange " enables the 
 banks to ascertain before closing, whether or no items re- 
 ceived that day are good. 1 
 
 Running Account. See " Open Account," which is the 
 same thing. 
 
 Rupee. Although the " sovereign " (pound sterling) is the 
 standard coin of India, the silver " rupee " is the " money of 
 account; " that is, the actual money in current use, and is 
 current at the rate of fifteen to the sovereign. A " rupee " 
 is equivalent to $.3244J United States money. 2 An American 
 dollar is roughly reckoned as the equivalent of three " rupees." 
 
 " Rs " is the sign of the " rupee." A " lac " is used to 
 designate 100,000 " rupees." The method of writing and 
 pointing off sums of Indian money in excess of a " lac " is 
 thus: Rs 80,35,000, indicating 80 " lacs " and 35,000 " ru- 
 pees " over; equivalent to 8,035,000 " rupees." A " crore," 
 as a " crore of rupees," is 10,000,000 " rupees " or 100 " lacs." 
 
 INDIA MONEY TABLE 
 
 1 pie = $.0016899 + 
 
 12 pies = 1 anna = .0202791 + 
 16 annas = 1 rupee = .3244J 
 
 Rupee Paper. The Government securities in India being 
 payable, both principal and interest, in " rupees " (a silver 
 coin equal to $.3244J United States money), are termed 
 " rupee paper." When, however, payment is demanded in 
 England, bills of exchange on Calcutta are given. 
 
 Rutland. Rutland Railroad Company. 
 
 s 
 
 S. The " ticker " abbreviation for South, Southern, Series, 
 or Shares; and also for Seller, when accompanied by figures, 
 as for example, BO. 110. S10, which indicates that Baltimore 
 
 1 This exchange ceased to exist Feb. 1, 1907, as the Philadelphia Clear- 
 ing-House Association decided to abolish it and consolidate the two " ex- 
 changes " into one daily " exchange " at 10 o'clock. 
 
 2 Treasury Department Circular, October 1, 1905.
 
 MONEY AND INVESTMENTS 343 
 
 & Ohio common stock was sold at 110, but that the seller, by 
 giving one day's notice to the buyer, is entitled to make de- 
 livery any time within ten days. Of course the ten days is 
 only used to illustrate, the figures would vary according to 
 the terms of the transaction. (See also " Seller's Option.") 
 
 s. The sign for the English " shilling." The modern way 
 of indicating shillings, however, is by an oblique line between 
 the sums for shillings and pence; as, for instance, 5s. 4d. is 
 written 5/4. 
 
 Sack. A sack of export flour contains 140 pounds. A sack 
 of Rio coffee is estimated at 200 pounds and Java at 133 
 pounds. 
 
 Saddle. To force an undesirable security upon any one 
 would be to " saddle " him with it. 
 
 Safe Deposit Companies. Companies incorporated for the 
 purpose of receiving upon deposit, for storage and safe- 
 keeping, stocks, bonds, and other valuable papers, money, 
 bullion, jewelry, household gold and silverware, and such 
 other valuables as it is considered wise, not only to store 
 beyond the risk of fire, but also of burglars. Such companies 
 are supposed to have very extensively built vaults, furnishing 
 sufficient protection for these purposes. In addition to storage 
 room for valuables of a more or less bulky nature, these com- 
 panies have what are known as safe deposit boxes, the rental 
 of which really constitutes their principal business. In these 
 boxes, which are of various sizes, the rental varying pro- 
 portionately, may be kept investment securities and valuable 
 papers. The access to such a box is obtained by the lessee 
 possessing a key, which will only unlock the box after a 
 previous unlocking of the same by an employee of the safe 
 deposit company, who has what is known as a " master key," 
 neither one being able to effect an entrance without the 
 other. The necessity for this safeguard is self-evident. It is 
 very customary, also, for the customer to be given a password, 
 which, in case of doubt upon the part of the employee as to 
 the customer's identity and right to seek entrance to the box 
 corresponding in number with his key, he may give the pass- 
 word, which must be found to correspond with the records 
 of the company before doubt may be removed. 
 
 Advice to all investors and owners of securities cannot be 
 too strenuously urged in regard to the renting of safe deposit 
 boxes, and to further impress this advice upon such persons, 
 reference is here made to another part of this book: viz., 
 " Care of Securities." 
 
 Sag. " The market is sagging." A small but general decline 
 in prices. " The market did not break, it sagged." Think of 
 a telegraph wire suspended from two poles, covered with a
 
 344 MONEY AND INVESTMENTS 
 
 frozen mass of ice and sleet; sagging is one thing, breaking is 
 more serious. 
 
 Saint Paul. Chicago, Milwaukee, and St. Paul Ry. Co. 
 
 Sale to Arrive. A sale dependent upon the safe arrival of 
 goods in transit. 
 
 Salt. A mine is " salted " when good ore is placed there 
 artificially for the purpose of deceiving. 
 
 Sanitary District Bonds. Separate municipalities, not terri- 
 torially the same as the cities which they embrace, but, usually, 
 greater in extent, have at times been formed for the purpose of 
 securing pure water supplies, removal of sewage, etc. The 
 Sanitary District of Chicago is the most notable example. It 
 has its own officials and creates its own indebtedness, for which 
 all the taxable property therein is held for payment. It is 358 
 square miles in extent; embraces all of Chicago and consider- 
 able adjacent territory, and is legally permitted an indebted- 
 ness of not exceeding 5% of the assessed valuation, but in no 
 event over $20,000,000. The well-known " Chicago Drainage 
 Canal " is the effort of this district. 
 
 Santa Fe". The Atchison, Topeka & Santa Fe Railway Co. 
 Also Santa Fe Gold & Copper Mining Co. 
 
 Satisfied. When an indebtedness or obligation is paid, it is 
 said to be " satisfied." 
 
 Savings Bank (or Institution). A bank organized under the 
 State laws, or under Federal laws if in the District of Colum- 
 bia, for the purpose of receiving deposits, the intent being that 
 such deposits shall largely be the savings of the small earners, 
 such as labourers, wage earners, and small salaried persons in 
 general, who are not expected to be in a position to intelli- 
 gently invest money for themselves, and whose savings are so 
 small that no adequate form of investment can easily be found. 
 The aggregate of these savings in any one bank is supposed to 
 be invested by an intelligent board of men elected for that 
 purpose, usually called the " Board of Investment " or 
 " Finance Committee." The legal restrictions placed upon the 
 investment of " savings bank " funds vary greatly in different 
 States, some being very strict and conservative and properly 
 safeguarding the interest of the depositors; others woefully 
 lax and unsafe. At present the States with the best regula- 
 tions, beginning with the most conservative, are New York, 
 Massachusetts, Connecticut, and then perhaps Vermont, 
 Maine, and New Hampshire. 
 
 In selecting a savings bank for the purpose of making a 
 deposit, one of the essential things to consider is the class of 
 securities in which the funds of the institution are invested. 
 A list of a bank's investments may be generally obtained from 
 the officials of the bank under consideration. Failing to
 
 MONEY AND INVESTMENTS 345 
 
 obtain one there, application may be made to the Board of 
 Savings Bank Commissioners at the State Capitol, for the 
 last Annual State Savings Bank Report. It is customary, in 
 most States, for these reports to list, separately, the security 
 holdings of each institution. 
 
 One able financial writer makes a very good point that 
 institutions of this kind do not conduct strictly a banking 
 business; that is, they take deposits not for their own use, 
 but for the safe-keeping and benefit of the depositors, making 
 safety a consideration before profit. 
 
 Although there are thousands upon thousands depositing 
 in the savings institutions of this country, yet there are count- 
 less others who ought either to place their funds therein or a 
 greater proportion than they now do. Small as may seem the 
 interest returned to the depositors by these institutions, yet it is 
 a fact that they furnish by far the safest and, in the long run, 
 the most profitable employment for the savings of a great 
 majority of people of limited means. The larger bulk of the 
 loss which the uninitiated incur by speculating in State and 
 Wall Streets could be avoided if temptation could be resisted, 
 and their earnings turned into the savings institutions rather 
 than squandered upon the gambling wheel of speculation. 
 
 An idea of the growth of a savings bank account may be 
 gathered from these figures: 25 cents saved weekly and com- 
 pounded twice a year at 4% per annum will amount to $403 
 in twenty years; 50 cents will amount to $806; and $5.00 to 
 $8,070. 
 
 Interest ranging from 3 to 5%, according to the bank, is 
 paid on money deposited, in accordance, of course, with the 
 rules and regulations of the institution. 
 
 The laws of different States, or the regulations of different 
 banks, vary more or less as to the amount which any one 
 depositor may have standing to his credit on the books in any 
 one bank. Unfortunately, this rule is easily avoided by a de- 
 positor's making use of the name of his wife, mother, sister, 
 etc., and opening up accounts under their names. 
 
 The deposits of all the savings banks of this country are 
 estimated at over $3,200,000,000, belonging to 7,696,229 
 persons and divided among 1,237 banks. In 1820 there were 
 but ten banks, $1,138,576 deposits and 8,635 depositors. 
 
 It may interest some to know that we are indebted to 
 Daniel Defoe of " Robinson Crusoe " fame, as the originator 
 of the modern " savings bank " idea. One was founded in 
 Hamburg in 1778 and at Berne in 1787, the idea having been 
 suggested by Defoe in 1697. The Rev. H. Duncan, of 'Ruth- 
 well, Dumfriesshire, is, however, known as the " father of 
 savings banks," as he established one in 1810, which at the 
 end of four years had accumulated $5,800. Acts to encourage
 
 346 MONEY AND INVESTMENTS 
 
 " savings banks " were passed in 1817 in England. (See also 
 " Mutual Savings Bank.") 
 
 Savings Bank Account, How to Open. See " How to 
 Open a Savings Bank Account." 
 
 Savings Bank Bonds. As this term is used among financiers, 
 bonds which certain Eastern States that have passed the most 
 conservative legislation in relation to bonds in which the 
 savings banks therein may invest, as New York and Massa- 
 chusetts, are commonly understood. The term may, however, 
 be used to refer to bonds which the savings banks of any 
 State may buy provided that State has passed any restrictive 
 legislation whatsoever in relation thereto. 
 
 Savings Banks with Capital Stock. Explained under 
 " Mutual Savings Bank." 
 
 Savings Institution. See " Savings Bank." 
 
 SB. The " ticker " abbreviation for " small bonds." 
 
 SC. The " ticker " abbreviation for " scrip." 
 . Scaled. When a corporation or municipality is unable to 
 meet the principal of, or interest on, a debt, and is able to 
 arrange a continuation of the debt at a lesser rate of interest, 
 or an extension of the debt for a lesser principal sum, or both 
 of the above, then the interest has been " scaled," or " the 
 debt scaled," or both, as the case may be. 
 
 Scaled Buying or Selling. Transactions of a security made 
 in equal amounts upon a scale of prices; for instance, a 
 " scaled buying " of Union Pacific may be buying lots of 100 
 shares each as the stock advances every two points. 
 
 Scalping. " Scalping points off the deal." This expression 
 has reference to those taking advantage of what seems some 
 hidden scheme in processof consummation, causing an advance 
 in prices of certain securities. Although, not knowing just 
 what the " deal " is, such persons take advantage of the rise 
 in prices and buy and sell accordingly, making small profits. 
 By this method, they are said to have been " scalping " 
 profits. Making a quick and small profit is " scalping." 
 
 Scandinavian Union. Norway, Sweden, and Denmark 
 have adopted the same monetary unit, viz.: a single gold 
 standard with the krone, or crown, as the unit, which equals 
 about 26.80 1 cents United States money. 
 
 School District Bonds. See " Board of Education." 
 
 School Savings Banks. A system adopted by many schools 
 throughout the country to encourage saving among the 
 pupils. The money saved by them during the week is col- 
 lected by the teachers once a week at the opening of the school 
 
 1 Oct. 1, 1905, circular of the United States Mint.
 
 MONEY AND INVESTMENTS 347 
 
 session, and turned over to the principal, he placing it in a 
 savings bank in the name of each depositor. 
 
 Deposits of $300 and over draw interest; no deposit of less 
 than $3.00 can be withdrawn, except in case of sickness or 
 removal from the city. 
 
 On January 1, 1906, there were 5,293 such banks in opera- 
 tion. These were in 1,023 schools of 122 cities of 25 States. 
 The amount which had been collected up to that date was 
 $4,864,575.98, of which $3,641,015.66 had been withdrawn, 
 leaving a balance due to 384,587 of these little depositors, on 
 that date, of $1,223,560.32. 1 
 
 Scrip. In financial transactions, a temporary paper or 
 certificate is often issued, to be exchanged later for money or 
 a permanent certificate, or whatever the " scrip " entitles 
 the holder to receive. " Scrip " is frequently issued during a 
 reorganization, or stock conversion, to represent fractions of 
 shares of stock. When enough of these are presented to 
 represent a whole share they may be exchanged for one. 
 " Scrip " is a name applied to a paper entitling a person to the 
 receipt of a dividend to be paid later, but in common usage 
 such a paper is called a " due-bill." During the Civil War, 
 and shortly following that time, fractional paper currency 
 was issued called " scrip." 
 
 Scrip Dividend. Sometimes corporations wish to declare a 
 dividend in some other form than cash, or declare what is 
 known as a " stock dividend," and, to that end, may issue 
 what substantially amount to " due-bills," carrying no voting 
 power, but generally at some later date convertible into stock; 
 but no dividends would be declared upon the same until 
 conversion had taken place, although they might bear interest 
 in the meantime. 
 
 S. D. M. J. September, December, March, and June; 
 interest or dividends payable quarterly beginning with 
 September. 
 
 Sealed Bid. When an issue of bonds is offered for sale and 
 for which the intending buyers must submit " sealed bids," 
 such buyers must state clearly in writing what they will pay 
 for the bonds, in accordance with the conditions imposed by 
 the seller. The buyer, usually, adds such conditions regarding 
 the legality of the issue, etc., as may seem to him wise. Most 
 issues of municipal bonds are sold in this way. The " sealed 
 bids " must all be in by a fixed date and should properly be 
 opened in the presence of those authorized to make the sale, 
 and, so far as may be, at the same time. This ensures all 
 bidders being treated alike. After opening the bids the bonds 
 
 1 The writer is indebted to J. H. Thiry, of Long Island City, N. Y., who, 
 above all others, is conversant with this subject.
 
 348 MONEY AND INVESTMENTS 
 
 are " awarded," or sold, to the highest responsible bidder who 
 is given a reasonable time to satisfy himself as to their being as 
 advertised, and valid. Sometimes a deposit is required of a 
 certain amount in cash, or its equivalent, with each bid, 
 which is called a " forfeit." It is customary to use for this 
 purpose a " certified check " for the amount required, and 
 made payable, for instance, as follows: " Pay to the city of 
 New Orleans, when accompanied by one hundred thousand 
 dollars, par value, of legally issued bonds of the said city " - 
 describing the bonds. This prevents the use of the check by 
 the city in case it cannot, or does not, comply with the con- 
 ditions as to legality imposed by the bidder. 
 
 The question of the proper wording of a " sealed bid " has 
 been much discussed and different forms are in use, but after 
 describing the issue, for which the bid is being submitted, the 
 following wording may be used as a protection to the bidder. 
 
 " The usual papers evidencing the legality of the issue 
 satisfactorily 1 to our attorneys to be furnished us prior to our 
 taking up and paying for the bonds." 
 
 It is not unusual for municipalities, in advertising for sale 
 an issue of bonds upon which sealed bids will be received, to 
 reserve the right to reject any or all bids. This safeguards 
 them against the necessity of making a sale, provided no 
 satisfactory bid is received. 
 
 Seat. One who possesses membership in an " exchange " 
 would be said to possess a " seat " therein. 
 
 Seat on the Stock Exchange. See " Stock Exchange Seat." 
 
 Second Consolidated Mortgage Bonds. An issue secured by 
 a mortgage subsequent to one " consolidated mortgage " 
 (refer to " Consolidated Mortgage Bond ") already covering 
 the property, and to all other prior mortgages. It bears, 
 roughly speaking, the same relation to all the earlier mort- 
 gages as the " consolidated mortgage " issue does to all issues 
 prior to that one. A bondholder of this class must consider 
 the sum total of all prior indebtedness secured by the " first 
 consolidated " and earlier mortgages, in order to determine 
 what value, if any, there is left in the property to secure his 
 investment. It must certainly rate along somewhere with 
 a " third mortgage " and perhaps a " fourth." Yet the rapid 
 increase in the value of the property due to good business and 
 large improvements may warrant the debt. 
 
 Second Mortgage. A mortgage placed upon property which 
 already has another mortgage existing upon it; for instance, 
 a certain piece of real estate supposed to be worth $10,000 
 has already existing upon it a mortgage for $5,000; the 
 
 1 Note the spelling of this word.
 
 MONEY AND INVESTMENTS 349 
 
 owner wishes to borrow $2,000 more, and finds some one who 
 is willing to accept a " second mortgage," upon the same, for 
 that amount, making the total mortgage indebtedness against 
 the property $7,000. Suppose the owner of the property is 
 unable to pay the interest, when due, on the " second mort- 
 gage; " in order for the holder of this mortgage to protect 
 himself, he must foreclose the property under his own mort- 
 gage and pay the holder of the first mortgage his due. 
 
 In taking a " second mortgage " one should have reason to 
 believe that the property will, at any time during the life of 
 his mortgage, bring at forced sale a price sufficient to pay off 
 both mortgages, because the first mortgage must be satisfied 
 in full before the " second mortgage " holder receives any- 
 thing. 
 
 Second Mortgage Bond. A bond secured by a mortgage 
 upon a property which already has one other mortgage exist- 
 ing upon it and which mortgage would have prior claim upon 
 the property and its earnings. (See " Second Mortgage.") 
 
 Second of Exchange. See " Set of Exchange." 
 
 Second Preference Shares. The English equivalent of our 
 " second preferred stock." 
 
 Second Preferred Stock. See " Preferred Stock." 
 
 Seconds. Second mortgage bonds. 
 
 Quotations in the newspapers regarding money rates appear 
 something like this: " The first commercial paper sells at 5%, 
 good names sell as high as 5J%, the names that are termed 
 ' seconds ' sell as high as 5%." " Good names," of course, 
 refers to the makers of notes, who, in this case, are rated at a 
 high standard of credit. " Seconds," therefore, would refer 
 to the next class of borrowers with not so good a standing. 
 
 Second Teller. The " receiving teller " of a banking 
 institution. 
 
 Second United States Bank. The organization of many local 
 banks followed the refusal to renew the charter of the First 
 Bank of the United States, which had expired in 1811. These 
 new banks, together with the existing war 1812 with 
 England, produced wild financiering and bank note inflation. 
 As a check upon these local banks and as a means of returning 
 to specie payments, the Second Bank of the United States was 
 chartered by Congress, April 10, 1816. It was to run for 
 twenty years, and was established at Philadelphia, with nine- 
 teen branches in other parts of the country. The capital was 
 $35,000,000, to which the Government subscribed for one- 
 fifth. The charter provided for the deposit of public moneys 
 in the bank, unless otherwise ordered by the Secretary of the 
 Treasury. At first, the bank was not a marked success;
 
 350 MONEY AND INVESTMENTS 
 
 there was more or less scandal attached to it. It went to the 
 verge of bankruptcy as the result of the most flagrant kind of 
 bad banking, and, instead of proving a check to the local 
 banks in their wild careers, it excelled them in their own 
 loose methods. Later, it became a sound and solid institution, 
 and grew to have twenty-five branches. 
 
 Twenty directors were elected each year by the stock- 
 holders, and five appointed by the President, subject to the 
 confirmation of the Senate. During most of the bank's 
 existence from 1823 until the charter expired it was 
 under the Presidency of Nicholas Biddle, who was both a 
 Government director and an elected director, so during his 
 management there were but twenty-four directors altogether. 
 
 Trouble was precipitated by opposition to the management 
 of the Portsmouth, N. H., branch. President Jackson grew 
 hostile to it, probably on account of not being able to control 
 the bank's appointments and actions politically. Jackson 
 had collected around him a little coterie of well-known 
 characters, other than members of his cabinet, who were 
 referred to as his " Kitchen Cabinet," prominent among 
 whom were Duff Green and Francis P. Blair, aided by their 
 newspapers, Isaac Hill, of New Hampshire, and Amos Kendall, 
 of Kentucky. As Sumner well puts it, " Andrew Jackson's 
 power and popularity, moving now under the impulse of the 
 passions which animate an Indian on the war-path, were the 
 engine with which these men battered down a great financial 
 institution." l An effort was made to renew the charter in 
 1832, and, although passed by Congress, was vetoed by Jack- 
 son. In 1833 he ordered the public moneys to be no longer 
 deposited in the bank, but distributed among certain State 
 banks. 
 
 Jackson professed to believe, as is shown by his message of 
 1835, that the bank had been in opposition to the Government 
 for four years, which proved the evil effects of such an institu- 
 tion. He declared the bank to belong to a system of distrust 
 of the popular will as a regulator of political power, and to a 
 policy which would supplant our system by a consolidated 
 government. 
 
 There had been more or less opposition to the bank through- 
 out the country. At one time, the popular feeling was such 
 that Kentucky and other States tried to tax the branches out 
 of existence. The local banks naturally anticipated with 
 pleasure the removal of their large competitor, and quite 
 generally lent their aid to Jackson's scheme of destruction. 
 
 Life of Andrew Jackson by William Graham Sumner. From this 
 admirable volume, and John Fiske's " History of the United States," the 
 writer drew largely for information regarding the bank.
 
 MONEY AND INVESTMENTS 351 
 
 There was quite a general belief that the bank had too great 
 a monopoly. There was an objection to the large foreign 
 stockholding; the system of making payments at one branch 
 with drafts on another was a grave error, etc., but in spite of 
 all this, there was a great public confidence in the bank which 
 nothing was able to shatter, as is evidenced by the following 
 figures: On January 1, 1833, previous to the removal of the 
 Government deposits, the assets stood at $80,800,000; lia- 
 bilities, $37,800,000; besides a capital stock of $35,000,000, 
 for the payment of which there was $43,000,000. The cir- 
 culation was $17,500,000. 
 
 The Government shares were paid off at the rate of $115 per 
 share. In January, 1836, about two months before the bank 
 went out of business, the stock was quoted at $116. - 
 
 Secured Creditor. One who has certain property as security 
 for the entire or partial satisfaction of his debt. 
 
 Securities. All forms of investments; stocks, bonds, mort- 
 gages, etc., of every kind; the written or printed papers that 
 represent the ownership of corporations, or the lender's 
 evidence of the borrower's indebtedness. 
 
 Securities Companies. These are " holding companies " 
 (to which refer), corporations formed to hold the shares of 
 other companies. The shareholders of the " securities com- 
 panies " own through this medium interests in other corpora- 
 tions. 
 
 Security Bills. " Bills of exchange " (which should be under- 
 stood first) drawn against shipments of stock, bonds, or other 
 securities. (See " Documentary Commercial Bill.") 
 
 Security Exchanges. Sometimes " stock exchanges " are 
 referred to as " security exchanges." 
 
 Security Insurance. A method of guaranteeing the interest 
 or principal, or both, of a security bonds, mortgages, etc. 
 If the company is satisfied with the risk, and the insured with 
 the premium asked, it will guarantee the latter against loss 
 from non-payment of the security in question. 
 
 Seigniorage. In the United States, this term has reference 
 to the profit arising from the coinage of bullion. As the 
 Government does not purchase gold bullion, but coins it for 
 private account, there is no profit on such coinage, the face 
 value of the coins being the same as their bullion value. There 
 is, however, a profit on the coinage of silver dollars based on 
 the present ratio of sixteen to one; therefore, when silver 
 bullion is purchased and coined there is a profit arising from 
 such a transaction, as the commercial value of silver is at the 
 present time far below the coinage value. " Seigniorage " 
 is, therefore, the profit arising from the difference between the
 
 352 MONEY AND INVESTMENTS 
 
 face value of the coin and the commercial value of the metal 
 which it contains. 
 
 Sell at the Market. An order to one's broker to " sell at 
 the market " gives the broker authority to sell the security 
 described at the best obtainable price. 
 
 Sell at the Opening. An order to sell immediately after the 
 opening of the stock exchange at the best price obtainable. 
 
 Sellers. " Sellers 71: " offered at 71. 
 
 Seller's Option. A stock exchange term for a contract 
 under which the seller of a security need not make de- 
 livery until the end of a specified time. He also has the 
 right to make delivery any time within the period covered by 
 the contract, by giving one day's notice to the buyer. The 
 understanding is briefly expressed as " seller 4," " seller 10," 
 the figures indicating the number of day's provided for in the 
 agreement. By the New York Stock Exchange rules the 
 time must be not less than four nor more than sixty days. 
 
 Upon Boards of Trade and Produce Exchanges, where 
 grain, cotton, coffee, etc., are dealt in, this method of trading 
 also exists with special rules and customs. (See " Delivery 
 Day.") 
 
 Seller the Month. A contract by the terms of which the 
 party selling may make delivery any time within the month. 
 
 Seller the Year. A contract by the terms of which the 
 party selling may make delivery any time within the year. 
 
 Selling at a Premium. Selling at a price higher than the 
 par or face value of the security. (See " Premium.") 
 
 Selling Off. Prices declining. 
 
 Selling on a Scale. Selling at regular intervals as the 
 market prices change. Example: A certain stock at 96, 98, 
 100, and so on, at every advance (or, reversing it, at every 
 decline) of 2%, selling a stated amount each time. 
 
 Selling Order. An order given to a broker to sell a certain 
 security, with or without limit as to price, as the case may be. 
 (See " Sell at the Market.") An order to sell is good for the 
 day for which it is given unless otherwise specified. Some- 
 times an order is given " good until countermanded," or 
 " good until cancelled," by which the broker understands 
 there is no definite limit as to time, but brokers, as a rule, 
 remind their customers at frequent intervals regarding such 
 an order, to be sure that the customer wishes it still to remain 
 in force. 
 
 Selling Short. Selling something which you do not own 
 with the expectation that the market price of the same will 
 decline so that the security or commodity can be bought at a
 
 MONEY AND INVESTMENTS 353 
 
 less price in season to fill the order; those in possession of 
 advance information regarding a stock, or who think they are, 
 " go short " of that stock sell for future delivery to 
 profit by the anticipated drop in price. The most noted 
 example was in the case of the Northern Pacific Railway stock, 
 the " selling short " of which caused so much misery on 
 May 9, 1901. Certain bankers in New York had obtained con- 
 trol of most of the Northern Pacific stock. This was unknown 
 to the public at large. An impression spread about that 
 Northern Pacific was very high and that there would be a 
 decline in price; the result was that many people sold it 
 " short." There was much more stock sold in this way than 
 there was stock in existence outside of that held by the 
 bankers above mentioned, and the people who had sold 
 " short " were unable, therefore, to buy enough to meet their 
 contracts. The result was that the stock rapidly advanced, 
 numerous failures resulted of concerns who were unable to 
 fill their orders at any price, and, in other cases, an enormous 
 advance in price was paid by people who did succeed in filling 
 their orders. 
 
 The query will naturally arise as to how delivery may be 
 made in the event of one's selling what he does not possess. 
 For an explanation of this, turn to " Borrowing Stock." 
 
 Sell Out. An understanding of buying on a " margin " is 
 first necessary. If a customer is unable to furnish " margin " 
 when called for by his broker, and the latter closes out the 
 account, he is said to have sold out his customer. 
 
 Semi-Annual Interest. Interest payable twice a year. If 
 interest on a bond is payable January 1st, the next corre- 
 sponding half yearly period would be July 1st. The interest, 
 or dividends, upon most investments are payable semi- 
 annually. 
 
 Semi-Tontine Insurance. See " Tontine Insurance." 
 
 Senior Mortgage (or Lien). First, or prior mortgage; 
 having precedence over some other mortgage or lien. " Senior 
 mortgages," when used in reference to some particular mort- 
 gage, would indicate all mortgages having prior claim (senior 
 to) that one. 
 
 Serial Bonds. An issue of bonds which is payable in in- 
 stalments. In California, every municipal issue must be made 
 payable and paid, not refunded during forty years 
 from its date. 
 
