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Everybody's Guide to Money Matters
by William Cotton, F.S.A.
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This etext was prepared by Nigel Lacey, Leicestershire, UK.



Transcriber's Notes:

I have used the UK pound symbol () in this e-text as it appears in the original. [It looks like an L with a crossbar.] I am uncertain whether this symbol will be supported on all systems and fonts that this text file ends being viewed with. My apologies if this applies to you.

I have endeavoured to retain the original table formatting, rather than to reformat the tables in alignment with the text. However, as several of the tables were in landscape orientation in the original, this has necessarily resulted in some very long lines in the tables (up to 130 characters in some cases).

Finally, as I checked the transcription process certain errors in the tables came to light. Rather than correct these errors, as they are an integral part of the original, the ones that I noted are marked with underscores (_). [Note that underscores are also used to mark _italicised_ passages in the original text.]



Everybody's Guide to Money Matters

With a description of the various invest- ments chiefly dealt in on the stock exchange, and the mode of dealing therein

also

Some account of the pitfalls prepared for the unwary, and suggestions to the cautious investor.

by

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.

As a first step we give an example of what is occurring daily in hundreds of cases.

Miss Jane Smith is a lady who has been brought up without the slightest instruction in business matters, indeed has rather plumed her- self on the idea of being quite above such things. Suddenly she finds herself dependent upon others for guidance and advice. She would like to act for herself if she only knew how to do so safely, being of a somewhat suspicious temperament and mistrustful of advice from friends or acquaint- ances. Even the highly respectable lawyer, who has handed her a packet of documents and 500 in cash (a legacy from her uncle), with much sage counsel, she is not quite sure about, for she has imbibed the idea from her youth that lawyers are not always to be trusted.

The packet of documents in the tin box as they came to her is set aside in a safe place for the moment, but the bank-notes and gold are a matter of serious concern to her. She fears to carry them about her person lest she should lose them, or be robbed, and feels sure that if kept in the house they will attract any burglars that may be in the neighbourhood.

The best thing Miss Smith can do is to go to one of the neighbouring banks of repute - say the Blankshire Bank - and ask them to help her out of the difficulty.

She has an interview with the Manager or Cashier, tells her story, and is advised to leave the money at the bank and have an account opened in her name. This course she consents to adopt, and hands over the 500, requesting some acknowledgment that she has done so, in common terms, "something to show for it."

Many banks provide and require their cus- tomers to use "paying-in slips," that is, printed forms specifying the payments made to the bank under the head of cheques, notes, gold, and silver. A form is handed in with each payment, and the initials of the cashier placed against the amount noted on the counterfoil, which is re- tained by the customer.

In addition to this Miss Smith will be pre- sented with what is called a pass-book - a book passing between the bank and herself, now become a customer - in which she will find it stated in the briefest business manner, that the Blankshire Bank is Dr. (debtor) to, or owes, Miss Jane Smith 500. She will be told that portions of this money may be drawn out from time to time as she may need it, but this can only be done by cheques, or forms of request to the bank to pay out the amount desired.* These forms, provided by the bank, are printed, blank spaces being left to be filled up in writing, and they are made up in books of various sizes, each form bearing a penny stamp. The customer pays for the book according to the number of stamps it contains, but no more. Miss Smith buys a cheque-book, and, opening it, finds the following form in print:-

(* The practice with some people of writing cheques on plain paper is discountenanced by bankers, and is to be condemned.)

- No. 10901. No. 10901. 189 189 To the Blankshire Banking Company, Blanktown. Pay to or bearer the sum of -

She then recollects that she has no money to go on with, and asks to have 10 of the 500 she has left in the bank. The cashier offers to fill up the blank spaces in her first cheque, making corresponding entries in the counterfoil, and having done so asks her to sign it at the foot.

It then appears as follows:-

- No. 10901. No. 10901. MarchI, 1898 March I, 1898 To the Blankshire Banking Company, Blanktown. Self Pay to Self or bearer the sum of TenPounds 10 10 JaneSmith -

The cheque is detached from the counterfoil at the dotted line, and is retained by the cashier, who hands over 10 to the lady together with the book containing the remaining cheques.

"Oh! I had quite forgotten - I owe Miss Tucker, the milliner, 23 10s. Will the cashier please to let me have 23 10s. to pay her with."

Miss Smith is told that there is no need of incurring the risk of carrying the money through the streets, as a cheque in favour of Miss Tucker will equally answer the purpose; and again he fills up the blank spaces in a second cheque, which appears thus:-

- No. 10902. No. 10902. ! ! _March_I,_ 1898 ! ! March I, 1898 To the Blank!hir! Banking Company, !Bla!ktown. ! ! order J.S. _Miss_Tucker_ Pay to _Miss_Tucker_ or ====== ! ! the sum of _Twenty-three_pounds_10/-_ ! ! 23_10/-__ 23_10/-_! ! _Jane_Smith_ ! ! -

"You see," says the cashier, "I have struck out the word 'bearer' and substituted the word 'order.' This will oblige Miss Tucker to sign her name on the back of the cheque (technically, to 'endorse it') before it can be paid. Your initials are required to confirm the alteration.* I have also drawn parallel lines across the cheque, which makes it what is termed 'a crossed cheque,' and a crossed cheque cannot be cashed direct, but must be paid into an account at a bank. So you see you will have the signature of Miss Tucker, proving that she has been paid her bill by means of this cheque; and it is obvious that by crossing the cheque, should it be lost and made an improper use of, there would be no difficulty in tracing through whose hands it passed."

(* Banks also issue cheques with the word "order" printed instead of "bearer.")

Miss Smith soon learns that all her trades- men's bills may be paid in the same way, with- out going to the bank to draw the money, and with the advantage that the cheque is not only a proof of payment, but that she has also a record of her accounts in the bank pass-book.

It may here be mentioned that should a banker cash a cheque with a forged endorsement, he is not responsible, and the loss falls on the drawer of the cheque.* The crossing of a cheque, how- ever, necessitating its being paid to a bank account, would facilitate the discovery of the culprit. An additional security is given to a crossed cheque if it bears the words "not nego- tiable" written underneath the crossing. This means that it cannot legally be used as a means of payment to a third party. In the event of such a cheque going wrong, the loss would fall upon a bank negotiating it for a customer. The bank could be called upon to make good the amount to the payee.

(* If, however, he pays a cheque with a forged signature he is responsible, as he is supposed to know the handwriting of his own customer.)

It is illegal to post-date a cheque, the reason being that bills of exchange, which are obliga- tions to pay money at a future date, bear a much higher stamp duty than cheques. It would, therefore, be a fraud upon the revenue to make cheques do duty for bills of exchange.



CHAPTER II. THE BANK ACCOUNT.

THE manner in which Miss Smith had left her money on what is termed a current account at the Bank is convenient to herself and profitable to the Blankshire Bank, for they have the use of it free, paying nothing for that use in the way of interest.

She will have other money coming to her in the shape of rents, and the interest on money invested, as represented in those documents in the tin box - all which money can be handed over to the Bank in the same way that the 500 was. There is, however, no reason why she should leave so much lying idle without obtaining any interest upon it. She will reckon up how much she will require for, say, the next six months, for house expenses and personal use, and also how much, on the other hand, she will be paid in rents or interest, and will then find that there will be a sum of; at least, say, 300 over and above all she desires to spend.

If she is wise, she will draw out this sum by cheque from her current account and have it placed on a deposit account. In this case the bank will give her a deposit receipt or interest note, somewhat in this form:-

- No. 23975 26th June, 1897. Blankshire Bank, Blanktown. RECEIVED from Miss Jane Smith the sum of Three Hundred Pounds, to be accounted for with interest at 2.5 per cent per annum, on 14 days' notice of withdrawl. Entered - J. Hill T. Dale, Manager. - (and, written across the receipt "Not transferable")

If the money is at any time wanted in a hurry, banks do not insist upon notice being given to withdraw, but deduct the days of notice from the time the interest note has run. For instance, if the money has been deposited for 184 days, the 14 days of notice will be deducted and interest allowed on 170 days only. These receipts or notes are not transferable, and the repayment of the principal or the interest must be applied for by the owner either personally or by letter.

Money may be deposited in a bank in two names and be repayable to both conjointly, by either separately, or to the survivor of the two. The bank will require a form to be signed by both parties, specifying the manner in which it is desired that the money may be deposited. By giving directions, too, the principal may be retained in the name of one person and the interest paid to another. Some banks adopt the plan of book deposits, that is, the amount paid in is entered in a pass-book, and the interest credited half yearly. This may go on accumu- lating, or it can be drawn out in one sum only, not as in the case of a current account by cheques of various amounts.

Having thus established relations between Miss Smith and her bankers, let us see at the end, say, of a month, the state of her pass-book, premising that in the meantime she has received and paid into the bank some moneys, and also signed and sent cheques to some of her trades- men:-

THE BLANKSHIRE BANK. BLANKTOWN, Dr. to Miss Jane Smith. of Blanktown. Cr. 1897 s. d. 1897 s. d. June 24 To Cash . . 500 0 0 June 24 By Self . . 10 0 0 July 8 " Dividend Consols 11 4 6 " " " Tucker . . 23 10 0 " 23 " Rent from Cook 24 10 0 " 26 " Deposit receipt 300 0 0 " 25 " G.W.R. dividend 30 0 0 July 1 " Figges . . 8 3 4 " 3 " Jones . . 5 10 0 " 24 " Self . . 10 0 0 Total 565 14s. 6d. Total 357 3s. 4d.

By the entries in the pass-book it will be per- ceived that 565 14s. 6d. has been paid into the bank, as appears on the left-hand page, and that 357 3s. 4d. has been drawn out, as appears on the right-hand page. The balance or difference between the two, amounting to 208 11s. 2d., remains to the credit of Miss Smith.

In this comfortable state of things we will leave Miss Smith, who can now claim to consult her banker in matters of business.

