Part 224

=====================================================================+ INTEREST LAWS | ----------------+----------------------------------------------------+ LEGAL RATE | PER CENT ALLOWED BY CONTRACT | PER CENT | AND PENALTY FOR USURY | ----------------+----------------------------------------------------+ Alabama 8| 8; Forfeit interest | Arizona 6| 12; No provision | Arkansas 6| 10; Forfeit principal and interest | California 7|Any; No provision | Colorado 8|Any; No provision | Connecticut 6| 15; Fine or imprisonment, or both | Delaware 6| 6; Principal and interest forfeited | Dist. of Col. 6| 6; Forfeit interest | Florida 8| 10; Forfeit interest | Georgia 7| 8; Forfeit excess of interest | Idaho 7| 12; Forfeit interest and 10% of principal | Illinois 5| 7; Forfeit interest | Indiana 6| 8; Excess interest forfeited | Iowa 6| 8; Forfeit interest and 8% of principal | Kansas 6| 10; Forfeit of double amount of usurious interest | Kentucky 6| 6; Forfeit of interest | Louisiana 5| 8; Forfeit interest | Maine 6|Any; No provision | Maryland 6| 6; Forfeit interest | Massachusetts 6|Any; No provision | Michigan 5| 7; Forfeit interest | Minnesota 6| 10; Forfeit interest | Mississippi 6| 10; Forfeit interest | Missouri 6| 8; Forfeiture or misdemeanor | Montana 8|Any; No provision | Nebraska 7| 10; Forfeit interest | Nevada 7|Any; No provision | New Hampshire 6| 6; Forfeit three times excess | New Jersey 6| 6; Forfeit interest and costs | New Mexico 6| 12; Forfeit of twice the amount of interest | New York 6| 6; Forfeit of principal and interest; misdemeanor | North Carolina 6| 6; Forfeit interest | North Dakota 7| 12; Forfeit interest | Ohio 6| 8; Forfeit interest over 6% | Oklahoma 6| 10; Forfeit interest | Oregon 6| 10; Forfeit principal and interest | Pennsylvania 6| 6; Forfeit excess of interest | Rhode Island 6|Any; No provision | South Carolina 7| 8; Forfeit interest | South Dakota 7| 12; Misdemeanor | Tennessee 6| 6; Forfeit of excess interest | Texas 6| 10; Forfeit interest | Utah 8| 12; Forfeit excess interest | Vermont 6| 6; Forfeit of excess interest | Virginia 6| 6; Forfeit interest | Washington 6| 12; Forfeit of double accrued interest and costs | West Virginia 6| 6; Forfeit excess interest | Wisconsin 6| 10; Forfeit treble amount of usurious interest paid| Wyoming 8| 12; Forfeit interest | ----------------+----------------------------------------------------+