 A " serial bond " needs no sinking fund. It takes the place 
 of a sinking fund, and is one of the best methods of accom- 
 plishing results ordinarily obtained through the creation of 
 one. The Treasurer of Massachusetts has recently very wisely
 
 354 MONEY AND INVESTMENTS 
 
 inaugurated an issue of " serial bonds " with this very idea in 
 view. 
 
 The recent very able city treasurer of Boston, Mr. George 
 U. Crocker, suggests a plan for the issuing of " serial bonds " 
 perhaps better than anything yet attempted. Instead of 
 making the issue due in equal amounts yearly by which 
 method the greatest burden upon the tax-payer would be 
 during the first year, as the interest on the issue would then 
 be greater, the burden growing proportionately less each 
 year Mr. Crocker proposes that the issue shall be made due 
 in such annual instalments, which, taking into consideration 
 the interest, shall make the total amounts necessary to be 
 raised each year approximately equal. As the interest upon 
 the issue would constantly be growing less, the principal sum 
 falling due each year would consequently be greater. Mr. 
 Crocker has evolved this formula by which may be easily 
 ascertained the amount of principal sum which should be due 
 yearly under his plan: 
 
 P = total issue of bonds. 
 D! = amount to be drawn or paid 1st year. 
 D 2 = amount to be drawn or paid 2d year, 
 r = rate. 
 
 n = number of years to run. 
 Pr 
 
 n 1 
 Then Dj = (1+r) 1 
 
 D 2 -D,/l4-rt 
 
 D 3 =D 2 (l4-r), etc. 
 
 The objection to " serial bonds " arises entirely from the 
 point of view of the investor, as it may be impossible for him 
 to procure an amount of an issue due in one year sufficient to 
 satisfy him. This method of payment is objectionable to a 
 great many investors, and, in Mr. Crocker's case, a working out 
 to the actual amount maturing annually would naturally 
 result in many bonds of odd denominations, which are, as a 
 rule, undesirable. He, therefore, says that as "it (the for- 
 mula) cannot be used to definitely fix the amount of principal 
 to be paid each year for the reason that we must pay in even 
 thousands, my idea would be to use the formula first and then 
 adjust the results so that even thousands of principal would 
 fall due yearly." 
 
 It would be wise for anybody contemplating bidding for an 
 issue of " serial bonds " to refer to the subject " Net Return 
 upon the Investment," as the basis for figuring the income 
 return upon " serial bonds " has been confusing to many 
 even experienced bankers. 
 
 Under this subject it may be as well to treat of another bond 
 of this nature, a typical example of which is illustrated in the
 
 MONEY AND INVESTMENTS 355 
 
 case of the American Mail Steamship Company. This com- 
 pany issued some 6% bonds, the whole issue being payable in 
 ten annual instalments, but instead of certain bonds being 
 due each year, one tenth of each bond was made so payable, 
 being made up of ten principal coupons of $100 each, besides 
 the coupons for the interest, the interest coupons growing 
 proportionately less in amount from year to year. This 
 method treats every bondholder without partiality. In case 
 of the bonds eventually proving an unsatisfactory investment, 
 each holder would have had equal amounts paid off on each 
 bond. In case of certain numbered bonds maturing each year, 
 the holders of the earlier numbered bonds, in the event of 
 financial insecurity of the issue, would have been the fortunate 
 ones. The objection, of course, to a partial payment bond 
 by which this plan of issue should be technically known 
 is that unless the investor owns a considerable amount of 
 them, it will call for the re-investing of a small principal sum 
 annually, which is often undesirable. Theoretically, however, 
 the partial payment bond is the true method of payment, as 
 all holders fare alike. 
 
 Set of Exchange. (See " Exchange.") When a commercial 
 house in one country draws a bill of exchange against one in 
 another, it sometimes writes these in duplicate, possibly 
 triplicate, each being addressed in a separate envelope, and 
 sent by different routes to avoid inconvenience in case of 
 delay in the mails. Of course only the first one of these pre- 
 sented is paid. These are called " Set of Exchange," 
 collectively, and " First of Exchange," " Second of Ex- 
 change," or " Third of Exchange," individually. 
 
 Settlement-Day. See " Account-Day." 
 
 Settling Price. This amounts to the same thing as the 
 " delivery price " as described under " Stock Exchange 
 Clearing-House." 
 
 Seven Day Bills. In the " Bank of England Statement " 
 (to which subject refer) there appears this item: " 7-day 
 and other bills." The Bank Statement appears weekly upon 
 Thursdays. " Seven-day bills " are " bills of exchange " matur- 
 ing between the dates of such statements. For example: All 
 bills falling due for payment between the 18th and 25th of the 
 month will appear in the statement of the 18th as " seven- 
 day bills," or " short bills." 
 
 To be more explicit, the term " seven-day bills " signifies 
 the amount of seven-day " sight drafts " which the bank 
 has issued to customers who wish to make a payment in what 
 is practically a Bank of England note. To all intents and 
 purposes, they are checks, with the one exception that they 
 are not payable " on demand."
 
 356 MONEY AND INVESTMENTS 
 
 Seven Thirties. Bonds bearing interest at the rate of 7.3% 
 per annum. The writer knows of no such bonds being issued 
 at the present time, but they were more or less frequently 
 met with in the past, and some issues are still outstanding. 
 The peculiar rate was based on its being equivalent to 2c. 
 per day interest for each $100 invested. During the years 
 of the Civil War, the United States Government borrowed 
 large amounts by the- issuance of " seven thirties." Among 
 municipalities, Newport, Kentucky, has given us an example. 
 
 SF. The " ticker " abbreviation for " sinking fund." 
 
 Shade. To " shade " the price: to make a slight concession 
 in the price. 
 
 Shaded Off. This expression is commonly used in reference 
 to a slight decline in market quotations. 
 
 Shaking Out. When, by a process of manipulation, the 
 owners of stocks have been forced to sell, the stock exchange 
 broker refers to this as a " shaking out " of stocks. It is used 
 in reference to most anything speculated in. 
 
 Shareholder. See " Stockholder." 
 
 Shares. When this word is used in relation to investments 
 it has the same meaning as the word " stock," but is more 
 commonly used in England, Canada, etc., than in this country, 
 where " stock " or " shares of stock " are the usual expres- 
 sions. Still, in England they distinguish between " shares " 
 and " stock," as will be seen by referring to the latter subject. 
 
 Shaving a Note. Discounting a promissory note at a rate in 
 excess of the " legal interest." Imagine the legal interest rate 
 6%. $30 would be the greatest amount legally collectable on 
 a six months' note for $1,000, drawn with interest payable 
 at maturity. To get around this, a note may be drawn for 
 $1,000 without any mention whatsoever of the rate of interest, 
 but such sum as may be agreed upon deducted at the time the 
 note is purchased or negotiated. In other words, the note 
 would be " discounted " for $75 or $100, or whatever the 
 agreed amount. (See " Discount.") 
 
 Sheared. See " Fleece," meaning the same. 
 
 Shekel. The " shekel " of the ancient Jews signified a 
 weight. In those days money had no regular shape, and was 
 without marks or devices. Thus precious metals were com- 
 puted by weight when used in payments. A " shekel's " 
 weight was a little less than a troy half ounce. 
 
 Modern slang utilizes " shekel " to indicate that one has 
 money as " he has the ' shekels.' " 
 
 Sherman Act. On July 14, 1890, the " Bland-Allison Law " 
 was repealed and the " Sherman Act," so called, substituted
 
 MONEY AND INVESTMENTS 357 
 
 in its place, directing the purchase of 4,500,000 fine ounces of 
 silver each month, or at least that proportion which could be 
 purchased at a market price not exceeding a coinage value of 
 $1.2929 per ounce. 
 
 In 1893 it was found that the price of silver was declining so 
 rapidly a panic in the silver market occurring in July in 
 London, when the price fell below thirty pence per ounce, 
 which would be equivalent to a ration of 1 to 31.43 that it 
 was deemed advisable to repeal the purchasing clause of this 
 Act, which Congress did on November 1st, of that year. 1 
 
 Sherman Notes. See " Treasury Notes of Act of July 14, 
 1890." 
 
 Shifting Loans. Paying off loans by borrowing elsewhere. 
 
 Shilling. A silver coin of Great Britain equal to l-20th of 
 the pound sterling, or 12 pence, and equivalent to 24.3 cents 
 our money. 
 
 Shinplasters. A popular name for the " fractional cur- 
 rency " issued for small change during the Civil War. After 
 the war of 1812, when metallic money was scarce, business 
 houses issued scrip which went by this same name. 
 
 Ship and Draw. By which is understood that the security, 
 note, commodity, or whatever it may be, may be forwarded 
 to the proper party, and a " draft " for the amount due sent 
 through a bank, and that it will be promptly paid upon 
 presentation. 
 
 Shipment of Money. Modern conveniences solve this 
 problem very easily. 
 
 First: The shipment of the actual money itself: For 
 small amounts registered mail may be used, but the Govern- 
 ment liability is limited to $25 in case of loss. Express com- 
 panies provide a good means but be sure to value your 
 package up to its full worth. The correct way is to hand the 
 money to the company and let them count it, enclose and 
 seal it in an envelope, and give you the proper receipt. 
 
 Second: Transfer of the equivalent of money, " postal 
 money-orders," " cashiers' checks," " certified checks," " ex- 
 press money-orders," " letters of credit," " commercial bills," 
 " certificates of deposit," " cable transfers," and " telegraphic 
 transfers," all of which are explained under those separate 
 subjects. 
 
 Ship with Draft Attached. The same as " ship and draw," 
 except that the whole transaction goes through the bank, 
 and no delivery of the note or security, etc., will be made 
 except in exchange for the amount due. 
 
 Shoe Machinery. United Shoe Machinery Co. 
 
 1 United States Treasury Department Circular No. 72.
 
 358 MONEY AND INVESTMENTS 
 
 Short. See " Selling Short." 
 
 Short Account. (See " Selling Short.") All of a particular 
 security which has been sold " short " or all of the securities 
 of every kind which have been sold " short." In trading 
 in grain or other commodities the same term is used. 
 
 Short Covering. When any one has sold a security " short," 
 and thinks it the proper time to buy it, in order to make de- 
 livery in accordance with his previous agreement so to do, he 
 " covers his sale." This is called a " short covering." The 
 " shorts are covering " when a number are doing this simulta- 
 neously. (See " Selling Short.") 
 
 Shorter's Court. The court outside the London Stock Ex- 
 change to which those having transactions with the American 
 market adjourn after four o'clock, London time, when dealing 
 ceases on the London exchange. This may be considered as 
 the London " curb market," although not so called on that 
 side of the water. 
 
 Short Exchange. A " bill of exchange " running for not 
 more than thirty days; also called " short-dated exchange," 
 " short bill," and " short-dated bill." 
 
 Short Interest. (See " Selling Short.") This term refers to 
 the quantity of transactions which have been made upon the 
 " short " side. In other words, the volume of " short " sales, 
 or all persons in a given market with such interests. 
 
 Short Rate. (As used in fire insurance.) A rate is based on 
 a year's period of time. A " short rate " is the rate charged 
 for periods less than one year, and is a percentage higher 
 than if based on the " pro rata rate " which the time the policy 
 is in force bears to the yearly period. 
 
 Short Ribs (Short Rib Middles). The unit of trading is 
 50,000 pound lots in bulk, or multiples thereof. The commission 
 charged is 25 cents per 1,000 Ibs. for purchase or sale, or pur- 
 chase and sale. The usual " margin " required is one-half 
 cent per pound. 
 
 Shorts. Those who have sold what they do not own, ex- 
 pecting to buy later at a lower price. (See " Selling Short.") 
 
 Short Side. Those who have thought it more profitable 
 to " sell short " than to buy in anticipation of an advance in 
 prices. (See " Selling Short.") 
 
 Short Stock. By reading " Selling Short," the heading of 
 this paragraph should be readily understood. 
 
 Siberians. Securities of Siberia, particularly mining, which 
 are handled in London. Siberia is rich in metals. 
 
 Sick Market. This is apt to follow one of great speculation, 
 and is a time when brokers are in doubt as to what to do, and 
 a condition of hesitancy prevails.
 
 MONEY AND INVESTMENTS 359 
 
 Sight. As used in reference to commodities, such as cotton, 
 etc., has the same meaning as " visible supply." 
 
 Sight Bill. This is the same as a " demand bill " (to which 
 refer) except in States or countries where " grace " is allowed 
 on a " sight bill," for in such cases a " sight bill " would natu- 
 rally not be payable until the expiration of the days of grace. 
 
 Sight Draft. (First read " Draft.") A draft due and made 
 payable upon presentation. 
 
 Sight Exchange. See " Sight Bill." 
 
 Signature of a Woman. See " Woman's Signature." 
 
 Signing by Mark. See " Mark Signature." 
 
 Sign in Blank. See " Assign in Blank." 
 
 Silent Partner. One not actively engaged in a business, and 
 who is not generally known to be interested. 
 
 Silver. See following subjects relating to silver; also " Bar 
 Silver." 
 
 Silver Act. Same as " Sherman Act." 
 
 Silver Certificates. The act of Feb. 28, 1878, provided that 
 any holder of standard silver dollars might deposit them in 
 sums not less than $10 with the Treasurer or any assistant 
 treasurer of the United States and receive certificates therefor, 
 in denominations not less than $10, which certificates should 
 be receivable for customs, taxes, and all public dues. They 
 are not " legal tender." The Act of Aug. 4, 1886, provided 
 for the issue of denominations of $1, $2, and $5. These silver 
 certificates have largely taken the place in circulation of the 
 standard silver dollars, which they represent. 
 
 On Feb. 1, 1907, the face value of these certificates outstand- 
 ing amounted to $462,936,189. 
 
 The Treasurer of the Philippine Islands is authorized, in 
 his discretion, to receive deposits of standard silver coins of 
 one " peso " (see that subject) in sums of not less than 20 
 " pesos," and to issue " silver certificates " in exchange there- 
 for in denominations not less than two nor more than ten 
 " pesos." The coin so deposited must be retained in the 
 treasury and held only for the payment of such certificates 
 on demand. These certificates are receivable for customs, 
 taxes, and all public dues in the Philippine Islands, and may 
 be reissued when so received. When held by any banking 
 association in the Islands they may be counted as a part of 
 its " lawful reserve." i 
 
 Silver Coinage. As at present provided by law in the 
 United States, " standard silver dollars " and subsidiary 
 silver are coined only by the Government for its own account, 
 
 1 An Act to establish a standard of value to provide for a coinage system 
 in the Philippine Islands, approved March 2, 1903.
 
 360 MONEY AND INVESTMENTS 
 
 and from bullion already on hand, and the profits of such 
 coinage belong to the Government. 
 
 The report of the Secretary of the Treasury for the fiscal 
 year 1905 stated that the stock of bullion purchased under 
 the Act of July 14, 1890, had become exhausted, and the 
 coinage of silver dollars necessarily discontinued, and no 
 subsidiary silver coins were being made except by the re- 
 coinage of the abraded and uncurrent coins of the same de- 
 nomination as they accumulated in the treasury. Following 
 this, the Government began, on Aug. 1, 1906, to enter the 
 market for the purchase of silver bullion for the subsidiary 
 coinage. The first purchase was at 65.44 cents per ounce. 
 The price steadily advanced until, in November, it had passed 
 71 cents. 
 
 Silver Dollars. See " Standard Silver Dollars." 
 
 Silver Product of the United States. The Bureau of the Mint 
 estimates the total production of silver in this country for the 
 year 1905 as 56,101,600 fine ounces, valued at $34,221,976. 
 For 1906, it is estimated at 56,183,000 ounces, valued at 
 $37,642,610, taking $.67 per fine ounce as the average price 
 in New York based upon the London daily quotations con- 
 verted into New York exchange. 
 
 Silver Product of the World. Beginning with 1860 the 
 commercial value of silver produced was $39,337,000. There 
 was a gradual increase, for in 1870 the product was $57,173,- 
 000; in 1880, $85,640,600; in 1890, $131,937,000. During 
 1893 the coinage of silver in British India was suspended; 
 there was a panic in the silver market in London; the United 
 States repealed the clause of the Act of July 14, 1890, authoriz- 
 ing the purchase of 4,500,000 fine ounces of silver per month. 
 As a result of all these happenings the annual commercial 
 value of silver produced suddenly fell off. In 1895 it was 
 $109,545,600; in 1902, $88,486,500; in 1903, $90,686,500; 
 in 1904, $97,666,300, and in 1905, $95,977,400. 1 Total world's 
 output (this and some of the foregoing figures partially 
 estimated) from 1860 to 1902 inclusive was $3,690,897,300. 
 As the coining value has been generally in excess of the 
 commercial value, the former for the same length of time was 
 $5,185,378,800. 
 
 The total coining value of silver produced in the world 
 from the discovery of America to 1902 inclusive is $11,854,- 
 213,500. (See also " Bar Silver.") 
 
 Silver Treasury Certificates. The same as "Silver Certif- 
 icates." 
 
 1 The figures from 1860 to 1872 inclusive were compiled by Dr. Adolph 
 Soetbeer. Since 1872 the estimates are those of the Bureau of the United 
 States Mint.
 
 MONEY AND INVESTMENTS 361 
 
 Simple Interest. Interest upon the principal sum only. 
 An example will perhaps make this clear: Green loans Black 
 $1,000 for six months at 5%, the interest amounting to, say, 
 $25. If at the end of that time the interest is not paid, Green 
 cannot collect additional interest on the $25 for such time 
 thereafter as Black fails to make the payment. " Compound 
 interest " would permit of charging interest on the $25; 
 that is, interest upon interest. In savings bank accounts 
 " compound interest " is usually allowed; that is, at the end 
 of stated intervals, say twice a year, the interest accumulated 
 upon the depositor's account is entered to his credit, increasing 
 the principal sum that much, and the total sum goes on draw- 
 ing interest. 
 
 Single Entry Bookkeeping. " Single entry bookkeeping," as 
 its name signifies, is a method by which only one entry is 
 made, as distinguished from " double entry bookkeeping." 
 " Single entry " differs from " double entry " in that by the 
 former method each entry necessitates but a single debit or 
 credit, which will be more readily understood if the reader 
 will turn to the subject " Double Entry Bookkeeping." It 
 will be seen by this that under " single entry," the only ac- 
 counts are those with parties dealt with, and only transactions 
 which involve the debiting or the crediting to such parties 
 appear in the books. This system requires but one book 
 a ledger which was the only book formerly used; but now 
 this has been modified to include day book and cash book. 
 
 Single-Name Paper. A note for which a single individual, 
 firm, or corporation is responsible for payment; a note bearing 
 but one signature and without indorsers. Also mentioned 
 as " single names " and " straight paper." 
 
 Single Option. Either a " put " or a " call." (See " Put " 
 and second paragraph under " Call.") 
 
 Single Standard. (First read " Standard of Value.") A 
 monetary system by which values are measured in one metal 
 only and not by the use of two, as explained under " Bimetallic 
 Standard " and " Bimetallism." 
 
 Sinking Fund. Sums set aside at stated intervals to provide 
 for the payment of all or part of the principal of a debt. A 
 method of sinking or extinguishing it; a provision for an 
 obligation not yet matured, and as binding upon the issuer 
 as any other provision of the mortgage. 
 
 This money is sometimes used to buy in, or pay off, some 
 of the debt itself, from time to time, under conditions pro- 
 vided; or may be held until the maturity of the debt and 
 then applied to its payment, and, in the meantime, invested 
 in other securities, so that it may increase in amount.
 
 362 MONEY AND INVESTMENTS 
 
 The conditions attached to sinking funds differ, but the 
 best form is that which applies the money as raised directly 
 to the extinguishment of the debt for which it was created, 
 thus avoiding any possible loss by temporarily investing it 
 otherwise. 
 
 In many bond issues a condition is imposed that the sinking 
 fund shall be applied to the principal by the calling by lot 
 of a certain number of bonds annually. This is very objection- 
 able, and it is hard to advance any good reason for such a 
 plan. It frequently works hardship upon investors who own 
 bonds subject to call in this way, and it often prevents bonds 
 advancing to a premium, owing to the fact that every bond 
 of an issue subject to call by lot must necessarily be looked 
 upon as subject to payment at the next call, making it unsafe 
 to figure the interest return upon such bonds based on but a 
 comparatively short time to run. In practice, however, 
 many issues, as, for instance, the Louisville & Nashville 6's, 
 have advanced to a premium, although subject to call. This 
 is one of the exceptions, and, moreover, when these bonds are 
 called, they are paid at 10% premium. A better plan is 
 explained under " Serial Bonds." 
 
 The " sinking fund " feature is deserving of much thought, 
 and should be well understood by the investor. It will be 
 found referred to in many places in this work, and is some- 
 thing the purchaser of bonds cannot afford to pass over lightly. 
 
 Generally speaking, " sinking funds " are desirable in 
 issues against properties which have not demonstrated a 
 tendency to liberal expenditures out of earnings for the 
 maintenance of the property at a high standard of efficiency; 
 and, also, in the case of properties which are exhausting 
 themselves, such as mines, oil wells, and the like. Or, in other 
 words, " sinking funds " are advisable in those issues, the 
 security of which is likely to become less before maturity. 
 Industrial concerns dependent upon a business of an unstable 
 character should create " sinking funds " for the retirement 
 of indebtedness. In large corporations, like our well-estab- 
 lished railroads, many financiers argue against the estab- 
 lishment of a " sinking fund " altogether. It is in the smaller 
 corporations where the future cannot be so well anticipated 
 that a " sinking fund " should be most carefully considered. 
 
 This statement, which appeared in a report of one of our 
 large railroad companies, is of interest: 
 
 " In 1903-04 the surplus profits in excess of charges was no 
 less than $9,814,000, and the whole of this was used for capital 
 purposes; and in five years the profit devoted to improvements 
 and capital purposes has been no less than $55,000,000. In 
 this sum I have included about $800,000 a year appropriated 
 out of profits to sinking funds. Sinking funds for bonds se-
 
 MONEY AND INVESTMENTS 363 
 
 cured upon improving properties may rightly be considered 
 profits; on the other hand, sinking funds for the purpose of 
 retiring bonds secured upon depreciating properties ought to 
 constitute a charge upon profits." 
 
 Sinking Fund Bonds. It is not often nowadays that bonds 
 are issued with " sinking fund " as the principal title, but 
 generally with some such nomenclature as " First mortgage 
 4% sinking fund bonds." Formerly, bonds were occasionally 
 issued as simply " sinking fund " bonds, notably, the Union 
 Pacific Sinking Fund issue which matured in 1899. As a 
 matter of fact, any bond may be a " sinking fund " bond, the 
 sinking fund feature being simply one of the provisions pro- 
 vided for in the deed of trust, for a better understanding of 
 which see " Sinking Fund." 
 
 Sinking Fund Mortgage. A mortgage securing a bond re- 
 deemable by a sinking fund would be so termed. (See " Sink- 
 ing Fund.") 
 
 Sixes. " Bills of exchange " due in six months; " dis- 
 counted " notes due in six months; and also used in speaking 
 of bonds bearing 6% interest. 
 
 Six-Pence. A silver coin of Great Britain, equal in value to 
 about $.121 United States money. 
 
 Sixteen to One. By the ratio of " 16 to 1 " it is understood 
 that the mint values of sixteen ounces of silver and one ounce 
 of gold shall be equal; in other words, sixteen ounces of silver 
 and one ounce of gold shall be each coinable into an equal 
 number of standard dollars. As a matter of fact, the United 
 States standa.d ratio is not exactly 16 to 1, but 15.988 to 1. 
 
 Sixties. See next subject. 
 
 Sixty Day Bill. A bill of exchange (see " Exchange ") 
 may be drawn payable in sixty days after date, but it is more 
 customary to draw them payable sixty days " after sight; " 
 that is, after presentation. If in the latter form, and drawn 
 on England, roughly speaking, ten days may be reckoned as 
 the time elapsed after drawing before presentation, and, as 
 three days' grace is allowed there on time bills, it would make 
 a total of approximately seventy-three days before actual 
 maturity. 
 
 Bills of this kind are called " Sixties." 
 
 Sky-Rocketing. Pushing prices of securities up to enor- 
 mous heights; unnatural levels; creating an unstable condi- 
 tion of affairs; forcing the price of this, that, and the other 
 security up with startling rapidity; booming prices. 
 
 Slaughter. To sacrifice securities at unnecessarily low prices. 
 
 Slid Off. Declined in price. 
 
 Slipped Back. Prices declined.
 
 364 MONEY AND INVESTMENTS 
 
 Sloss-Sheffield. Sloss-Sheffield Steel & Iron Co. 
 
 Slow Assets. Property which cannot be readily converted 
 into money; property which is not salable at the time, but 
 which may be during some future period. 
 
 Slug. A fifty-dollar gold piece of the United States Assay 
 Office in San Francisco. It first appeared in April, 1851. 
 
 The coins were in general circulation in California about 
 the middle of the last century. They were in two shapes, 
 round and octagonal, and are now to be found only in col- 
 lections, and are selling, when any are to be had, at $150 to 
 $175 each. 
 
 When these were issued they put a stop to the coinage of 
 private mints in that section. 1 
 
 Sluggish. Business very quiet; very few transactions 
 taking place. 
 
 Slump. A sudden and big fall in prices. 
 
 Sm. Smelter. 
 
 Small Bonds. Transactions in United States Government 
 Bonds are usually for $1,000 par value or multiples thereof. 
 Quotations on " small bonds " often differ from those of 
 larger denominations of the same issue, according to supply 
 and demand. 
 
 Any bond of a lesser denomination than $1,000 is called a 
 " small bond." 
 
 Smash. This term is sometimes used when there is a very 
 sudden fall in prices in the stock market, and everything 
 goes to " smash," as it were, and almost a panicky condition 
 exists. 
 
 Smelt. Smelter. 
 
 Smelting. American Smelting & Refining Co. 
 
 Snuff. American Snuff Co. 
 
 Soft. The market softens when there is a small decline in 
 prices. 
 
 Soft Coalers. Railroad companies, the earnings of which 
 are more or less dependent upon the transportation of bitu- 
 minous coal, including such roads as the Chesapeake & Ohio, 
 the Norfolk & Western, the Hocking Valley, etc. 
 
 Soft Money. Paper money; a term used to distinguish it 
 from metallic money. 
 
 Soft Spot in the Market. When one or more securities show 
 a weakness in price; a tendency to decline, but which con- 
 dition does not extend to the market in general. 
 
 1 " New Varieties of Gold and Silver Coins, Counterfeit Coins, and 
 Bullion; With Mint Values," by Jacob R. Eckfeldt and William E. 
 DuBois, Assayers of the Mint of the United States.
 
 MONEY AND INVESTMENTS 365 
 
 Sol. The monetary unit of Peru, equal to $.487 United 
 States money. 
 
 Solvent. Having financial resources sufficient to pay all 
 debts as they severally become due. 
 
 Soo Line. Minneapolis, St. Paul & Sault Ste. Marie Ry. 
 Co. 
 
 Sou. A small French coin, equal to about $.0096^ United 
 States money. 
 
 Southerns. Railway companies in the Southern States 
 whose securities are listed upon the New York Stock Ex- 
 change. 
 
 South Sea Bubble. The Earl of Oxford, at the time (1710) 
 Prime Minister of England, proposed a plan by which the 
 holders of the Government debt should be allowed to ex- 
 change the same for shares in the South Sea Company, a 
 corporation which was granted certain trading monopolies 
 along the Atlantic coast of South America. This was at- 
 tempted as a method of consolidating the Government's in- 
 debtedness and to effect a saving in interest. It being upon 
 the eve of a great speculative era in England, many exchanges 
 were made, and the price of the shares of the South Sea 
 Company advanced tremendously. The whole plan proved 
 worthless and collapse followed in 1720, to the great loss of all 
 the shareholders. 
 
 This era of unreasonable speculation above referred to is 
 partially explained by Bagehot by the statement that there 
 were no banks at that time for the deposit of the funds of the 
 people, and the speculation was the natural outlet for their 
 money. 1 
 
 Sovereign. A gold coin of Great Britain equal in value to 
 the pound sterling, or $4.866^ United States money. 
 
