J^Jl V^ JL/ ^ ■ UC-NRLF ■■■■■^^^H {liijiiii 1 1 III II LjI.I. i.,1 .1 ■■ "it^E ^^^^^^^^^^^^^^^^^^^1 ^ ^ll ! Digitized by the Internet Archive in 2007 with funding frorn Microsoft Corporation http://www.archive.org/details/firstbookinbusinOOtellrich A FIRST BOOK IN BUSINESS METHODS FIRST BOOK IN USINESS METHODS WILLIAM P. TELLER, formerfy Credit Man, the Puritan Manufacturing Company , Kalamazoo, Michigan, noiv Credit Man and Accountant, the Illinois Envelope Company, Kal- amazoo, Michigan, and HENRY E. BROWN, Principal of the New Trier Township High School, Cook County, Illinois 7. Do not make too many paragraphs. LETTER WRITING . 17 I, »9. The Complimentary Close. The phrase of respect, courtesy, or endearment written at the end of a letter is called :he complimentary close. The words used vary according to nrcnmstances. The complimentary close of a social letter may be " Yours truly," "Your friend," "Fraternally yours," "Yours as ever," " Very sincerely yours," etc., and should be in conformity with the salutation. The forms most used for business letters are "Yours truly," "Yours very truly," "Respectfully yours," "Very respectfully yours," etc. The complimentary close should be written on the next space below the body of the letter, and should begin not far from half the distance between the left-hand margin (see §8) and the right-hand edge of the paper. « 10. The Signature. The signature is composed of the name of the person or firm writing, and it should be written with care so that it may be easily read. Everyone should adopt some form of signature and always use the same form I in signing letters and all business papers. . In signing legal documents the first name should always be used, as, for example, "John W. Green" rather than "J. W. Green" or "J. William Green." [1 When one person signs a letter or business paper for another, as, for example, a clerk signing a firm name, he should sign the firm name and then, immediately below it, should write, " per " (his own name), in order to indi- cate by whom the letter or paper was signed. A comma should follow the complimentary close, and a period the sig- I nature. The signature should end near the right-hand mar- gin of the paper. For illustration of the preceding, note the arrangement in Form IX. 1 8 -A FIRST BOOK IN BUSINESS METHODS Form IX. San Francisco, Cal., Jtily 29, 1901. Messrs. J. K. Johnson & Co., City. Gentlemen : I have just returned to the city, after an absence of several days, and learn with much regret, from yours of the nth inst., that my note has been protested for non-payment. I hasten to withdraw it from the bank, and beg to say that such an oversight will not occur again. Regretting the trouble it has caused you, I am. Yours truly, F. O. Robinson. 11. Folding. In folding a business letter of the usual size, the first fold should be from the bottam towards the top, making the fold nearly in the middle of the sheet. See that the edges are exactly even, then press down the fold. Next fold the right side towards the center and then the left over the right. The letter as folded should be slightly shorter and narrower than the envelope. The last two folds should be equal. The letter should be inserted in the envelope so that the loose edges will be at the top and back. 12. The Address Upon the Envelope. In writing the address upon the envelope the name of the person addressed should be in a straight line, and a little below the middle of the envelope. Care should be taken to commence far enough to the left so that the blank spaces at either end will be about equal. After the name should come the street address, if the residence of the recipient is in a town of any considerable importance. This should be placed below and slightly to the right of the name. The name of the city LETTER WRITING 19 Form X. 20 A FIRST BOOK IN BUSINESS METHODS or town should follow on the next line, and the name of the state should be placed near the lower right-hand corner. If the name of the county is added, it is usually placed in the lower left-hand corner, as is the name of the person in whose care the letter may be sent. The stamp should always be placed in the upper right-hand corner. The address of the sender should always be placed in the upper left-hand corner to insure its return should the postoffice authorities be unable to find the person to whom the letter is addressed. . 13. Letters of Introduction. Letters of introduction are frequently used by business men to introduce a friend to some other business man or firm. A letter of this kind should state briefly the business of the person introduced and give such other information regarding him as the writer desires. It should not be sealed, as it would be very discourteous to the person introduced not to give him an opportunity to see the contents of the letter before presenting it. The letter should be so addressed that the person receiving it may know at a glance that it is a letter of introduction. Form XI. tT'^^^i'*^*''^^::^^*^^*'^^ An Addressed Envelope of Introduction LETTER WRITING 21 Form XII. Seattle, Wash., Aug. 14, 1901. R. George L. Smith, Buffalo, N. Y. Dear Friend : •I This will introduce to you Mr. Isaac M. Viele of this city, who is a friend of mine and one whom I know you will be glad to meet. He visits your city for the purpose of selecting a suitable location for business. If you can assist him in any way, ^our kindness will be appreciated by him and also by Your sincere friend, A. G. Thompson. Form XIII. Meriden, Conn., Aug. 14, 1901. Mr. Charles H. Carter, New York, N. Y. Dear Friend : You will, I am sure, be glad to know my friend, Mr. George D. Johnson, whom this letter will introduce to you. He visits your city for the purpose of purchasing a stock of goods for a hardware store which he proposes to open in this city in the near future. Any favors which you can render him will be greatly appreciated. Yours very truly, Henry R. Mathews. %. 4. Letters of Recommendation. Sometimes a Utter of reconnnendation is given with a letter of introduction. Letters of recommendation are sometimes addressed to a particular person or firm, but usually the address is more general; as, "To whom it may concern," or "To the public." There are few people who are not called upon occasionally to furnish such a letter. School ofi&cers are often requested 22 A FIRST BOOK IN BUSINESS METHODS to give a letter of recommendation to a teacher. Ladies who employ servants in their homes are frequently asked, by those who have worked for them, for letters testifying to their capa- bility and honesty. Business men oftentimes require that applicants for positions bring letters setting forth character, ability, and fitness for the particular position. As these letters of recommendation are so generally demanded, it is necessary that everyone should know how to write a letter of this kind. Care should be taken not to be too extravagant in praise of the person who is recommended, but to state simply and briefly his real merits and capabilities. The form given below will show how a letter of recom- mendation is usually written: Form XIV. Buffalo, N. Y., Sept. i, 1901. To WHOM IT MAY CONCERN : This is to certify that Mr. Charles W. Thompson has been in our employ during the past three years. He is a reHable young man, faithful and industrious in his habits, and we take pleasure in recommending him to anyone in need of such service as he is willing to undertake. Respectfully, Wm. B. Wilberforce & Co. 15. Directions. There are certain titles and forms which, though not always recognized legally, have grown to be necessary through common usage. Here are some examples : 1. A minister of the Gospel should be addressed as '* Rev- erend." 2. The President of the United States, the Governor of any state, and the Ambassadors of the United States should be addressed as " His Excellency." I I LETTER WRITING 23 F 3. The Vice-President, Senators, and Representatives of the United States, the Lieutenant-Governor of a state, state Senators, Judges, Mayors, and heads of Departments of the General Government should be addressed as ''Honorable." 4. In official correspondence it is better to address the office than the officer, as, "To the Secretary of State, The Honorable John Hay. Sir : — ", instead of " To the Honorable John Hay, Secretary of State." 5. The following miscellaneous titles are generally used: His Excellency and Mrs. Woodrow Wilson; Governor and Mrs. Hazen S. Pingree; the Honorable and Mrs. William P. Frye; the Rev. Dr. and Mrs. James P. Henson; Prof, and Mrs. Chas. B. White; Mr. and Mrs. W. J. Burdick. 6. In writing letters to ordinary officials, it is customary to begin with the salutation " Sir : — " and close with " I remain your obedient servant," or ** I have the honor, Sir, to be your obedient servant." A common form of addressing the President of the United States is, "To the President, Executive Mansion, Washington, D. C.," and the salutation merely, " Mr. President." 7. In writing a letter to a gentleman, the salutation should be *' Dear Sir," " Dear Mr. ," or if he be an old acquaint- ance, " My dear Sir," " Dear Friend," or " My dear Friend." 8. In writing a letter to a married woman, the salutation should be " Madam" or " Dear Madam " or " Dear Mrs. ." If the lady is immarried the salutation is *' Dear Madam " or ** Dear Miss ." Caution. — Letters containing blots, erasures, or interlineations should 7ievcr be posted, but should be rewritten. Careless writers show a lack of respect for the person zvritten to, and the recipient of such a letter is likely to consider it of little importance. 24 A FIRST BOOK IN BUSINESS METHODS Exercises /. Write a letter to a friend who lives in an adjoining state, giving him a cordial invitation to visit you. 2, You are about to visit a friend who lives in a distant city. Write him a letter telling him when you will arrive, and ask him to meet you at the train. J. Write a letter to farmer Rice asking him if he can supply you with a few bushels of choice apples for your winter use. Ask him, also, what varieties he has, and the price per bushel. ^. You are a young man just beginning business for yourself with a small amount of capital. Write to a whole- sale merchant asking him if he will sell you $500 worth of goods and give you four months' time in which to pay for them. 5. You receive a quantity of goods and a bill for the same, but you find that, in footing the bill, an error of $10.00 was made in favor of the wholesale merchant. Write him a polite letter calling his attention to the error. 6, You order a bill of goods from Johnson & Co., 231 Canal Street, Chicago, but the goods have not been shipped in time for your need. Write a letter countermanding the order. 7. H. C. Whitney of Downey, Cal., is owing you money which is long past due. Write him in reference to the matter. Mr. Whitney has given your letter no attention. Write him a second letter more pointed than the first. You now find that he does not intend to pay you the amount that he owes unless he is forced to do sc. Write a letter to Howard & Johnson, attorneys at law, in Downey, Cal., and instruct them to commence legal proceedings for collection of the account. LETTER WRITING 25 8. Answer the following advertisements : WANTED-BRIGHT BOY FOR OFFICE WORK. Must be froocl penman and quick at fl'^ures. Ad- drefd In own bandwrltlug, A. K., care Telegraph. BOY-BRIGHT, SMART, ACTIVE OFFICE BOY; 17 or 18 years old ; niiiet be good penman and ac- curate In figures; salary f25 per month. Address, with references, P O 518, Tribune. YOUNG LADY-TO FILL VACANCY IN TMrOR- tant clerical department; one writing a rapid com- mercial h: Ctat "f l— TtnFM Jeokeon. Mlch» Auf* 9. 1916 Brown and HananoDd WeBt Water St. Chicago, Ship ten buBhels timothy seed by first Bxpreee D.V.SlDpson e Paid A Telegram Form XX. P CLUsoriBRictoanS^ WESTEm UNION telR^am NtWCOMB CAIU.TOM. wltwotT atOMOl W. K. ATVlMa. nCMMMXMT MLVIOOIC adOOIU. vict-MOIMMt MwtMr^H*. X^XMm mmfmmm *^ ^MisisaMtfftt^ Terms 30 DA TS. CENTS PER CA LLQM NO'S 220^2 8.2 30.inNFrEE19TH ST. Tuamln ro» tuomtucet mar at fHOI mmm nti Btri trrtm »tciin If t§$*S IF Paid WITHIK l O da TS. •'i *'^f^ iuuicr m sisxr o»*n ifKOf^uo wnenout -- ■»»» Invoice with Terms of Discount noted 38 A FIRST BOOK IN BUSINESS METHODS Form XXVII. CM.CHW«BERUN.Pr». B PECK Vlc« Pr**l WD EDWARDS. Se<;y Kendallville. Ind. ?, Aqz . Wheelbarrows @ tl4.50 29 00 1 n f+. . Rt.anrt St.«p l.addor 14 00 J 'QO lT)f? Sheet Zinc & .08 16 00 •| ? ■ SQ nn Less 5jJ trade (Jlscount 2 95 1 *56 )5 ■fi An Invoice with Terms of Discouiit noted a "Duplicate Invoice." This invoice should be sent to take the place of the one which was lost. When a bill or invoice is receipted by the seller, if there is not sufficient room to do this properly at the foot of the bill or invoice, he may write on the margin of the sheet or across the face. 24. Trade Discount. In business transactions, reductions or allowances are sometimes made from the amount of an account, a debt, or the face of a note, and these reductions are called discounts. Manufacturers and wholesale dealers some- times allow to their best customers, and to those who buy in large quantities, a discount from the amount of the bill, and this is called trade discount. I BILLS, INVOICES, STATEMENTS, RECEIPTS 39 Sometimes two or more discounts are given in succession. Exa?nple : A merchant buys a bill of goods amounting to J150 and is allowed a discount of 10^ and 5^ off from the list price. This does not mean a reduction of 155^ of the amount of Form XXVIII. W« iwdw ttotemenU for biUa, DUE AND NOT DUE, aa per onr Ledgw, od Chs Bnt cA «adl month. Tbia givM opportooity for the oorreotioa of error* and is not a demand for bilU NOT DUE. MONTHLY STATEMENT. 9i«« njo^, AIJG-1 I9QI Is Account with Eagle PENCIL CO . ' ■ Office and Salesroom. 377 and 379 Broadway, KNCIL A NUBBCR WORKS. No. TOt TO TM IA«T ««M tT. STCCL PtNCIt WORKS. NO. T03 TO TM KMT 1STM VT TO e^ Qpp*^ // ^a-o •« ^r^ '^ ^^ ^Cc t-C^ ^^ 4ro ■' — Statement showingr one Debit and one Credit the bill, but it means a reduction of \o from $150 and 5^^ of the remai.:der after deducting the amount of the first discount. In the foregoing example, 10^ of $150 would be $15.00. Sub- tracting this from the amount of the bill gives us the new amount of $135, the amount the merchant is to pay if but one discount is allowed. But there is a second discount of 5^, and ^^jL of $135 is $6.75. Now if we subtract $6.75 from $135 we have $128.25, the amount the merchant is to pay, unless he is entitled to a cash discount also. I HN VOICES, STATEMENTS, RECEIPTS 41 Form XXX. ^^ ^ y Peoria. III. P^^fity // i90-2r TO The F. H. Pfeiffer Crockery Co., dr. 320 SOUTH ADAMS STREET. Crockery, Lamps and Glassware. ■>pro rt-rttt, MM aiait b« »rTp«l an payable la Peoria. t* ^ /2 .^ Tm^Uu. m/U. A^ /t««i6M — ^^Y^' oo > a^ 2-3 A .c^ /d-o oo ^7 7* ro •* 3-^ .. 2*- oo 3.^7 ro fy ro __ __,_, ^^^^ *-^* — ** — >s-^^"-^V>i^. i9o:g< cd^.?P2iD TO The F. H. Pfeiffer Crockery Co., dr. 326 SOUTH ADAMS STREET. Crockery. Lamps and Glassware. P?ta^ \(f \oifu€u, m»/>Mt ^^ /u^^Ou,/ /*^0 4>& — '?- « /.-.«•> .y ^^ J"e> „ 9 />6 -«^0 *« 87 «•*#.* ^6 a 4- A. ^(t (3t. P?fay 9^ c^ ^^^^^^^ A7««• collaRUc o» read •• Willi 8«tfc««««." 0«r t> ry te.k. m.«t Ixixk aSMBOWCM ■lis arc pajrabte u Pcorta. «•• 4^ ^ h* *# ♦ " ** *» ** >* -i^ rfv - •# ^ ♦# •# *« " ^ /¥3 a^ ^ /^ ^/* Jf' — - (5i ^ •• • # »» ^ V /xy «»• V ;2.^^ 00 ' 2.6 9t l|M Bttttmrmt for AtammlMMiin, mni rigut • yH t— i^ -OjJL ^,f6ii.r4ii A Bill showing Terms of Discount remit the balance, or $61.87. These terms of discount are often written as follows: 2/10, 1/30, or 60 net, which means, of course, that the buyer will be allowed a discount of 2% if he pays within 10 days, and a discount of i^ if he pays within 30 days, but if he waits until the expiration of the 60 days he would not be entitled to any discount, but must pay the whole amount of the bill BILLS. INVOICES, STATEMENTS, RECEIPTS 45 Form XXXIV. TO The F. H. Pfeiffer Crockery Co., n. 328 SOUTH ADAMS STREET Crockery, Lamps and Glassware. •"- «i.t sScr.::!o^f:3^!-wKV.'iii5!i-?-o':rK2i:i%:: ri-xs5i»~*^- •» w^ ^^ /^ ^•^s;../*^ 1 Ji^t '^ • t^dZU^ f ^f 4 tkA t / .^■7% w (^^y^J-.yy yr ^ ^ a jfy/,0^^ic^ ^oA u-c^ttZ^yCc ^y^^^iEf^ f^^r^.J" ^x ■. ♦ - l: — i^ija __ . Iff yr^ tttf |M MM*. statement of Account Paid 26. Statements of Account. A statement of account is quite a different thing from an invoice or bill. It shows all the debits and credits of an account as they appear on the books of the seller. If an invoice was made out and delivered to the purchaser when the goods were bought, it is not necessary to make an itemized statement, but simply to give the amount of each purchase and the date "As per bill rendered.* 46 A FIRST BOOK IN BUSINESS METHODS Sometimes when goods are sold on account by retail estab- lishments, no bill is made out until the end of the month. In such cases an itemized statement should be rendered, giving a list of all the articles sold. In the retail business these statements are usually made out at the end of each month, and in the wholesale trade, statements are made at the expi- ration of the term of credit. Usually these terms of credit are 30, 60, or 90 days, and sometimes four or five months. When a statement is paid, it should be receipted the same as an invoice or bill, and returned to the person who paid it. Form XXXV. CREDIT MEMORANDUM . ^ ^ Pittsburgh. i^.t^..J...f^^ 1 m Account With Armstrong Cork Company, Corner Twenty-fourth and Railroad Streets. , / h '^j-- it<^^, M. R1^ .Ui Jo /L ' ' /«. ^ 71 n li(o f ] / n I a / n { IXkK'.r.^A — A Credit Memorandum 27. Credit Memorandum. Sometimes when goods are ordered, they do not prove satisfactory to the purchaser and they are returned, or the price is higher than he expected to pay, or for some other reason a rebate or deduction is made to tof BILLS, INVOICES, STATEMENTS, RECEIPTS 47 the purchaser. In such case a credit memorandum is made out by the party selling the goods and is sent to the purchaser, to show him how much credit or reduction will be allowed. This credit memorandum is a statement quite like an invoice in form, except that it shows a credit instead of a debit. Usually, but not always, it is printed in red or green, some color different from that of the invoice. ^ |[ 28. Receipts. When one person gives another money or other valuables for goods bought or labor performed, it is customary for the receiver of these valuables to give to the payer a written statement showing that the debt has been paid. This written statement is called a receipt or voucher. A receipt should contain the name of the place where written, the date, the names of the persons interested, and should state for what the valuable consideration was given. Blanks for receipts may be obtained at any stationery store. Care should be taken to preserve all receipts of whatever kind, for if there were no receipt or other evidence to show that the debt had been paid, it would perhaps be necessary to pay the account or obligation a second time. Form XXXVI. RECEIPT TO APPLY ON ACCOUNT $2^.00 Ogden, VTAH^/u/jy 9, igo2. Received of Frank Brown^ twenty-five dollars, to apply on hts account. Peter Morris. Form XXXVII. RECEIPT IN FULL OF ACCOUNT $42.33 YoRKy Neb., June 23, ipo2. Rfceiz'ed of J. W. Thompson, forty-two and j^-ioo dollars, in full of account to date. E. P. Woodman. 48 A FIRST BOOK IN BUSINESS METHODS Form XXXVIII. RECEIPT FOR MERCHANDISE ON ACCOUNT $12.60 Laurel, Del., March 2, igo2. Received of George P. Simpson^ forty-two bushels of oats at joc, per bushel^ to apply on account. R. P. Waterman. Form XXXIX. RECEIPT IN FULL OF ALL DEMANDS ^3 4-5 '3 5 Norfolk, Va., Nov. 7, igoi. Received of E. Norton^ three hundred and forty-five and j^- 100 dollars^ in full of all demands to date. Wm. Dickinson. Form XL. RECEIPT FOR HOUSE RENT $12.50 Helena, Mont., April jo^ igoi. Received of Samuel Hopkins^ twelve and 50-100 dollars for rent of house ^ pp Grove Street, for one month ending April jo, igoi. Mrs. Sarah Smith. Form XLI. RECEIPT BY PERSON WHO CANNOT WRITE $25.00 Shelby, N. C, July 21, igoi. Received of T, G. Benson, twenty -three dollars, in full of all demands to date. His Witness: J. W. Blum. John X Smith. S. E. Sangren. mark Note. — All receipts and all other documents signed by a person who can- not write should also be signed by witnesses. IF! BILLS, INVOICES, STATEMENTS, RECEIPTS 49 P» Form XLII. RECEIPT FOR PAYMENT OF ACCOUNT BY ONE PERSON FOR ANOTHER ^IS'OO Clinton, lym.^Jan.^y igo2. Received of A. J. Hill^ fifteen dollars^ to apply on the account of Hiram Cooper. Smith Manufacturing Co., Per D. H. Moore. 1^ Form XLIII. RECEIPT FOR PART PAYMENT ON NOTE n f 100.00 St. Louis, Mo., Dec^ //, i^oi. Received of W. O. Billings^ one himdred dollars, to apply on his note of three hundred dollars in my favor, dated May j, i8gg. H. C. Hamilton. Note. — The amount of the payment on a note should also be indorsed on the back of the note. (See chapter on Promissory Notes.) Form XLIV. RECEIPT FOR MONEY PAID BY ADMINISTRATOR OF AN ESTATE $4..jo Hartford, Conn., Jan. 2, igo2. Received of R. IV. Brown, administrator of the estate of H. J. Cole, deceased, four and ^o-ioo dollars, for services as clerk at auction of property belonging to said estate. A. P. Simonds. Form XLV. RECEIPT FOR MONEY ADVANCED ON CONTRACT $25.00 Atlantic City, N. ^.^ June 5, igo2. Received of Homer B. Sparr, twenty- five dollars, as part payment on contract dated April /^, i^oi ^ for furnishiftg 100 perch of stone at $1.00 per perch. F. W. Tabor. 4 50 A FIRST BOOK IN BUSINESS METHODS Form XLVI. RECEIPT FOR LOST OR STOLEN NOTE $12^.00 San Francisco, Cal., August S, igoi. Received of James R. Powers, 07ie hundred and twenty-five dollars, in full payme7it of his note in my favor, dated July 8, igoo^ without interest. Said note has been lost or stolen. G. H. Parker. Note. — When payment is received for a note which has been lost or stolen, it is usually customary to give a bond, called an indemnity bond. (See form in chapter on Promissory Notes.) 29. Orders. Orders in the commercial sense mean direc- tions or commands by one person on another to give to the party holding the order that which is mentioned therein. The following are common forms of orders : Form XLVII. ORDINARY FORM OF ORDER DowAGiAC, Mich., June 6, igo2, Mr. W. J. BuRDiCK : Please deliver to W. Buckingham, goods from your store amount- ing to fifteen dollars, and charge to my account. L. Thornton. Form XLVIII. ORDER PAYABLE IN CASH ^25.00 Mr. John C. Smith: Please pay to G. D. Williams, twenty-five dollars, and charge the same to my account. G. W. Powers. I IE BILLS, INVOICES, STATEMENTS, RECEIPTS 51 From XLIX. FOJ^Af OF DUE BILL ^9-75 Due C. W. Pennelly fiine and J5-100 dollars in merchandise from my store. O. D. Snyder. Questions and Exercises /. What is the difference, if any, between an invoice and a bill? 2. What is the difference between an invoice and a state- ment of account? J. If a man comes into your wholesale store and buys a bill of goods, should you give him an invoice or should you make for him a statement of account? I 4. You sell a bill of goods to R. W. Powers, Oshkosh, ' Wis., and make out an invoice which you send him, showing the amount of the bill to be $123.50. You afterward discover that you have made an error and the amount should have I been $125.50. What would you do? 5. You sell a bill of goods to D. W. King & Co. of Toledo, O., and send them an invoice of the same. At the expiration of ten days you receive a letter from them stating that no invoice was received from you. What would you do ? 6, You sell a bill of goods to G. D. Sturgis, Osage, Iowa, amounting to $534.58, due in thirty days. At the end of that time he has not remitted for the goods. Send him a state- [ ment of account. Write him a letter dated ten days later, notifying him that his account is past due and make an urgent request for its payment. Ten days later telegraph him that you are greatly in need of the money and must have it. Make the message as brief as possible. M 52 A FIRST BOOK IN BUSINESS METHODS 7. What is a credit memorandum? 8. J. W. White of Manistee, Mich., buys a quantity of groceries of W. M. Hoyt & Co., Chicago, and from one barrel of syrup, five gallons leak out, worth 33 J cents per gallon. Mr. White asks for a credit memorandum covering the amount of leakage. Write his letter to W. M. Hoyt & Co. Make out the credit memorandum which W. M. Hoyt & Co. send him. 9. Messrs. Shafter & Shafter of Salt Lake City, Utah, order of the Jackson & Steck Manuf. Co. of Denver, Colo., 20 disk harrows to be sent by freight. Write the letter ordering the goods. Make out the invoice. Trade discount, 10% and 5%. Terms of sale, 2/10, 1/30, net 60. CHAPTER HI. BANKING 30. Uses of Banks. Banks are an absolute necessity to the modern business man. Usually he does not have the conveniences for the safe keeping of money that banks have, and instead of paying for the goods which he buys, and the bills which he owes, in cash, he deposits his cash in the bank and pays his bills by checks. Many business men find it necessary at times to borrow money to carry on their business. If a man's business reputation is good, or if he can give good security for pay- ment of the money at the end of the term of credit, the bank will loan him the necessary amount, and he will thereby be enabled to carry on a much larger and more successful business than would otherwise be possible. Banks make collections of commercial paper, issue foreign and domestic bills of exchange, notes, and letters of credit, and loan money. There is no branch of business which is carried on more systematically than that of banking. Every one who has an income or a salary sufficient to enable him to make even a small saving, should open a bank account. By so doing he not only becomes accustomed to saving, but by keeping an account with a bank he acquires habits of promptness and accuracy which render him more efficient and successful in business. [53] 54 A FIRST BOOK IN BUSINESS METHODS 31. Savings Banks. Banks which receive small deposits and return the same to depositors with a moderate rate of interest, are called savings banks. Some savings banks will receive any sum of money from 5 cents up to $1,000, while others prefer not to receive sums of less than $1.00 at a time. Although these sums are small, they soon begin to draw interest, and if allowed to remain in the bank, with a little more added each month, the deposit rapidly increases in amount from year to year. Fractional parts of a dollar are not usually reckoned as drawing interest, and some banks do not allow interest on deposits amounting to less than $3.00. The United States Postal Savings System provides for depositing savings at interest secured by the United States Government. Any person ten years old or over may open an account by depositing one (nothing less) or more dollars in a post office authorized to accept postal savings. Deposits may be made as often as desired, but no person can deposit more than $2,500 at one time or have more to his credit. Postal savings certificates serve as receipts. Amounts less than one dollar may be saved by purchasing postal savings cards and postal savings stamps at 10 cents each. All or any part of the deposit may be withdrawn at any time, together with interest due. Two per cent interest is paid, but no interest is paid for a fraction of a year. The whole deposit or a part may be exchanged for United States postal savings bonds. 32. Rates of Interest and Dates of Reckoning. The rate of interest varies with different banks, but usually it is from 3 to 4 per cent. Each bank, too, has its own rules as to the dates at which calculation of interest is made on the various amounts which the depositors have to their credit. If the dates for reckoning interest are January ist, April I St, July I St, and October ist, money deposited March 31st BANKING 55 . would begin to draw interest the next day, but if deposited April 2d, it would not begin to draw interest until July ist, the beginning of the next interest term. If a depositor withdraws his money from the bank before the close of any interest term, he is not usually allowed inter- est for any part of that term, but the rules of different banks vary in reference to these matters. In some banks, money deposited January loth would draw interest from January ist and for every month thereafter if left for three months or longer. In other banks the interest is reckoned on all moneys that have been in three or more months, even if the depositor has withdrawn his money before the regular interest period, and the same is placed to his credit. If he opens his account again, he has this balance to his credit. 33. Deposit Book. Each depositor is furnished with a book in which he is given credit for his deposits, and for the interest his money has earned at the end of the term of credit. If a depositor wishes to draw out his money, this book must be presented to the paying teller by either the depositor himself or some person duly authorized by signature. The paying teller enters the amount withdrawn in the book, and it is returned to the depositor. When all of a deposit is drawn out, the bank keeps the book. Money deposited in a savings bank cannot be withdrawn by check. A general rule with savings banks is that sixty days* notice must be given before the withdrawal of money, but unless there is a "run on the bank" or some unusual disturbance of the money market, it is paid promptly on request. 34. Commercial Deposit Banks. K commercial deposit bank is one from which the depositor may check out his funds at 56 A FIRST BOOK IN BUSINESS METHODS pleasure, but no interest is allowed on the money while in the bank unless his balance is kept above a certain figure. Many savings banks receive commercial deposits, and many com- mercial deposit banks receive accounts for savings. Banks usually require some evidence of the character and integrity of a depositor before opening an account with him. Generally it is only necessary that he be introduced by some person or firm with whom the banker is acquainted. A depos- itor who opens a small checking account with a bank ought not to expect that the bank will issue bills of exchange to him or cash his drafts without charge as it does for customers who are heavy depositors or who borrow large sums of money from it. The bank does this only because the patronage of such depositors pays for the extra work. The customer who deposits only a small amount in the bank and withdraws it by checks within a few days really owes something to the banker for the services rendered. Some banks make charges for deposits of this kind. 35. Records of Deposits. A depositor should keep a careful record of his dealings with the bank, so that he will always know the state of his account and avoid overdrawing. When opening an account with a bank, a depositor is required to leave his autograph in a record book or upon a signature card, authorizing the bank to accept said signature in paying out the depositor's moneys. The bank then pre- sents the depositor with some deposit tickets or deposit slips, a pass book or bank book, and a book of blank checks. The deposit ticket is a blank form for the depositor to fill out when he makes his deposit. It shows who the depositor is, and the date and kind of funds deposited, whether checks, specie, or currency. I ^f BANKING 57 When the deposit slip is filled out, the bills, specie, and checks should be entered separately as shown in the accom- panying form. When there are several checks to be deposited, they should be arranged in the order in which they have been Form L. Metropolitan National Bank J^ DeposiUd for mctmmt of ^ J*/ raff 7 'ac/ A Bank Deposit Slip entered on the deposit slip. The depositor should foot up the various amounts, instead of leaving this to be done by the receiving teller at the bank. When the deposit slip is ready, it should be taken to the receiving teller with the funds to be deposited, and he will enter the amount of the deposit in the 58 A FIRST BOOK IN BUSINESS METHODS bank or pass book, and return it, after he has verified the sums named in the deposit slip. 36. The Bank Book. The bank book is a small book that can be conveniently carried in the pocket, in which the. banker gives the depositor credit for the amounts of money which he deposits at various times. Th^s bank book is the only receipt which the depositor has for the money which he has left in the hands of the banker. At the end of each month a complete statement of each depositor's account is given him. Usually the banker enters in the bank book the amount of the checks which have been paid and deducts this from the total credits, the balance showing how much is still to the credit of the depositor. Some banks enter a list of the checks in the bank book, while others list the checks on a separate blank and then enter only the whole amount in the book. 37. The Check Book. The check book is a book of blank checks to be used by the depositor whenever he wishes to draw money from the bank. Check books are so arranged that the checks may be torn out, leaving a stub which shows in whose favor the check is drawn, the amount, the number, the date, and for what purpose the check is used. (See Form LI.) Form LI. New Lotnrop, Mich. 100^ No" ^^? Bank of New Lothrop \ K^JU^c^^::^ '^^^jJ ^^^ '^^^^ Form for a Check as it appears on the Check Book Dollars. I BANKING 59 Pi I 38. Directions for Writing Checks. A c/ieck is a written order on a bank directing that a certain amount of money- be paid to some person named in the check, or to his order, and signed by a depositor. No special form of wording is Fonn LII. i^'^r^^ KZ.^.^^^^ ^ 2 ^.4^^^^ ^n-z-zTT^ ^VfiiZ- ||9 ^ ^^<6A-.'..^*# n*TioH*i aAuK Wilt *etrir ron this cueeK. tuimgiir ciiAnet raii txcuAnet, ir atitr omtci ro " ^o Winnebago National ROCKFOR Bank. ) d.Ill J Checks Correctly Drawn 64 A FIRST BOOK IN BUSINESS METHODS used to stamp or cut out the figures and also the written words showing the amount of the check. If the amount in figures does not correspond with the amount in writing, the written amount will be considered correct. 9. Some checks are made payable to ''bearer," and some to the "order" of the person in whose name they are drawn. If they are made payable to the order of the payee, he must write his name on the back of the check before he can get the money on it, or, if he wishes, he may make the check payable to some other person, by indorsing the check as in Form LVII. Form LVII. An Indorsed Check 39. The Indorsement. The word " indorse " comes from two Latin words, m and dorsum, which mean, when com- bined, on the back. Then to indorse means to write on the back, and the purpose of indorsement is to transfer the own- ership of the paper so indorsed. There are several different kinds of indorsement. BANKING 65 h V Example: In the form of indorsement given in Form LVIL A. J. Williams transfers the ownership of the check by indorsing- it to J. B. Clay, who in turn may transfer his ownership to some other person, and so on. Checks may have any number of indorse- ments. Any person presenting a check which has been properly indorsed over to him, to the bank on which it is drawn, may receive the money. An indorsement of a check is either an indorsement in full or an indorsement in blank. Form LVIL is an example of an indorsement in full, because the check is made payable by the indorsement to a particular person or his order. 40. Payable to Bearer or Order. To indorse a check in blank, the person indorsing writes his name across the back of the check, and any person holding it can receive the money on presenting it at the bank. If a check is made payable to *' bearer," it need not be indorsed before present- ing it at the paying teller's window at the bank to get the money on it. Most banks, however, prefer to have an indorse- ment in blank on the check even if it is made payable to "bearer." One should never indorse a check in blank until just before presenting it to the bank for payment, for if the check should be lost when so indorsed, it may be paid to the finder. It is always safer, both in writing and indorsing checks, to make them payable to the order of the person who is to receive the money, for he must in turn indorse it, and this indorsement serves as a receipt for the payment. If a person loses a check made payable to his order, the maker can give him another without risk to himself, by simply writing across the face of the second check, so that it may be plainly seen, the word " Duplicate." The bank on which it is drawn should 66 A FIRST BOOK IN BUSINESS METHODS be notified of the loss of the check at once, in writing, giving a description of the original check, and a request that it be not paid. Some banks require that a bond shall be issued before stopping the payment of a check. Note. — For other forms of indorsement, see chapter on Promissory Notes. 