He will be able to offer her facilities in various ways. He will hold for her, in safe custody, any deeds or securities; and whilst she is absent from home will take charge of her plate or valu- ables, free of all expense. If she is travelling about the country he will arrange so that her cheques on the Blankshire Bank may be cashed at any other bank in the kingdom. If she has occasion for it he will send money on her account to some other person's credit at any bank in the kingdom or the civilised world. If she desires to travel abroad, he will obtain a passport for her and provide her with "circular notes," which may be turned into money at any place she is likely to visit.

He will buy and sell stocks, shares, annuities, &c., for her, and collect dividends, interest, coupons, &c., payable anywhere at home or abroad. He will cheerfully advise her on all matters connected with money, and it will be quite the exception if she does not, in all things, find him a safe and prudent counsellor.

As a rule, no charge is made by a bank for keeping an account, provided the balance, that is, the amount of money they hold for the cus- tomer - technically the credit balance - is not persistently small. If it were always under 50 that would be considered small, but if only occa- sionally below that figure, and sometimes above 200 for any time, it would generally be exempt from charge. When a charge is made for keeping an account which is not remunerative or free from trouble, it does not amount to much, and is fairly earned.

If an advance of money is required for a tem- porary purpose, the bank will often lend the money by allowing the account to be overdrawn, that is, the balance in the pass-book will appear as due to the bank instead of from the bank for the sum required from time to time. This is sometimes convenient when the advance is only required for a short time as avoiding the necessity for disturbing any investment which otherwise would have to be sold. As a rule, however (though exceptions are made where the customer is absolutely to be depended upon), the bank would desire some security to be deposited. This may take the form of a sufficient portion in value of stocks or shares in which the customer has invested, or sometimes the personal guar- antee of one or two responsible persons is accepted. This is quite regular business, and the interest usually charged is fair and reason- able.



CHAPTER III. LONDON BANKS AND BANKING.

THE private banks now doing business in London are few in number. The tendency of late years has been to transform these banks into "Limited Liability" Companies, or to amal- gamate with companies of this character. It looks as though, in course of time, private banks will altogether cease to exist, the joint-stock banks being better adapted to modern require- ments. The private banks do not invite deposit, and interest on accounts is not allowed. They look to the average balance on each account to compensate for the trouble and expense of keeping it, with a considerable margin for profit. They require that not less than a certain fixed sum shall be the minimum balance of a customer's account, but, of course, the larger the balance the better for the banker.

The balance in some cases may be very large where the bank has a wealthy connection, it being a boast with some rich persons that they have never less than 10,000, or even 20,000 at their bankers. The money so left in the banker's hands is lent out, or invested in various ways, and all that he receives in the shape of interest, after paying the expenses of his estab- lishment, is clear profit. In short, the 500 a year which the customer might obtain if he in- vested the 20,000 he leaves at the bank, goes to the banker.

At the head of the joint-stock banks of London is the Bank of England, which, like the private banks, do not take deposits upon which interest is allowed, but rely upon the cash at their dis- posal in their customers' accounts for their profits. In all other respects their mode of transacting business is much the same as that of other joint-stock banks. Accounts may be opened by merchants and traders, and by private individuals of known respectability, and no par- ticular sum is required to be lodged upon open- ing the account. Formerly cheques were not allowed to be drawn for a less sum than 10, but now there is no restriction as to the amount. The profits of the bank are chiefly made by dis- counting bills of exchange, which is done to an enormous extent. A bill of exchange is an in- strument by which a party who is owed money by another party, and accords to him the benefit of delay in payment, for a fixed period, draws on him in a form of order to that effect.

For instance, the firm of Bullion & Co. have sold to John Robinson certain goods, which need not be specified, as the principle applies in all cases, whether it be bankers, merchants, or traders, and for all transactions where one party is indebted to another. The form drawn by Bullion & Co. on John Robinson, which requires to be stamped according to the amount, would be as follows:-

- Due 1st Nov. 500 London, 29th Aug., 1987. THREE months after date pay to our order the sum of Five Hundred Pounds for value received. To Mr. John Robinson, Bullion & Co. Merchant, Liverpool. - (Written across: Accepted payable at the Bank of London. J. Robinson. )

The acceptance of the obligation by John Robinson is written across the face of the docu- ment, and he makes it payable, as most bills are for convenience, at a London bank, pre- sumably the London agent of his own bankers at Liverpool. Payment becomes due three months after date, with three days of grace added according to custom. Probably Bullion & Co. would find this 500, if in cash, useful in their business, and supposing the parties to be of good repute, they can readily convert it by discounting this bill at their bankers or at a bill broker, who, deducting a small amount in the shape of discount, will hand over the balance to the firm, or carry it to the credit of his account. It is this discount that constitutes the profit to the banker, and the rate varies according to the value of money, whether it is plentiful or scarce.

The rate of discount is supposed to be regu- lated by the Bank of England, and the "bank rate," which is arbitrarily fixed by the directors, is moved up and down (sometimes for other reasons than the value of money), and is sup- posed to be the rate of discount for bills of the best description. It is found in practice, however, that when there is an abundance of money seek- ing employment, bills are discounted at lower rates.

The Bank of England make purchases and sales of British or Foreign securities, and divi- dends on stocks will be received and placed to account. Exchequer bills, bonds, railway deben- tures, or any other securities may be deposited, and the interest, when payable, will be received and placed to a customer's account free of charge. Cash boxes (contents unknown), plate chests, and deed and security boxes are also received for customers for safety, free of charge, and all other banking facilities conceded, as are given by the Blankshire Bank.

The other joint-stock banks of London trans- act their business in all respects in the same manner as the Bank of England. In addition they invite money on deposit, allowing interest on the same. Sums of money lodged on deposit, and they may be by persons who are not other- wise customers, are not carried to a customer's account, but, as in the case of the Blankshire Bank, are placed on a special form of receipt which is changed for a new one when the in- terest or any part of the principal is withdrawn. The rate of interest allowed by the Blankshire Bank, and by the country banks generally, is a fixed one, but that of the London banks is regulated by the value of money, and fluctuates from time to time, notice being given by adver- tisement in the London newspapers of any change in the rate. Deposits are received by the London bankers "at call," that is, payment may be required on demand; or at an arranged term of notice of repayment. The rate of in- terest on money at call is less than where notice is required, and the longer the period of notice the higher the rate of interest.

In Scotland there are no private banks, and in Ireland only two. The joint-stock banks are numerous, and their mode of business is practi- cally the same as in England, indeed the English system is founded on that practised by the Scotch many years before the joint-stock bank was general in England.



CHAPTER IV. INVESTMENTS.

GOING back to the parcel of securities which Miss Smith received from her lawyer, we will presume that they represent safe investments of various kinds. It will be prudent, however, to ask her banker to examine them to see if any, in his judgment, might be sold with advantage (either on account of doubtful character or ex- ceptionally high price), and the money invested elsewhere. This business the bank will transact for her; and in the matter of investment, in addition to using her own common sense as to the nature of the securities in which she should place her money, she should seek the advice of her banker, and rely very much upon his opinion.

The undertakings in which the public are in- vited to invest their money are so numerous, and the prospects of success so speciously asserted, in good and bad alike, that it is necessary to be extremely cautious in accepting any state- ments of the kind without rigid examination and proof of their being true and genuine. Other- wise the investment or purchase becomes a speculation, and, more than likely, will only end in disaster.

The term "securities" applies both to the concerns in which investments are made and to the deeds and documents which represent the investments. Thus a mortgage or a mortgage deed is a "security." The Government Funds, stocks and shares in all companies, bonds, foreign and otherwise, Corporation Stocks, &c., are all termed "securities." A convertible se- curity is one which may be sold in the open market, there being no restriction upon the persons who may hold it.

We will now endeavour to put before the reader some account of the various "securities" in which the public invest their money accord- ing to individual choice, and which (with the exception of mortgage on real property-land or houses) may be bought and sold in the stock- market through the agency of a banker or broker. Quotations of the market price of these securities may be found in the Stock Exchange list, which is published daily, and can be seen at most bankers' offices. Many of them are also quoted in the daily newspapers.

MORTGAGES.

To invest money upon mortgage is to lend it to a person who has house or landed property, and desires to borrow money at a certain speci- fied rate of interest. The title deeds of the property are deposited with the lender of the money, together with a mortgage deed, which describes, in full detail, the terms which may have been agreed upon.

The interest is usually made payable half- yearly, and in the event of its payment not being kept up, or the lender desiring the return of his money, the principal sum can be called up, the lender giving six months' notice of his intention to do so. If the borrower fails to pay, a process of law has to be instituted, called a foreclosure suit, which, if successful, transfers the absolute ownership of the property into the hands of the lender, so that he can receive the rents as his own, or, if he pleases, sell the property under legal authority. In view of such a contingency the value of the property should considerably exceed the amount of the money advanced, so as not only to cover the principal sum, but also any arrears of interest, together with law costs and expenses. The usual pro- portion of an advance on mortgage is two-thirds of the ascertained value of the property, but there might be circumstances which would war- rant some variation in the proportion.

The mortgage deed should be prepared by the lender's own solicitor, who would see that the property had a good title and use all the pre- cautions necessary in transactions of this kind to guard against fraud and loss; and in many cases a professional valuation of the property would be desirable, as a preliminary, before the advance is entertained at all.

Cases have been known where fraudulent per- sons have borrowed money on mortgages of property conveyed to themselves, but as to which they were trustees only for others. The lenders or mortgagees have, in such cases, no alternative but to give up the deeds and submit to the loss of their money.

Debentures are a form of mortgage applicable to the raising of money by a corporation or joint-stock company.

The company mortgages its property for a certain sum, too large for a single person to advance, so it is divided up into even amounts of, say, 100, the money being secured by de- benture bonds, bearing interest at a fixed rate, and being saleable in the stock markets.

THE FUNDS.

"What are the Funds?" The writer has been asked this question over and over again, though it seems scarcely credible that, in these days, any person of ordinary intelligence should be ignorant of the meaning of the term. Unfor- tunately these things are not usually taught in our schools.