 1 Smollett in his History of England says: " The directors (April 7, 1720) 
 opened their books for a subscription of one million, at the rate of 300 
 for every 100 capital. Persons of all ranks crowded to the house in such 
 a manner, that the first subscriptions exceeded two millions of original 
 stock. In a few days this stock advanced to 340; and the subscriptions 
 were sold for double the price of the first payment. 
 
 "The infatuation prevailed till the 8th day of September, when the stock 
 began to fall. Then did some of the adventurers awake from their delirium. 
 The number of the sellers daily increased . On the 29th day of the month, the 
 stock had sunk to one hundred and fifty. Several eminent goldsmiths and 
 bankers, who had lent great sums upon it, were obliged to stop payment, 
 and abscond. The ebb of this portentous tide was so violent, that it bore 
 down everything in its way; and an infinite number of families were over- 
 whelmed with ruin. Public credit sustained a terrible shock; the nation 
 was thrown into a dangerous ferment; and nothing was heard but the 
 ravings of grief, disappointment, and despair. Some principal members of 
 the ministry were deeply concerned in these fraudulent transactions. 
 When they saw the price of stock sinking daily, they employed all their 
 influence with the bank to support the credit of the South Sea Company."
 
 366 MONEY AND INVESTMENTS 
 
 Special Assessment Bonds. Bonds for which a special dis- 
 trict, or section, of a city is taxed to meet interest and princi- 
 pal; the city as a whole not being held for their payment, the 
 idea being that the section improved by the expenditure of 
 the proceeds of the bond sale should be responsible for the 
 payment of the bonds. (Read " Street Improvement Bonds," 
 all of which applies here.) It is better for the novice in invest- 
 ment matters to fight shy of these bonds altogether. 
 
 Special Deposit. A " special deposit " differs from a " gen- 
 eral deposit " or a deposit of the ordinary nature, by being 
 placed in a banking institution for retention and safe keeping 
 only, but not to be used by the bank as are its general funds, 
 which treatment an ordinary or general deposit would re- 
 ceive. 
 
 Special Depository. This will be understood by reading 
 " United States Depository." 
 
 Special Indorsement. One which specifies the person or to 
 the order of whom payment shall thereafter be made, and 
 which calls for the indorsement of the party to whom it was 
 made payable before it can be further negotiated; as, for 
 example, suppose a note is made payable to Henry Adams. 
 He makes a " special indorsement " by writing across the 
 back " Pay to James Frazer or order," and then signing his 
 own name below; i. e. " Henry Adams." By this form James 
 Frazer is specified as the person to whose order the paper 
 shall afterward be paid, and he must indorse it before it can 
 be further negotiated. 
 
 Specialist. Certain stock brokers are sometimes known as 
 " specialists," which means that they have particular interest 
 in one or more securities and devote much of their time to 
 buying and selling the same; their interest in such being well- 
 known to other brokers. 
 
 Specialized. See " Crossed Check." 
 
 Special Partner. A partner in a firm whose liability is 
 legally limited to the amount of capital contributed by him. 
 In order to become a " special partner " certain legal formali- 
 ties must usually be complied with or the " special partner " 
 is considered as a general partner. A " special partner " 
 is not supposed to take any active part in the business. 
 
 Specials. See " Council Drafts." 
 
 Special Settlement (Settling) Day. A London term. When 
 a new issue of securities is being made, dealings in the first 
 instance always take place for the " special settlement," and, 
 until that is granted, no settlement of any transactions in that 
 particular security can occur. When, however, that has 
 been granted, the security takes its place in the ordinary way,
 
 MONEY AND INVESTMENTS 367 
 
 and is dealt in for the fortnightly accounts. (See " Fortnightly 
 Settling-Days. ") 
 
 Specialties. " Boston specialties were traded in largely 
 to-day." Each of the large stock exchanges has various se- 
 curities which are dealt in more particularly on such exchange 
 than upon any others; the prices of such securities being very 
 largely regulated by the quotations upon that particular 
 exchange, and, to a great extent, transactions in these " spe- 
 cialties " are consummated upon that exchange. If a broker 
 in New York is given an order to sell a stock which is a Boston 
 " specialty," the chances are that he will telegraph the order 
 to Boston, and have the sale made on the latter exchange. 
 " Boston specialties," therefore, are such securities as are more 
 particularly handled in Boston than elsewhere. Many of the 
 copper stocks are " Boston specialties." 
 
 " Specialties advanced; " meaning that there was no general 
 advance in prices, but simply a rise in the quotations of certain 
 securities which were attracting special interest at the time. 
 
 Specie. There seem to be several different uses for this 
 word. As understood by the United States Mint, it means 
 coin of any denomination and of any metal in contradistinction 
 to notes and bills. In the term " specie payment," the word is 
 held to apply also to gold and silver bullion. 
 
 When reference to " specie " is made in relation to the 
 lawful money reserve of a national bank, it includes the fol- 
 lowing: gold and silver coin, gold and silver certificates, and 
 gold clearing-house certificates. 
 
 The dictionary meaning of " specie," as generally accepted, 
 is metallic money. 
 
 Specie Payment. By this is usually understood payment in 
 gold or silver, but by reading the subject " Specie " it will be 
 seen that " specie payment " may be considered to mean any 
 metallic money. 
 
 Specie Point. Another term for " Gold Point," to which 
 subject refer. 
 
 Speculation. Discounting future events. This differs 
 from " investment," because it has as the direct object buying 
 in expectation of a rise in value, or of selling expecting to 
 buy again at a lower price in time to make delivery, having 
 no regard for the income-producing capacity; whereas " in- 
 vestment " considers the interest return and safety of princi- 
 pal as the first object. One who engages in " speculation " 
 is called a " speculator." 
 
 One writer distinguishes " speculation " from " gambling " 
 by stating that the former is a venture based upon calculation, 
 and the latter a venture without calculation, which distinction
 
 368 MONEY AND INVESTMENTS 
 
 the law recognizes, sustaining the one and condemning the 
 other. 
 
 Speculator. See " Speculation." 
 
 Spelter. This is the commercial name for the metal zinc, 
 as turned out from the smelters. It is customarily cast in slabs 
 9 x 18 inches and from 1^ to 1 inches thick, weighing from 
 45 to 65 pounds. 
 
 The term has a parallel significance to " pig iron." 
 
 Split. The execution of an order to sell by selling in two 
 or more lots at different prices. 
 
 Split a Commission. Divide it with another. 
 
 Split Quotation. In ordinary quotations, the prices vary 
 by ; as, for instance, 9, 9|, 9f, etc. A " split quotation " 
 divides the and gives the quotations by 1-16; as, for instance, 
 9i 9 3-16, 9i, 9 5-16, etc. 
 
 Spondulacs. Money. He who has the necessary " spondu- 
 lacs " has the needed money. Formerly paper money was 
 meant by this term, but now funds of any kind. 
 
 Spot. By " spot cotton " or " spot wheat," or whatever 
 commodity is preceded by this adjective, it is understood 
 that such commodity is ready for immediate delivery as dis- 
 tinguished from " futures." (See " Grain.") A " spot sale " 
 is a sale for cash for immediate delivery. 
 
 Spot Cash. Immediate cash; cash at once; cash on the 
 spot. 
 
 Spot Grain. Grain for immediate delivery. 
 
 Spotted. The market was " spotted; " meaning that prices 
 were advancing at times, and declining at times, or that 
 certain securities were advancing, and others declining, but the 
 majority remaining about stationary in price. 
 
 Spotty. The same thing as " spotted." 
 
 Spread. (Read " Straddle.") A " spread " differs from a 
 " straddle " only in that the " put " and " call " prices are 
 not alike. A " spread " on Illinois Central might read: 
 
 " For value received, the bearer may deliver to me 100 
 shares of Illinois Central at 124 or call upon me for 100 shares 
 of Illinois Central at 126 at any time within thirty days from 
 date." 
 
 Then would follow the time of its expiration and the signa- 
 ture. 
 
 Sprinkler Insurance. By this insurance the assured is 
 guaranteed against direct loss or damage caused by leakage 
 of water from the sprinkler system. Damage to the sprinkler 
 equipment itself is not covered. The tank is part of the 
 sprinkler system. If a tank bursts and the falling water
 
 MONEY AND INVESTMENTS 369 
 
 crushes in the roof of an insured building, the roof is covered 
 by the insurance, but the tank is not. Where heads, fittings, 
 valves, or pipes belonging to the sprinkler system break and 
 cause water damage, the water damage is covered, but the 
 apparatus and any labour necessary to replace same are not. 
 
 Spurt. A sudden and considerable rise in prices; not a 
 jump of several " points " at a time, but by more even de- 
 grees. A spurt of water does not suddenly appear at the end 
 of the nozzle and the next instant a hundred feet away, but 
 has to cover all the intervening space to get there. 
 
 Squeegee Agreement. An agreement to take back a security 
 within a stated time at a price representing a definitely limited 
 loss to the one who made the purchase. A transaction of this 
 kind is opposed to the stock exchange rules. 
 
 Squeeze. In general, a squeezing out process; by which 
 many are compelled to part with something, as securities or 
 money, in order to protect their interests. 
 
 When those who have been selling short (see " Selling 
 Short ") are forced to buy at losing prices in order to fulfil 
 their contracts. 
 
 " Money Squeeze; " interest rates high; difficult to borrow. 
 
 Squeeze of Shorts. To understand this subject, first read 
 " Selling Short " and then " Borrowing Stock." When there 
 is a large amount of stock being borrowed by numerous people, 
 of course the borrowers are known to the lenders; some rough 
 idea as to the amount loaned is understood. We are suppos- 
 ing all the time that one stock only is under consideration. 
 When there is a great deal of one kind of stock being borrowed, 
 the natural inference is that there is a bear element at work 
 to depress the price of that stock. There may be others who 
 do not wish to see that particular security decline in price, 
 and who may, therefore, form a combination by which they 
 prevail upon the lenders of it to demand its return. As a 
 result, the borrowers, being notified to return the stock, 
 immediately seek for it again elsewhere. Owing to the 
 combination working against them, they find a scarcity of 
 supply, and are obliged to actually purchase the stock in 
 order to make delivery. This sort of a move causes the simul- 
 taneous buying on the part of those who are " short," with 
 the result that prices are suddenly advanced. 
 
 STA. The " ticker " abbreviation for " stamped." 
 
 Stagnation. Practically no business being transacted; busi- 
 ness extremely quiet. 
 
 Stale Check. One which has not been presented for pay- 
 ment for a considerable or unnecessarily long time, after the 
 date upon which it was drawn. A bank may decline to pay
 
 370 MONEY AND INVESTMENTS 
 
 such a check, on the supposition that it may have been lost, 
 and a new one issued in its place, or the liability discharged 
 in some other way. 
 
 Stamped Security. Any stock, bond, or other security, 
 which, since its original time of issue, has been stamped 
 showing some new condition or privilege by which it is bound, 
 or to which it is entitled. 
 
 Stamp Savings Banks. A corporation formed to aid the 
 working classes and school children to save sums of money too 
 small to be deposited in a savings bank. Special stamps are 
 sold by the central office to branch offices who in turn sell 
 them to depositors. When a sufficient quantity has been saved 
 the money may be withdrawn and deposited in a savings 
 bank if desired. 
 
 No interest is paid the holders of the stamps; any interest 
 that may accrue from investments of the principal represent- 
 ing the stamps being used by the society to help pay expenses. 
 
 Out of this system grew the Legal Trading Stamp. 
 
 In England and other European countries Government 
 stamps are used and are honoured at special banks for deposit. 
 
 Standard. The legal weight and fineness for coins; " stand- 
 ard weight," " standard fineness." (See " Standard of 
 Weight and Fineness.") One of the best explanations of this 
 term as used in a system of coinage is set forth in various parts 
 of Chevalier's work " On the Probable Fall in the Value of 
 Gold," in this language: 
 
 " When it is said that such a metal is the standard, it 
 means that the monetary unit is a certain weight, settled 
 once for all, of this metal. . . . 
 
 " In a word, standard and monetary unit are terms allied 
 in the closest manner to each other, and they are synonymous 
 the one with the other, as far as the materials of which a 
 thing is made can be cpnfounded with the thing itself. . . . 
 
 " The most rigorously exact meaning, perhaps, of the word 
 standard would be to say that it is the monetary unit, the 
 latter itself being defined by the three following conditions: 
 the metal of which it is composed, its weight, and its fineness." 
 
 Standard Bullion. This is composed of 900 parts of pure 
 gold or silver and 100 parts of copper alloy. An ounce of pure 
 gold would have a coinage value of $20.671834+, whereas 
 the coinage value of a standard ounce of gold is $18.60465. 
 The coinage value in standard dollars of an ounce of pure 
 silver is $1.2929-1- and of an ounce of standard silver $1.1636. 
 
 Standard of Value. 1 By an Act of Congress April 2, 1792, 
 
 1 Jevons defines this as some uniform unchangeable substance chosen, 
 in terms of which all ratios of exchange may be expressed and calculated,
 
 MONEY AND INVESTMENTS 371 
 
 passed upon the recommendation of Alexander Hamilton, 
 there was established a " standard of value " between gold 
 and silver at the ratio of 15 to 1; i. e. the value of 15 ounces of 
 fine silver was declared to be equal in value to an ounce of 
 fine gold. It very soon became apparent that this ratio was 
 not proper, as it undervalued gold; therefore, in 1834, the 
 ratio was changed to 16.002 to 1, and in 1837 it was changed 
 to 15.988 to 1, which is the present ratio; usually referred to 
 as 16 to 1. From 1792 to 1834 values in this country were 
 measured by silver, but since the latter date gold has been 
 the only standard of value in actual practice. Troy weights 
 are used to determine weights of both gold and silver. 
 All the principal nations have the gold standard. Over three 
 fourths of international commerce is fixed upon this standard, 
 even though many countries have not adopted it. 1 
 
 Standard of Weight and Fineness. The proportion by weight 
 of pure metal in coins to the alloy is the " fineness." In the 
 United States it is 900 parts by weight to 100 parts of alloy 
 in both gold and silver. The weight of a gold dollar is 25.8 
 grains and a silver dollar 412.5 grains. The " present standard 
 of weight and fineness " in this country, therefore, provides 
 for gold and silver dollars as above. 
 
 Our unit of weight was obtained from England, is of bronze, 
 and weighs 5,760 grains, or one pound troy. It is in safe 
 keeping at the Philadelphia Mint. Each year an assay com- 
 mission appointed by the President compares the working 
 copies of the weight with the original. 
 
 The weight and fineness of the United Kingdom of Great 
 Britain and Ireland (Act fifty-six George the Third, chapter 
 sixty-eight) provides that there should be nine hundred and 
 thirty-four sovereigns and one ten shilling piece contained in 
 twenty pounds weight troy of standard gold, of the fineness 
 at the trial of the same of twenty-two carats fine gold and 
 two carats of alloy in the pound weight troy; and, further, 
 as regards silver coins, that there should be sixty-six shillings 
 
 without any regard whatever to the feelings or mental phenomena which 
 the commodities produce in men. And " that the standard unit of value 
 is some entirely arbitrary weight of the standard metal, the exact amount 
 of which, being a matter of indifference on general ground, should be fixed 
 as seems most convenient in reference to the habits of the nations or other 
 accidental circumstances." 
 
 1 The Act of Congress, March 14, 1900, commonly known as the " Finan- 
 cial Bill," declares " that the dollar consisting of twenty-five and eight- 
 tenths grains of gold nine-tenths fine, as established by section thirty-five hun- 
 dred and eleven of the Revised Statutes of the United States, shall be the 
 standard unit of value, and all forms of money issued or coined by the United 
 States shall be maintained at a parity of value with this standard, and it 
 shall be the duty of the Secretary of the Treasury to maintain such a 
 parity."
 
 372 MONEY AND INVESTMENTS 
 
 in every pound troy of standard silver of the fineness of 
 eleven ounces two pennyweights of fine silver and eighteen 
 pennyweights of alloy in every pound weight troy. 1 
 
 Standard Oil Influence. Perhaps no better impression of this 
 can be conveyed than by the following, which appeared in one 
 of our daily papers: 2 
 
 " The election of H. H. Rogers to the Atchison board of 
 directors renders interestingthelist of railroads inwhich Stand- 
 ard Oil influence is openly recognized: 
 
 Mileage 
 
 Atchison 8,003 
 
 Baltimore & Ohio 4,397 
 
 Chicago & Alton 915 
 
 Chicago, Milwaukee & St. Paul 6,682 
 
 Chicago & Northwestern 7,365 
 
 Rock Island system 16,000 
 
 Delaware, Lackawanna & Western 947 
 
 Delaware & Hudson 824 
 
 Denver & Rio Grande 2,460 
 
 Erie 2,556 
 
 Illinois Central 4,301 
 
 Kansas City Southern 839 
 
 Missouri, Kansas & Texas 2,713 
 
 Missouri Pacific system 20,000 
 
 New York Central 11,178 
 
 New York, New Haven & Hartford 2,037 
 
 New York, Ontario & Western 549 
 
 Northern Securities 18,920 
 
 Oregon Railroad & Navigation 1,151 
 
 Oregon Short Line 1,823 
 
 Reading 2,144 
 
 Southern Pacific 9,621 
 
 Union Pacific 6,105 
 
 Total 131,530 
 
 " This list does not include the 24 industrial corporations, 
 among others Amalgamated Copper, Consolidated Gas, 
 United States Steel, Western Union Telegraph, United States 
 Realty, Colorado Fuel, and Linseed Oil in which similar 
 representation or control is exercised, nor the 14 banks and 
 14 trust companies in which the recognized representatives 
 of the ' Standard Oil group ' have seats as directors." 
 
 Standard Silver Dollars. In the United States these " are 
 legal tender at their nominal or face value in payment of all 
 debts, public and private, without regard to the amount, 
 except where otherwise expressly stipulated in the contract." 
 Issued by the Treasurer and assistant treasurers of the United 
 
 1 The Coinage Act, 1870. 
 
 2 The author does not guarantee the infallibility of this, but, 
 whether or no it is correct in all its details, it gives a general idea of the 
 prevailing belief as to the magnitude of the " Standard Oil influence."
 
 MONEY AND INVESTMENTS 373 
 
 States in redemption of silver certificates and Treasury notes 
 of 1890; sent, express paid, by the Government, in sums of 
 $500 or any multiple thereof, for silver certificates or treasury 
 notes of 1890 deposited with the Treasurer or any assistant 
 treasurer. 1 
 
 A dollar such as the above contains 412 grains of standard 
 silver, .900 fine, which is equivalent to 371-^ fine grains of silver, 
 balance being copper alloy to the amount of 41 grains. 
 Since February 28, 1878, when the coinage of standard silver 
 dollars was restored by act of Congress, the total amount 
 coined up to December 31, 1904, was $570,272,610. 
 
 Standard Stocks (or Standard Investments). Well known 
 securities, of established reputation, in which confidence is 
 felt as to the future payment of interest or dividends, and 
 of the principal, if redeemable; stocks which are sought as 
 conservative investments. 
 
 State Banks. Formerly " State banks " issued bank notes, 
 but in 1865 Congress passed a law taxing these notes 10%, 
 which speedily resulted in their retirement. 2 Since that time, 
 in other respects, they have performed about the same func- 
 tions as national banks. As a class they have very largely 
 disappeared in the East, but are more frequent in other 
 sections of the country. Fiske writing in 1903 said that these 
 institutions outnumbered the national banks in the country. 
 State banks are under the regulation of the State in which 
 they are located. 
 
 State Bonds. An obligation in the form of a bond issued by 
 a State, the payment of which must be accomplished through 
 the collection of taxes assessed upon the taxable property 
 embraced within its corporate limits. 
 
 Some State issues have valuable assets in the shape of 
 income-producing property, which contribute towards the 
 payment of the principal and interest of its obligations; 
 such, for instance, are the large income-producing State-owned 
 wharves and docks in San Francisco. 
 
 Again, an indebtedness of this nature may be incurred for 
 some improvement more or less local in its nature, the par- 
 ticular section benefited being primarily responsible for the 
 
 1 The .difficulty experienced in keeping silver dollars in circulation is 
 shown by the following excerpt from the Report of the Secretary of the 
 Treasury for 1905: " The silver dollars in circulation June 30, 1898, were 
 $58,482,966. The amount of this coin distributed at Government expense 
 for transportation, from July 1, 1898, to June 30, 1905, was $275,536,512, 
 but the amount in circulation on the latter date was only $73,584,336. 
 
 3 As one writer declares: " The State institutions, however, were so far 
 from the direct control of the central Government that the currency and 
 finances in the country were left in a state of uncertainty which paralyzed 
 industries, seriously handicapping private as well as public transactions.
 
 374 
 
 liquidation of the debt, for which, nevertheless, the State has 
 obligated itself for payment. An example being bonds issued 
 by the Commonwealth of Massachusetts for the benefit of the 
 Metropolitan Water District. 
 
 The interest return from most of our State securities is not 
 large, and, consequently, their purchase is more or less limited 
 to institutions such as insurance companies and savings 
 banks, or to trustees of estates, or to those seeking a par- 
 ticularly conservative form of investment, and who can 
 afford the low rate of interest. 
 
 The past record of " State bonds " has not been a very 
 happy one. Many of the issues have entailed great losses 
 upon the holders. These debts, however, were incurred under 
 different conditions than at present existing, and there is not 
 to-day any reason to believe that any of our State issues of 
 recent date are anything but safe holdings. 
 
 The fact that States cannot be sued by an individual is a 
 point which has always deterred some investors from placing 
 money in securities of that kind. 
 
 State Street. Financial Boston; meaning not only that 
 section where matters of finance are transacted (not literally 
 State Street itself), but also the men engaged in the manage- 
 ment of such matters. 
 
 Steady. The stock market is, or prices are, said to be 
 steady, when there are few and small variations in prices; 
 an even tone existing. 
 
 Steamship Company Bonds. The average investor has not 
 had the opportunity to familiarize himself with this class of 
 investments, owing to the somewhat infrequency of these 
 issues appearing upon the market. One very notable example 
 is that of the International Mercantile Marine Co. 
 
 To safeguard an issue of bonds on vessel property, it is 
 better that the ships should be comparatively new; otherwise 
 a careful appraisement of their value should be obtained, and, 
 in any event, if the mortgage is to cover the vessels only, with- 
 out other property or guaranty, the bonded debt should not 
 much exceed 50% of the valuation. Owing to the rapid 
 depreciation of steamships, the mortgage should provide for 
 some method of reducing the debt either by a well-pro- 
 tected sinking fund or direct redemption of the bonjds at 
 a rate of, say, one tenth of the total issue annually, beginning 
 one or two years from its date. The trustee of the mortgage 
 should be required to cause the property at all times during 
 the life of the bonds to be properly insured in good companies, 
 against all risks on vessel property ordinarily covered by such 
 insurance, to the full insurable value of the ships; such insur- 
 ance to be made with loss payable to the trustee, and the
 
 MONEY AND INVESTMENTS 375 
 
 policies deposited with it. It should further provide that any 
 money received by the trustee on account of destruction of 
 the property mortgaged should either be used to replace the 
 property destroyed, in proportion to the insured value of the 
 same the steamship company paying the difference or 
 if not so used or arranged to be used, at the end of a given 
 time say six months to be divided in some equitable 
 way among the bondholders; perhaps added to the sinking 
 fund, if any. 
 
 It is a point in favour of " steamship company bonds " that 
 the steamship line is not usually confined to any given terri- 
 tory or section. If a certain line of sailing or business proves 
 unprofitable, the boats may be changed to another line of 
 ports, or another class of business, or nearly always be sold 
 at a fair valuation. You cannot economically remove railway, 
 manufacturing, or other similar properties from one section 
 of the country to another, if they prove unprofitable where 
 located, whereas, of course, the sailing of a line of boats may 
 usually be changed at will. 
 
 " The liability of the owner of a vessel for loss or damage 
 to another vessel or to the cargo of either vessel, happening 
 through errors in navigation or management, or from perils 
 of the sea, but without his knowledge or privity, is limited 
 to the value of his vessel, and the freight then earned, in the 
 condition in which it is after the happening of the loss or 
 accident. 
 
 " The owner is also not liable for loss or damage by fire to 
 the cargo carried in his own vessel unless caused by his own 
 neglect. 
 
 " If an owner exercises due diligence to make his vessel 
 seaworthy and to see that she is properly manned and 
 equipped, neither he nor his vessel is liable for loss or damage 
 to the cargo carried, from errors of navigation or management, 
 or from dangers of the sea. 
 
 " The owner may relieve himself of all liability by trans- 
 ferring all his interest in the vessel and the freight then pending 
 to a trustee for all claimants. 
 
 " It follows that the owner is not personally liable if his 
 vessel becomes a total wreck. 
 
 " Insurance on the vessel, recovered by the owner, is no 
 part of the owner's interest in the vessel, and is not liable to be 
 taken to pay for the loss or damage. 
 
 " The owner of a vessel is of course personally liable, with- 
 out limitation, if the loss is attributal to his own fault or 
 negligence. 
 
 " In case of a corporation, the ' knowledge and privity ' 
 which would make it liable must be the knowledge and privity
 
 376 MONEY AND INVESTMENTS 
 
 of its officers or managers, and not of the masters of its 
 vessels." 
 
 Steel. United States Steel Corporation. 
 
 Sterling (or Sterling Exchange). " Exchange " (to which 
 refer) on Great Britain. 
 
 " Sterling at Paris 25.21." This means that twenty-five 
 francs and twenty-one centimes, French money, was the 
 equivalent in value, at the time of quotation, in English 
 money, to the " pound sterling," and that a purchaser in 
 Paris of a " bill of exchange " on London would pay for it at 
 the rate of twenty-five francs and twenty-one centimes for 
 each " pound sterling." Similar quotations in other financial 
 centres, as " Berlin, 20.49 " would mean the value in Ger- 
 man money of the English " pound sterling " for exchange 
 purposes. 
 
 " Sterling " is very generally used in reference to English 
 money, as, for instance, 3 million sterling, meaning 3,500,000 
 " pounds sterling." The English say " pounds " or " ster- 
 ling " when referring to their money, whereas we say " dollars " 
 in speaking of our own. 
 
 It is the common term for the money of Great Britain in 
 whatever form, including its own standard bars of silver or 
 gold. 
 
 Sterling Bill. " Exchange " payable in English money, 
 (See last subject.) 
 
 Sterling Bond. See next subject. 
 
 Sterling Loan. Bonds, or other forms of indebtedness, pay- 
 able in English money; i. e. pounds sterling. Also loans 
 made on " sterling (which see) bills " of exchange. 
 
 Bills payable, say, at sixty days' sight, are drawn by the 
 American banker on London. These are negotiated either by 
 the banker or the borrower, the latter, in any event, getting 
 the proceeds. Suppose, at the time when the bill is drawn, 
 the net rate of exchange is $4.85 for the " pound," then a 
 " sterling loan " for 10,000 would cost $48,500. Deduct 
 from this the banker's commission of perhaps one half of one 
 per cent. $242.50, leaving net amount paid to the borrower 
 $48,257.50. At the end of sixty days the loan will have to 
 be paid on the basis of the rate of demand " sterling exchange " 
 then ruling, which, in this suppositional case, we will figure 
 at $4.885, making the amount due $48,850, and subtracting 
 from this the original amount of $48,257.50 we have left 
 $592.50, which is the interest paid for the use of the money 
 for sixty days, or at about the rate of 4% yearly. 
 
 " Sterling loans " differ from " foreign loans " in that the 
 former are almost exclusively drawn upon London.
 
 MONEY AND INVESTMENTS 377 
 
 Stiffened. Advanced; prices " stiffen " when they rise. 
 
 Stock. The property of any corporation is divided into 
 various parts or shares called " stock." (See also " Shares.") 
 
 There is a peculiar feature attached to what is referred to 
 as a " stock " in Great Britain; namely, that it can be dealt 
 in and transferred in multiples of one pound, and sometimes 
 even less, and, in this way, it differs from what they term 
 " shares," as they are dealt in according to their specific de- 
 nominations. It may be taken as a general rule that most 
 British railway issues are in the form of " stocks," not 
 " shares." 
 
