Chapter 1

Produced by Barbara Tozier, Bill Tozier, Jacqueline Jeremy and the Online Distributed Proofreading Team at http://www.pgdp.net

UP-TO-DATE BUSINESS

HOME STUDY CIRCLE LIBRARY

EDITED BY

SEYMOUR EATON

UP TO DATE BUSINESS

INCLUDING

LESSONS IN BANKING, EXCHANGE, BUSINESS GEOGRAPHY, FINANCE, TRANSPORTATION AND COMMERCIAL LAW

FROM THE CHICAGO RECORD

NEW YORK THE DOUBLEDAY & McCLURE CO.

1900

Copyright, 1897, 1898, 1899, by the CHICAGO RECORD COPYRIGHT, 1899 by SEYMOUR EATON COPYRIGHT, 1899, 1900, by VICTOR F. LAWSON

CONTENTS

I

GENERAL BUSINESS INFORMATION

PAGE

I. Commercial Terms and Usages 3

II. Commercial Terms and Usages (_Continued_) 4

III. Bank Cheques 6

IV. Bank Cheques (_Continued_) 8

V. Bank Cheques (_Continued_) 12

VI. Bank Drafts 15

VII. Promissory Notes 18

VIII. The Clearing-house System 21

IX. Commercial Drafts 26

X. Foreign Exchange 31

XI. Letters of Credit 37

XII. Joint-stock Companies 41

XIII. Protested Paper 46

XIV. Paper Offered for Discount 49

XV. Corporations 51

XVI. Bonds 54

XVII. Transportation 57

XVIII. Transportation Papers 59

Examination Paper 64

II

BUSINESS GEOGRAPHY

TRADE FEATURES

I. The Trade Features of the British Isles 69

II. The Trade Features of France 94

III. " " " " Germany 102

IV. " " " " Spain and Italy 111

V. " " " " Russia 120

VI. " " " " India 129

VII. " " " " China 139

VIII. " " " " Japan 148

IX. " " " " Africa 157

X. " " " " Australia and Australasia 166

XI. " " " " South America 177

XII. " " " " Canada 187

XIII. " " " " The United States 194

Examination Paper 210

III

FINANCE, TRADE, AND TRANSPORTATION

I. National and State Banks 215

II. Savings Banks and Trust Companies 221

III. Corporations and Stock Companies 225

IV. Borrowing and Loaning Money 228

V. Collaterals and Securities 233

VI. Cheques, Drafts, and Bills of Exchange 240

VII. The Clearing-house System 248

VIII. Commercial Credits and Mercantile Agencies 254

IX. Bonds 263

X. Transportation by Rail 267

XI. Freight Transportation 274

XII. Railroad Rates 281

XIII. Stock and Produce Exchanges 288

XIV. Storage and Warehousing 294

Examination Paper 301

IV

COMMERCIAL LAW

I. The Different Kinds of Contracts 309

II. The Parties to a Contract 312

III. The Parties to a Contract (_Continued_) 315

IV. The Consideration in Contracts 318

V. The Essentials of a Contract 321

VI. Contracts by Correspondence 326

VII. What Contracts Must Be in Writing 332

VIII. Contracts for the Sale of Merchandise 336

IX. The Warranties of Merchandise 340

X. Common Carriers 344

XI. The Carrying of Passengers 347

XII. On the Keeping of Things 350

XIII. Concerning Agents 353

XIV. The Law Relating to Bank Cheques 358

XV. The Law Relating to Leases 363

XVI. Liability of Employers to Employés 369

XVII. Liability of Employers to Employés (_Continued_) 373

Examination Paper 377

V

PREPARING COPY FOR THE PRESS AND PROOF-READING

I. Preparing Copy 381

II. On the Names and Sizes of Type 382

III. The Terms Used in Printing 384

IV. Marks Used in Proof-reading 387

ILLUSTRATIONS

I

GENERAL BUSINESS INFORMATION

PAGE

A Poorly Drawn Cheque 7

A Carefully Drawn Cheque 8

A Cheque Drawn so as to Insure Payment to Proper Party 9

A Cheque Payable to Order 11

A Blank Indorsement 11

A Cheque Made to Obtain Money for Immediate Use 13

A Certified Cheque 14

A Cheque for the Purchase of a Draft 16

A Bank Draft 17

Ordinary Form of Promissory Note 18

A Promissory Note Filled Out in an Engraved Blank 19

A Special Form for a Promissory Note 20

The Advantages of the Clearing-house System 22

The Route of a Cheque 24

Backs of Two Paid Cheques 25

A Sight Draft Developed from Letter 27

A Sight Draft 28

An Accepted Ten-day Sight Draft 28

An Accepted Sight Draft 29

A Time Draft 29

Foreign Exchange 32

A Bill of Exchange (Private) 35

A Bill of Exchange (Banker's) 36

First Page of a Letter of Credit 38

Second Page of a Letter of Credit 40

A Certificate of Stock in a National Bank 42

A Certificate of Stock in a Manufacturing Company 43

A Protest 48