"The Funds," generally speaking, is the term applied to the National Debt of Great Britain, the money borrowed by the Government from the people, chiefly for the purpose of carrying on the great wars at the beginning of the present century. For these loans as much as 5 per cent. has in former years been paid, but at present 2 3/4 is the rate payable on the great bulk of the debt.

The year after the Battle of Waterloo the National Debt amounted to nine hundred mil- lions of money; at the present time it amounts to about five hundred and seventy millions, and is steadily diminishing. This being the case, there is of course no need of further borrowing at present, but the loans outstanding - any por- tion of them - may be bought and sold in the market; that is, any lender may transfer all or any part of his loan to some other person, and as there are, daily, hundreds and thousands of individuals wanting to buy or to sell, there is no difficulty whatever, through the medium of the Stock Exchange, in arranging so that a person can obtain, or dispose of, the exact amount of stock he desires.

The chief method by which the National Debt is reduced is described under the head of Terminable Annuities.

STOCKS AND SHARES.

The stock of an institution or company is a fixed sum forming the capital upon which the concern is carried on, or it is the fixed sum bor- rowed for certain purposes. Any quantity of stock may be purchased, but shares, which represent the capital of a company, can only be purchased in whole numbers.

The nominal or face value of stocks and shares by no means necessarily represents their market value; in fact it is the exception that they should do so. The market price is con- tinually fluctuating. Thus, if the price of a given stock is quoted in the lists and news- papers at 110, it means that for every 100 of such stock 10 additional has to be paid, and the stock is said to be at 10 premium. If, on the other hand, it is quoted at 90, it means that 100 of such stock can be purchased for 90, and the stock is said to stand at a discount of 10. The interest in either case is of course calculated on the face value, that is, 100.

This applies to all kinds of stock on the same principle, the prices varying according to the esteem in which they are held, or, in other words, the credit they have with the moneyed world.

The shares of companies, which are only purchasable in whole numbers, are of various denominations, or face values; and again these face values by no means represent the market value. Shares of 5 each (nominal value) may be quoted as selling at 6, which would be 1 pre- mium, but the dividend or interest would be calculated on 5. On the other hand, a 5 share quoted at 4 would be 1 discount, but the dividend or interest would still be calculated on the face value of 5.

In very many cases the whole of the nominal value of a share is not called up, i.e., is not re- quired to be immediately paid. Thus a 5 share may have only 3 paid upon it, leaving a lia- bility of 2, which the holder may at any time be called upon to pay, whether convenient or not. This should always be borne in mind when purchasing shares of any kind, as the neglect of this precaution has often involved holders in serious difficulties, from being called upon to pay up when least able to do so.

The dividend on shares of this kind is calcu- lated only on the amount paid up.

DIVIDENDS.

A dividend is the sum apportioned periodi- cally, in the shape of profit or interest, to holders of stocks and shares. It may be a fixed sum according to the rate of interest, as in the case of the Funds, Colonial Stocks, &c., or a varying sum according to the profits made, as in the case of railway shares and those of other companies. The dividends on the Funds and some Colonial Stocks are paid quarterly, at the beginning of January, April, July, and October. A month prior to the date of payment the stocks are marked "ex-div.," meaning that any purchase effected after the 1st December, 1st March, 1st June, and 1st September, would not carry that quarter's dividend, as it is held in favour of the person whose name is registered on the books on those dates.

The interest dependent upon the shares or stocks of companies is usually paid half-yearly, after the periodical meeting, when the accounts are presented and the profits declared. A cer- tain date is fixed when these shares and stocks are saleable "ex-div." or "ex-interest."



CHAPTER V. BRITISH GOVERNMENT FUNDS.

THE safest of all investments are those repre- sented by the National Debt of this country, but the rate of interest or annual income derivable therefrom is small. The debt is nominally divided into three parts:- The Funded Debt, the Unfunded Debt, Terminable Annuities.

The Funded Debt (1) is permanent; it is repre- sented by Consols yielding interest at the rate of 2 1/2 per cent. per annum, or 2 10s. a year for every 100 of stock. The Government is not under obligation to redeem the principal at any fixed time, but power is reserved to pay off the loan at par (that is at the rate of 100 for every 100 stock, irrespective of its then selling value) in the year 1905. Another debt of compara- tively small amount, bearing interest at 2 3/4 per cent. per annum, may also be paid off at par in 1905.

The great bulk of the National Debt, amount- ing to over five hundred millions sterling, is, represented by what, in Stock Exchange par- lance, is known as Goschen's Consols, so called from the Chancellor of the Exchequer of that name, to whom is due the conversion of the old "three per cents.," in the year 1888.

This stock bears interest at the rate of 2 3/4 per cent. per annum until the year 1903; from that date it is to be reduced to 2 1/2 per cent. until 1923, when the principal may be paid off at par.

There is yet another fixed debt of about forty millions sterling called "Local Loans Stock," being money borrowed by the Government for the purpose of making advances to Corporations for local works. This stock may be redeemed at par in 1912.

The Unfunded Debt (2) consists of loans to the Government for temporary purposes. These loans are for various periods varying from seven days to as many years. They are represented by Exchequer Bills, Exchequer Bonds and Trea- sury Bills, which bear interest, according to the value of money at the time they are issued, from day to day. Due notice is given when a loan is to be paid off or renewed, and interest ceases on the day named for redemption.

TERMINABLE ANNUITIES.

Terminable Annuities (3) may be regarded as a "Sinking Fund," or means by which a con- siderable portion of the National Debt is paid off every year and "The Funds" proportionately reduced.

Thus the Government is empowered to give an annuity for a certain number of years in ex- change for permanent stock in the Funds. For instance, a holder of 1,000 2 3/4 per cent. stock is receiving 27 10s. a year in the shape of interest. The Government offers to pay double the amount of interest or 55, if the 1,000 stock is trans- ferred to them, and to continue this 55 a year for twenty years and no longer.

At the expiration of that period the interest ceases and the principal sum of 1,000 is struck off the National Debt, which is in consequence reduced by that sum.

LOANS - THE INTEREST ON WHICH IS GUARAN- TEED BY THE BRITISH GOVERNMENT.

These consist of loans to the Government of Canada for railway purposes, upon which 4 per cent. per annum is guaranteed. Also loans to the Colonies of Jamaica at 4 per cent. and Mauri- tius at 3 per cent., to the Egyptian Government at 3 per cent. and to the Turkish Government at 4 per cent.; in this latter case the French Government joins in the guarantee.

These are all perfectly safe investments, so far as the interest or income derived is concerned, but there appears to be no arrangement for the redemption of the loans.

The large loans to the Government of India at 3 1/2 and 3 per cent., repayable in 1931 and 1948, are guaranteed by the Secretary of State for India, practically the British Government.

Any amount may be invested in the above stocks and annuities through the medium of either a banker through his broker, or by a broker direct. The broker's charge for trans- acting in Consols is 25. 6d. (1/8) per cent. on the amount invested, but provincial bankers make a further small charge for guaranteeing the busi- ness, that is, they protect their customer from any loss that may arise owing to the failure of the broker to carry out the contract.

The dividends, interest, or annuity derivable from these investments, may be received by personal application of the holder at the Bank of England on certain fixed days, or on signing a printed form furnished on application by the Bank of England, per post, they will send from time to time without further notice a warrant or order for the amount due, which warrant or order may be paid into a bank account, or, on a proper introduction, cashed at any bank or post office. The simplest plan, however, may be to give your banker a Power of Attorney to receive the divi- dends from time to time and place the amount to the credit of your account.

Income tax is deducted from all dividends; but if a person is not liable to such tax, by reason of the total income coming within the Exemption Clause, the amount can be recovered through a surveyor of taxes, as to which the banker would give all the information required (*).

(*) Such information may also be found in detail in a little handy book, "Income Tax, and how to get it Refunded." 1s. 6d. Pub- lished by Messrs. Effingham, Wilson & Co.

The stock of the Bank of England, which may be purchased in any amount, the same as Consols, is a favourite investment with some, but the price is so high that the income to be derived therefrom is no more, and sometimes even less, than from the Funds.

AUTOMATIC RE-INVESTMENT OF DIVIDENDS.

Holders of stock in the Funds who are not desirous of receiving their dividends, but prefer to have them added half-yearly to the capital sum without further action on their part, are granted facilities by which this may be done automatically, on application to the Bank of England. The instructions apply to amounts of stock of less than 1,000 only. These facilities are also extended to holders of Metropolitan Consolidated Stocks, and to the India 3 per cent. and 3 1/2 per cent. stocks.



CHAPTER VI. GOVERNMENT ANNUITIES.

THE Commissioners for the Reduction of the National Debt, under the authority of Parlia- ment, grant annuities either on single lives, or on two lives and the life of the survivor, or on the joint continuance of two lives, such annui- ties to commence immediately. In the case of single lives, the annuity may be made to com- mence at a future period, and the consideration for it may be paid by the purchaser annually in sums of money not less than 5, but in case of default in keeping up the annual instalments, all the annual payments previously made are forfeited, and all right to the annuity is ex- tinguished.

Payment for an annuity is made by the transfer of 2 1/2 per cent. Consols, or money of equi- valent value, at the price of the stock on the day of the transaction.

The tables (see p.44) show the annuity which 100 of 2 1/2 per cent. stock will purchase, to con- tinue during the life of a nominee at the re- spective ages and according to the prices of 2 1/2 per cent. stock therein stated. It will be seen that in the case of money being paid for the purchase of the annuity, the higher the price of Consols the dearer will be the purchase. Thus, a female buying an annuity at the age of fifty, amounting to 5 19s. 8d. per annum, and Consols being at par, or 100, would, if she paid for it in money, have to expend 100. But suppose Consols to be at 108 (as they are at present) she would have to pay 108 for the same annuity.

Tables relating to annuities on joint lives and to deferred annuities may be obtained at the National Debt Office, 19, Old Jewry, London, by application direct, or through a bank.