 The English have a way of referring to their municipal 
 bond issues as " corporation stock," using " stock " as the 
 equivalent of our " bond " at such times. What we call a 
 " corporation " they call a " company." 
 
 Stock Bills. Bills of exchange (see " Exchange ") drawn 
 against a shipment of investment securities; stocks. 
 
 Stock Certificate. The ownership of " stock " (read last 
 paragraph) is represented by a printed, lithographed, or en- 
 graved 1 form, properly filled in, sealed and signed by the 
 proper officers, giving the owner's name and number of shares 
 of the stock it represents. This is a " stock certificate " and 
 is the rightful possessor's evidence of ownership in the prop- 
 erty of the corporation. (Read " Transfer of Stock.") 
 
 Stock Company. A corporation, the ownership of which is 
 represented by shares of stock. (See " Corppration.") 
 
 Stock Dividend. Issuing new stock pro rata to those already 
 holding stock of the same company; the new stock to be the 
 equivalent of profits earned by the corporation which are to 
 be retained as additional capital rather than to be paid to 
 stockholders as a cash dividend. For example: a company 
 of $500,000 capital stock has gradually accumulated $100,000 
 in profits very likely having paid reasonable dividends in 
 the meantime and finding its business of sufficient magni- 
 tude to warrant the retaining of the $100,000 for use in carry- 
 ing on its affairs, and, at the same time, wishing to satisfy the 
 stockholders, who, perhaps, had been asking for its division, 
 decides to issue $100,000 in new stock, making a total capital 
 of $600,000. Of course the $100,000 " profits " on the books 
 of the company disappear under that heading, but " capital " 
 account is increased that much. By this method, the $100,000 
 capital stock becomes fully paid, for had the amount been 
 paid out to the stockholders as a dividend, and they, in turn, 
 
 1 A security to be dealt in on the principal stock exchanges of the world 
 must be engraved, consequently blank stock certificates are, generally, 
 engraved
 
 378 MONEY AND INVESTMENTS 
 
 paid it back in to the company for new stock, the same result 
 would have been accomplished. 
 
 Supposing the par value of each original share to be $100, 
 then, as $100,000 is one fifth of $500,000, each holder of five 
 shares of original stock would receive, without cost, one share 
 of new stock, and a " stock dividend " would have been 
 declared. One of the most notable examples of the declaration 
 of " stock dividends " has been that of the Pullman Co. 
 
 The recipient of a stock dividend must not consider himself 
 richer than before, although the market quotations of the 
 stock may appear to make him so. His ownership in the 
 corporation is no greater, as his proportionate interest in 
 the entire capital is the same as previous to the declaration 
 of the stock dividend. 
 
 Stock Exchange. It seems almost unnecessary to treat to 
 any extent upon this subject. Some information will be 
 found under the next heading. However, it may not be out 
 of place to say that the first definite organization in America 
 which may be recognized as an exchange of this kind was 
 brought about by a board of stock brokers in Philadelphia, 
 who met, organized, and adopted a constitution early in the 
 18th century. Medberry makes the statement that upon 
 May 17, 1792, some twenty New York dealers in public stock 
 met together and signed a paper of the nature of a protective 
 league. The New York Stock Exchange was organized in 
 1817. The above few facts are given to show that the idea 
 of a " stock exchange " is an old one, and that the stock 
 brokers, so-called, have existed for many years. In fact, 
 Nelson states that as early as 1285, in England, the term 
 " broker " is referred to in an act of Parliament. 
 
 A " stock exchange," as generally understood, need not 
 necessarily be a building where securities are bought and 
 sold, but any place, even in the open air, as, for instance, 
 " curb " stock exchanges. 
 
 The Century Dictionary defines a " stock exchange " as 
 " An association of brokers and dealers or jobbers in stocks, 
 bonds, and other securities, created under State or municipal 
 authority, or by corporations concerned in the business con- 
 nected with the carrying on of railways, mines, manufactures, 
 banks, or other commercial or industrial pursuits." 
 
 As a matter of fact, in any of the largest cities where trans- 
 actions such as above are carried on, a portion or all of some 
 building is occupied for the purpose. 
 
 It is said that a " stock exchange " offers the most highly 
 organized and delicately adjusted market in the world. 1 
 (See " Stock Exchange Seat.") 
 
 *The New York Supreme Court has handed down a decision as follows:
 
 MONEY AND INVESTMENTS 379 
 
 Stock Exchange Clearing-House. This system for simplify- 
 ing the deliveries of securities sold between members of a 
 stock exchange resulted from the large over-certification of 
 checks which the former system of actual deliveries to each 
 different broker required. 1 
 
 Pratt declares that the New York stock business of 1901 
 could not have been transacted without the assistance of the 
 clearing-house machinery. On May 6, 1901, " the shares 
 cleared both sides amounted to 13,313,800, having a value 
 of $1,132,200,000. . . . The bank certifications obviated 
 amounted to $286,100,000." 
 
 The New York Stock Exchange adopted this system in 
 1892. There had been, however, a stock clearing system in 
 successful operation in several European cities for some years. 
 Philadelphia and Boston had already adopted it before the 
 idea went into effect in New York. 
 
 The European system is based on the " fortnightly settle- 
 ment " plan, whereas the New York system is based on daily 
 deliveries. 
 
 To follow an actual transaction through the clearing-house 
 would consume more space than can be here allotted. In 
 effect, however, at the close of a day's business each stock 
 exchange member delivers a sheet " clearance sheet " 
 on which is recorded his sales and purchases of certain securi- 
 ties; i. e. the active ones. It is the duty of the clearing-house 
 to reconcile all deliveries between different parties and to 
 adjust the cash differences by either paying or receiving the 
 balances due, so that as little money may be required in the 
 settlement as possible. 
 
 One very important function of this clearing-house system 
 is to facilitate the borrowing of money on the stock exchange. 
 To understand this thoroughly, a reading of the subject 
 " Borrowing Stock " is advisable. By way of illustration, 
 Poole & Co. buy 500 shares of Labrador & Florida at 100. 
 In the ordinary course of business they would be obliged to 
 pay the next day, say, $50,000, to take up this stock, and then 
 make a loan with their bank, furnishing 20% margin, neces- 
 sitating a cash outlay on their part of about $10,000. Instead 
 of making this loan, however, they, in turn, loan these 500 
 shares of stock to Baldwin & Co. at an agreed rate of interest, 
 and the next day the clearing-house just offsets. In other 
 
 Justice O'Gorman said, " Stock exchanges have the power to enact such 
 rules and regulations concerning the government of their affairs as may 
 be deemed necessary for the carrying on of their business, but such rules 
 and regulations must not be contrary to the law of the land." 
 
 1 " The first official stock exchange clearing-house was founded at Frank- 
 fort in May, 1867." " The Principles of Money and Banking," Charles 
 A. Conant.
 
 380 MONEY AND INVESTMENTS 
 
 words, no money changes hands in this transaction, and 
 Poole & Co. are saved the necessity of first paying for the 500 
 shares of stock previous to loaning to Baldwin & Co. 
 
 In the words of the committee which reported upon the 
 advisability of establishing a clearing-house in the New York 
 Exchange: 
 
 " The party who is ' even ' in a stock has then nothing to 
 receive or deliver, and all the contracts are closed. The com- 
 mittee in charge of the clearing ascertain who has a balance 
 of a stock to deliver, and also who has a balance to receive, 
 and then order the former to deliver direct to the latter, 
 thereby relieving from deliveries all intermediate parties who 
 are ' even ' in the stock." 
 
 There is a " delivery price " fixed each day for each stock, 
 and in assigning the receipts or deliveries the clearing-house 
 bases its reckoning upon the delivery price, usually being the 
 even price which most closely approximates the last sale of 
 the day for the stock in question. 
 
 A charge of 2c. is made for clearing each 100 shares of 
 stock of $100 par value. 
 
 Only 100 share lots, or multiples of the same, are cleared; 
 and bonds only on special occasions. 
 
 As the foregoing gives but the merest idea of the workings 
 of this very valuable time-saving institution, the writer sug- 
 gests, for the benefit of those who wish more detail and com- 
 plete information upon the subject, a reference to the " Work 
 of Wall Street," by S. S. Pratt, who very ably devotes a 
 chapter to the subject. 
 
 Stock Exchange Collateral. (Read " Collateral.") Col- 
 lateral security which is dealt in upon the particular stock 
 exchange to which reference is had, as, for instance, any New 
 York Stock Exchange collateral would mean securities dealt 
 in upon the stock exchange of that city. 
 
 Stock Exchange Seat. In order to possess the right to buy 
 or sell securities upon a stock exchange, one must be a duly 
 elected member of the same, pay his initiation fee, and share 
 in the assets and liabilities of the exchange. His interest, 
 instead of being called a share of stock, is called a " seat." 
 A " seat " may be, as in the case of the New York Stock 
 Exchange, very valuable, 1 but varying in price, in accordance 
 with the activity of the exchange; that is, the amount of 
 
 1 Up to Nov. 1, 1906, the record price .on the New York Exchange was 
 $95,000; but in 1871 the quotation was as low as $2,750, and in 1896 down 
 to $13,000. Up to the present time January 1, 1907 the price on the 
 Boston Exchange is $37,500. The initiation fee upon the former is $2,000 
 the latter $500. Unless for some reason an exchange increases its number, 
 of members, a " seat " must be purchased from some member who is willing 
 to sell, or from an insolvent, or the estate of a deceased member.
 
 MONEY AND INVESTMENTS 381 
 
 business being transacted; which naturally affects the de- 
 mand. The owner of a " stock exchange seat " may transfer 
 or sell to another person by permission of the proper authori- 
 ties of the exchange. The owner of the " seat " has no right, 
 in any way, to charge commissions for the sale or purchase of 
 securities, otherwise than in accordance with the established 
 rules of the exchange; rates are less between members 
 than for others; for instance, John Smith owns a "seat," 
 but does not wish to actually go upon the " floor," as it is 
 called, of the exchange, to personally buy or sell securi- 
 ties; he may employ some other member to act for him to 
 whom he pays a reduced commission amounting to $200 for 100 
 shares. From this arises the term " two dollar man." 
 
 Stockholder. The owner of one or more shares of stock in an 
 incorporated company. In the eyes of the law, the legal stock- 
 holder is the one whose name appears upon the records of a 
 corporation as the owner of one or more shares of its capital 
 stock, regardless of whether, or no, such a person may have 
 parted with his stock by signing the same in blank, without 
 taking the necessary precaution of having his original certif- 
 icate of stock cancelled, and a new one issued in its place to the 
 purchasing party. 
 
 Stock Interest Certificates. See " Stock Trust Certificates," 
 for all practical purposes the same. 
 
 Stock-jobber. A speculator; one who cares not for the 
 disasters he may cause others, so long as he forces the prices 
 of securities up or down for his own gain; one who issues 
 securities upon a corporation far in excess of the actual value 
 of the property of the corporation; watered stock, so-called. 
 London has a different meaning for this term, as given under 
 " Jobber." 
 
 Stock- Jobbing. The use of this term in London will be 
 understood by reading the subject " Jobber." With us 
 " stock-jobbing " has reference to the use of unsavoury methods 
 for varying the prices of stocks. 
 
 Stock Kiting. See " Kiting." 
 
 Stock Savings Banks. Explained under " Mutual Savings 
 Banks." 
 
 Stock Transfer. See " Transfer of Stock." 
 
 Stock Transfer Tax. See " Taxes on Stock Transfers." 
 
 Stock Trust Certificates. In August, 1902, the St. Louis and 
 San Francisco R. R. Co. secured control of the stock of the 
 Chicago and Eastern Illinois R. R. Co., by exchanging, on the 
 basis of equal par value, certificates calling for fixed dividends, 
 with other conditions. These certificates bear the name of the
 
 382 MONEY AND INVESTMENTS 
 
 St. Louis and San Francisco Co., but as they represent its 
 ownership in another company whose shares are held in trust, 
 as it were, they are called " stock trust certificates." Certif- 
 icates of this nature, sometimes known simply as " trust 
 certificates," are occasionally issued representing the stock 
 certificates of numerous stockholders in a corporation who 
 wish to " pool " their ownings for the purpose of control. 
 A trustee is appointed to hold the stock and generally to 
 exercise certain rights vested in him by what is known as the 
 " trust agreement." 
 
 Stock Watering. See " Watered Stock." 
 
 Stock Yards. Chicago Junction Railways & Union Stock 
 Yards Co. 
 
 Stop Loss Orders. Sometimes called "stop orders." A 
 method of limiting one's losses, particularly in dealing in 
 stock exchange securities; for example, suppose A owns 100 
 shares of a certain stock costing $90 per share. He anticipates 
 and hopes that it will advance in price, at the same time, the 
 market conditions are such that it is possible a sudden decline 
 may take place. Being willing to hold the stock, in case of a 
 small drop, with the expectation that it may shortly recover, 
 but not wishing to hold the stock for a great decline, say to 
 below 80, a " stop loss order " is given by A to his broker. 
 This means that if the stock declines to a point where its sale 
 takes place at 80, or even if the last sale is above this figure, 
 and a broker offers some of the same stock for sale at 80, the 
 " stop loss order " goes into effect, and the broker holding the 
 same must not wait for a bid, but offer the customer's stock at, 
 say, 79, and so on down until a purchaser is obtained. In 
 other words, when the " stop loss order " goes into effect it 
 means that a sale will be made at the best price obtainable 
 at the time. In practice, of course, brokers use their judgment 
 as to " offering it down," but a sale must be effected at some 
 price. " Stop loss orders " in inactive stocks are dangerous. 
 The cautious speculator uses such a safeguard only in regard 
 to securities that are frequently traded in, and almost con- 
 tinually quoted. 
 
 The expression is often used that many " stop loss orders 
 were uncovered," meaning that the decline in prices was such 
 that the point set by many holders of stocks as their " stop 
 loss orders " had been reached, and, consequently, such selling 
 orders were filled by the brokers. 
 
 In case of stocks being sold short (see " Selling Short ") 
 a " stop loss order " may be placed as a preventative against 
 too great loss in case of a sudden advance in price beyond a 
 point at which the party desired the stock bought in for his 
 protection.
 
 MONEY AND INVESTMENTS 383 
 
 Stop Order. See " Stop Loss Orders." 
 
 Stop Payment. When a check is lost it is simply necessary 
 to notify the bank against which it is drawn; giving a de- 
 scription of the check, generally the number it bears; the 
 amount for which it was drawn; the date, and to whom pay- 
 able; stating that the check has been lost and requesting 
 that no payment be made should the same be presented. 
 
 Suppose that John Smith finds a check, which is payable to 
 " bearer," " cash," or " currency; " that is, good in the hands 
 of John Smith, or any one else, without indorsement. The 
 person who lost this check has already notified the bank to 
 " stop payment." John Smith takes it to some person whom 
 he knows and gets the cash; that is, receives the money upon 
 it. This person accepts it on the supposition that it came 
 honestly into the hands of John Smith, and then presents it 
 to the bank against which it was drawn for payment and 
 finds that payment has been stopped. He cannot collect the 
 money, even although the check has come into his hands 
 honestly, for the law expects each person who accepts a 
 check to satisfy himself as to whether or not it properly be- 
 longs to the person presenting the same. 
 
 All that is said above in regard to checks applies with 
 equal force to notes and all papers of similar nature. 
 
 Straddle. First understand the two subjects, " Call " 
 second paragraph and " Put." A " straddle " gives the 
 owner the right to either " put " or " call " a specified amount 
 of a certain security at a fixed price. A " straddle " on 
 Illinois Central at 125 would carry the right to " put " or 
 " call " it at 125 during the option (or if in London, on the 
 last day of the option). 
 
 Straddle the Market. An understanding of " Selling Short " 
 is first necessary. One has " straddled the market " when he 
 is " short " of one stock and " long " of another. 
 
 Straight City Bond. The bondman's term for an issue for 
 which the faith and credit of an entire city is pledged, as 
 distinguished from " special assessment bonds," to which 
 subject the reader is referred. 
 
 Straight Paper. Same as " single-name paper." 
 
 Straw Board. American Straw Board Co. 
 
 Straw Name. A general example will best illustrate this 
 term: The laws of many States stipulate that savings banks 
 shall not loan money to an individual, firm, or corporation, 
 without collateral or mortgage security, unless the borrower 
 shall furnish the indorsement of a certain number of persons 
 upon the note, the intent of such laws being, that in case the 
 original maker of the note is not for any reason able to meet
 
 384 MONEY AND INVESTMENTS 
 
 its payment, the bank may demand payment of the indorsers. 
 Of course, the spirit of such laws contemplates each indorser 
 having sufficient financial means to make such payment; 
 in other words, that, for the amount of the debt, he is just as 
 good as the maker. The spirit is continually being broken by 
 banks being willing to accept as indorsers the signatures of 
 persons absolutely incapable of paying the obligation. Cases 
 are not at all infrequent of notes for large amounts bearing 
 the indorsements of clerks or office boys, with no means 
 whatsoever. The letter of the law is complied with, but such 
 indorsers are known as " straw names," having no value or 
 stability. 
 
 Street. " The Street said so and so, " " The Street was 
 uneasy," and such like expressions arise from the use of the 
 term " Wall Street " or " State Street," which designate the 
 financial centres respectively of New York and Boston. 
 Throughout the country at large " Street " means the financial 
 centre or pulse of New York. 
 
 Street Broker. A broker between offices: one who buys 
 from one banker and sells to another. These men have their 
 uses and are frequently called upon by bankers to hunt up 
 some security not dealt in actively upon the stock exchange. 
 The bankers can better afford to pay the small commission 
 asked than to devote the time to that end themselves. Again, 
 a banker may wish to get control of certain bonds and prefer 
 to deal through a " street broker " rather than disclose his 
 own identity. 
 
 Street Call Loans. Loans made to or between brokers; 
 loans carrying stock exchange and similar securities as col- 
 lateral; loans made in the " Street," meaning Wall Street, 
 State Street, etc., and representing in a broader sense the 
 financial centres of New York, Boston, etc. 
 
 Street Certificate. The stock-broker's name for a certificate 
 of stock, or other similar paper, which has been transferred in 
 blank. (See " Transfer in Blank.") A certificate of this kind 
 may be passed from hand to hand without further " indorse- 
 ment " or transfer upon the books of the company. It must 
 have the requisites set forth under " Good Delivery." 
 
 Street Improvement Bonds. As a rule bonds of this class are 
 secured by a special tax levy upon the property abutting upon 
 the street or in the special district improved; the entire city 
 not being responsible for their payment. The tendency of 
 the Eastern States is to disallow such bonds as proper invest- 
 ments for savings banks, and it is good judgment for the in- 
 vestor to be guided likewise. In some States, the city is 
 responsible for the payment in case of failure on the part of
 
 MONEY AND INVESTMENTS 385 
 
 the improved section to meet the obligation, and, in that 
 event, the bonds are said to be the " direct obligation " of the 
 municipality. Under such conditions the objections above 
 raised disappear. 
 
 Street Railway Securities. See " Electric Railway Securi- 
 ties." . 
 
 Stricken from (the) List. (First read " Listed.") Any 
 security which has previously been " listed " on a stock ex- 
 change, but which, for any reason, the authorities of the 
 exchange decide shall be no longer dealt in thereon, is said to 
 be " stricken from the list." 
 
 Strike a Balance. To " strike a balance " is to balance an 
 account, thus determining to which party money is due, if 
 any, and the amount. 
 
 Stringent Money Market. Those having money to loan de- 
 mand high interest rates; loans may be difficult to obtain at 
 any price; possibly money can be borrowed only by those of 
 the highest credit, or upon the most conservative class of 
 collateral security. " Stringency in the money market " 
 generally acts as a deterrent to business; making it hard for 
 the business world to obtain loans with which to conduct 
 business, and the effect is apparent at once. " Stringency," 
 though, may be more a stock exchange factor than general, 
 and may only temporarily restrict speculation, and not extend 
 to commerce at all. The New York financial institutions often 
 artificially raise money rates, when speculation is too ram- 
 pant, just to call a halt and thus prevent eventual disaster. 
 
 String of Cash. See " Cash." 
 
 Strong. The stock market is, or prices are, said to be 
 " strong " when rapidly advancing; prices rising. 
 
 Struck Twelve. A slang expression, meaning that the limit 
 has been reached in an advancing market, or a prosperous 
 condition of affairs. We may say that it " struck twelve to- 
 day in Labrador Common," meaning that the general feeling 
 prevailed that there were likely to be no higher quotations 
 recorded on that stock than to-day's. 
 
 Stub. The " stub " of a check-book is explained under 
 " Check-Book." 
 
 Other books with detachable leaves, such as books of stock 
 certificates and the like, are arranged in a similar manner to 
 check-books, and have " stubs " in printed form. In general, 
 " stub " refers to that part which is retained in a book from 
 which leaves are detached. 
 
 Another meaning for this word is illustrated in the case of 
 the Northern Securities Corporation. After the stocks which 
 rnis company held were distributed as explained under the
 
 386 MONEY AND INVESTMENTS 
 
 subject " Holding Company," there was still left about 1% 
 of the old company, and, as a consequence, to every holder of 
 100 shares of Northern Securities stock was delivered one 
 share of this " stub stock," as it was called, the " stub stock " 
 evidencing ownership in the remaining assets. 
 
 Sub-Company. See " Subsidiary Company." 
 
 Subject. See " Subject to Sale." 
 
 Subject to Call. See " Called Bonds." 
 
 Subject to Check. Any deposit in a banking institution 
 which the depositor has the right to withdraw without notice 
 to the bank, by the use of a written order called a " check," 
 being made payable to himself, or to whomsoever else he may 
 choose to designate on its face, is an account " subject to 
 check." (See " Check.") 
 
 Subject to Prior Sale. Same as " Subject to Sale." 
 
 Subject to Redemption. See " Called Bonds." 
 
 Subject to Sale. In order to protect himself, the banker 
 usually offers securities " subject to sale." For example: 
 Morgan & Co. offer Maria Jones $10,000 worth of Baltimore & 
 Ohio R. R. Co. bonds. In the meantime, before they hear 
 from Maria Jones, they may have an order from another party, 
 and, therefore, make the sale. The next day they receive a 
 letter from Maria Jones ordering the bonds; they notify her 
 that they have already been sold. If they had not made the 
 offering to her upon the condition of " subject to sale " or 
 " in case of previous sale," they might be obliged to deliver 
 the bonds to Maria Jones; but, with the conditions of previous 
 sale inserted, she has no valid claim against them. It will be 
 seen that this method is necessary, because securities offered 
 by bankers are liable to be sold at any moment, and, of course, 
 they cannot lose opportunities to sell as they come along. 
 
 In telegraphing, cabling, etc., the word " subject " is often 
 used, and has the same meaning as " subject to sale," or may 
 mean, in the case of a bid, that the bid is made conditional 
 upon the bidder not being able to buy elsewhere in the mean- 
 time. 
 
 Subscriber. One who signs a " subscription blank; " (see 
 " Subscription Blank ") or one who signs an agreement to 
 purchase a security. 
 
 Subscription Blank. A printed form, which often accom- 
 panies a prospectus or circular, whereby the intending in- 
 vestor may execute an agreement to purchase the security or 
 securities named, but which blank provides for certain con- 
 ditions regarding payment and delivery, with which the 
 signer must comply.
 
 MONEY AND INVESTMENTS 387 
 
 Subsidiary Company. A company belonging to, or under the 
 management of, another corporation. The various railway 
 companies whose stock is owned and controlled by the Boston 
 & Maine R. R. Company, in such a manner that the corporate 
 organization of such companies is still maintained, are known 
 as its " subsidiary companies " or, to be more brief, " sub- 
 companies." 
 
 Subsidiary Silver. In the United States " is legal tender 
 for amounts not exceeding $10 in any one payment." At the 
 present time, the subsidiary coins are half dollars, quarter 
 dollars, and dimes. 
 
 Subsidy. It is the custom of many Governments to give 
 financial assistance to public enterprises railroads, steam- 
 ships, and the like especially at their inception, as without 
 such help the prosposition might not be attractive to investors, 
 and a matter of public need not developed. To encourage 
 building railroads into unsettled regions, and pioneering work 
 of that kind, the Government grants a " subsidy " gives 
 to of so many thousands of dollars a mile of completed 
 road, for example, and, with this assistance, the railroad goes 
 on to completion. " Subsidies " vary greatly in their character 
 and conditions. Some railway companies have been granted 
 in this country large tracts of public land along their rights of 
 way, which afterwards become valuable, as the country de- 
 veloped. Steamship companies are often allowed a very large 
 annual sum for carrying the mails. In Canada and Mexico, 
 many direct grants of money have been made; and so on. 
 
 The investor is, from time to time, encouraged to buy 
 securities of a company by the fact of a " Government sub- 
 sidy " having been allowed it. This may be a very important 
 factor, and enough so to make an otherwise insecure invest- 
 ment a good one. 
 
 Sub-Treasury. 1 Unless otherwise specified, the New York 
 sub-treasury is understood, although there are " sub- 
 treasuries " in other large cities in the United States. The 
 former is located on Wall Street, and through it the larger 
 proportion of the Government's money transactions with the 
 people are conducted. Such matters as payment of checks 
 issued in settlement of Government bond interest; pension 
 disbursements, the redemption of mutilated paper money, 
 refunding and redeeming of Government bonds, etc., are 
 
 1 The first " sub-treasury " resulted from a change in the financial 
 policy of the Government after the fall of the Second United States Bank, 
 and was established in 1846 in Wall Street. 
 
 Besides New York City, there are sub-treasuries located at Baltimore, 
 Boston, Chicago, Cincinnati, New Orleans, Philadelphia, St. Louis, and 
 San Francisco; a total of nine.
 
 388 MONEY AND INVESTMENTS 
 
 among its many duties. The Assistant Treasurer of the 
 United States is in direct charge. 
 
 The " sub-treasuries " receive money from the custom- 
 houses, post-offices, and such other departments of the 
 Government, and are of material assistance to the people in 
 telegraphic transfers of money from one section of the country 
 to another. Between any two points in which there are such 
 institutions, gold received at one and deposited with that 
 " sub-treasury " may be credited by telegraph to a person at 
 the other " sub-treasury " point. Currency, likewise, for sud- 
 den needs, may be so transferred. The Government makes a 
 charge for such accommodation. 
 
 An importation of gold at San Francisco from Australia 
 may be immediately credited to parties in New York through 
 the medium of the " sub-treasuries." By this method, Lon- 
 don will often pay with Australian gold its own debts to 
 New York. 
 
 Sub-Treasury Credit. See " Sub-Treasury Operations." 
 Sub-Treasury Debit. See " Sub-Treasury Operations." 
 Sub-Treasury Operations. (First read " Sub-Treasury.") 
 The following is an example of a newspaper treatment of this 
 subject: 
 
 SUB - TREASURY OPERATIONS 
 
 Paid to Received Banks 
 
 Banks from Banks 
 
 March 6 $6,087,000 $7,048,000 Lost $ 961,000 
 
 Since Friday 15,930,000 18,781,000 Lost 2,851,000 
 
 The sub-treasury was debtor at the clearing-house on Wednesday 
 $131,129. There were no important items. The banks have lost to the 
 sub-treasury since Friday $2,851,000, and for the same period the sub- 
 treasury was creditor at the clearing-house $653,780. The sub-treasury 
 paid to banks $700,000 on telegraphic order against the deposit of new 
 gold at the San Francisco mint. 
 
 Supposing the reader to be familiar with the " clearing- 
 house " system, the above will be clearly understood. 
 
 In each city where there is a clearing-house and a sub- 
 treasury, the latter is by courtesy made a member of the 
 association, and " clears " through it practically the same as 
 any bank. 
 
 The statement that it was " debtor " at the clearing-house 
 means that there Was a certain amount due from it to the 
 clearing-house under settlement, and may be referred to as 
 a " sub-treasury debit." The balance is usually the other 
 way, however, and the clearing-house owes the sub-treasury, 
 in which event it is referred to as " sub-treasury credit." 
 The statement that the banks have lost to the sub-treasury
 
 MONEY AND INVESTMENTS 389 
 
 $2,851,000, means payments by them to the Government. 
 The reference to a telegraphic order against the deposit of new 
 gold at the San Francisco mint, indicates that there had been 
 deposited in the hands of the Government at San Francisco 
 $700,000, which was quickly made available in New York 
 City by a telegraphic order to the sub-treasury there from the 
 San Francisco mint to pay it out in accordance with instruc- 
 tions given by the depositing party. 
 
