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+The Project Gutenberg EBook of Up To Date Business, by Various
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org
+
+
+Title: Up To Date Business
+       Home Study Circle Library Series (Volume II.)
+
+Author: Various
+
+Editor: Seymour Eaton
+
+Release Date: February 6, 2007 [EBook #20531]
+
+Language: English
+
+Character set encoding: ISO-8859-1
+
+*** START OF THIS PROJECT GUTENBERG EBOOK UP TO DATE BUSINESS ***
+
+
+
+
+Produced by Barbara Tozier, Bill Tozier, Jacqueline Jeremy
+and the Online Distributed Proofreading Team at
+http://www.pgdp.net
+
+
+
+
+
+
+
+
+
+UP-TO-DATE BUSINESS
+
+
+HOME STUDY CIRCLE LIBRARY
+
+EDITED BY
+
+SEYMOUR EATON
+
+
+UP TO DATE
+BUSINESS
+
+INCLUDING
+
+LESSONS IN BANKING, EXCHANGE, BUSINESS
+GEOGRAPHY, FINANCE, TRANSPORTATION
+AND COMMERCIAL LAW
+
+
+FROM THE CHICAGO RECORD
+
+
+NEW YORK
+THE DOUBLEDAY & McCLURE CO.
+
+1900
+
+
+Copyright, 1897, 1898, 1899, by the CHICAGO RECORD
+COPYRIGHT, 1899 by SEYMOUR EATON
+COPYRIGHT, 1899, 1900, by VICTOR F. LAWSON
+
+
+
+
+CONTENTS
+
+I
+
+GENERAL BUSINESS INFORMATION
+
+                                                          PAGE
+
+    I. Commercial Terms and Usages                           3
+
+   II. Commercial Terms and Usages (_Continued_)             4
+
+  III. Bank Cheques                                          6
+
+   IV. Bank Cheques (_Continued_)                            8
+
+    V. Bank Cheques (_Continued_)                           12
+
+   VI. Bank Drafts                                          15
+
+  VII. Promissory Notes                                     18
+
+ VIII. The Clearing-house System                            21
+
+   IX. Commercial Drafts                                    26
+
+    X. Foreign Exchange                                     31
+
+   XI. Letters of Credit                                    37
+
+  XII. Joint-stock Companies                                41
+
+ XIII. Protested Paper                                      46
+
+  XIV. Paper Offered for Discount                           49
+
+   XV. Corporations                                         51
+
+  XVI. Bonds                                                54
+
+ XVII. Transportation                                       57
+
+XVIII. Transportation Papers                                59
+
+Examination Paper                                           64
+
+
+II
+
+BUSINESS GEOGRAPHY
+
+TRADE FEATURES
+
+    I. The Trade Features of the British Isles              69
+
+   II. The Trade Features of France                         94
+
+  III.  "    "      "      " Germany                       102
+
+   IV.  "    "      "      " Spain and Italy               111
+
+    V.  "    "      "      " Russia                        120
+
+   VI.  "    "      "      " India                         129
+
+  VII.  "    "      "      " China                         139
+
+ VIII.  "    "      "      " Japan                         148
+
+   IX.  "    "      "      " Africa                        157
+
+    X.  "    "      "      " Australia and Australasia     166
+
+   XI.  "    "      "      " South America                 177
+
+  XII.  "    "      "      " Canada                        187
+
+ XIII.  "    "      "      " The United States             194
+
+Examination Paper                                          210
+
+
+III
+
+FINANCE, TRADE, AND TRANSPORTATION
+
+     I. National and State Banks                           215
+
+    II. Savings Banks and Trust Companies                  221
+
+   III. Corporations and Stock Companies                   225
+
+    IV. Borrowing and Loaning Money                        228
+
+     V. Collaterals and Securities                         233
+
+    VI. Cheques, Drafts, and Bills of Exchange             240
+
+   VII. The Clearing-house System                          248
+
+  VIII. Commercial Credits and Mercantile Agencies         254
+
+    IX. Bonds                                              263
+
+     X. Transportation by Rail                             267
+
+    XI. Freight Transportation                             274
+
+   XII. Railroad Rates                                     281
+
+  XIII. Stock and Produce Exchanges                        288
+
+  XIV. Storage and Warehousing                             294
+
+Examination Paper                                          301
+
+
+IV
+
+COMMERCIAL LAW
+
+    I. The Different Kinds of Contracts                    309
+
+   II. The Parties to a Contract                           312
+
+  III. The Parties to a Contract (_Continued_)             315
+
+   IV. The Consideration in Contracts                      318
+
+    V. The Essentials of a Contract                        321
+
+   VI. Contracts by Correspondence                         326
+
+  VII. What Contracts Must Be in Writing                   332
+
+ VIII. Contracts for the Sale of Merchandise               336
+
+   IX. The Warranties of Merchandise                       340
+
+    X. Common Carriers                                     344
+
+   XI. The Carrying of Passengers                          347
+
+  XII. On the Keeping of Things                            350
+
+ XIII. Concerning Agents                                   353
+
+  XIV. The Law Relating to Bank Cheques                    358
+
+   XV. The Law Relating to Leases                          363
+
+  XVI. Liability of Employers to Employés                  369
+
+ XVII. Liability of Employers to Employés (_Continued_)    373
+
+Examination Paper                                          377
+
+
+V
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+    I. Preparing Copy                                      381
+
+   II. On the Names and Sizes of Type                      382
+
+  III. The Terms Used in Printing                          384
+
+   IV. Marks Used in Proof-reading                         387
+
+
+
+
+ILLUSTRATIONS
+
+I
+
+GENERAL BUSINESS INFORMATION
+
+
+                                                          PAGE
+
+A Poorly Drawn Cheque                                        7
+
+A Carefully Drawn Cheque                                     8
+
+A Cheque Drawn so as to Insure Payment to Proper Party       9
+
+A Cheque Payable to Order                                   11
+
+A Blank Indorsement                                         11
+
+A Cheque Made to Obtain Money for Immediate Use             13
+
+A Certified Cheque                                          14
+
+A Cheque for the Purchase of a Draft                        16
+
+A Bank Draft                                                17
+
+Ordinary Form of Promissory Note                            18
+
+A Promissory Note Filled Out in an Engraved Blank           19
+
+A Special Form for a Promissory Note                        20
+
+The Advantages of the Clearing-house System                 22
+
+The Route of a Cheque                                       24
+
+Backs of Two Paid Cheques                                   25
+
+A Sight Draft Developed from Letter                         27
+
+A Sight Draft                                               28
+
+An Accepted Ten-day Sight Draft                             28
+
+An Accepted Sight Draft                                     29
+
+A Time Draft                                                29
+