No person under the age of fifteen can be ap- pointed the nominee for any life annuity.

Life annuities are payable quarterly at the National Debt Office, in the form of a warrant on the Bank of England, either on personal demand, or through a bank by Power of Attor- ney; or they can be transmitted to the pro- prietor by post. The fixed dates are the fifth of January, the fifth of April, the fifth of July, and the fifth of October in each year.

The first quarterly payment of annuities will become due as follows, namely: On annuities purchased between the first of December and the last day of February, on the fifth of April next following the day of purchase.

Between the first of March and the last day of May, on the fifth of July next following.

Between the first of June and the last day of August, on the fifth of October next following.

Between the first of September and the last day of November, on the fifth of January next following.

No sum less than 100 of stock or money can be received in the first instance, but it may be added to subsequently in sums of not less than 20.

Upon the expiration of any life annuity a sum equal to one-fourth of the annuity (over and above all quarterly arrears thereof) will be paid to the representatives of the annuitant, if claimed within two years after such expiration.

Very heavy penalties attach to persons making false statements or declarations in respect of the purchase of an annuity.

Per Acts 10 Geo. IV., cap. 24, and 51 and 52 Vic. cap 15. ————————————- TABLE showing the ANNUITY, continuing during the Life of any person of the following Ages, which 100 STOCK in the 2 1/2 PER CENT. BANK ANNUITIES will purchase.

- When the price of When the price of When the price of 100 of 2 1/2 per 100 of 2 1/2 per 100 of 2 1/2 per Age cent. Stock exclusive cent. Stock exclusive cent. Stock exclusive Age of the of accrued dividend of accrued dividend of accrued dividend of the Nominee lies between lies between lies between Nominee 94 15 9 and 95 13 11. 95 13 11 and 96 12 5. 96 12 5 and 97 11 3. - - - Male. Female. Male. Female. Male. Female. - - - - - - - - s. d. s. d. s. d. s. d. s. d. s. d. 15 4 1 2 3 15 3 4 1 7 3 15 7 4 2 0 3 15 11 15 16 4 1 10 3 15 9 4 2 3 3 16 1 4 2 8 3 16 6 16 17 4 2 7 3 16 4 4 3 0 3 16 8 4 3 5 3 17 1 17 18 4 3 4 3 16 11 4 3 9 3 17 3 4 4 3 3 17 8 18 19 4 4 2 3 17 6 4 4 7 3 17 11 4 5 0 3 18 3 19 20 4 4 11 3 18 2 4 5 5 3 18 6 4 5 10 3 18 11 20 21 4 5 9 3 18 9 4 6 2 3 19 2 4 6 8 3 19 7 21 22 4 6 7 3 19 5 4 7 1 3 19 10 4 7 6 4 0 3 22 23 4 7 6 4 0 1 4 7 11 4 0 6 4 8 5 4 0 11 23 24 4 8 4 4 0 10 4 8 10 4 1 3 4 9 4 4 1 8 24 25 4 9 3 4 1 6 4 9 9 4 2 0 4 10 3 4 2 5 25 26 4 10 3 4 2 4 4 10 9 4 2 9 4 11 3 4 3 2 26 27 4 11 3 4 3 1 4 11 9 4 3 6 4 12 3 4 4 0 27 28 4 12 3 4 3 11 4 12 9 4 4 4 4 13 3 4 4 10 28 29 4 13 3 4 4 9 4 13 10 4 5 2 4 14 4 4 5 8 29 30 4 14 4 4 5 7 4 14 11 4 6 1 4 15 5 4 6 7 30 31 4 15 6 4 6 6 4 16 0 4 7 0 4 16 7 4 7 6 31 32 4 16 7 4 7 6 4 17 2 4 8 0 4 17 9 4 8 6 32 33 4 17 10 4 8 6 4 18 5 4 9 0 4 19 0 4 9 6 33 34 4 19 0 4 9 6 4 19 7 4 10 0 5 0 3 4 10 6 34 35 5 0 4 4 10 7 5 0 11 4 11 1 5 1 6 4 11 8 35 36 5 1 8 4 11 9 5 2 3 4 12 3 5 2 11 4 12 9 36 37 5 3 0 4 12 11 5 3 8 4 13 5 5 4 3 4 14 0 37 38 5 4 5 4 14 2 5 5 1 4 14 8 5 5 9 4 15 3 38 39 5 5 11 4 15 5 5 6 7 4 16 0 5 7 3 4 16 7 39 40 5 7 6 4 16 10 5 8 2 4 17 5 5 8 10 4 18 0 40 41 5 9 1 4 18 3 5 9 9 4 18 10 5 10 6 4 19 5 41 42 5 10 9 4 19 9 5 11 6 5 0 4 5 12 2 5 1 0 42 43 5 12 6 5 1 4 5 13 3 5 2 0 5 14 0 5 2 7 43 44 5 14 5 5 3 0 5 15 1 5 3 8 5 15 11 5 4 4 44 45 5 16 4 5 4 10 5 17 1 5 5 6 5 17 10 5 6 2 45 46 5 18 4 5 6 9 5 19 1 5 7 5 5 19 11 5 8 2 46 47 6 0 6 5 8 9 6 1 3 5 9 6 6 2 1 5 10 2 47 48 6 2 9 5 10 11 6 3 7 5 11 8 6 4 5 5 12 5 48 49 6 5 2 5 13 3 6 6 0 5 14 0 6 6 11 5 14 9 49 50 6 7 8 5 15 7 6 8 7 5 16 5 6 9 5 5 17 2 50 51 6 10 5 5 18 1 6 11 3 5 18 11 6 12 2 5 19 9 51 52 6 13 3 6 0 9 6 14 2 6 1 7 6 15 2 6 2 5 52 53 6 16 4 6 3 7 6 17 4 6 4 5 6 18 4 6 5 4 53 54 6 19 8 6 6 7 7 0 8 6 7 6 7 1 8 6 8 5 54 55 7 3 2 6 9 10 7 4 3 6 10 8 7 5 3 6 11 8 55 56 7 7 0 6 13 3 7 8 1 6 14 2 7 9 2 6 15 2 56 57 7 11 2 6 17 0 7 12 3 6 17 11 7 13 5 6 18 11 57 58 7 15 8 7 0 11 7 16 10 7 1 11 7 18 0 7 2 11 58 59 8 0 7 7 5 1 8 1 9 7 6 2 8 3 0 7 7 3 59 60 8 5 10 7 9 6 8 7 0 7 10 8 8 8 4 7 11 9 60 61 8 11 3 7 14 4 8 12 7 7 15 6 8 13 11 7 16 8 61 62 8 16 11 7 19 5 8 18 3 8 0 7 8 19 8 8 1 10 62 63 9 3 0 8 4 10 9 4 5 8 6 1 9 5 10 8 7 4 63 64 9 9 5 8 10 8 9 10 11 8 12 0 9 12 5 8 13 4 64 65 9 16 3 8 17 2 9 17 10 8 18 6 9 19 5 8 19 11 65 66 10 3 6 9 4 1 10 5 1 9 5 6 10 6 8 9 7 0 66 67 10 11 0 9 11 8 10 12 8 9 13 2 10 14 5 9 14 8 67 68 10 19 0 9 19 9 11 0 9 10 1 4 11 2 7 10 2 11 68 69 11 7 8 10 8 4 11 9 6 10 10 0 11 11 4 10 11 8 69 70 11 17 0 10 17 5 11 18 11 10 19 1 12 0 11 11 0 11 70 71 12 6 11 11 6 8 12 9 0 11 8 6 12 11 0 11 10 5 71 72 12 17 8 11 16 5 12 19 10 11 18 4 13 2 0 12 0 4 72 73 13 9 0 12 6 9 13 11 3 12 8 9 13 13 6 12 10 10 73 74 14 0 9 12 17 8 14 3 1 12 19 10 14 5 6 13 2 0 74 75 14 13 0 13 9 4 14 15 6 13 11 7 14 18 0 13 13 10 75 76 15 6 2 14 1 9 15 8 9 14 4 1 15 11 5 14 6 6 76 77 15 19 8 14 15 0 16 2 5 14 17 6 16 5 2 15 0 0 77 78 16 14 0 15 9 0 16 16 10 15 11 8 16 19 9 15 14 4 78 79 17 9 3 16 4 0 17 12 3 16 6 10 17 15 4 16 9 7 79 80 18 5 4 16 19 10 18 8 6 17 2 9 18 11 9 17 5 9 80 -

Per Acts 10 Geo. IV., cap. 24, and 51 and 52 Vic. cap 15. ————————————- TABLE showing the ANNUITY, continuing during the Life of any person of the following Ages, which 100 STOCK in the 2 1/2 PER CENT. BANK ANNUITIES will purchase.