 Sub-Treasury Receipts. Issued by the various sub-treas- 
 uries of the United States in receipt for money received from 
 various sources, such as taxes, custom receipts, post-office re- 
 ceipts, and mutilated currency. The reason why new cur- 
 rency is not given in place of the old without the intervention 
 of the receipt is that it takes time to count the money which 
 is deposited, and not infrequently requisition has to be made 
 on the Treasury at Washington for the new currency before 
 the transaction is complete. The receipt given for mutilated 
 currency is one " subject to count," and it will readily be seen 
 that it would be impossible to count the old currency received 
 and the new currency to be furnished in its place while the 
 customer is waiting. 
 
 Receipts were issued, and now are issued, in non-negotiable 
 form, for legal tenders or gold, if deposited with a sub-treasury, 
 but do not differ in character from any other receipts issued 
 by such offices. 1 
 
 Sucre. Monetary unit of Equador. On Oct. 1, 1905, as 
 valued by the Treasury Department, it was equal to $.487 
 United States money. 
 
 Sugar. The American Sugar & Refining Co. 
 
 Sundry Assets. (First read " Assets.") Miscellaneous 
 property which has not been placed under some definite head- 
 ing; which has not been classified. 
 
 Support. One " supports " the market when he buys freely 
 as offers to sell are made, without endeavouring to make ad- 
 vantageous trades for himself as to prices; that is, buys at 
 prices offered, so as to give the impression that there is a good 
 demand and thus prevent a decline in prices, and, perhaps, 
 inspire enough confidence among those desiring to sell so that 
 they will regain their courage and not only stop selling, but 
 begin to buy again. 
 
 Supporting Orders. Orders given to buy securities in order 
 to " support " the market. (See " Support.") 
 
 Surety. A guaranty or securit)^ against loss, or for the 
 carrying out of some agreed promise or act. A person or 
 
 1 1 am indebted to Mr. Geo. A. Marden, late Assistant Treasurer of the 
 United States at Boston for the above.
 
 390 MONEY AND INVESTMENTS 
 
 company who so guarantees another acts as " surety," and 
 any paper or bond given as evidence of the fact bears the 
 same title. A surety company is one, which, for proper com- 
 pensation, acts as " surety." 
 
 Surety Company. See last subject. 
 
 Surplus. That proportion of the earnings of a business 
 after paying all expenses for operating and making all pro- 
 visions for mterest on bonded indebtedness, dividends, in- 
 surance, taxes, rentals, etc., and is the amount of profits 
 which can be carried forward into the next business period. 
 When this amount of " surplus " is added to a similar previous 
 accumulation, it is referred to as " total surplus." 
 
 The " surplus " of a corporation may be far greater than 
 the capital. A good illustration is the case of the Chemical 
 National Bank of New York, which, on Nov. 12, 1906, had a 
 surplus of $7,200,000, and a capital of only $300,000. 
 
 Surplus, New. This is explained under second paragraph 
 of " Reserve " and has reference to the " surplus reserve " 
 on the basis of no reserve being held against the United States 
 Government deposits. 
 
 Surplus, Old. (See last subject.) This is the " surplus 
 reserve," taking the Government deposits into consideration. 
 
 Surplus Reserve. Cash i. e. " lawful money " held 
 by national banks in excess of the " reserve " requirements. 
 (See " Reserve.") 
 
 Surrender Value. The " surrender value " of an insurance 
 policy is what the company agrees to pay to the holder of 
 the policy upon surrender of the same. This value is figured 
 on the policy reserve and at a lesser sum than what has been 
 paid in in premiums. 
 
 Suspense Account. An account under which items are 
 entered, the final disposition of which has not been deter- 
 mined. An account in which an item is held in suspense until 
 the proper account is ascertained, to which it is afterwards 
 transferred. 
 
 Imagine a corporation to be sued for $10,000 damages. 
 There is a chance that but a small part, or none of it, will be 
 allowed by the courts. The company may see fit to transfer 
 the full amount to " suspense account " pending the litigation. 
 
 Suspension. A temporary delay in meeting payments on 
 the part of a concern perfectly solvent, but which, owing to a 
 financial crisis or some unusual existing condition, may not 
 be able to get its resources in shape to meet demands for a 
 brief time. 
 
 Suspension of Specie Payment. This took place about
 
 MONEY AND INVESTMENTS 391 
 
 Jan. 1, 1862, and continued until Jan. 1, 1879; both gold and 
 silver practically disappeared from circulation except on the 
 Pacific coast, where, it is estimated, there was generally about 
 twenty-five million specie in circulation. Small change was so 
 scarce that Congress authorized, first, the use of postage 
 stamps, then, a modified form of the latter called " postal 
 currency," and, finally, paper money in fractional amounts of 
 a dollar. There is practically none of the last in use now as 
 money, but $15,245,183.88 is still outstanding, a little more 
 than half of which is officially estimated as destroyed. 
 
 Sweating. A method of diminishing the weight of coins by 
 shaking them in a confined space, as a bag; the dust so col- 
 lected and retained being a dishonest profit. This used to be 
 a wide-spread evil in England and strenuous efforts were 
 made to break it up. 
 
 Sweeten. To give more " collateral " or " margin." When 
 a loan is asked for and the collateral offered is not satisfactory 
 to the lender, the borrower " sweetens " it by improving the 
 grade or adding more to it. 
 
 Swings. Ups and downs of periods of business activity. 
 From the close of the Civil War these " swings," back and 
 forth from good to bad times, followed this course; 
 
 Years Period of Duration 
 
 1868 1873 Advance 5 years 
 
 1873 1877 Decline 4 " 
 
 1877 1882 Advance 5 " 
 
 1882 1885 Decline 3 " 
 
 1886 1892 Advance 6 " 
 
 1892 1896 Decline 4 " 
 
 1896 1902 Advance 6 " 
 
 1902 1903 Decline 1 " 
 
 1903 Advance 
 
 Note the fact that the periods of depression are of shorter 
 duration than those of advance. 
 
 " Swings " in market prices refer to the movement of prices 
 in one direction followed by considerable change in the other. 
 Like the action of the pendulum of a clock. 
 
 Switching. See " Grain." 
 
 Syndicate. A group of men, bankers, or any combination 
 of the same, who combine their mutual interests for the pur- 
 chase or control of certain properties or securities. The mem- 
 bers of the syndicate are generally bound by what is called a 
 " syndicate agreement; " in other words, a written instru- 
 ment to carry out the terms of the agreement, signed by the 
 parties. (See also " Underwriting.") Some person, firm, 
 bank, or trust company is usually selected as a " syndicate
 
 392 MONEY AND INVESTMENTS 
 
 manager," whose duty it is to see that the terms of the 
 " syndicate agreement " are fulfilled by all parties to it. 
 
 Before signing a " syndicate agreement," it is desirable to 
 note carefully its provisions, it being especially important 
 that it should not become operative until a sufficient amount 
 of the issue in question has been subscribed to ensure its 
 success. 
 
 Syndicate Agreement. See " Syndicate." 
 
 S. & M. September and March; interest or dividend pay- 
 ments semi-annually, beginning with September. 
 
 T 
 
 T. The " ticker " abbreviation for " terminal." 
 
 Tael. The " tael " is a weight as used in the Chinese money 
 
 system. It is in no sense a monetary unit. 1 (See also the 
 
 subject " Cash.") 
 
 1 " One of the worst of the evils from which China now suffers is the 
 lack of uniformity in her standards of value. Her finances are in an abso- 
 lutely chaotic condition, on account of the instability of her currency and 
 the constantly changing ratio between one kind of money and another. 
 The coin in common use among the people is the copper cash, but the 
 standard of value in all large mercantile transactions, as well as in the 
 Government service, is the silver ounce, or tael. If there were only one 
 tael, and if that tael bore some fixed and definite relation to the copper 
 cash, the state of things would be no worse than it is in silver-standard 
 countries generally; but there are more than seventy local varieties of tael, 
 each differing slightly from every other; and the values of these taels, 
 expressed in terms of cash, vary not only from day to day in time, but from 
 district to district in space. In one village the tael exchanges for a thousand- 
 cash string and a half, while in another village eight hundred cash make, 
 nominally, a thousand-cash string, and a tael can be had for a string and 
 a quarter. But the tael is not the only silver coin in circulation. The 
 Chinese make or import four or five different silver dollars, and each of 
 these has an uncertain value, in taels or cash, which also fluctuates widely 
 in accordance with varying conditions of time and space. There is no 
 uniformity even among the cash. A ten-cash piece issued by one provin- 
 cial mint is not equal in value to a piece of like denomination issued by 
 another mint, and neither of them will buy ten-cash pieces separately. 
 In Ningpo, for example, a local ten-cash coin exchanges for nine separate 
 one-cash pieces, while in Tsingkiangpu a ten-cash coin will buy only seven 
 separate cash. Then there are the paper notes of private Chinese banks 
 and private foreign banks, which add still another complication because 
 they are discounted at rates which vary directly with the distance from 
 the place of issue. A Tientsin bank note may pass at par in Peking, but it 
 will be taken only at a discount of five per cent, in Shanghai, and perhaps 
 ten per cent, in Canton or Hankow. The same railroad company will some- 
 times accept a bank note at par in one of its ticket offices and cut it five 
 per cent, in another. In my own experience, bills of the Russo-Chinese 
 Bank were taken at par by the railroad ticket agent at Peking, while they 
 were refused altogether by the ticket agent of the same railroad 'at Pao- 
 tingfu, only a hundred miles away." George Kennan in the Outlook of 
 April 1, 1906.
 
 MONEY AND INVESTMENTS 393 
 
 Taller (or Taller On) . One who has but little capital or self- 
 confidence, and who follows some one else's lead. 
 
 Take Up. A very common term used to denote that the 
 purchaser of bonds, stocks, or whatever it may be, has paid 
 for and obtained delivery of the same; i. e. " taken up; " 
 got rightful possession of. 
 
 Tale. " By tale; " i. e. by count. In transactions regarding 
 metallic money, " by tale " is used to distinguish from " by 
 weight." The former would have reference to the sum total 
 of a given amount of gold coin, for instance, without any 
 regard to the abrasion; whereas " by weight " would mean 
 its actual value, abrasion deducted, and would naturally 
 give a less total sum than as if reckoned " by tale." 
 
 Talent. " Talent bought the stock." Those very close in 
 touch with financial affairs; members, for instance, of a stock 
 exchange; bankers and brokers or " professional traders." 
 (See " Traders.") The ordinary investor or speculator would 
 not be included among the " talent." 
 
 Tamarack. Tamarack Mining Co. (Copper.) 
 
 Tangible Assets. Property which one may possess himself 
 of, such as real estate, machinery, etc. Good-will would not 
 be considered a " tangible asset." 
 
 Tape. See " Ticker." 
 
 Tape Price. The price of a security as indicated by the 
 " tape." (See " Tape.") 
 
 Tare. Tare is the weight of the vehicle, cask, or package in 
 which a commodity is shipped; as in the case of a load of 
 hay, the difference in weight between the total weight, in- 
 cluding the cart, and the weight of the hay itself is the tare, and 
 must be deducted from the total weight to ascertain the true 
 weight of the hay. 
 
 Tax Certificates. See " Delinquent Tax Certificates." 
 
 Taxes on Stock Transfers. Since June 2, 1905, the State of 
 New York has enforced a stamp tax law on stock transfers, 
 which, in part, is as follows: 
 
 " A tax is imposed on all sales, agreements to sell, deliveries, 
 or transfers, of shares or certificates of stock in any domestic 
 or foreign association, company or corporation. 
 
 " The unit upon which a tax is imposed is one share of 
 stock, and the minimum tax is two cents thereon. 
 
 " Every share of the face value of one hundred dollars or 
 less is taxable in the sum of two cents. 1 
 
 1 A recent court ruling has decided that the tax is now 2c. on each 
 $100 of face value. By the first interpretation of the law, two shares of 
 $50 each, to illustrate, would have been subject to double the tax of one
 
 394 MONEY AND INVESTMENTS 
 
 " Where the par value of one share exceeds one hundred 
 dollars, an additional tax of two cents is required for each 
 additional one hundred dollars of par value or fraction 
 thereof. 
 
 " The original issue of stock by a corporation is taxable. 
 
 " A sale of stock made outside New York State is subject 
 to a tax if it is evidenced by entries in transfer books or by any 
 form of written instrument within the State necessary to 
 effect sueh transfer. 
 
 " A transfer of stock in a building and loan association is 
 within the provisions of the law. A surrender of shares to 
 such a corporation for cancellation upon maturity is not a 
 taxable transfer. Shares transferred are taxed upon par 
 or face value in the sum of two cents each without regard 
 to whether the share is partially paid in or not. 
 
 " The surrender of a certificate of stock to a corporation for 
 the purpose of receiving other certificates to be issued to the 
 same owner in smaller amounts, but in an aggregate equal to 
 the amount of the surrendered certificate, being a mere ex- 
 change of certificates without a transfer of ownership, is not 
 taxable. 
 
 " A certificate when divided and re-issued, part to a new 
 stockholder and part to the original owner, is taxable to the 
 extent of the transfer to the new purchaser and not taxable 
 in the portion retained by the original owner. 
 
 " The law does not make an exemption from the tax of 
 stock in religious or charitable associations. 
 
 " Stock held by a corporation as treasury stock is not tax- 
 able until shares are issued and transferred to a stockholder. 
 
 " Shares of stock held by an executor or administrator and 
 transferred by him to other parties, whether heirs or not, are 
 subject to a tax." 
 
 The total receipts by the State of New York resulting from 
 the imposition of the above taxes, for the calendar year 1906, 
 were $6,500,654. 
 
 Tax Exempt. See " Non-taxable Investments." 
 
 Tax Free Investments. See " Non-taxable Investments." 
 
 Tax Relief Bond. Bonds issued in anticipation of payment 
 of taxes; that is, a municipality needs money for some purpose 
 immediately, the expenses of which would ordinarily be taken 
 care of by taxation, the taxes, however, are being paid slowly 
 and not coming in fast enough to furnish mnds for the pur- 
 pose needed. Consequently, bonds having a short time to 
 run are issued, but more frequently short time notes are sold 
 for this purpose. 
 
 share of $100 face value, although the face values of the two lots were 
 identical. This was held to be unconstitutional.
 
 MONEY AND INVESTMENTS 395 
 
 Technical. This is used in reference to an artificial condi- 
 tion of the market, which has been brought about usually by 
 " manipulating " or over-speculation; an unnatural level of 
 prices, which cannot last. 
 
 Tecumseh. Tecumseh Copper Co. 
 
 Telegraphic Transfers. See next subject. 
 
 Telegraphic Transfers of Money. A method of obtaining 
 immediate use of money at a distant point in the same country, 
 and effected in the same general way as " cable transfers." 
 The telegraph company charges a certain fee according to the 
 sum transferred, plus the charge for the telegram. 
 
 Telephone. American Telephone & Telegraph Co. 
 
 Telephone Securities. Bonds, stocks, and notes of the 
 American Telephone & Telegraph Company and its licensee 
 companies. For the sake of brevity we will refer to the former 
 as the parent company and the latter as the operating com- 
 panies. The impression prevails that an extensive amount of 
 securities is being issued from time to time by the parent 
 company, but, if the following facts are taken into considera- 
 tion, it may not seem so excessive. A large percentage of 
 the telephone business is under the control of the parent 
 company through ownership of stock in the operating com- 
 panies. The securities of the former are issued to pay its 
 proportion (51% or more) of new stock as issued by the 
 latter. Instead of this 51% being put upon the market, 
 in each case, as the stock of different operating companies, 
 it is represented by an issue of securities bearing one name, 
 as it were. Of course the telephone investment is small com- 
 pared to that of the railroads, but imagine, by way of illustra- 
 tion, that one parent railway company issued a uniform 
 bond to pay for its subscription to a controlling interest in all 
 the new stock issues of a large part of the operating railways 
 of the country. The idea would prevail that there was an 
 enormous over-issue. The bonds of the American Telephone 
 & Telegraph Co. are virtually a stock issue without voting 
 power on account of having for security the stocks of the oper- 
 ating companies. The soundness of these bonds as an invest- 
 ment rests largely upon the success of the telephone business 
 of the country as a whole, and the success or non-success of one, 
 or even a few, of the operating companies, stocks of which are 
 behind the parent company's issues, are not to affect the 
 payment of the interest or principal of the same. 
 
 One point deserves serious treatment, and much literature 
 has resulted from its consideration, viz., the large amounts of 
 money which seem to be required, from time to time, for the 
 development and the equipment of the telephone business. 
 Yet, such a demand for money must be the result of the enor-
 
 396 MONEY AND INVESTMENTS 
 
 mous increase in the telephone industry itself. The rapid 
 increase in the number of telephones in use during the past 
 few years of prosperous times is something enormous. There 
 seems little expectation of an end of this in a growing country 
 like ours so long as prosperous times continue. How many 
 telephones will be returned, and how great will be the falling off 
 of users in bad times, is difficult to predict, but such times 
 of depression will affect, to a greater or lesser degree, most 
 classes of business, and it would seem that there is as much 
 reason to anticipate unsettled conditions in relation to indus- 
 tries in general as to the telephone. The latter is becoming 
 daily more and more a necessity of modern business and social 
 life. 
 
 The ability of the parent company to maintain its present 
 rate of dividends upon its capital stock is a question beyond 
 discussion here. 
 
 The stocks and bonds of the operating companies as in- 
 vestments depend entirely upon their locality and the exist- 
 ence of competition. They have proved very satisfactory 
 so far, and there seems to be no reason why, as a class, they 
 will not continue to be. The investor, in each case, should 
 select with care, as he would the securities of any other 
 corporation. 
 
 The independent telephone companies have been very 
 largely situated in the West, but are now becoming more 
 generally distributed through the country, and have been a 
 fruitful source of competition to the companies above men- 
 tioned. This competition has not resulted very seriously 
 to the American Telephone & Telegraph Co. itself, on account 
 of its large earnings as a whole. It could afford to operate a 
 licensee company, here and there, at a loss in order to meet 
 competition. This has, however, been somewhat hard on the 
 company so operated. Many franchises granted in the Middle 
 West to independent companies have been conditioned upon 
 these companies not selling out to the American Telephone & 
 Telegraph Co., or any of its licensee companies. Many of the 
 independent companies have been successful and the number 
 of exchanges is astonishing. 
 
 These comparative figures taken from the United States 
 Census Bulletin covering the telephone statistics of the year 
 ending Dec. 31, 1902, are given for the reader's consideration. 
 
 Bell Independent 
 
 Number of subscribers 1,222,327 956,039 
 
 Number of Public Exchanges 3,753 6,608 
 
 Telephones in use 1,317,178 1,053,886 
 
 Miles of Wire 3,387,924 1,462,562 
 
 In this bulletin is also the following paragraph: 
 
 " The American Telephone and Telegraph Company re-
 
 MONEY AND INVESTMENTS 397 
 
 ported that in addition to the telephones operated by it and 
 its licensees there were probably included with the telephones 
 reported by independent companies Bell instruments leased 
 by 84,021 subscribers and operated under sub-license arrange- 
 ments with its licensees." 
 
 In the report of the president of the American Telephone 
 and Telegraph Company to the stockholders on March 26, 
 1907, appears the following, covering the year ending Dec. 31, 
 1906: 
 
 " The number of exchange stations at the end of the year 
 operated by the companies which constitute our system was 
 2,727,289. In addition to this number there were 297,290 
 exchange and toll stations operated by companies or asso- 
 ciations under sub-license contracts and making use of our 
 telephones. Adding also telephones employed for private 
 line purposes, our companies have a total of 3,068,833 stations. 
 The total mileage of wire for exchange and toll service was 
 7,468,905 miles, of which 1,688,987 miles were added during 
 the year." 
 
 For the past three years the company shows the following 
 increase in subscribers' stations: 
 
 1904 Increase over previous year 320,126 
 
 1905- " " 525,502 
 
 1906 " 540,118 
 
 Under date of March 2, 1907, James B. Hoge, President of 
 the International Independent Telephone Association, con- 
 tributed the following: " There are approximately 3,500,000 
 independent telephones installed in the United States, and 
 over 7,500 independent telephone companies operating in 
 between 14,000 and 15,000 cities and towns." 
 
 Without making further comment on these statistics, it 
 may be well to bear in mind that it is a recognized fact that 
 the expense of operating an exchange increases enormously 
 with an increase of subscribers and many of the independent 
 exchanges are as yet small ones. 
 
 In newer sections of the United States, these companies 
 have naturally met with greater success than in New England. 
 This is partly due to the nature of the latter people not to 
 change so rapidly to a new thing; from one company to an- 
 other; partly, also, to the loyalty of the people to the old 
 " Bell," and its many shareholders, both in the old and suc- 
 cessor company. Local prejudice has also, in many instances, 
 aided the independent companies. 
 
 The fact that telephone companies, as a rule, are peculiarly 
 exempt from certain disadvantages common to many other 
 corporations rendering public service, should be given a mo- 
 ment's thought. There is very little likelihood of strikes and
 
 398 MONEY AND INVESTMENTS 
 
 labour troubles and comparatively small liability from acci- 
 dents and resulting losses for damages. Telephone service 
 being usually paid for in advance, little loss of revenue is 
 experienced from bad debts. 
 
 The securities of the " Independents " are being quite 
 extensively handled in some parts of the country. There 
 must be many investors ready to take them, and, as a class, 
 they may prove satisfactory. Very likely there is plenty of 
 room in these progressive growing States for both the rival 
 systems. Let us hope so. But give due thought to the fact 
 that the independent companies, on the one side, are a lot 
 of disunited corporations, with many different manage- 
 ments; on the other hand, the centralized management of the 
 " licensee companies " through their parent company must 
 give the Bell system a certain advantage. 
 
 One word more. It is, the writer believes, a noteworthy 
 fact that, even in periods of widespread business depression, 
 there has been a comparatively slight falling off of earnings 
 in the telephone business. Naturally, there is more or less 
 economizing in this direction, but it must be borne in mind 
 that many of the telephones are in on yearly contracts, and 
 subscribers, in any event, are likely to order out their in- 
 struments as one of the last means of economy. 
 
 Teller. The one who receives the money at a bank, when 
 taken for deposit, is called the " receiving teller." The one 
 who pays out money, as demanded by the depositors, is 
 called the " paying teller." 
 
 Temporary Receipts. Corporations issuing bonds or other 
 securities may wish to obtain money from the sale of the 
 same before the actual securities are ready for delivery. 
 " Temporary receipts," so called, are frequently issued at 
 such times to the purchasers, to be exchanged later for the 
 securities themselves. 
 
 Tender. See " Bid." 
 
 Tenn. Coal. Tennessee Coal, Iron and Railroad Co. 
 
 Tennessee. Tennessee Copper Co. There is also the Ten- 
 nessee Coal, Iron & Railroad Co., generally known as " Ten- 
 nessee Coal and Iron." 
 
 Ten-Twenties. Bonds due in twenty years, but subject to 
 redemption after ten years from date of issue, at the pleasure 
 of the issuer. 
 
 Term Deposit. Same as " Time Deposit." 
 
 Terminal Company Bonds. Proper terminals that is, 
 passenger and freight stations, yard room and trackage 
 especially in the larger cities, has become a matter of vast 
 importance to railway companies. In many instances the
 
 MONEY AND INVESTMENTS 399 
 
 very inability on the part of a railway to secure proper ter- 
 minal facilities has prevented its entrance into a city. 1 Fre- 
 quently railroads are unable, on account of conditions in 
 previous mortgages outstanding upon their property, to create 
 an additional indebtedness to pay for terminal properties; 
 or, again, several railways wish to share the same terminal 
 facilities. For either of the above, or possibly for other rea- 
 sons, a " terminal company " may be formed, upon which 
 distinct issues of securities are created, the proper contracts, 
 being executed with the railroad or railroads using the same, 
 to provide for all charges for maintenance, interest, etc. It 
 is quite customary for the railroad or railroads to guarantee 
 a bond issue by such a " terminal company." 
 
 Bonds of the above nature, as a rule, are considered very 
 safe investments, as is evidenced in Massachusetts by the fact 
 that the bonds covering what is known as the South Terminal 
 Station have been made a legal investment for savings banks 
 in that State. 
 
 An investor contemplating the purchase of a terminal bond 
 must consider several things: 
 
 First, the strategic position occupied by the terminal itself; 
 that is, whether or not satisfactory terminal facilities for the 
 company's using the same could be found elsewhere. 
 
 Second, the standing of the road or roads using the terminal 
 and their earning capacity above interest upon their own 
 bonded indebtedness, whether or no in good times or bad the 
 excess of earnings will be sufficient to meet the terminal 
 contract. 
 
 Third, the character of the contracts drawn between the 
 " terminal company " and the railway company or companies, 
 whether or not such contract or contracts properly safeguard 
 the interest payments during the full life of the bond and 
 provide for the payment of the principal when it matures, 
 unless the real estate value of the terminal property is so 
 much greater than the bonded indebtedness that the payment 
 of the principal need not be considered. 
 
 In brief, terminal bonds upon properties difficult to dupli- 
 
 1 The cost and importance of terminals in the larger cities is well illus- 
 trated by a struggle between two of our great railroad systems in competi- 
 tive railroad building in the Northwest. The Railway Age declares 
 that one company is reported to have invested between $11,000,000 and 
 $12,000,000 for terminals in one city, the railroad extension leading 
 to it being but 180 miles long, upon which the expenditures for 
 terminals would be equivalent to $64,000 per mile, or probably a greater 
 cost than the actual construction of the mileage itself. Estimating at 
 $50,000. the total cost per mile of the extension, securities will un- 
 doubtedly have to be issued to the amount of about $114,000 per mile. 
 Even with the realization of the large traffic which it is anticipated that 
 the extension will bring about, such traffic will have to be exceedingly 
 heavy to justify the construction of such an expensive piece of road.
 
 400 MONEY AND INVESTMENTS 
 
 cate and in important railroad centres or shipping points 
 should be good investments if proper care is taken to look into 
 the securities along the lines suggested above. 
 
 Term Insurance. A life insurance policy of this class is one 
 that is taken out for a stated number of years; the face of the 
 policy to be paid only in case of death before the expiration of 
 the term. A term policy has no value after its expiration. 
 
 Term of Discount. The length of time for which a note is 
 " discounted," to which subject refer. 
 
 Terms of Sale. Conditions, other than price, named by the 
 seller; or the price only; or both. 
 
 Thaler. The " thaler " of Germany is an old silver coin of 
 the value of three marks or about seventy-two cents in our 
 money. Until recently these coins had full value as legal 
 tender; they are now being rapidly recoined into other pieces 
 in the German monetary system. 
 
 The Papers. See " Documents," meaning the same. 
 
 Third Consolidated Mortgage. A very uncommon issue, but 
 a reading of " Second Consolidated Mortgage " will naturally 
 make this subject understood. 
 
 Third Mortgage. A mortgage placed upon property which 
 already has two other mortgages existing upon it: for in- 
 stance, a certain piece of real estate, supposed to be worth 
 $15,000, has against it a first mortgage for $5,000 and a second 
 mortgage for $3,000. The owner wishes to borrow $2,000 
 more, and finds some one who is willing to accept a " third 
 mortgage," upon the same, for that amount, making the 
 total mortgage indebtedness against the property $10,000. 
 Imagine that the owner of the property is unable to pay the 
 interest upon the " third mortgage " when due; in order for 
 the holder of this mortgage to protect himself, he must fore- 
 close the property under his own mortgage and pay the 
 holders of the other two mortgages their due. 
 
 In taking a " third mortgage," one should have reason to 
 believe that the property will, at any time during the life of his 
 mortgage, bring at " forced sale " a price sufficient to pay off 
 all three mortgages, because the first and second mortgages 
 must be satisfied in full before the " third mortgage " holder 
 receives anything. 
 