+Foreign Exchange                                            32
+
+A Bill of Exchange (Private)                                35
+
+A Bill of Exchange (Banker's)                               36
+
+First Page of a Letter of Credit                            38
+
+Second Page of a Letter of Credit                           40
+
+A Certificate of Stock in a National Bank                   42
+
+A Certificate of Stock in a Manufacturing Company           43
+
+A Protest                                                   48
+
+A Private Bond                                              55
+
+A Shipping Receipt ("Original")                             60
+
+A Steamship Bill of Lading                                  61
+
+A Local Waybill                                             62
+
+
+II
+
+BUSINESS GEOGRAPHY
+
+London the Natural Centre of the World's Trade              72
+
+British Mercantile Marine                                   74
+
+London Bridge                                               76
+
+The Coal-fields of England                                  80
+
+The Manchester Ship Canal                                   84
+
+The Great Manufacturing Districts of England                88
+
+France Compared in Size with the States of Illinois and
+      Texas                                                 95
+
+Street Scene in Paris, Showing the Bourse                   97
+
+Approximate Size of the German Empire                      104
+
+North Central Germany, Showing the Ship Canal and
+      the Leading Commercial Centres                       109
+
+Spain Compared in Size with California                     113
+
+Italy and its Chief Commercial Centres                     117
+
+Russia, the British Empire, and the United States
+      Compared                                             121
+
+Moscow                                                     127
+
+Comparative Sizes of India and the United States           133
+
+China and its Chief Trade Centres                          145
+
+Japan's Relation to Eastern Asia                           155
+
+The Partition of Africa                                    159
+
+Australia                                                  171
+
+The Most Prosperous Part of South America                  183
+
+Trade Centres of Canada and Trunk Railway Lines            192
+
+Export Trade of United States and Great Britain Compared   198
+
+United States Manufactures and Internal Trade Compared
+      with the Manufactures and Internal Trade of all
+      Other Countries                                      199
+
+Principal Articles of Domestic Exports of the United
+      States                                               205
+
+
+III
+
+FINANCE, TRADE, AND TRANSPORTATION
+
+The Bank of England                                        216
+
+Showing Cheque Raised from $7.50 to $70.50                 241
+
+A Certified Cheque                                         244
+
+A Bank Draft                                               245
+
+A Bill of Exchange                                         246
+
+Illustrating Cheque Collections                            252
+
+A Mercantile Agency Inquiry Form                           259
+
+Specimens of Interest Coupons                              266
+
+Judge Thomas M. Cooley, First Chairman of the Interstate
+      Commerce Commission                                  287
+
+The Paris Bourse                                           289
+
+Interior View of New York Stock Exchange                   290
+
+
+V
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+A Printer's Proof                                          390
+
+A Printer's Corrected Proof                                391
+
+
+
+
+GENERAL BUSINESS INFORMATION
+
+
+I. COMMERCIAL TERMS AND USAGES
+
+[Illustration]
+
+There is a distinction between the usage of the names COMMERCE and
+BUSINESS. The interchange of products and manufactured articles
+between countries, or even between different sections of the same
+country, is usually referred to as _commerce_. The term _business_
+refers more particularly to our dealings at home--that is, in our own
+town or city. Sometimes this name is used in connection with a
+particular product, as the _coal_ business or the _lumber_ business,
+or in connection with a particular class, as the _dry-goods_ business
+or the _grocery_ business. The name _commerce_, however, seldom admits
+of a limited application. In the United States TRADE is synonymous
+with _business_. The word TRAFFIC applies more especially to the
+conveyance than to the exchange of products; thus we refer to
+_railroad_ traffic or _lake_ traffic. PRODUCTS, when considered
+articles of trade, are called _merchandise, goods, wares_. The term
+MERCHANDISE has the widest meaning, and includes all kinds of movable
+articles bought or sold. GOODS is applied more particularly to the
+supplies of a merchant. WARES is commonly applied to utensils, as
+_glassware_, _hardware_, etc.
+
+GROSS commonly means coarse or bulky. In trade it is used with
+reference to both money and goods. The _gross_ weight of a package
+includes the weight of the case or wrappings. The larger sum in an
+account or bill--that is, the sum of money before any allowance or
+deductions are made--is the _gross_ amount of the bill. The word NET
+is derived from a Latin word meaning neat, clean, unadulterated, and
+indicates the amount of goods or money after all the deductions have
+been made. To say that a price is _net_ is to indicate that no further
+discount will be made.
+
+The word FIRM relates to solidity, establishment, strength, and in a
+business sense signifies two or more persons united in partnership for
+the purpose of trading. The word HOUSE is very frequently used in the
+same sense. In mercantile usage _house_ does not mean the building in
+which the business is conducted, but the men who own the business,
+including, perhaps, the building, stock, plant, and business
+reputation. The name CONCERN is often used in a very similar way.
+
+The name MARKET expresses a locality for the sale of goods, and in
+commerce is often used to denote cities or even countries. We say that
+Boston is a leather market, meaning that a large number of Boston
+merchants buy and sell leather. In the same sense we call Chicago a
+grain market, or New Orleans a cotton market. In its more restricted
+sense the name _market_ signifies a building or place where meat or
+produce is bought and sold. We say that the _market is flooded_ with a
+particular article when dealers are carrying more of that article than
+they can find sale for. There is _no market_ for any product when
+there is no demand. The money market is _tight_ or _close_ when it is
+difficult to borrow money from banks and money-lenders.
+
+
+II. COMMERCIAL TERMS AND USAGES (_Continued_)
+
+THE NATURAL RESOURCES of a country are mainly the mineral commodities
+and agricultural produce that it yields. The lumber and fish produced
+in a country are also among its natural resources. The positions and
+industries of cities are usually fixed by natural conditions, but the
+most powerful agent is the personal energy of enterprising and
+persevering men, who, by superior education, or scientific knowledge,
+or practical foresight, have often been able to found industrial
+centres in situations which no geographical considerations would
+suggest or explain.