=========================================+===================== STATUTES OF LIMITATION | EXEMPTION LAWS --------------+---------+-------+--------+---------+----------- |JUDGMENTS| NOTES | OPEN |PERSONAL |HOMESTEAD, | | |ACCOUNTS|PROPERTY,| EXEMPT | | | | EXEMPT | --------------+---------+-------+--------+---------+----------- Alabama | 20 yrs. | 6 yrs.| 3 yrs. | $1,000 | $2,000 Arizona | 4 yrs. | 4 yrs.| 3 yrs. | 500 | 2,500 Arkansas | 10 yrs. | 5 yrs.| 3 yrs. | 500 | 2,500 California | 5 yrs. | 4 yrs.| 4 yrs. | ... | 5,000 Colorado | 6 yrs. | 6 yrs.| 6 yrs. | ... | 2,000 Connecticut | 7 yrs. | 6 yrs.| 6 yrs. | ... | 1,000 Delaware | 10 yrs. | 6 yrs.| 3 yrs. | 200 | ... Dist. of Col. | 12 yrs. | 3 yrs.| 3 yrs. | 300 | ... Florida | 20 yrs. | 5 yrs.| 3 yrs. | 1,000 |160 acres Georgia | 7 yrs. | 6 yrs.| 4 yrs. | 300 | 1,600 Idaho | 6 yrs. | 5 yrs.| 4 yrs. | ... | 5,000 Illinois | 20 yrs. |10 yrs.| 5 yrs. | 400 | 1,000 Indiana | 20 yrs. |10 yrs.| 6 yrs. | 600 | or 600 Iowa | 20 yrs. |10 yrs.| 5 yrs. | 200 |or 40 acres Kansas | 5 yrs. | 5 yrs.| 3 yrs. | ... | 160 acres Kentucky | 15 yrs. |15 yrs.| 5 yrs. | 250 | 1,000 Louisiana | 10 yrs. | 5 yrs.| 3 yrs. | ... |Total 2,000 Maine | 20 yrs. |20 yrs.| 6 yrs. | ... | 500 Maryland | 12 yrs. | 3 yrs.| 3 yrs. | 100 | ... Massachusetts | 20 yrs. | 6 yrs.| 6 yrs. | ... | 800 Michigan | 6 and 10| 6 yrs.| 6 yrs. | 500 | 1,500 Minnesota | 10 yrs. | 6 yrs.| 6 yrs. | 500 | 80 acres Mississippi | 7 yrs. | 6 yrs.| 3 yrs. | ... | 2,000 Missouri | 10 yrs. |10 yrs.| 5 yrs. | 300 |1,500(min.) Montana | 10 yrs. | 8 yrs.| 5 yrs. | ... | 2,500 Nebraska | 5 yrs. | 5 yrs.| 4 yrs. | 500 |or 2,000 Nevada | 6 yrs. | 6 yrs.| 4 yrs. | ... | 5,000 New Hampshire | 20 yrs. | 6 yrs.| 6 yrs. | ... | 500 New Jersey | 20 yrs. | 6 yrs.| 6 yrs. | 200 | 1,000 New Mexico | 7 yrs. | 6 yrs.| 4 yrs. | 500 | 1,000 New York | 20 yrs. | 6 yrs.| 6 yrs. | 250 | 1,000 North Carolina| 10 yrs. | 3 yrs.| 3 yrs. | 500 | 1,000 North Dakota | 10 yrs. | 6 yrs.| 6 yrs. | 1,000 | 5,000 Ohio | 5 yrs. |15 yrs.| 6 yrs. | 100 | 1,000 Oklahoma | 5 yrs. | 5 yrs.| 3 yrs. | ... | 5,000 Oregon | 10 yrs. | 6 yrs.| 6 yrs. | ... | 1,500 Pennsylvania | 20 yrs. | 6 yrs.| 6 yrs. | 300 | ... Rhode Island | 20 yrs. | 6 yrs.| 6 yrs. | 800 | ... South Carolina| 20 yrs. | 6 yrs.| 6 yrs. | 500 | 1,000 South Dakota | 20 yrs. | 6 yrs.| 6 yrs. | 750 | 5,000 Tennessee | 10 yrs. | 6 yrs.| 6 yrs. | ... | 1,000 Texas | 10 yrs. | 4 yrs.| 2 yrs. | 500 | 5,000 Utah | 8 yrs. | 6 yrs.| 4 yrs. | ... | 2,000 Vermont | 8 yrs. | 6 yrs.| 6 yrs. | 200 | 500 Virginia | 20 yrs. | 5 yrs.| 2 yrs. | ... | 2,000 Washington | 6 yrs. | 6 yrs.| 3 yrs. | 1,000 | 2,000 West Virginia | 10 yrs. |10 yrs.| 5 yrs. | 200 | 1,000 Wisconsin | 20 yrs. | 6 yrs.| 6 yrs. | 200 | 5,000 Wyoming | 5 yrs. | 5 yrs.| 8 yrs. | 500 | 1,500 --------------+---------+-------+--------+---------+-----------

NOTE.--In many of the States it is impossible to place a fixed amount on personal property exempt. In the table above these states have no amount given in the personal property column. Days of grace have been abolished in all states except the following: Arkansas, Mississippi, South Carolina and Texas.

If the drawee accepts the draft, he writes across the face of it “_Accepted_” with the date and his signature. This is called an _Acceptance_.

Once accepted, the draft becomes a note, with the same laws regulating it. If the draft is not accepted, it is not binding and we say that it has been “_dishonored_.”

A bill of exchange is entitled to days of grace, if it is payable in a State where grace is allowed, unless a particular day is named in the draft. In most States, no grace is allowed on sight drafts.

PRINCIPLES OF EXCHANGE

To find the cost of a draft, the face and rate per cent of exchange being given.

RULE.--_Find the percentage of the given rate per cent of exchange and add it to, or subtract it from the amount of draft._

EXAMPLE: What is the cost, in Chicago, of a sight draft on Denver for $400, if exchange is 3/4% premium; and how much if 1/2% discount?

$400 × .00-3/4 = $3; $400 + $3 = $403, at 3/4% premium.

$400 × .00-1/2 = $2; $400 - $2 = $398, at 1/2% discount.

To find the face of a draft, cost and rate per cent of exchange given.

RULE.--_Divide by the cost of a draft for $1, at given rate per cent of exchange._

EXAMPLE: Find face of draft that can be bought for $1000 at 1% premium; at 1% discount.