- When the price of When the price of When the price of 100 of 2 1/2 per 100 of 2 1/2 per 100 of 2 1/2 per Age cent. Stock exclusive cent. Stock exclusive cent. Stock exclusive Age of the of accrued dividend of accrued dividend of accrued dividend of the Nominee lies between lies between is above Nominee 97 11 3 and 98 10 6. 98 10 6 and 99 10 1. 99 10 1. - - - Male. Female. Male. Female. Male. Female. - - - - - - - - s. d. s. d. s. d. s. d. s. d. s. d. 15 4 2 5 3 16 4 4 2 10 3 16 8 4 3 3 3 17 0 15 16 4 3 1 3 16 10 4 3 7 3 17 3 4 4 0 3 17 7 16 17 4 3 11 3 17 5 4 4 4 3 17 10 4 4 9 3 18 3 17 18 4 4 8 3 18 0 4 5 1 3 18 5 4 5 7 3 18 10 18 19 4 5 6 3 18 8 4 5 11 3 19 1 4 6 5 3 19 6 19 20 4 6 3 3 19 4 4 6 9 3 19 8 4 7 3 4 0 1 20 21 4 7 2 4 0 0 4 7 7 4 0 5 4 8 1 4 0 10 21 22 4 8 0 4 0 8 4 8 6 4 1 1 4 9 0 4 1 6 22 23 4 8 11 4 1 4 4 9 5 4 1 9 4 9 11 4 2 3 23 24 4 9 10 4 2 1 4 10 4 4 2 6 4 10 10 4 3 0 24 25 4 10 9 4 2 10 4 11 4 4 3 3 4 11 10 4 3 9 25 26 4 11 9 4 3 7 4 12 3 4 4 1 4 12 10 4 4 6 26 27 4 12 9 4 4 3 4 13 4 4 4 11 4 13 10 4 5 4 27 28 4 13 10 4 5 3 4 14 4 4 5 9 4 14 11 4 6 3 28 29 4 14 11 4 6 2 4 15 6 4 6 7 4 16 0 4 7 1 29 30 4 16 0 4 7 0 4 16 7 4 7 6 4 17 2 4 8 0 30 31 4 17 2 4 8 0 4 17 9 4 8 6 4 18 4 4 9 0 31 32 4 18 4 4 9 0 4 18 11 4 9 6 4 19 6 4 10 0 32 33 4 19 7 4 10 0 5 0 2 4 10 6 5 0 10 4 11 1 33 34 5 0 10 4 11 1 5 1 6 4 11 7 5 2 1 4 12 2 34 35 5 2 2 4 12 2 5 2 10 4 12 9 5 3 5 4 13 4 35 36 5 3 6 4 13 4 5 4 2 4 13 11 5 4 10 4 14 6 36 37 5 4 11 4 14 7 5 5 7 4 15 2 5 6 4 4 15 9 37 38 5 6 5 4 15 10 5 7 1 4 16 5 5 7 10 4 17 0 38 39 5 7 11 4 17 2 5 8 8 4 17 9 519 4 4 18 5 39 40 5 9 6 4 18 7 5 10 3 4 19 2 5 11 0 4 19 10 40 41 5 11 3 5 0 1 5 11 11 5 0 8 5 12 8 5 1 4 41 42 5 12 11 5 1 8 5 13 8 5 2 3 5 14 6 5 3 0 42 43 5 14 9 5 3 3 5 15 6 5 4 0 5 16 4 5 4 8 43 44 5 16 8 5 5 0 5 17 6 5 5 9 5 18 3 5 6 5 44 45 5 18 8 5 6 11 511 6 5 7 7 6 0 4 5 8 4 45 46 6 0 9 5 8 10 6 1 7 5 9 7 6 2 5 5 10 4 46 47 6 3 0 5 10 11 6 3 10 5 11 8 6 4 8 5 12 6 47 48 6 5 3 5 13 2 6 6 2 5 13 11 6 7 1 5 14 9 48 49 6 7 9 5 15 6 6 8 8 5 16 4 6 9 7 5 17 1 49 50 6 10 4 5 18 0 6 11 4 5 18 10 6 12 3 5 19 8 50 51 6 13 2 6 6 6 6 14 1 6 1 5 6 15 1 6 2 3 51 52 6 16 1 6 3 3 6 17 1 6 4 2 6 18 1 6 5 0 52 53 6 19 4 6 6 2 7 0 4 6 7 1 7 1 5 6 8 0 53 54 7 2 8 6 9 4 7 3 9 6 10 3 7 4 10 6 11 2 54 55 7 6 4 6 12 7 7 7 5 6 13 6 7 8 7 6 14 6 55 56 7 10 3 6 16 2 7 11 5 6 17 2 7 12 7 6 18 2 56 57 7 14 6 7 0 0 7 15 9 7 1 0 7 16 11 7 2 1 57 58 7 19 2 7 4 0 8 0 5 7 5 1 8 1 8 7 6 2 58 59 8 4 3 7 8 4 8 5 6 7 9 6 8 6 10 7 10 7 59 60 8 9 7 7 12 11 8 10 11 7 14 1 8 12 4 7 15 3 60 61 8 15 3 7 17 10 8 16 7 7 19 1 8 18 0 8 0 4 61 62 9 1 0 8 3 1 9 2 6 8 4 4 9 4 0 8 5 8 62 63 9 7 3 8 8 8 9 8 9 8 10 0 9 10 4 8 11 4 63 64 9 13 11 8 14 8 9 15 6 8 16 1 9 17 1 8 17 6 64 65 10 1 0 9 1 4 10 2 7 9 2 9 10 4 4 9 4 3 65 66 10 8 5 9 8 6 10 10 1 9 10 0 10 11 10 9 11 6 66 67 10 16 2 9 16 3 10 17 11 9 17 10 10 19 9 9 19 6 67 68 11 4 5 10 4 7 11 6 3 10 6 3 11 8 2 10 7 11 68 69 11 13 3 10 13 5 11 15 3 10 15 2 11 17 2 10 17 0 69 70 12 2 11 11 2 9 12 4 11 11 4 7 12 7 0 11 6 6 70 71 12 13 2 11 12 4 12 15 4 11 14 3 12 17 6 11 16 3 71 72 13 4 2 12 2 4 13 6 5 12 4 5 13 8 9 12 6 6 72 73 13 15 10 12 13 0 13 18 2 12 15 1 14 0 7 12 17 4 73 74 14 7 11 13 4 2 14 10 5 13 6 5 14 13 0 13 8 9 74 75 15 0 7 13 16 2 15 3 2 13 18 7 15 5 10 14 1 0 75 76 15 14 1 14 8 11 15 16 10 14 11 6 15 19 7 14 14 0 76 77 16 8 0 15 2 7 1710 11 15 5 3 16 13 10 15 7 11 77 78 17 2 8 15 17 0 17 5 9 15 19 10 17 8 10 16 2 8 78 79 17 18 5 16 12 6 18 1 8 16 15 5 18 4 10 16 18 5 79 80 18 15 0 17 8 10 18 18 4 17 11 11 19 1 9 17 15 0 80 -

INSURANCE OFFICE ANNUITIES.

Some of the Insurance Offices grant imme- diate annuities. Of course, in purchasing a life annuity from an Insurance Office, it is necessary to ensure as far as is humanly possible that an annuity will be paid for life. This not only de- pends upon the present solvency of the company, but upon that solvency being maintained. There is not much difficulty, however, in selecting from amongst the numerous well-established companies, with proper advice, one that will answer every requirement. The following table shows the amount of an annuity granted by the undermentioned companies for every 100 paid. The age last birthday is that upon which the pay- ment is based, and the initial letters M. and F. indicate the rates for male and female lives. The ages quoted range from 50 to 70 years, but the terms for purchasing an annuity at any age can be obtained at the Insurance Office.

By a few companies, distinguished thus (!), the proportionate amount of annuity is payable to the day of death.