+
+COMMISSION MERCHANTS receive and sell goods belonging to others for a
+compensation called a commission. A SELLING AGENT is a person who
+represents a manufacturing establishment in its dealings with the
+trade. The factory may be located in a small town, while the selling
+agent has his office and samples in the heart of a great city. As
+regards the quantity of goods bought or sold in a single transaction,
+trade is divided into WHOLESALE and RETAIL. The wholesale dealer sells
+to other dealers, while the retail dealer sells to the consumer--that
+is, the person who _consumes_, or uses, the goods. A JOBBER is one who
+buys from importers and manufacturers and sells to retailers. He is
+constantly in the market for bargains. The names JOBBER and WHOLESALER
+are often used in the same sense, but a jobber sometimes sells to
+wholesalers. WHOLESALE has reference to the quantity the dealer sells,
+and not to the source from which he buys, or the person to whom he
+sells. The wholesaler, as a rule, deals in STAPLES--that is, goods
+which are used season after season--though of course there are
+wholesalers in practically all businesses.
+
+Wholesale dealers send out TRAVELLERS or DRUMMERS, who carry samples
+of the goods. Frequently the traveller starts out with his samples
+from six months to a year in advance of the time of delivery. It is
+quite a common thing for the retailer to order from samples
+merchandise which at the time of placing the order may not even be
+manufactured.
+
+By the PRICE of a commodity is meant its value estimated in money, or
+the amount of money for which it will exchange. The exchangeable value
+of commodities depends at any given period partly upon the expense of
+production and partly upon the relation of supply and demand. Prices
+are affected by the creation of monopolies, by the opening of new
+markets, by the obstructing of the ordinary channels of commercial
+intercourse, and by the anticipation of these and other causes. It is
+the business of the merchant to acquaint himself with every
+circumstance affecting the prices of the goods in which he deals.
+
+The entire world is the field of the modern merchant. He buys raw and
+manufactured products wherever he can buy cheapest, and he ships to
+whatever market pays him the highest price. Our corner grocer or
+produce-dealer may furnish us with beef from Texas, potatoes from
+Egypt, celery from Michigan, onions from Jamaica, coffee from Java,
+oranges from Spain, and a hundred other things from as many different
+points; and yet, so complete is the interlocking of the world's
+commercial interests, and so great is the speed of transportation,
+that he can supply us with these necessaries under existing conditions
+more easily and readily than if they were all grown on an adjoining
+farm.
+
+
+III. BANK CHEQUES
+
+A CHEQUE is an order for money, drawn by one who has funds in the
+bank. It is payable on demand. In reality, it is a _sight draft_ on
+the bank. Banks provide blank cheques for their customers, and it is a
+very simple matter to fill them out properly. In writing in the amount
+begin at the extreme left of the line.
+
+The illustration given below shows a poorly written cheque and one
+which could be very easily _raised_. A fraudulent receiver could, for
+instance write, "_ninety_" before the "_six_" and "9" before the
+figure "6," and in this way raise the cheque from $6 to $96. If this
+were done and the cheque cashed, the maker, and not the bank, would
+become responsible for the loss. You cannot hold other people
+responsible for your own carelessness. A cheque has been raised from
+$100 to $190 by writing the words "_and ninety_" after the words "_one
+hundred_." One of the ciphers in the figures was changed to a "9" by
+adding a tail to it. It is wise to draw a running line, thus ~~~~~~,
+after the amount in words, thus preventing any additional writing.
+
+[Illustration: A poorly drawn cheque.]
+
+The illustration on page 8 shows a cheque carefully and correctly
+drawn. The signature should be in your usual style, familiar to the
+paying teller. Sign your name the same way all the time. Have a
+characteristic signature, as familiar to your friends as is your face.
+
+A cheque is a draft or order upon your bank, and it need not
+necessarily be written in the prescribed form. Such an order written
+on a sheet of note-paper with a lead-pencil might be in every way a
+legally good cheque.
+
+[Illustration: A carefully drawn cheque.]
+
+Usually cheques should be drawn "_to order_." The words "_Pay to the
+order of John Brown_" mean that the money is to be paid to John Brown,
+or to any person that he _orders_ it paid to. If a cheque is drawn
+"_Pay to John Brown or Bearer_" or simply "_Pay to Bearer_," any
+person that is the bearer can collect it. The paying teller may ask
+the person presenting the cheque to write his name on the back, simply
+to have it for reference.
+
+In writing and signing cheques use good black ink and let the copy dry
+a little before a blotter is used.
+
+_The subject of indorsements will be treated in a subsequent lesson._
+
+
+IV. BANK CHEQUES (_Continued_)
+
+The banks of this country make it a rule not to cash a cheque that is
+drawn payable to order, unless the person presenting the cheque is
+known at the bank, or unless he satisfies the paying teller that he is
+really the person to whom the money should be paid. It must be
+remembered however, that a cheque drawn to order and then indorsed in
+blank by the payee is really payable to bearer, and if the paying
+teller is satisfied that the payee's signature is genuine he will not
+likely hesitate to cash the cheque. In England all cheques apparently
+properly indorsed are paid without identification.
+
+[Illustration: A cheque drawn so as to insure payment to proper
+party.]
+
+In drawing a cheque in favour of a person not likely to be well known
+in banking circles, write his address or his business after his name
+on the face of the cheque. For instance, if you should send a cheque
+to John Brown, St. Louis, it might possibly fall into the hands of the
+wrong John Brown; but if you write the cheque in favour of "John
+Brown, 246 West Avenue, St. Louis," it is more than likely that the
+right person will collect it.
+
+If you wish to get a cheque cashed where you are unknown, and it is
+not convenient for a friend who has an account at the bank to go with
+you for the purpose of identification, ask him to place his signature
+on the back of your cheque, and you will not likely have trouble in
+getting it cashed at the bank where your friend keeps his account. By
+placing his signature upon the back of the cheque he guarantees the
+bank against loss. A bank is responsible for the signatures of its
+depositors, but it cannot be supposed to know the signatures of
+indorsers. The reliable identifier is in reality the person who is
+responsible.
+
+INDORSING CHEQUES
+
+In indorsing cheques note the following points:
+
+ 1. Write across the back--not lengthwise.
+
+ 2. If your indorsement is the first, write it about two inches from
+    the top of the back; if it is not the first indorsement, write
+    immediately under the last indorsement.
+
+ 3. Do not indorse wrong end up; the top of the back is the left end of
+    the face.
+
+ 4. Write your name as you are accustomed to write it, no matter how it
+    is written on the face. If you are depositing the cheque write or
+    stamp "For Deposit" or "Pay to ______BANK______," as may be the
+    custom, over your signature. This is hardly necessary if you are
+    taking the cheque yourself to the bank. A cheque with a simple or
+    blank indorsement on the back is payable to bearer, and if lost the
+    finder might succeed in collecting it; but if the words "For Deposit"
+    appear over the name the bank officials understand that the cheque is
+    intended to be deposited, and they will not cash it.