 Third Mortgage Bond. A bond secured by a mortgage upon 
 a property which already has two other mortgages existing 
 upon it and which mortgages would have prior claims upon 
 the property and its earnings. (See " Third Mortgage.") 
 Third of Exchange. See " Set of Exchange." 
 Third Preference Shares. The English equivalent of the 
 American " third preferred stock." Not very many such
 
 MONEY AND INVESTMENTS 401 
 
 issues in existence; the British National Telephone Co. has 
 " third preference shares " outstanding. 
 
 Third Preferred Stock. (See " Preferred Stock.") Such an 
 issue as this is rare, but it would simply rank after the first 
 and second preferred stocks. 
 
 Third Teller. Same as " Note Teller." 
 
 Thirties. See next subject. 
 
 Thirty-Day Bill. A bill of exchange (see " Exchange ") 
 may be drawn payable in thirty days after date, but it is more 
 customary to draw them payable thirty days " after sight; " 
 that is, after presentation. If in the latter form, and drawn 
 on England, roughly speaking, ten days may be reckoned as 
 the time elapsed after drawing before presentation, and as 
 three days' grace is allowed there on time bills, it would make 
 a total of approximately forty-three days before actual 
 maturity. 
 
 Bills of this kind are called " Thirties." 
 
 Threadneedle Street. See " Lombard Street." 
 
 Three-Cent Silver Pieces. A small silver coin of the United 
 States, the minting of which was discontinued by Act of 
 February 12, 1873. Legal tender in amounts not exceeding 
 $10. 
 
 Three C's. The Cleveland, Cincinnati, Chicago & St. Louis 
 Railway Co. is often referred to in this manner. " Three C's " 
 is also used to refer to the three large products of the earth 
 copper, corn, and cotton. 
 
 Three-Dollar Gold Pieces. The coinage of these was dis- 
 continued under Act of September 26, 1890. They contain 
 69.66 grains of fine gold and 7.74 grains of alloy. The total 
 coinage was only 539,792 pieces. 
 
 Three I's. The Indiana, Illinois & Iowa Railroad Co., now 
 a part of the New York Central system, used to be, and is now, 
 frequently referred to as the " Three I's." 
 
 Three Months' Bills. These do not differ in any way from 
 " ninety-day bills " (to which subject refer) except wherein 
 the actual months covered might total in days more or less 
 than ninety days; that is to say, a " three months' bill " dated 
 the first day of November, would cover 30 days in that month, 
 31 days in December, and 31 days in January, making a 
 total of 92 days. With this understood, everything else 
 mentioned under " Ninety-Day Bills " applies here. It is 
 very much more the custom to draw " ninety-day bills " 
 than " three months' bills." 
 
 Three-Name Paper. A note for which three parties are each 
 responsible for payment; a note bearing three signatures, or
 
 402 MONEY AND INVESTMENTS 
 
 
 
 a combination of three signatures and indorsements, whereby 
 three parties are each responsible for its payment. 
 
 Three Pence. A silver coin of Great Britain, equal in value 
 to about six cents United States money. 
 
 Three Sixty-Fives. Bonds bearing interest at the rate of 
 3.65% per annum. This peculiar rate results from the fact 
 that it is the equivalent of one cent per day on each $100 
 invested. A good illustration is the District of Columbia, 
 which has borrowed quite largely by the issuing of bonds 
 bearing this rate. 
 
 Ticker. 1 A small printing machine operated by telegraph, 
 by which the outside world obtains reliable information as to 
 the prices of securities and commodities dealt in upon the 
 principal exchanges of the world. It is the broker's never- 
 failing source of information. The results are read from a 
 narrow strip or ribbon of paper, which automatically unwinds 
 as needed, and, after passing between type-bearing wheels, 
 run out into a basket set for the purpose. This ribbon is 
 called the " tape." 
 
 The quotations appear on the " tape " in printed form, the 
 name of each security being abbreviated. The sale of ten 
 shares of common stock of the Union Pacific Railway Co. at 
 110 per share, would be recorded: " 10 U. P. 110." Men group 
 about the " ticker," in the various offices, and follow the un- 
 winding of the " tape " with keen interest, and the faster the 
 " tape " travels, and the more audible the sound of the 
 ticking, the greater the attention which it attracts, as it 
 indicates increased market activity or something of impor- 
 tance happening. 
 
 Tickerosis. A humourous name for one who has a craze for 
 watching the quotations as they come in on the " tape/' and 
 who may be found during stock-exchange hours hanging over 
 the " ticker." 
 
 Ticket-Day. Next to the last of the London " Fortnightly 
 Settling-Days" (see that subject). Upon this day clearing 
 tickets are passed. The broker prepares a ticket upon which 
 is given the buyer's name and address and the price at which 
 the transaction is made, which he hands to the selling jobber. 
 These tickets go from one to another until they reach the 
 actual buyers or sellers. Thus delivery may be accomplished 
 
 1 Introduced in 1867. 
 
 Besides the stock " ticker " there are similar machines which furnish 
 quotations upon various commodities, such as grain, cotton, coffee, etc., 
 as the transactions take place in the large exchanges where such commod- 
 ities are handled. 
 
 Complete information in relation to all the signs and abbreviations 
 appearing upon the " tape " will be found in "The Ticker Book " by S. S. 
 Fontaine and R. L. Neville.
 
 MONEY AND INVESTMENTS 403 
 
 without the intervention of any intermediaries. (This whole 
 matter may be better understood by reading " London 
 Stock Exchange Transactions.") " Ticket-day " is also 
 called " Name-Day." 
 
 Tickler. A book in which all debts due to a banking insti- 
 tution (or any one) are entered, together with dates of ma- 
 turity, so that failure to present for payment at the proper 
 time may not occur. It is a reminder. 
 
 Tied Up. See " Locked Up." 
 
 Tierce. In speculating in lard this term represents 340 
 pounds. 
 
 Tight Money. Difficult to borrow money, except at high 
 interest rates, and, sometimes, impossible regardless of rate. 
 
 Till Money. An English term for money which a banker 
 must keep close at hand ready to meet payment of checks 
 as presented over the counter. 
 
 Time Bills. Bills of exchange (see " Exchange ") payable 
 at some fixed date as distinguished from " sight " or " demand 
 bills." If the holder of a " time bill " wishes to realize money 
 upon the same, he takes it to some dealer in " foreign ex- 
 change," who buys it at the prevailing rate of exchange, less 
 the interest for the unexpired time, reckoned on the basis of 
 the rate prevailing in the country against which the bill is 
 drawn. 
 
 Time Certificate. See " Certificate of Deposit." 
 
 Time Collateral Paper. See " Collateral." 
 
 Time Deposit. A deposit of money in a banking institution 
 to remain for a specifieoStime. Upon money deposited in this 
 way the institution is supposed to pay interest, and a greater 
 rate of interest (if any) than allowed on deposits " subject to 
 check." 
 
 For all practical purposes, savings bank deposits are " time." 
 To withdraw them before the expiration of a given time, a 
 greater or less sacrifice of interest accrues to the depositor. 
 Most savings banks reserve the right, and it is so specified in 
 fheir deposit books, to require a certain notice, thirty, sixty 
 days, or some such time, in which to pay depositors. This 
 privilege is very rarely exercised and only in case of financial 
 troubles. 
 
 Time Discount. Any money gain accruing to the purchaser 
 of merchandise on account of anticipating the payment of the 
 bill for the same. 
 
 Time Draft. (First read " Draft.") A draft payable on a 
 certain named day or at expiration of a stated length of 
 time after it has been presented for " acceptance " (see that
 
 404 MONEY AND INVESTMENTS 
 
 subject); that is, after "sight." A draft payable ten days 
 after " sight " becomes payable ten days after it has been 
 presented for " acceptance." The presenting of the same, 
 however, often depends upon the receipt of goods against 
 which the draft may have been drawn for payment, and, in 
 such a case as above, would not be presented for " acceptance " 
 until the arrival of the goods themselves. 
 
 Time Loan. A form of borrowing where the agreement 
 between the borrower and the lender sets a definite time at 
 which the loan shall be paid, and by which the right does not 
 exist on the part of either for earlier payment than the date 
 specified in the note. 
 
 Time Money. Loans for a definite time as opposed to 
 " call " or " demand " loans; loans which neither the lender 
 nor borrower has the right to demand or make payment of 
 before the time specified in the note. 
 
 Time Paper. Notes, drafts, etc., payable at certain future 
 dates. See " Time Loan " and " Time Draft." 
 
 Tip. Information given in a secretive, or what is supposed 
 to be a secretive, way, purporting to aid one in deciding as to 
 what action to take regarding the purchase or sale of certain 
 securities. " Tips " are sometimes honestly given; some- 
 times given with the intent to mislead; and, again, are honestly 
 given, but in spite of that fact may not prove to have been 
 based on correct information. (Read " Tipster.") Advice 
 sincerely given, however, by the legitimate banker or stock 
 exchange broker must not be confused with the underhand 
 fatherless advices of the " tipster." 
 
 Tipster. One who advises another what to buy or sell, with 
 the expectation of making a profit, if the advice is followed, 
 either by the business being done through the one giving the 
 " tip," or by being given an interest in the profits, if any. 
 
 Beware of a " tipster." An advertisement of one's being 
 able to furnish " tips " on stocks, returning fabulous wealth 
 to those seeking the advertiser's advice, is a thing to be 
 avoided like the smallpox. No legitimate broker does any- 
 thing of this kind. A member of the stock exchange so 
 advertising would be heavily penalized by the officers of the 
 exchange. In the financial world, there is no such thing as an 
 " absolute certainty " for the making of money. If it existed, 
 there would be no need to advertise regarding it. 
 
 A good example of a circular sent out by an irresponsible 
 member of society of this kind, who advertised that all trades 
 were made on either the New York Stock Exchange or the 
 Consolidated Stock Exchange, is one which reads in part: 
 
 " The funds are operated by us for our clients on informa- 
 tion which we receive, and which we are supposed to use for
 
 MONEY AND INVESTMENTS 405 
 
 our own benefit, and which we are not supposed to retail to the 
 public at large. At the present time a certain low-priced rail- 
 way stock has been cornered. It will mean a profit in from 
 five to ten days of 200 or 300 per cent. In other words, we will 
 return every dollar you send to us, with 6 per cent, interest, 
 inside of 10 days if the movement does not take place as 
 scheduled. If it does, we will return all the money you send, 
 with all the profits, less 5 per cent, of the profits, our commis- 
 sion. Why such generosity? Just to get acquainted with 
 you to get you for a permanent customer." 
 
 Title Insurance. A plan by which one may obtain insurance 
 against loss arising from an imperfect title to real estate, it 
 falling upon the company to satisfy itself as to the title's 
 soundness. This is often advisable for those purchasing 
 mortgages. 
 
 Title Insurance Company. See " Mortgage." 
 
 To Account Rendered. Indicating that a bill or statement 
 for the same had been previously furnished the debtor. 
 
 To Bearer. See " Payable to Bearer." 
 
 To Bill Rendered. See " To Account Rendered." 
 
 To Boot. Money or anything given as an extra inducement 
 to effect an exchange (swap) between parties. 1 
 
 Token Money. Formerly issued by merchants as small 
 change when there was a scarcity of Government coins of 
 small denominations. They had the general appearance of 
 coins, but not equal in value to the face amount. The issuers 
 were expected to redeem them on demand. 
 
 Government issues of minor coins, which in themselves are 
 of less value than their face, but which, by law or custom, 
 are current at their face value, or in excess of their real value, 
 are " token " coins; such as our copper cents and nickel coins. 
 
 Tolerance. The legal allowance for abrasion of coins, below 
 which the Treasury will not redeem them at their face value. 
 The allowance varies with the time of circulation. Also called 
 " Mint Remedy." 
 
 Ton Mile. The movement of one ton of freight one mile. 
 It is taken as the unit of cost and service in freight transpor- 
 tation. Transportation service consists of two factors, weight 
 and distance. The weight alone is no indication of the amount 
 of a railroad's business; that is to say, a railroad carrying a 
 
 1 Trenholm states that " money was probably at the very first used only 
 as a make-weight in bartering and trading ; the ' boot,' as we call it now. 
 It may be imagined that when bartering and ' trading ' became close, some 
 article of general acceptability was added to the less valuable of the two 
 things under exchange, so as to equalize the values received by the parties 
 to the barter."
 
 406 MONEY AND INVESTMENTS 
 
 larger number of tons than another might actually be doing 
 less business, because the number of tons carried was for a 
 less distance. 
 
 The product of tons and miles is used by railroads to com- 
 pare business done with that of other roads, or with their own 
 business in other years. 
 
 Ton Mile Cost. The cost of carrying one ton of freight one 
 mile. This cost cannot be accurately ascertained. It is 
 merely a rough approximation used by railroads for com- 
 parative statistical purposes. 
 
 Tonnage. The amount of freight carried by rail or boat. 
 
 Tonopah. Tonopah Mining Co. of Nevada. (Gold and 
 silver.) 
 
 Tontine Insurance, A life insurance contract which pro- 
 vides that all payments made by the insured and all accrued 
 profits shall be forfeited and the contract terminated upon the 
 non-payment of any premium when due. Sometimes used 
 incorrectly to designate deferred dividend policies which have 
 both cash surrender and paid-up values. These policies are 
 semi or free " tontine," being " tontine " only as to their 
 dividends, which are lost to the insured in case of death or 
 lapse. 
 
 To Order. See " Payable to Order." 
 
 Top-Heavy. A market is, or prices are, "top-heavy" 
 when too high for the times, and ought, judging from existing 
 conditions, to tip over, react, or decline. 
 
 Toppy. Prices getting dangerously high and ready to 
 topple over; top-heavy. 
 
 Torrington. The Torrington Co. (Needles, etc.) 
 
 Total Surplus. See " Surplus." 
 
 Touched. " General Electric touched 180; " meaning that 
 the stock of that company reached the price of $180 per 
 share. 
 
 TR. The " ticker " abbreviation for " trust receipts." It 
 is also otherwise used to mean " transit " or " trust." 
 
 Traction Shares. In general, the stock of any or all street 
 railway companies; but, as used in the New York newspapers, 
 stocks of the local companies. 
 
 Traction Stocks (or Bonds). Issues of securities by street 
 railway companies of all kinds, whether operating elevated 
 roads, surface lines, or subways. It is to distinguish these 
 securities from railroad companies, as commonly understood, 
 that the word " traction " is used. (See " Electric Railway 
 Securities.") 
 
 Trade Balance. Same as " Balance of Trade."
 
 MONEY AND INVESTMENTS 407 
 
 Trade Bills. An English term for " inland (exchange) 
 commercial bills." (See " Exchange.") 
 
 Trader-Broker. A member of the stock exchange who buys 
 and sells on his own account. 
 
 Trade Discount. The discount allowed by the manufacturer 
 or wholesaler to some one else in the trade, generally the 
 retailer, on goods purchased; the goods themselves to be 
 billed at the retail price, and the discount, therefore, being so 
 much off the retail price. Dealers of certain commodities, the 
 prices of which have a wide range of fluctuation, such as 
 paper, glass, etc., have fixed charges for their goods, and issue 
 discount sheets, from time to time, stating what discounts 
 from these prices will be allowed. 
 
 Trade Dollars. Authorized by the Act of February 12, 
 1873, containing 420 grains troy; intended for circulation in 
 oriental countries as a substitute for the Mexican dollar; 
 slightly exceeding the same in weight; formerly legal tender 
 in the United States in sums not exceeding $5. This latter 
 quality was withdrawn in 1876 and the coinage was limited 
 to such amounts as the Secretary of the Treasury should con- 
 sider sufficient to meet the export demand. In 1887 the 
 retirement of trade dollars and their recoinage into standard 
 silver dollars or subsidiary silver was provided for by law. 
 The total number of trade dollars coined was 35,965,924. 
 The number redeemed under the Act of 1887 was 7,689,036. 
 For six months after the passing of the Act of 1887 trade 
 dollars could be exchanged, dollar for dollar, for standard 
 silver dollars or subsidiary coin. Since the expiration of that 
 redemption period Trade Dollars have been purchased as 
 bullion when presented at the mints. 
 
 Trade Paper. See " Business Paper." 
 
 Traders. Those who make a business of buying and selling 
 securities upon their own accounts. They must not be con- 
 fused with bankers who sell to regular clients, or with brokers 
 who execute orders on a commission for others. 
 
 There are several classes of " traders " so-called; first, 
 those who are not stock exchange members; second, pro- 
 fessional traders, who differ from the first named only in 
 owning stock exchange seats, who also have their orders 
 executed by some other stock exchange member, and 
 to whom they pay a very much reduced commission, in ac- 
 cordance with the stock exchange rules, but do not go upon 
 the floor of the stock exchange to execute their own orders, 
 although they would be privileged so to do, in which latter 
 event they would become, third, room traders; i. e. those 
 upon the floor of the stock exchange, who buy and sell
 
 408 MONEY AND INVESTMENTS 
 
 securities for their own account. Such, of course, must be 
 members of the stock exchange. 
 
 One writer very well says: 
 
 " Trading in stocks can ordinarily be divided into profes- 
 sional and public dealings. There is a great difference between 
 the two. Professional trading includes manipulation and the 
 operations of those who make trading in stocks a considerable 
 part of their daily business. Trading by the public covers 
 investment business and a form of dealing which is partly 
 speculative and partly investment. The professional operator 
 trades all the time. Public trading is variable and very un- 
 certain." 
 
 Trading. Buying and selling securities for personal gain, 
 the dealings being with bankers or brokers and not with the 
 investment public. A reading of the subject under the head- 
 ing " Traders " will give a fair idea of what is known as 
 " trading." 
 
 Traffic Density. May be either " freight density," or 
 " passenger density." (See those subjects.) 
 
 Traffic Pools. See footnote to the subject " Pool." 
 
 Train Mile. The movement of a train one mile. It is taken 
 as the unit of movement of trains between terminals. 
 
 Transfer. See " Transfer of Stock." 
 
 Transfer Agent. A person, banking house, bank, or trust 
 company generally the latter which has in its possession 
 the books of unissued stock certificates, and, probably, a 
 seal of the corporation, for which it acts as transfer agent, 
 and which is authorized to issue new certificates for old ones 
 when presented, properly assigned and witnessed, and to keep 
 a record of all such transfers. 
 
 A " transfer agent " is one through whom a change in 
 ownership of a corporation is made; corresponds to a register 
 of deeds in a transfer of real estate. 
 
 A great many corporations do not have " transfer agents," 
 in which case transfers of stock are made through the office of 
 each corporation itself, some officer generally the treas- 
 urer keeping the records and seal. 
 
 Transfer Book. A book in which is recorded transfers of 
 shares of stock, showing a change of ownership. 
 
 Transfer Books Closed. See " Books Close." 
 
 Transfer in Blank. First read " Transfer of Stock." It 
 will there be observed that there is a blank on the back of each 
 stock certificate which provides that the one wishing to make 
 a transfer of it may fill in the name of the person to whom the 
 stock is sold, or to be transferred. If, for instance, Maria 
 Morton sells her fifty shares to John Roe, and fills in his name
 
 MONEY AND INVESTMENTS 409 
 
 in this blank, then he only is entitled to have a new certificate 
 issued in his name, and it is notice to the corporation that 
 John Roe owns the certificate. But if Maria Morton sells and 
 delivers her certificate to John Roe, and no name is filled in 
 as above, then the certificate can pass from owner to owner, 
 without the necessity of a new one being issued each time. 
 However, should there be any dividend declared in the mean- 
 time and while the books of the company still showed Maria 
 Morton to be the owner of the stock, the dividend would go 
 to her and not to John Roe, or any subsequent owner. It 
 would be proper and legal for the owner of the stock at the 
 time of the declaration of any dividend to demand of the 
 person from whom he bought the stock, and so on back to 
 Maria Morton, the payment of the amount of such dividend, 
 and she should pay it to John Roe, taking a receipt from him 
 at the time of so doing. 
 
 There is an exception in case of the stock being sold " ex- 
 dividend," for an explanation of which turn to that subject. 
 
 In the case of the sale of a stock of doubtful value, where 
 possibly the corporation is in danger of failure, it is very im- 
 portant that the seller should personally attend to making the 
 transfer on the company's books, for the name on the records 
 of the company would be accepted, in law, as evidence of 
 ownership, and if the stockholders, as in national banks, 
 were liable for the debts of the corporation to an additional 
 amount equal to the par value of the stock, then those whose 
 names appeared on the records, at the time of the failure, 
 as owners of the stock, would be the ones liable. By far the 
 safest way is for the seller to forward the certificate to the 
 transfer agent (see " Transfer Agent "), giving instructions for 
 the issuing of the new one, thus being assured of the change 
 in name upon the records. 1 Never " transfer in blank " any 
 
 1 The very pertinent objection may be raised here, of forwarding a stock 
 to be transferred into the name of another party before receiving payment 
 for the same. Likewise, the transferee might object to paying for the stock 
 until delivered. To prevent all doubt and risk, this may oe effectually 
 accomplished, as follows: The seller agrees to make delivery by transfer, 
 as it is called. The transferee agrees to pay for the stock upon delivery. 
 The latter executes a power of a'ttorney, authorizing the transfer of the 
 stock from himself to the original party; so that, at any time previous to 
 the delivery and payment for the stock, the seller could, by the use of power 
 of attorney, have it re-transferred to himself. He will hold this power of 
 attorney; forward the stock to the transfer office with instructions for it 
 to be returned to him after transfer. Upon its receipt, he will deliver to the 
 purchaser the certificate of stock in the latter's name, together with the 
 power of attorney referred to. By this method, if, for any reason, the 
 purchaser should refuse or be unable to accept the certificate of stock, then 
 the seller, by the use of the power of attorney, could have a new certificate 
 issued in his own name. 
 
 The ordinary method, which is considered sufficiently free from risk by
 
 410 MONEY AND INVESTMENTS 
 
 stock which carries additional liability for debts or which is 
 subject to any assessment whatsoever. (See " Non-Assess- 
 able.") 
 
 Transfer Office. See " Transfer Agent." 
 
 Transfer of Stock. Transfer of ownership in a corporation 
 from one person to another. The actual method of accom- 
 plishing this is for the holder of the certificate (see " Stock 
 Certificate ") to fill in a blank to be found upon the back of 
 the same, inserting the name and address of the next owner 
 and signing his or her name. (If owned by another corpora- 
 tion, then that corporation's name followed by the signature 
 of the officer authorized to sign for such purpose, and accom- 
 panied by a copy of the vote or extract from the company's 
 by-laws, authorizing the transfer, and certified by some officer 
 other than the one signing the transfer.) Then the signature 
 should be witnessed by another person who should sign after 
 the word " Witness." Care should always be taken to make 
 the owner's signature upon the back agree exactly in wording 
 and spelling with the name as filled in upon the front of the 
 certificate. For example, if Mrs. Maria Morton is the name 
 on the front, then she must prefix the Mrs. to her signature on 
 the back. The certificate may then be sent to the transfer 
 agent (see " Transfer Agent ") and a new one the old 
 certificate being cancelled will be issued in the name of the 
 new owner, and delivered in accordance with instructions 
 accompanying the old certificate. Suppose, however, Maria 
 Morton owned a certificate for fifty shares of a certain stock, 
 of which she had sold to John Roe, twenty. She would then 
 fill in upon the back, in the blank showing the next owner, as 
 follows: 
 
 ^ John Roe twenty shares ) Give in each case the full 
 Maria Morton thirty shares J post-office address. 
 
 And then the transfer agent would issue new certificates 
 accordingly. 
 
 There is another part of the blank upon the back of a stock 
 certificate, which is sometimes filled in by the person wishing 
 to make transfer; that part which allows the naming of 
 an attorney to make the transfer. If, for any reason, Maria 
 Morton should wish to send her certificates to some one in 
 whom she placed confidence, giving this person not neces- 
 sarily a lawyer power to go to the transfer agent and 
 accomplish the transfer, she must fill in the name of the person 
 to whom she wishes to delegate such power and in the blank 
 
 the brokers, is for the seller of a certificate to fill in upon the back the name 
 of the party to whom he is selling. This will compel a transfer of the cer- 
 tificate before it can again be sold.
 
 MONEY AND INVESTMENTS 411 
 
 last mentioned. The name of one's broker or banker is often 
 used in this way. (Read " Transfer in Blank.") 
 
 Transfer agents must be satisfied as to the genuineness of 
 signatures on certificates. It is well, therefore, when the 
 signature is likely to be unknown to the transfer agent, to 
 have some bank, banking firm, or notary public guarantee 
 the signature. 
 
 Certificates should always be made out in one's full Christian 
 name. In the case of a married woman " Mrs." should be 
 prefixed, and in the case of an unmarried woman " Miss." In 
 case of marriage, or re-marriage, a new certificate should be 
 issued at once with the change of name. To have this done, 
 fill in the transfer blank on the back, as follows: " Mrs. 
 Maria Roe, formerly Maria Morton." Sign the transfer blank 
 the same as on the front, " Maria Morton " in this example, 
 and forward for transfer. A woman must never use her 
 husband's Christian name in the issuing of a certificate; for 
 instance, it should be issued to Mrs. Maria Roe, not Mrs. 
 John Roe. 
 
 If a certificate is received, issued with any error, report 
 such error to the transfer agent at once. 
 
 In the case of a lost certificate, notify the transfer agent 
 immediately, sending description of certificate, particularly 
 its number. 
 
 In transferring to a corporation, give the exact legal title, 
 in order that there may be no mistake in the name. 
 
 When to a person under guardianship, the certificate should 
 read, for instance, " William French, minor, 1 under guardian- 
 ship of Henry Allen." When a transfer of such a certificate is 
 necessary, the guardian must send with it a recently certi- 
 fied copy of his appointment likewise administrators and 
 executors, who must also send certified copy of the will also 
 the license of the court appointing him (if the laws of the 
 State under which he is appointed require such a license). 
 If a guardianship is ended, the legal evidence must be fur- 
 nished. 
 
 Should it be desired to issue a certificate to a trustee, or 
 trustees, send full description of the trust, giving clear refer- 
 ence to the document under which the trust was created. It is 
 best to give the name of the beneficiary if possible. 
 
 Never make any additions or alterations to the face of a 
 certificate. 
 
 Always give prompt notice of change of address to the 
 transfer agents of all the different stocks owned. Name the 
 corporations in the notice. 
 
 In transferring under a power of attorney, send the original 
 power or a certified (by a notary) copy of it. Such powers 
 1 If insane, write " incompetent " in place of " minor."
 
 412 MONEY AND INVESTMENTS 
 
 should be of recent date, or clearly show in their wording that 
 they are still in force. 
 
 Unless there is State law giving authority for direct transfer, 
 husband and wife should always transfer to one another 
 through the medium of a third person. Executors, guardians, 
 trustees, administrators, and attorneys should never have 
 certificates transferred to them individually. 
 
 Transfers by trustees, administrators, or executors should 
 be made with care. It is well to find out just what the 
 transfer agent wishes in such cases. 
 
 For delivery upon the New York Stock Exchange, a certif- 
 icate in the name of a married woman, and properly signed 
 and witnessed by her, is acceptable unless the transfer books 
 of the particular company are closed, when a joint execution 
 of the assignment by both husband and wife before a notary 
 public is required. 
 
 Ordinary form of reverse side of stock certificate: 
 
 For value received I hereby sell, assign, and transfer unto 
 
 / 
 John Roe, 23 Broad St., Cartersville, N.C., all my 
 
 right, title, and interest represented by the within certificate, and hereby 
 
 constitute and appoint .true and 
 
 lawful attorney, with full power of substitution, for the purpose of effecting 
 the transfer of said interest on the transfer books of the depository referred 
 to in said certificate. 
 
 Dated this 1st day of Jan., 1907. 
 
 (Mrs.) Maria Jones. 
 In the presence of 
 
 William Green. 
 
 Transfers. Meaning telegraphic transfers or cable transfers, 
 as the case may be. (See " Cable Transfers " and " Tele- 
 graphic Transfers of Money.") 
 