41. Post-Dated Checks. A check is usually dated on the day on which it is drawn and is payable on demand, but some- times it bears a different date. If a check drawn on the ist of March were dated March loth, it would be a post-dated check, and would show on its face that it should not be paid before the loth of March. If a person buys an article and is not sure of its value, he can give in payment a post-dated check ; then if he finds that the seller has cheated him and the article is not worth what he agreed to pay for it, he can stop the payment of the check. Never give your check dated ahead unless sure that you will have money enough on deposit at that date to meet the obligation. Through some misfortune you might have the check returned unpaid, and thus your credit would be injured. It is advisable for one to be very careful about receiving post-dated checks. In fact it is a good business maxim never to give or accept them. 42. Checks Should be Cashed Promptly. Checks should be presented for payment at the bank within a reasonable time. If the maker of the check be a responsible party and his credit good, it would not be necessary to have the check cashed immediately; but if there be any doubt as to his responsibility, it should be cashed at once. If the person in whose favor the check is drawn does not BANKING 6^ present it for payment promptly and the bank then becomes insolvent, the drawer cannot be held responsible for the amount of the check ; for if the maker of the check has funds in the bank and the payee has sufficient time to get his check cashed before the bank fails, and he does not do so, the maker is not at fault. Form LVIII. Collars To HOMER BANKING CO. HOMER. MICHIGAN $^^.< fe? Z^ rtC^ A Check similar to a Bank Draft 43. Payment of Exchange. Most checks now used by business men are similar to bank drafts. (See Form LVIII.) Some business men draw their checks payable to the order of themselves, and then, by indorsement, make them payable to the order of the person to whom they wish to make the remittance. (See Form LIX.) When these checks state on their face that they are " Pay- able in New York or Chicago exchange at par," the payee is not required to pay exchange on them when he has them cashed at his bank. They pass through the banks without payment of exchange by the payee, because they are payable in New York or Chicago exchange at par, and it is understood that the amount called for on the check is 68 A FIRST BOOK IN BUSINESS METHODS an amount sufficient to pay for both check and exchange. If any charges are made for exchange on such checks, they are made against the drawer of the check by the bank on which it is drawn. Form LIX. 6^^=^^-^^l-^^^^:^ ^N\NNNN\\\\\\\\\\\\\\\\\\\\^ A Check drawn payable to the order of the signer 44. Certified Checks. A certified check is an ordinary check upon which the cashier or teller of the bdnk on which it is drawn has stamped or written the word ''Certified** or "Good when properly indorsed," or other equivalent words, with the date and his signature. By certifying the check, the banker guarantees that it will be paid on presentation. Usually an ordinary check will not be paid by the bank unless the depositor has sufficient funds to his credit to cover the amount of the check. A business man may wish to present his check for pay- ment at some bank other than that in which his money is deposited and which is some distance from his home. As he does not wish to carry the money around with him he csn BANKING 69 ^tave his check certified at his bank if he has that amount of money on deposit, thus doing away with much of the danger tloss or theft and also the inconvenience of carrying money. Example: Suppose Mr. John Wood sells a pair of horses to stranger for $300 and instead of making cash payment for the horses, the stranger hands to Mr. Wood a check on the First National Bank for the amount. Before accepting the check in payment for the horses, Mr. Wood ought to be sure that the check is good. He may ask to have the check certified. If the stranger Form LX. ^«. Sfnfc \^nf"'h ^o..2LS^:^ Q>OIIARS A Certified Check should send the check to the bank to have it certified and it is good, the cashier or the teller of the bank would stamp or write across the face of the check, usually in red ink, the words "Certi- fied," or "Good," or "Good when properly indorsed," with the date and his signature. Mr. Wood need then have no hesitancy in accepting the check, for the bank would be responsible for its payment if the signature of the cashier or teller were genuine. If you receive a check which you do not wish to use for some time, it is best to have it certified. The bank will then charge the account of the man who drew the check for the 70 A FIRST BOOK IN BUSINESS METHODS amount of it, and he cannot draw all his money from the bank and leave nofhing there for the payment of the check which you hold. 45. Voucher Checks. A form of check, called a voucher check, has come into use recently and is being used more and more by business men. The object of a voucher check is to show for what purpose the check is issued or what bill that particular check is intended to pay. Usually the back of the check is used to make a notation upon, showing what bill or account is intended to be paid. Some of these checks are very large and so ruled that a complete statement of an account may be made if desired. 46. Certificate of Deposit. When money is deposited in a bank which is not a savings bank, with the intention of leaving it there for only a few weeks or months, the banker Form LXI. 9^ />,f^e:u//zJ-n^^/^ /^4^ rr^runtt/d/ (^nAfUj/^/^. £*/ur^at^ 42^y <£U^ Certificate of Deposit BANKING 71 iisually issues to the person depositing the money, a certificate ^mf deposit as shown in Form LXI. If the holder of a certificate of deposit wishes to draw his money from the bank, he must return his certificate to the bank. He cannot get the money by drawing a check on the bank. He may, however, if he chooses to do so, sell his certificate of deposit to some other person, and transfer it by indorsement to the purchaser. If a person holding a certificate of deposit wishes to draw a part of the amount from the bank, the banker sometimes pays the amount desired and indorses the same on the back of the certificate, but usually the certificate of deposit is taken up and a new one issued. 47. Additional Directions for Writing Checks. There is no commercial paper more common or more universally used than checks; it is, therefore, necessary that all should be familiar with their use and understand how to indorse them properly. By such a knowledge one may avoid annoyance and possible financial loss. Special attention is called to the following suggestions : 1. Before depositing a check or cashing it at the bank it must be indorsed. This indorsement is valuable as a receipt to the maker and as evidence of ownership to the banker. 2. In indorsing a check, write across the back of the check, not lengthwise. 3. Do not indorse wrong end up, write across the top or head of the check, about an inch from the end. The head of a check is the end at the left as it lies before you on the desk. Now to indorse it, turn it over, not endwise, but directly toward you. 4. Always indorse a check by writing your name exactly L 72 A FIRST BOOK IN BUSINESS METHODS as it appears on the face. If your name is John T. Smith, and your name appears on the check as J. T. Smith, you may in- dorse it as J. T. Smith. If payable to John T. Smith, indorse it as John T. Smith. If your name is spelled incorrectly on the check, indorse it twice, spelling it once as it is spelled on the check, and once correctly. Form LXII. 48. Safety Deposit Vaults. In nearly all cities, and some of the larger towns, are safety deposit vaults^ which are very convenient places for the safe keeping of insurance policies, wills, securities, jewelry, and other valuables. These vaults are fireproof, and are provided with all the safeguards neces- sary for absolute protection. Any person may rent a box or drawer in a vault of this kind at a small cost per annum. Usually the rent is very reasonable, being from $3.00 up to $25.00 or $30.00 per year, depending upon the size of the box or drawer rented. Each renter is provided with a key to the drawer which he rents, and no person except himself or his duly authorized BANKING 73 agent can have access to his valuables. Even if his key should be found by some other person, that person would not be allowed access to the box by the man in charge unless he could show that he had a right to be admitted there. Note. — For Letters of Credit ^ Travelers' Checks, and Bills of Exchange, see Chapter VI. I Exercises on Chapter III. 7. What is a check ? 2. Describe the process of depositing money in a bank. J. What is the difference between a bank book and a check book ? 4. Is it important that the stub of the check should be written up first ? What should the stub contain } 5. What is the difference between a savings bank and a commercial deposit bank? 6. What is meant by an indorsement ? Name two kinds of indorsement and the effect of each. 7. Where is the proper place on a check to make an indorsement? 8. What is an indorsement in blank ? What is an indorse- ment in full ? p. If you receive a check on which your name is mis- spelled or there is an error in one of the initials, how would you indorse the check ? /o. What is a post-dated check ? //. Would it make any difference to the person in whose favor a check is drawn, whether it is made payable to his order or to bearer? Would there be any advantage to the person drawing the check ? 12. If you lose a check made payable to your order, what 74 A FIRST BOOK IN BUSINESS METHODS ought you to do ? Could you stop the payment of the check ? How could payment be stopped ? ij. If you give a check on the Second National Bank in favor of John P. Wood, and he loses it, what ought you to do if he asks you for another ? 14. Who is the drawer of a check ? Who the payee ? 75. What is a certified check, and what is the advantage of having a check certified ? 16. What is a certificate of deposit ? 77. If you deposit money in a bank and receive a certifi- cate of deposit in place of it, how can you draw the money from the bank ? Can you draw it by check ? 18. How would you write a check for 28 cents? ig. How would you write a check to draw money for your own use ? 20. If you receive a check from John D. Wood for $50.00, how soon ought this check to be cashed ? 21. Write a letter to H. O. Stone & Bro., Chicago, inclosing your check in their favor in payment of a bill of goods bought some time since, amounting to $10.57. Write the check on a blank piece of paper and inclose it in a letter. 22. Write out a deposit slip, on a blank piece of paper, depositing in the Maryland National Bank of Baltimore, $28.00 in silver, $25.00 in bills, and the following checks : One on the Second National Bank of Baltimore for $543.21 ; one on the Fort Dearborn National Bank of Chicago for $26.43, ^^^ ^^^ on the Chemical National Bank of New York for $231.67. 2j. You order a bill of goods from Sargent & Larson of St. Joseph, Mo., amounting to $545.50, and you pay for the same by certified check. Write them a letter explaining the matter, and inclosing the certified check. 24. When your bank book is written up and returned to BANKING 75 you by the bank, you find that your bank book and check book do not agree. What would you do under these circumstances? 2^. Do banks pay interest on deposits, and if so, when ? • 26. What are the advantages of banks to a community ? 2"/, In what way do checks serve as receipts ? 28. Would you expect to find many banks in Turkey or Africa? Explain. 2^. What does a large number of banks in a community indicate ? General Review Exercises /. What is the size of letter paper generally used for a business letter ? 2, How much margin should there be at the left ? J. How much margin at the right ? 4. How should the sheet be folded ? 5. What is the address of a letter? 6. What is the salutation of a letter? 7. What is a title ? 8. How should you address a letter to your member of Congress ? p. Write a short letter to S. R. Clark calling his attention to the fact that he is owing nearly $30.cx) rent, and urge him to make payment of same. 10. Write to J. W. Stone & Co. and inclose a check for $25.00, stating that the same is to apply on your account. 11. What is a statement of account ? 12. What is an invoice ? ij. C. W. Wilson buys of you 150 barrels of flour at $6.50 per barrel. Should he receive an invoice or a statement of account ? 76 A FIRST BOOK IN BUSINESS METHODS /^. D. J. Cutler & Co. of Dayton, O., ask for a rebate of $10.00 on their invoice of August 4th, claiming goods were damaged by not being properly packed. Send them a credit memorandum. 75. G. H. Thornton of Bloomington, 111., bought of you January loth, a bill of goods amounting to $245.30, on sixty days' time. March 30th he paid $50.00, and June 12th, $45.00. Send him a statement of his account, and write urging him to pay the balance at once. 16, Bell & Johnson, Fort Wayne, Ind., buy of you 50 bar- rels of flour at $5.75 per barrel, on which you allow them a cash discount of 6 per cent if paid within ten days or 5 per cent if paid within thirty days. Make out the invoice. ly. At the end of five days the invoice is returned to you, the firm claiming that they were to be allowed a trade dis- count of 5 per cent in addition to the cash discount. Send them a corrected invoice. CHAPTER IV. PROMISSORY NOTES, INTEREST, BANK DISCOUNT, PARTIAL PAYMENTS II 49. Promissory Notes. Many times in business trans- actions a person wishes to buy something and does not have the money on hand with which to pay for it at the time of purchase. If the business reputation of the buyer is good, the seller may agree to accept the written promise of the buyer to pay the amount of the purchase at some future time. This written promise to pay is called a promissory note. The seller of the goods would prefer to take the written promise of the buyer rather than a mere verbal one, because the written promise would usually be sufficient evidence in court to prove that the sale had actually been made, while the mere verbal promise would have to be proved by other evidence should any question ever arise concerning it. 50. Uses of Promissory Notes. It is more convenient to sell or transfer the ownership of a promissory note than an ordinary account. The original payee of a promissory note can secure money on the note by transferring his right to some other person, at any time after the note is made. Most business men prefer a promissory note to a running account. A promissory note then is a written promise to pay a specified sum of money at a specified time. The person who U7l y^ A FIRST BOOK IN BUSINESS METHODS signs the note, or, in other words, the person who promises to pay, is called the maker, and the person who is to receive the money is called the payee. Example : If Mr. N. C. Evans buys a horse of Mr. John Crose for $ioo and is not prepared to pay the money when he gets the horse, he may give his promissory note for the amount. The note may be written with pen or pencil, but it is much preferable to write it with ink on good durable paper. Form LXIII. Ordinary Promissory Note " The note given by Mr. Evans to Mr. Crose would be something like Form LXIII. Now, if Mr. Evans makes a payment on this note of $25.00 to Mr. Crose, August 12, 1902, Mr. Crose would write across the back of the note, "Received on the within note $25.00, August 12, 1902," and sign his name as shown in Form LXIV. The maker of a promissory note cannot be hindered from selling all his goods and leaving the country before the ma- turity of the note, if he chooses to do so, while with an ordinary account in which no time of payment is specified, the amount of the account is due and payable at any time. NOTES, INTEREST, DISCOUNT, PAYMENTS 79 B 51. Indorsement of a Note. When a person indorses a note, that is, writes his name across the back of it, he becomes responsible for its payment in case the original maker does not pay when the note becomes due. By writing his name across the back of the note he virtually says to all future holders that he knows the maker of it and that he believes he will pay ; and that if the maker does not pay, he, the Form LXIV. 6^ 4}. I Hi ni l i i iimwuii — — — ggj £>e^..-A<'^ ■ ■■■■ffffli ^ Partial Payment of a Note Indorsed on the Back indorser, will do so. The laws regarding the indorsement of notes are somewhat different in the different states. In most states the indorser of a note cannot be held responsible for its payment unless the holder gives him notice that the maker has refused to pay, and this notice must be sent to the indorser within twenty-four hours after the note becomes due. This law prevails in all states where no statutory law has been enacted making protest and notice unnecessary. Each indorser is responsible to all indorsers who follow him and also to the holder of the note at its maturity. So A FIRST BOOK IN BUSINESS METHODS Example : Should Mr. Crose wish to sell the note outlined in the foregoing- section to G. A. Allen and obtain the balance of the amount before the note is due, he would write across the back of the note, '* Pay to G. A. Allen or order," and sign his name. The effect of this indorsement would be to transfer the ownership of the note from Mr. Crose to Mr. Allen. This form of indorsement is called an indorsement in full, and no one can collect the amount due on this note until G. A. Allen writes his name across the back of the note. A note may have any number of indorsements. You will remember that the trans- fer of the ownership of checks is accomplished by the same method (see §§ 39 and 40). Had Mr. Crose simply written his name across the back of the note when he sold it to Mr. Allen, the indorsement would be called an indorsement in blank, and Mr. G. A. Allen or any one else who held it could collect the amount of Mr. Evans when the amount became due. If, however, Mr. Crose had written across the back of the note, •^Pay to G. A. Allen, oyily,'' the indorsement would be called a restrictive indorsement, and Mr. Allen would be the only person who could collect from the maker when the note became due, unless he chose to transfer his interest in the note to some other person, by assignment. If the indorser did not wish to become responsible for the payment of the note, he would write just above his name, *' With- out recourse to me," or "Without recourse." This is called a qualified indorsement. 52. Negotiable Notes. This form of note which we have been considering, like all others of a similar nature, is called a negotiable note because it may be sold or transferred from one person to another ; but in order to be negotiable the words *' Pay to bearer," or, " Pay to the order of " (the person IF' ■ P NOl NOTES, INTEREST, DISCOUNT, PAYMENTS 8i who is to receive the money, /. e., the payee), must appear on the face of the note. On the other hand a note which is made payable to the person named in the note, without the word "bearer" or "order" appearing on its face, is called a non-7iegotiable notey because its ownership cannot be passed from one person to another. Negotiable notes, checks, and also drafts, which are con- sidered in the next chapter, are alike in this respect, that they may be transferred from one person to another and that the maker is responsible for payment to the holder of the paper at the time of its maturity. All these forms are called, tech- nically, commercial papers. Form LXVII. INDORSEMENT IN FULL "^A B VORHES ^^-^ ^^*^' ^'J^^^^y ^^ order, H, GILBERT. Form LXV INDORSEMENT IN BLANK H Form LXVI. Form LXVIII. QUALIFIED INDORSEMENT RESTRICTIVE INDORSEMENT Without recourse to me. Pay to J. R. Smithy only. M, A. LEA CH. ALBER T WILLIAMS, 53. Joint Makers. Sometimes the payee will not receive a promissory note from the maker unless the maker has some one sign the note with him to insure its payment when due. When two persons sign a note, they are called joint makers. If one signs his name on the back of a note before it is delivered to the payee, he is not merely an indorser (see § 51), but a joint maker ; and if one of the makers refuses to pay the note when it becomes due, the person who signs with him will have to pay, whether he is notified of the other's failure to pay the note when it falls due or not. 82 A FIRST BOOK IN BUSINESS METHODS We have seen that notes are divided into at least two classes, negotiable and non-negotiable. They are further divided into demand and time notes, and these may be either interest bearing or non-interest bearing. 54. Demand Notes. Sometimes the maker of a note promises to pay the amount named in the note at any time when payment is demanded. In such cases the note is usu- ally written like the form given below, and it is called a demand note. Form LXIX. A Demand Note A note written, ''One day after date I promise to pay,** etc., is also called a demand note. Demand notes are usually given when money is borrowed for a short time only. Days of Grace. By this term is meant an additional period of three days from the maturity of the note, gratuitously allowed to the maker to enable him to provide the funds for payment. Days of grace were formerly allowed in all cases, but the present tendency is to abolish them, and this has been done in many states. I NOTES, INTEREST, DISCOUNT, PAYMENTS 83 55. Interest. Interest is a sum paid for the use of money; it may be for money borrowed, or for accounts which are past due, or for other obligations. The money lent or due is called the principal, and the sum paid for the use of it is called the interest. Interest is reckoned at a certain ratio, or per cent of the principal, yearly. Simple interest is that sum which is paid for the use of the principal only. Sometimes the interest is not paid when it becomes due, but is added to the principal, the whole sum then drawing interest. When interest accumulates on interest in this way it is called compound interest. The collection of compound interest cannot be enforced, as the laws of the different states generally prohibit it. The usual custom is to charge simple interest only, and if the interest on a debt is not paid when due, interest on that unpaid interest is not generally collectible. 56. Bank Discount. When money is borrowed from a bank, it is customary for the borrower to give his note for the amount, and instead of adding the interest the banker deducts a discount from the amount of the note and pays to the borrower the remainder. If a business man should give his note at the bank for $500, payable in thirty days, the note would be drawn like Form LXX. This note would not draw any interest until due, but the banker would deduct from the amount a certain percentage or discount, and this is called bank discount. It is simple interest on the principal taken in advance, and in states where three days of grace are allowed, it is reckoned for three days more than the time specified in the note. The legal rates of discount and interest are usually the same. 84 A FIRST BOOK IN BUSINESS METHODS 57. Interest and Date of Maturity. If a note were given March 4th, payable in thirty days, it would be necessary, in order to find the date of maturity, to count thirty days from March 4th, which would make the date of maturity April 3d, or if three days of grace were allowed, April 6th; but if a note were given March 4th, payable one month from date, it would be due April 4th, or April 7th if three days of grace were added. Form LXX. A 30-day Note Payable to the Bank If a note reads ''with interest" and no rate is specified, it draws, from the date of the note, the legal rate of interest in the state where it is made. Notes payable on demand draw no interest until after they have been presented for payment unless it is stated in the notes that they are to draw interest. After they have been presented for payment they draw the legal rate. What is the legal rate in your state? (See table, §62.) From the fact that notes are usually due a certain number of days after date, great care should be taken to see that the NOTES, INTEREST, DISCOUNT, PAYMENTS 85 date is indicated plainly on the face of the note. This is so important that many persons place the date of maturity as well as the date of issue on the face, as, for example, " I prom- ise to pay June i, 1901." It is very important to remember that when a note is given payable a certain number of days after date, the actual number of days must be counted ; but if it is payable a certain number of months after date, the calen- dar months are counted. Example : Stephen J. Cramer gave a note to J. J. Boardman on February 7, 1901, payable one month after date. The note was due March 7, 1901. If he had made it payable thirty days after date, it would have been due March 9, 1901. If no time of payment is specified in a note — simply a promise to pay — the note is due at once, or on presentation to the maker. 58. Place of Payment. Some place of payment is usually indicated on the face of a note. If no place of payment is indicated, the place of business of the maker, if he has an office, or if he has no regular place of business, his residence address, is the proper place of presentation. If a place of payment is indicated, the note must be pre- sented there, and it should be presented for payment on the very day of maturity in states in which no days of grace are allowed ; and in those which do recognize grace, at the expi- ration of grace. It is customary, also, to send to the maker notice of the maturity of a note, several days before it is due. Sometimes the making of any demand or the giving of any notice is waived by the maker and indorsers, by making the words " waiving demand and notice " a part of the note or of the indorsement. 86 A FIRST BOOK IN BUSINESS METHODS The ordinary form of notice used by a bank is shown in Form LXXI. , Form LXXI. W^MmtmWtsi^mfm^lBm^ Corner La SaUe and Monroe Streets jnatures on the. -- ^y CHICAGO, ..^^z/^Z^ i^y ! Yoar Note for «.....:^:^.-_ii2!™-.._-.» J. R. CHAPMAN, Cashier. CHECKS PRESEKTED IN PAYHEHT MUST BE CERTIFIED. Office Hoon. 10 to 3; Saturdays. 9 to 12. A Bank Notice for Note Due 59. Protest and Notice. When presentment of a note is made to the maker and he refuses to pay, it is customary to have the note *' protested." A protest is a statement made by a notary public certifying that the note has been presented for payment and the pay- ment refused, and thereupon he protests against the maker, and indorsers if there are any, for damages and costs. The object in protesting a note is to fix the liability of the indorsers and to afford good evidence of the fact of its having been dishonored, — in other words, that the note has been pre- sented and payment has been refused,— and of giving notice thereupon. The maker is said to have dishonored the note when he refuses to pay the note at its maturity. This notice of dis- honor should be sent to the indorser, or if there is more than one, to each of them, within twenty-four hours after such r NOTES, INTEREST, DISCOUNT, PAYMENTS 87 Form LXXII. tie of-QU<^^:^\ I 3e it Knonm, that <• a, ^ ytm III om Lord one fliuiiiMit aia* ^ 1 Nouiy NbB^ »it M M il ii l iii L i I u*ima. u^aidiof Hid Cooqr tat 9BM. M U* f»q«*^,-«^J&^!!!!I^±»<««« of •«>« •fowMid, did i»lIOr£Sr, rad, W thw Procnu, do SofemiOy ProUH, IM^ a iH alkm vfcoa k mtj or doth ccoCTrn, for exchufc, fc exchug*, ud dl cab, cbngo, duaca, ud laurol AnAi hfnJ trnwaef Ikt HQ. -^t.^^tfr»*4M-l- Court of Record to appvar _'tollari Ritorney'B («•, and Vt waive a holder of tbU .Sot« for nic>»am»«ot orron whicL maTlDter- oey may do b/ vlrtoe t^ \£^^!^^y£^. A Judgment Note ^ NOTES, INTEREST, DISCOUNT, PAYMENTS 97 maker of the note will pay an additional amount to cover attorney's fees and expense of collecting. Some of the states have a form of note called 2l judgment note. This form of note contains a ''power to confess judg- ment" in case the note is not paid at maturity. A power to confess judgment authorizes the court to take immediate possession of as much of the maker's property as will cover Form LXXX. ^//^x^j>r^////'//^4«fiM^^ ± u A common form of Promissory Note the amount of the note and costs. It is necessary to ^nve a notice of such action to the maker of the note. This judg- ment could be secured from any court of record. When a note contains a clause of this description it is frequently called an ironclad note. One should be extremely careful about giving such a note, and, in fact, it never should be given if it can be avoided. In some of the states a note of this description would be considered illegal on the ground that it may afford cover for usury, and the payee of a note should be careful to ascertain what the law is in the state where he is doing business before inserting a clause of this kind in a promissory note. 98 A FIRST BOOK IN BUSINESS METHODS 70. Joint Notes. When two persons give a note they make it in either of two ways. They may write it, "we jointly and severally promise to pay," or, ** we promise to pay," and both sign their names. In the former case the note is called 2i joint and several note, and in the latter 2i joint note. In case any question arises as to the payment of the above, the makers of a joint and several note may be sued separately, and in a joint note they must be sued jointly, that is, together, but in some states this distinction is abolished by law. Form LXXXI. JOINT NOTE $216.00 Sioux Falls, S. D., August /p, igoi. Sixty days from date, for value received, we promise to pay E. W. Hazard, or order^ Two Hundred and Sixteen Dollars, with interest. B. J. PIenshaw. C. D. Snook. Form LXXXII. JOINT AND SEVERAL NOTE $600.00 South Bend, Ind., May 28, igoi. Thirty days after date, for value received, zve jointly and sever- ally promise to pay to the order of R. L. Peters, Six Hundred Dollars^ with use. Robert Beardsley. George Johnson. 71. Collateral Notes. A collateral 7iote differs somewhat from an ordinary promissory note, and is used when the person in whose favor the note is drawn receives and holds as security for the payment of the amount named in the note, certain property belonging to the maker. This is called " col- lateral security," and if the maker of the note does not keep his promise faithfully to pay the note when due, the holder NOTES, INTEREST, DISCOUNT, PAYMENTS 99 of the collateral security is empowered to sell the property, keeping a sufficient amount of the proceeds to cover his own claims, and restoring the remainder to the maker of the note. Form LXXXIII. OOlXATIHAt. NOTC. ShoMT Pokm. . Na.Se4 PrtaM«>ii4loci>l*kT>i.O Bncii.»«MMr.CMei«k .••_.»f«er dale (oc >-atue received ^^,^^,...,..pn»lM lo |»r Co loe order'aC -hpi^ i^yfvr rr rtf jr-T T-T I i -» > > ■ n m ii-iin>^i , .. .» ^^^if^^^^yTZ^t^^f-^ ,,^9->^i^ ^sfy^^r^ ..>..,,. „. ■„...-..?^.... ....jaoUa>5. y...:^^i<<^. ^ wiih ioMrw al ibe^tft^^^^ per ceol pvr annam. aller dos having depoiiied >riih ibe legal bolder hcreol at collaleral i ' ' ' A aad ^J[_ berabf giv* i r*- — --^^ — — — — - — — — berabjr giv* ibe uid legal holder hu her or ihetr assign or assigns, auihoril; to tell the same, or any pan ■rilr of Ibis Noca, oc ai aair Um« ibercaiter. or before, in ih« «y^ni of «aid secarity depreciating in »alue. at publi Ibooi advanaaac lb* i inn . or deiMuiding paymenL or giving aoiftj^and K^Jppl)' so much of tb« proceeds Ih ol Ibis Now. as aar b« Da c essa r y lo pay ihe same. «iih all iSreresi dur i*ii£t. and tfsjfc^e payment ol I ihc^sale of the said '■'«>i**"*i« ■n'* •« -vu ■k' n^^-^.^. »r >k.. >.i. ^i .u.. ..... .t..iu#.> ....ft. .k. ..^..... Jr fnmi» 10 paj lie or pnvaia thereof lo the of all collaicrab. and in proceeds of the sale «l collateral above iiWai. the |vSASlMe of siBS^Ajie shall eneod to such Porm for a Collateral Note A collateral note is used in many cases where the maker borrows money and wishes to make his promise of payment as secure and satisfactory as possible without asking any of his friends to sign the note with him. The property left as a pledge is described in the body of the note itself. Stocks, bonds, and negotiable notes are often used for this purpose. lOO A FIRST BOOK IN BUSINESS METHODS Form LXXXIV. NOTE PAYABLE BY INSTALLMENTS $2^5.00 Cleveland, O.^/une ii^ igoi. For value received^ I promise to pay to George D.Johnson or order^ the sum of Two Hundred and Seventy-jive Dollars^ with interest from date at 6 per cent per annum as follows : One Hundred Dollars on or before May 5^ igo2, One Hundred Dollars on or before August /, igo2^ and Seventy-five Dollars on or before December 11^ igo2. C. D. Smith. Form LXXXV. NOTE PAYABLE ON OR BEFORE A CERTAIN DATE $56.75 Milwaukee, Wis., J/<^jj/ J, 7po/. On or before the twelfth day of January^ igo2, 1 promise to pay to G. McDonald or order ^ Fifty-six and -3-Y7 Dollars^ zuith interest from date at y per cent. Value received. G. P. Truesdale. Form LXXXVI. PRODUCE NOTE $25.00 Buchanan, Mich., September 5, igoi. For value received, I promise to pay to George D. Johnson^ on demand^ Twenty-five Dollars in produce at my feed store. M. W. Brown. Note. — A produce ?ioie is one payable in produce. 72. Special Things to Remember About Notes. The sub- ject of promissory notes is a very extensive one, and only a few of the many important things pertaining to it can be mentioned here. The following are of special interest and should be carefully noted : 1. A note made on Sunday is void in some states. 2. A note made under duress or compulsion is void. NOTES, INTEREST, DISCOUNT/PAYMEN^S ioi ■ »— j i ■ r^^ .y .^^.^ j 3. Notes obtained by fraud, or made by a person when intoxicated, usually cannot be collected. 4. Notes bear interest only when so stated in the note, except after maturity, when they draw the legal rate of interest in the state where they are issued. 5. The holder of a note has a legal claim against every person who has indorsed it, and each indorser is responsible to all indorsers who follow him. 6. A note may be written on any paper, with pen or pen- cil, and it will be valid. 7. If a note be lost or stolen, the maker is not necessarily released from payment. 8. If no time of payment is specified in a note — simply a promise to pay — the note is due at once. 9. A note made in one state and payable in another must be governed by the laws of the state in which it is to be paid. 10. Notes payable on demand draw no interest until after they have been presented for payment, unless it is stated in the note that they are to draw interest. After they have been presented for payment they draw the legal rate of interest. 11. If a note reads "with interest," but no rate is speci- fied, it draws the legal rate of interest in the state where it was given, from the time it was made. 12. If a note falls due on a Sunday or on a legal holiday, it should be paid the day before unless otherwise provided by law. 13. Notes payable "on demand" are not entitled to days of grace. 14. If no place of payment is mentioned in the note, it should be presented to the maker personally, or at his place of business during business hours. 15. The misspelling of a word will in no case invalidate the note. I02 A FIRST BOOK IN BUSINESS METHODS 1 6. If a note is given by a person who cannot write, it is important to have a witness who can testify to the genuine- ness of his mark. 17. The promisors of a joint note must be sued jointly, while either promisor of a joint and several note may be sued alone. 18. A note payable on demand is due as soon as the demand is made; but if it is payable ''one day from date," three days of grace are allowed for payment in most of the states. 19. If both figures and words are used for the amount in a note, the words take precedence in a case of doubt or dis- agreement. 20. The figures are usually placed in the upper left-hand corner of the note, and the words in the body of the instrument. 21. If a note is signed by a firm, it may be collected from either of the partners. 22. If a note is given on the 8th day of February, 1916, payable one month after date, it would be due on the 8th day of March, but if the note is given on the 8th of February, 19 1 6, and is payable 30 days after date, the exact number of days must be counted in order to find just when it falls due. 23. If a note has been lost or stolen, the holder must make a formal demand for its payment, and must offer an indemnity bond in case the maker pays. 24. If a payment is made on a note which is secured by a mortgage, the amount of the payment is indorsed on the back of the note, not on the mortgage. 25. A note given by a minor is void unless it is given for actual necessities, such as food and clothing. If, however, the note is given when the maker is under age, and when he has become of legal age he ratifies the note, it is binding. I NOTES, INTEREST, DISCOUNT, PAYMENTS 103 Exercises on Chapter IV. /. What is a promissory note ? 2. What is the difference between a note and a check? J. Is a note signed with a lead pencil good at law? Would you advise signing them that way ? Why ? <^ If no time of payment is specified in a note, when is it due? 5. A note is drawn payable one month after date, and is dated February 2, 1898; when is it due? If made payable thirty days after that date, when would it be due ? 6. A note is given by a young man eighteen years of age, who has property of his own; can the note be collected? Supposing the note had been given for board or for other necessities, would that make any difference about collecting the amount of the note? 7. What is an accommodation note ? Describe two forms of accommodation notes, and tell which, in your judgment, would be the better form. 8. What is a judgment note ? Why should one not sign a judgment note unless absolutely necessary ? p. Supposing no rate of interest is mentioned in a note, does it draw any interest, and if so at what rate? When would it commence to draw interest ? 10. If the holder of a note sells it to a third person and transfers it by indorsement, is he responsible for its payment ? How can he indorse it so as not to hold himself responsible for its payment ? //. If a man sign a note on its face as security, is he one of the makers of the note or is he an indorser? 