+
+ 5. If you wish to make the cheque payable to some particular person by
+    indorsing, write "PAY TO ______(NAME)______ or ORDER," and under this
+    write your own name as you are accustomed to sign it.
+
+ 6. Do not carry around indorsed cheques loosely. Such cheques are
+    payable to bearer and may be collected by any one.
+
+ 7. If you receive a cheque which has been transferred to you by a
+    BLANK indorsement (name of indorser only), and you wish to hold it a
+    day or two, write over the indorsement the words "PAY TO THE ORDER OF
+    (yourself--writing your own name)." This is allowable legally. The
+    cheque cannot then be collected until you indorse it.
+
+[Illustration: A cheque payable to order and a blank indorsement.]
+
+ 8. An authorised stamped indorsement is as good as a written one.
+    Whether such indorsements are accepted or not depends upon the
+    regulations of the clearing-house in the particular city in which
+    they are offered for deposit. The written indorsement is considered
+    safer for transmission of out-of-town collections.
+
+ 9. If you are indorsing for a company, or society, or corporation,
+    write first the name of the company (this may be stamped on) and
+    then your own name, followed by the word "TREAS."
+
+10. If you have power of attorney to indorse for some particular
+    person, write his name, followed by your own, followed by the
+    word "ATTORNEY" or "ATTY.," as it is usually written.
+
+11. It is sometimes permissible to indorse the payee's name thus,
+    "BY ______(your own name)." This may be done by a junior member of
+    a concern when the person authorised to indorse cheques is absent
+    and the cheques are deposited and not cashed.
+
+12. Do not write any unnecessary information on the back of your
+    cheque. A story is told of a woman who received a cheque from
+    her husband, and when cashing it wrote "Your loving wife" above
+    her name on the back.
+
+
+V. BANK CHEQUES (_Continued_)
+
+If you wish to draw money from your own account, the most approved
+form of cheque is written "Pay to the order of _Cash_." This differs
+from a cheque drawn to "_Bearer_." The paying teller expects to see
+yourself, or some one well known to him as your representative, when
+you write "Cash." If you write "Pay to the order of (_your own
+name_)" you will be required to indorse your cheque before you can get
+it cashed.
+
+If your note is due at your own bank and you wish to draw a cheque in
+payment, write "Pay to the order of _Bills Payable_." If you wish to
+write a cheque to draw money for wages, write "Pay to the order of
+_Pay-roll_." If you wish to write a cheque to pay for a draft which
+you are buying, write "Pay to the order of _N. Y. Draft and
+Exchange_," or whatever the circumstances may call for.
+
+[Illustration: A cheque made to obtain money for immediate use.]
+
+If you wish to stop the payment of a cheque which you have issued you
+should notify the bank at once, giving full particulars.
+
+Banks have a custom, after paying and charging cheques, of cancelling
+them by punching or making some cut through their face. These
+cancelled cheques are returned to the makers at the end of each month.
+
+If you have deposited a cheque and it is returned through your bank
+marked "_No Funds_," it signifies that the cheque is worthless and
+that the person upon whose account it was drawn has no funds to meet
+it. Your bank will charge the amount to your account. The best thing
+to do in such a case is to hold the cheque as evidence of the debt,
+and write the person who sent it to you, giving particulars and asking
+for an explanation.
+
+If you wish to use your cheque to pay a note due at some other bank,
+or in buying real estate, or stocks, or bonds, you may find it
+necessary to get the cheque _certified_. This is done by an officer of
+the bank, who writes or stamps across the face of the cheque the words
+"_Certified"_ or "_Good When Properly Indorsed_," and signs his name.
+(_See illustration._) The amount will immediately be deducted from
+your account, and the bank, by guaranteeing your cheque, becomes
+responsible for its payment. Banks will usually certify any cheque
+drawn upon them if the depositor has the amount called for to his
+credit, no matter who presents the cheque, and this certifying makes
+it feasible for a man to carry in his pocket any amount of actual
+cash. If you should get a cheque certified and then not use it,
+deposit it in your bank, otherwise your account will be short the
+amount for which the cheque is drawn. In Canada all cheques are
+presented to the "ledger-keeper" for certification before being
+presented to the paying teller.
+
+[Illustration: A certified cheque.]
+
+THE USEFULNESS OF BANKS
+
+Banks are absolutely necessary to the success of modern commercial
+enterprises. They provide a place for the safe-keeping of money and
+securities, and they make the payment of bills much more convenient
+than if currency instead of cheques were the more largely used. But
+the great advantage of a banking institution to a business man is the
+opportunity it affords him of borrowing money, of securing cash for
+the carrying on of his business while his own capital is locked up in
+merchandise or in the hands of his debtors. Another important
+advantage is to be found in the facilities afforded by banks for the
+collection of cheques, notes, and drafts.
+
+
+VI. BANK DRAFTS
+
+A draft is a formal demand for the payment of money. Your bank cheque
+is your sight draft on your bank. It is not so stated, but it is so
+understood. A cheque differs from an ordinary commercial draft, both
+in its wording and in its purpose. The bank is obliged to pay your
+cheque if it holds funds of yours sufficient to meet it, while the
+person upon whom your draft is drawn may or may not honour it at his
+pleasure. A cheque is used for paying money to a creditor, while a
+draft is used as a means of collecting money from a debtor.
+
+Nearly all large banks keep money on deposit with one or more of the
+banks located in the great commercial centres. They call these
+centrally located banks their _correspondents_. The larger banks have
+correspondents in New York, Chicago, Boston, and other large cities.
+As business men keep money on deposit with banks to meet their
+cheques, so banks keep money on deposit with other banks to meet their
+drafts.
+
+A BANK DRAFT is simply the bank's cheque, drawn upon its deposit with
+some other bank. Banks sell these cheques to their customers, and
+merchants make large use of them in paying bills in distant cities.
+These drafts, or CASHIERS' CHEQUES, as they are sometimes called, pass
+as cash anywhere within a reasonable distance of the money centre upon
+which they are drawn. Bankers' drafts on New York would, under
+ordinary financial conditions, be considered cash anywhere in the
+United States. A draft on a foreign bank is usually called a BILL OF
+EXCHANGE.
+
+[Illustration: A cheque for the purchase of a draft.]
