William Cotton, F.S.A.
Late treasurer of the county of Devon, author of "An Elizabethan Guild," "Gleanings from Records," "The Bank Manager," etc. Originator of the postal order system.
London 1898.
PREFACE.
THE Author, emboldened by a Banking expe- rience of over forty years, offers this little work to the public in the hope that, elementary though it be, it may prove acceptable to many persons of both sexes.
The work has been prepared chiefly for the use of women, a vast proportion of whom are brought up in utter ignorance of money matters in the simplest form, though otherwise they may be highly accomplished.
The subject, it must be allowed, is not a fasci- nating one, but there are periods in the lives of most persons when some knowledge of money matters may be useful and even necessary.
W.C.
CONTENTS.
PAGE CHAP. I. - What is Money? - What to do with it - How to open a Bank Account - How to draw Cheques . . . 1
CHAP. II. - How to Deposit Money at Interest - The Bank Pass Book - The Advantages of a Bank Account . 13
CHAP. III. - London Banks and Banking - Bill of Exchange - Deposits - Scotch and Irish Banks . . . . . . . 20
CHAP. IV. - Investments - What are Securities - Mortgages - The Funds - The National Debt - Stocks and Shares - Dividends, how Payable . . . . . . . . . . . . 26
CHAP. V. - British Government Funds - The Different Debts - Terminable Annuities - Loans Guaranteed by Govern- ment - Dividends, how to Receive them - Automatic Re- investment of Dividends . . . . . . . . . . . . 35
CHAP. VI. - Government Annuities, how to Purchase - When Payable - Tables - Insurance Office Annuities - Tables - Indian Government Stocks . . . . . . . . . . . 41
CHAP. VII. - Loans to Corporations, &c. - Colonial Govern- ment Securities - Inscribed Stocks and Bonds - List of Inscribed Stocks - Bonds and Coupons - Foreign Govern- ment Stocks - Caution in Investing - Railways - The Different Stocks and their Relative Values - The War- rants for Interest and Dividends - Indian Railway Stocks - American Railways - Foreign Railways - Banks - As an Investment - Colonial and Foreign Corporation Stocks - Canals and Docks - Gas - Electric Lighting, Telegraph and Telephone - Water Works - Breweries - Industrial Companies - Financial, Land and Investment Companies - Financial Trusts - Insurance Companies - Steamship Companies - Mines . . . . . . . . . . . . . . . 55
CHAP. VIII. - The Stock Exchange - Brokers and Jobbers - How Business is Done - "Contango" and "Backwarda- tion" - "Bulls" and "Bears" - "Boom" and "Slump" - Settlement - Risk in Keeping Convertible Bonds - Brokers - Traps and Snares - Good Companies and Bad - Advertising Swindles - Gold Mines - A Typical Case - Exploration Companies . . . . . . . . . . . . . 79
CHAP. IX. - Life Insurance - Its Advantages - Mutual and Joint Stock Companies - Choice of Office - Form of Pro- posal - Examination - Premiums, how Payable - Examples of Advantage - Various Modes of Insuring - Bonuses - How Applied - Endowment Insurance - Non-profitable Policies - Settlement Policies - Endowment of Children - Insurance of Joint Lives - Insurance on Longest of Two Lives - Surrenders - Fire Insurance - Farm Stock - Other Insurances . . . . . . . . . . . . . . . . . . 101
CHAP. X. - A Building Society, Mode of Doing Business - How to Obtain a Share, and Table of Payments - How to Withdraw, and Table - Borrowers - How to Build a House - Table of Payments - How Profits are made - The Weak Points of Societies Badly Conducted - What Leads to Collapse - Necessity for Choosing Directors of Standing and Character - Necessity for Efficient Audit of Ac- counts . . . . . . . . . . . . . . . . . . . . 122
CHAP. XI. - The Post Office Savings Bank - Mode of Depo- siting - Opening an Account - Convenience and Precau- tions - Limit in Amounts - Withdrawal - Payment to Representatives - Government Annuities, &c. - Advan- tages the Post Office Offers . . . . . . . . . 134
APPENDIX.
Table of Interest on Investments . . . . . . . . . . . 142 Examples of Business Communications - Sending Money by Post . . . . . . . . . . . . . . . . 143 Requiring Money . . . . . . . . . . . . . . . 143 Acknowledging Receipt . . . . . . . . . . . . . 144 Transfer to Deposit Account . . . . . . . . . . 144 Arranging Cheques to be Honored by Another Bank 145 Request for Passport and Circular Notes . . . . 145 Ordering Letter of Credit . . . . . . . . . . . 146 Remitting in this Country . . . . . . . . . . . 146 Lodging Securities at Bank . . . . . . . . . . 147 Order to Receive Dividends . . . . . . . . . . 147 Ordering Investments . . . . . . . . . . . . . 148
EVERYBODY'S GUIDE TO MONEY MATTERS.