A Private Bond 55

A Shipping Receipt ("Original") 60

A Steamship Bill of Lading 61

A Local Waybill 62

II

BUSINESS GEOGRAPHY

London the Natural Centre of the World's Trade 72

British Mercantile Marine 74

London Bridge 76

The Coal-fields of England 80

The Manchester Ship Canal 84

The Great Manufacturing Districts of England 88

France Compared in Size with the States of Illinois and Texas 95

Street Scene in Paris, Showing the Bourse 97

Approximate Size of the German Empire 104

North Central Germany, Showing the Ship Canal and the Leading Commercial Centres 109

Spain Compared in Size with California 113

Italy and its Chief Commercial Centres 117

Russia, the British Empire, and the United States Compared 121

Moscow 127

Comparative Sizes of India and the United States 133

China and its Chief Trade Centres 145

Japan's Relation to Eastern Asia 155

The Partition of Africa 159

Australia 171

The Most Prosperous Part of South America 183

Trade Centres of Canada and Trunk Railway Lines 192

Export Trade of United States and Great Britain Compared 198

United States Manufactures and Internal Trade Compared with the Manufactures and Internal Trade of all Other Countries 199

Principal Articles of Domestic Exports of the United States 205

III

FINANCE, TRADE, AND TRANSPORTATION

The Bank of England 216

Showing Cheque Raised from $7.50 to $70.50 241

A Certified Cheque 244

A Bank Draft 245

A Bill of Exchange 246

Illustrating Cheque Collections 252

A Mercantile Agency Inquiry Form 259

Specimens of Interest Coupons 266

Judge Thomas M. Cooley, First Chairman of the Interstate Commerce Commission 287

The Paris Bourse 289

Interior View of New York Stock Exchange 290

V

PREPARING COPY FOR THE PRESS AND PROOF-READING

A Printer's Proof 390

A Printer's Corrected Proof 391

GENERAL BUSINESS INFORMATION

I. COMMERCIAL TERMS AND USAGES

There is a distinction between the usage of the names COMMERCE and BUSINESS. The interchange of products and manufactured articles between countries, or even between different sections of the same country, is usually referred to as _commerce_. The term _business_ refers more particularly to our dealings at home--that is, in our own town or city. Sometimes this name is used in connection with a particular product, as the _coal_ business or the _lumber_ business, or in connection with a particular class, as the _dry-goods_ business or the _grocery_ business. The name _commerce_, however, seldom admits of a limited application. In the United States TRADE is synonymous with _business_. The word TRAFFIC applies more especially to the conveyance than to the exchange of products; thus we refer to _railroad_ traffic or _lake_ traffic. PRODUCTS, when considered articles of trade, are called _merchandise, goods, wares_. The term MERCHANDISE has the widest meaning, and includes all kinds of movable articles bought or sold. GOODS is applied more particularly to the supplies of a merchant. WARES is commonly applied to utensils, as _glassware_, _hardware_, etc.

GROSS commonly means coarse or bulky. In trade it is used with reference to both money and goods. The _gross_ weight of a package includes the weight of the case or wrappings. The larger sum in an account or bill--that is, the sum of money before any allowance or deductions are made--is the _gross_ amount of the bill. The word NET is derived from a Latin word meaning neat, clean, unadulterated, and indicates the amount of goods or money after all the deductions have been made. To say that a price is _net_ is to indicate that no further discount will be made.

The word FIRM relates to solidity, establishment, strength, and in a business sense signifies two or more persons united in partnership for the purpose of trading. The word HOUSE is very frequently used in the same sense. In mercantile usage _house_ does not mean the building in which the business is conducted, but the men who own the business, including, perhaps, the building, stock, plant, and business reputation. The name CONCERN is often used in a very similar way.