+
+Cheques have come to be quite generally used for the payment of bills
+even at long distances. If a business man desires to close an
+important contract requiring cash in advance he sends a bank draft, if
+at a distance, or a certified cheque, if in the same city. If he
+desires simply to pay a debt he sends his own personal cheque. Bank
+drafts are quite generally used by merchants in the West to pay bills
+in the East. A draft on New York bought in San Francisco is cash when
+it reaches New York, while a San Francisco cheque is not cash until it
+returns and is cashed by the bank upon which it is drawn. In the
+ordinary course of business cheques are considered cash no matter upon
+what bank drawn. The bank receiving them on deposit gives the
+depositor credit at once, even though it may take a week before the
+value represented by the cheque is in the possession of the bank.
+
+[Illustration: A bank draft.]
+
+All wholesale transactions and a large proportion of retail
+transactions are completed by the passing of instruments of
+credit--notes, cheques, drafts, etc.; a part only of the retail trade
+is conducted by actual currency-bills and "change." Banks handle the
+bulk of these transferable titles and deal to a very small
+extent--that is, proportionally--in actual money. The notes, drafts,
+bills of exchange, and bank cheques are representative of the property
+passing by title in money from the producers to the consumers. A small
+proportion--perhaps six or eight per cent.--of these transactions is
+conducted by the use of actual bank or legal-tender notes. This trade
+in instruments of credit amounts in the United States to fifty
+billions of dollars yearly.
+
+
+VII. PROMISSORY NOTES
+
+[Illustration: Ordinary form of promissory note.]
+
+A PROMISSORY NOTE is a written promise to pay a specified sum of
+money. At the time of the note's issue--that is, when signed and
+delivered--two parties are connected with it, the _maker_ and the
+_payee_. The maker is the person who signs or promises to pay the
+note; the payee is the person to whom or to whose order the note is
+made payable. NEGOTIABLE in a commercial sense means _transferable_,
+and a negotiable note is a note which can be transferred from one
+person to another. A note to be made negotiable must contain the word
+_bearer_ or the word _order_--that is, it must be payable either _to
+bearer_, or _to the order_ of the payee. A NON-NEGOTIABLE note is
+payable to a particular person _only_. A note may be written on any
+kind of paper, in ink or pencil. It is wise, however, to use ink to
+prevent changes. All stationers sell blank forms for notes which are
+easily filled in.
+
+The samples of notes which appear in this lesson are selected simply
+to illustrate to students the fact that there are a great many special
+forms of notes in common use. The wording differs slightly in
+different States.
+
+The DATE of a note is a matter of the first importance. Some bankers
+and business men consider it better to draw notes payable at a certain
+fixed time, as, "_I promise to pay on the 10th of March, 1897_." The
+common custom is to make notes payable a certain number of days or
+months after date. A note made or issued on Sunday is void. The DAY OF
+MATURITY is the day upon which a note becomes legally due. In several
+of the States a note is not legally due until three days, called DAYS
+OF GRACE, after the expiration of the time specified in the note.
+
+[Illustration: A promissory note filled out on an engraved blank.]
+
+The words VALUE RECEIVED, which usually appear upon notes, are not
+necessary legally. Thousands of good notes made without any value
+consideration are handled daily.
+
+The PROMISE TO PAY of a negotiable note must be unconditional. It
+cannot be made to depend upon any contingency whatever.
+
+Notes that are made in settlement of genuine business transactions
+come under the head of regular, legitimate business paper. An
+ACCOMMODATION note is one which is signed, or indorsed, simply as an
+accommodation, and not in settlement of an account or in payment of an
+indebtedness. With banks accommodation paper has a deservedly hard
+reputation. However, there are all grades and shades of accommodation
+paper, though it represents no actual business transaction between the
+parties to it, and rests upon no other foundation than that of mutual
+agreement. No contract is good without a consideration, but this is
+only true between the original parties to a note. The third party or
+innocent receiver or holder of a note has a good title, and can
+recover its value, even though it was originally given without a
+valuable consideration. An innocent holder of a note which had been
+originally lost or stolen has a good title to it if he received it for
+value.
+
+[Illustration: A special form for a promissory note.]
+
+A note does not draw interest until after maturity, unless the words
+WITH INTEREST appear on the face. Notes draw interest after maturity
+and until paid, at the legal rate.
+
+A note should be presented for payment upon the exact day of maturity.
+Notes made payable at a bank, or at any other place, must be presented
+for payment at the place named. When no place is specified the note is
+payable at the maker's place of business or at his residence.
+
+In finding the date of maturity it is important to remember that when
+a note is drawn _days after date_ the actual days must be counted, and
+when drawn _months after date_ the time is reckoned by months.
+
+To DISCOUNT a note is to sell it at a discount. The rates of discount
+vary according to the security offered, or the character of the loan,
+or the state of the money market. For ordinary commercial paper the
+rates run from four to eight per cent. Notes received and given by
+commercial houses and discounted by banks are not usually for a longer
+period than four months.
+
+
+VIII. THE CLEARING-HOUSE SYSTEM
+
+In large cities cheques representing millions of dollars are deposited
+in the banks every day. The separate collection of these would be
+almost impossible were it not for the clearing-house system. Each
+large city has its clearing-house. It is an establishment formed by
+the banks themselves, and for their own convenience. The leading banks
+of a city connect themselves with the clearing-house of that city, and
+through other banks with the clearing-houses of other cities,
+particularly New York. Country banks connect themselves with one or
+more clearing-houses through city banks, which do their business for
+them. The New York banks, largely through private bankers, branches of
+foreign banking houses, connect themselves with London, so that each
+bank in the world is connected indirectly with every other bank in the
+world, and in London is the final clearing-house of the world.
+
+[Illustration: The advantages of the clearing-house system.]
+
+Suppose that the above diagram represents the banks and clearing-house
+of a city, and also the two business houses of Brown and Smith. Brown
+keeps his money on deposit in Bank E, and Smith in Bank B. Brown sends
+(by mail) a cheque to Smith in payment of a bill. Now, Smith can come
+all the way to Bank E, and, if he is properly identified, can collect
+the cheque. He does not do this, however, but deposits Brown's cheque
+in Bank B, the bank where he does his banking business. Now, B cannot
+send to E to get the money. It could do this, perhaps, if it had only
+one cheque, but it has taken in hundreds of cheques, some, perhaps, on
+every bank in town, and on many banks out of town. It would take a
+hundred messengers to collect them. So, instead of B's going to E,
+they meet half-way, or at a central point called a clearing-house, and
+there collect their cheques. B may have $5000 in cheques on E, and E
+may have $4000 in cheques on B, so that the exchange can be made--that
+is, the cheques can be paid by E paying the difference of $1000, which
+is done, not direct, but through the officers of the clearing-house.