6 12, If you hold a note against P. W. Van Arsdale and the note is destroyed by fire, can the amount of the note be I04 A FIRST BOOK IN BUSINESS METHODS collected? How would you proceed if Mr. Van Arsdale refuses to pay the note ? 13, If the figures in the left-hand corner of a note showed the principal to be $120.25, and the writing in the body of the note showed one hundred thirty and 45-100 dollars, which would be considered correct ? /^. You sell a horse to H. W. Gilson for $125, and in payment receive his note due in six months. R. W. Powers signs the note with him as security. Write the note with signatures. 75. At the end of six months H. W. Gilson pays $100. Make the indorsement on the note. One month later you sell the note to A. C. Howe and transfer it to him by indorsement. Make the proper indorsement. How could you make the indorsement so as not to hold yourself responsible for its payment ? 16. Define and give examples on paper of the following : Indorsement in blank, indorsement in full, qualified indorse- ment, and restrictive indorsement. 77. When may a note be transferred without indorsement? 18. What is the object of protesting a note and how is it done? ig. How many years will it take to outlaw a note in your state if no part of the principal or interest is paid ? 20. Distinguish between a joint and a joint and several note. 21, Write a letter to Johnson, Forbes & Co. of Little Rock, Ark., telling them that a note made on the 20th day of May last by F. C. Larkin and indorsed over to you by Johnson, Forbes & Co., is now due, and that presentation has been made to Mr. Larkin, who dishonored the note. Tell Johnson, Forbes & Co. that under these circumstances you look to them for payment. NOTES, INTEREST, DISCOUNT, PAYMENTS 105 General Review Exercises 1. In an invoice of goods sold, what is the first double col- umn to the right of the invoice used for? 2. Which is the extension column ? J. What other things are noted in an invoice besides the quantities and prices of the goods? ^. What is meant by trade discount ? 5. Is there any difference between a trade discount and a cash discount ? 6, You receive an invoice of goods from Simpson & Brown, St. Louis, Mo., and find that they have overcharged you. Write a polite letter to them, calling their attention to the overcharge, and ask them for a corrected invoice. 7. Of what use are banks ? 8, What is the difference between a savings bank and a bank of deposit ? g. Describe the method of opening an account with a bank of deposit. 10. Will bankers accept deposits of money from anyone who wishes to open an account with them ? //. When a depositor places money in a commercial deposit bank, what does he hold as a receipt to show the amount of his deposit ? 12, Can money which is deposited in a savings bank be withdrawn by check ? I J. You buy of T. D. Wood & Co. a bill of goods amount- ing to $245.35. Write a check in payment, making it payable to their order. i^. If you owe William Smith $23.45 on account and give him a check in payment, would it be necessary for him to give you a receipt showing that the account has been paid ? CHAPTER V. DRAFTS 73, Uses of Drafts. A draft is a written order or request by one party to a second to pay to a third a certain sum of money at a specified time. There are always three parties to a draft : the drawer, the drawee, and the payee. The drawer of a draft is the person who draws it or signs his name to it. The drawee is the person on whom the draft is drawn, or the one who is to pay the draft. 'Y\\^ payee is the person to whom the payment is to be made. It is customary in writing a draft to place the address of the person who is to pay the draft in the lower left-hand corner. - A very common method used by business men for collect- ing accounts is by draft. Example : Let us suppose that Mr. Charles Green, who lives in Muskegon, Mich., owes Mr. George D. Johnson, a wholesale mer- chant of Chicago, $45.50 for a bill of goods purchased. If Mr. Green does not send the remittance for the amount due for the goods after a certain time which is usually specified in the invoice, Mr. Johnson would probably draw a draft on him for the amount due. The draft might be drawn "on demand" or "at sight" or any number of days after sight or demand. If it were drawn pay- able "at sight," it would be drawn like Form LXXXVII. When Mr. Johnson has drawn the draft, he will take it to some C 106 ] DRAFTS 107 Form LXXXVII. tommtrcial iiight Drafts bank in Chicago, the First National Bank in this instance, and it will be indorsed over to some bank in Muskegon and be sent there for collection. If Mr. Johnson had wished to do so he could just as well have drawn the draft payable to some bank in Muske- gon, and sent it direct to the banker there for collection instead of asking the banker in Chicago to attend to the collection for him. If Mr. Green had happened to live in some small place where there was no bank, Mr. Johnson could have sent the draft to the postmaster or some other responsible person for collection. When the banker in Muskegon receives the draft to be collected, he sends io8 A FIRST BOOK IN BUSINESS METHODS it to Mr. Green by one of the bank clerks whose business it is to look after collections. As it is a sight draft, Mr. Green will be given three days of grace after he has accepted it, but he would not be allowed this time in states where days of grace have been abol- ished. If he is willing to pay the draft, he writes across its face, usually in red ink, "Accepted," and the date, and also states where he will pay it, and signs his name as in the form following: Form LXXXVIII. Form of an Accepted Draft Mr. Green is not obliged to accept the draft unless he chooses to do so, but when he has accepted it he is obliged to pay it when it becomes due, just as he would be obliged to pay a note. After the draft has been accepted the clerk takes it back to the bank and waits until the expiration of the time when the accept- ance is due. He then leaves it at the place designated by Mr. Green for payment, and when the draft is paid the proceeds are remitted to Mr. Johnson by bank draft, a.nd the whole cost to him will not be more than 20 or 25 cents. One should be careful not to draw on a person unless he has been notified of the intention. Many business men pre- fer to be notified of the dates their accounts become due, and to make arrangement for payment by other means. DRAFTS 109 74. Indorsement "for Collection." It frequently happens that a person holding a bill or note finds it necessary to send it for collection to some place where there is no bank, and if he has little or no acquaintance with the person whom he asks to make the collection for him, he should indorse and add the words, **for collection.'* This checks the further transfer of the paper, because any one to whom it may be offered can see that it was the business of the person presenting it to him to collect it on the indorser's account. It is not customary, how- ever, to do this where collections are made through banks, and some banks refuse to accept drafts indorsed " for collection." 75. Dishonoring a Draft. Thousands of drafts are col- lected by banks every day. Some business men do not send a remittance for goods purchased, preferring to wait until a draft is drawn upon them for the amount due. Some people are more likely to pay drafts drawn upon them for amounts due than they are to send a remittance for the amount if a state- ment of account is sent them. A business man is not obliged to accept a draft when presented, even if the account for which the draft is drawn is past due; but if he refuses to accept the draft, he should give some reason for refusing, so that a brief explanation may be made on the back of the draft before it is returned to the drawer. Business men often borrow money of banks, and should they habitually refuse to honor drafts on them the banks would soon refuse to extend them credit. A person who refuses to pay or to accept a draft that is drawn upon him is said to have dishonored it. Many business men draw on their customers and then discount these drafts at their bank. Some of the drafts are dishonored when pre- sented to the drawee, but the drawer is, of course, responsible for the payment of any drafts which he has discounted at his no A FIRST BOOK IN BUSINESS METHODS bank, and he must make good the shortage caused by any drafts which are dishonored. 76. Protest of Drafts. Drafts which are not accepted or paid when due are usually protested in the same manner that notes are protested, but not for the same reason. Notes, you will remember, are protested in order to hold the indorsers liable (see §59). Drafts are protested usually to serve as a notice to the drawer of non-payment or non-acceptance, or, if the drafts have been discounted, to hold the drawer or maker liable. Drafts may be transferred by indorsement the same as notes and checks, and the same rules as to indorsement apply. 77. Bank Drafts. Nearly all banks keep money on deposit to their credit with some metropolitan bank or some bank in a commercial center. As New York is the commercial center of the United States, most large banks keep a deposit in some New York bank. Usually they have money on deposit in one or two cities in the West and one or two cities in the East. Example: Let us suppose that Mr. George L. Peters of Madison, Wis., owes Scott, Jackson & Co. of New York $35-75, and wishes to pay his bill. He does not care to send them the money, for there would be considerable expense connected with paying the bill in that way. The express companies would charge him for carrying the money, and if he should send it through the post office there might be more delay. He would much prefer, and it would be much safer, cheaper, and more convenient, for him to go to his banker and buy a draft on a New York bank for the amount he owes, and send it to Scott, Jackson & Co. The bank in Madison, Wis., would charge Mr. Peters a little more than the amount of the draft, $35-75— enough more to pay them for the trouble of drawing the draft. DRAFTS III The draft which Mr. Peters would receive from the bank in Madison would be something like the first form given below. Form LXXXIX. ;.^ NO. 659. Madison, Wis , Nov. 2nd, 1901. FIRST NATIONAL BANK OF MADISON. Pay TO the order of Scott, Jackson & Co |35.75 Thirty five and 75/100 Dollars To FIRST NATIONAL BANK i> ' New 5for)< ^ Cashier. 7fj: 'Tl2M3Lt ]^I.iTTINSOX, WttSOBr ht CO. y ^y^ '^m^PAY TO THE ORDEFt OF^^, — Duplicate Unpaid TO rm«T NATIONAL BANK. CHICAGO. ILL. ^^^S3L==5P. Forms of Bank Draft If Mr. Peters had wished to do so he could have had the draft drawn payable to himself and then indorsed it over to Scott, Jack- son & Co. of New York, by writing across the back of the draft, " Pay to the order of Scott, Jackson & Co.,*' and signing his name. As all drafts are finally returned to the banks where they were issued, they may be used if necessary to prove that pay- ment has been made. 112 A FIRST BOOK IN BUSINESS METHODS 78. Uses of Bank Drafts. Business men use bank drafts more than any other method for sending money remittances from one part of the country to another. There are, however, several other methods by which one may send money from one place to another. Any of the New York banks would accept the draft drawn by the Madison bank on a bank in New York. In fact, almost any bank in the United States would cash a bank draft on New York or Chicago or any of the other commercial centers. Banks in which other banks have deposits are called by them correspondents or correspondent banks. Nearly all banks furnish application blanks for drafts as shown in Form XC. Form XC. Metropolitan National Bank OP CHICAGO. 1 /7 Chicago, ^:&Z/...../.S.^^ tf^\ tvanun by /:z:!L/_,JB::uJ.A.^jl^ Dm/i on .^j:jL£f£/Tr:.<^j:z:}Lj^.„ — -^ — .., i — ™_ i — i~~- ....- i ,.:ll Form of Request for a Draft In buying a draft at a bank it is always best to have it made payable to yourself, and then indorse it in favor of the party to whom you intend to transfer it. This draft will then serve as a receipt if proof of payment is necessary. DRAFTS 1^3 Exercises on Chapter V. /. How many parties are there to a draft ? Name them. 2. J. B. Shearer & Co. of Flagstaff, Ariz., owe you $73.29. Draw a sight draft on them for the amount. Write a letter to them advising them of your action. To whom would you send this draft for collection? Suppose J. B. Shearer & Co. do not accept the draft on presentation, what would be done ? J. Where are the drawee*s and payee's names placed on a draft ? /J.. What is the object of protesting a draft ? 5. Render Merritt F. Oilman of Moberly, Mo., a state- ment of account containing three debits and one credit item. Draw on him at ten days' sight, and have the draft discounted at the bank. Write him with reference to the matter, advis- ing him of your action. Mr. Oilman dishonors the draft because, as he thinks, there is a mistake in your statement of account. Write his letter to you. 6. In your opinion, is it best to draw on a good customer without his consent ? Why ? 7. How can payment of a check be stopped ? 8. V. Y. McClure transfers a draft to you by blank indorsement. Can you pay- a bill which you owe to Oeorge McMurray & Co. with the same ? Why ? p. Explain fully the difference between a note, a check, and a draft. 10. Which would you prefer to receive in payment of a bill : a check, a note signed by one person without indorse- ment, or a bank draft ? Why ? //. Explain acceptance, indorsement in full, and indorse ment in blank, as applied to commercial paper. 12. ^ What do we mean by commercial paper? 114 A FIRST BOOK IN BUSINESS METHODS General Review Exercises 1, How would you address a letter to the Governor of your state ? 2. Mention the proper titles for three different people with whom you are acquainted. J. To whom is a general letter of recommendation ad- dressed ? ^. Write a short letter to C. J. Williams & Co. acknowledg- ing the receipt of a check for $250 to apply on their account, and thanking them for same. 5. Mr. John W. Adams sends you a check to settle his account, but has deducted a trade discount of 10 per cent amounting to $14.50, to which he is not entitled. Write a letter to him calling his attention to the matter, and return the check to him with the request that a check for the full amount be sent. 6. What is an invoice ? 7. On May 20th you sell to C. D. Davis & Co., Topeka, Kan., 40 barrels flour at $5.50 per barrel, 2,245 pounds corn meal at $1.15 per hundred, 345 pounds oatmeal at 5 cents per pound. Make out an invoice of same. 8. What is an indorsement ? p. Where is the proper place for an indorsement oh a check ? 10. How can you determine whether it is necessary that a check be indorsed or not before presenting it for payment? 11. Why should a check not be indorsed until just before having it cashed ? 12. Why is the existence of promissory notes necessary ? /J. Why is a written promise to pay better than a verbal one? /^. What does negotiability mean ? DRAFTS 115 » rj. How many parties are there to a note, and what are they called ? 16. What is meant by the maturity of a note ? ly. If a man holds a note which is already indorsed in blank, and transfers it by mere delivery, what responsibility does he assume ? 18. When is a note said to be dishonored ? /p. What is meant by days of grace ? 20. If a note falls due en a holiday, when should it be pre- sented for payment? CHAPTER VI, GENERAL POSTAL INFORMATION, POST OFFICE MONEY ORDERS, EXPRESS MONEY ORDERS, LETTERS OF CREDIT 79. General Postal Information. The postal service of the • United States is maintained by the Government for the benefit of the people, and is one of the most important branches of the public service. It is not intended as a money- making institution, but to provide a safe and convenient method of transmitting mail matter of various kinds and at small expense. Mail matter is divided into four classes, and a different rate is charged for each class. DOMESTIC POSTAGE RATES LKTTKRS AND POSTAL CARDS WITHIN VNITKD STATES Letters to any part City drop letters Postal cards to any part Registration fee in addition to regular postage For immediate delivery. In addition to regular postage Per oz. 2 cts. 2 cts. • 1 ct. each 10 cts. 10 cts. FIRST-CLASS MATTER.— This Includes let- ters, postal cards, post cards (private mailing cards) ; anything sealed or otherwise closed against Inspection; anything wholly or partly In writing, sealed or unsealed, not allowed as an accom- paniment to printed matter under class three. Nothing must be added or attached to a postal card, except that a printed address slip may be pasted on the address or message side. The addi- tion of anything else subjects the card to letter postage. A message may now be written on the face of a postal card, using space indicated. A card containing any threat, offensive dun, or any scur- rilous or indecent communication will not be for- warded. The rule that has heretofore existed excluding from the face of a postal card words Indicating the occupation or business of the addressee has been revoked. These additions, or others of a like general character, are now held to be constructively a part of the address, and there- fore permissible. Cards that have been spelled in printing or otherwise will not be redeemed. "Private Mailing Cards" bearing written mes- sages may be sent In the mails at the rate of a cent apiece, stamps to be affixed by the sender; such cards to be sent openly in the mails, to be no larger, and to be approximately of the same form, quality, and weight as the stamped postal card now in general use in the United States. Private mailing cards sent to foreign countries, except to those where there is a special rate, require a 2c stamp. Rates on special delivery letter, ten cents In addi- tion to the regular postage; this calls for immediate [n6] GENERAL POSTAL INFORMATION 17 delivery by special messenger. Ten cents In ordi- nary stami>s, affixed to a letter bearing renuiar post- age, entitles It to special delivery. If it is so marked. All typewriter or manifold proce^ss, all produc- tions by printed imitations of tyi>ewriting or mamiscrlpt, unless such reproductions are pre- sented at post-offlce windows in the minimum num- ber of twenty identical copies, call for letter rates. Letters (but no other cUus.s of mail matter) will be returnet3, manuscript copy with same; printed matter used by the blind; productions by photographic process and blue prints; reproduc- tions or Imitations of handwriting and typewriting by means of printing pr(»ss, neostyle, multlgraph, or similar mechanical process If mailed in minimum number of 20 Identical unsealed copies. Kate on unsealed matter Ic for each two ounces or fraction thereof, on each Individually addressed piece or package. Limit of weight, four pounds. Hesldes name and address of atldres-see, wrapper, envelope, ta.;, label, or matter may bear (written or printed) name, occupatidu, residence or business address, of sender, preceded by "from"; certain Inscriptions; written designation of contents; Inclosiire of either single card or envelope bear- ing written or printed name and address of sender Is also permissible. FOURTH-CLASS MATTER— Embraces what Is known :us domestic parcel pr)st mail, and includes merehatidise, farm and factory products, .seeds, cuttings, bulbs, ro<)t«, seioiLs, plants, books (includ- ing catalogs,) miscellaneous printed matter weighing more than four pf)unds, and all mailable matter not embraced In first, second, and third classes. Special treatment and advantages are accorded to Khiptnents of farm products weighing between 20 aiul .'jO pounds. Rates fully prepaid and on unsealed parcels are as follows: (a) Parcels weighing 4 ounces or less, except books, seeds, plants, etc., 1 cent for each oimce or fraction thereof, any distance. (b) Parcels weighing s ounces or less containing books, seeds, cuttings, bulbs, nwls. scions, and plants, I cent for each 2 ounces or fraction thereof, regardless of distance. (c) Parcels weighing more than 8 ounces contain- ing books, seetis, plants, etc., parcels of miscella- neous printed matter weighing more than 4 pounds. and all other parcels of fourth-cla-ss matter weigh- ing more than 4 ounces are chargeable, according to distance or zone, and at pound rates, a fraction of a pound being considered a full pound. Limit of weight, .50 pounds for parcels mailed for delivery within the tlrst and second zones, and 20 pounds for all other zones. Parcel post matter may not exceed 84 Inches in length and girth combined. In meiusuring a parcel the greatest distance in a straight line betwiHjn the ends (but not around the parcel). Is taken-as its length, while the distance around the parcel at its thickest part is taken as Its girth. A parcel of fourth-class matter must bear the name and address of the sender, which should be preceded by the word "from." Written additions permissible upon third-class matter may be placed on fourth-class matter, together with any marks, numbers, names, or letters for purpose of descrip- tion. This applies also to wrapper or cover, tag or label. Simple manuscript dedication or Inscrip- tion not In the nature of personal correspondence is allowed. Space sufficient for a legible address, postmark and the necessary postage stamps must be left on the address side of parcels. Certain proprietary articles of merchandise such as soap, tobacco, food-products, may be sent in fixed Quantities in original sealed packages, if clearly labeled as to nature and quantity of contents, and with name of manufacturer. The sender of meat and meat-food products must prepare and file with the postmaster the certificate of Inspection or exemption required by section 477, Postal Laws and Regulations. Game and nursery stock also subject to certain requirements. Fourth-class, or domestic parcel post mall (only) may be insured against loss upon payment of a 3-cent fee for value up to $5; a 5-cent fee for value up to $25; a lO-cent fee for value up to $50: a 25-cent fee for value up to $100. Loss Is paid for actual value within limit of Insurance. Mailable articles should be securely wrapped so as to bear transmission without breaking or causing Injury to mall bags, their contents or the persons handling them. Parcels not properly packed or marked as required by the Regulations and Instructions printed in Departmental Circu- lar III, September, 1914, will not be accepted for transmission In the malls. Fourth-class or parcel post matter (no other) may be sent C. O. D. from one domestic money order post-office to another. Including those In the Canal Zone, on payment of a 10-cent fee In addition to postage, both to be prepaid with stamps affixed. Amount to be collected and remitted to sender must not exceed SIOO. Remittance Is made by post-office money order, fee therefor being Included in amount collected from addres.see. A C. O. D. tag furnished by postmaster mast be filled in by sender and attached to parcel. C. O. D. fee also covers Insurance against loss up to $50. Lost CO. D. parcels are paid for when value does not exceed SSO, under conditions governing payment of indemnity for lost Insured parcels. All postmasters furnish pamphlet, "Postal Infor- mation," which defines matter not admissible to the Unltjd States malls. CANADA — Same as In the United States, except seeds, scions, bulbs, cuttings and roots are one cent per ounce up to four ounces; aii over Uiis, 12 cents a pound. CUBA — The United States domestic rates of postage and classification apply to all mall matter passing between the United States and Cuba. MEXICO AND REPUBLIC OF PANAMA— Same as in the United States. Ii8 A FIRST BOOK IN BUSINESS METHODS CANADA, CUBA, MEXICO, PANAMA — Commercial Papers— 5c for the first 10 ounces or Commercial papers and bona fide trade samples '^^^> *"^ ^^ 'or each additional 2 ounces or frac- are transmissible in regular mails at postage rate, * o ''^''T*^^^-. , ^r x. ^. ^ , ^ ^ subject to same conditions as in foreign mails. Samples of Merchandise— 2c for the first 4 ounces Packages of printed matter — other than second- ^J' less, and Ic for each additional 2 ounces or frac- class matter and single volumes of printed books — ^'^J? thereof. exceeding four pounds six ounces in weight are Registration Fee on the five classes mentioned, excluded; also sealed packages other than letters. 10c each in addition to postage. Foreign Parcel Post — Packages of mailable FOREIGN POSTAGE RATES merchandise may be sent in unsealed packages by Parcel Post to countries belonging to Postal Union. Letters — 5c for the first ounce or fraction of an Rate. 12c a pound or fraction thereof; limit of ounce, and 3c for each additional ounce or fraction weight, 11 pounds. Packages limited to 3H feet of an ounce. in length, 6 feet in length and girth combined. This rate applies to all countries In Postal Union, Ordinary letters for any foreign country (except except countries above named, also letter mail to Canada, Cuba, Mexico and Republic of Panama) Republic of Panama, Shanghai, Great Britain, must be forwarded whether any postage is paid on Ireland, Germany (in German steamers only), and them or not. All other mailable matter must be Newfoundland, for which see U. S. rates. prepaid, at least partially. Postal Cards — Single, 2c each; double, 4c each. U. S. Army and Navy — Rates on mall addressed Printed Matter — Ic for each 2 ounces or fraction to a member of the U. S. Army or Navy, regardless thereof. Limit of weight, 4 pounds and 6 ounces. of where stationed, are the same as domestic. 8o. Postal Money Orders. The method used by most business men for paying accounts or obligations in a distant city is by bank draft. There are, however, other methods as safe and almost as convenient. One is by postal money order, a method in which the U. S. government positively insures the sender against loss. All post offices are not money order offices, and postal money orders may be used to send money only to those places where there are such offices. The cost varies with the amount of the order issued. At all money order offices, money order blanks like that shown in Form XCI. will be found. On this blank the sender makes a written application for the money order which he wishes to send. 8i. Collection of Postal Money Orders. After the application is made out and the money for the order and the charges for same are paid to the postmaster, the pur- chaser is given an order by the postmaster which, after detaching and retaining the receipt at the right, he will send to the person to whom he wishes to pay the money. The money order contains the name of the sender and of the payee, who must be identified when he presents the order to the postmaster at the place where it is to be paid. No GENERAL POSTAL INFORMATION 119 Form XCI. No. Sttmi of IsMlof Offici DOLLARS CBHT8 (Form No. 6001) THIRD ASSISTANT POSTMASTER GENERAL DIVISION OF MONEY ORDERS The Poetmaster wlU Insert here — the office drawn on, when the office named by the remitter In the body of this application Is not a Money Order Office. Spaces above this I ioe are for tbe Postmaster's record, to b« filled In by him. Application for Domestic Money Order Spaces below to be filled In by purchaser, or. If necessary, by«nother person for him Ajnount Dollars .Cents Pay to ) (Mum of p«nott or firm for whom order U intended) Whose ) Address V Is J No. ■ ..i^trAAt Post 1 Offloa f .,.. State fi*iit Ky . . , ,,. .,., , (KaJM of 8«ad«r) Address) of [ •snderj No._ street PUKCHASER MUST SEND ORDER AND COUPON TO PAYBB 120 A FIRvST BOOK IN BUSINESS METHODS Form XCIl. Fees for Money Orders drawn on Domestic Form Payable in the United States (which includes Guam, Hawaii, Porto Rico and Tutuila, Samoa) ; or payable in Bermuda, British Guiana, British Honduras, Canada, Canal Zone (Isthmus of Panama), Cuba, Newfoundland, at the United States Postal Agency at Shanghai (China), in the Philippine Islands, ol* the following islands in the West Indies: Antigua, Bahamas, Barbados, Dominica, Grenada, Jamaica, Martinique, Montserrat, Nevis, St. Kitts, St. Lucia, St. Vincent, Trinidad and Tobago, and Virgin Islands. From 5 2.51 to? 5.00 . ceuus. Scents. From S 5.01 to $ 10.00 . Scents. From $10.01 to $ 20.00 lOXjents. From $20.01 to $ 30.00 . 12 cents. From $30.01 to $ 40.00 . 15 cents. From $40.01 to $ 50.00 18 cents. From $50.01 to $60.00 . 20 cents. From $60.01 to $ 75.00 . 25 cents. From $75.01 to $100.00 . 30 cents. Memoranda of Issuing Postmaster: MoTK. — The maxlmam amount for which a eingle Money Order may be isined ia |100. Whea a larger sum is to be sent additional Orders must be obtained. Any number of Orders may b« drawn on any Money Order office on any one day. Applications most be preserved at the office of issue for three years from date of Issue. (Edition Feb., 1915.) GENERAL POSTAL INFORMATION 121 money passes between one office and the other, merely the order from one postmaster to the other to pay the amount on the presentation of the order by the proper party. This order from one postmaster to another is very similar then to a bank draft. The postmaster will not pay the order to the person named until he has satisfactory proof that the person holding the order is the person named therein. Form XCIII. cwo«^ UL 77168 United States Postal Wooey Order ! 10100 ^''•"••'"- 77168 77168 RECEIPT jS^.^^^^2 ^sis Form for a Domestic Postal Money Order Before paying the order the postmaster will require the holder to receipt it. It is well, when one wishes to have a postal money order cashed in a strange city, to have some person identify him. If this is .not practicable, he will doubtless be required to exhibit papers of some kind through which he may establish his identity to the satisfaction of the postmaster. A post office money order may be transferred by indorse- ment, but only once. Banks frequently accept money orders on deposit from their customers, but stamps of banks through 1^ whose hands the order has passed are not regarded as indorse- 122 A FIRST BOOK IN BUSINESS METHODS 82. Express Money Orders. Leading express companies issue money orders payable at any of their offices. As these companies have offices in the principal cities of Europe, where such orders may be cashed, this is one means of carrying credit when traveling. Money is often sent by express, and money orders may be secured by making written application and paying a small fee. These orders are negoti- able to any extent, and are received by banks on deposit as readily as checks or drafts. The receipt given when the order is purchased should be kept, for, should the order be lost, the amount can be secured by giving the company an indemnity bond similar to the one given in the case of a lost or stolen note. Form XCIV, evAOtNTAT POINT or ISSUE ID v»A.vlU I ^ Pay, on pREsrmteowo i^^^1^-i'*C^_>-?__^^^b^^^ / #^ 16- "'"^".-.iMl MOHCT OltDlW. '•'^S ftEMtTTWS fteCelPT j^j AuouMT or o»i>55r ■ J An American Express Money Order At times it is necessary to send money by telegram. This method is very expensive, and for this reason it is used only in case of great necessity. Few of the telegraph offices in the United States are money order offices. The charge is i per cent of the amount, plus twice the rate charged for a single fifteen-word message between the two places. I GENERAL POSTAL INFORMATION 123 83. Registered Packages: The United States Govern- ment, through its mail department, registers letters and packages for the trifling sum of 10 cents above the regular postage, sealed packages carrying a guaranty up to fifty dollars actual value, and those unsealed, up to twenty-five, actual value. Money is oftentimes sent by this method, but as the registration carries only a fifty-dollar guaranty that it will be delivered, the package is often insured in an insurance company. Much currency and valuable paper are, however, sent through the registered mail. Every post office through which registered mail passes must keep track of it, and should a package be stolen, the post office officials will make a strong effort to discover the thief. The envelope or wrapper of regis- tered articles must bear the name and address of the sender. All letters should bear the name of the sender, so that they may be returned to the writer if necessary. All post offices are register offices, and money is sent by registered mail usually from such offices as are not money order offices or such towns as do not have express offices. 84. Coin or Bullion by Express. By far the safest method of sending actual coin, currency, or bullion from one place to another is by express. The money is placed in an envelope or bag and sealed by the shipper, and is not counted by the express companies. They simply guarantee the safe delivery of the package. Express companies frequently transfer money to a person or firm in a distant city, by means of the telegraph or telephone. By this method, the person wishing to send the money pays to the agent of the express company the amount he \vishes delivered in some other city, and by payment of a small fee in addition to the cost of the telegram sent by the agent, the money is promptly delivered to the person named in the message. 124 A FIRST BOOK IN BUSINESS METHODS 85. Letters of Credit. Many persons visit foreign coun- tries each year for pleasure or for the purpose of buying goods or live stock, or of doing other kinds of business. They do not wish to carry the amount of money with them which they may need, for it would be both inconvenient and unsafe; therefore, they take with them either letters of credit or bills of exchange. A letter of credit is a letter issued by a bank, in which the writer authorizes the person addressed to pay a certain sum of money to the bearer. The bearer must be fully identified and comply strictly with all the conditions of the letter before he can receive the money. On the paper called the letter of credit is printed a list of the correspondents of the issuing bank, and the buyer of the letter can secure all or any part of the value at any of the banks mentioned. These banks are located in the principal cities of one or various foreign countries. If the traveler wishes, he may have the letter made out payable in the money of any of the countries. If in England, it would be payable in pounds ; if in France, in francs ; if in Germany, in marks. When the traveler receives the letter of credit, he signs his name on its face and also gives the issuing banker various other signatures, which are forwarded to the correspondent banks. The signature of the holder m the presence of the banker will then serve as an identification. As various sums are drawn, the amounts are entered on the back of the letter, thus enabling the correspondent banker to see readily how much is due the holder. When the last of the money is drawn, the letter is taken up, canceled, and returned to the issuing bank. This letter of credit answers the same pur- pose as a bank draft. Should it be lost, the issuing and cor- respondent banks should be immediately notified. II GENERAL POSTAL INFORMATION 125 Example : Suppose Mr. Henry Thompson of Chicago wishes a letter of credit to the amount of $5,000, on some banking house in Leipzig, Germany. He may go to one of the banks in his city and leave as security money or bonds or other articles of value, and the bank will then issue to him a letter of credit. The money expressed in the letter of credit would be in marks, as that is the unit of value of German money. The value of a mark is equal to about 23.8 cents of United States money, and $5,000 would be equal to a little more than 2 1,000 marks. The letter of credit would read as follows : Form XCV. LETTER OF CREDIT Chicago, III., June 28, 1896. Messrs. Knauth, Nachod & Kuhne, Leipzig, Germany. Gentlemen: We take pleasure in introducing to you Mr. Henry Thompson, who purposes visiting Germany and France, and who desires us to open a credit with you for him for twenty-one thou- sand marks. You will please honor his drafts to an amount not exceeding the above-named sum, and charge the same to us, with advice. The signature of Mr. Thompson accompanies this. Yours very respectfully. Brown & Wilson. [Signature of Henry Thompson.] Messrs. Brown & Wilson also send to the banking house of Knauth, Nachod & KUhne, by mail, a letter similar to the form given below, notifying them that they have issued to Mr. Thomp- son a letter of credit to the amount of 21,000 marks, and giving them a, description of him. If the letter of credit is not accepted by the person to whom it is addressed, the writer of the letter should at once be notified. 