 Transit Stocks and Bonds. Very much the same as " trac- 
 tion securities " (see " Traction Stocks "), but in common use 
 being applied more to the large street railway corporations of 
 greater New York, such as the Brooklyn Rapid Transit Co., 
 etc. 
 
 Transmission Company Securities. See " Power Company 
 Bonds." 
 
 Transmission of Money. See " Shipment of Money." 
 
 Traveller's Checks. See " International Checks."
 
 MONEY AND INVESTMENTS 413 
 
 Traveller's Letter of Credit. See " Letter of Credit." 
 
 Treasurer. A custodian of funds; the receiver and dis- 
 tributer of funds. The treasurer of any incorporated com- 
 pany, municipality, or banking institution is the one directly 
 responsible for the care of ita financial resources. The treas- 
 urer of a savings bank corresponds to the cashier of a national 
 bank. It is customary for treasurers to either sign or counter- 
 sign all evidences of indebtedness, checks, contracts, etc. 
 The bookkeeping department comes under his supervision. 
 
 Treasury Bills. A form of short time borrowing by the 
 Government of Great Britain. It was first introduced in 1877. 
 The bills are drawn in sums of 1,000, 5,000 and 10,000 
 each, either for three or for six months, and are issued 
 sold to those who bid for them at the lowest rates. That 
 is to say, they do not bear interest, but the purchaser obtains 
 them at a price sufficiently less than their face value to cover 
 the interest. In other words, the bills are sold " discon- 
 tinued." 
 
 Treasury Notes of Act of July 14, 1890. By an Act of Con- 
 gress, known as the Sherman Act, the Secretary of the Treas- 
 ury was instructed to buy at the market price during each 
 month, or so much thereof as was offered, fine silver to the 
 amount of 4,500,000 ounces, paying for the same with treas- 
 ury notes, redeemable on demand in coin and legal tender for 
 all debts, public and private, except where otherwise expressly 
 stipulated in the contract. " It was provided in the act that 
 when the notes should be redeemed or received for dues they 
 might be reissued, but that no greater or less amount of such 
 notes should be outstanding at any time than the cost of the 
 silver bullion and the standard silver dollars coined therefrom, 
 then held in the Treasury purchased by such notes." 
 
 The purchasing clause of this act was repealed by Act of 
 November 1, 1893; in the meantime there had been purchased 
 168,674,682.53 fine ounces costing $155,931,002 in treasury 
 notes. 
 
 From November 1, 1893, to July 1, 1894, there were coined 
 from the bullion, 140,939,750 standard silver dollars, of which 
 $94,897,110 represented the cost of the bullion coined, while 
 the remainder, $46,042,640, constituted the gain or " seignor- 
 age." On July 1, 1894, the total amount of silver bullion 
 remaining uncoined was 5,607,238 fine ounces. 
 
 In the United States these " are legal tender for all debts, 
 public and private, except where otherwise expressly stipu- 
 lated in the contract." On February 28, 1905, there were 
 outstanding $10,330,000 of these. 
 
 Treasury Stock. Stock which a corporation has the right, 
 under certain conditions, to issue, but which, pending the ful-
 
 414 MONEY AND INVESTMENTS 
 
 filling of the conditions or the desire on the part of a corpora- 
 tion to issue the same in compliance with conditions, is held 
 in the treasury of the company as " treasury stock;" stock 
 authorized but not yet issued. 
 
 Trial Balance. Taking a " trial balance " of a ledger is the 
 method used to prove the mathematical correctness of the 
 " posting " in the ledger. 
 
 Trial of the Pyx. The English coinage laws provide for the 
 setting apart, from time to time, of specimen coins in order to 
 ascertain whether or not the laws regulating the weight and 
 fineness of the coins are being complied with. Once a year the 
 coins so collected are tested by weight and assay before a 
 jury summoned from the " mystery of goldsmiths of the City 
 of London or other competent persons." As the coins are 
 chosen so as to represent fairly all the coinage of the period 
 since the last test, the trial amounts to a public attestation of 
 the coin as to its standard of purity. 1 The box or chest in 
 which the specimen coins are placed awaiting the trial is the 
 " pyx." 
 
 Triangular Operation. A method, to use an example, by 
 which London pays its debts to Paris through the medium of 
 New York. Really being a shifting of London to our shoulders 
 of the duty of meeting the demands of Paris. 
 
 Trimountain. Trimountain Mining Co. (Copper.) 
 
 Trinity. Trinity Copper Co. 
 
 Trolley. A nickname for Brooklyn Rapid Transit Co. 
 
 Trolley Securities. See " Electric Railway Securities." 
 
 True Discount. " True discount " differs from " bank 
 discount," the former being the sum of money, which, if in- 
 vested at the same rate at which the note or obligation is dis- 
 counted, would amount to" the " bank discount " rate at the 
 time the obligation matures; in other words, allowance is 
 made for the investment of the interest, deducted or paid in 
 advance, for the time of the obligation. Example: The 
 " bank discount " on a note of $10,000 for six months at 5% 
 is, say, $250. The " true discount " would be the sum of 
 money which added to the interest on itself for six months at 
 5%, would equal $250. 
 
 The rule for figuring " true discount " is to multiply the 
 face sum of the note by the discount rate per annum and 
 divide the result by 100 plus the rate. This result is for a 
 year, by the aid of which any lesser time may be ascertained. 
 
 Trunk Lines. As commonly understood, the lines of railway 
 connecting the Atlantic Seaboard and the Central West. 
 
 1 See " The Coinage Act, 1870," 33 Victoria, Chapter 10.
 
 MONEY AND INVESTMENTS 415 
 
 Trust. There are two meanings commonly attached to the 
 use of this term: the " trust " as popularly known, and the 
 " legal trust," so-called. In its popular sense, it means a 
 combination of competing industries or businesses for the 
 purpose of monopolistic control, as was, for instance, the 
 Sugar Trust, in its early days, when it was simply the combina- 
 tion of many of the principal refineries for this purpose. 
 
 Its legal sense is better explained by an illustration than by 
 any process of definition. From 1881 to 1887 many of the 
 whiskey distillers had pooled their interests for the purpose of 
 maintaining prices in about the same way as the sugar re- 
 fineries already referred to, and this was, also, a trust in the 
 popular sense. But in the spring of 1887 it was deemed 
 advisable to form a " legal trust," and the stocks of the in- 
 dividual distilleries, seeing fit to enter the combination, were 
 exchanged for certificates of the newly formed Distillers' and 
 Cattle Feeders' Trust, commonly known as the " Whiskey 
 Trust." This was managed by trustees, who placed a manager 
 over each distillery, and those not found profitable were im- 
 mediately discontinued. This is a typical illustration of a 
 " legal trust," namely: " A combination of competing con- 
 cerns effected through the exchange of the stocks of the con- 
 stituent companies for certificates of ownership issued by 
 trustees who manage the enterprise." 1 Or, to put it dif- 
 ferently: " An organization managed by a board of trustees 
 to whom all the capital stock of the constituent companies is 
 irrevocably assigned; in other words, the original shareholders 
 accept the trustees' certificates in lieu of former evidence of 
 ownership." 
 
 A generally accepted reason for the creation of a " trust " 
 is to control output and prices for monopolistic purposes. 
 " The replacement of independent enterprises already con- 
 ducted on a large scale by a single centralized management." 
 
 Professor Ripley, in his very able book " Trusts, Pools, 
 and Corporations " treats upon this subject most com- 
 pletely, the following extracts being from that work: 
 
 " The vast majority of writers recognize that the Trusts 
 generally attempt to secure a monopoly and actually possess 
 monopolistic features. ... It is clear, furthermore, that the 
 meaning attached to the term is such a degree of control over 
 the supply of a commodity as enables the person or persons 
 possessing it to control the price, and fix charges at something 
 more than the normal competitive rate. In order to be com- 
 plete, the monopoly must be able to maintain prices at the 
 point of highest net returns. 
 
 "... If the tendency towards combination means any- 
 
 1 Prof. Wm. Z. Ripley, Harvard University.
 
 416 MONEY AND INVESTMENTS 
 
 thing, it means the substitution of centralized and consoli- 
 dated management for the rivalry of independent concerns; 
 and this may fairly be termed monopoly ..." or that 
 Trusts represent ' a vast accumulation of productive resources 
 which renders the competition of small concerns hopeless.' 
 
 " Professor Bemis looks upon a trust as ' virtually a monop- 
 oly of large capital,' possessing ' vast possibilities of social 
 advantage; ' but thinks that we cannot pronounce a final 
 iudgment ' until we have first removed all special privileges.' ' 
 
 William J. Bryan defines a " trust " as " any corporation 
 which controls so much of the product of any article that it 
 can fix the terms and conditions of sale." 1 
 
 Refer also to " Trust Estate," and " Real Estate Trust." 
 
 Trust Certificates. See " Stock Trust Certificates." 
 
 Trust Company. A corporation chartered under State laws 
 and not amenable to Government control, as in the case of 
 national banks. Trust companies, however, do very much the 
 same business as national banks as regards receiving business 
 deposits, that is, deposits subject to check, but also may 
 receive on storage, or otherwise, securities, money, jewelry, 
 valuable papers, and documents, and property of any kind 
 upon such terms as may be agreed upon, making a charge for 
 the same; may collect and disburse interest or income, if any, 
 upon principal received on deposit, and collect and disburse 
 the principal investments when they become due, and, in 
 general, act as " trustee " for the handling of funds for minors, 
 incompetents, or trusts in general. Trust companies also dea> 
 in securities, and receive money upon which interest is allowed, 
 in much the same way as savings banks. 
 
 Trust companies, therefore, may fulfil the functions of all 
 other kinds of banking institutions, with the exception of 
 issuing bank bills, as in the case of national banks. In the 
 words of Secretary Shaw, " they are permitted by law to 
 engage in well-nigh every kind of legitimate business ap- 
 propriate to private citizens or corporations." 
 
 These companies have very generally adopted the rule of 
 allowing interest at a low rate, say two or three per cent., on 
 denosits subject to check. It is, perhaps, this fact, as well as 
 the wide scope of their business, which has caused such enor- 
 mous increase in the resources of trust companies in recent 
 years. The resources of the trust companies of New York 
 State alone reached January 1, 1907 the enormous total 
 of $1,367,245,430, as against the savings banks, $1,464,950,- 
 833.40, for the same date. 
 
 Although the first trust company for the care of trust funds 
 was established in New York as far back as 1822, yet there 
 
 The Outlook, Sept. 8, 1906.
 
 MONEY AND INVESTMENTS 417 
 
 was no very broad field covered by such institutions until 
 comparatively recent years, for no such company existed in 
 Boston prior to 1871. 
 
 One reason why it is becoming more customary to appoint 
 a trust company as executor, trustee, guardian, or adminis- 
 trator, is that such a company is looked upon as a permanent 
 institution, and, therefore, not subject to the annoyances or 
 confusions which might arise from death, incapacity, or un- 
 willingness to serve on the part of one or more individuals. 
 One of the great functions performed by these companies is 
 acting as trustee for railroad and other mortgages, as agent 
 for registering and transferring shares of stock, and fiscal 
 agents, in general, for corporations and municipalities. 
 
 In 1905 the deposits in institutions of this country, such as 
 the above, were estimated at nearly $2,000,000,000. 
 
 Trust Company Account. See " Bank Account." 
 
 Trust Company Receipts. When a corporation is under- 
 going re-organization, or when, for any purpose, the deposit 
 of outstanding securities is asked for, a trust company may 
 act as custodian for the same, and issue its receipts which may 
 be traded in upon the stock exchange or used in the form of 
 any other negotiable instrument, as, for all practical purposes, 
 they represent the original securities. 
 
 Trust Deed. The written or printed instrument which con- 
 veys the title of property to some party to be held in trust for 
 others; the instrument which provides for the duties of a 
 trustee of a mortgage, and sets forth the rights of the borrower 
 and the lender. 
 
 The law finds other uses for " trust deed " than the above, 
 but in investment matters the definition here is what is under- 
 stood. 
 
 Trustee. Used most commonly in reference to an individual, 
 banking house, bank, trust company, etc., acting as " trustee " 
 of a mortgage. When a corporation desires to borrow money 
 by the issuing of bonds there must be some party to act in 
 the common interest of both the lender and the borrower. 
 Trust companies are becoming the most common class of 
 " trustees," and buyers of bonds, nowadays, prefer to have 
 some such institution act as " trustee " of the mortgage 
 securing an issue. The majority of trust companies investi- 
 gate quite carefully all legal documents in relation to the bonds 
 to be issued; that is, they often investigate the legality 
 of the franchises; ascertain that the mortgage covers the 
 property which it purports to mortgage, and is properly drawn; 
 and that all other legal requirements are duly complied with. 
 They then certify the regularity of the issue and each bond 
 bears the trust company's certificate in some form, which
 
 418 MONEY AND INVESTMENTS 
 
 indicates that the bond has been issued under its authority 
 acting as " trustee." 
 
 Should a default in either interest or principal occur, or the 
 promises of the corporation borrowing money not be fulfilled, 
 then, under certain conditions, it is the " trustee's " duty to 
 enforce these promises or take possession of the property and 
 act for the benefit of the bondholders, in accordance with the 
 terms of the trust deed. 
 
 One who has the legal custody of money or property (holds 
 it in trust) for others is a " trustee." 
 
 Trust Estate. An estate whose legal possession and benefits 
 are vested in one or more persons, the actual possession and 
 management of it, however, being intrusted to another party 
 or parties sometimes called " trustee," or " trustees." 
 
 Trust Funds. Money which, under specific conditions, is 
 placed in the hands of an individual, several individuals, 
 trust company, etc., to be cared for and managed accordingly. 
 
 Trust Receipt. A receipt given by an importing house to a 
 banking house on account of goods imported but against 
 which the " bill of exchange " has not matured and so has not 
 been paid. This gives the importing house the possession, 
 but not the title to the goods. Some receipts provide for a 
 storage of the goods in a warehouse, under a " warehouse 
 receipt." 
 
 Turn. " A profitable turn; " a profitable and finished 
 transaction. A " turn " is the selling of a security (or any- 
 thing) after its purchase, or a purchase to make good a con- 
 tract to deliver. (See " Short Covering.") 
 
 Turned Down. Declined to buy; declined to avail oneself 
 of the privilege. Suppose a banking house buys an issue of 
 bonds subject to the usual conditions of investigation, and, 
 upon making its investigation, finds facts not as represented, 
 and ends negotiations, and declines to purchase the issue. In 
 bankers' parlance they are said to have " turned down the 
 issue." 
 
 Turned Over. To sell; dispose of. " Turned over their 
 stocks at a profit; " sold them at a profit. 
 
 Turn in the Market. A change in the trend of prices. 
 
 Twenty-Cent Piece. A silver coin of the United States 
 minted only to the extent of $271,000. This piece of money 
 was found to be unpopular, being near the quarter-dollar in 
 size and liable to be passed as such. Its coinage was discon- 
 tinued by the Act of May 2, 1878. Legal tender to the extent 
 of $10 in any one payment. 
 
 Twenty-Five Cent Silver Piece. The United States " quarter- 
 dollar," containing 86.805 grains of fine silver and 9.645 grains
 
 MONEY AND INVESTMENTS 419 
 
 of alloy. Not including the Columbian " quarter-dollars," 
 these pieces had been coined, up to June 30, 1904, to the face 
 value of $77,160,687. These are " legal tender " in amounts 
 not to exceed $10 in any one payment. 
 
 Twisting the Shorts. (First read '" Selling Short.") When 
 the " short " selling has been overdone, prices may be sud- 
 denly advanced by artificial methods, compelling those 
 " short " to make settlements of their contracts at a con- 
 siderable loss. 
 
 Two-Dollar Man (or Broker). A great many stock brokers, 
 although owning stock exchange seats, may wish to em- 
 ploy others to buy or sell securities for them, and, con- 
 sequently, employ brokers to act in their stead, to whom they 
 pay a reduced commission amounting, usually, to $2 per 
 one hundred shares. There are exceptions to this rate, how- 
 ever, for the commission is less for stocks selling below certain 
 fixed prices. Brokers acting in such capacity for others are 
 known as " two-dollar men." Brokers acting one for the 
 other as above must be members of the same exchange. 
 
 Two Months' Bills. Read what is given under " Three 
 Months' Bills," to apply here with the difference in time. 
 
 Two-Name Paper. A note for which two parties are each 
 responsible for payment; a note bearing two signatures, or 
 one signature and one indorsement (also called " indorsed 
 paper"), whereby, in either case, each is responsible for its 
 payment. 
 
 Two Pence. A silver coin of Great Britain, equal in value 
 to about four cents United States money. 
 Tx. Taxes. 
 
 U 
 
 U. G. I. The United Gas Improvement Co. 
 U. K. The United Kingdom, i. e. Great Britain and 
 Ireland. 
 
 UN. The " ticker " abbreviation for " unified." 
 Unassented. " Unassented " securities are those the owners 
 
 of which have not agreed to some change in their status. 
 Uncovered Money (or Paper). Paper money behind which 
 
 there is no stock of metallic money or anything to redeem or 
 
 secure it. 
 
 Under. This is a term used in Great Britain and means 
 1-32 of 1% less or below a price. To illustrate, " under | " 
 would equal 3-32. 
 
 Underlie. " Underlying mortgage." This is almost self-
 
 420 MONEY AND INVESTMENTS 
 
 explained by the literal dictionary definition of the word 
 " underlie." An " underlying mortgage " takes precedence 
 over some other mortgage covering the same property. It 
 may be a first mortgage, and is usually so considered, but all 
 mortgages on a property which have precedence over any 
 other mortgage " underlie " the latter. 
 
 Underlying Mortgage. See " Underlie." 
 
 Under the Rule. The meaning of this term may be best 
 explained by using this rule of the New York Stock Exchange 
 as an example: " When the insolvency of a member or firm 
 is announced to the Exchange, members having contracts 
 subject to the rules of the Exchange with the member or 
 firm, shall without unnecessary delay proceed to close the 
 same. If the contracts involve securities admitted to quota- 
 tion upon the Exchange the closing must be in the Exchange, 
 either officially by the chairman, or by personal purchase or 
 sale. If the contracts involve securities not dealt in on the 
 Exchange, the purchase or sale of such securities must be 
 promptly made in the best available market. Should a con- 
 tract not be closed, as above provided, the price of settlement 
 shall be fixed by the price current at the time when such 
 contract should have been closed under this rule." 
 
 Although the rules of other exchanges may vary somewhat 
 from the above, the intent is substantially the same. 
 
 Securities bought or sold as above are frequently quoted 
 upon the " tape " accompanied by the letters " U. R." 
 
 Undertone. " The undertone of the market was weak," 
 meaning that there was an underlying weakness prevailing; 
 a tendency towards a decline in prices. 
 
 Underwriter. See " Underwriting." 
 
 Underwriters' Agreement. An agreement by which members 
 of an " underwriting syndicate " are bound. (See Under- 
 writing " and " Syndicate.") 
 
 Underwriting. A method of guaranteeing the sale of an 
 issue of securities. Let us take this to illustrate: 
 
 A banking house proposes to offer at public sale bonds 
 amounting in par value to $100,000,000. An " underwriting 
 syndicate " is formed composed of certain individuals or 
 corporations with some one among them selected as the 
 " syndicate manager " who agree that when the public offer- 
 ing of these bonds is made, that portion which is not sold, they 
 - the " underwriters " will buy at 95c. on the dollar; 
 that is, the " underwriting syndicate " guarantees the sale 
 of the bonds at par. On all bonds which are sold, therefore, 
 they make 5%, and, if the entire $100,000,000 are disposed of, 
 the " underwriting syndicate " will make a profit of $5,000,-
 
 MONEY AND INVESTMENTS 421 
 
 000. In case part or none of the bonds are sold, then the 
 "underwriting syndicate" must take such portion as is not 
 sold, at the rate of 95. Of course an " underwriter " joins 
 such a syndicate with the expectation that all the bonds 
 will be sold, and that he will not be called upon to take any 
 himself. The banker forming the syndicate protects himself 
 by providing for the sale of the issue whether the public 
 takes it or not; that is, he insures himself against a sudden 
 unfavourable change in the market, and, for such insurance, 
 is willing to give a proportion of his own profit, which is the 
 "underwriter's" share. 
 
 These syndicates are sometimes formed so that each mem- 
 ber takes and pays for his proportion of the securities in ad- 
 vance of the public sale, so that as the securities are sold he 
 delivers his proportion, and, if all are sold, he profits accord- 
 ingly; if not, he is left with his share to do with as he sees 
 fit, but under conditions generally regulated in the " under- 
 writers' agreement" (see that subject; also "Syndicate"). 
 
 Underwriting Syndicate. See " Underwriting." 
 
 Undesignated City. Cities in which " country banks " (to 
 which refer) are located. Cities not designated as " central 
 reserve " or " reserve " cities. 
 
 Undigested Securities. Securities that have been issued 
 and sold to bankers, underwriters (see " Underwriters "), 
 etc., who had expected to again sell them to investors, or the 
 " public," so-called. The public, owing to unfavourable 
 market conditions unforeseen, or for other reasons, not 
 having taken these securities, has not absorbed or " di- 
 gested " them, and they remain in the hands of the bankers 
 and underwriters " undigested," where they are likely to re- 
 main until market conditions improve sufficiently to permit 
 of their absorption. 
 
 Undivided Profits. Earnings or profits which have not been 
 divided among the partners in a firm or the stockholders in a 
 corporation. The difference between " surplus " and " un- 
 divided profits " is merely a bookkeeping one; the latter 
 account on the books of any business, if it does not seem 
 probable that these profits will in the near future be divided, 
 may all, or in part, be transferred to a " surplus account." 
 (See " Dividend.") 
 
 Uneven Market. Many variations in prices; first up and 
 then down; such variations at times may be large. 
 
 Unfunded. Indebtedness not funded; " floating debt." 
 
 Unification. At the time when the president of the New 
 York Central & Hudson River R. R. Co. took the presidency 
 of the " Big Four R. R.," so-called, and the Michigan Central
 
 422 MONEY AND INVESTMENTS 
 
 R. R., both of which companies had previously been in control 
 of the New York Central, the newspapers reported that the 
 latter had " unified " its interests, meaning that by the 
 presidency of the different roads being in the hands of one 
 man there would be a more uniform system of management. 
 
 Of course, the meaning is to simplify, make alike. Some- 
 times a mortgage on a corporate property is called a " unified 
 mortgage," meaning that where there had been several mort- 
 gages outstanding before, and of different kinds, that these 
 various mortgages had been, or would be paid off, and one 
 common mortgage issued to take their places, called a " uni- 
 fied mortgage." " Consolidated Mortgage " has the same 
 meaning. 
 
 Unified (or Unified Mortgage). See " Unification." 
 
 Union Land. Union Copper, Land & Mining Co. 
 
 United Metal Selling Co. The selling agency for the Apial- 
 gamated Copper Co. 
 
 United States Bonds. See " Government Bonds." 
 
 United States Depository. The Secretary of the Treasury 
 is authorized to appoint any national bank as a " deposi- 
 tory " for the moneys of the United States Government. 
 This is a method which the Government adopts in order that 
 a proportion, at least, of the large sums of money which it 
 often accumulates may get into use. It is conceivable that 
 the Government receipts might be so large that an enormous 
 amount of money could go into its hands and thus out of 
 circulation, making such a contraction that there would be 
 a scarcity of money for actual use, and it is to prevent such 
 contingencies to even a small degree that this plan has been 
 adopted. 
 
 The Government does employ national banks as de- 
 positories for other reasons than the above. It has what are 
 called " permanent depositories," in localities where the 
 principal offices of internal revenue collectors are located, 
 or where sales of public lands occur, for the purpose of re- 
 ceiving the proceeds of such collections or sales; also " special 
 depositories " in which post-office money-order and United 
 States Court funds are kept. 
 
 Any bank accepting the appointment, as above, must give 
 satisfactory security by the deposit with the Treasury De- 
 partment of United States Government bonds and other- 
 wise. 
 
 The Secretary of the Treasury has, however, construed the 
 law as permitting him, at his discretion, to accept other than 
 Government bonds, which may, in his judgment, furnish 
 sufficient security. There is an impression among many lead-
 
 MONEY AND INVESTMENTS 423 
 
 ing financiers that this is a bad precedent, and might, some- 
 time, lead to an abuse of the privilege. 1 
 
 United States Deposits. See " United States Depository." 
 
 United States Government Bonds. See " Government 
 Bonds." 
 
 United States Notes. During the Civil War, the United 
 States forced a certain amount of paper currency into cir- 
 culation, known as " greenbacks " or " United States notes." 
 There are outstanding to-day (Feb. 28, 1905) $346,681,016. 
 They are legal tender for all debts, public and private, except 
 duties on imports and interest on the public debt, but this 
 latter restriction amounts to little at the present time, be- 
 cause, upon presentation of any of these notes, the United 
 States Treasury redeems them in gold coin, which coin itself 
 may be used as legal tender for purposes prohibited to " green- 
 backs." 
 
 United States Public Debt. One is apt to think that the 
 debt of the Government is its outstanding bonds, but this 
 is incorrect, for paper money of all kinds, even although not 
 interest bearing, is figured into the debt statement. Deduc- 
 tions, however, are made for cash in the Treasury. 
 
 On March 31, 1907, the debt, less cash in the Treasury, 
 amounted to $793,330,626.93. It was made up as follows: 
 Interest bearing debt, $908,233,660; outstanding bonds not 
 presented for payment, $1,095,365.26; debt bearing no inter- 
 est, $402,645,542.78, a total of $1,311,974,568.04. In addi- 
 tion to this, however, there were $1,130,146,869 treasury 
 notes and certificates outstanding, but these were offset by an 
 equal amount of cash on hand held for their redemption. 
 
 United States Smelting. United States Smelting, Refining 
 and Mining Co., formerly the United States Mining Co. 
 
 United Verde. United Verde Copper Co. 
 
 Unit of Account. The " unit of value," as our gold dollar, 
 may not necessarily be coined, but the " unit of account " is 
 the selected unit which itself, and multiples of which, are 
 actually coined. This was the case with our gold dollar before 
 we ceased to coin gold in that denomination, for, on April 
 2, 1792, Congress established it as the " unit of the money 
 of account " for this country. 
 
 Unit of Value. The gold dollar is the " unit of value " in 
 
 'The Secretary obtained his authority from 5153 of the Revised 
 Statutes of the United States, reading in part as follows: " The Secretary 
 of the Treasury shall require the associations thus designated to give 
 satisfactory security, by the deposit of United States bonds and otherwise, 
 for the safe-keeping and prompt payment of the public money deposited 
 with them, and for the faithful performance of their duties as financial 
 agents of the Government."
 
 424 MONEY AND INVESTMENTS 
 
 this country, and must be of a certain " weight and fineness " 
 (25.8 grains of gold, .900 fine) and by it all values are meas- 
 ured. This is to our money system what the pound is to our 
 system of weights. In like manner the " pound sterling," 
 the " lira," the " yen," etc., are the units of value or mone- 
 tary units of Great Britain, Italy, and Japan respectively. 
 (See "Standard.") Trenholm, in "The People's Money," 
 defines a " unit of value " or " monetary unit " as " a definite 
 weight of a particular metal of a certain fineness, established 
 by law, to be the actual substantive value designated by the 
 term which is the denominational unit of the money system 
 of the country." 
 
 Unlisted Department. " Unlisted Securities," as distin- 
 guished from " listed." (See those subjects.) 
 
 Unlisted Securities. Securities, trading in which is per- 
 mitted upon a stock exchange, the same as the " listed " 
 ones, but regarding which it is understood that satisfactory 
 information has not been furnished the governors of the ex- 
 change sufficient to warrant their official sanction to the 
 placing of the same upon the regular " list." In the case of 
 the New York Stock Exchange, there is a " committee on 
 unlisted securities " which has general charge of the " un- 
 listed department " of the exchange. 
 
 At the time of writing (1906) such important stocks are 
 among the " unlisted securities," as: Amalgamated Copper, 
 American Sugar Refining, American Woolen, etc. 
 