The name MARKET expresses a locality for the sale of goods, and in commerce is often used to denote cities or even countries. We say that Boston is a leather market, meaning that a large number of Boston merchants buy and sell leather. In the same sense we call Chicago a grain market, or New Orleans a cotton market. In its more restricted sense the name _market_ signifies a building or place where meat or produce is bought and sold. We say that the _market is flooded_ with a particular article when dealers are carrying more of that article than they can find sale for. There is _no market_ for any product when there is no demand. The money market is _tight_ or _close_ when it is difficult to borrow money from banks and money-lenders.

II. COMMERCIAL TERMS AND USAGES (_Continued_)

THE NATURAL RESOURCES of a country are mainly the mineral commodities and agricultural produce that it yields. The lumber and fish produced in a country are also among its natural resources. The positions and industries of cities are usually fixed by natural conditions, but the most powerful agent is the personal energy of enterprising and persevering men, who, by superior education, or scientific knowledge, or practical foresight, have often been able to found industrial centres in situations which no geographical considerations would suggest or explain.

COMMISSION MERCHANTS receive and sell goods belonging to others for a compensation called a commission. A SELLING AGENT is a person who represents a manufacturing establishment in its dealings with the trade. The factory may be located in a small town, while the selling agent has his office and samples in the heart of a great city. As regards the quantity of goods bought or sold in a single transaction, trade is divided into WHOLESALE and RETAIL. The wholesale dealer sells to other dealers, while the retail dealer sells to the consumer--that is, the person who _consumes_, or uses, the goods. A JOBBER is one who buys from importers and manufacturers and sells to retailers. He is constantly in the market for bargains. The names JOBBER and WHOLESALER are often used in the same sense, but a jobber sometimes sells to wholesalers. WHOLESALE has reference to the quantity the dealer sells, and not to the source from which he buys, or the person to whom he sells. The wholesaler, as a rule, deals in STAPLES--that is, goods which are used season after season--though of course there are wholesalers in practically all businesses.

Wholesale dealers send out TRAVELLERS or DRUMMERS, who carry samples of the goods. Frequently the traveller starts out with his samples from six months to a year in advance of the time of delivery. It is quite a common thing for the retailer to order from samples merchandise which at the time of placing the order may not even be manufactured.

By the PRICE of a commodity is meant its value estimated in money, or the amount of money for which it will exchange. The exchangeable value of commodities depends at any given period partly upon the expense of production and partly upon the relation of supply and demand. Prices are affected by the creation of monopolies, by the opening of new markets, by the obstructing of the ordinary channels of commercial intercourse, and by the anticipation of these and other causes. It is the business of the merchant to acquaint himself with every circumstance affecting the prices of the goods in which he deals.

The entire world is the field of the modern merchant. He buys raw and manufactured products wherever he can buy cheapest, and he ships to whatever market pays him the highest price. Our corner grocer or produce-dealer may furnish us with beef from Texas, potatoes from Egypt, celery from Michigan, onions from Jamaica, coffee from Java, oranges from Spain, and a hundred other things from as many different points; and yet, so complete is the interlocking of the world's commercial interests, and so great is the speed of transportation, that he can supply us with these necessaries under existing conditions more easily and readily than if they were all grown on an adjoining farm.

III. BANK CHEQUES

A CHEQUE is an order for money, drawn by one who has funds in the bank. It is payable on demand. In reality, it is a _sight draft_ on the bank. Banks provide blank cheques for their customers, and it is a very simple matter to fill them out properly. In writing in the amount begin at the extreme left of the line.

The illustration given below shows a poorly written cheque and one which could be very easily _raised_. A fraudulent receiver could, for instance write, "_ninety_" before the "_six_" and "9" before the figure "6," and in this way raise the cheque from $6 to $96. If this were done and the cheque cashed, the maker, and not the bank, would become responsible for the loss. You cannot hold other people responsible for your own carelessness. A cheque has been raised from $100 to $190 by writing the words "_and ninety_" after the words "_one hundred_." One of the ciphers in the figures was changed to a "9" by adding a tail to it. It is wise to draw a running line, thus ~~~~~~, after the amount in words, thus preventing any additional writing.

The illustration on page 8 shows a cheque carefully and correctly drawn. The signature should be in your usual style, familiar to the paying teller. Sign your name the same way all the time. Have a characteristic signature, as familiar to your friends as is your face.

A cheque is a draft or order upon your bank, and it need not necessarily be written in the prescribed form. Such an order written on a sheet of note-paper with a lead-pencil might be in every way a legally good cheque.