126 ' A FIRST BOOK IN BUSINESS METHODS Form XCVI. LETTER SENT BY MAIL Chicago, III., June 28, 1896. Messrs. Knauth, Nachod & Kuhne, Leipzig, Germany. Gentlemen: We have to-day granted a letter of credit on your house (as per enclosed duplicate) to Mr. Henry Thompson, for 21,000 marks. Mr. Thompson is forty-five years of age, five feet nine inches tall, has a light complexion, with light hair and blue eyes. Yours very truly, Brown & Wilson. Mr. Thompson, having his letter of credit, needs to take only enough money for his journey. Arriving in Leipzig, he may draw from the banking house of Knauth, Nachod & Kiihne any amount not exceeding 21,000 marks. They run no risk, because they have the letter from the Chicago bank giving a description of Mr. Thompson, and also agreeing to be responsible for any amount Mr. Thompson may draw not exceeding 21,000 marks. Mr. Thompson could have taken a bill of exchange, but when he wished to have it cashed at some banking house in Germany he would need to be identified, and it might be difficult to get some one to do this if he had no acquaintances. The letter written by the Chicago bank enables him to establish his identity to the banking house of Knauth, Nachod & Kuhne. However, people may purchase bills of exchange (see § 87) to take with them when traveling in foreign countries. Sometimes they take bank drafts on some bank in New York. These drafts may be cashed at any banking house in Europe if the holder is properly identified and a small exchange fee is paid. GENERAL POSTAL INFORMATION 27 86. Travelers' Checks. Travelers' checks are now issued by express companies and by the American Bankers Associa- tion. These are largely taking the place of letters of credit, bills of exchange, and bank drafts. When these checks are Form XCVII. iMteic.'N nmfts tmttxt g^s.asdaBaii53Bi5i5aESP="® |) ^•.«?^^ Travelers' Checks purchased the purchaser signs his name on the check, and iH when the check is cashed he again places his name on it, IB which establishes his identity and guards against forgery. IB These checks may be had in any quantity and in the 128 A FIRST BOOK IN BUSINESS METHODS issue a check for $200) with the exact amount of foreign money paid therefor in the principal countries of Europe printed on each check. As these checks may be cashed in any of the principal cities of the world, they afford a very convenient and safe form of travelers' credit. Form XCVIII. $l<*^* 1 346 Chicago, III., ^^^- ^^^ iq 01 MARK-^;, 1875.85 ^^^'^^^ (^gy^ _AFTER DATE (DUPLICATE UNPAID) PAY TO THE ORDER OF KfiautJi, Nachod & Kulme^ One thousand eight hundred and seventy -five and 8^ mark-<; 100 VALUE RECEIVED, AND CHARGE THE SAME TO OUR ACCOUNT. ®0 ®^in^ & eta* T TT TXT'l or, 4'ig, (Germans. • «^«^^^ ^' ^^^^^^ ^ ^^- A Foreign Draft — the Original $l0*134G Chicago, ILL.,_ Oct-'^t \Qni MARKS,_i??M^ Thirty days after date (original unpaid) pay to the ORDER OF Knauth, Nachod & Kuhne, One thousand eight hundred and seventy-jive and 8s mark-<; 100 value RECEIVED, AND CHARGE THE SAME TO OUR ACCOUNT. ®0 fflein^ $c ffia* , Tj TTT'i on The Duplicate of the above Foreign Draft GENERAL POSTAL INFORMATION 129 " 87. Bills of Exchange. A draft drawn by one bank on another in its own country is sometimes called an inland bill of exchange. If it is drawn upon a bank in another country it is called a foreign bill of exchange. Foreign bills of exchange were formerly drawn in sets of two or three and were sent by different mails, so that if one should get lost the other would probably reach its destination and thereby save any unnecessary delay and annoyance ; for the person in whose favor the bill of exchange was drawn could get the one that reached him first cashed at once. Drafts drawn on private individuals or on business firms in foreign countries were also drawn in duplicate, and this method is still used to some extent, especially if the draft is for pay- ment of goods, and is attached to a bill of lading; for, if only a single draft was drawn and lost, the consignee would not be able to get his goods until a duplicate could be obtained. It has become customary for banks in nearly all cases to issue foreign bills of exchange singly. I Questions and Exercises on Chapter VI. It /. What is meant by first-class mail matter? IB 2, What is second-class mail matter? !■ 3' Name some articles which are third-class mail matter; IB describe fourth-class or domestic parcel post. IK ^. Upon what are rates for parcel post based? IK 5' Name some articles which cannot be sent by mail. ym 6, How much would it cost to send a letter from Chicago, II 111., to London, England? How much to send a letter from 1 1 Detroit, Mich., to Mexico City, Mexico? I30 A FIRST BOOK IN BUSINESS METHODS 8. What is a post office money order ? g. Do all post offices issue money orders? 10. For how large an amount may a post office money order be purchased ? //. What is the cost of having a letter or package regis- tered ? I2» What is a letter of credit ? jj. What is a domestic bill of exchange? /^. What is a foreign bill of exchange ? 75. Is a letter of credit more convenient for a person traveling in Europe, and if so, why ? 16. Why are foreign bills of exchange usually drawn in sets of two or three ? General Review Exercises /. J. S. Harwood is owing you $125 on account, which is past due. He sends you a check for $75.00 in part pay- ment, and asks for more time in which to pay the balance. Write a letter thanking him for the remittance, and also grant his request for more time for payment of the balance, but stipulate when the money shall be paid. 2. You receive a letter from H. B. Miller & Co. of Rock- ford, Iowa, claiming that the goods you sent them in your last shipment were of inferior quality, and asking for a rebate of $25.00. Write their letter. J. Write a polite reply to their letter, declining to allow them a rebate, and tell them why. 4. What is the object in post-dating a check? 5. Why is it better to have a check drawn payable to the •order" of the payee than to ''bearer"? 6. If a person has a check which he does not wish to use for some days, why is it better to have it certified? GENERAL POSTAL INFORMATION ^31 7- 8, 9- 10. II, 12, What is a restrictive indorsement ? What is meant by the term " joint makers " ? What does the expression "without recourse " mean? Of what use are drafts ? Explain how collections are made by drafts. If a draft is drawn by one person upon another who is in his debt, is the drawee obliged to accept the draft ? ij. If he did not accept it, what object would there be in having it protested ? 14.. What is an accommodation note ? /J-. What is the object in signing as an accommodation party ? 16, When is a note said to be outlawed? CHAPTER VII. PETITIONS, POWER OF ATTORNEY, COMMERCIAL AGENCIES, MISCELLANEOUS 88. Forms of Petitions. Most people, whether living in a city, town, or in the country, sometimes have occasion to petition those in authority for some improvement which they wish to have made, or the abatement of some nuisance, or for the granting of some favor, or the enactment of some law. While it is a very simple matter to write a petition, those who have had but little experience in matters of this kind may find the following forms of assistance : Form XCIX. PETITION FOR OPENING A STREET To the Mayor and Aldermen of the City of Burlington^ in Common Council assembled: Gentlemen: The undersigned respectfully solicit your hon- orable body to open and extend Walnut Street, which now termi- nates at Adams Street, through blocks Nos. lo and 12 in Hall's Addition, to Benton Street, thereby making Walnut Street a nearly straight and continuous street for two miles, and greatly accommodating the people in that portion of the city. (Here insert city, state, and date.) (Signed by two hundred taxpayers, more or less.) [132] PETITIONS 133 Form C. PETITION TO SCHOOL BOARD To the Honorable Members of the Board of Education of the City of Racine : Gentlemen: We, the undersigned citizens of the city of Racine, are personally acquainted with Mr. John Wood of this city, and know him to be an industrious and reliable man who we believe would fill the position of janitor of our High School building in a very satisfactory manner. As he is desirous of obtaining this position, we respectfully petition your honorable body to appoint him to fill the place. (Here insert city, state, and date.) Form CI. PETITION TO A GOVERNOR To His Excellency , the Governor of the State of. .* The petition of the subscribers, citizens of , in the County of , State of , respectfully shows that, etc. (as in the above forms). 89. Heading for a Subscription Paper. It is a very sim- ple matter to arrange the heading for a subscription paper, but for one who has had no experience in such matters, the following form may be of assistance : Form CII. We, the undersigned, hereby subscribe and agree to pay the amount set opposite our respective names to William Wood, for the purpose of defraying the expenses of a Street Fair to be held in the city of , October 4th, 5th, and 6th, 1901. Name. Amount. Name. Amount. Note.— The writin;^ should be very plain and the wording as brief as pes- iiblc to explain fully the object for which the money is subscribed. 134 A FIRST BOOK IN BUSINESS METHODS 90. Proxy. A proxy is a writing- by which one person authorizes another to vote in his place. Form cm. KNOW ALL MEN BY THESE PRESENTS, That /, Hiram S. Cole of , do hereby appoint George IV. Woodworth of , my attorney for me in my stead, to vote as my proxy, at a certain election of directors of the Company, to be held on the day of , 1902, according to the number of votes / should be entitled to cast if per- sonally present. Witness my hand and seal \h\^ first day of November^ IQ02. Hiram S. Cole. 91. Power of Attorney. It is sometimes necessary for a firm or an individual doing a large business to employ others to act as collectors or agents, and they are frequently required to transact business a long distance from the home office, where it may be necessary for the agent to sign a deed or execute a mortgage. In such cases the agent is given what is termed a power of attorney, which permits him to exercise the same authority as the principal would have. Form CIV. KNOW ALL MEN BY THESE PRESENTS, That /, Charles IV, Carson of Jackson, in the County of Jackson and State of Michigan^ have made, constituted, and appointed, and by these presents do make, constitute, and appoint Glen IV. Rogers of Salem, County of Marion and State of Illinois^ a true and lawful attorney for me, and in my namC; place, and stead, and in my behalf, to [here insert the things which the attorney is to do], hereby giving and granting unto my said attorney full power and authority in the premises to do and perform all such acts, matters, and things as my said attorney shall deem necessary and expedient for the completion of the authority hereby given, as fully as / might or could do if personally present, hereby ratifying and confirming all that my said attorney shall lawfully do or cause to be done by virtue hereof. In witness whereof, / have hereunto set 7ny hand and seal, this third day of June, in the year of our Lord one thousand eight hundred and ninety' seven. Signed and sealed in the presence of ) Charles W. Carson. f CS«AL.] COMMERCIAL AGENCIES 135 Form CV. REVOCATION OF POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That whereas, /, John E. Smithy in and by my letter of attorney bearing date August 4, iSgy, did make, constitute, and appoint Samuel Jones my attorney, as by the said letter of attorney will more fully and at large appear : Now know ye, that /, the said John E. Smith, have revoked, counter- manded, and made void, and by these presents do revoke, countermand, and make void, the said letter of attorney above mentioned, and all power and authority thereby given or intended to be given to the said Samuel Jones. In witness whereof, /have hereunto set fny hand and seal this jd day of December, iSgj. In the presence of ) ^ John E. Smith. John Jones, \ ' _ _ Oeor£-e Wilson. ) [seal.] If power is given to convey lands, the same regulations regarding its acknowledgment by husband and wife are required as would be required in a deed, and as a general rule a power of attorney should be acknowledged before a notary public. (See chapter XII.) 92. Commercial Agencies. The two largest commercial or mercantile agencies in this country are R. G. Dun & Co. I and The Bradstreet Co. These firms publish reports of the credit or financial standing of men in all lines of business. They get their information from their agents, who are located in all parts of the country, and from various other sources. The service has been so much improved of late years that the information which they furnish is of great assistance to the business man who gives credit to his customers. Example : Suppose Mr. John Smith, who lives in Smithtown, should order a bill of goods from some firm which has no business acquaintance with Mr. Smith and which has no knowledge of his financial standing. It would be quite necessary that the firm of 136 A FIRST BOOK IN BUSINESS METHODS Mr. Smith's ability to pay, before giving him much credit. This information they may get from Dun & Co.'s or Bradstreet's com- mercial reports. If they do not get the desired information from these commercial reports, they can get a special report by apply- ing for it at the offices of these agencies. The information which these commercial agencies furnish is obtained by their agents, from individuals, and by consult- ing the tax lists, deed, mortgage, and judgment records, etc., and this information may generally be relied upon. The expense to subscribers is small in comparison with the bene- fit which they derive from the reference books and the reports of the agencies. If a business man in any part of the country places a mortgage upon his goods or becomes bankrupt, the subscribers of these commercial agencies are notified by the reports which the agencies publish. Form CVI. INSIDE COVER OF REFERENCE BOOK This hook is the property of the Commercial Agency. It is loaned to subscribers tinder a certain specific agreement, and is to be returned as per conditions of the agreement under which it is loaned. COMMERCIAL AGENCIES 37 Form CVII. KEY The omission of a rating is not intended to reflect upon a party's credit. It simply implies that we have not the information upon which to base a rating. ESTIMATED WEALTH GRADES OF CREDIT 1st 2d 3d $1,000,000 500,000 400,000 300.000 250,000 200,000 150,000 100,000 75,000 50,000 35,000 20,000 10,000 5,000 3,000 2,000 1,000 500 and above. \ to $1,000,000 i" 500,0001 400,000 I 300,0001- 250,000 i 200,000 I Aa to to to to to to to to to to to to 150,0001 100,000 75,000 50,OOOJ 35,000" 20,000 ■ 10,000. 5,0001 3,000 I- 2,000j 1,000) 500) I The division sign (+) indicates more than one business. 93. Reference Books of Commercial Agencies. The com- mercial agencies publi.sh referoice books quarterly, in January, March, July, and September of each year. They also publish notification sheets, which appear more frequently; some of them weekly and some monthly. These notification sheets 138 A FIRST BOOK IN BUSINESS METHODS record the names of new firms, changes in old ones, fires, failures, judgments, etc. The forms below will show how the pages of the reference books and the notification sheets are made up, and the nature of the information : Form CVIII. PART OF PAGE OF STATE REFERENCE BOOK KANSAS DRURY, [S. E. C] Sumner. 40 On Kansas Southwestern R. R. — Pop. 11 — Tel., *, Ex. and % South Haven, 5% miles. McDougall Edward Gen. Store W E Raypholtz William Miller T C DRYWOOD, [S. E.] Crawford. 40 Six and one-half miles from Pawnee Sta- tion—Pop. 12- Tel. and Ex. Pawnee Station — * Cato, IJ^ miles — X Arcadia, 8 miles. Beebe E. C Blacksmith Coonrod Bros Gen. Store X D Washburn J. E Grocer Z E DUBUQUE, [C] RusseU. 40 Eleven miles from Dorrance — Pop. 20— Tel., * and Ex. Dorrance — t Wilson, 13 miles. Weber N Gen. Store -1- 8 C DUN, [S. E.] Wilson. 40 On Kansas Division St. Louis dk San Fran- cisco R. R. — Pop. 38— Tel, *, Ex. and X Nendesha, 5 miles. AdellC. S. Gen. Store Browning V.L Mill E DUNAVANT, [N. E. C] Jefferson. 40 On Kansas City dk Northwestern R. R.—Pop. 50- Tel.— * — Pacific Ex.-X Winchester, 5 miles. Becker Charles Hardware, &c X D Becker Henry & Co Lumber V D Jacquemin C. N, & Co Gen. Store T C EDSON, [N. W.] Sherman. 40 On Chicago, Rock Island dk Pacific R. R.— Pop. \b—Tel., *, Ex. and X Goodland, 9 miles. Day A Gen. Store W D r MISCELLANEOUS ^39 Form CIX. PART OF A NOTIFICATION SHEET SHOWING CORRECTIONS AND CHANGES MISSOURI Anabel— OverstreetG. W.-G. S Sold out Ash Grove— Rose & Co..D. G. &c Cannon «& Strader succeed Auxvasse— Adams Bros..G. S A. C. Adams deceased Boonville— Eppstein & Hain..Q. 8 Veit Eppstein CJarthage— CarpH.-D. G. «S;c Moved to Joplin Head&Baird...Blk8th8 Dissolved Cassvillfr-Marbut T. A..Gro Selling out Clarksville-Nicklin W. P. & Co.. Drugs.... W. P. Nicklin succeeds Clinton— Wright- Austin Candy Co Dissolved Commerce -Ireland A. N..G. S Sold to B. C. Moore Hannibal— Bowles &Traynor..Clo.&c.. J. J. Bowlessuc'ds Harrisonville-Frazier J. A..Gro Bill of sale $350 r [ 94. Legal Tender. That kind of money which has been I declared by law to be suitable to offer for the payment of a debt is called legal tender. Under the United States Statutes, legal tender is as fol- lows : Gold coin is legal tender at its nominal or face value for all debts, public and private, when not below the standard weight and limit of tolerance prescribed by law; and when below such standard and limit of tolerance it is legal tender in proportion to its weight. Standard silver dollars are legal tender at their nominal or face value in payment of all debts, » public and private, except where otherwise expressly stipu- lated in the contract. Silver of lower denomination is legal tender for amounts not exceeding $io in any one payment. The minor coins of nickel and copper are legal tender to the extent of 25 cents. Treasury notes of the act of July 14, 1890, are legal tender for all debts, public and private, except \ I40 '% A FIRST BOOK IN BUSINESS METHODS where otherwise expressly stipulated in the contract. United States notes are legal tender for all debts, public and private, except import duties and interest on the public debt. Gold certificates and silver certificates are receivable for all public dues. National-bank notes are receivable for all public dues except duties on imports, and may be paid out by the Gov- ernment for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on the public debt and in redemption of the national currency. 95. How to Make Change. The most convenient and accurate way to make change is by addition. Example: If you buy something that costs $3.37 and in pay- ment hand the salesman a five-dollar bill, he would not subtract $3.37 from $5.00 to find out how much change you should receive. He would first get 3 cents from the money drawer and add it to the amoimt of your bill, $3.37, making $3.40; then perhaps he would add a dime to the $3.40, making $3.50; then 50 cents, making $4.00; then $1.00 more, making in all $5.00. The salesman does not know, perhaps, just how much change he gave you, nor is it necessary that he should know, if the money you receive, added to the amount of your purchase, equals the amount of the bill which you handed to him. In counting your change, add just as the salesman did and you will find it a more convenient method than subtracting. 96. Marking Goods. Merchants have various ways for marking goods so that the cost price may be known to the salesman only. Many use a word or a combination of words containing ten different letters, each letter representing a single figure. I MISCELLANEOUS 141 Ixample : For illustration, let us take the word PURCHASING 1234567890 If ^V IS a marking key. ^V Now if the cost of an article be $2.75 the mark would be USH md if the cost be $3.50 the mark would be RHG. Sometimes an extra letter called a repeater is used to prevent repetition. For example, we will use X for the repeater. Now if the cost of an article be $2.55, instead of marking it UHH the mark would be UHX. Below are a few words and phrases which may be used as marking keys : ^B jr Authorized Previously ^H Importance Sent by mail ^1 Parchments Cash profit ^H \ Now be quick Hard moneys ^ 97. Suggestions for Pen-Lettering and Brush-Marking. Everyone should learn how to mark neatly and plainly, with pen or brush, packages, boxes, and bulletins ; and this is some- thing which may be so easily learned that any person, with a little practice, can do the work as well as the copies given on page 142, which are taken from actual work. 1. Care should be taken to have the letters slant well back H|to the left and to have the heaviest part of the down stroke come just on the line. 2. A very good way to mark packages and small signs is to use a flexible steel pen. Until one has learned the forms of the letters, a pen is much better to practice with than a brush. The ability to make a neat sign comes from practice J but with practice almost anyone can learn to do good work. 142 A FIRST BOOK IN BUSINESS METHODS long hair, No. 6 or 8. Then get a can of Ivory black paint, Distemper color of any good brand, ground in water. 4. If you do not wish to expose a sign to the rain, water colors are much better than oil, for they are cleaner and cheaper, and the brushes and hands may be washed clean, with water, in a moment. 5. Put a small quantity of the Ivory black in a separate cup or pot and thin it down with water to about the consist- ency of writing ink. A little mucilage should be added to Form ex. An Alphabet for Brush-Marking t ' ij \J the paint to prevent it from rubbing off, and if you wish it to dry quickly, add a little alcohol. 6. Do not get enough paint on the brush so that it will drip. Get some old pieces of paper or cardboard, take your brush between the thumb and index finger and you are ready to begin. 7. The hand may be steadied by letting the little finger rest lightly on the card or desk. By following these suggestions and the copies given above, any one can soon learn to make a good plain sign or to mark a box or package very well. MISCELLANEOUS 143 I Questions and Exercises on Chapter VIL /. What is a petition ? 2. Draw up a petition addressed to the proper authorities, asking that a street lamp be placed on the corner near your house. J. Write a petition asking that a night watch be appointed for that part of the city in which you live. 4.. Mr. Charles Wood wishes to be appointed postmaster of the town in which he lives, and he asks you to write a petition which he may have signed by his friends and neigh- bors who approve of his appointment. Write his petition. 5. Write a suitable heading for a subscription paper for raising money with which to purchase a piano for the public school in your town. 6, Write a suitable heading for a subscription paper for the purpose of raising funds for defraying the expenses of an appropriate celebration on the Fourth of July in your city. 7. What is a power of attorney ? 8, How may a power of attorney be revoked? p. Is it necessary to have a power of attorney acknowl- edged before a notary? Are any witnesses required? 10, Could a mortgage be executed by a power of attorney which would be legal ? 11, Name two of the leading commercial agencies in the United States. 12, Of what use are these agencies to business men ? /J. May the information which they furnish be relied upon? /^. How do they get their information regarding the business standing of individuals and firms doing business in various parts of the country? 144 A FIRST BOOK IN BUSINESS METHODS 75. Your store, at 430 State Street, is rented to J. W. Simpson, who pays you $27.50 for one month's rent. Write a receipt for the amount paid. 16. Write a due bill for the balance of your account, due S. N. Howe, $25.65, payable in goods from your store. I J. Write an order on C. H. Groves & Co., dealers in cloth- ing, in favor of your hired man, William Smith, for $28.25. 18. You buy a horse of L. W. Rowley for $135 and give him your note at sixty days in payment. Write the note, making it to draw interest at 6 per cent from date. At the end of the sixty days you figure up the amount due and give him a check on the First National Bank for the amount. Write the check, making it payable to "order." Ten days after, Mr. Rowley notifies you that he has lost the check and asks you to give him a duplicate check. Write the duplicate check. ig. H. W. Peters, who lives at Manistee, Mich., owes you $145.35. Draw a sight draft on him for the amount and notify him that you have drawn on him. 20. R. B. Thompson buys a bill of goods of you amount- ing to $345.75 and gives you in payment a check on the First National Bank. Write the check and ask him to have it certified. Write the certification in its proper place on the check. You sell the check to Howe & Powers and indorse it over to them. Write the indorsement. 21. You owe Johnson Bros., grocers, Chicago, $125.45, and they draw a draft on you for the amount, at sight. Accept the draft when presented. When will the draft be due ? The exchange on the draft is 25 cents. Write a check on the City National Bank for the whole amount of draft and exchange. 22. You ship to D. W. Kingsley, Michigan City, Ind., 13,500 feet of lumber at $14.50 per 1,000 feet, and they ask for MISCELLANEOUS 145 a rebate of $15.00 on account of the poor quality of some of the lumber. Make out a credit memorandum for them. 2j. You ship to Packard & Jones, Chicago, to be sold on commission : 42 bbls. Baldwin apples. 35 " greenings. 10 " pears. f Make out the shipping invoice. 2^. You ship to G. H. Woodham & Sons, Toronto, Canada 23 bbls. Baldwin apples, @ $3.25 50 " Wagner " @ 3.00 400 baskets grapes, @ .15 What invoices and other papers are necessary ? They send you a New York draft in payment, and by mis- take they have the initials of your name wrong. How can you get the money on the draft ? General Review Exercises /. How should a letter be addressed to the President of the United States ? 2, How should a letter be addressed to the Lieutenant- Governor of your state? J. You wish to write a letter to the president of a college Show how the heading should be arranged, including the address and salutation, and the proper punctuation. 4., Show how a billhead should be arranged for a quantity of goods which you sell to S. R. Woodbridge. 5. You work in the office of Culver & Smith three days and two hours at $2.25 per day. Make out your bill for same- 6 J. C. Fillmore owes you for twelve cords of wood at 146 A FIRST BOOK IN BUSINESS METHODS $2.20 per cord. Make out your bill. You sell the account to H. M. Powers. Write the assignment of the account. 7. You send a shipment of goods to G. W. Haywood, Cedar Rapids, Iowa, and mail him an invoice of same. At the expiration of ten days he writes you that no invoice has been received. What should you do ? 8, How is a check certified ? p. What is a stub of a check, and of what use is it ? JO. If a person holds a certificate of deposit for $100 on the First National Bank and wishes to use $50.00 of the amount, how can he get the money? //. What is the difference between a promissory note and a bill of exchange ? 12, When may commercial paper be transferred without any indorsement? jj. Is there any difference between a bank draft and an inland or domestic bill of exchange? /^. What is a post office money order? ^ 75. Are post office money orders more convenient for making remittances than bank drafts? 16. Why are post ofiice money orders used in some cases in preference to bank drafts? 77. What is the maximum amount for post office money orders? CHAPTER VIII. RAILROAD AND EXPRESS BUSINESS 98. Shipping Orders and Bills of Lading. When goods are shipped by railroad or by steamboat, the person shipping the goods, who is called the consignor, fills out a shipping order , which is a written statement of the goods shipped, conditions of shipment, etc. Form CXI. J WlCHlCAN HeNTRAL ^AILROAD fi OMBMJY I-,,.,]V,H^.7;;T'>H'"H'^'t|'^ ' 'l ' ^«H ''H — 1^-='- mgrp ^^CT<.r/ /kJ .^tl ^^^^'^ ^(" ^j^'y) ^^ ^ ' / nSm ..^.-rt^. •S." Si ua«n.«...>. Jl. Al^^^^^W,^ ' k«.T»k.ls.»««.- _J_ A^£- \D . 'tririininr^iM .1 Ik. tk.no - •• L^ ' *_.- .s;jrcs==s Of !»»■■■« A Shipping Order (147) 148 A FIRST BOOK IN BUSINESS METHODS Form CXII. Michigan Central I ^ailroad f^ OMPANY STRAIOHT BILL OF LADING-ORIGINAL— NOT NEGOTIABLE. ^"""" "' this Origins) Bill of LadiDK. .^... I^: ./3^i^ X^il.A ENTt^AL T ^AILROAD fJ OMmwr • ■^riVfT, '^^^Mp^f^ ^K«-a^ i2,ti~ , _»<• :=^:n]E=~£=£sr« "^ :Jr- ^ .-^«-- -^ ^a.^^5^^cji^ .^^^ — ta.. -T>t.n«» • /, f.^^^^^S^/ . Ch-t/ttS -Trt'-r-rT-M- \JL. ' '"" *" — ' " — — jaw-.ntm — - MMHA • JU '-■■■6-<-^' ^ t^eu .. , .- I-orvi of Railroad Memorandum 99. Railroad Expense Bills. The cost for freight on goods shipped from one place to another by railroad is not paid until the gfoods reach their destination; then the 50 A FIRST BOOK IN BUSINESS METHODS railroad agent where the goods are delivered to the consignee makes out what is called an expense bill, showing all the statement of transportation charges. Two copies of this bill are made, one of which is signed by the consignee to show that he has received the goods. This copy the railroad agent keeps. The other is signed by the railroad agent and is retained by the consignee as a receipt for the money which he paid for freight on the goods. Form CXIV. shows an ordinary railroad expense bill. Form CXIV. FREIGHT BILL CONSIGNEE CHICAQO STATION. DESTINATION. To Cmcago, Burlington & Quincy Railway C»-f Dr. 2«^L_^0_-C -/ So^/^^^^y-'^^^^ f^ ^A ^^<^ COttMIOTtNO LlH( RcrtllCNOI OKIQINAL W*«SlLk. NUMBM RtMiVEO Payment ;. ti? fg. tor ti.ck.tfe *'"i 'rniAt o' $t UO p9*^it*^or .ACh 7\ hours deuntton, oi frut'OAAl pirt thereof, .ft.r 1h* .xpirition Hi;.UUBUiini7.lsUu>sldbFRUra«luaK«latlM<«.>iniaiwl SPECIAL IMSTRUOTIOHS. RKMAIIKti I An Adams Express Special Collection Envelope When a collection is to be made by an express company a statement of the account should be made and placed in a special collection envelope, as shown by the form above; this envelope containing the statement of the account is then handed to the express agent. A small fee is charged by the express company for undertaking the collection, and if the collection cannot be made, there are no further charges, but if they make the collection, a small additional fee is charged for return of the money. The whole expense for collecting an account of $12.00 or $15.00 by this method is not more than 20 or 25 cents. 154 A FIRST BOOK IN BUSINESS METHODS Form CXVII. (64) sr T otal Amount to he returned. m<\. &i^^AAMXS be.collecied from the consienee OAdaliverj of the proptrty described berew Is not paid within ihiriy dayslrbm date of this Cotnpaoy s receipt, the shipper agrees that this Company may return said properly to "him ai the ■exniratioit nf thai time subject to the conditions of this Company's receipt, that he-will pay the charges for transporution both ways and ihat ihe Hability of this Company, for such property, vrbile h> hs possewon, for (be purpose of making such collectloOj shaU be that ol warehousemen o«Iy, . , - NOTICE TO AGENTS. RBNIARKS. Counted and Sealed by. A United States Express C. O. D. Envelope i RAILROAD AND EXPRESS BUSINESS 155 103. Sending Goods C. O. D. by Express. If goods are sent C. O. D. (Collect on Delivery), which means that they are to be paid for when delivered, the sender makes out a bill of the goods and places it in an envelope called a C. O. D. envel- ope, which he sends with the goods. When the goods are delivered by the express company to the person to whom they are addressed, it collects the charges for delivering the goods and also the amount of the bill. Sometimes, too, they collect charges for the return of the money to the shipper. If the charges for the return of the money are to be col- lected, the amount of the charges should be shown on the C. O. D. envelope. The bill which the sender makes out to be sent with the goods should be receipted, for the expressman will not deliver the goods to the purchaser until the C. O. D. bill has been paid. Form CXVII. shows a return C. O. D. envelope properly filled out. 104. Bill of Lading with Draft Attached. Sometimes when a man who does not have very high credit in the com- mercial world, orders a bill of goods from a wholesale firm, they have some hesitation in shipping the goods without being assured that prompt payment will be made. If the goods to be shipped are too heavy to go by express, they may be shipped C. O. D. by freight. This is usually done by means of a bill of lading with draft attached. The ship- per bills the goods to himself at the place where the pur- chaser lives. He does not, however, send the bill of lading direct to the purchaser of the goods, but draws a draft on him to which the B/L is attached, and the draft is sent through the bank to him for collection. Before the B/L is 156 A FIRST BOOK IN BUSINESS METHODS Form CXVIII. The Lake Shore & Michigan Soathera Railway Company STRAIC HIT BILL OF LADING-ORIGINAL— NOT NEGOTIABLE «C~»H»_ « -^^^M^ 7W S^ oiibiiOrio»iBiii Tlie uU put^^^L-Df Uk Kccnd put HEREBY COVENANT A.ANt) AGREEj-to p*; nlo the uU pait^ol ^t> ^ ^^^ U^tf^fL-U^-A^tCif^^^ gy ^ A^ Bnl) To 4)uU uid turrcndei ibe ptcntiet, al the expirmtion Hn& TTie Mid yv\JU^^ the Kcood put further ( UlTJ —.^^iX-Z vUl not occnpT or a>c t1 . under the like peniltj. HnO Thr^ put^L-of the iccoDd p»rt further coveninl^thil — J\Li. wlU | fint p»rt. Of — Ai.(# *6eni, to »bow the premuc* to penons wiihing to hire or pttrchue, of FebruvT B«rt preccdine the ex[^tlioa of the term, wi*' ^,fmx the vsual notice of "to let" oi the walU or doon of liid pfemiseii and rcmaiD thereon wiiboui hiadrance or molestation. Bn& also, TVt >t the uid premitct, or uiy put Ibereof, U»ll become ncaot •duriac thi n& also, iyt>t the ui pert, or— -"^*? the rent thereof, erp'yine ' of the ufd pait-jLof Um < (if asy) 10 bt pud erer to i 1 term, the eaid pertj^ rwiac, withoM being lUUt Bltt) The uid part -^ -of the lecond part berebj itutbar covena9t-2.that if any < rent, or aaj part thereof, at the (imca above ipeeified, or U dctaah be Bade in the f part *c hereunto Ml their anO iDcUvecco In tbc pteeence of mmdM^ Form of Lease {front) /" LEASES 167 Form CXXIII. 3 1 r m > t I I ! i I 1 1 1 '^ ^ '^ [ 1 » ii I { t ' , J » i I ^ r [ : ■ 1 ■ * , I p 1 Lf .! if ill ■lii III 'i lii Hi ill m iii' i lu 1 i'i 11: 11 if Form of Lease {back) i68 A FIRST BOOK IN BUSINESS METHODS III. Leases. A contract made between two parties, by which real estate is rented for a specified time, is called a lease, A person who leases real estate to another is called a Form CXXIV. UMDLORO'* nVE OAV NOTICK.-fOII CMtCAM. FORM N». 23S. CX'^ ^^'tyd^ l/r- y?'Z<:i^-^L ^e)u^(Zyt^2^y. Ltt ^tt^^H[I10U|itb, ihat there is now duyfafUlZ.the mm .Cents, being rent for the premises situated in the City of Chicago, 9k County, in the State of Illinois, and knnwn and described as, follows, viz.: Onb ^ou are Jurijer Qtoftfie^, That payment of said sum so due has been ana it hereby dem^ dgig, of^..j2^<^y;^. _.„^ D. WOj^our lease of saiA premises will be terminated. ,-^r.\^y^.*''^rl^^'y^^,,,,,Y fw-^v^^»^^?^^vf?tr<^M hereby authorized Uk receive said rent so due. ^ ,^^r ^^i^y ©aicb thU /C7 V^ Jlay o/__.^^;^^_ A. D. 190 J^ Notice to Quit (front) — {Used in Illinois) landlord, and the person to whom he leases the real estate is called a tenant. In law, the person giving the lease is termed the lessor, and the person to whom the lease is made is termed the lessee. A verbal lease for more than one year is void; therefore, LEASES 169 Pirhen a promise to rent for more than a year is made, it should be in writing. No particular form of wording is Form CXXV. ^. Fire Day Notl®e< Served ih» within notice by delivering a eopy thereof to tho within named iMi- J.D. 190. Feu, /- Mileage. S- Serviee, - /- of I II fl I ^ !f L I {111 .1 II Notice to Quit (back) necessary, but it is important that the lease state in a plain, straightforward manner, all the conditions of the agreement, so that there may be no misunderstanding. It must include I70 A FIRST BOOK IN BUSINESS METHODS the whole agreement, for if a lease or contract of any kind be made in writing, any additional verbal agreement is of no avail in law. Each of the parties should have a copy of the lease. The tenant must pay the rent provided for in his lease, strictly in accordance with his agreement. Even if the prem- ises are rendered useless by unavoidable accident of fire, or flood, or tempest, the tenant will still be liable for the payment of the rent. But leases generally contain a clause providing for a suspension of the payment of the rent during the time the premises are rendered untenantable by reason of any of these causes. If the tenant use the premises for any purpose not contem- plated by the letting, it may terminate the lease. 112. Repairs and Subletting. The statutes of some of the states provide that the landlord must keep the premises in repair, but in others there is no such provision. The parties to the lease may make such agreement in their lease respect- ing repairs as they see fit. If the landlord agrees to keep the premises in repair and fails to do so, the tenant may deduct from his rent as much as he has been compelled to pay out for such repairs as the landlord agreed to make ; but in order to do this he must have given due notice to the landlord of the necessity of such repairs. When the lease is made, a definite understanding should be had by the parties regarding repairs, and the agreement concerning the matter should be fully written out in the lease. If the terms of the lease do not prohibit the lessee from subletting the premises, he may, if he wishes, sublet any part or the whole of them, but he will still be liable for the payment of the rent if the sub-tenant does not pay it. If a GUARANTIES 171 landlord consents to take a substitute, the first tenant is released. 113. Notice to Quit. If the lessee does not remove from the premises when his term of lease has expired, his right to possession cannot be taken away except by a notice to quit. The notice to quit may be served upon the lessee or any per- son holding under him. The notice should state that posses- sion of the premises is demanded, and that the tenant must vacate within the time specified in the notice. 