+Now Bank E's messenger carries Brown's cheque back with him and enters
+it up against Brown's account. This in simple language is the primary
+idea of the clearing-house.
+
+The clearings in New York in one day amount to from one to two hundred
+millions of dollars. By clearings we mean the value of the cheques
+which are _cleared_--that is, which change hands through the
+clearing-house. Usually once a week (in some cities oftener) the banks
+of a city make to their clearing-house a report, based on daily
+balances, of their condition.
+
+[Illustration: The route of a cheque.]
+
+To illustrate the connection between banks at distant points let us
+suppose that B of Media, Pennsylvania, who keeps his money on deposit
+in the First National Bank of Media, sends a cheque in payment of a
+bill to K of South Evanston, Illinois. K deposits the cheque in the
+Citizens Bank of his town and receives immediate credit for it upon
+his bank-book, just the same as though the cheque were drawn upon the
+same or a near-by bank. The Citizens Bank simply sends the cheque,
+with other distant cheques, to its correspondent, the National Bank of
+the Republic, Chicago, on deposit, in many instances in about the
+same sense that K deposited the cheque in the Citizens Bank. The
+National Bank of the Republic sends the cheque, with other cheques, to
+its New York correspondent, the National Park Bank. It may possibly
+send to Philadelphia direct, or even to Media; but this is very
+unlikely. The National Park Bank sends the cheque to its Philadelphia
+correspondent, say the Penn National Bank. Now the clearing-house
+clerk of the Penn National carries the cheque to the Philadelphia
+clearing-house and enters it, with other cheques, on the First
+National of Media. Custom, however, differs very greatly in this
+particular. Many near-by country banks clear through city banks;
+others clear less directly. If the First National Bank of Philadelphia
+is known at the clearing-house as the representative of the First
+National Bank of Media it likely has money belonging to this Media
+bank on deposit. In that case the cheque is charged up against the
+account of the First National of Philadelphia. This bank then sends
+the cheque to the First National of Media, by which it is charged up
+against B. This system of collection of cheques is about as perfect as
+is the post-office system of carrying registered mail.
+
+[Illustration: Backs of two paid cheques.]
+
+Now, the banks and clearing-houses through which the cheque passes on
+its way _home_ stamp their indorsements and other information upon the
+back. Our illustration shows the backs of two cheques which have
+"travelled." Millions of dollars are collected by banks daily in this
+way, and all without expense to their customers. It is estimated that
+these collections cost the New York City banks more than two million
+dollars a year in loss of interest while the cheques are _en route_.
+Ten thousand collection letters are sent out daily by the banks of New
+York City alone.
+
+
+IX. COMMERCIAL DRAFTS
+
+A COMMERCIAL DRAFT bears a close resemblance to a letter from one
+person to another requesting that a certain sum of money be paid to
+the person who calls, or to the bank or firm for whom he is acting.
+For instance, the draft shown in the first illustration might be
+worded something like this:
+
+                                 _St. Louis, Mo., Feb. 22, 1899._
+
+    _Mr. Robert Elsmere,_
+        _Jefferson City, Mo._
+
+    _My dear Sir:_
+
+   _Will you kindly pay to the messenger from the ---- Bank who will
+   call to-morrow the sum of three hundred and ninety-seven dollars
+   and charge to my account?_
+
+    _Yours, very truly,_
+        _David Grieve._
+
+[Illustration: A sight draft developed from the above letter.]
+
+Commercial usage, however, recognises a particular form in which this
+letter is to be written, and the address of the person for whom it is
+intended is usually written at the lower left-hand corner instead of
+on an envelope. Commercial drafts usually reach the persons upon whom
+they are drawn through the medium of the banks rather than directly by
+mail. Let us illustrate. Suppose that A of Chicago owes B of Buffalo
+$200, and B desires to collect the amount by means of a draft. He
+fills in a blank draft, signs it, and addresses it on the lower
+left-hand corner to A. Instead of sending it by mail he takes it to
+his bank--that is, deposits it for collection. It will reach a Chicago
+bank in about the same way that cheques for collection go from one
+place to another. A messenger from the Chicago bank will carry the
+draft to A's office and present it for payment or for acceptance. If
+it is a _sight_ draft--that is, a draft payable when A sees it--he may
+give cash for it at once and take the draft as his receipt. If he has
+not the money convenient he may write across the face "Accepted,
+payable at (his) Bank," as in the illustration. It will then reach his
+bank and be paid as his personal cheque would be, and should be
+entered in his cheque-book. Banks usually give one day upon sight
+drafts. The draft will not be presented a second time, but will be
+held at the bank until the close of the banking hours the next day,
+where A can call to pay if he chooses. Leniency in the matter of time
+will depend largely upon B's instructions and the bank's attitude
+toward A. If the draft is a time draft--that is, if B gives A time, a
+certain number of days, in which to pay it--A, if he wishes to pay the
+draft, _accepts_ it. He does this by writing the word _accepted_ with
+the date and his signature across the face of the draft. He may make
+it payable at his bank as he would a note, if he so desires. He then
+returns the draft to the messenger, and if the time is long the draft
+is returned to B; if only a few days, the bank holds it for
+collection.
+
+[Illustration: No. 1. A sight draft.]
+
+[Illustration: No. 2. An accepted ten-day sight draft.]
+
+[Illustration: No. 3. An accepted sight draft.]
+
+[Illustration: No. 4. A time draft.]
+
+An accepted draft is really a promissory note, though it is more often
+called an _acceptance_. When a man pays or accepts a draft he is said
+to _honour_ it. In the foregoing illustration A is not obliged either
+to pay or to accept the draft. It is not binding upon him any more
+than a letter would be. He can refuse payment just as easily and as
+readily as he could decline to pay a collector who calls for payment
+of a bill. Of course, if a man habitually refuses to honour legitimate
+drafts it may injure his credit with banks and business houses.
+
+It is a very common thing to collect distant accounts by means of
+commercial drafts. A debtor is more likely to meet--that is, _to
+pay_--a draft than he is to reply to a letter and inclose his cheque.
+It is really more convenient, and safer, too, for there is some risk
+in sending personal cheques through the mail. There are some houses
+that make all their payments by cheques, while there are others which
+prefer to have their creditors at a distance draw on them for the
+amounts due.
+
+If a business man who has been accustomed to honour drafts continues
+for a period to dishonour them, the banks through which the drafts
+pass naturally conclude that he is unable to meet his liabilities.
+
+Some houses deposit their drafts for collection in their home banks,
+while others have a custom of sending them direct to some bank in or
+near the place where the debtor resides. If the place is a very small
+one the collection is sometimes made through one of the express
+companies.