 Unload. To sell, dispose of, get rid of. A finer meaning, as 
 used financially, is to dispose of certain securities in season 
 to prevent disaster; i. e. to sell an undesirable stock before 
 it declines, in which event, it is sometimes said that the person 
 who " unloaded " succeeded in " getting ashore." This is a 
 bit of slang which means the same as " unloading " and is 
 likened to a person getting ashore from a sinking boat in 
 season to prevent drowning. 
 
 Unsecured Creditor. One who has no legal claim upon 
 certain specified property for the satisfaction of his debt; one 
 who must accept the same basis of settlement as all others, 
 having no security, in the adjustment of the debts of an 
 insolvent or bankrupt. 
 
 Unsteady Market. Many variations in prices, such varia- 
 tions at times being large. 
 
 Upset Price. A fixed price less than which a security, 
 property, or whatever it may be, will not be sold. For ex- 
 ample: During the Cleveland administration, at the time 
 when there was an issue of Government bonds offered for 
 sale, a price was set less than which no bid would be received;
 
 MONEY AND INVESTMENTS 425 
 
 it was permissible to bid as much above the fixed price as 
 the bidder saw fit, but it would avail him nothing to bid at a 
 less price than the " upset price," so-called. 
 
 UR. The " ticker " abbreviation for " under the rule." 
 
 Usance. This is really " grace," as applied to " bills of 
 exchange; " the time allowed in which bills of exchange may 
 be paid. This varies, by custom, in different parts of the 
 world. 
 
 Use and Occupancy Insurance. This insurance guarantees 
 to the assured the use of the manufacturing buildings and 
 machinery of the insured plant in so far as such use may be 
 interfered with by damage by fire or sprinkler leakage for 
 which the insurance companies are liable under the fire 
 policy. This is a " valued policy " (see that subject) and 
 agrees to pay to the assured a stipulated amount of money 
 for the entire or partial interruption in the use of the buildings 
 or machinery, or both, as measured by the product. This in- 
 surance extends over one year of 300 working days, to be 
 applied pro rata, both as to duration and proportion of 
 interruption. 
 
 Usury. See " Legal Rate of Interest," and also second 
 paragraph under " Demand Loan." 
 
 Utah. Utah Consolidated Mining Co. (Gold, silver, and 
 copper.) 
 
 Valuation. See " Assessed Valuation." 
 
 Valued Policy. A form of fire insurance policy under which 
 the insured can recover the full face of his policy in case 
 of total loss, regardless of the value of the property insured. 
 This makes it incumbent upon the company not to insure to 
 a greater value than the property covered, for whatever the 
 amount of insurance is accepted under the " valued policy " 
 cannot be afterwards disputed on the basis of the property 
 having been over-insured. In New Hampshire, this form of 
 policy is obligatory; in other States it is illegal, the reason for 
 which is to guard against any collusion between the agent and 
 the insured, it being desired to prevent the insured obtaining 
 a greater insurance than the value of his property, thus 
 encouraging incendiarism. (See " Use and Occupancy In- 
 surance.") 
 
 Value Received. The giving an equivalent in value to the 
 obligation. Formerly there was considerable controversy 
 whether or not, in a bill of exchange or promissory note, it 
 was essential to its validity that " value received " should 
 be expressed, and there were old cases which decided in the
 
 426 MONEY AND INVESTMENTS 
 
 affirmative. In most States this is not the law at the present 
 time, it being well settled to-day that the words are not 
 necessary, for " value " is implied in every bill, note, accept- 
 ance, and indorsement. There is an exception in the case of 
 Missouri, however, where the words " value received " are 
 essential to the negotiability of a promissory note. In 
 Pennsylvania, it has long been customary to use the words 
 " without defalcation " in the place of " value received," 
 but the words are non-essential. 
 
 The statutes of the State of Michigan declare that: " Every 
 negotiable instrument is deemed prima facie to have been 
 issued for valuable consideration; and every person whose 
 signature appears thereon to have become a party thereto 
 for value." x 
 
 Vanderbilt Interests. Those railway companies in which the 
 well-known Vanderbilt family in New York, and other persons 
 associated with them, own either direct control, or control 
 through other companies; and those railway companies in 
 which their direct or indirect ownership is great enough to 
 influence its management, and lines leased to any of the fore- 
 going. Such railway companies, for instance, as the New 
 York Central & Hudson River, Michigan Central, the Cleve- 
 land, Cincinnati, Chicago & St. Louis, the Lake Shore & 
 Michigan Southern, the Canada Southern, the Lake Erie 
 & Western, the New York, Chicago & St. Louis, the Boston & 
 Albany, the Rutland, the Cincinnati Northern, the Peoria & 
 Eastern, the Pittsburg & Lake Erie, etc., a list too long to give 
 here. 
 
 Velvet. Profit; a " bonus." If a man buys 100 shares of 
 stock for $10,000, and later sells 75 shares at such an advance 
 in price that his original $10,000, plus commission, etc., is 
 returned to him; the 25 shares left standing him nothing, these 
 shares may be called " velvet." 
 
 Vendor's Shares (of Stock). Shares issued to one who sells 
 property to a company, and in entire or part payment for the 
 same. An English term and custom. ' 
 
 Victoria. Victoria Copper Mining Co. 
 
 Virginia Debt Certificates. See " Brown Brothers' Virginia 
 Deferred Certificates." 
 
 Visible Supply. This term is generally used in reference to 
 grain, cotton, or agricultural products, meaning the amount 
 on storage in the large centres and what is in transit. 
 
 Voluntary Association. An example of the use of such an 
 association as the above is that of the Massachusetts Electric 
 Companies, a " voluntary association " managed by a board of 
 
 1 Act 265, P. A. 1905.
 
 MONEY AND INVESTMENTS 427 
 
 trustees, who hold the title to its assets, consisting of the 
 majority and, in most cases, practically all of the stock of 
 certain street railway and lighting companies. These com- 
 panies were already in existence and their capitalization 
 fixed, so far as the property owned was concerned, when this 
 association was formed. By the " voluntary association " 
 plan, shares and notes may be issued at the pleasure of the 
 association, they being secured by the stock of the constitu- 
 ent companies bought and deposited with the board of trustees. 
 This amounts to a virtual consolidation of the several proper- 
 ties, and allows of a greater capital stock and indebtedness 
 than permissible to the companies direct. The " voluntary 
 association " is unknown to the law, but the subsidiary com- 
 panies are not, and their integrity is preserved. Each com- 
 pany is amenable to the law and recognized as if the " volun- 
 tary association " did not exist. 
 
 To make this clearer, suppose a railway company is limited 
 by law to an issue of $100,000 worth of stock. John Jones 
 buys all, or substantially all, of this, and puts it up as collateral 
 for a loan of some greater sum, say $200,000, than the par value 
 of the stock. There is no legal obstacle in the way of his doing 
 this provided he can find somebody to lend him the $200,000. 
 
 Voluntary Bankruptcy. See " Bankrupt." 
 
 Voting Trust. It is often desirable to place the voting con- 
 trol of the stock of a corporation in the hands of certain persons 
 for a definite time. A " voting trust " is formed, the stock- 
 holders agreeing to delegate the voting power of their stock to 
 certain named persons, called " voting trustees." 
 
 " These forms of control as vested in a board of trustees 
 represent, not ownership of stock, but merely a unified voting 
 power during a specified term of years." 
 
 Any dividends declared in the meantime go to the owners 
 of the stock, or, more particularly, to the owners of the " Vot- 
 ing Trust Certificates." (See next subject.) 
 
 Voting Trust Certificates. (See " Voting Trust.") When a 
 " voting trust " is formed it may be so arranged that each 
 stockholder deposits his stock certificate with the " voting 
 trustees," they issuing a negotiable receipt for the same 
 called a " voting trust certificate." 
 
 Voting Trustees. See " Voting Trust." 
 
 Voucher. A receipted bill or any written evidence of money 
 expended. 
 
 W 
 
 W. The " ticker " abbreviation for " West " or " Western." 
 Wabash. The Wabash Railroad Co.
 
 42$ MONEY AND INVESTMENTS 
 
 Waive Protest. See " Protest." 
 
 Wall Street. 1 Financial New York; meaning not only all 
 that section where matters of finance are transacted (not 
 literally Wall Street itself), but also the men engaged in the 
 management of such matters. As one financial writer well puts 
 it, " the business pulse of the nation." 
 
 Wall Street Crowd. The bankers, brokers, and moneyed 
 men of financial New York (not literally of Wall Street itself) 
 who mould or influence matters relating to finance and in- 
 vestments. 
 
 Walsh Roads. The Southern Indiana Railway Co. (succes- 
 sor to the Evansville & Richmond R. R. Co.), the Illinois 
 Southern Railway Co. (part of this system was formerly the 
 Centralia & Chester R. R. Co.), and the Chicago Southern 
 Railway Co. 
 
 Warehouse Receipt. A written evidence issued by a ware- 
 house company showing that certain commodities have been 
 stored with it. Suppose that a merchant imports a quantity 
 of wool. He is allowed to keep the same in what is called a 
 " bonded warehouse " for a certain length of time, without 
 paying duty; or the distiller of whiskey may store therein 
 goods subject to internal revenue taxes for a limited time, 
 pending the payment of the taxes upon same. 
 
 All transactions upon the Chicago Board of Trade for 
 future delivery are based on the delivery of " warehouse (some- 
 times called ' elevator ') receipts," covering the property 
 stored in a regular elevator or warehouse, licensed by the 
 State and under control of the State Railroad and Warehouse 
 Commission. 
 
 All " elevator receipts " for grain must be registered by the 
 State Grain Registrar, and all " warehouse receipts " for 
 provisions, i. e. pork, lard, and ribs, must be registered by 
 the Board of Trade Provision Registrar. 
 
 All regular grain elevators and provision warehouses are 
 bonded to the Chicago Board of Trade for the faithful per- 
 formance of their duties as prescribed by the laws of the 
 State and rules of the Exchange. 
 
 In distinguishing between the terms " warehouse " and 
 " elevator receipts," the former is the proper term, although 
 the latter is often used by the trade to designate receipts 
 covering grain on storage. Deliveries on provision contracts, 
 however, are always designated as " warehouse receipts." 
 
 1 The name Wall Street arose from the fact that in the 17th century, 
 when New York was settled by the Hollanders and known as New Amster- 
 dam, there was a stockade, or wall, built across Manhattan Island near 
 what is now Wall Street. This was to protect the inhabitants from Indian 
 attacks.
 
 MONEY AND INVESTMENTS 429 
 
 In speaking of receipts covering grain delivered on contracts, 
 the terms " warehouse receipts " or " elevator receipts " are 
 understood to mean the same thing in the Chicago market. 
 
 Warrant. State, county, city, or town. An order given by 
 some authorized official of a municipality upon its treasurer, 
 for payment to some person for services rendered, and which 
 this person presents to the treasurer, who, for lack of funds 
 on hand, is unable to meet it. The process is to take the order, 
 or " warrant," as it is very familiarly called, and stamp on 
 the back of it: " Presented, but not paid from lack of funds. 
 This warrant bears interest from this date until paid at the 
 
 rate of %." Below this is affixed the treasurer's signature. 
 
 He enters the description of this " warrant " in a book, and 
 the stamping upon the back of the " warrant " is called the 
 " date of registration." This " warrant," if made payable 
 " to bearer," is negotiable, the same as any piece of money; 
 if it is made payable " to order," it becomes negotiable only 
 by indorsement, the same as a check. If the owner of the 
 " warrant," after it has been stamped by the treasurer, 
 prefers not to hold it as an investment, he will probably sell 
 it to some local bank at some price less than its full value, 
 and the bank, in turn, will hold it, or sell it to some investor, 
 to be held until called for redemption. It is customary for a 
 municipality which has " warrants " outstanding to call 
 them for payment, from time to time, as money accumulates 
 for that purpose, and a " call " is inserted in some local paper 
 for " warrants " of certain numbers to be presented for 
 payment, and a certain date is named upon which interest 
 will cease. An investor in " warrants " must provide for some 
 way to be notified of a " call " covering his '* warrants," 
 otherwise he may lose interest. 
 
 Also used at times in the same sense as " interim certifi- 
 cates," to which refer. 
 
 " Dividend warrants " are orders for the payment of divi- 
 dends to shareholders. In England, however, a check for 
 the payment of dividend is termed a " dividend warrant." 
 An " interest warrant " is a similar order for the payment 
 of interest on a bond or like security, and thus a check for 
 payment of the interest on a " registered bond " may be 
 termed an " interest warrant." 
 
 In general, a " warrant," in a financial sense, is an instru- 
 ment authorizing a person to receive money or its equivalent, 
 or some security or negotiable paper. (See " Copper War- 
 rants.") 
 
 Warranty Deed. See " Deed." 
 
 Washington. Among the Boston quotations, Washington 
 Copper Mining Co. is understood.
 
 430 MONEY AND INVESTMENTS 
 
 Wash Sales. One broker orders another to sell a certain 
 quantity of stock at a fixed price, and when it is sold on the 
 stock exchange, the first broker buys it back again. The 
 stock does not actually change hands, but the " ticker " 
 reports the sale and gives a false impression as to the activity 
 of the stock, and no commission is received by the broker 
 making the purchase. An example of a " wash " transaction 
 would be between two stock exchange houses; the first, Smart 
 & Co., orders Clement Bros, to sell a thousand shares of Union 
 Pacific stock at a certain price, for which, of course, they will 
 receive a regular commission. Smart & Co., however, buy 
 this stock in at the time the sale is made, but as this stock 
 had belonged to them, they receive no commission on the 
 purchase. This sort of business is against the rules of the 
 stock exchanges, and when discovered, the perpetrators are 
 penalized. Had John Astor, not owning a seat on the ex- 
 change, given Smart & Co. an order to sell this stock through 
 Clement Bros., and then again had ordered Smart & Co. to 
 make the purchase, so that an actual commission had been 
 paid a broker for both the buying and the selling, the trans- 
 action would have been legal, so far as the rules of the stock 
 exchange are concerned. But for John Astor it would have 
 been a " wash sale," as he was endeavouring to establish 
 an apparent activity in the stock which really did not exist. 
 Such a transaction would come under the head of " manipula- 
 tion," rather than a " wash sale," because, from a stock ex- 
 change point, it would not be technically the latter. 
 
 As early as 1820 a rule was passed prohibiting such trans- 
 actions upon the New York Stock Exchange. 
 
 Dos Passos' Law of Stock-brokers defines " wash sales," 
 on the basis of judicial decisions, as " not real sales, but made 
 by persons interested in each other, for the purpose of giving 
 a fictitious value to the stock." 
 
 Water. See " Watered Stock." 
 
 Water Bonds. Of all the different purposes for which a 
 municipality may borrow money, it is conceded that bonds 
 issued for supplying the inhabitants with water are the most 
 desirable for investment purposes. No public improvement 
 is more necessary, besides which, the water plant is not only 
 usually self-sustaining, but frequently earns enough to pay 
 the interest on the " water bonds," and often something in 
 addition. 
 
 Water Company Bonds. These must not be confused with 
 municipal " water bonds," which are the obligation of the 
 town or city issuing them. " Water company bonds " are 
 the obligation of an incorporated company and secured by a 
 mortgage on its property. Whether these are desirable
 
 MONEY AND INVESTMENTS 431 
 
 or not depends upon such things as management, location, 
 permanency of supply, amount of business, etc. The fran- 
 chise should mature at a later date than the bonds; the net 
 earnings should be, roughly, twice the interest charges; there 
 should be a sinking fund large enough to retire, say, at the rate 
 of one-half of the issue in forty years this is a very mov- 
 able quantity, though. And, lastly, a satisfactory contract 
 with the municipality during the life of the bond issue itself, 
 for supplying water for hydrant and other purposes, should 
 exist. This contract should not be at rates so high as to be 
 likely to encourage dissatisfaction and a desire to install 
 other and competing plants, or to buy out the one already 
 doing the business. 
 
 Where charters have included conditions which stipulate 
 that the water supply shall be pure, trouble has sometimes 
 resulted. This has occurred in cases where the municipali- 
 ties have desired to purchase the water company property, a 
 fight being waged upon the agreement for the supplying of 
 pure water not being complied with. 
 
 Greene says, in his " Corporation Finance: " " Water and 
 gas are modern necessaries of life, and the supplying of these 
 necessaries, when done by private companies under a conserv- 
 ative plan, is a proper and safe business for the investment 
 of money." 
 
 Watered Stock. When the face value of the stock issued is 
 greater than the property value represented by it at the time 
 of its issue. To illustrate: A certain amount of water may 
 be put into a quart of pure milk, and a greater bulk of what 
 appears to be milk will result, but the amount of food matter 
 has not been increased by the process. No more will it in- 
 crease the property value of a corporation to increase its 
 stock, unless the same is exchanged for real value. 
 
 The exception to this may be when a corporation has 
 accumulated a surplus over and above all debts and the face 
 value of outstanding stock; then an additional stock issue 
 is sometimes properly made not greater than the cash value 
 of the surplus. Strictly speaking, this latter should be termed 
 a " stock dividend," and is in no sense " watered stock." 
 
 Water-Power Company Bonds. See " Power Company 
 Bonds." 
 
 Weak. The stock market is, or prices are, said to be 
 " weak " when declining; a tendency to a fall rather than 
 to a rise in prices. 
 
 Weather-Crop Bulletin (or Report). See " National 
 Weather Bulletin." 
 
 Welcher. A debtor who takes advantage of the law to
 
 432 MONEY AND INVESTMENTS 
 
 evade the payment of a debt, which, though not enforcible 
 in a legal way, is considered an honourable obligation. 
 
 Westinghouse. Westinghouse Electric and Manufacturing 
 Co. 
 
 Westralians. Securities of West Australia, particularly 
 mining, which are dealt in upon the London Stock Exchange. 
 
 Wheat. The trading unit is 1,000 or 5,000 bushel lots, or 
 multiples thereof. The commission charged for the purchase 
 or sale, or the purchase and sale, is one-eighth cent per 
 bushel. The usual " margin " required is 5 cents per bushel. 
 (See " Grain.") 
 
 Wheat Pit. See " Pit." 
 
 When and as Issued. Sales of securities made prior to their 
 being issued especially when some doubt exists as to when 
 and how they will be issued are traded in with the condi- 
 tion attached " when and as issued." 
 
 When, as, and if Issued. The same as the preceding, with 
 the additional condition of " if issued." 
 
 The first trading in this country in securities at the time 
 unissued occurred in connection with a sale of United States 
 4% bonds in 1895. 
 
 When Issued. A sale made of a new security conditional 
 upon an uncertain date as to its issuance. (See last two sub- 
 jects.) 
 
 Whipsawed. Two losses, occasioned by making a purchase 
 at the highest price and selling out at the lowest; or the re- 
 verse. 
 
 White Knob. White Knob Copper Co., Limited. 
 
 W. I. When issued. 
 
 Wide. " Wide from the market: " a price one or two per 
 cent, above, or below, the prevailing price. " Wide " means 
 far apart, or away from. A bid of 75 and a simultaneous offer 
 of the same security at 79 would be a " wide " quotation. 
 
 Widener-Elkins Interests. Corporations in which the 
 families of (in Philadelphia, Pa.) Peter A. B. Widener and the 
 former Wm. L. Elkins have a partial or controlling interest; 
 such as the United Gas Improvement Co., Metropolitan Street 
 Railway Co. of New York, Public Service Corporation of New 
 Jersey, Rhode Island Securities Co., and the Philadelphia 
 Rapid Transit Co., and many street railway companies in 
 various sections of the United States, including the States of 
 Illinois, Ohio, Pennsylvania, New Jersey, Rhode Island, etc. 
 
 Wildcat Money. Money worth less than its face value, or 
 worth nothing at all. Many of the notes formerly issued by 
 our State banks were so termed. " Wildcat " is used to
 
 MONEY AND INVESTMENTS 433 
 
 denote anything deceptive or unreliable, and is thus often 
 applied otherwise than as a qualifying adjective to " money." 
 
 Will. The law usually permits every one of legal age and 
 of sound mind to provide for the distribution of their property 
 after death, by will, and in most of our States this applies to 
 married women, although not formerly. Personal property 
 may be willed away by those not of age, the laws of some 
 States providing that male children as young as eighteen and 
 female children as young as sixteen may draw wills for the 
 disposition of personal property. 
 
 Witnesses are necessary to the validity of almost all wills, 
 the number varying in different States. 
 
 The drawing of a will is a matter of great importance, and 
 calls for exceeding care, and should always be entrusted not 
 only to a lawyer, but to an exceedingly good lawyer. 
 
 Window Dressing. Fixing the accounts of a corporation 
 so that they will look well in a public statement. In New 
 York, the trust companies are compelled to make exhibits to 
 the State authorities at stated times. A calling of loans and 
 the selling of securities in anticipation of such a report so 
 that the amount of cash on hand would show favourably 
 would come under this heading. 
 
 Wind Up. Liquidate; go out of business. 
 
 Winona. Winona Copper Co. 
 
 Wiped Out. Used to denote a total loss of one's possessions, 
 or the loss of a " margin." 
 
 Wire. The expression " to wire " has more particular 
 reference to a message by telegraph rather than by telephone. 
 
 With Exchange. See " Payable with Exchange." 
 
 With Interest. See " Accrued Interest." 
 
 Without Interest. See " Flat," meaning the same. 
 
 Without Offset. See " Offset." 
 
 Without Recourse. Without responsibility or liability. 
 Every one who indorses a note or check is responsible for its 
 payment, if its original signer does not pay it. This respon- 
 sibility can be avoided by the indorser prefixing the words 
 " without recourse " to his signature. 
 
 It does not follow, however, that the instrument would 
 always be accepted in this form. In fact, there are only 
 certain conditions under which this may be done. To illus- 
 trate, a note broker would not wish to assume liability in 
 case of a note made payable to him by indorsing the same, 
 and, in such an instance, he could resort to the words " with- 
 out recourse," which would be usually acceptable to the pur- 
 chaser of the note, he buying upon the strength alone of the
 
 434 MONEY AND INVESTMENTS 
 
 maker and previous indorsers, if any. Had the note been 
 given to John Smith in the course of business, and John 
 Smith, having received a direct benefit on account thereof, 
 resold the note, the purchaser would then wish John Smith 
 to incur all the liability of an indorser, and would not usually 
 permit him to avoid recourse. 
 
 Wolverine. Wolverine Copper Mining Co. 
 
 Woman's Signature. Women puzzle bankers, and business 
 men in general, by the way they often sign their names. It 
 may not occur to them that the banker does not necessarily 
 know that the wife of Henry E. Fisher is Jane W. Fisher. 
 The banker may have been doing business with the husband, 
 who may be taken ill; possibly his wife will write some com- 
 munication regarding his business and will refer to " Mr. 
 Fisher," and sign it as Jane W. Fisher. Good luck attends the 
 banker in his efforts if he always pairs such people off in the 
 way they belong. The best way for a woman to sign her 
 business letters is, to continue above illustration, Jane W. 
 Fisher, and then directly below (Mrs. Henry E. Fisher); 
 or the words " wife of " may be inserted between the two 
 signatures. Of course, in all legal documents and in checks, 
 etc., she must use her legal signature, which, in this instance, 
 would be Jane W. Fisher. The writer has seen four different 
 consecutive letters received from the same woman, all within 
 a period of less than two weeks, the first one signed, we will 
 say, Jane W. Fisher, the second one J. W. Fisher (thus being 
 mistaken for a man), the third, Mrs. Jane W. Fisher, and the 
 fourth, Mrs. Henry E. Fisher. This was confusing, indeed. 
 A system of letter filing in an office may be much upset by 
 this method, and letters incorrectly filed by some clerk and 
 never afterwards located. Countless women sign their busi- 
 ness communications in a way that makes it impossible to tell 
 whether or not they are married. In all business communica- 
 tions the " Miss " or " Mrs." should be made apparent. 
 
 The query is often raised as to how a married woman 
 shall legally sign: 
 
 There is no law fixing other than the surname of a woman 
 who is married. When Mary Jane Doe becomes Mrs. Brown 
 the law provides no rule which she must follow. It would 
 seem more logical to use the form " Mary Jane Brown," but 
 as a matter of convenience to indicate whom the person is 
 or was before marriage " Mary Doe Brown " is better. 
 Either method of signing is accepted. It is customary, 
 however, when a woman, after marrying, executes papers 
 transferring title to something which she acquired under 
 her maiden name, to put a recital in the instrument she signs 
 setting out the fact. For instance, in discharging a mort-
 
 MONEY AND INVESTMENTS 435 
 
 gage, the discharge would contain a clause substantially like 
 this: " I, Mary Jane Brown, the holder of a certain mortgage 
 given by Richard Rowe to me under my maiden name of 
 Mary Jane Doe, dated January 1, 1907, and recorded, etc." 
 
 This, or something equivalent to it, is inserted in the papers 
 for the purpose of identification. 
 
 Woolen. American Woolen Co. 
 
 Wore Off. Prices gradually declined. 
 
 Worked for Export. Indicates that a quantity of grain 
 has been sold for export purposes. It is not necessarily under- 
 stood, however, that the grain is being actually delivered by 
 the elevators or warehouses. 
 
 Worked Off. Prices gradually declined. " The market 
 worked off fractionally; " prices declined an eighth or a 
 quarter per cent., for example. The fall in prices was by 
 fractions and not whole points. 
 
 Working. See " Manipulation." 
 
 Working Capital. The money which is actually needed and 
 used in the conduct of a business. 
 
 Working Expenses. This is another term for " Operating 
 Expenses." 
 
 World's Shipments. A Chicago Board of Trade term indi- 
 cating weekly shipments of grain from exporting to importing 
 countries. 
 
 World's Stock of Money. The Director of the Mint, at the 
 close of 1905, estimated the monetary stock in the principal 
 countries of the world, as follows: 
 
 All kinds $12,215,400,000; classified as follows: Gold 
 $6,483,500,000; silver $3,176,400,000; uncovered paper 
 currency $3,555,900,000. 
 
 Ignoring certain South American countries, which it is 
 hardly fair to include, the greatest per capita stock is held 
 in France, followed next by the'United States, then Australasia, 
 The Netherlands, Belgium, Germany, Canada, and Greece, 
 in the order named. 
 
 Write Off. This has the same meaning as " charge off." 
 
 Wyandot. Wyandot Copper Co. 
 
 X. The " ticker " abbreviation for " ex-coupon," " ex- 
 dividend," or " ex-interest." 
 
 XC. The same as " ex-coupon." 
 
 '
 
 436 MONEY AND INVESTMENTS 
 
 Yankee Rails. The general foreign particularly London 
 name for United States railway shares. As a rule, however, 
 railway shares traded in upon the New York Stock Exchange 
 are those referred to. 
 
 Yankees. The general foreign especially London name 
 for United States securities; meaning particularly those dealt 
 in upon the New York Stock Exchange. 
 
 Year Money. Same as " Year Note." 
 
 Year Note. A note or written agreement to pay money at 
 the expiration of one year from its date. 
 
 Yen. The monetary unit of Japan, equalling $.498 United 
 States money. 
 
 Yield. See " Net Return upon the Investment." 
 
 Z 
 
 Zinc. American Zinc, Lead & Smelting Co. 
 MISCELLANEOUS 
 
 I. The " ticker " abbreviation for " first." It is used in 
 connection with such securities as " first mortgage bond," 
 " first preferred stock," etc. 
 
 II. The " ticker " abbreviation for " second." It is used 
 in connection with such securities as " second mortgage 
 bond," " second preferred stock," etc. 
 
 III. The " ticker " abbreviation for" third." It is used in 
 connection with such securities as " third mortgage bond," 
 etc. 
 
 P. The sign for " Peso," the monetary unit of the Philippine 
 Islands, as $ is for our dollar. 
 
 i st. First mortgage. 
 
 2d. Second mortgage. 
 
 3d. Third mortgage. 
 
 $. The sign for the United States " Dollar." Since the 
 new coinage law went into operation in Mexico, in 1905, 
 our $ sign has been adopted as a sign for the standard Mexican 
 " peso." 
 
 . Sign for the English " pound sterling " as $ is for our 
 " dollar." 
 
 E. "Pounds Egyptian;" the sign of the Egyptian 
 " pound," which slightly exceeds in value the English " pound 
 sterling," being equal to $4.943 United States money.