114. Guaranty. A guaranty is an agreement to answer for the liability of another, and a person who guarantees the fulfillment of another's agreement is called a guarantor. If a man gives his note for a certain amount, or makes a contract to do a certain piece of work, or leases some property for which he agrees to pay a certain sum per month, in any of these cases it might be necessary to have some friend guar- antee the fulfillment of his promise. In order that the guarantor may be held, the guaranty should be in writing and signed by him. Although no special words are necessary to constitute a guaranty, the guarantor must clearly show that it is his inten- tion to guarantee the fulfillment of the agreement. The guarantor cannot be held for the fulfillment of the agree- ment unless the conditions of the guaranty are strictly fol- lowed, and he can be held only for the amount agreed upon or for the time mentioned in the guaranty. If the guaranty is for the payment of a debt, and the principal fails to pay, it is usually necessary that the guarantor be notified, but in some states a mere indorsement is equivalent to a guaranty, and the indorser need not be notified (see p. 172). It is a part of business courtesy, however, to notify. 172 A FIRST BOOK IN BUSINESS METHODS Form CXXVI. GUARANTY OF RENT TO BE ATTACHED TO A LEASE In consideration of the letting of the premises above mentioned to the above named C. C. , and of the sum of one dollar to me paid by the said party of the first part, /do hereby covenant and agree, to and with the party of the first part above named, and with his legal representative, that if default shall at any time be made by the said C. C. in the payment of the rent and performance of the covenants above contained on /i/s part to be paid and performed, that J will well and truly pay the said rent, or any arrears thereof that may remain due unto the said party of the first part, and also all damages that may arise in con- sequence of the non-performance of said covenants, or either of them, without requiring notice of any such default from the said party of the first part. Witness my hand and seal this day of , in the year of our Lord one thousand nine hundred and [Name of witness.] [Signature.] Form CXXVII. GUARANTY OF PAYMENT OF NOTE For value received, I hereby guarantee the payment of the within note. [Date.] [Signature.] Form CXXVIII. GUARANTY OF PAYMENT OF BOND In consideration of the sum of one dollar to me in hand paid by G. P., I hereby guarantee the payment of the foregoing bond. Witness my hand (and seal), the day of , 19 . . [Signature, with or without seal.] 115. Bill of Sale. A bill of sale is an agreement in writ- ing by which one person transfers his interest in personal property to another. Like many other legal documents, no special prescribed form is necessary; the seller of the "chat- tels" or personal property simply shows by his bill of sale BILL OF SALE 173 I that he has transferred his interest in the property to some one else. Form CXXIX. BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, That /. James Stone of Salinas, County of Monterey and State of California, in consideration of One Hundred and Fifty dollars, to me paid by William Irving, of the same place, have bargained and sold to said William Irving, the following goods and chattels, to wit : one gray horse, one carriage, and three cows. In witness whereof, /have hereunto set my hand and seal, this 20th day of October, A. D. igoi. Signed, sealed, and delivered in presence of t ■< SEAL. >• Although the above is the usual form of a bill of sale, the following would be equally binding and would answer every purpose ; Form CXXX. SHORT FORM OF BILL OF SALE Salinas, Cal., October 20^ igoi. I have this day sold to William Irving^ one gray horse ^ one car- riage^ and three cows. James Stone. 116. Bonds. A bond is a writing under seal by which the maker acknowledges some debt, liability, or duty. It is called a bond because it bi?ids the maker of it. The maker of a bond is called the obligor, and the person in whose favor it is made is called the obligee, A bond first states an indebtedness, and then a condition that if the obligor performs some particular act, the obligation is 174 A FIRST BOOK IN BUSINESS METHODS Form CXXXI. Rnotp all men t>y tijcsc presents, xhu we,._.,,<^<..t?^^.i/_/I?Ai^f^B*a*^ --^^. ut,(a:^:^...^...,jUi^..^ •ra held *nd firmly ir bound unto ..^jiS^V^^^af^:^.... is the BDin of *« ? c E i T3 ! C j i Bond for Fidelity of Clerk (back) 176 A FIRST BOOK IN BUSINESvS METHODS void ; otherwise it shall remain in full force and virtue. The penalty in a bond is usually fixed at double the amount of the real debt. This is for the purpose of securing the full debt with interest and cost if necessary. Let us examine the working of a bond. Example : Suppose John Wood agrees to build a house for Peter Brown and to have it finished according to certain specifi- cations on or before a certain day. Peter Brown requires John Wood to give a bond for two thousand dollars, in which he guar- antees that the house shall be completed in good workmanlike manner, etc., at the time specified. Let us suppose that John Wood goes to work and completes the house and does everything exactly according to agreement, except that he is a month late in completing his undertaking. Now, according to the strict terms of the bond, he is indebted to Peter Brown to the amount of two thousand dollars, and, under the early common law, the whole amount of the bond would be payable to Peter Brown, no matter how much or how little damages or inconvenience Peter Brown had suffered on account of the delay. It would, however, be exceedingly hard if John Wood were made to pay all this money on account of a trifling default, and now the law will not compel him to pay any more than a sufficient amount to compensate Mr. Brown for any loss or inconvenience which the delay has caused him. It is customary to have one or two sureties to a bond, and the sureties are bound the same as the obligor, unless the bond states otherwise. The sureties to a bond are usually required to '* justify** in a certain amount. This means that they must swear to being worth a certain amount of money above all their indebtedness. Although it is not necessary that bonds be witnessed and BONDS 177 acknowledged, it is sometimes desirable to have it done, such as in cases where the signer cannot write, and is obliged to sign by his mark, or in any other case where a question may arise regarding the genuineness of the signature. I Form CXXXIII. COMMON FORM OF BOND KNOW ALL MEN BY THESE PRESENTS, That /, , of County and State of , am held and firmly bound unto , of the same place, in the sum of dollars, lawful money of the United States, to be paid to the said , his certain attorney, execu- tors, administrators, or assigns ; to which payment well and truly to be made, / do bind myself, my heirs, executors, and administrators, firmly by these presents ; sealed with my seal, and dated this day of A. D. one thousand eight hundred and The condition of this obligation is such, that if the above-bounden , his heirs, executors, administrators, or any of them, shall and do well and truly pay or cause to be paid, unto the aforesaid , his executors, adminis- trators, or assigns, the full and just sum of . . . dollars, lawful money, as afore- said, with legal interest for the same, on or before the . . . day of next, without fraud or further delay, then this obligation to be void and of no effect, otherwise to be and remain in full force and virtue. Signed, sealed, and delivered^ in the presence of I 1 J [seal] 117. Bonds for Faithful Service. Persons who hold posi- tions of trust or responsibility are usually required to give a bond signed by some person or company, thus guaranteeing faithful service and agreeing to make good any loss caused by defalcation or carelessness. If a young man obtains a responsible position and it is necessary for him to give a bond guaranteeing faithful per- formance of his duties, and he has no personal friend who will become his bondsman, he may, if he has good character w 178 A FIRST BOOK IN BUSINESS METHODS and good habits, arrange with a. surety company to sign his bond. There are now several surety companies which give bonds for any one whom they consider "a good risk" When an application is made, it is necessary to give three references, with whom the company corresponds, and they make very careful inquiries concerning the character and habits of the applicant before signing his bond. The amount of the surety bond in any position depends, of course, upon the position ; but any young man or woman with good habits and a good record has no difficulty in securing bonds for five or ten thousand dollars by paying a small sum annually. Note. — For Stocks and Bonds, see §§ 127-129. Exercises on Chapter IX. /. May a contract be partly verbal and partly written ? 2. If a man promises to give a suit of clothes to his neigh- bor, is the promise legally binding ? J. Need there be any witnesses to a written contract ? ^. If you make your friend a present of a pair of shoes, can you compel him to give them back to you ? 5. If a man make a contract to commit a forgery, would the contract be binding upon him ? 6. What is a bond and why is it called a bond ? 7. There are usually two parts to a bond; what are they? 8. Who is the obligee in a bond? ^. Who is the obligor ? 10. If a man sign a bond to perform a piece of work before a certain day and there is a slight default in the performance of the work, does the whole sum become due ? //. V\^hat is the surety of a bond ? BONDS 179 12, Is it necessary to have a bond witnessed and acknowl- edged ? /J. Name some kinds of officers who have to give bonds. I /J.. If a man has no personal friend to sign his bond, what can he do? 75. Which is considered better, a bond signed by a per- sonal friend or one which is signed by a surety company? Why? 16, Will a surety company sign a bond for any one who applies, if the regular fee is paid ? ij. What is a landlord ? 18, What is a lease ? ig. Can you make a verbal contract which will be bind- ing for renting a house for more than one year? 20. Is any special wording necessary to make a written lease binding? 21. Suppose you rent a house for a year and the house burns down after one month, would you be obliged to pay rent for the whole year? 22. Is it necessary to have witnesses to a written lease ? 2j. What is a notice to quit? 24.. May a tenant sublet any part of a house which he has rented? ^5. You have a house known as No. 340 West Main Street, Bloomington, 111., which you rent to D. W. Miller for one year, at $12.00 per month. Write the lease. May the lease be partly written and partly verbal ? 26. What is a guaranty? What is a guarantor? 2y. Is a guaranty usually in writing ? Would it be bind- ing if it were not in writing ? 28. Are any special words necessary to constitute a guar- anty? If the principal fails to pay, what ought to be done? I So A FIRST BOOK IN BUSINESS METHODS 2g, Name some conditions tender whicli a guaranty is used. JO. What is a contract ? J/. Name three cases in which the law requires a con- tract to be in writing. ^2. Is a contract with a drunken person binding ? jj. Is a contract with an insane person binding ? j^. What is a minor ? J5. Would a contract made with a minor be binding upon him? General Review Exercises /. If Thomas J. Ward owes you $24.60 on account, how would you proceed to collect it ? • 2. If Mr. Ward pays no attention to your first notice, what would your next step be ? And the next ? J. If a person signs his name on the back of a check and then adds the words, " Without recourse to me," what kind of an indorsement is that ? /J.. What advantage would there be in making such an indorsement? 5. When is a sight draft payable? 6. If no place of payment is mentioned in a note, where should it be presented for payment ? 7. What is meant by the legal rate of interest ? 8. How do business men get information regarding the financial standing of their customers ? p. Name some of the companies or agencies which fur- nish such information. 10. If the name of a business man is omitted from their reports, does that indicate that his business credit is not good? BONDS i8i //. How often are new reports gotten out by these agencies? 12. Give an explanation of the best method for making change. /J. When goods are shipped by railroad or by steam- boat, what is the person called who ships the goods ? 14.. What is the person called who receives the goods ? /J. The person making the shipment usually receives a receipt for the goods shipped. What is this receipt called ? 16, Does he receive more than one copy of this receipt, and if so, how many ? What is the object in having more than one copy ? //. When goods are shipped by express, why is it neces- sary that the name of the sender be placed upon the package ? 18. What advantage is there in marking a package of fruit or flowers, " Perishable " ? ig. Give an explanation of a bill of lading with draft attached. CHAPTER X. MERCHANDISE SALES, STOCKS AND BONDS Ii8. Merchandise Sales. There are many little matters pertaining to the sale of merchandise and the laws governing the same, with which every person who buys or sells any amount of goods ought to be familiar, but the subject is such an extensive one that it is impossible to more than touch upon a few of the most important points in a work of this kind. A business man ought to know, of course, when a written contract is necessary in making a sale ; what a warranty is worth ; when goods may be stopped in transitu ; how far a common carrier is responsible, etc. In those states where no statutory laws governing these matters have been enacted, a part of the common law, or what is known as the statute of frauds, prevails. The common law provides that "no contract for the sale of any goods, wares, or merchandise, for the price of $50.00 or more, shall be allowed to be good unless the buyer shall accept a part of the goods so sold, and actually receive the same or give something in earnest to bind the bargain, or in part payment, or some note or memorandum in writing of said bargain to be made and signed by the parties to be charged by such contract, or by their agents, thereunto lawfully authorized." [182] SALES, STOCKS AND BONDS 183 I Example j : A man goes into a wholesale establishment to pur- chase a supply of hats for his retail store. He looks the stock over and finds a lot of six dozen hats which seem to be satisfactory in price and quality. He informs the merchant in the wholesale store that he will take the hats, and asks that they be set aside for him, at the same time saying- that he will send for them. Although there are several opportunities to sell the hats to those who are anxious to buy, they are held for the retail merchant who promised to send for them, until it is too late in the season to dispose of the hats. Now this was very unjust to the wholesale dealer, but the man who ordered the goods was not obliged to take them if he did not choose to do so, because he had not taken any part of the goods with him, and had signed no memorandum nor agreement, nor had he paid anything down on the goods. Had he made a small payment on them, or taken away even one of the hats, or had he ordered the goods by letter, then the agreement would have been binding upon him. If the price of the articles sold had been less than $50.00, then a verbal or oral contract would have been binding. If a man who purchases goods or chattels pays a part of the purchase price down, even $1.00, and the seller accepts it, the bargain is binding upon both parties, providing each is com- petent to make a contract. Example 2 : A farmer sold to a drover a yoke of cattle for $100, and, as part payment on the cattle, the drover paid $5.00 down and agreed to pay the balance and take the cattle away within a week. Before the expiration of a week the farmer had an opportunity to sell the cattle for $125, which he did. When the drover returned to get his cattle the farmer offered to return the $5.00 which he had received, thinking that would settle the matter; but the drover sued the farmer for the amount which he claimed he could have made as profit on the cattle, and col- lected it. i84 A FIRST BOOK IN BUSINESS METHODS If the seller of goods sells them for cash and the purchaser does not pay the cash as per agreement, he cannot, of course, take possession of the goods ; and if the payment is delayed an unreasonable time, the seller may sell them over again. If goods are sold on credit and the man to whom they are sold fails to pay as he agreed to do, the seller cannot go to the purchaser's store and reclaim the goods on the ground that they are not paid for. He must collect the debt in the regular way. 119. Stoppage in Transitu. Although the seller of the goods cannot go to the store of the purchaser and reclaim them in case the purchaser fails to pay for them, he can stop the delivery of the goods before they reach the purchaser if he should find that the purchaser has become insolvent. This is called stoppage in transitu. It can only be exercised when the buyer is insolvent and the goods are not paid for. Example i : If a wholesale firm in New York sells to a retail dealer in Indiana a quantity of goods on credit, and before the goods are delivered, the sellers are informed through Dun's or Bradstreet's commercial agency, or in some other way, that the buyer has become insolvent and is unable to pay his debts, they can at once telegraph the railroad company not to deliver the goods. The railroad company is now bound to hold the goods, subject to the order of the seller. Example 2 : Suppose a farmer ships a carload of grain to a grain dealer in a distant city, with the understanding that the payment for the grain shall be made at some future time. While the grain is on the road, the farmer learns from a friend that the grain dealer has become insolvent. The farmer at once tele- graphs the agent of the railroad company to hold the grain subject to his order, and the railroad company will be obliged to do so. SALES, STOCKS AND BONDS 185 H 120. Common Carrier. A common carrier is one who undertakes for hire, to carry goods or passengers from one point to another. This includes only those who make a regu- lar business of carrying goods or passengers, or both, such as P .railroads and ^express companies. There are certain laws governing the duties of a common carrier. He is required to i carry all goods which are offered, such as he is accustomed to H \ carry or proposes tc carry. He cannot discriminate in favor ' of any one person, and when once he receives goods for the purpose of carrying them from one point to another, he must deliver them safely. If the goods are lost or stolen or burned while in his possession, he must pay for them unless he can [' show that the loss or destruction of the goods was caused by \ what is called "an act of God or by a public enemy.'* Violent storms, lightning, floods, cyclones, etc., are things which can- not be foreseen, and a common carrier would not be held responsible for any damage caused by them. If the goods I are destroyed by fire while in possession of a common car- rier, he is usually held responsible for their full value, but if the fire was caused by a stroke of lightning, the loss must be borne by the owner of the goods. Y\ I 121. Market Quotations. Nearly every issue of the news- papers published in our large cities contains a record of the market quotations of the day, and every person, no matter whether he be a business man or not, should be sufficiently familiar with these quotations to understand their meaning. They include not only the market prices of grain, provisions, and live stock, but also the quotations of the principal stocks and bonds, together with their fluctuations in price. The quo- tations are obtained from the actual sale of these commodities in the principal market centers of the country. 1 86 A FIRST BOOK IN BUSINESS METHODS 122. Boards of Trade. In most of the larger cities of the United States there are associations of business men organized for the purpose of furthering commercial interests and the enactment of rules for the regulation of trade. An association of this kind is called a board of trade ^ chamber of commerce^ produce exchange, or a stock exchange. Grain and provisions, as well as many other commodities, including stocks and bonds, are bought and sold there. Some of these associations are devoted to transactions in single classes of commodities or investments, as cotton, corn, or in stocks and bonds, as the New York Stock Exchange. The principal board of trade of the United States devoted to the sale of grain and provisions is the Chicago Board of Trade, located in Chicago. It is a corporation organized under the laws of the state of Illinois, and its members buy and sell, on the floor of this exchange, the larger portion of the cereals and meat products of the Mississippi Valley and the West Chicago is, in fact, the greatest wheat market in the world. The price of wheat in Chicago determines the price of wheat for future delivery in Europe, South America, Asia, and Africa. The millers of this and foreign countries wish to know what their grain will cost them in any given month, and the future price of grain as determined by the Chicago Board of Trade is the price relied upon by foreign com- mission merchants in selling their grain for delivery at some future time. The board of trade keeps an open market for handling all the grain of the world, and by having an open market it makes the cornering of the grain business an absolute impossibility. The margin of profit between the consumer and the pro- ducer of grain is probably the smallest of any commodity in u SALES, STOCKS AND BONDS 187 which the middleman has a transfer. The margin is not more than three cents per bushel. The local grain man finds it necessary to take two cents and Chicago commission houses not more than one-half cent. The services performed for the producer and local dealer of grain through the market reports by means of the telegraph and telephone is very great, and any hour of the day the producer of grain or the owner of the elevator in the small town may secure the market price, and in conse- quence the elevator owner may pay the producer the highest price and handle his business on this very narrow margin, as he knows what he can sell grain for at any special time. 123. Sales and Values. The sales in this board of trade determine the price of such commodities for the United States and practically for the world. Provisions are bought and sold on the board of trade for present or future delivery. When grain is sold to be delivered at once, it is called cash grain, and one who deals in grain to be delivered at some future time is said to be dealing in futures. The usual time for future delivery is in May, July, September, and December. The changes in the market from day to day or from hour to hour are dependent on the actual sales. Whenever a sale is made, if it changes in price ever so little from the price of the last amount sold, this price constitutes a change in the market price. These changes are sometimes very frequent, the prices of the commodities ranging higher or lower accord- ing to the opinion of the buyer or seller as to what the prices will be at the time of delivery, be it in the months of May, July, September, or December. A person who buys grain or provisions, hoping to sell later at a profit, is said to be long on grain or provisions; and one i88 A FIRST BOOK IN BUSINESS METHODS who sells them, hoping to buy later at a lower price and thus make a profit on the transaction, is said to have sold short. 124. Brokers— Bulls and Bears. Only members can deal on the floor of the board of trade, and should any one not a member desire to buy or sell grain there, he must do so through some one who is a member. This person who buys and sells for another is called a broker^ or commission merchant. The prices charged for such sale or purchase are regulated by the rules of the board, and on grain range from one-eighth of a cent to one cent a bushel, according to the kind and quantity of the grain bought or sold. Form CXXXIV. SATURDAY'S RANGE OF PRICES The following shows the range of prices Saturday on the Chicago Board of Trade; Closing Saturday, Friday, High. Low. Mch.8. Mch.7. % .76 $ .75 % .15% 9 .15% .78 .77 .77M "i'M .IM .^SJ^s .77M .77 .77%8 .77J| Wheat— Open. March., e May.... July.... Sept .... Corn- March.. May... July.... Sept .... Dec Oats- March.. May .... July .... Sept .... Flax- May .... Fork- March.. May.... July.... Lard- March.. May.... July.... Sept.... .75 .im .62^@62Ji .61M@62 .59%@60 .49 .44%®44V .35^@35^ 15.32^ 15.50 9.42^ 9.52^ 9.62Jig .mi ,36 .30% 15.82J. 15.52J 9.421^ 9.52^ 9.62i| 15.25 15.42^ 9.37^ 9.47V 9.62}. .49J^ .43% 15 10 15.30 15.47J^ 9.27J^ 9.42Vi 9.62VS 1.72 15.20 15.40 15.5T3< 9.30 9.421^ 9 55 9.67J|g Persons who buy grain or other provisions believing that they will sell for a greater price in the future, are called ■ SALES, STOCKS AND BONDS 189 tills. This name came to be applied to such operators on I he board because of the tendency of a bull to elevate every- 1 hing with which he comes in contact. Those traders who ■^ 1^11 provisions believing that prices will decline in the future .re called bears. We often read comments in the newspapers on the narket prices as they go higher or lower, and such state- nents may be seen as the following: *'The bulls had things heir own way to-day," which means that prices had an ipward tendency ; or "The bears had their inning/* indicating I falling market. The opening, high, low, and closing prices of commodities ire usually given. (See Form CXXXIV.) I i 125. Inspection and Grading. The prices of provisions iealt with on the board of trade are regulated, as are the trices on commodities sold in other places, by the demand md the supply ready to fill such demand. The grain and Bfrovisions sold on all regular boards of trade are inspected Ind graded by experts, who are either appointed by the board ?r by the state governments. Hi In some cases such inspection is regulated by statute and carried on by officers of the state. Grain is graded according :o its nearness to or remoteness from a certain standard, as No. I, No. 2, No. 3, No. 4, or *'sample grade," as the case may be. No. I is the best and *'sample grade" the poorest quality. En some states four grades of wheat and corn have been decided upon, five of barley, five of oats, and three of rye. The quality is determined by the size, color, and full- • ness of the kernel, together with its weight, dryness, and freedom from dirt. This grading of grain greatly facilitates trade, because it establishes a basis of comparison for both uyer and seller. I 190 A FIRST BOOK IN BUSINESS METHODS 125 a. Bucket Shop. The Chicago Board of Trade has been declared by the Supreme Court of the United States a legitimate and desirable organization, as a large portion of the grain of the United States passes inspection in Chicago and is handled on the board of trade. But there are organizations of men formed purely for speculating in the future rise and fall of prices of commodities that have no connection with the board of trade and buy and sell no grain. These organizations, called bucket shops, have been declared illegal by the courts, over three thousand of them being closed in the years 1908-1911 by the United States government authorities because they had no legitimate trading functions and were gambling organizations. 126. Stock Companies. When several persons desire to organize a company other than a partnership, they come together and make out a statement to the effect that they desire to organize such a company, stating its name, the place and kind of business they wish to transact, together with the amount of capital and the division of this capital in the form of shares. This certificate is then sent to the Secretary of State, who will grant them a charter which defines their rights and powers. The money or capital of the company is called the capital stock, and this stock is divided into shares of equal amounts. The usual par or face value of a share is one hundred dollars. Every person who joins the company, or, in other words, subscribes and pays for stock, receives a certificate of stock showing the amount of his holdings, and he is called a share- holder or stockholder. These certificates of stock may be trans- ferred from one person to another by indorsement. Each shareholder has voting power in the company or corporation according to the number of shares he holds. I » SALES, STOCKS AND BONDS 191 If the company makes profits, they are divided among .he stockholders according to the number of shares held by iach, and such divided profits are called dividends. Dividends ire declared on a percentage basis; i. e., a certain number of lundredths of the capital stock. Dividends are declared quarterly, semi-annually, or annually. 127. Stocks and Bonds. Stocks are of two kinds, pre- ferred and common. Preferred stock is that which entitles the owners to dividends out of the net profits in preference to the common stock. Common stock entitles the owners to an equal proportionate dividend of the corporate profits and assets, with one shareholder or class of shareholders having no advantage, priority, or preference over another. Dividends are declared first on the preferred then on the common stock. Should a stock company wish to borrow money for any purpose, as, for example, to increase its plant or to acquire more money to carry on the business, it may issue bonds or certificates of indebtedness, bearing interest. These bonds may be transferred the same as stock. They are issued for a number of years and have coupons attached which are cut off at stated intervals and presented to the officers of the com- pany for the payment of interest. Bonds are secured by a mortgage or trust deed on the property of the corporation. A sum is usually set apart annually to redeem or pay for these bonds when they become due. This sum is called a sinking fund. The owners of these bonds run less risk of loss than the shareholders, for the bonds bear interest whether the company is able to pay dividends on its stock or not. If the company is very successful, however, the shareholders may fare better than the bondholders, for the latter are entitled to the interest stipulated in the bond only, while 192 A FIRST BOOK IN BUSINESS METHODS the shareholders may receive large dividends. The United States Government issues bonds from time to time; that is, it borrows money and issues certificates of indebtedness which bear interest for the amount. These bonds usually bear interest at 2, 3, or 4 per cent, and are called Governme7tt twos, three s^ and fours, 128. Stock Exchanges. Stocks and bonds, especially of the larger corporations, are frequently bought and sold, and in order to have a place where people wishing to buy and sell can come together, stock exchanges have been formed in the leading cities of this and other countries. The principal stock exchange in the United States is the New York Stock Exchange in New York City. There the members buy and sell stocks and bonds for themselves and others, the same as grain and other commodities are bought and sold in the Chicago Board of Trade. The market prices of these stocks and bonds are quoted in the financial columns of our daily papers, as are the different prices of other commodities. In the table of prices on page 193 it will be noted that both the common and preferred stocks are quoted, and also that some of them, as, for example, the Colorado & Southern, have first and second preferred stock. The abbreviation used to distinguish the preferred from the common stock ispfd. All stocks not otherwise marked are common stocks. 129. Of the Quotation's Value. The value of the stocks quoted on the following page depends upon a number of con- siderations, some of which are the reputation of the managers of the various corporations, the amount and regularity with which dividends have been paid in the past, the amount of bonds outstanding, the earning capacity, present and prospective. SALES, STOCKS AND BONDS 193 Form CXXXV. RANGE OF PRICES ON THE NEW YORK STOCK EXCHANGE The following table shows the range of prices on the New York Stock Exchange March 8, the number of shares traded in each stock, ftod the net changes from the closing prices March 7, 1902: STOCKS. Am. Sagar... . Am. Loco Am. Cot. OU.. Dopfd Am. Smelting.. Dopfd Am. Or. Tw.... Am. Linseed... Dopfd Am. CarFdy... Do pf d Am. Ice Dopfd Atchison Do pfd Anaconda Amal. Copper.... Bkln. R.T. B.&O C.&N.W Chi. & Alton C.,M. & St. P... C, St P.,M.&0 C. R.L&P ChLTerml Do pfd , Can. Pacific Cn.QMCS.Y.)... Colo. & So DolBtpfd. ... Do ad pfd O..LAL STOCKS. Bf., K. & T. pf . . Met, SL Ry Mex. C. (Ltd.). . Mo. Pacific Mex. N. ctfs..... Dopfd M.& StL Nat. Biscuit. . . . National Salt.... N. Y. Central ... NorfoHc& W... Dopfd North Am. Co. . N. Y., O. &W... N. Y., C. & 8. L. N. \. Dockpf... P. & Eastern.... Peopled Gas Pa. R. R ... .. Pacific MaU ... Pressed Stl.C... Dopfd Pacific Coast ... Do ad pfd .... Quicksilver Dopfd Rfflding Do ail pfd Rubber Goods. . . Rep. Iron & 8... Dopfd Rutland pfd i 800 800 1,100 6,000 17,900 7,100 2,300 100 100 600 400 100 1,700 600 100 800 100 400 12,900 2,700 800 100 1,000 600 700 600 8,400 8,800 1,100 8,700 7,4i« It will be noted that some of the stocks sold at very much above par — the Chicago & North Western Railroad at two hundred and thirty dollars ($230) per share, and the Consoli- dated Gas Company of New York at two hundred and twenty- one dollars and seventy-five cents ($221.75) per share; t, e., one share of Consolidated Gas stock was one hundred and twenty- one dollars and seventy-five cents ($121.75) above par. It will also be noted that others sold at very much below par. Quicksilver stocks sold at four cents ($.04) on the dollar or at four dollars ($4.00) a share, and Chicago Terminal stock sold at seventeen and three-fourths cents ($.17}) on the dollar. 194 A FIRST BOOK IN BUSINESS METHODS In the following quotation of bonds the interest is given, as, Northwestern Elevated 4's, meaning the Northwestern Elevated Railroaa bonds bearing 4 per cent interest. Form CXXXVI. PRICES OF BONDS ChlcagoGasSs 109i^ 109^ 109J^ 109^ Northwestern Elevated 48 98% 98% 98^ 98^ West Chicago con. 58 lOOjl \mi 100^ 100^ Met. Elevated gold 48 IOIJI 101?^ lOlJ^ 101% Consumers' Gas 58 108 108 108 108 Lake Street deb. 58 103^ 103% 103V6 10356 Con. Traction 41.^8 70 72 70 72 North Chi. City Ry. 4^8 106^ 107 IO6J1S 107 Pearsons-Taft 4.408 99% 99% 99% 99% Questions on Chapter X. /. From what source are the market quotations given in the newspapers derived ? 2. What is a board of trade ? J. Is there any difference between a board of trade and a stock exchange ? ^. Of what use is a board of trade? 5. What is cash grain? What is "dealing in futures"? 6. What makes the changes in prices of commodities bought and sold in the market? 7. Who can buy and sell on the floor of the board of trade ? 8. What is a broker? g. What IS meant by the term "bear"? By "bull"? 10. How many grades of wheat are there in some grain markets ? How many of corn ? How many of oats and rye? / /. What is meant by capital stock ? By par value of stock? 12. What is meant by dividends ? /J. What determines the value of stocks and bonds sold in the market ? II SALES, STOCKS AND BONDS 195 /^. What is common stock? What is preferred stock? 75. Does capital stock draw interest ? 16. Where is the leading stock exchange of the United States? 1 7. Of what value are boards of trade and stock exchanges to a community? 18. Telegraph your broker in Chicago to buy for you 50,000 bushels of corn. General Review Exercises. /. What is the usual size of a sheet of paper for a business letter? How should it be folded ? 2. What is meant by the address of a letter ? J. What is the salutation ? 4., What is the phrase "Yours truly" called when placed at the end of a letter? 5. What is a telegraphic code ? (5. What advantage is there in using these codes ? 7. Are the words in the address and signature of a tele- gram counted in the cost for sending the message ? 8, After sending a customer an invoice of goods purchased by him, you find that you have made a mistake in the footing, and the amount is $10.00 too much. Would you send him a corrected invoice or a credit memorandum for the amount? p. What is a check ? Is it legal tender ? 70. What advantage is there in having a check certified? 77. What is meant by the term "ironclad note"? 12, What is a collateral note ? 