+
+When goods are sold for distinct periods of credit, and it is
+generally understood that maturing accounts are subject to sight
+drafts, there should be no need of notifying the debtor in advance.
+Some houses, however, make a general custom of sending notices ten
+days in advance, stating that a draft will be drawn if cheque is not
+received in the meantime.
+
+Notice the illustrations. The protest notice at the left of Nos. 1, 2,
+and 4 is intended for the bank presenting the draft for payment. The
+reason for this will be fully explained in our lesson on protested
+paper. (See LESSON XIII.) No. 2 shows an accepted draft payable to the
+order of a bank in the city upon which it is drawn. No. 1 is payable
+to the order of a bank in the city of the drawer. No. 3 is a sight
+draft payable to the order of a bank and accepted payable at a bank.
+No. 4 is a time draft payable to "_ourselves_"--that is, the
+Pennsylvania Steel Company.
+
+Drafts are often discounted at banks before acceptance where the
+credit of the drawer is good. In such cases the drafts which are
+dishonoured are charged up against the drawer's account.
+
+
+X. FOREIGN EXCHANGE
+
+It is quite in order that we should follow lessons on the
+clearing-house and commercial drafts with a lesson on foreign
+exchange.
+
+We learned in the last lesson that commercial drafts are made use of
+to facilitate the collection of accounts. They are simply formal
+demands for the payment of legitimate debts. When these formal demands
+are made upon foreign debtors they are called bills of exchange; and
+the process of buying and selling these drafts, the drafts themselves,
+and the fluctuations in price, all are included in the general name
+_exchange_.
+
+[Illustration: Foreign exchange.]
+
+To illustrate the principles of exchange let us suppose that the
+following transactions have occurred:
+
+1. C of Boston has sold goods, £2000, to H of Hamburg.
+
+2. D of Chicago has sold goods, £5000, to F of Glasgow.
+
+3. M of Chicago has sold goods, £3000, to K of London.
+
+4. E of Philadelphia has sold goods, £6000, to R of Paris.
+
+5. P of New York has sold goods, £1000, to G of Paris.
+
+C draws on H for £2000, sells the draft to a banking-house in Boston;
+they send to Bank A of New York, and the New York bank to their
+London correspondent, say Bank B, with instructions to collect from
+Hamburg.
+
+D draws in a similar way on F. E draws on R, and P on G. Suppose that
+M instead of drawing on K receives a draft drawn by Bank B of London
+on Bank A of New York, payable to M's order.
+
+AMERICA has sold goods worth £17,000 to EUROPE.
+
+    EUROPE . . . . . . owes £17,000 to . . . . . . AMERICA
+                    But B has paid A £3000.
+                       ---------------
+    B . . . . . .  therefore owes £14,000 to . . . . . . A
+
+Now it will cost B a considerable sum of money to ship £14,000 in gold
+to A, for all exchanges between Europe and America are payable in
+gold. Suppose that S of New York owes T of London £14,000, and T draws
+on S and takes the draft to Bank B in London and offers it for sale.
+Will B offer more or less than £14,000 for the bill of exchange or
+draft? He will offer more. It will be cheaper for him to pay a premium
+for the draft than to ship gold, for he can send this draft to Bank A
+to pay his indebtedness, and A can collect from S.
+
+In the money market in New York there is a constant supply of
+exchanges (drafts) on London, and in London a constant supply of
+exchanges on New York.
+
+Experience has shown that at all times the number of persons in Europe
+indebted to American business houses is about (though of course not
+actually) the same as the number of persons in America indebted to
+European houses. Hence when A of New York wishes to make a payment
+to B of London he does not send the actual money, but goes into the
+market--that is, to a banker doing a foreign business--and buys a
+draft, called a bill of exchange, which is in reality the banker's
+order on his London correspondent, asking the latter to pay the money
+to the person named. It may be that about the same time some London
+merchant who owes money in New York goes to the very same London
+banker and buys a draft on the New York bank. In this way the one
+draft cancels the other, and when there is a difference at the end
+of the week or month the actual gold is sent across to balance the
+account.
+
+These exchanges have a sort of commodity value, and like all
+commodities, depend upon the law of supply and demand. When gold is
+being shipped abroad we say that the balance of trade is against
+us--that is, we are buying more from Europe than Europe is buying from
+us, and the gold is shipped to pay the balance or difference.
+
+The _par_ of the currency of any two countries means, among merchants,
+the equivalency of a certain amount of the (coin) currency of the one
+in the (coin) currency of the other, supposing the currencies of both
+to be of the precise weight and purity fixed by the respective mints.
+The par of exchange between Great Britain and the United States is
+4.86-2/3; that is, £1 sterling is worth $4.86-2/3. Exchange is quoted
+daily in New York and other city papers at 4.87, 4.88, 4.88-1/2, etc.,
+for sight bills and at a higher rate for sixty-day bills. Business men
+who are accustomed to watching fluctuations in exchange rates use the
+quotations as a sort of barometer to foretell trade conditions. The
+imports and exports of bullion (uncoined gold) are the real test of
+exchange. If bullion is stationary, flowing neither into nor out of a
+country, its exchanges may be truly said to be at par; and on the
+other hand, if bullion is being exported from a country, it is a proof
+that the exchange is against it; and conversely if there be large
+importations.
+
+The cost of conveying bullion from one country to another forms the
+limit within which the rise and fall of the _real_ exchange between
+them must be confined. If, for illustration, a New York merchant owes
+a debt in London and exchange costs him, say, two per cent., and the
+cost of shipping the gold is only one per cent., it will be to his
+advantage to pay the debt by sending the actual coin across. A
+favourable _real_ exchange operates as a duty on exportation and as a
+bounty on importation.
+
+[Illustration: A bill of exchange (private).]
+
+It is to the interest of merchants or bankers who deal in foreign
+bills to buy them where they are the cheapest and to sell them where
+they are the dearest. For this reason it might often be an advantage
+for a New York merchant to buy a bill on London to pay a debt in
+Paris.
+
+[Illustration: A bill of exchange (banker's).]
+
+Two illustrations of bills of exchange are given in this lesson. Each
+is drawn in duplicate. The original is sold or sent abroad, while the
+duplicate is preserved as a safeguard against the loss of the
+original. When one is paid the other is of no value. Notice the
+similarity between bills of exchange as shown here and commercial
+drafts as shown in our last lesson.