- Office Age 50 Age 52 Age 55 Age 58 Age 60 Age 62 Age 65 Age 70 - - - s. d. s. d. s. d. s. d. s. d. s. d. s. d. s. d. !British Empire Mutual M 7 4 6 7 10 2 8 0 2 8 12 10 9 3 2 9 14 6 10 14 4 12 16 4 M F 6 12 0 6 17 0 7 6 2 7 17 4 8 6 2 8 16 2 9 14 4 11 15 10 F Caledonian M 7 6 2 7 12 0 8 2 8 8 16 0 9 7 0 9 19 2 11 0 0 13 5 10 M F 6 11 8 6 17 0 7 6 2 7 17 11 8 7 0 8 15 7 9 13 10 11 14 11 F City of Glasgow M 7 5 6 7 11 6 8 2 0 8 15 6 9 6 6 9 18 6 10 19 0 13 4 6 M F 6 12 6 6 17 6 7 7 5 7 17 9 8 6 7 8 16 0 9 14 10 11 14 7 F Eagle M 7 5 10 7 11 6 8 1 10 8 15 0 9 5 8 9 17 6 10 18 0 13 1 4 M F 6 12 10 6 18 2 7 7 6 7 19 2 8 8 4 8 18 8 9 17 6 12 0 4 F Economic M 7 5 6 7 11 6 8 1 10 8 15 4 9 6 4 9 18 4 10 19 8 13 4 10 M F 6 12 4 6 17 8 7 7 4 7 19 2 8 8 4 8 19 0 9 18 4 12 2 8 F Edinburgh M 7 4 6 7 10 6 8 1 4 8 14 10 9 6 2 9 18 6 11 0 0 12 19 6 M F 6 11 2 6 16 8 7 6 6 7 18 6 8 8 0 8 18 10 9 18 6 11 17 8 F !English and Scottish M 7 10 0 7 16 8 8 6 10 8 19 0 9 10 2 10 2 8 11 3 2 13 6 4 M Law F 6 12 4 6 17 4 7 7 4 7 19 4 8 8 6 8 18 10 9 18 4 11 19 0 F !Friends' Provident M 6 15 4 7 0 10 7 10 4 8 1 8 8 10 7 9 0 9 9 18 10 11 18 6 M F 6 5 8 6 10 9 6 19 11 7 11 1 7 19 11 8 9 11 9 7 1 11 4 7 F General M 7 4 8 7 11 10 8 3 10 8 17 4 9 7 2 9 18 8 11 2 0 13 8 6 M F 6 13 4 6 18 10 7 9 2 8 1 2 8 10 0 8 19 6 9 15 8 11 10 10 F !Gresham 6 18 5 7 4 0 7 14 1 8 6 7 8 16 8 9 7 11 10 8 1 12 12 11 !Guardian M 6 19 4 7 5 4 7 15 8 8 9 0 8 19 8 9 11 6 10 1 2 12 15 10 M F 6 6 6 6 11 10 7 1 6 7 13 2 8 2 4 8 12 10 9 11 8 11 14 8 F !Hand-in-Hand M 7 3 4 7 9 4 8 0 0 8 13 4 9 4 2 9 16 2 10 17 0 13 1 4 M F 6 10 2 6 15 8 7 5 4 7 17 2 8 6 6 8 17 0 9 16 2 11 19 10 F Law Union and Crown M 7 2 8 7 8 4 7 18 10 8 12 0 9 2 8 9 14 8 10 15 6 13 0 2 M F 6 9 10 6 15 2 7 4 8 7 15 10 8 4 10 8 15 2 9 14 2 11 17 6 F !Legal and General M 7 2 0 7 7 6 8 18 6 8 13 8 9 5 2 9 17 6 10 17 10 M F 6 7 10 6 13 0 7 2 0 7 13 0 8 1 10 8 12 2 9 6 8 F Life Association of M 7 6 0 7 12 0 8 2 8 8 16 0 9 7 0 9 19 2 11 0 6 13 4 8 M Scotland F 6 12 10 6 18 2 7 7 10 7 19 8 8 9 0 8 19 10 9 19 2 12 2 6 F Liverpool and London M 7 4 4 7 10 6 8 1 4 8 15 0 9 6 4 9 19 0 11 0 10 13 7 8 M and Globe F 6 10 10 6 16 6 7 6 4 7 18 4 8 8 0 8 19 0 9 19 0 12 4 10 F London, Edinburgh, M 8 5 0 8 11 0 9 1 8 9 15 4 10 6 8 10 19 2 12 1 2 14 7 10 M and Glasgow F 7 11 0 7 16 6 8 6 2 8 18 4 9 8 0 9 18 10 10 18 8 13 4 10 F Marine and General M 6 17 3 7 3 3 7 13 3 8 5 0 8 14 9 9 7 0 10 10 0 12 12 0 M Mutual F 6 4 3 6 9 6 6 18 9 7 10 6 7 19 6 8 9 6 9 8 3 11 10 6 F National Life M 7 11 3 7 17 3 8 7 11 9 1 5 9 12 7 10 4 10 11 6 5 13 12 3 M F 6 17 9 7 3 3 7 13 0 8 4 11 8 14 4 9 5 2 10 4 9 12 9 10 F National Provident M 6 15 4 7 0 10 7 10 4 8 1 8 8 10 6 9 0 8 9 18 10 11 18 6 M F 6 5 8 6 10 8 6 19 10 7 11 0 7 19 10 8 9 10 9 7 0 11 4 6 F North British and M 7 5 4 7 11 4 8 1 10 8 15 2 9 6 2 9 18 2 10 19 4 13 4 6 M Mercantile F 6 12 2 6 17 6 7 7 2 7 19 0 8 8 2 8 18 10 9 18 2 12 2 6 F !Northern M 7 1 8 7 7 0 7 16 6 8 8 8 8 18 6 9 9 4 10 8 6 12 8 8 M F 6 9 6 6 14 4 7 3 0 7 13 10 8 2 2 8 11 10 9 9 2 11 9 0 F !Pearl M 7 9 4 7 15 8 8 6 10 9 0 4 9 11 0 10 3 2 11 4 6 13 10 6 M F 7 3 2 7 9 4 8 0 2 8 13 0 9 3 0 9 14 6 10 14 6 12 17 6 F Positive M 7 0 0 7 8 0 8 0 0 8 15 0 9 5 0 9 19 0 11 0 0 13 5 0 M F 6 10 0 6 16 0 7 5 0 8 0 0 8 10 0 9 0 0 9 15 0 11 15 0 F !Provident Clerks' M 6 15 10 7 1 6 7 11 9 8 4 9 8 15 1 9 6 9 10 6 10 12 9 5 M F 6 3 3 6 8 7 6 17 10 7 9 1 7 18 1 8 8 5 9 7 0 11 8 7 F Prudential M 6 16 6 7 2 6 7 13 6 8 7 0 8 18 0 9 10 6 11 12 0 12 17 0 M F 6 3 0 6 9 0 6 19 0 7 11 0 8 0 6 8 11 0 9 11 0 11 15 0 F !Rock M 7 5 0 7 11 2 8 2 2 8 16 2 9 7 9 10 0 5 11 2 11 13 4 2 M F 6 11 4 6 17 0 7 6 11 7 19 4 8 9 0 9 0 2 10 0 6 12 1 3 F Royal M 6 12 7 6 18 11 7 9 5 8 1 8 8 11 2 9 2 2 10 1 10 12 1 0 M F 6 5 3 6 11 0 7 0 7 7 11 3 7 19 6 8 8 8 9 5 0 10 17 9 F Royal Exchange M 6 16 11 7 2 9 7 13 0 8 5 11 8 16 6 9 8 1 10 8 5 12 11 3 M F 6 4 3 6 9 6 6 18 11 7 10 5 7 19 5 8 9 8 9 8 3 11 10 7 F Scottish Amicable M 7 0 7 7 6 2 7 16 5 8 9 2 8 19 4 9 11 1 10 11 10 12 15 7 M F 6 7 8 6 13 2 7 2 8 7 13 9 8 2 5 8 12 9 9 12 0 11 14 1 F Scottish Life M 7 7 6 7 13 6 8 4 4 8 17 10 9 9 0 10 1 2 11 2 8 13 8 6 M F 6 13 6 6 19 0 7 8 8 8 0 8 8 10 0 9 0 8 10 0 0 12 2 6 F Scottish Metropolitan M 7 10 10 7 18 0 8 9 4 9 2 0 9 11 8 10 3 6 11 5 8 13 11 11 M F 6 12 9 6 17 9 7 6 8 7 17 6 8 6 1 8 16 3 9 14 6 11 15 8 F Scottish Provident M 7 2 8 7 8 5 7 18 9 8 11 11 9 2 8 9 14 6 10 15 3 12 16 10 M F 6 9 8 6 15 0 7 4 4 7 15 11 8 5 1 8 15 6 9 14 5 11 14 3 F !Scottish Widows' Fnd. M 6 8 0 6 13 4 7 2 2 7 12 10 8 1 0 8 10 6 9 7 10 11 8 6 M F 6 2 6 6 7 6 6 16 0 7 6 2 7 14 0 8 3 2 8 19 10 10 18 6 F Standard M 6 19 4 7 5 0 7 15 1 8 7 10 8 18 5 9 10 0 10 10 3 12 7 9 M F 6 9 8 6 15 0 7 4 4 7 16 0 8 5 1 8 15 6 9 14 5 11 7 1 F Star M 7 3 9 7 10 6 8 2 1 8 15 8 9 5 5 9 16 7 10 17 2 13 0 1 M F 6 14 4 6 19 11 7 9 6 8 0 11 8 9 11 9 0 1 9 18 6 11 15 8 F Sun (of India) M 7 5 10 7 12 0 8 2 10 8 16 8 9 8 0 10 0 4 11 2 2 13 8 8 M F 6 12 6 6 18 0 7 7 10 8 0 0 8 9 8 9 0 8 10 0 6 12 6 0 F United Kingdom M 6 15 0 7 0 6 7 10 3 8 2 6 8 15 11 9 3 3 10 0 3 12 1 0 M Temperance F 6 2 11 6 8 0 6 16 11 7 6 5 7 16 4 8 6 0 9 3 4 11 2 3 F Yorkshire M 7 1 2 7 7 6 7 18 0 8 10 4 9 0 0 9 11 6 10 11 0 12 15 0 M F 6 8 0 6 13 6 7 2 0 7 12 6 8 2 6 8 13 6 9 12 0 11 12 0 F - - - Post Office (Govt.) M 6 13 4 6 19 2 7 9 10 8 3 2 8 14 0 9 6 0 10 6 10 12 10 10 M Anns. F 6 0 6 6 6 0 6 15 8 7 7 6 7 16 8 8 7 4 9 6 4 11 9 6 F - - - Equitable, U. States} M 7 10 0 7 15 9 8 6 2 8 19 3 9 9 10 10 1 9 11 1 8 12 17 11 M Mutual, New York } F 6 16 9 7 2 1 7 11 6 8 3 1 8 12 1 9 2 8 10 0 9 11 17 8 F New York } -

INDIAN GOVERNMENT STOCKS.

These stocks stand as high in the estimation of the public as the British Government Funds. They consist of loans raised in this country for the use of the Indian Government and are two in number, bearing interest respectively at the rate of 3 and 3 1/2 per cent.

There is also what is termed a Rupee Paper Loan, raised in India at 3 1/2 per cent. per annum. The interest is paid in the currency of the coun- try, which is the rupee, and that coin being worth only a little more than half its nominal value in this country, the investor in this stock would receive in the shape of interest little more than half the 3 10s. a year. The price of the stock in the market is consequently in the same proportion, and at the present moment is about 62 for every 100 stock.



CHAPTER VII. LOANS TO CORPORATIONS AND COUNTIES OF THE UNITED KINGDOM.

THESE are loans raised by boroughs and coun- ties, and other authorities in this country, for local purposes, upon the security of the rates or other assured income. Before the money is borrowed the consent of the Local Government Board is necessary to make the loan legal, and evidence is required that the resources of the borrowers are ample to meet their obligations.

On most of these stocks the rate of interest is 3 per cent., though there are some few at 3 1/2 per cent. The principal is redeemable at fixed dates, or by a sinking fund, that is, by setting aside so much a year to pay off the loan at a fixed time, or as opportunity offers. For instance, in times when money is scarce or dear there is a proba- bility of these stocks falling below their par value, and the Sinking Fund is then used to buy the stock in the market. Thus the Corporation may be able in effect to pay off a loan of 100 for 90 or 95, whatever the price may be, and so gain the amount of the difference.

Investments in securities of this kind may be considered absolutely safe, although certainly there is the contingent risk of a town, after bor- rowing up to its full powers, drifting into decay from the loss of its staple trade, and so finding itself unable to meet its obligations. The in- vestor should, however, find no difficulty in discovering where such a contingency would be possible.

The interest on these loans is usually sent direct to the stock-holders, by means of an order on a bank.

COLONIAL GOVERNMENT SECURITIES.