$1000 ÷ 1.01 = $990.10, at 1% premium.

$1000 ÷ .99 = $1010.10, at 1% discount.

Time Drafts, when negotiated before maturity, are subject to discount which is computed on the face of the draft, the same as interest.

EXAMPLE: What is the proceeds of a 60-day draft for $800, at 5/8% premium, and discounted at 7%?

$805.00, face + 5/8% premium 9.33, interest (7%, 60 days) ------- $795.67, proceeds. _Ans._

Foreign Drafts are usually made payable in the money of the country on which they are drawn.

To find the equivalent of foreign money in United States money and vice versa.

RULE.--_Multiply, or divide (as the case may require) the given sum, by the equivalent of a unit in United States money._

EXAMPLE: What is the cost of a draft on London for £125, reckoning exchange at $4.8665?

125 × 4.8665 = 608.31. _Ans._ $608.31.

Wishing to remit $182.50 to Ireland, for what amount must I buy a draft on London?

182.50 ÷ 4.8665 = 37.5. _Ans._ £37-1/2.

How many francs in $100?

100.000 ÷ .193 = 518.13. _Ans._ 518.13 francs.

How many dollars in 7500 German marks?

7500 × .238 = $1785, _Ans._

How many Swedish crowns in $750?

750 ÷ .268 = 2798-1/2 crowns, _Ans._

How many dollars in 4635 rubles?

4635 × .772 = $3578.32, _Ans._

A simple method to reduce pounds sterling to United States money, and vice versa; exchange being at $4.8665.

RULE.--_Multiply pounds sterling by 73, and divide the product by 15. Or multiply dollars by 15 and divide the product by 73._

EXAMPLES: How many dollars in £85?

85 × 73/15 = 413.67. _Ans._ $413.67.

How many £’s in $748.25?

748.25 × 15/73 = 153-3/4. _Ans._ £153-3/4.

Another method to change pounds sterling, shillings and pence, to dollars and cents.

RULE.--_Reduce pounds sterling to shillings, add the shillings, and multiply the sum by .24-1/3--the product will be cents. Add 2 cents for each pence, if any._

EXAMPLE: Change £46, 13s. 9d. to United States money.

46 × 20 = 920 933 × .24-1/3 = 227.03 13 9d. = .18 --- ------- 933 _Ans._ $227.21

Tourists of today patronize express companies for _Foreign Money Orders_. These are made out similar to regular express money orders and may be cashed in any of the larger cities of all foreign countries. They take the place, to a large extent, of _Letters of Credit_, which are letters from banking houses in one country to those in another, allowing sums to be drawn not to exceed a total named in the letter.

STOCKS AND BONDS

_Stocks_ is a general name given to the capital of incorporated companies. They are divided into equal parts, usually of $100 each, called _Shares_, the owners of which are called _Stockholders_. A _Dividend_ is a part of the net income of the company, divided among the stockholders.

A _certificate of stock_ is a written paper signed by the proper officers of the corporation, naming the number of shares to which the person named therein is entitled, and the original value of the same.

_Preferred stock_ is stock which is given a preference over the common stock. Ordinarily, a dividend is paid on the preferred stock before any is paid on the common shares.

_Common stock_ is the ordinary stock of a corporation, which has no preference, in the payment of dividends, over any other.

The _par value_ of a share of stock is the value named in the certificate of stock.

When a corporation is prosperous, its shares of stock often sell for more than the value named in the certificate of stock. They are then said to be _above par_, or _at a premium_. In times of business depression, often these shares of stock sell below their face value. They are then said to be _below par_, or _at a discount_.

The _market value_ of a share of stock is the value for which it sells in the open market.

A _stock broker_ is one who makes a business of buying and selling stocks and bonds. He charges a commission for this which is called _brokerage_.

A _surplus_ is a part of the earnings of a corporation.

The _gross earnings_ of a corporation are its total receipts from all sources.

The _net earnings_ are the profits remaining when all expenses, losses, interest and debts due are paid.

An _assessment_ is a sum levied proportionate to stock held by stockholders, to help out the business when it is not prospering, or when more money is needed to carry it on. It is levied as so many dollars on each share at its par value.

The _directors_ are those shareholders elected by all to manage the affairs of the corporation.

A _bond_ is, in form, a carefully drawn interest-bearing promissory note. Ordinarily, it runs for a period of years with interest often payable semi-annually. It is more formal than the ordinary promissory note. Bonds are usually issued by national, state, county, or local governments, or by corporations, when they wish to raise large sums of money for immediate use.