Usually cheques should be drawn "_to order_." The words "_Pay to the order of John Brown_" mean that the money is to be paid to John Brown, or to any person that he _orders_ it paid to. If a cheque is drawn "_Pay to John Brown or Bearer_" or simply "_Pay to Bearer_," any person that is the bearer can collect it. The paying teller may ask the person presenting the cheque to write his name on the back, simply to have it for reference.

In writing and signing cheques use good black ink and let the copy dry a little before a blotter is used.

_The subject of indorsements will be treated in a subsequent lesson._

IV. BANK CHEQUES (_Continued_)

The banks of this country make it a rule not to cash a cheque that is drawn payable to order, unless the person presenting the cheque is known at the bank, or unless he satisfies the paying teller that he is really the person to whom the money should be paid. It must be remembered however, that a cheque drawn to order and then indorsed in blank by the payee is really payable to bearer, and if the paying teller is satisfied that the payee's signature is genuine he will not likely hesitate to cash the cheque. In England all cheques apparently properly indorsed are paid without identification.

In drawing a cheque in favour of a person not likely to be well known in banking circles, write his address or his business after his name on the face of the cheque. For instance, if you should send a cheque to John Brown, St. Louis, it might possibly fall into the hands of the wrong John Brown; but if you write the cheque in favour of "John Brown, 246 West Avenue, St. Louis," it is more than likely that the right person will collect it.

If you wish to get a cheque cashed where you are unknown, and it is not convenient for a friend who has an account at the bank to go with you for the purpose of identification, ask him to place his signature on the back of your cheque, and you will not likely have trouble in getting it cashed at the bank where your friend keeps his account. By placing his signature upon the back of the cheque he guarantees the bank against loss. A bank is responsible for the signatures of its depositors, but it cannot be supposed to know the signatures of indorsers. The reliable identifier is in reality the person who is responsible.

INDORSING CHEQUES

In indorsing cheques note the following points:

1. Write across the back--not lengthwise.

2. If your indorsement is the first, write it about two inches from the top of the back; if it is not the first indorsement, write immediately under the last indorsement.

3. Do not indorse wrong end up; the top of the back is the left end of the face.

4. Write your name as you are accustomed to write it, no matter how it is written on the face. If you are depositing the cheque write or stamp "For Deposit" or "Pay to ______BANK______," as may be the custom, over your signature. This is hardly necessary if you are taking the cheque yourself to the bank. A cheque with a simple or blank indorsement on the back is payable to bearer, and if lost the finder might succeed in collecting it; but if the words "For Deposit" appear over the name the bank officials understand that the cheque is intended to be deposited, and they will not cash it.

5. If you wish to make the cheque payable to some particular person by indorsing, write "PAY TO ______(NAME)______ or ORDER," and under this write your own name as you are accustomed to sign it.

6. Do not carry around indorsed cheques loosely. Such cheques are payable to bearer and may be collected by any one.

7. If you receive a cheque which has been transferred to you by a BLANK indorsement (name of indorser only), and you wish to hold it a day or two, write over the indorsement the words "PAY TO THE ORDER OF (yourself--writing your own name)." This is allowable legally. The cheque cannot then be collected until you indorse it.

8. An authorised stamped indorsement is as good as a written one. Whether such indorsements are accepted or not depends upon the regulations of the clearing-house in the particular city in which they are offered for deposit. The written indorsement is considered safer for transmission of out-of-town collections.

9. If you are indorsing for a company, or society, or corporation, write first the name of the company (this may be stamped on) and then your own name, followed by the word "TREAS."

10. If you have power of attorney to indorse for some particular person, write his name, followed by your own, followed by the word "ATTORNEY" or "ATTY.," as it is usually written.

11. It is sometimes permissible to indorse the payee's name thus, "BY ______(your own name)." This may be done by a junior member of a concern when the person authorised to indorse cheques is absent and the cheques are deposited and not cashed.

12. Do not write any unnecessary information on the back of your cheque. A story is told of a woman who received a cheque from her husband, and when cashing it wrote "Your loving wife" above her name on the back.

V. BANK CHEQUES (_Continued_)

If you wish to draw money from your own account, the most approved form of cheque is written "Pay to the order of _Cash_." This differs from a cheque drawn to "_Bearer_." The paying teller expects to see yourself, or some one well known to him as your representative, when you write "Cash." If you write "Pay to the order of (_your own name_)" you will be required to indorse your cheque before you can get it cashed.