Loans made to the various Colonies of Great Britain have always been a favourite mode of investing money, as they command a better rate of interest, at least they have done so in the past, although the confidence which the Colonies have succeeded in inspiring now enables them to borrow money at a low rate of interest. At the same time the old stocks have advanced to a very considerable premium.

Experience has shown that, so far, the invest- ment has been a safe one, although great fluc- tuations have from time to time taken place in the value of some of the stocks, owing to a check in prosperity, depression of trade, or diminished confidence in the stability of the Colony from various causes. These transient clouds have, however, in time, passed away, and confidence has again been established.

The investor should be able readily to distin- guish between those Colonies which are perma- nently settled and not likely to be seriously affected by any passing crisis, and others in a less fortunate or advanced position. And he would do well, if adversity should at any time overtake a Colony, and so send down the value of its stock, to avoid selling out in a panic, but to consider whether the circumstances are such that the crisis may pass off at no distant date, and confidence be restored. It should be remem- bered that there are always speculators who, at such times, endeavour to intensify a crisis, in order that prices may be forced down, and that they may be thereby enabled to acquire stocks at low prices from timid holders.

There are two modes of investing in these securities, 1. Inscribed or Registered Stock. 2. Bonds.

In the case of Inscribed or Registered Stock, any amount can be invested, and the same is registered in the books of the Bank of England or elsewhere, in the name of the investor, in the same way as the Government Funds. The divi- dend or interest is sent to the owner's address by an order payable at a bank, half-yearly or quarterly, as the case may be, or it may, on written instructions being sent to the agents, be transmitted to the credit of the account of the holder at his own bankers periodically. This is by far the best plan; it saves trouble and risk, and, for the matter of that, something in postage. It is, moreover, the method much preferred by the agents themselves, and it involves no additional expense.

The following is a list of the Inscribed Stocks of the Colonial Governments, with an example of the way in which the market price, which of course varies almost from day to day, is quoted:-

COLONIAL GOVERNMENT INSCRIBED STOCKS. - 1 2 3 4 5 6 7 8 - - - 100,000 100,000 1 Mar. 1 Sept. 4 Aug. 4 Antigua 4% Inscribed Stock 1919-44 115 - 117 375,000 375,000 15 Mar. 15 Sept. 17 Aug. 3 1/2 Barbados 3 1/2% Inscribed Stock 1925-42 109 - 111 1,120,000 969,940 1 Jan. 1 July 16 Dec. 3 British Columbia (Province of) 3% Insc. Stock 1941 101 - 103 194,500 15 Jan. 15 July 16 Dec. 4 British Guiana 4% Inscribed 1935 118 - 120 7,505,800 7,505,800 1 May 1 Nov. 19 Oct. 4 Canada 4% Stock Registered 1904-4-6-8 105 - 111 3,975,614 3,975,614 1 Jan. 1 July 15 Dec. 4 Do. 4% Reduced (late 5%) Registered 1910 109 - 111 4,550,300 4,550,300 1 June Dec. 16 Nov. 3 1/2 Do. 3 1/2% Stock Registered 1909-34 107 - 109 3,431,700 3,431,700 1 Jan. July 15 Dec. 4 Do. 4% Loan for 4,000,000 1910-35 110 - 112 10,939,834 9,978,021 " " " 3 Do. 3% Stock Registered 1938 102 - 104 3,000,000 2,115,152 1 June 1 Dec. 16 Nov. 4 Cape of Good Hope 4% Stock Registered 1917-23 117 - 119 3,769,465 3,769,465 " " " 4 Do. (Loan of 1883) Inscribed 1923 119 - 121 9,997,566 9,997,566 15 Apl. 15 Oct. 2 Oct. 4 Do. 4% Consolidated Stk. Ins. 1916-36 116 - 118 5,154,272 1 Jan. 1 July 16 Dec. 3 1/2 Do. 3 1/2% Consolidated Ins. Stk. 1929-49 115 - 117 1,076,100 1,070,100 15 Feb. 15 Aug. 16 Jan. 4 Ceylon 4% Inscribed Stock 1934 123 - 125 1,450,000 1,450,000 1 May 1 Nov. 2 Oct. 3 Do. 3% Inscribed Stock 1940 104 - 106 123,670 123,670 15 May 15 Nov. 16 Oct. 4 Grenada 4% Inscribed Stock 1917-42 115 - 117 341,800 341,800 15 April 15 Oct. 16 Sept. 3 1/2 Hong Kong 3 1/2% Inscribed Stock 1918-43 107 - 110 1,086,241 16 Feb. 16 Aug. 16 Jan. 4 Jamaica 4% Inscribed Stock 1934 120 - 122 480,749 480,759 1 Feb. 1 Aug. 2 Jan. 4 Mauritius 4% Inscribed Stock 1937 121 - 123 282,481 15 May 15 Nov. 16 Oct. 4 Natal 4% Consolidated Stock, Inscribed 1927 120 - 122 3,026,444 3,026,444 1 April 1 Oct. 1 Sept. 4 Do. do. do. 1937 123 - 125 3,714,917 3,714,917 1 June 1 Oct. 3 Nov. 3 1/2 Do. 3 1/2% Inscribed Stock 1914-39 107.5-108.5 320,000 320,000 1 Jan. 1 July 16 Dec. 4 Newfoundland Inscribed 1913-38 109 - 111 550,000 550,000 " " " 4 Do. 4% Inscribed Stock 1935 110 - 112 200,000 200,000 " " " 4 Do. 4% Consolidated Stock Inscribed 1936 110 - 112

9,686,300 9,686,300 1 Jan. 1 July 2 Dec. 4 New South Wales Stock, Inscribed 1933 120 - 122 16,500,000 16,500,000 1 April 1 Oct. 2 Sept. 3 1/2 Do. 3 1/2% Stock, Inscribed 1924 110 - 111 12,826,200 1 Mar. 1 Sept. 5 Aug. 3 1/2 Do. 3 1/2% Stock, Inscribed 1918 109 - 110 4,000,000 4,000,000 1 April 1 Oct. 2 Sept. 3 Do. 3% Inscribed Stock 1935 101.5-102.5 29,150,302 29,150,302 1 May 1 Nov. 2 Oct. 4 New Zealand 4% Consolidated Stock Inscribed 1929 115 - 116 5,960,588 5,960,588 1 Jan. 1 July 2 Dec. 3 1/2 Do. 3 1/2% Stock 1940 105.5-106.5 1,527,000 1,526,620 1 April 1 Oct. 2 Sept. 3 Do. 3% Inscribed 1945 100.5-101.5 10,866,900 10,866,900 1 Jan. 1 July 2 Dec. 4 Queensland Stock Inscribed 1915-24 113 - 115 8,516,734 8,516,734 " " " 3 1/2 Do. 3 1/2% Inscribed 1921-4-30 105.5-106.5 1,250,000 1,250,000 " " " 3 1/2 Do. 3 1/2% do. 1945 107.5-108.5 85,490 85,480 15 Feb. 15 Aug. 16 Jan. 4 St. Lucia 4% Inscribed Stock 1919-44 112 - 114 7,721,000 7,721,000 1 April 1 Oct. 11 Sept. 4 S. Australia (Loans of 1882-3-4-5-6-7) Reg. 1916-36 112 - 114 2,850,713 2,517,800 1 Jan. 1 July 14 Dec. 3 1/2 Do. 3 1/2% Inscribed Stock Registered 1939 111 - 113 839,500 839,500 " " " 3 Do. 3% do. do. 1916-26 97.5- 98.5 3,546,500 3,546,500 1 Jan. 1 July 16 Dec. 3 1/2 Tasmanian 3 1/2% Inscribed Stock 1920-40 106 - 108 1,000,000 1,000,000 " " " 4 Do. 4% do. 1920-40 114 - 116 100,000 100,000 15 Mar. 15 Sept. 17 Aug. 4 Trinidad 4% Inscribed Stock 1917-42 114 - 116 3,365,300 3,365,300 1 Jan. 1 July 16 Dec. 4 Victoria 4% Railway Loan, 1881, Inscrib. Stock 1907 106 - 108 9,358,200 9,358,200 1 April 1 Oct. 16 Sept. 4 Do. Loans of 1882-3-4, Inscrib. Stock 1908-13-19 107 - 113 6,000,000 6,000,000 1 Jan. 1 July 16 Dec. 4 Do. Loan of 1885, Inscribed Stock 1920 112 - 114 12,000,000 12,000,000 " " " 3 1/2 Do. 3 1/2% Inscribed Stock 1921-3-6 104.5-105.5 2,107,000 2,107,000 " " " 4 Do. 4% Inscribed Stock 1911-26 108 - 110 961,277 961,277 15 Jan. 15 July 16 Dec. 4 Western Australia 4% Inscribed Stock 1934 121 - 123 1,876,000 1,876,000 15 April 15 Oct. 2 Oct. 4 Do. 4% Inscribed Stock 1911-31 112 - 114 750,000 750,000 1 May 1 Nov. 16 Oct. 3 1/2 Do. 3 1/2% Inscribed Stock 1915-35 110 - 112 750,000 750,000 " " " 3 Do. 3% Inscribed Stock 1915-35 98 - 99 - The numbered columns are explained as follows:- 1. The amount of Loan authorized to be raised. 5. The rate of interest on the Loan. 2. The amount actually owing. 6. The name of the country borrowing. 3. When the interest is payable. 7. When the Loan is re-payable - thus "1919 or 1944." 4. When ex interest. 8. The price for every 100 of stock.

Colonial Government Bonds, the other form of investment, are paper or parchment docu- ments, on which are printed all details of the par- ticular loan taken up by the Colony, the nature of the Security the lender has in advancing his money, the rate of interest, and when and how the principal is to be repaid. These bonds are payable to bearer, and pass from hand to hand without any formal transfer, so that as much care is necessary in safe-keeping them, as with bank-notes. Attached to these bonds are little coupons or slips of paper, each one representing a half or quarter year's in- terest, from the date of purchase to the time when the principal is to be paid off. The coupon bears the name of the bank or agency where it may be cashed, and any banker will negotiate it. Of course, only the coupon for the interest actually due on the date indicated on the face must be cut off.