DIFFERENCE BETWEEN STOCKS AND BONDS

A bond runs for a specified time. It bears a specified interest, and is an absolute promise to pay the face of it at maturity. It matures at a definite time, and at that time the holder is paid its _face value_ and no more, by the organization that issued it, unless such organization is insolvent, or has repudiated its debts.

_Stocks._--A certificate of stock is no promise to pay. It simply shows that the holder owns as much stock in the corporation as is shown by the face of the certificate. It bears no interest and has no date of maturity.

The interest returns of the bondholder are certain and definite. The returns of the stockholder, dividends, are uncertain and depend on the profits of the business.

Consequently, no table can be arranged to show at what rate stocks can be bought to yield a definite return; but with bonds, tables may be made which show at a glance what the return will be from a purchase made at any rate.

APPLICATION OF PERCENTAGE TO STOCKS

1. To find the value of stocks, when above or below par.

RULE.--_Multiply the price per share, by the number of shares._

EXAMPLE: Find cost of 65 shares of bank stock, at $107 per share, or 7% premium. Also of 48 shares of railroad stock, at $87-1/2 per share, or 12-1/2% discount.

(1) 65 × 107 = 6955. _Ans._ $6955.

(2) 48 × 87-1/2 = 4200. _Ans._ $4200.

2. To find what rate per cent is realized by investing in stocks or bonds when above or below par.

RULE.--_Annex two ciphers to the fixed rate per cent, and divide by the cost per share._ Or by proportion: _As the cost per share is to the fixed rate, so is 100 to the required rate_.

EXAMPLE: Mr. Warren bought ten shares of Illinois Central Railroad stock at 96. What does he get when a dividend of 6% is declared? What per cent is that on his investment?

WORK AND EXPLANATION:

(1) 1 share at 6% yields $6 10 shares yield 10 × $6 = $60.

(2) Each share at 96 costs $96. Each share yields $6.

_Query?_ $6 is what per cent of $96? $6 is 6/96 of 100%, or 6-1/4%. ∴ the investment yields 6-1/4%.

3. To find which is the more profitable investment.

RULE.--_Find the rate per cent that each investment yields, by rule, under item 2; then compare rates._

EXAMPLE: Which is the better investment; 6% mortgages at 10% premium, or 5% bonds at 10% discount?

(1) 110)600(5-5/11%.

(2) 90)500(5-5/9%. 5/9 - 5/11 = 10/99, practically 1/10.

_Ans._ The latter, by 1/10 of 1%, nearly.

TAXES AND TAXATION

A _tax_ is a contribution levied on persons, property, incomes, or business, for public purposes.

SOME USES FOR TAXES.--The _National Government_ requires money to support the army and navy, to pay the salaries of government employes, to pay pensions, and to finance other activities carried on by the nation.

The _State Governments_ require money for the expense of their officers, and to support their various institutions, schools, universities, asylums, and penitentiaries.

The _counties_ require money for the building of bridges, the trial of criminal cases, the salaries of officers, the relief of the poor, etc.

_Cities_ must pay for police and fire protection, care of streets, etc.

_School districts_ contribute to the support of the public schools.

The money required for all these expenses is raised by taxes, licenses, fees, assessments, and fines.

STATE AND LOCAL TAXES.--The amount of tax paid by any individual to state and local governments depends upon the value of the property which he owns and the tax rate. In many places the adult male citizen pays a poll tax.

The tax levied on property is called a _property tax_.

The tax levied on persons is called a _poll tax_. This is sometimes called a _capitation_ (by the head) _tax_.

Sometimes a man’s income is taxed. This is an _income tax_.

After the amount of money to be raised by tax is decided upon, a man, called the _assessor_, examines each piece of taxable personal property and real estate, and places a value upon it. This is taken as a basis for proportioning the tax among the property owners.

A _tax collector_ is one who collects the taxes. He is sometimes paid a salary. Sometimes he gets only a percentage of the money he collects.

The _treasurer_ receives and takes care of the money collected by the tax collector. He is paid a salary.

THE TAX RATE.--Sometimes the rate is fixed by law or by vote of the citizens. More often the lump sum to be raised is named, and the assessor determines the rate.

When the assessor is to determine the rate, he proceeds in this way: First, he assesses each piece of property, usually not at its full market value. Then he determines the total value of all the property in his district. Next, he divides the total tax to be raised by the total value of the property in his district. The result is the _rate of tax_ on the dollar.

USE OF THE MILL IN TAXES.--When a tax is apportioned, it is usually found that if a few mills are paid on each dollar’s worth of property in the district, the aggregate amount is equal to the whole sum of tax needed. Consequently, we often hear of tax levies of so many _mills_ on the _dollar_, as, 2 mills on the dollar, 5 mills on the dollar, etc.