7j. You wish to send a package by express C. O. D. to H. G. Hulbert, Stillwater, Minn What papers are you required to make out? What is the express agent required to do? CHAPTER XL PARTNERSHIP, INSURANCE 130. Partnership. A partnership is an association of two or more persons for the purpose of carrying on business. Each member of the firm should contribute something toward the success of the enterprise, but it is not necessary that each contribute an equal amount of capital, nor need their investments in the enterprise be all of the same kind. Sometimes one will invest capital without undertaking any personal service, while others contribute labor or experience. The division of the profits is usually in proportion to the value of that which each partner puts into the business. If there be no special agreement among the members as to the division of the profits, the law will presume that the partners intend to divide the profits equally. When a partnership of two or more individuals is formed, the agreement which they enter into regarding matters of detail should be in writing. Although there is no provision of law which positively requires that an agreement for a part- nership should be in writing, there are many matters per- taining to any business which may cause dissatisfaction amongf partners, and it is best in all cases to have a written agree- ment specifying the kind of business in which the firm is to engage, the names of the parties, and the period during which [196] I PARTNERSHIP, INSURANCE 197 the partnership is to last, the amount which each partner is to contribute to the business, the nature of the duties which any of them undertakes to perform, and any other matters of moment pertaining to the business. The duration of the partnership should be specified, because if that is not done any partner may withdraw when he chooses, although he could not, by withdrawing, rid himself of any responsibilities which had already been incurred. (See § 133.) If one of the partners dies, the firm is dissolved, unless the others agree to continue the business. If the profits of the firm are not to be divided equally among the partners, the manner of their division should be clearly stated. 131. Silent and Nominal Partners. Sometimes a person invests capital in the business, but takes no active part in its management. Such a person is called a silefit part?ter. He usually has a share in the gain, and is as fully responsible for the debts of the firm as though he took an active part in the management of the business. Sometimes a person lends his name to a partnership for the purpose of giving credit to the business, and he is then said to be a nominal partner. Although he has no capital in the business and gets no profit out of the transaction, he is responsible for the obligations of the firm, because those who do business with the firm are perhaps induced to do so on account of his connection with it. It is not a common occurrence for a person to become a nominal partner, and he does so only as an unusual accommodation to his friends, having implicit faith in the honesty and integrity of the other partners, just as a man has who signs for a friend an accommodation note. 198 A FIRST BOOK IN BUSINESS METHODS Form CXXXVII. s .^a^lk:^^ ^ j C'^g^ ^fr'g *^'^^ ^^^ ^^9> . and bg thtw Frtsents, do agrtf to be eO'pertner i ugtt llm rttmkti. Oit. lai mk * *«*V fJMBj »<<•< IM <»^ m4 t^ • mtmmtt(fmtntlMmdimn^t,»m.m,mtri/t ^^^m*tmtmtd ,f dH Articles of Copartnership 132. Liability of Partners. In all matters of ordinary business, each partner has authority to act for the firm, and his acts will be binding upon the firm ; but this would apply only to transactions in their regular line of business. One partner cannot execute a bond by which the firm becomes a ' 200 A FIRST BOOK IN BUSINESS METHODS surety, or make a deed of real estate belonging to the firm, or confess judgment in the name of the firm, unless his asso- ciates concur with him. Every partner in an ordinary firm is liable, together with the others, for the whole indebtedness of the firm, and if a firm becomes embarrassed so that it cannot pay its creditors in full, they can proceed against the firm and take any real or personal property belonging to it which can be found. If there is not a sufficient amount of property belonging to the firm to pay its indebtedness, they can collect from the private property of any or all of the partners. If one of the partners of a firm becomes privately indebted so that he cannot pay his creditors in full, they can get judg- ment against him and take such of his property as is not exempt from execution, and if there is not a sufficient amount of his private property to pay his indebtedness, they can take proceedings to have the interest which he holds in the firm applied to the payment of his debts. But they could not take in execution any specific piece of property belonging to the firm, as his share,- and apply it to the payment of his debts. An accounting must first be had, showing how much the firm is owing him as his share in the business,, and this must be done in a manner prescribed by law. A new partner admitted into the business is not responsible for the debts of the old firm unless he has previously agreed to become so responsible. 133. Methods of Dissolution. A partnership may be dis- solved by mutual agreement of the partners or by a decree of a court of equity. If one of the members of a firm should conduct himself in such a way that the firm is likely to become financially PARTNERSHIP, INSURANCE 201 embarrassed, and should refuse to agree to a dissolution of the partnership, the partners wishing to have the partnership closed up may apply to a court of equity for a decree of dis- solution. A member of the firm cannot withdraw from the partner- ship at any time he chooses to do so and thus rid himself of any obligation or indebtedness which the firm has already incurred. Some provision must first be made for paying the debts of the firm. If a member of the firm withdraws from the partnership, he should, in order to protect himself from any obligations which the firm may incur after he has retired, publish a notice of his withdrawal in the newspapers, and he should also send a notice to those with whom the firm has been doing business. ! Form CXXXIX. NOTICE OF DISSOLUTION The copartnership heretofore existing between R. Blair and L. Allen, under the firm name of Blair & Allen^ is this day dis- solved by mutual consent. The business will be continued by R. Blair, who is authorized to settle the accounts of the late firm. August 10, 1901. R. Blair. L. Allen. 134. Limited or Special Partnership. The laws of many of the states provide for a limited or special partnership. This is an arrangement by which a person can put a certain amount of money into a business and receive a proportion of the profits without being liable to lose more money than he has invested in the business. A partnership of this kind can be formed only under positive statutes. 202 A FIRST BOOK IN BUSINESS METHODS 135. Insurance. Insurance^ although known to the ancients, has had its principal development during modern times. It was first applied to shipping. The fear of partial or total loss of a cargo, through the action of the elements or foes on the high seas, tended to check the growth of commerce. Few people were so wealthy that they alone could afford to suffer the great loss of a ship and cargo. By dividing the risk among many, it was seen that the proportion of loss to each might be small. Associations were formed for the purpose of protect- ing the members from losses of this nature, and out of such associations have grown the modern insurance companies. The insurance business has grown to mammoth propor- tions during the last century, until now no prudent man will allow his property to be without the protection of insurance. The object of insurance, then, is to distribute any losses which may occur to one or more persons among a great many per- sons, and to scatter a large number of risks over a wide terri- tory and during a long period of time, so that the loss to each person will be small. Example : Suppose that one hundred buildings out of every five thousand should burn every year. No one can tell which hundred this will be, but if each owner of the five thousand build- ings pays his pro rata share of the value of the one hundred buildings, the loss will fall but lightly on each, where otherwise some might be totally ruined. Insurance may be defined as a contract whereby one person agrees to protect another against loss. The written contract by which one guarantees to protect another is called a policy, and the amount paid for such a contract or guaranty is called the premium. Both parties are bound by the conditions named in the policy. PARTNERSHIP, INSURANCE 203 136. Fire Insurance. There are many kinds of insurance i ad a great variety of risks. The farmer sometimes insures 1 is property against loss by storms ; the manufacturer against 1 )ss by boiler explosions ; the banker against loss from a Dbbery; but the most common kinds are fire insurance, life isurance, accident insurance, and marine insurance. The lost important of all these is ^re insurance^ and as the under- ying principles are the same for all, we will consider at ength only this most common form. By a careful compilation of statistics, insurance companies ire enabled to determine approximately what the fire loss ^ill be for a certain year and upon certain classes of prop- erty, if there are no extraordinary conflagrations. The rates Df insurance are based upon this estimate and the sums so collected, though small in each particular case, reach large proportions in the aggregate. A portion of the amounts col- lected in premiums is applied to the paying of losses. An effort is made by insurance companies to keep the sum col- lected very close to the actual loss. The profit to all companies doing business in the United States for the past ten years, on insurance written, has been one-third of a cent out of each dollar received. In other words the people of the United States have received their insurance practically at cost. I K 137. Classes of Companies. There are two general classes of companies, mutual companies and ''Old Line'' companies. In the former, each person insured becomes a shareholder in the company, and all losses as well as all gain, if there be any, are apportioned among the members according to the mount of insurance carried by each shareholder. In the "Old Line" companies, a company is formed whose share- holders assume all liability for loss and reap all the gain, if 204 A FIRST BOOK IN BUSINESS METHODS there be any. The *'01d Line" companies depend for their profits for the most part on the interest of the money paid them in premiums. For example, should the premiums paid in to such a company equal $1,000,000 a year, this company would have the use of approximately $500,000 a year. This money invested in the best securities yields them a fair interest. Thus we see that insurance is of advantage to both parties. It relieves the person who takes out the policy of the risk and leaves a margin of profit for the insurer on account of the risk of loss he takes. 138. Policies. Policies of insurance are of two kinds, open and valued. The usual form of policy is the open policy, which leaves the question of value to be determined after the loss has occurred. Some states, however, have by law declared all policies on buildings to be valued policies, which means that the value of the property insured is fixed at the time of writing the policy, and that that amount must be paid whenever a total loss occurs regardless of whether or not it can be shown that the building may be replaced for a less amount. These laws have been strenuously opposed by the insurance companies because they claim that it puts a premium on crime, for, should a building be insured for more than its value, the owner might be tempted to destroy the building in order to secure the amount of the policy. The policy holder must have an insurable interest in the property he insures or the policy is void. Insurable interests are of many kinds. Whoever owns property or has any inter- est in it, or stands in the nature of a trustee, executor, or administrator, or is a mortgagee or part owner, may insure it for that interest. The law will not permit one to insure property for a greater amount than his insurable interest. If N PARTNERSHIP, INSURANCE 205 le owns a house, he may insure it for its insurable value. If le owns any portion of a piece of property, say one-half, he nay insure for that portion, but that portion only. 139. What Policies Contain. The policies in a fire insur- mce contract, although there are usually a multiplicity of conditions, always contain the following principal elements : I. A description of the property insured. . 2. The amount for which the insurance policy is given. 3. The length of time the policy is to run. 4. The amount of premium to be paid. If the property insured is a building, the description includes the location, the materials of which it is constructed, the way it is heated and lighted, the location of the nearest buildings and the materials of which they are constructed, the fire limits, if near a city or town, the use to which the building is to be put, the interest of the insured and the mortgages, if any, that are carried on the property, and the amount, if any, of insurance already carried. If it is personal property that is insured, a general de- scription of the property is given, and its value; also the kind of building in which it is placed, with a description of the surrounding buildings, as above. ' There is usually, also, a clause forbidding the storage of explosives, such as gunpowder and dynamite, excepting very small quantities, or inflammable oils, such as kerosene, gas- oline, or benzine, in the building or within a certain distance i of the building, excepting such an amount as shall be neces- sary for lighting or heating. This clause does not prevent persons in business from selling gunpowder and inflammable oils in the way of trade, because the insurer is supposed to ■ t know the nature of the business before he issues the policy. It n f 2o6 A FIRST BOOK IN BUSINESS METHODS 4 140. Forms of Risks. In fire-insurance policies the risk taken by the insurer is the danger of loss by fire and does not include loss by lightning or wind storms unless such loss causes fire, or is particularly provided for in the policy. It does, however, include the damage sustained by putting out a fire. This is very often greater than the loss actually caused by the fire itself. As so many elements enter into an insurance policy, it may be readily seen that anything which tends to alter the risk will be of supreme importance to the insurer. Therefore, any alteration of the building, or change in surrounding buildings, or in the use to which the building is to be put, would change the risk. A change in the ownership of such building would also change the risk. A change of the risk must have the assent of both parties, since an insurance policy is a contract. The insurance company should, therefore, be immediately notified of any contemplated changes in order that the policy may not be rendered void. -* Should an insured building be vacant for any length of time, the insurer should be notified. Vacant buildings are very hazardous risks, because they are earning nothing for the owner and it is presumed, and the presumption is based on experience, that unproductive buildings are more likely to be set on fire than those which are earning something for the owner. So also, if a building is sold, the policy becomes void unless the company is notified, because the risk is changed ; and furthermore, because the insured has no insurable interest in it. 141. Protection from Fraud. It is of the utmost impor- tance to the community as well as to the insurer, that, in the event of total loss, the insured must himself suffer loss. ^ ^ PARTNERSHIP, INSURANCE 207 Therefore, policies are never knowingly written for the full ^alue of the property insured. If it is insured to the full '•alue, the owner may be tempted to commit fraud or crime n order to reap the benefit of his insurance. Insurance companies usually ask the applicant many ques- :ions concerning the building, its contents, the interest of the .nsured in the building, etc., and the applicant must give a iruthful answer to these inquiries in order to hold the compa- dies responsible. These answers, or warranties, are made a part of the policy, and should they prove untrue, whether knowingly false or not, they will affect the validity of the policy, provided they are of a material nature. The inten- tional withholding of facts that would affect the risk would also render the contract voidable; that is, would allow the insurer to declare it void should loss occur. H 142. Proportion of Insurance to Value. The amount for which property is insured, or an insurance policy is written, merely represents the maximum amount the insurer is willing to pay should a loss occur. The amount, however, is the sum on which the premium is based, and should only a partial loss occur, the insured is the loser of a proportion of his premiums. It is a full and complete protection to the property for that amount, and, should the property be totally destroyed, the insured would receive full compensation. But if only a partial loss occurs, the insured will be reimbursed for the actual loss as ascertained by appraisers after the fire. The policy will continue in force on the uninjured portion for the amount less the insurance paid. i Example : If a man insures a building worth $2,500, for $1,500, and a loss occurs amounting to $r,ooo, the insurance company caij only be held for the loss of $1,000, and the remainder of the policy 2o8 A FIRST BOOK IN BUSINESS METHODS would be in force for $500. Should the building be totally- destroyed, the owner will suffer a loss of $1,000, for the company cannot be compelled to pay a greater amount than the policy calls for. Most insurance policies contain a provision that the insur- ers may rebuild the building destroyed or replace a stock rather than pay the cash value of the loss to the insured. Thus, if an insurance company suspects that a man has burned his building for the purpose of collecting the insur- ance, the company can rebuild at, perhaps, a less amount than the policy called for. Some policies require that the owner shall exercise due diligence in protecting his property from fire. Thus, if the owner should discover a blaze of such insignificant propor- tions that it could easily be extinguished, and should fail to extinguish it, though fully within his power, and the property insured should be destroyed, the owner could not recover from the company, because of his failure to exercise due diligence. Should the owner of insured property injure or destroy such property in attempting to save it from destruction by fire, the company would be liable for such injury. So the insurers are liable for loss or injury sustained by the blowing up of buildings to prevent the progress of fire, but not for a loss which cannot be directly traced to the fire. 143. Duration of Policies. Policies usually run for one, two, three, or five years, and the very hour of day on which they are to expire is indicated. Policies are usually written to expire at twelve o'clock noon by standard time. Agents of the companies usually notify the insured of the expiration of the policy some time before such expiration. Should the insured wish to renew his policy in the same company, ah PARTNERvSHIP, INSURANCE 209 entirely new policy is written, to the conditions of which the insured agrees. All persons buying insurance protection should read their insurance policies before accepting them. Many more con- ditions than those named above are inserted in policies, and one should be careful to know their nature, because, on the compliance with these provisions will depend the ability of the insured to collect the amount in case of loss. Questions on Chapter XI. /. What is a partnership ? 2. What may the several partners contribute ? J. Need an agreement for a partnership be in writing ? 4.. If there is no special agreement as to the division of profits, how are they divided ? 5. Why is it necessary to state in the agreement what length of time the partnership is to last ? 6. What is a nominal partner ? 7. If one member of a firm dies, does that dissolve the partnership ? 8. Are the acts of each partner binding upon the firm ? p. How may a partnership be dissolved ? 10, Can one member of the firm withdraw at any time and thus rid himself of any indebtedness of the firm ? What must first be done ? //. What is the use of publishing a notice of dissolution of a partnership ? 12, What is a limited partnership ? I J, What is meant by insurance ? 14.. How many kinds of insurance are there? /J. What is a mutual insurance company? 2IO A FIRST BOOK IN BUSINESS METHODS i6. What is the difference between a mutual insurance company and a corporation or ** Old Line " company? //. What is meant by a policy ? 1 8. What is meant by a premium ? ig. What is meant by an open policy ? 20. What is meant by a valued policy ? 21. May a person have property which is not his own msured ? 22. Are policies ever written for the full value of the property insured ? 2j. What does the description of property insured include ? 2/j.. Is it necessary to notify the insurance company if the premises are at any time vacant or unoccupied ? 2^. Will an insurance company knowingly insure property for its full value, and if not, why ? 26. Write a letter to a local insurance agent telling him that you desire to make some additions to your building which is insured in his company. General Review Exercises /. In indorsing checks, what form of indorsement is most frequently used? 2. Name two other kinds of indorsement. J. Define a bill of exchange. 4. You draw a draft on T. J. Whitman, Nashville, Tenn., for amount of his account, and the draft is returned to you unpaid. Write him, asking for an explanation. 5. You receive a letter from one of your customers in which he claims that the goods recently received from you were of inferior quality, and asks for a rebate of $10.00. Write a polite letter in reply declining to grant his request. PARTNERSHIP, INSURANCE 211 B 6. Give an example of stoppage tn transitu. 7. What is the difference between a railroad bill of lading and a railroad expense bill ? 8. What special form of invoice is required when goods are exported to Canada ? g. When goods are exported from the United States, a statement must be furnished by the shipper showing the kind and value of the goods. What is this statement called ? 10. Of what use is this statement ? //. Will express companies undertake the collection of accounts ? 12. Is that a good way to make collections? I J. What is a tenant ? /^. Why is it necessary that a lease of property for more than one year be in writing ? 15. What is the person called who gives the lease ? 16. What is the person called to whom the lease is made ? I J. What is a guaranty ? 18. You sell a bicycle to Harry G. Smith. Write a bill of sale for him. /p. Name some things which are necessary to the validity of a contract. 20. Name some contracts which would not be binding. 21. Would a contract made by a drunken person be bind- ing upon him ? 22. Name some cases in which a writing is necessary to make a sale binding upon both parties. 2 J. In sales of what amount does the law generally require a writing? 24. A dealer in buggies and wagons sells a wagon for $49.00 to a farmer who promised to take the wagon, but no money was paid down and no written contract was made ; is the farmer 212 A FIRST BOOK IN BUSINESS METHODS i obliged to take the wagon ? If the wagon had been sold for $60.00, and no written contract was made, how could the con- tract have been made binding? 25, A man sells goods for cash and the buyer cannot at once pay cash as agreed ; what can the seller do ? 26, If a man sells goods on credit and the buyer fails to pay as agreed, can the seller take the goods back without the buyer's consent ? What can he do ? 2y. A wholesale dealer sells goods and ships them to the purchaser by freight, and before the goods reach their desti- nation the seller learns that the buyer is bankrupt ; can he stop the goods, and if so, how ? 28. What is stoppage in transitu f 2g. Is a railroad company obliged to hold goods when ordered to do so by the shipper ? JO. What is a common carrier ? J/. Is a common carrier obliged to carry any and all goods offered ? j^. Is a common carrier responsible for the goods while in his possession? Suppose the goods were destroyed by fire, would the common carrier be obliged to stand the loss ? jj. Name some ways in which a partnership can be dis solved. j^. What is a limited or special partnership ? j5. Can persons become limited partners in a firm simply by agreeing to be regarded as such ? CHAPTER XII DEEDS, MORTGAGES ' 144. Deeds. When a person buys real estate, he usually receives from the person selling the property, a deed, which is a written instrument showing that the title to or interest in the property has been transferred from the seller to the buyer ; and before the deed is signed and delivered, it is important to the seller, as well as to the buyer, to know that the seller has a good title to the property. This is a matter of so much importance that, as a rule, the title should be examined by some one who has a thorough knowledge of real-estate law. It is better to employ a good lawyer, at considerable expense if need be, than to have any uncertainty in reference to the title. 145. Abstracts of Title. The person who expects to buy the property should require the seller to furnish him with an abstract of title, as this is of the utmost importance in determining the validity of the title. An abstract of title is a brief memorandum taken from the records, and showing the history of the title from the United States Government to the date of the examination. Abstracts of title are gen- erally prepared by the recording officer or by other persons who make it a business to do such work. The seller of the property should also furnish the purchaser with a certificate [213] 2 14 A FIRST BOOK IN BUSINESS METHODS Form CXL. ia the ymx oi ov Lord ooe thoiamd aiac hundred .^^^^^^j^^...-^^^^.. i^sAeMOA ^^WITNBSBBTH, That the uid. fttU^AA the firtt put, (or and in consideration of the •um oi Vt^^Lt-JlHt. >o hand paid by the said part^^.ol the second pan, the receipt whereof is hereby coofetaed ■ad acknowledged do . by these prcseot^rant, bargain, sell, remise, release, alien and confirm unto the said pwt^.ol the second part, and.:^|j:^^^...heir5 and assigns, FOREVER, All .;^^^fc3/'.„ ~ :...:. certain piece, .or parceU.of Land, aitoate and being in Ih* I of Michigan,. T"r" ii^^ted pnmiwa io Fee Simple; that tbey are tree from all iocnmbraocet whatever:.^:^ «ad tha»_^^i^r__willl •»<».. , ahaU Wamnt and Dcfead the same afaiul all tewM a*ttf atoiMrtfalo la WitDCM Wbereof, The said part/i^..o( the first p«t ba J:( hoctuio va,:^^/^.. Hamdituti seal^^the day aod year first above writteo. JS?^J^^I&^^rrr. V Stale of 2nicftt9:?.3!^C^^...f^..2lc;:^^.yi.^. ..io and for said Coonly, peraonally appeared ..i2^lji£^&«5W^...i^/S^{**^ 1 i^ 4111 % I Warranty Deed {continued) ilHliii 2i6 A FIRST BOOK IN BUSINESS METHODS from the proper officer showing whether or not all taxes assessed against the property have been paid. Abstracts of title are not furnished in many of the older states where the origin of the titles antedates the existence of the United States Government. In looking up the title, the records of the various instru- ments affecting the ownership of the property should be carefully examined, and if there have been any mortgages, attachments, liens, or tax-claims, it is important to see that they have all been properly discharged. 146. Title Guarantee Companies. In many of the larger cities there are companies who will undertake the examination of titles, and will issue policies guaranteeing the validity of the title. A guarantee policy is a binding agreement by which the company undertakes to defend at its own expense any litigation against the title insured by it. These companies employ examiners who have made a life study of real-estate law, and after they have examined the title, and the policy has been issued guaranteeing the validity of the same, the policy holder is protected, to the extent of the amount of the policy, by the company from any losses which may arise if the title should prove to be imperfect. This is a form of insurance business which has reached large proportions in recent years. 147. Parties to a Deed. The person selling the land is called the grantor, and the person buying it is called the grantee. In order to have the deed binding upon the grantor, he must be twenty-one years of age or over, and be of sound mind. It is not necessary, however, that the grantee be of legal age or of sound mind in order to make the deed binding upon the grantor. I I DEEDS, MORTGAGES 217 The laws of some states require that if the grantor be a married man, his wife shall sign the deed with him, for if she did not do so the grantee would not have a clear title. The grantor's wife would still have an interest in the property, which is called the right of dower. This right of dower is the right of the wife to use a portion of her husband's real estate as long as she lives after her husband's death ; and if she sur- vives her husband she may immediately institute proceedings to have her portion of the real estate set off to her own use during the remainder of her life. If the grantor of the deed is a married woman, it is gener- ally necessary that her husband should join with her in the execution of the deed, but this is not required in some states. The deed should be written or printed, or it may be partly written and partly printed. Blank deeds may be purchased at almost any stationery store. It is much better for the ordi- nary person to use a printed form, because they have been drawn up very carefully by competent lawyers. 148. Forms of Deeds. Deeds are not all alike. They may be general warranty deeds, or special warranty deeds, or quit- claim deeds. But a purchaser of property always desires a gefteral warranty deed if he can get it, for in a general warranty deed the grantor agrees for himself, his heirs, executors, administrators, and assigns, that, at the time of the ensealing of the deed, he is lawfully seized of the premises described in the deed, that they are free from all encumbrance, and that he will warrant and defend the grantee and his heirs and assigns against all lawful claims whatsoever. In a quit-claim deed the grantor simply conveys any interest which he has in the property to the grantee. He does not warrant the title to the property, nor warrant the grantee 2x8 A FIRST BOOK IN BUSINESS METHODS Form CXLII. ^%^ fi^s^%^ff^ wmm^^%% tut - jS^jCsX'jJ^^i^ Z^^^ of ..^a/J<^?:^i(^f^<^rTTr^^ iruthe Slate of.:::^(?:7,<4<.a^^ sum of-^-^^i^ '^^i^/'/^si^A^. CU-ci/ g^^g^^^'^ the receipt whereof it hereby acknowU6t(,d,ihefoUcvc\n(RE4L ESTATE, in Elkhart County in the Slate of Indiana, to-wit: aJi^ f/). r^ .^ WAja^Lc^ :^Ju}^^ Qr^a....J90.'l. Quit -Claim Deed DEEDS, MORTGAGES 219 against any other claims to the property. He quits his claim to it. 149. Special Warranty Deed. A special warranty deed covenants and warrants only against the acts of the grantor and those claiming under him. 150. Signing, Sealing, and Delivery. After the deed is properly drawn it is ready to be signed, sealed, and delivered to the grantee. If the grantor is a married man, his signature should pre- cede that of his wife. If either of them is unable to write, the signature may be made by a mark or cross, in the man- ner following : Form CXLIII. His John X Smith. Witness mark. The laws of some states require that deeds be signed by one or more persons as witnesses to the signature of the grantor, but in others no witnesses are required. The acknowledgment is the act of admitting before a justice or notary public that the signatures are genuine and are vol- untarily made. The notary public then stamps the document with his official seal and adds his written signature. This formal signing and sealing of the document by an officer of the law gives a certain solemnity and validity to the signa- tures of the grantor and grantee, and generally no other proof of the execution of the deed is required. In some states it is necessary to have a paper or wax seal affixed to the instrument in order to make it legal, while in others a simple scroll of the pen or the letters L. S. are all that are necessary. 220 A FIRST BOOK IN BUSINESS METHODS After the deed is signed, sealed, and acknowledged, it must be delivered to the grantee. This is absolutely necessary, for unless the deed is delivered it is of no value, even after it is signed before witnesses, and sealed and acknowledged. The delivery of a deed means that the grantor must indi- cate by acts or words, or both, his intentions that the deed be delivered to the grantee. The grantor may direct the grantee to take the deed lying upon the table, and if the grantee takes it there will be a good delivery, and if the grantor throws the deed upon the table with the intention that the grantee shall take it, though nothing be said to indicate the intention, it will be a good delivery. A man may make a deed for a piece of land which has already been paid for, and intend to deliver it at the first opportunity, but if he dies before doing so the deed is of no effect. A deed taken from a grantor by fraud, deceit, or com- pulsion is voidable. 151. Deed in Escrow. A deed is sometimes delivered in escrow, which means that it is deposited with a third party to be by him delivered to the grantee when certain conditions have been fulfilled or certain time has elapsed. When these conditions have been fulfilled and the deed is turned over to the grantee, it takes effect upon his receiving it, the same as though the grantor had delivered it to him personally. 152. Recording of Deeds. As soon as the grantee receives his deed he should have it recorded. If he did not do so, the grantor, if he were dishonest, might sell the land to some one else, and if the subsequent purchaser bought it in good faith and his deed were placed on record first, his title to the property would probably be good. If the subsequent pur- chaser had notice or knowledge of the unrecorded deed, his DEEDS, MORTGAGES 221 title would not be good, even if he had paid full value for the land. But uncertainties are never safe, and in business mat- ters prompt attention to details is of the utmost importance. In every county of the United States there is a public office for the recording of deeds and mortgages, and usually this office is at the county court house. To have the deed recorded, the grantee takes it to the registrar of deedsy who makes an exact copy of the deed in a book kept for that purpose. After the deed has been recorded the grantee may have it returned to him again. The cost of having the deed recorded is usually paid by the grantee, and the cost of draw- ing the deed and having it acknowledged before a notary public, is paid by the grantor. ! 