CHAPTER I. EASY STEPS TO MONEY MATTERS.
MONEY is the medium by which we may acquire from others, who are willing to part with them, such things as we may desire. The price of an article is the value set upon it by the possessor, as represented by an expressed sum in money.
The price of some things are arbitrarily fixed by law or custom, such as stamps, professional fees, duties, &c.
The standard of value in this country is gold, and it is as against gold, represented by coins of different denominations, that the value of all commodities is estimated.
The authorised coins of the United Kingdom consist of the following pieces:-
GOLD. Five-sovereign piece, equal to Five pounds. Two-sovereign piece, equal to Two pounds. One-sovereign piece, equal to One pound. Half-sovereign piece, equal to Half-a-pound.
SILVER. A crown, or five-shilling piece, equal to one- fourth of a sovereign. Double-fiorin, or four-shilling piece, equal to one-fifth of a sovereign. Half-a-crown, or two shillings and sixpence, equal to one-eighth of a sovereign. Florin, or two-shilling piece, equal to one- tenth of a sovereign. Shilling piece, equal to one-twentieth of a sovereign. Sixpenny piece, one-half of a shilling. Threepenny piece, one-half of a sixpence.
BRONZE. A penny, equal to one-twelfth of a shilling. Halfpenny, equal to one-half of a penny. Farthing, one-fourth of a penny.
In writing or speaking of sums of money the expression takes the form of "pounds, shillings, and pence"; for example, Twenty-one pounds five shillings and nine pence. Sometimes the word "sterling" is added, meaning genuine or standard coin of the realm. In accounts the figures are placed in three parallel columns under the heading of £ s. d. "£" for pounds, "s." for shillings, and "d." for pence, from Libri, solidi, and denarii, the Latin equivalents for these values.
|| | | | || £ | s. | d. | || 21 | 5 | 9 | || | | |
Another form of money, if it may be so termed, is the Bank note. This is simply a promise to pay, on demand, the amount repre- sented on the note, in gold or some legal tender. The most common in use are £5 notes, but there are others of different denominations, such as £10, £20, £50, £100, &c. Some country banks still issue these notes, but they are by law restricted from issuing beyond a certain amount fixed by the Bank Act of 1844. No new bank can issue notes, and those which have the privi- lege are gradually relinquishing it, so that in course of time there will be only one bank entitled to issue notes, and that is the Bank of England.
The notes of country banks, other than the Bank of England, are not a legal tender; that is, it is not compulsory on anyone to accept them in payment of a debt.
The Bank of England is the oldest joint-stock bank in the country, and although, in its consti- tution, it does not differ materially from other joint-stock banks, yet, being the agent of the British Government in all money matters, and possessing other exclusive privileges, it is looked upon as one of the enduring institutions of the country.* (* See Joint-Stock Banks, p. 68.)
Amongst other privileges it enjoys is the authority to issue promissory notes to a certain extent, representing respectively sums of £5, £10, £20, £50, £100, £200, £500, and £1,000.
These Bank of England notes, as they are termed, are absolutely convertible, that is to say, the bank is legally bound to exchange them for gold at all times when demanded; and a cer- tain amount of gold has always, by law, to be kept in stock for the purpose. Moreover, the tender of Bank of England notes, the same as with gold, in payment of a debt, cannot, in this country, legally be refused. No one, however, can be compelled to give change; that is to say, if you owe a person £4 15s., you are bound in strict law to pay him that exact sum. You cannot offer him a five-pound note and insist upon his giving you 5s. change, though, as a matter of courtesy and convenience, payments are constantly accepted in that form.
It must be obvious that these Bank of Eng- land notes are a great convenience, and even a necessity to the public, as it would be quite impossible to carry on the enormous business of the country if such a cumbersome medium as gold coins was the only legal way of paying debt. Nevertheless, gold coin of proper weight is a legal tender to any amount. Silver is not a legal tender for sums over two pounds, nor bronze for sums over one shilling.
But even with bank-notes the requirements of business are not fully satisfied, as there is always the risk of their being lost or stolen. To avoid this risk, and to provide facilities for buying and selling, with the complications inci- dent thereto, and the passing of money from one hand to another, an intermediary agency is required, and that agency is to be found in the banking companies. In nearly every town, having a pretence to the name, in the United Kingdom, will be found a branch bank of some establishment of more or less repute, and those who are fortunate enough to possess money will do well to take advantage of such an agency for their money matters, having, of course, first ascertained that the standing of the company is such that they may do so with safety and confi- dence.