FOREIGN GOVERNMENT STOCKS.

These represent money borrowed by various foreign countries on the security of their credit or solvency, and the loans stand to them in the same relationship as the British Government Funds do to this country. The debts are chiefly repre- sented by bonds, the same as Colonial Govern- ment Bonds, and with coupons attached, which, whether payable in England or their own country, are collected by bankers in the same manner. Such European States as Germany, France, Russia, Denmark, Sweden, and Italy, always enjoy good credit, and they may be con- sidered responsible for their financial engage- ments. In the case of Italy, however, it must be remembered that the Italian income-tax, amounting to 20 per cent., is deducted from the interest, which has also to bear the English income-tax, whatever at the time it may be.

When investing in Colonial or Foreign bonds, especial care is necessary in observing the con- ditions of re-payment. Sometimes it is at the option of the borrower, but usually at a certain specified date. Neglect of this precaution may lead to an investor purchasing at a premium, and sooner than expected being paid off at par.

Some of these loans, too, are paid off by annual instalments, lots being drawn to deter- mine the bonds to be redeemed. If the bonds, therefore, have been bought at a premium, there is always the risk of their being drawn for pay- ment and paid off at par. On the other hand, if the bonds are bought at a discount, there is no danger of loss; and a profit will be realised should they be drawn for payment.

For instance, a 100 bond is purchased at 4 premium, costing 104. If the bond is paid off at par, or 100, there is obviously a loss of 4; but if the bond is purchased at 4 discount, cost- ing 96, it is equally obvious that, if paid off at par, there would be a gain of 4.

RAILWAYS.

Next to the British Government Funds, by far the largest amount of money is invested in Eng- lish railways. First in order of safety, as an investment, is the debenture stock of a railway company. This is the first charge on the rail- way, and holders of the stock are paid the in- terest thereon in priority to all other stocks. In the event of the failure of the company they must also be fully satisfied as to principal and interest before any one else can receive a penny. Any amount of stock, odd or even, may be pur- chased through a banker or broker, and war- rants for the interest are forwarded half-yearly to the address of the registered holder. The debenture stocks of good English railways com- mand a high premium, and the investment, therefore, though undoubtedly safe, does not yield much in the way of interest. Guaran- teed stocks are of various kinds and rank — some on the same level as, and others next in order to, debenture stocks. In some cases the interest is guaranteed by another railway. Before investing in these stocks the nature of the guarantee should be ascertained and its value taken into consideration. Preference stocks and shares come next in rank as an invest- ment. The interest on these is fixed at a cer- tain rate per cent., and, after satisfying the preceding stocks, must be paid in full; or if there is not sufficient profit in the year to pay in full, then as much as means will allow. But any deficiency cannot be carried on to the next year, and so it is lost to the holders.

There are several degrees of Preference stock, some taking precedence of others as to interest; a first preference may be as good as debenture stock, whilst the last preference of the same railway company may be no better than ordinary stock.

Preference stock may be purchased in any amount in the market, and the interest war- rants are sent half-yearly to the registered holders.

Ordinary stocks depend on the profits for the year for the interest they yield, and thus afford a wide field for speculation. The stocks of the great English lines may be relied upon as a good investment, the profits being steady and sufficient to assure a fair amount of interest after satisfying the prior claims of debenture and preference stocks.

Ordinary stock may also be purchased in any amount, and the warrants for interest are sent half-yearly to registered holders of stock.

In all cases railway warrants of every kind will, upon written request to the secretary of the railway company, be forwarded periodically to the bankers of the holder of the stock for the credit of his or her account.

INDIAN RAILWAY STOCKS.

These are a favourite investment with the British public. They consist of Debenture, Guaranteed, and Ordinary stocks. The Deben- ture stocks are similar to those of British rail- ways, and are a first charge on the undertaking. The Guaranteed stocks are those upon which there is an undertaking by the Secretary of State for India that the interest shall not be less at any time than they are stated to bear; any deficiency in the earnings being made up by the Government. Should the earnings be more than sufficient to pay the stated interest, the surplus is divided between the Government and the railway company. Annuities may be purchased in some of these railways, that is to say, by paying, we will assume, 30 as the market price, an annuity of 1 a year will be granted for a certain number of years. In dealing with these it is necessary to ascertain when the annuity ceases, or the investor, hav- ing sunk the capital sum, may cease to receive any income therefrom when least expected.

Warrants for interest on these stocks are periodically sent to registered holders.

AMERICAN RAILWAYS.

The stocks and shares of Canadian and American railways offer a more remunerative return than English railways, as they may be purchased at much lower prices. They are subject, however, to speculative influences of many sorts, and can hardly be recommended for safe permanent investment.

No venture should certainly be made in these stocks without full knowledge of the position and prospects of the railway company and the contingencies to which it may be subject. Any banker would obtain for a customer all the in- formation that could be afforded in regard to these stocks, and indicate their market value as an investment, apart from the fictitious value induced by speculators, and the manoeuvres of syndicates and wire-pullers.

FOREIGN RAILWAYS.

The capital of foreign railways consists of obligations, stocks, and shares. The obligations are in the form of bonds, being a first charge on the railway. The bonds vary in amount, but chiefly represent 100 and 20, and they bear a certain rate of interest. Some of the Conti- nental railways may offer a fair investment in this way, but great care is required in the selection.

The stocks and shares of some of the South American railways command a high premium, but of the whole number quoted in the official list the large majority show a heavy decline on the original value, many indeed being valueless. These stocks are highly speculative and subject to be affected by political convulsions and other contingencies, which make them undesirable as an investment.

BANKS.

A joint-stock bank is composed of a number of proprietors who hold the shares which make up the capital of the bank, and to the nominal amount of these shares their liability is limited.

The whole of this amount, however, is not paid up, but only sufficient for the working re- quirements of the bank, the remainder being held in reserve for contingencies. Let us take, for instance, the London and Westminster Bank, which has the largest capital of all the joint- stock banks.

The capital amounts to 14,000,000, made up of 140,000 shares of 100 each. Only 20 of this 100 is paid up, leaving a liability of 80 on every share.

A joint-stock bank is governed by a board of directors, elected by the shareholders; and managers and other officers are appointed by the board to conduct the business. Many of these banks, besides having a head establish- ment in London, have branches all over the country. Every joint-stock bank is compelled by law to publish its accounts so as to show its position, and these accounts are presented to a yearly or half-yearly meeting of the shareholders for approval.

The British Colonies have a good many joint- stock banks, with agencies in London. By a Permissive Act passed in 1825 the shareholders in most of these are liable for double the amount of their shares.

The profits of banking have been, in times past, very large, and the original shareholders of the older banks have reaped the advantage thereof, but bank shares of good repute are not now to be obtained except at a high premium.

The dividends are sent half-yearly to the ad- dress of the shareholders, and they are not liable to income-tax, as the bank pays this. Any one entitled to exemption from income-tax can claim from the surveyor of taxes the amount the bank has paid in respect of the dividend, on a certifi- cate from the bank to that effect.*

* See Note, p.39.

Individuals of a timorous disposition, if they value their peace of mind, would do well to avoid investing their money in bank shares. There are banks whose position and stability are above suspicion, and which return handsome dividends to their shareholders; but there have been cases of banks, enjoying unlimited confi- dence, which have unexpectedly collapsed and overwhelmed their shareholders in ruin. The nervous person, therefore, who could not read of the collapse of a bank without a fearful appre- hension that his own would be the next to go, had better be content with a smaller rate of in- terest and a tranquil mind therewith. The more sanguine investor who desires a good rate of interest for his money, and has a contempt for contingencies, should at least have some know- ledge of accounts, and be able to form some estimate of the position of a bank from the annual balance-sheet, and should carefully ascertain what immediate contingent liability he would be subject to in the event of collapse.

COLONIAL AND FOREIGN CORPORATION STOCKS.

These represent money borrowed by munici- palities and trusts in Colonial and foreign towns, and the security offered consists of rates and revenues from the various undertakings, such as harbours, gas, and water-works, city improve- ments, &c., in which the loans are invested. The loans are mostly represented by bonds, to which coupons are attached for interest, and are repayable at a certain specified date. Although they do not command the high credit of British Corporation loans, yet some of the Colonial towns are in fair repute as an investment, and the rate of interest is high enough to tempt a large amount of money from this country. Towns of some size in our Colonies, and thoroughly settled, may be relied upon to carry out their obligations, but mushroom cities and foreign places liable to political fluctuations should be looked upon with suspicion.

CANALS AND DOCKS.

These offer but a limited area for investment. They were formerly very popular with the British investor, but rival interests and labour troubles have affected the confidence in which they were held, and the ordinary stocks are mostly at a considerable discount.

Gas and electric lighting companies, trams and omnibus companies, telegraphs, telephones, water-works, &c., must all be judged by the localities which they serve and the amount of business they are likely to command. As per- manent investments it should be considered whether they are likely to suffer by supersession or opposition, and if they are managed by a trustworthy competent board of directors.

BREWERIES.

Among the numerous commercial undertak- ings offering for investment, brewery companies form a class of themselves, and, with few excep- tions, the English companies appear to have done well, and the shares of the best of them stand at a high premium. Properly managed and dealing in an article of universal consump- tion, brewery companies ought to be a trust- worthy investment: but they are liable to much fluctuation. The shares of one of the leading concerns, which now stand at about 150 for the 100 share, were only four years ago as low as 28, and at the same time only half the interest was paid on the preference shares. American brewery companies are liable to be manipulated by cliques and syndicates, and should be avoided as an investment.

COMMERCIAL AND INDUSTRIAL COMPANIES.

Speaking generally, taking shares in this class of property is like purchasing tickets in a lottery in which the prizes are not numerous. It may fairly be said that at least three-quarters of these companies are formed for the purpose of relieving private owners of concerns which were on the verge of failure through some cause or another.

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