153. Trust Deeds. A trust deed is used to convey prop- erty for the use of some other person who is entitled to the proceeds, profits, or use of the property. Trust deeds are I very often used as a means of securing the payment of a debt, or the fulfillment of an obligation in the nature of a debt, and in some states they have entirely superseded mortgages. \ Instead of giving a mortgage to secure the payment of a debt, property is deeded to a third person called a trustee, who becomes the agent for both parties, and he must perform his duties with strict impartiality. The deed specifies the nature of the debt or obligation intended to be secured, and it some- times confers upon the trustee the power, in case the debt or obligation is not paid, to sell the property and pay the debt out of the proceeds, but in many states such a power is con- trary to law. This deed is, in substance and effect, a mortgage. As a general rule, the grantor in a trust deed is entitled I to the rents and profits of the property therein described — 222 A FIRST BOOK IN BUSINESS METHODS Upon the payment of the indebtedness secured by a trust deed, it becomes the duty of the trustee to execute an instru- ment called a release deed^ which, when recorded, discharges the lien created by the trust deed. The forms of trust deeds used in the various states are quite different, and so also are the laws regarding the execu- tion and recording of the deed ; and if sale of the property is made by the trustee, it must be done strictly in accordance with the laws of the state in which the property is located. The following shows a simple form of a trust deed : Form CXLIV. THIS INDENTURE WITNESSETH, That the Grantob. ., of the In the County of and State of for and In consideration of the sum of Dollars, In hand paid. Convey ..and Warranl. . to of the County of and State of. . , the following described Real Estate, to wltr situated In the County of , In the State of .hereby releasing «nd waiving all rights under and by virtue of the Homestead Exemption Laws of the State of , and all right to retain possession of said premises after any default In payment or a breach of any of the covenants or agreements herein contained. In trust, nevertheless, for the following purposes : Whereas, The said Grantor, .herein justly Indebted upon. . . .Promissory Note. ., bearing even date herewith, payable to the order of Now, If default be made In the payment of the said . . .Promissory Note . , or of any part thereof, or the Interest thereon, or any part thereof, at the time and In the manner above specified for the pay- ment thereof, or In case of waste, or non-payment of taxes or assessments on said premises, or of a breach of any of the covenants or agreements herein contained, then In such case the whole of said principal sum and Interest, secured by the said — Promissory Note.., shall thereupon, at the option of the legal holder or holders thereof, become Immediately due and payable ; and, on the application of the legal holder of said Promissory Note.., or either of them, It shall be lawful for the said grantee, or his successor In trust, to enter Into and upon and take possession of the premises hereby granted, or any part thereof, and to collect and receive all rents. Issues and profits thereof; and, In his own name or otherwise, to file a bill or bills in any court having jurisdiction thereof against the said party of the first part, heirs, executors, administrators and assigns, to obtain a decree for ttae sale and convey- ance of the whole or any part of said premises for tlie purposes herein specified, by said party of the second part, as such trustee or as special commissioner, or otherwise, under order of court, and out of the proceeds of any such sale to first pay the costs of such suit, all costs of advertising, sale and con- veyance. Including the reasonable fees and commissions of said party of the second part, or person who maybe appointed to execute this trust, and Dollars attorney's and solicitor's fees, and also all other expenses of this trust, including all moneys advanced for Insurance, taxes and other liens or assessments, with Interest thereon at seven per cent, per annum, then to pay the prindpal of said note. ., whether due and payable by the terms thereof or the option of the legal holder thereof, and interest due on said note., up to the time of such sale, rendering the overplus. If any, unto the said party of the first part, legal representatives or assigns, on reasonable request, and to pay any rents that may be collected after such sale and before the time of redemption expires, to the purchaser or purchasers of said premises at such sale or sales, and it shall not be the duty of the purchaser to see to the application of the purchase money. When The said note. . and all expenses accruing under this Trust Deed shall be fully paid, the said grantee or his successor or legal representatives shall re-convey all of said premises remaining unsold to the said grantor, .or heirs or assigns, upon receiving lils reasonable charges therefor In case of the death, resignation, removal from said County, or other inability to act of said grantee then of said. .. is hereby appointed and made successor In trust herein, with like power and authority, as Is hereby vested in said grantee. It is agreed that said grantor. . . . shall pay all costs and attorney'*s fees Incurred or paid hy said grantee or the holder or holders of said note In any suit In which either of them may be CMlntlff or defendant, by reason of being a party to tlils Trust Deed, or a holderof said note.., and tho'J the same shall be a lien on said premises, and maybe included in any decree ordering the sale oi f.ald premises and taken out of the proceeds of any sale thereof. Witness, The hand. .. and seal. . . of the said grantor. . . ., this day of A. D. 190. . [Seal] [SbalI DEEDS, MORTGAGES 223 154. Mortgages. A mortgage is a conveyance of the title of property, either personal or real, given to secure the pay- ment of a debt, or as a guaranty for the performance of some special duty. When the debt is paid or the duty performed the martgage becomes void. Example : Suppose a person buys a farm but is not able to pay the whole amount of the purchase price ; in order to secure the payment of the balance, he gives a mortgage on the farm. Or suppose he borrows some money, and as security for its payment he gives a mortgage on his team of horses. When the money which was borrowed has been repaid, principal and interest, the mortgage, after it has been discharged, is of no value. (See § 157.) Form CXLV. 0. ^^/irtZyL^ M/ ^'O^ ^^>^Zc^n.^(^J^^Cfr.yi^u^ ??.^ . II Note Secured by Mortgage 155. Forms of Mortgage. If a person borrow money, the payment of which he proposes to secure to the lender by giv- ing a mortgage, a note is usually given in which he promises to pay the debt, and the mortgage is given to secure the pay- ment of the note. The note is quite like any other prom- issory note, except that when it is secured by a mortgage this fact is stated in the note. This note accompanying a 224 A FIRST BOOK IN BUSINESS METHODS Form CXLVI. (a) •tOMOMZ-SulslM'TS l>art.^^..of the first part, mortgage. _And warrant. _.to„... _Oi^sCtj!iy^(i^- . • part ftfeCf theje«ond part, the {ollowing described land and premises, situated in itit-yU^I^iAf. of. County ll pay to sai() second part,y..&2g?:l:^<^.^fc^. . .-;-....dollaTs. Attorney Fee Mortgage DEEDS, MORTGAGES 225 Form CXLVI. (b) tt i» Wurt^tr Atpretily Agrted, By and between the parties hereto, that the uid partf^^I tki lini part shall and will keep the buildings erected and to be erected upon the lands above conveyed, insured •gainst loss and damage by fire, in an amount and by insurers approved by said party..of the second part and assign the policy and certificates, the^f to the said part^of.the second part, and in debult thereof, the whole amoual o( the principal, vitJ^t6<"^K/?<Said part^f the first part ha?2hereunto itl.7^4^ .freejct and deed. '^"^ ^^^^^U^.^^OTCtHf^/... o o 15 Mortgage {continued) 226 A FIRST BOOK IN BUSINESS METHODS mortgage is really a part of the mortgage, and in case of doubt, each may be used to explain the meaning of the other. A mortgage is similar to a deed except that there is an additional clause called the defeasance^ which provides that if the grantor pays a certain sum of money the mortgage shall be void. A mortgage on real estate is called a real estate mortgage, and a mortgage on personal property is called a chattel mort- gage. The man who mortgages his property is called the mortgagor, and the man in whose favor the mortgage is made is called the mortgagee. 156. Recording of Mortgages. When real estate is mort- gaged the mortgage must be properly acknowledged, signed, sealed, and witnessed, like a deed, before a notary public or other legal officer. Like a deed, too, the mortgage must be recorded. A mortgage on real estate should be recorded in the office of the registrar or recorder of deeds at the Form CXLVII. Chattel Mortgage Note. after date for Value ReCetUedt promise to pay to the Order of. the sum of. DOLLARS, at with interest thereon at the rate of per cent per annum, payable. annually. This note is secured by a Chattel Mortgage to of even date herewith, on personal property in , and is to bear interest at the rate of per cent per annum after no. Form for a Chattel Mortgage Note DEEDS, MORTGAGES 227 county-seat, and a chattel mortgage is recorded in the same place, or in such other office as the law directs. The laws of the different states vary somewhat in reference to the record- ing of chattel mortgages, and they are frequently required to be recorded in the office of the township or city clerk. When a married man gives a mortgage on real estate to secure the payment of a note, his wife should sign the mort- gage with him, as is required by law in some states, but she need not sign the note. In most states where the law requires that a wife shall sign with the husband in giving a mortgage, it is not necessary to have her signature in cases where the mortgage is given to secure a part of the purchase price of the property. 157. Payments on Mortgages. A person who loans money and takes as security for its payment a mortgage on buildings which are insured against fire, should see that the insurance policy is made in his favor, so that in case the buildings are destroyed by fire the owner of the property could not collect the money on the insurance policy and leave the land only as security for the money borrowed. When a part payment is made for the money borrowed, the amount paid is indorsed on the note. When a payment is made on a mortgage which is not sufficient to pay the whole debt, it is first applied to the payment of the interest due and the balance is to be applied on the principal. When the whole amount has been paid it is the duty of the mortgagee to have the mortgage discharged. Sometimes this is done by giving a satisfaction of mortgage (see Form CXLVIIL), which the mortgagor takes to the registrar's office and has placed on record to show that the mortgage has been paid. Sometimes the mortgagee has the mortgage discharged by 228 A FIRST BOOK IN BUSINESS METHODS Form CXLVIII. IMSCIIAROE OP MORTOaOB. Hify, That a certain Indenture <^llortgage bearing date the Ja...^>CTl ■&i/\J. one thousand eight hundred and SJ??^^^-l/h:ki^. 1ZZ..IZ..........I day ot.^.£rCa^^inAJ. made and executed by of the fin* part, to .5?tC/ .'OA^^izAH.^..<:^ of the second part, and recorded in thMiegister's offl(C^..... one thou8and'4@& hundred •nd...-*A^..li^l^^ Jwrfcl ttoney of tbe United States of Ain6riea,i.: «( the aeooo^'pitH, at or. before Uie ensealing or dtlivery of tliege presents, the receijit whereof is hereby Mknowledged, have granted,. bargained, sold, assigned, transferred and set over, and by these presents do grant, bargain, sell, assign, transfer and set over unto the said part C?r..of the second part, a certain Indenture pf Moitgiige, bearing date the .C^/C. day of .^s/^a5<^^/<\fc_—., .^««te of Michigan, in tiber C^..„^„^. „ of Hoitgagcs, at Page.. vT?./.,--.....^. with all and singular the premises therein mentioned and described, \a- gMitt with the..J%^ .or obligation therein also mentioned, and the moneys now duo, and the interest that may hereafter grow dne thereon; Ta Have and to Hold the same nnto the said part..^. ..of the second part, .T^^f^. heirs and assigns, Fobeveb, subject only to the proviso in the said indenture of Uortgage mentioned. And ,:fy. . name or otherwise, brftat.^^... proper ooeta aod charges, to have, use and take all lawful ways and means for the recovery of the snm or sums of money now doe and owing, or hereafter to become doe and owing, upon the 8aid..C?? I General Review Exercises 7. Give an example showing where it would be necessary to make an assignment of an account. 2. You wish to draw a draft on E. D. Matthews who lives in Cedar Rapids, Iowa, and who owes you $50.75. In whose favor would you draw the draft ? J. What is the difference between a silent partner and a nominal partner? ^. What is meant by " Ltd." placed after a firm name, as Brown, Wilson & Co., Ltd.? 5. What is the difference between a copartnership and a stock company ? 6. What is the difference between a mutual insurance company and an ** Old Line " company? 7. What is a board of trade ? 8. What is a certificate of stock ? p. What is the difference between common stock and pre- ferred stock ? 10. What are coupon bonds ? //. Is there any difference between a board of trade and a stock exchange ? 12. When a mortgage is paid in full and the mortgage and note are turned over to the mortgagee, does that dis- charge the mortgage ? ij. Name two methods used for discharging a mortgage when payment has been made in full. y. Is it necessary to have a discharge of mortgage ded? CHAPTER XIII. UNITED STATES LAND SURVEYING i6i. Surveying Meridians. In surveying the public lands of the United States, lines are established at different points, some running" north and south, which are called surveying meridians, meridian lines, or principal meridians, and some run- ning east and west, at right angles to the meridian lines, which are called base lines. These meridian and base lines are shown upon the large maps of the United States, published by the General Land Office, and are also severally shown upon the various official state maps. Some of the meridian lines are numbered and others have local names, as the Tallahassee principal merid- ian, which governs the United States land surveys in the state of Florida ; or the St. Stephens principal meridian, governing the land surveys in the states of Alabama and Mississippi. The state of Michigan has a distinct meridian, and its base line crosses the lower peninsula of the state from Lake St, Clair to Lake Michigan. 162. Townships: Lines east and west of the principal meridian and north and south of the base line divide the land into squares containing thirty-six square miles. Each square is called a tozvnsJiip. A series or row of townships lying between any two successive meridian lines and running either north or south from the base line is called a range, [234] LAND SURVEYING ^35 r The illustration below shows a principal meridian line and a base line. Form CL. 3N. 2 W. 2N. 4 W. 2N. 3 W, I 1 il; 1 N. 3 W. 1 N. 2 W. 1 s s l^lt^ 1 s. 3 E. 2S. 8W. Vyi. 11- 8 S. 3E. The description of a township which is three north from the base line and two west from the principal meridian line would be: Township number three north, range two west of the first principal meridian. Each township, though said to be square, is not exactly so, for since the meridians are not exactly parallel to each other, because they all meet at the poles, the townships are longer on their southern boundaries than on their northern ones. This is corrected as far as practicable by establishing sub- ordinate meridian lines called correction lines. In Michigan, a correction line is taken at every tenth township along the range, and in newer states and territories they are much more frequent. 236 A FIRST BOOK IN BUSINESS METHODS 163. Sections. Each township is divided into thirty-six squares each a mile square, and each square (or square mile) is called a section and contains 640 acres, or nearly that. See diagram below. Form CLI. 6 5 4 3 2 1 7 8 9 10 11 12 18 17 16 15 14 13 19 20 21 22 23 24 80 29 28 27 26 85 25 81 32 83 84 86 A Township The sections in each township are numbered. Beginning with number one in the northeast corner, they are numbered back and forth to number thirty-six (36) in the southeast corner. This system furnishes a very simple method of describing a piece of land so that it may be readily located. Sections are subdivided into half sections, quarter sections, and sometimes into eighths and sixteenths. Form CLII. Sec. 2. m 80 acr's 80 acres. B.W.H Sec. 2. 160 acres. N.E.M 40 acr's Section {640 acres) with subdivisions LAND SURVEYING 237 The diagram given below shows how land in any shape may be measured, so that the area can be ascertained by the simple method of using triangles. Form CLIII. Example : Suppose the portion of land shown in the diagram has a crooked creek running across it, and it is desired to find how much land there is on the right-hand side of the creek. If the average width of the land is multiplied by the length it will, of course, give the area. Now suppose a measurement is taken from the first bend in the creek to the section line and is found to be 10 rods, and a measurement from the next bend in the creek to the section line is found to be 20 rods ; the next measurement 15 rods; the next 25 rods, and the n(^xt 35 rods. Now the sum of all the measurements taken is 105 rods, and if we divide this sum by the number of measurements, the result will show the average width of the land. 238 A FIRST BOOK IN BUSINESS METHODS In this case five measurements were taken. I St measurement . . . lO rods j 2d (< 20 " 3d << 15 u 4th it 25 « 5th « 35 11 Sum of the measurements, 105 rods Dividing the sum of the measurements (105) by 5, the number of measurements taken, we have 2 1 rods as the average width of the land. Now, if the average width of the land is 2 1 rods and the length 40 rods, the number of square rods in the piece of land would be 40 times 21, which equals 840 square rods, which, divided by 160 (the number of square rods in an acre), would show the number of acres. Operation : 840 divided by 160 = 5:^ acres. If desired, the operation may be performed by cancellation and the work be much shortened. m X 21 im — 5^ acres. I 164. Lands Not Included in the United States' Surveys. The system of survey by which the public lands of the United States and the position of any plot described could be located was adopted in 1786. The original thirteen states, together with Maine, Vermont, Kentucky, Tennessee, and certain parts of Ohio, never were public lands of the United States and are not included in the surveys. Indian reserva- tions, and lands that were owned by individuals or companies before the territory in which they were situated became a part of the United States, are also omitted. The public lands of Texas are the property of that state and have a system of their own. LAND SURVEYING 239 I Questions on Chapter XIII. /. Tell where two of the principal meridian lines of your state are located. 2. Which one of the principal meridian lines is nearest to where you live? J. Is this system of land surveying used in the state in which you live ? ^. If so, where is the base line located? J. Are the townships exactly square ? 6. What is the usual size of a township? 7. How many sections are there usually in a township? 8. What is a correction line ? 9. How long is one side of a section of land ? General Review Exercises /. Why should you not send your check away indorsed in blank? 2. If a check is indorsed to you and the indorsement is placed across the back of a check at the wrong end, where would you indorse it ? J. If you hold a certificate of deposit for $100 on the First National Bank, and wish to get the money from the bank, how would you indorse the certificate ? 4.. Would you make any different indorsement on it if you wished to sell it to H. B. Osgood ? 5, You receive from C. T. Davis, for collection, a note against George P. Fletcher for $500; the note is made pay- able to you by indorsement. You find that you cannot collect the amount of the note; how would you indorse it so as to transfer it back to C. T. Davis ? 240 A FIRST BOOK IN BUSINESS METHODS 6. If your name is on the back of the note, would you be responsible for its payment ? 7. You wish to send a quantity of merchandise worth $245.60 to R. A. Munger, Dallas, Texas, by freight, and to collect payment for the goods before they are delivered. Explain how this can be done. 8. You wish to send a quantity of goods by freight to H. A. Jennings & Co., Toronto, Can. What papers would be required ? g. If goods are sold and before they reach the buyer it is found that he is insolvent, can the goods be stopped? 10. Can a railroad company carry a part of the freight offered and refuse a part if they choose to do so? CHAPTER XIV. WILLS, SETTLING OF ESTATES 165. Wills. Any person who is twenty-one years of age or more, and of sound mind, may, if he chooses to do so, make a valid will, stating what disposition he wishes to have made of his property after his death. The law varies somewhat in the different states in reference to wills, but as a rule a per- son may dispose of his property in any way he wishes. In a few of the states a married woman is not entitled to dispose of her property by will, but this restriction does not gener- ally exist. 166. Kinds of Wills. There are two kinds of wills - written and unwritten. Unwritten wills are called mincuyv' tive wills. The latter are used only when the maker mecs with some accident, or by persons in the military or navfil service who are called upon to make a will under circuin- stances which will not admit of delay. Unwritten or verbal wills must have reliable witnesses, and generally apply to personal property only. An unwritten will is unsafe, and should never be used when it is possible to make a written will. No exact form of words is necessary in making a will, but the maker must state in plain language just what dispositicn he wishes to have made of his property after his death. A 16 [241] 242 A FIRST BOOK IN BUSINESS METHODS will may be canceled or modified at any time before the maker's death. The last will annuls the force of all preced- ing wills, unless it be simply an addition to a will previously made. Such an addition is called a codiciL If the person who makes the will is a man, he is called the testator^ but if the maker is a woman, she is called the testatrix, 167. Limitation of Bequests. No husband can make a will which will deprive his wife of her interest in his real estate and appurtenances, which is called her right of dower. If he devises to her other property in lieu of dower, she need not accept it unless she chooses to do so, but she can renounce the provisions of the will and take the share allowed to her by law. The dower interest which the wife has in her hus- band's estate is only an estate for life, and upon her death the property goes to the heirs, the same as though there had been no widow. In some states the right of dower has been abolished. 168. Making of a Will. It is preferable to make a will rather than to leave the property to be divided after death. Litigation among the heirs is thus often prevented. A person may write his own will if he chooses to do so, but unless he is accustomed to drawing legal papers it is safer to employ some thoroughly capable person for that purpose. The person making the will should appoint some person to carry out its provisions, who is called an executor. No person can serve as an executor of a will who is under twenty-one years of age at the time of the proving of the will ; nor can he serve if he be a convict, or drunkard, or a lunatic. No person appointed as an executor is obliged to serve against his will. WILLS, SETTLING OF ESTATES 243 169. Witnesses. There must be two witnesses to a will, and in some states three witnesses are required. They need not know the contents of the will, but must know that the instrument which they sign as witnesses is a will. Only such Form CLIV. /, of in the County of and State of being of sound mind and memory^ hereby make, ordain, publish and declare, this to be my last l^lU a7id Cefiitament : SiXiXt I order and direct that ?ny Execut hereinafter named pay all my just debts and funeral expenses as soon after my decease as con- veniently may be. S'econll, After the payment of such funeral ex- penses and debts, I give, devise, and bequeath Lastly, I make, constitute and appoint to be Execut. . .of this, ?ny last Will and Test amenta hereby revoking all former Wills by me made. 5n WiiMM l^JerCOf, / have hereunto subscribed my name and affixed my seal, the day of in the year of our Lord one thousand nine hundred. \ 1^ I This instrument was, on the day of the date thereof signed, published and declared by the said testator tobe h.. .last iVill and Testament, in the presence of us who at h... request have subscribed our names thereto as wit- nesses, in h.. presence, and in the presence of each other. A short form of Will witnesses as are competent to testify should be selected. They should not be beneficiaries under the will, for by the common law a will so witnessed is made void, and although the statutes of some states provide that a will so witnessed is valid, the witnesses cannot receive their legacies. 244 A FIRST BOOK IN BUSINESS METHODS Witnesses should write their respective places of residence after their names, and their signatures should be made in the presence of each other and in the presence of the testator. If the testator has children and does not provide for them nor make any mention of them in his will, the law sometimes presumes that they were forgotten, and will generally give them the same share as though there had been no will. In all wills the testator's name should be written in full at the end of the will, after which follow the certificate and sig- natures of the witnesses. 170. Duties of an Executor. The executor of a will is the personal representative of the person making the will, and after his death it is the duty of the executor to see that the will is carried into effect. Any one who is competent to make a will is legally qualified to act as an executor. The executor is generally required to give a bond for the faithful discharge of his duties as an executor. The bond is usually about twice the amount of the personal property involved. If no executor is named in the will, or if the one named does not wish to act, or dies, or resigns, the court appoints a per- son to act in his place, and the person so appointed is called an administrator with the will annexed. The court having jurisdiction of the estates of deceased persons is called the probate court in most of the states ; in some states, however, it is called the surrogate courts and in others, the orphans court, 171. Administrators. If a person dies without making a will and leaves any property, an administrator is appointed by the judge of the probate court, or surrogate court, to settle the estate of the person deceased. A petition is presented to WILLS, SETTLING OF ESTATES 245 the judge by some one who is interested in the settlement of the estate, asking him to appoint an administrator. If a woman is appointed she is called an administratrix. The administrator must give a bond similar to that of an executor, and his duties regarding the settlement of the estate are substantially the same as those of an executor, except in the division of the property after the debts are paid. In the settlement of the estate the administrator should be guided by the law and by the instructions given him at the probate office. He is required to make an itemized statement of all property belonging to the estate, and the value of the personal property is determined by persons called appraisers, who are appointed by the court for that purpose. The administrator must account to the court for all property that comes into his possession or control. The administrator first pays the debts of the deceased. These are paid out of the personal property, and if there is not a sufficient amount of personal property to pay the in- debtedness and there is any real estate belonging to the estate, he may sell a part or the whole /Df it if permission is given him to do so by the court. The debts of the deceased must be paid in the order prescribed by law. Although the law is not the same in all states, the debts are usually paid in the following order : First, the funeral expenses and expenses of the last illness. Second, the widow's award or allowance. Third, the debts due the state. Fourth, claims of other creditors. If anything is left after paying the debts, the remainder is divided among the legal heirs of the estate, under the direc- tion of the court and in the manner required by law. 246 A FIRST BOOK IN BUSINESS METHODS 172. Payment of Debts. The administrator, executor, or other officer appointed by the court for that purpose, publishes a notice in one or more papers in the county, stating when and where claims against the estate may be presented for adjustment. The administrator then settles all claims against the estate as adjusted by the court, and its decision regard- ing the settlement relieves him of much responsibility in the matter. Six months is the time usually allowed for the settle- ment of debts, but claims may be allowed at any time before the final settlement of the estate. All expenses connected with the settlement of an estate, including the fees of executors, administrators, appraisers, and officers of the court, are paid from the funds belonging to the estate. 173. Final Settling of an Estate. When the debts are all paid and the residue divided among the legal heirs as instructed by the court, an account of all his proceedings is made and filed by the administrator. Notice by the court is then given that a final hearing of the administrator's account will be had, at which any one interested may appear and object to its allowance. But if the account is allowed and no appeal is taken, the executor or administrator is given his discharge and the estate is closed. As there is considerable expense incurred in settling an estate, parties who are interested sometimes desire to have the estate settled out of court. This may be done if all parties interested agree to it, and there are no disputed claims against the estate, but it is better to have an estate settled in the regular way and the full record of the settlement filed in the probate court, so that there can never be any question as to its legality. WILLS, SETTLING OF ESTATES Questions on Chapter XIV. /. 2, J' 4' 5- 6. 7- What is a will? Who is competent to make a will ? When is an unwritten will used ? What is an unwritten will called ? Is any special form necessary in making a will? After a will has been made, may it be changed? Can a man make a will so that his wife shall have no share of his property ? 8. What is meant by the word " dower " ? g. Can a person make his own will, or is it necessary to employ a lawyer to make it for him ? 10. What is meant by the executor of a will ? //. Can any one act as an executor of a will? 12. Is a person who has been appointed executor of a will obliged to act ? I J. Need there be any witnesses to a will ? What persons could not serve as witnesses to a will ? i^. If the testator of a will has children and makes no mention of them in the will, what provision does the law make for them ? /J". What court has jurisdiction of the estates of deceased persons ? 1 6. What other names are sometimes given to this court? //. What is meant by the term administrator? By whom is he appointed ? 1 8.^ What are his duties? /p. If a woman is appointed to settle the estate of a deceased person, what is she called? 2o. Is an administrator required to give a bond? 2^8 A FIRST BOOK IN BUSINESS METHODS 21. Who pays the expenses of settling the estate of a deceased person ? 22. Can an estate be settled without having an adminis- trator appointed ? General Review Exercises /. What is meant by the maturity of commercial paper? 2. What is meant by legal tender ? What is the effect of a legal tender on the payment of an obligation ? J. What is the general purpose of drafts ? /J.. Name some kinds of officers who are required to give bonds. 5. What is the object in fixing the amount of a bond at double the amount of the debt ? 6. Name some cases in which it is necessary to have wit- nesses to a bond. 7. Why should a partnership agreement be in writing ? 8. Why should the duration of a partnership be specified in the agreement ? p. Name some things which one member of a firm cannot do without the consent of the other. 10. Why should a notice of dissolution of partnership be published in the newspapers ? IT. If property is insured against fire, and loss occurs from putting the fire out instead of from the fire itself, can the owner collect the insurance ? 12. If a house which has been insured becomes vacant, why should the insurance company be notified ? /J. Why are vacant buildings called hazardous risks ? i/j.. Why are not insurance policies usually written for the full value of the property ? _!' WILLS, SETTLING OF ESTATES 249 75. What is the difference between a quit-claim deed and a general warranty deed ? 16. How old must the grantor be before he can make a deed which will be binding upon him? //. May a boy who is twelve years of age buy a piece of property and get a deed for it which would be binding ? 18. Suppose a man who cannot write, sells a piece of land ; how can the deed be signed ? ig. What is the object in having witnesses to a deed? 20. What is the seal to a deed ? 21. What is important about the delivery of a deed ? 22. What is meant by the recording of a deed ? 2j, Why should a person who loans money and receives as security a mortgage on a building, have the insurance on the building made payable to him? 2^, When the full amount due on a mortgage has been paid, how is the mortgage discharged ? 2§. If a man cannot pay the mortgage which he owes when it becomes due, does he lose his title to the property ? 26, What is the difference between a chattel mortgage and a real-estate mortgage ? 2j. In United States land surveying, what is meant by a meridian line ? 28. What are base lines ? 2(). What is a range ? ja How many principal meridian lines are there ? J/. How large is a township ? j2. What is meant by range three west ? jj. How large is a section of land ? j^. How many sections in a township? jj-. How are sections numbered ? SIGNS, ABBREVIATIONS, AND CONTRACTIONS USED IN BUSINESS V Check mark ; also radical sign. " (It. Ditto) The same (referring to the line above the marks). ° Degrees. ' Primes. Minutes. Feet. '' Seconds. Inches. Thus: 7° 1 0^4" in circular measure. Some- times used for ditto marks. 1^ One and one-fourth. 1^ One and one-half. 1^ One and three-fourths. -|- (L. P/us, more) Addition. — (L. Minus, less) Subtraction. X (By or into) Multiplication. Also, area, as 7X9, read 7 by 9, means 7 wide and 9 long. -?- (Divided by) Division. The : alone is also a sign of division as used in ratio, thus 4:7; and the — alone is a sign of divi- sion as used in writing fractions, thus 4. = (Equality) Equals. The double colon, :: , as used in propor- tion, is also a sign of equality, thus 4 : 7 :: 12 : 21. % Per cent. The upper represents a numerator and the lower the denominator 100; thus: 7% was formerly written y^^. ^ Per. (L. By or through) $ Dollars ; said to be a contraction of U upon S for United States. ft Means "Number" if written before a figure, as #40 ; but "pounds" if written after, as 4o#. [250] SIGNS, ABBREVIATIONS, CONTRACTIONS 251 @ (L. ad.) To or at. A I. First class. Ans. Answer. Acc.^ Acct.^ or a/c. Account. Ad vat. (L. According to value) Ad valorem. Admr. Administrator. Admx. Administratrix. Adv. Advertisement. Agt. Agent. Amt. Amount. a/ s. At sight or Account sales. Ass'd. Assorted. Asst. Assistant. Bal. Balance. B. B. Bill Book. Bbl; Bhls. Barrel ; Barrels. Bdls. Bundles. B/E. Bill of Exchange. Bgs. Bags. Bk. Bank; Book. Bkts. Baskets. B/L. Bill of Lading. Blk. Black. Bis. Bales. Bot. Bought. B. P. Bills Payable. B. Rec. Bills Receivable. Bro't. Brought. Bu. Bushel. Bx. Box or Boxes. Cash. Cashier. C. B. Cash Book. Chgs. Charges. Chts. Chests. C. H. Court House ; Custom House. C. I. F. Costs, Insurance, Freight. Cks. Casks or Checks. Clk. Clerk. Co. Company ; County. C. O. D. Cash (or Collect) on Delivery. Col. Collection. Coin. Commission. Const. Consignment. Cor. Sec. Corresponding Secre- tary. Cr. Credit; Creditor. C. S. B. Commission Sales Book. Ct. or ^. Cent. (L. Centum, a hundred.) Cts. Cents. Cwt. A hundred weighty D. B. Day Book. d/d. Days after date. Dept. Department ; Deponent. Dft. Draft; Defendant. Disct. Discount. Div. Dividend ; Division ; Di- vide ; Divisor. Do. (It. Ditto) The same. Doz. Dozen. Dr. Debtor ; Doctor. Dray, Drayage. d/s or d. s. Days after sight. 252 A FIRST BOOK IN BUSINESS METHODS ea. Each. E. E. Errors excepted; Ells English. e, g. (L. Exempli gratia) For example. End. Enclosed; Enclosure. E, & O. E. Errors and omis- sions excepted. et al. (L. et alii) And others. etc. (L. et cetera) And so forth. Exch. Exchequer ; Exchange. Exec, or Exr. Executor. Execx. or Ex'x. Executrix. Exp. Export; Exporter; Ex- pense. F.; Fahr. Fahrenheit. Fav. Favor. Fir. Firkin. Fo. or FoL Folio. F. O. B. Free on Board. Fo'd. Forward. fr. From. Fr't. freight. Gal.; Gals. Gallon; Gallons. Gr. Grain; Grains. Guar. Guarantee. Hdkf. Handkerchief. Hf. chts. Half chests. Hhd. Hogshead. Hon. Honorable. Hund. Hundred. /. B. Invoice Book. i. e. (L. id est) That is. Inc. or Incor. Incorporated. Ins. Insurance. Inst. Instant — in the present month. Int. Interest. In trans. (L. In transitu) In the passage. Inv. Invoice. Inv't. Inventory. Jr. Junior. Kg Keg. L. or lb.; lbs. (L. Libra) A pound in weight ; Pounds. L/c. Letter of credit. Led. Ledger. L. F. Ledger Folio. L. S. Left Side; (L. Locus sig- illi) Place of the seal. M. One thousand. Manuf. Manufacture ; Manu- facturer. Mdse. Merchandise. Mem. Memorandum. Messrs. or MM. (F. Messieurs) Gentlemen, Sirs. Mfd. Manufactured. Mfst. Manifest. Mme. Madame. Mmes. Mes- dames. Mo. Month. Mol. Molasses. Mr. Master or Mister. Mrs. Mistress. Mtg. Mortgage. N. A. North America. SIGNS, ABBREVIATIONS, CONTRACTIONS 253 Navig. Navigation. N. B. (L. Nota bene) Note Well or Take Notice. No. or . Number. N. P. Notary Public. O. B. Order Book. O. K. All Correct. oz. Ounce or ounces. p.; pp. Page ; pole ; part ; pages. Payt. Payment. pes. Pieces. Pd. Paid. Per. a7i. or p. a. (L. per annuvt) By the year. J^, per ccnt.^ per ct. (L. per ccn- tiifn) By the hundred. Pk.; Pks. Peck; Pecks. Pkg. Package. P. & L. Profit and Loss. P. O. D. Pay on Delivery. P. O. O. Post-office Order. Pr. or per. By. Prein. Premium. Prop'r. Proprietor. Prox. (L. Proxmiolmense])'Mext month. P. 5. Postscript. Pt.; Pts. Pint; Pints. Pub. Publisher; Public. Pwt. Pennyweight. Qr, Quarter (28 pounds); Quire. Qt.; Qts. Quart; Quantity; Quarts. Reed. Received. Retd. Returned. R: R. Railroad. Ry. Railway. 5. B. Sales Book. Schr. Schooner. Shipt. Shipment. 5. O. Seller's Option. Sig. Signature. 5. 5. Steamship. St. Saint; Street; Sight. St. Dft. Sight Draft. Stor. Storage. Str. Steamer. Sunds. Sundries. Siipt. Superintendeiit. T. B. Time Book. Treas. Treasurer. Ult. (L. Ultimo \mense^ Last, or in the last month. U.S.A. United States of Amer- ica ; United States Army. U. S. M. United States Mail. U S. N. United States Navy. Ves. Vessel. via. (L.) By way of. Vice.