The denomination of our money system called the _mill_ has practically its only use in the levy of taxes.

Assessors make use of a table like the one given on the following page. This table is based on a tax levy of 9 mills on the dollar.

The following tax rates are equivalent:

16 mills (on the dollar);

1.6%;

$1.60 (on each hundred dollars).

EXPLANATION OF TABLE. The second column shows the tax at nine mills on the dollar, for values of $1 to $30. The fourth column shows the tax for values of $40 and multiples of ten, to $600. The sixth column shows the tax for values of $700 and multiples of one hundred, to $10,000.

TAX TABLE

========+========+========+=======+=========+======= PROPERTY| |PROPERTY| |PROPERTY | VALUE | TAX | VALUE | TAX | VALUE | TAX --------+--------+--------+-------+---------+------- $ 1 | $0.009 |$ 40 | $0.36 |$ 700 |$ 6.30 2 | 0.018 | 50 | 0.45 | 800 | 7.20 3 | 0.027 | 60 | 0.54 | 900 | 8.10 4 | 0.036 | 70 | 0.63 | 1,000 | 9.00 5 | 0.045 | 80 | 0.72 | 2,000 | 18.00 6 | 0.054 | 90 | 0.81 | 3,000 | 27.00 7 | 0.063 | 100 | 0.90 | 4,000 | 36.00 8 | 0.072 | 200 | 1.80 | 5,000 | 45.00 9 | 0.081 | 300 | 2.70 | 6,000 | 54.00 10 | 0.09 | 400 | 3.60 | 7,000 | 63.00 20 | 0.18 | 500 | 4.50 | 8,000 | 72.00 30 | 0.27 | 600 | 5.40 | 9,000 | 81.00 --------+--------+--------+-------+---------+-------

THE AMOUNT OF TAX.--To find the amount of tax to be paid by any property owner.

Rule.--_Multiply the assessed value of the property by the tax rate._

EXAMPLE: Taylor’s property is assessed at $3800. The rate is 24 mills.

SOLUTION: $3800 assessed valuation .024 tax rate in mills ------ $91.20 tax.

EXAMPLE: The town of Grant is to raise $4725 in tax. The property in the town has an assessed valuation of $395,140. What is the rate?

If on $395,140 a tax of $4725 is to be raised, on $1 as much tax must be raised as $395,140 is contained times in $4725, which is .0119+, or about $.0119. This would be called $0.012, or 12 mills on the dollar.

EXAMPLE: Finch’s property is assessed at $5470. The tax rate is $1.95.

SOLUTION: $1.95 the rate per hundred dollars 54.70 the number of hundreds of dollars assessed value ------- $106.67 the tax.

INDIRECT TAXES are taxes placed upon goods by the national government, and collected before the goods are sold to the consumer.

The national government needs this money to pay:--

1. Interest on the public debt.

2. To support an army and navy, to build vessels, and keep up arsenals and forts.

3. To pay pensions.

4. To improve the rivers and harbors.

5. To pay the salaries of its officers; as, the president, cabinet officers, judges, ministers to foreign countries, congressmen, etc.

Indirect taxes are of two kinds, _customs or duties_, and _excises_ or _internal revenue_.

_Excises_ or _internal revenue_ are taxes levied on certain domestic goods, as, manufactured tobacco, liquors, and the like.

Indirect taxes levied by the government on imported goods or merchandise are called _duties_ or _customs_.

A _custom house_ is a government office where duties are collected and where vessels are entered and cleared. Nearly every seaport of consequence has a custom house. So also have important towns near the Canadian and Mexican boundaries.

Duties are of two kinds, _specific_ and _ad valorem_.

A _specific_ duty is one levied at a specified sum per yard, gallon, ton, etc.

An _ad valorem_ duty is one levied at a certain percentage of the value of the goods, at the port of export.

_Tare_ is an allowance made for the weight of bags, barrels, or cases, in which merchandise is shipped.

_Leakage_ is an allowance made for loss of liquids from casks, barrels, etc., in shipping.

_Breakage_ is an allowance made for the loss of liquids from bottles in shipping.

EXAMPLE: Find the duty on 4 dozen bottles of cologne, allowing 4% for leakage and 3% for tare. The invoice value is 90 cents a bottle and the duty is 25% ad valorem and 20 cents specific. Find the total cost per bottle.

WORK AND EXPLANATION:

Leakage and tare are 4% + 3% = 7%.

4 dozen bottles = 48 bottles.