-Pres. Vice-President. viz. (Contraction from L. vide- licet) Namely ; to-v/it. VoL; Vols. Volume; Volumes. vs. (L. versus) Against. W.B. Waybill. Wt, Weight. X. Extra. XX. Doubly Extra. Yd.; Yds. Yard; Yards. - Yr.; Yrs, Year; Years. COMMERCIAL WORDS AND PHRASES Account Current, A running account. A detailed statement of the transactions between two persons or firms. • Account Sales. A detailed statement of the sales of goods by a commission merchant, showing also the expenses, after charges, and net proceeds. Administrator. A man appointed by the court to settle the estate of a person deceased. Administratrix. A woman appointed by the court to settle the estate of a person deceased. Ad valorem. (L.) According to value. A custom-house term, relating to the estimating of duties upon the value of im- ported goods. Affidavit. A written declaration under oath. Annuity. A sum to be paid yearly, to continue for a given num- ber of years or for life ; an annual allowance. Annul, To make void ; to cancel. Ante-date. To date before the actual time of writing. Appraisal, The act of placing a value on goods. Appraiser, A person appointed to value real or personal property. Arbitration. The adjustment of a disputed point by a person or persons chosen by the parties in dispute. Assets. The funds, property, and total resources of a person in ' business. Assignee, A person to whom the property of a bankrupt or an insolvent debtor is transferred for adjustment, for the bene- fit of the insolvent's creditors. ^2541 I to COMMERCIAL WORDS AND PHRASES 255 Assignment. The act of transferring property to the assignee. Attachment, A warrant for the purpose of seizing a man's prop- erty. Balance Sheet, A statement in condensed form showing the con- dition and progress of the business. Bankable, Receivable at a bank at par value. Bank Balance, Net amount on deposit at bank. Bear, Among stock brokers, one who having " sold short" — that is, sold what he has not yet bought — desires the price of the stock to fall so that he may buy at a lower rate than he has sold at, and thus make a profit. He will do all he can to " bear down " the price. Bill of Lading, A written account of goods shipped and the con- dition of shipment, having the signature of the carrier's agent, and given to the shipper as a receipt. Bill of Sale. A writing given by the seller to the buyer, trans- ferring the ownership of personal property. Board of Trade, An association of business men for the regula- tion and advancement of commercial interests. Bona Fide, (L.) In good faith. Bond, An instrument under seal by which a person binds him- self, his heirs and assigns to certain stipulations. Bonded Goods, Goods which are stored "in a bonded warehouse (see below) or in bonded cars, the owner having given bonds securing the payment of import duties or of internal revenues upon their removal or their arrival at some inland city of entry, and before a specified time. Bonded Warehouse. A building or warehouse in which goods t subject to revenue duties are stored until the importer either pays the duties or re-exports the goods, or, where goods subject to an internal revenue tax are held, until the tax is paid. nan. One who gives security for the faithful performance of a contract 256 A FIRST BOOK IN BUSINESS METHODS Bonus. A premium for a loan or for other privileges. Broker, An agent or middle-man between the buyer and seller. Bull. One who operates to increase the values of stocks in the market that he may sell his own at a better advantage. He labors to "toss up " the price. Bullion. Uncoined gold or silver. Charter. A paper from government defining the rights and privi- leges of corporations ; to hire or let an instrument of trans- portation, as a ship, a railway car. Charter Party. A written contract for hiring or chartering a ship. Chattel. Any kind of property except real estate, as merchandise, notes and accounts, animals, leases of real estate, etc. Check. An order on a bank drawn by a depositor. Clearing House. A kind of banking exchange established in some of the large cities for the convenience of daily settlements. The drafts and checks of the various banks on each other are mutually exchanged without individual presentation at the banks, and a balance struck; the balance only is paid in cash. Collateral. Pledges ot stocks, notes, or chattels for security of loans and other indebtedness. Commerce. The business of exchanging commodities between different places ; mercantile business in general, as carried on between individuals or companies of different countries, or of the same country ; and, in a restricted sense, the ship- ping which belongs to a country. Commission Agent. One who does business on commission. Common Law. The unwritten law which receives its binding force from immemorial usage, in distinction from the writ- ten or statute law. Consignee. The agent or person to whom goods are sent to be sold on commission. The goods are said to be consigned^ and are called by the one who receives them a consignment. The person to whom merchandise is addressed by a bill of lading or otherwise. COMMERCIAL WORDS AND PHRASES 257 Consignor. The party who consigns his goods to an agent. A \ shipper of merchandise. Contra. (L.) On the opposite side. Copartnership. The joining of two or more persons into one firm for the purpose of carrying on any enterprise. It has the same meaning as partnership. Coupon. An interest note or a certificate attached to a bond or I principal note which is cut off and collected when the note or certificate is due. Credentials. Testimonials giving authority. Demurrage. Money forfeited for detaining a vessel beyond the time specified in her charter party. Dishonor. A failure to pay an obligation when due. A failure to accept a draft when presented for acceptance. Dockage. Charge for the use of a dock. Dower. The right of a widow to a one-third interest in all the real estate owned by her husband at any time after their mar- riage. \Draft. A written order or request for the payment of money at a certain time. Drawee. One on whom the draft is drawn. The payer. Drawer. The person who draws the draft, and thus asks the drawee to pay to the payee named. Duress. Personal restraint from fear of personal injury or im- prisonment. Earnest. Part of purchase money paid or part of goods delivered to bind a verbal contract. Effects. Goods or property of any kind, including debts due. Resources. Embargo. An order of the government prohibiting ships of commerce from departing or landing. Equity. The principles of right and justice, especially as applied to the correction of statute law in extreme cases. Equity of Redemption. The right allowed a mortgagor of a rea- sonable time to redeem lands mortgaged. 258 A FIRST BOOK IN BUSINESS METHODS Execution. A writ which authorizes an officer to carry into effect the judgment of the court. Fee Simple. A title to real estate held by a person in his own right and without conditions. Forced Sale. Sale made under compulsion. Forwarder. An agent who attends to the conveyance of goods, especially re-shipping. Gross Weight. Weight of merchandise, including the case or wrapping. Guarantee or Guaranty. A surety for the performance of a con- tract in case the party making the contract fails to keep it. A security against loss. Honor. To accept a draft or to pay it when due. Impost. Duty on goods paid by the importer. Indemnify. To recompense for injury or loss. Indemnity. A guarantee against loss. Insurance. Indenture. A writing containing a contract. Indorse. To write one's name on the back of a note, draft, or other document. Injunction. A legal writ by which a party is restrained from doing a certain act. Inland Bill. A draft between parties in the same country. Insolvency. Inability to pay debts. , Bankruptcy. Intestate, Without having made a valid will. In transitu. (L.) During passage. Inventory. An itemized schedule or list of goods and other prop- erty, with their value as then estimated. Invoice Book. A book in which invoices are copied or placed. Jettison (also /etson). The goods voluntarily thrown overboard to lighten a ship in cases of extreme peril. Jobber, One who buys goods from the manufacturers and import- ers and sells them to retailers. Job Lot, An irregular assortment. Miscellaneous goods unsold at the end of the season. COMMERCIAL WORDS AND PHRASES 259 Judgine7it. The decision of a court. Lease. A contract granting possession and use of property for a specified time. Legacy. A bequest ; a gift of property by will. Lessee. One to whona a lease is made. Letter of Credit. An open letter authorizing the bearer to receive money on the credit of the writer. (Generally issued by banking houses to travelers in foreign countries.) License. A legal permit to carry on a certain business. Lien. (Fr, bond) A legal claim on property, and power to pre- vent sale of the property without satisfying the claim. Lighter. A flat-bottomed boat used in loading and unloading vessels that cannot sail up to the wharf. Lighterage. Charges for the use of a lighter. Ma7tifest. A list or invoice of a ship's cargo, each package being specified. Margin. Variance between an article's buying and selling price. Marine. Pertaining to the sea. Maturity. The date when commercial paper becomes due. Mercantile Agency. A company whose business it is to obtain and circulate among its patrons information as to the busi- ness standing of merchants and traders. Mercantile Law. Law pertaining to business transactions. Mortgagee. The person in whose favor a mortgage is given. Mortgagor. The person who gives a mortgage. Negotiable. That which is transferable by delivery, assignment, or indorsement. Net. Clear of all charges and deductions. Net Proceeds. The remainder after deducting charges from sales. Net Weight. Weight after deducting all allowances. Nominal. Existing in name only. Notary or Notary Public. An officer authorized by law to admin- ister oaths, take acknowledgments of deeds and other papers, and to protest notes and drafts for non-acceptance or non-payment. 26o A FIRST BOOK IN BUSINESS METHODS Open Account. An unsettled account with a firm or individual. Outlawed, A term applied to a debt which has run beyond the time when the law will enforce payment. Par Value, The nominal value ; usually the printed or written value of any commercial paper. Parol. Not written ; especially not written and sealed. Pawn-Broker (also written pawnbroker^. One who lends money on goods, possessing the goods and the power to dispose of them if the money is not returned according to contract. Payee, A person to whom money is to be paid. Payer. A person who pays or promises to pay. Plant, The entire outfit necessary to carry on a trade or mechan- ical business. It includes the real estate as well as the tools and machinery. Post-date. (After date.) To date after the real time of writing. Power of Attorney. A written instrument giving an agent author- ity to act for his principal' in matters requiring such written delegation of power. Price Current. A list of merchandise with market values annexed. Primage. A percentage allowed to the master of a vessel on the amount of freight earned. Priina Facie. On the first view. Pro Rata. (L. In proportion.) A proportional distribution. Protecting a Draft. Accepting or paying a draft to prevent its being dishonored or protested. Protest. A formal declaration made by a notary public, that a note was not paid at maturity, or that a bill of exchange was not accepted when presented, or was not paid when due. (2) An official statement by the master of a vessel that damage to ship or cargo was caused by stress of weather and not by negligence. Receiver, A person appointed to take charge of a corporation on its dissolution, and to distribute its property according to law. COMMERCIAL WORDS AND PHRASES 261 Rescind. To revoke ; to annul ; to countermand. Resources. Money, property, or that which can be converted intu property, as claims against other people either on written or verbal promises. Revocation. The recall of authority conferred on another, as the revocation of agency. Salvage. The allowance made by law to persons who voluntarily assist in saving a ship or her cargo from peril. Shipping Clerk. A person who attends to the shipping of goods. Silent Partner. One who shares in the profits of a business, but whose name does not appear in the firm name, and who takes no active part in the business. Sinking Fund, A sum of money set apart for the redemption of debts. Stock. Capital invested in trade. Goods on hand. Capital Stock. The capital of a corporation as represented by the shares. Common Stock. That stock which entitles the owner to an equal proportionate dividend of the corporate profits and assets with one shareholder or class of shareholders, having no advantage, priority, or preference over another. Preferred Stock. That stock which entitles the owner to divi- dends out of the net profits before or in preference to the holder of the common stock. Watered Stock. Stock which purports to represent, but does not represent in good faith, money paid into the treasury of the corporation or money's worth actually contributed. Stock Exchange, A place where brokers and bankers meet to buy and sell stocks, bonds, etc. Stockholder, One who owns shares in a joint stock company or corporation. Stoppage in transitu. The right which the seller has to stop the goods he has shipped any time before they reach the buyer, if he discovers that the buyer is insolvent. 262 A FIRST BOOK IN BUSINESS METHODS Syndicate. A number of capitalists who unite to conduct some great commercial enterprise. Tare, (Fr.) An allowance for the weight of boxes, barrels, etc., in which goods are shipped. Tenant. One who holds or occupies property under a lease. Tender. An offer ; a proposal for acceptance. Tickler. A book containing a memorandum of notes and debts arranged in the order of their maturity. Time Draft. A draft maturing at a future specified time. Trade Discount. A discount or series of discounts from list prices made to dealers, or because of a change in prices. Trustee. One to whom any business or property is committed as a trust. Underwriter. One who insures ; so called from writing his name under the conditions of the policy. Usury. The taking of more than the legal rate of interest. Voucher. Such papers or documents as prove the truth of ac- counts — thus, a receipt is a voucher for the payment of money. Waybill. A document containing a list of goods sent by railroad. Wharfage. Money paid for the use of a wharf. Wharfinger. The owner or keeper of a wharf. Wholesale. (To sell whole.) To sell goods in large quantities, usually in unbroken packages. Writ. An order issued from a court of law to one of its officers, as in the case of a writ of attachment ; or to one or more litigants, as in the case of an injunction writ. SUGGESTIONS TO THE TEACHER THE lessons on Business Methods given in this book are intended to give the pupil some insight into practical business matters with which every person, no matter what his vocation in life, will have more or less to do. The work is not too difficult for pupils twelve or fourteen years of age. Pupils who have had no instruction in this branch will need encouragement in getting started, but with a little assist- ance and a few suggestions from the teacher, the pupil soon becomes interested, and this may easily be made one of the most enjoyable and instructive studies in the course. The first subject taken up is that of Letter Writing. Too much importance cannot be attached to this subject. Special attention should be given to the arrangement of the various parts of the letter ; also to punctuation and folding, and to the address on the envelope. Pupils should be required to write letters frequently upon various subjects assigned them. The teacher should examine carefully all work handed in by the pupils, and, after noting any errors which have been made, should return the work to the pupils for correction. This is the only way in which pupils can be kept interested. If they feel that their best efforts are not appreciated, or that their work is not examined and criticized, they soon lose interest in the study. (263) 264 A FIRST BOOK IN BUSINESS METHODS The lists of questions following the lessons are intended as brief reviews, and are merely suggestive of the thoughts which may be brought out. The teacher should not get into the habit of using simply the questions given, and regard the subject as finished. He should try to bring out as many important points in reference to the lesson as possible. Before commencing the subject of Banking, the pupils should be supplied with blank checks, deposit slips, and other papers for them to fill out. This subject is especially interest- ing to the average pupil. Bank checks are so frequently used instead of cash for payment of accounts and debts of every kind, that all are interested in knowing how money is deposited in a bank and how withdrawn by check; how to properly indorse checks so that they may be transferred from one per- son to another, and the difference between a check and a bank draft. Have the pupils fill out checks showing how they are drawn for various purposes. If desired, a small bank may be organized with pupils as depositors, allowing them to deposit small sums and withdraw the same by check. This may be done even where there are only a few pupils in the class. It has been tried again and again by the authors and has been found interesting and instructive to both teacher and pupils. Imitation money may be used if desired, but real money — a few cents from each pupil — will be found much more interesting to the class. Do not try to cover too much ground in one lesson. The subject of Promissory Notes is usually sufficient for half a dozen lessons. After the pupils have carefully studied the lesson given in the book, the teacher should commence the subject by having each pupil write a common promissory note, just as he would do if he had borrowed a sum of money or purchased a horse and given his note in payment. Have r SUGGESTIONS TO THE TEACHER 265 II each pupil carefully observe the form of the note, the punctu- ation, and the use of capitals ; where the figures showing the amount of the note are placed; whether the note should be drawn payable "to order" or *'to bearer," and why; whether rate of interest should be specified in the note or not, and if not specified, whether it would draw any interest at all. C?V attention to the proper form of an indorsement when transfer- ring the note to some other person, or when a partial payment is made, and many other things which will readily suggest themselves to the teacher. Require each pupil to read carefully whatever portion of the lesson has been assigned, and to be prepared to answer the questions following the lesson. THE INDEX ABBREVIATIONS, in letters, 13, 15, 16; used in business, list of, 250-253. Abstracts of Title, 213-216. Accommodation Notes, 89-90. Account, statements of, see Statements. Acknowledgment of Signature, 219. Adams Express Company Collection En- velope, 153. Address, in the heading of a letter, 13; in- side the letter, 12, 14 ; upon the envelope, 18-20 ; forms for envelope, 19 ; for envel- ope of letter of introduction, 20. Administrator, 244-245. Administratrix, 245. Agencies, see Commercial. Appraisers, 245. Articles of Agreement, 165. Assignment of Mortgage, 229; form, 230. Attorney, power of, 134; revocation of , 135. 83. IIO-II2. BANK Book, 58. Bank Discount, Bank Drafts, Banking, 53-76. Banks, uses of, 53 ; savings, 54; commercial deposit, 55-56; correspondent, 112. Base Lines, in surveying, 234. Bears and Bulls, 187. Bills, 34-35 ; forms for, 34, 35 ; assignment of, 35 ; form showing discount, 44. See also Invoices. Bills of Exchange, see Exchange. Bills of Lading, 147 - 149 ; with draft at- tached, 155-158. Bills of Sale, 172-173; forms, 173. Boards of Trade, 186-187; sales and values, 187-188; brokers— bulls and bears, 188-189; range of prices, 188; inspection and grad- ing, 189. Bondholders, 191. Bond of Indemnity, 91. Bonds, 173-178; forms, 174, 175, 177; for fidel- ity of clerk, 174-175; for faithful service, 177-178; sureties, 176; surety companies, 178; and stocks 191; government, 192; prices of, 194. Bonds, stocks and, 191-192. Bradstreet Co., The, 135. Brokers, 188. Brush-marking, directions for, 141-142; form, 142. Bucket Shops, 190. Bulls and Bears, 188-189. Business Letters, 11-12; form for, 12; suit- able paper for, 12; parts of, 13; body of, 16; directions for, 16; models for, 18, 28-29; folding, 18. CABLE Messages, 30. Capital Stock, 190. Carriers, common, 185. Cash Discount, 42-44. Cash Grain, 187. Certificate of Deposit, 70-71; form, 70. Certificates of Stock, 190. Chamber of Commerce, 186. Change, how to make, 140. Chattel Mortgage, 226; note, 226. [266] THE INDEX 267 Check Book, 58. Checks, forms, 58, 59, 60, 61, 62, 63, 64, 67, 68, 69 ; directions for writing, 59-64, 71-72 ; indorsement of, 64-65 ; payable to bearer or order, 65-66 ; post-dated, 66 ; exchange on, 67-68; certified, 68-70; travelers', 127- 128; voucher, 70. Codes, telegraphic, 32. Codicil of a Will, 242. Coin or Bullion by Express, 123. Collateral Notes, 98-99. Collection, indorsement for, 109. Collection by Express Companies, 153-155. Collection Envelopes, forms, 153, 154. Commerce, Chamber of, 186. Commercial Agencies, 135-139; reference books, 137-139 ; forms of reference books, 137. 138, 139- Commercial Words and Phrases, list of, 254-262. Common Carriers, 185. Common Stock, 191. Complimentary Clcse of a Letter, position of, 12, 17 ; forms of, 17. Compound Interest, see Interest. Consignee, 149. Consignor, 147. Contractions used in Business, list of, 250- 253- Contracts, 162-165; valid consideration necessary, 163 ; written, 163-164 ; verbal, 164; articles of agreement, 165; form, 165. Copartnership, articles of, 198-199. Correction Lines, in surveying, 235. Correspondent Banks, 112. Courts, equity, 200 ; probate, 244 ; surrogate, 244 ; orphans', 244. Credit, letters of, 124-127 ; forms, 125, 126. Credit Memorandum, 46-47 ; form, 46. Credits, on statements of account, 39, 40, 41, 421 43- DATE of Maturity, of note, 84-85. Dates of Reckoning Interest, 54-55. Days of Grace, 82. Debits, on statements of account, 39, 40, 41, 42. 43- Deeds, 213-222; warranty, 214-215; parties to, 216-2x7; general warranty, 217; quit- claim, 217; form, 218; special warranty, 219 ; signing, sealing, and delivery, 219- 220; in escrow, 220 ; recording of, 220-231; trust, 221-222 ; registrar of, 221. Defeasance, 226. Delivery of Deed, importance of, 220. Deposit, certificate of, 70-71 ; form, 70. Deposit Book, 55. Deposits, in savings banks, 54, 55 ; records ofi 56-57; in metropolitan banks, no. Deposit Slip or Ticket, 56-57 ; form, 57. Directions, for letter writing, 16 ; for use of titles, 22-23 ; for writing checks, 59-64, 71-72 ; for pen lettering, 141-142. Discount, trade, 38-42 ; cash, 42-44 ; bank, 83. Dishonoring a Draft, 109-110. Dissolution of Partnership, 200-201 ; notice of, 201. Dividends, 191. Dower, right of, 217, 242. Drafts, 106-115 ; uses of, 106-108 ; forms, 107, 108, 111, 112, 128, 156, 157 ; indorsement of "for collection," 109 ; dishonoring, 109-110; protest of, no; bank, 110-112; uses of bank, 112; foreign, 128; attached to bill of lading, 155-158. Drawee, of a draft, 106. Drawer, of a check, 59 ; of a draft, 106. Due Bills, form, 51. Dun & Co., R. G., 135. EQUITY, court of, 200. Equity of Redemption, 229-231. Escrow, deed in, 220. Estates, settling of, 244-246. Exchange, on checks, 67-68 ; payable at par, 67 ; foreign bill of, 127, 129 ; inland bill of, 129. Exchanges, stock, 186, 19a; produce, i86. Executor, 242; duties of, 244. Expense or Freight Bills, railroad, 149-150. Express, coin or bullion sent by, 123. Express Business, 152-155 ; collections by express companies, 153; express collec tion envelopes, 153, 154. I^xoress Money Orders, laa ; form, 133. lU 268 A FIRST BOOK IN BUSINESS METHODS FOREIGN Bills of Exchange, see Ex- change. Foreign Drafts, see Drafts. Forms, I., outline for a letter, 12; II.-IV., headings of letters, 14; V.-VIII., forms of salutation, 15; IX., model letter, 18; X., forms of address on the envelope, 19 ; XL, addressed envelope of introduction, 20 ; XII.-XIIL, letters of introduction, 21; XIV., letter of recommendation, 22 ; XV. -XVIII., friendly and business letters, 27-29; XIX., a telegram, 31; XX., night lettergram, 31; XXL, illustration of tele- graphic code, 32 ; XXIL, bill of goods, 34; XXIIL, bill, 35; XXIV., assignment of account, 35 ; XXV., invoice, 37 ; XXVL- XXVIL, invoices with terms of discount, 37, 38; XXVIIL-XXXIL, statements showing debits and credits, 39-43; XXXIIL, bill showing discount, 44; XXXIV., statement of account paid, 45 ; XXXV., credit memorandum, 46; XXXVL-XLVL, receipts, 47-50, XLVIL, ordinary order, 50 ; XLVIIL, order pay- able in cash, 50; XLIX., due bill, 51 ; L., bank deposit slip, 57; LL, check with coupon, 58 ; LIL, checks payable to cash, 59 ; LIIL, checks for less than one dollar, 60 ; LIV., check specifying for what used, 61; LV., checks incorrectly drawn, 62; LVL, checks correctly drawn, 63 ; LVIL, indorsed check, 64 ; LVIIL, check similar to draft, 67 ; LIX., check payable to order of signer, 68 ; LX., certified check, 69 ; LXL, certificate of deposit, 70; LXIL, indorsed check, 72 ; LXIIL, promissory note, 78 ; LXIV., partial payment of note indorsed on back, 79; LXV.-LXVIIL, kinds of indorsements, 81 ; LXIX,, de- mand note, 82; LXX., 30-day note pay- able to bank, 84 ; LXXL, bank notice for note due, 86; LXXIL, certificate of pro- test, 87 ; LXXIII.-LXXIV., notices of dis- honor, 88 ; LXXV., bond of indemnity, 90; LXXVL, note with date of payment, 92 ; LXX VII., indorsement of partial pay- ment on note, 92 ; LXX VIII. , simple paid indorsement on note, 93 ; LXXIX., judg- ment note, 96; LXXX., promissory note. Forms — continued. 97; LXXXL, joint note, 98; LXXXIL, joint and several note, 98 ; LXXXIIL, collateral note, 99 ; LXXXIV., note pay- able by installments, 100; LXXXV., note payable on or before certain date, 100; LXXXVL, produce note, 100; LXXXVIL, drafts payable at sight, 107; LXXXVIIL, accepted draft, 108; LXXXIX., bank drafts, III ; XC, request for a draft, 112 ; XCL, application for money order, 119; XCIL, fees for money orders, 120 ; XCIIL, postal money order, 121 ; XCIV., Ameri- can Express Company money order, 122 ; XCV , letter of credit, 125 ; XCVL, letter of credit sent by mail, 126; XCVIL, a travelers' check, 127; XCVIIL, original and duplicate foreign drafts, 128; XCIX., petition for opening street, 132; C, peti- tion to school board, 133; CL, petition to governor, 133; CIL, heading for sub- scription paper, 133; CIIL, proxy, 134; CIV., power of attorney, 134 ; CV., revo- cation of power of attorney, 135 ; CVL, inside cover of commercial agency ref- erence book, 136 ; CVIL, key to reference book of commercial agency, 137 ; CVIIL, page of commercial agency state ref- erence book, 138 ; CIX., notification sheet of commercial agency, 139 ; CX., alphabet for brush-marking, 142 ; CXI., shipping order, 147; CXIL, shipping receipt or bill of lading, 148; CXIIL, railroad memoran- dum, 149; CXI v., railroad expense bill or freight bill, 150; CXV., railroad manifest, 151 ; CXVL, Adams Express collection envelope, 153; CXVIL, United States Express C. O. D. envelope, 154 ; CXVIIL, bill of lading to which draft is attached, 156; CXIX., draft to be attached to bill of lading, 157; CXX., shipping invoice, 158; CXXL, contract to perform work, 165; CXXIL-CXXIIL, lease (front and back), 166-167; CXXIV.-CXXV., notice to quit (front and back), 168-169 ; CXXVL- CXXVIIL, guaranties, 172 ; CXXIX., bill of sale, 173; CXXX., short form bill of sale, 173; CXXXI.-CXXXIL, bond for fidelity of clerk (front and back), 174-175 ; THE INDEX 269 Forms — continued. CXXXIII., bond, 177; CXXXIV., prices on Chicago Board of Trade, 188; CXXX V. , prices on New York stock exchange, 193; CXXXVL, prices of bonds, 194; CXXXVII.-CXXXVIII., articles of co- partnership, 198-199; CXXXIX., notice of dissolution, 201 ; CXL.-CXLI., warranty deed, 214-215; CXLIL, quit-claim deed, 218; CXLIIL, signature of person who cannot write, 219; CXLIV., trust deed, 222; CXLV., note secured by mortgage, 223; CXLVI. (a) and (b), mortgage, 224- 225; CXLVIL, chattel mortgage note, 226; CXLVIIL, satisfaction of mortgage, 228; CXLIX., assignment of mortgage, 230; CL., meridian and base lines, 235; CLI., township, 236; CLIL, section, 236; CLIIL, measurement of irregular tracts of land, 237; CLI v., short form of will, »43- Frauds, statute of, 182. Freight or Expense Bills, railroad, 149- 150. Futures, 187. GENERAL Warranty Deed, azy. Government Bonds, zga. Grace, days of, 82. Grain, cash, 187. Grantee, 216. Grantor, 216. Guarantee Policy, 216. Guaranties, 171-172 ; forms, 172. H EADING, of a letter, 12, 13; ptmctu- ation of, 13; forms, 14. How to Make Change, 140. Insurance, 202-209 ; fire, 203 ; companies, 203- 204 ; policies, 204-209 ; insurable interests, 204-205 ; risks, 206 ; proportion of insur- ance to value, 207-208. Interest, on deposits, 54 ; rates of, 54-55, 84; dates of reckoning, 54-55; simple, 83; compound, 83; date of maturity, 84-85; table of, 91 ; merchants' rule for, 95, Invoices, 35-38 ; corrected and duplicate, 36- 38; forms of, 37-38; forms showing dis* count, 37, 38; shipping, 158. "Ironclad," or judgment, notes, 96-97. OINT Makers of a Note, Joint Notes, 98. LADING, bills of, see Bills of Lading, ^ Landlord, 168. Land Surveying, United States, 334- 240 ; surveying meridians, 234 ; base lines, 234; townships, 234-235 ; sections, 236-238; ranges, 234-235 ; lands not included, 238. Leases, 166-172 ; forms, 166, 167 ; forms of notice, 168, 169; repairs and subletting, 170-171 ; notice to quit, 171 ; guaranties, 171-172. Legal Tender, 139-140. Lessee, 168. Lessor, 168. Letter, Night, 30-31. Letters, of introduction, 20-ai ; of recom- mendation, 21-22. Letters of Credit, 124-127 ; forms, 125, 126. Letter Writing, 11-33. Liability, of partners, 199-200. Limitations, statute of, 91. Limited or Special Partnership, 20X. "Long," brokers' phrase, 187. Lost Notes, 90-91. INDEMNITY, bond of, 91, 122. Indorsement, of checks, 64-65 ; of notes, 79-80, 93; forms, 81 ; of drafts "for col- lection," 109 ; of money order, 121. Inland Bills of Exchange, 129. Inspection and Grading, 189. Insurable Interests, see Insurance. MAKER, of a check, 59. Manifest, railroad, 150-151. Margin, of a business letter, 16. Market Quotations, 185. Marking Goods, private codes, i4»-i4t. Maturity, date of, 84-85. lU 2 70 A FIRST BOOK IN BUSINESS METHODS Memorandum of Credit, see Credit. Merchandise Sales, 182-190. See also Sales. Merchants' Rule for Computing Interest, 95- Meridians, surveying, 234. Money, telegraphing of, 122. Money Orders, post office, 118-121 ; forms, 119, 120, 121 ; express, 122; form of express order, 122. Mortgagee, 226. Mortgages, 223-231; as security for note, 223 ; ordinary form, 224-225 ; defeasance, 226 ; real estate, 226 ; chattel, 226 ; chattel note, 226 ; satisfaction of, 227 ; form of satisfaction, ^28 ; recording of, 226-227 ; payments on, 227-229 ; assignment of, 229; redemption of, 229-231 ; foreclosure of, 229-231. Mortgagor, 226. Mutual Insurance Companies, 203-204. PARCEL POST, 117. Partial Payments, 92-93; United States rule for, 93. Partners, silent, 197; nominal, 197; liability of, 199-200. Partnership, 196-201; dissolution of, 200-201; notice of dissolution, 201; limited or special, 201. Payee, of a check, 60; of a draft, 106. Pen Lettering, 141-142. Petitions, 132-133. Phrases, commercial words and, list of, 254- 262. Policies, insurance, 204-209; open and val- ued, 204; guarantee, 216. Postal Savings Back, 54. Post-Dated Checks, 66. Premium, in insurance, 202. Probate Court, 244. Produce Exchange, 186. NEGOTIABLE Notes, 80-81. New York Stock Exchange, table of prices, 193. Night Letter, 30-31. Night Rates for Telegrams, 30. Nominal Partner, 197. Notes, promissory, 77-82; forms of, 78, 79, 82, 84, 86, 87, 93, 96, 97, 98, 99, 100 ; indorse- ment of, 79-80 ; forms of indorsement, 81 ; negotiable, 80-81 ; joint makers of, 81 ; de- mand, 82; accommodation, 89-90; lost, 90-91 ; outlawed, 91 ; " Ironclad," or judg- ment, 96-97 ; joint, 98 ; collateral, 98-99 ; special points about, 100-102 ; secured by mortgage, 223, 226. Notice and Protest, 86-88. Notice to Quit, 171 ; forms, i68, 169. Notification Sheets of Commercial Agen- cies, 137-139; form of, 139. Nuncupative Wills, 241. OBLIGEE, 173. Obligor, 173. "Old Line" Insurance Companies, 203-204. Orders, 50 ; forms, 50. Orphans' Court, 244. Outlawed Notes, 91. Q UIT-CLAIM Deed, 217. Quotations, market, 185; and bonds, 193-194. of stocks RAILROAD Business, 147-161; ^i^s of lading, 147-149; memorandum. 149; expense bills, 149-150; manifests, 150- 151; bill of lading with draft, 155-158; shipping invoice, 158. Ranges, in surveying, 234-235. Rates of Interest, 54-55. Real Estate Mortgage, 226. Receipts or Vouchers, 47-50; forms, 47-50. Recording of Deeds, 220-221. Redemption, of mortgage, 229; equity of, 229-230. Reference Books of Commercial Agencies, 137-139- Registered Packages, 123. Registrar of Deeds, 221. Repairs and Subletting, 170-171. Right of Dower, 217, 242. Risks, insurance, 206. Rules, United States rule for partial pay- ments, 93 ; merchants' rule for comput- ing interest, 95. THE INDEX 271 SAFETY Deposit Vaults, 72-73. Sale, bills of, 172-173. Sales, merchandise, 182-189 ; stoppage in transitu^ 184 ; common carriers, 185 ; market quotations, 185 ; boards of trade, 186-187; sales and values, 187-188; brok- ers— bulls and bears, 188; inspection and grading, 189; bucket shops, 190. Salutation, in a letter, 12, 15 ; forms, 15. Satisfaction of Mortgage, 227-229; form, 228. Savings Banks, 54; U. S. Postal, 54. Sections, in surveying, 236-238 ; form, 236. Settling of Estates, 244-246. Shareholders, 190. Shares of Stock, 190. Shipping Order, 147; receipt, 148-149; memo- randum, 149; invoice, 15R. "Short," brokers' phrase, 188. Signature, of a letter, 12, 17 ; form, 17. Signs used in Business, list of, 250-253. Silent Partner, 197. Simple Interest, see Interest. Sinking Fund, 190. Statements of Account, 45-46; forms, 39, 40,41, 42,43,45. Statute of Frauds, 182. Statute of Limitations, 91. Stock, preferred, 191; common, 191; certifi- cate of, 190. Stock Companies, 190-191. Stock Exchanges, 192; New York, 193-194, Stocks and Bonds, 191-192; exchanges, 193; value of quotations, 192; tables of prices, 193, 194. Stoppage in transitu^ 184. Subletting, 170-171. Subscription Paper, heading for, 133. Sureties to a Bond, 176. Surety Companies, 178. Surrogate Court, 244. Surveying, United States land, see Land Surveying. TABLE of Interest and Statute of Limitations, 91 ; table of time in days, 94. Telegrams, 29-33; cable messages, 30; forms, 31. Telegraphic Codes, 32. Telegraphing Money, 122. Tenant, 168. Testator, 242. Testatrix, 242. Time, table of, 94. Title, abstracts of, 213-216. Title Guarantee Companies, 216. Titles, in the address of a letter, 14 ; general directions for use of, 22-23. Townships, 234-235; form, 236. Trade, boards of, 186-189. See also Boards. Trade Discount, 38-42. Travelers' Checks, 127-128. Trust Deeds, 221-222; form, 222. Trustee, 221-222. UNITED States Express Company C. O. D. envelope, 154. United States Land Surveying, 234- 240. See also Land Surveying. United States Pcstal Savings System, 54. United States Rule for Partial Payments, 93. Usury, 95-96. VALID Consideration, necessary to contract, 163. Voucher Check, 70. Vouchers, see Receipts. WARRANTY Deeds, see Deeds. Wills, 241-248; kinds of, 241-343; making of, 242 ; short form, 243 ; witnesses to, 243-244; executor, 242; duties of executor, 244; administrator, 244-245 ; settling of estate, 244-246. Witnesses, 243-244. Words and Phrases, commercial, list o£, 254-262. .!■ A CONTRIBUTION to the STUDY OF ENGLISH COMPOSITION and RHETORIC BASED ON LITERARY MODELS By ROSE M. KAVANA, Teacher of English in the Joseph Medill High School, Chicago, III., and ARTHUR BEATTY, Ph.D., Instructor in English in the University of Wis- consin, Madison, Wis. Illustrated with 18 full-page plates in sepia after masterpieces : : Cloth, i2mo, 423 pages; $1.00 CHARACTERISTICS OF THE BOOK THE STUDIO METHOD First of all it is a frank attempt to apply to the teaching of composition the " studio method " so long practiced in other arts. As an artist analyzes his model into its artistic elements and combines these in a new way to make a new picture, and as an architect analyzes a building into its architectural elements and combines these in a new way to design a new structure, so the authors of this book analyze literary models and direct the pupil in his own composition based on these analyses. THE METHOD OF THE MASTERS This method is not new. It has been used for centuries in other arts, and such writers as Stevenson, Franklin, Montaigne, Byron, Burns, Tennyson, and many others have testified that they acquired their art in writing by similar training:. This is the first time, however, that it has been elaborated and pre- sented in a practical way in a text-book for High School use. We have collected a number of extracts from some of the greatest writers of all countries, in which they acknowledge that they attained their facility and art in writing by the use of Literary Models. "We have published these in an attractive booklet under the title, " How I Learned to Write," which we shall be glad to send you on request. It is a remarkable body of evidence. A BOOK OF TECHNIQUE The book presents a literary rather than a rhetorical method, and aims at stimulating an interest in good workmanship. The pupil's own composition is made the basis of the instruction he receives, and he is given continuous prac- tice with little theory. IT CORRELATES LITERATURE, COMPOSITION, AND RHETORIC The use of particular paragraph and theme models reacts on the study of literature and gives a power in construction and a skill in literary analysis which assure an appreciation of literature that is genuine and discriminating. ITS PLACE IN THE SCHOOLS The book is intended for a complete course in High Schools, and a beginning course in Academies, Seminaries, and Normal Schools. 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