+
+The first form shows a draft made by a coal company upon a steamship
+company to pay for coal supplied to a particular steamer. Suppose that
+the steamship company has a contract with Robert Hare Powel & Co. of
+Philadelphia to supply coal to their steamers. The steamer _Cardiff_,
+when in port at Philadelphia, is supplied; the bill is certified to by
+the engineer; the master (captain) of the vessel signs Powel & Co.'s
+draft (and in doing this really makes it the captain's draft); the
+bill is receipted. Now Powel & Co. sell this exchange (draft) on
+London to a broker or banker doing a foreign business. It is forwarded
+to London and presented in due time at the office of the Wales
+Navigation Company for payment.
+
+The second form shows a bill of exchange drawn by a Philadelphia
+banking house upon a London banking house and payable to the order of
+the firm buying the draft. C. H. Bannerman & Co. will send this bill
+(the original) to pay an account in Europe. The first form bears the
+same relation to a commercial draft that the second does to a
+cashier's cheque.
+
+[Illustration: First page of a letter of credit.]
+
+
+XI. LETTERS OF CREDIT
+
+The usual instruments of credit by means of which travellers abroad
+draw upon their deposits at home are known as CIRCULAR LETTERS OF
+CREDIT. These forms of credit are of such common use that every one
+should be familiar with their form. We reproduce here a facsimile of
+the first and second pages of a circular letter for £1000, copied with
+slight change of names from an actual instrument. The first page shows
+the credit proper authorising the various correspondents of the bank
+issuing it to pay the holder, whose signature is given on its face,
+money to the extent of £1000. The names of the banks who are
+authorised to advance money upon the letter are usually printed upon
+the third and fourth pages, though letters issued by well-known
+banking houses are usually recognised by any banking house to which
+they are presented.
+
+The second illustration shows how the holder of a particular letter
+availed himself of its advantages. It gives the names of the banks to
+which he presented his letter, and the amounts paid by each.
+
+With such a letter a traveller could make a trip around the world and
+not have in his pocket at any one time more gold or silver or bills
+than would be necessary to meet immediate expenses.
+
+Suppose that A. B. is about to make a European trip. He goes to a bank
+doing a foreign business, say Brown Bros. & Co. of New York City, and
+asks for a circular letter for £1000, for which he is obliged to pay
+about $4880. Copies of A. B.'s signature are left with Brown Bros. &
+Co., and may perhaps be forwarded to their foreign banking houses.
+When A. B. presents himself at a Glasgow or Paris bank with his letter
+of credit, and asks for a payment upon it, the banker asks him to sign
+a draft on Brown Bros. & Co., New York, or more likely on their London
+bank, for the amount required, which amount is immediately indorsed on
+the second page of the letter of credit, so that when the indorsements
+equal the face the letter is fully paid. A. B. is simply drawing upon
+his own account--that is, upon the money he deposited to secure the
+letter of credit.
+
+Payment is usually made upon the simple identification or comparison
+of signatures. If a traveller should lose his letter of credit he
+should notify at once the bank issuing it and, if possible, the banks
+upon which drawn.
+
+[Illustration: Second page of a letter of credit (used).]
+
+There are several other forms of travellers' credits in use. The
+_Cheque Bank_, an English institution with a branch in New York City,
+issues to travellers a book of cheques, each of which can be filled up
+only to a limited amount, as shown by printed and perforated notices
+appearing on the face. For instance, for £100 one can buy a
+cheque-book containing fifty blank cheques, each good, when properly
+filled up, for £2. Each of these cheques is really a certified cheque,
+only it is certified in advance of issue. Any of the thousand or more
+foreign banks which are agents for the _Cheque Bank_ sell these
+cheque-books, and cash the cheques when presented. The amounts that
+may be short drawn go toward the cost of a new cheque-book, or may be
+returned in cash. The American and other express companies have forms
+of travellers' cheque-books very similar to those issued by the
+_Cheque Bank_.
+
+
+XII. JOINT-STOCK COMPANIES
+
+To organise a stock company it is necessary for a number of persons to
+come together and make a certificate to the effect that they propose
+to form a company to bear a certain name, for the purpose of
+transacting a certain kind of business at a certain place. The
+certificate states that they propose to issue a certain number of
+shares of stock at a certain price per share, that the capital stock
+is to be a certain amount, and that the company is to continue to
+exist for a definite period of time. Blank forms for such certificate
+are supplied by the Secretary of the State where the company is being
+organised, and when such certificate is properly filled out, signed,
+and delivered to him, he issues a license, or charter, to the persons
+making such certificate, giving them permission to open books, sell
+stock, and carry on the enterprise outlined.
+
+State laws regarding stock companies differ very largely. Students of
+this course who desire to know the law in any particular State can
+easily secure the information by writing to the secretary of that
+State.
+
+The usual par value of a share of stock is $100. That is, if a company
+organises with a capital of $200,000, there will be 2000 shares to
+sell. Each person who buys or subscribes for the stock--that is, who
+joins the company--receives a CERTIFICATE OF STOCK. Our illustrations
+show two examples; one of a national bank, and the other of a
+manufacturing company. These certificates are transferable at the
+pleasure of the owners. The transfer is made usually by a form of
+indorsement on the back of the certificate, but to be legal the
+transfer must be recorded on the books of the company.
+
+[Illustration: A certificate of stock in a national bank.]
+
+The men subscribing in this way become responsible for the good
+management of the business and are obliged to act according to the
+laws of the State in which the company is organised. Usually they are
+not responsible individually for the liabilities of the concern beyond
+the amounts of their individual subscriptions.
+
+[Illustration: A certificate of stock in a manufacturing company.]
+
+Every person who subscribes for stock owns a part of the business and
+is called a SHAREHOLDER. All the shareholders meet together, and out
+of their number they choose a certain number of DIRECTORS. The
+directors choose a president and other necessary officers, and in a
+general way direct the policy of the company. As a rule directors have
+no salaries attached to their positions. General meetings of
+shareholders are held once a year to elect the directors and to hear
+the reports of the officers.
+
+The student should be familiar in a general way with the different
+classes of stock and with the technical terms familiar to stock
+companies. The more important of these matters are as follows:
+
+DIRECTORS. All the shareholders meet together and out of their number
+choose a certain number of directors. The directors choose a president
+and other necessary officers and fix the amount of salary which shall
+be paid such officers for their work.
+
+CAPITAL STOCK. This name is given to the gross capital for which the
+company is organised, without any reference to its value or to whether
+it has been fully paid in or not. The _paid-in capital_ is the amount
+received from the stockholders on the shares for which they have
+subscribed.
+
+DIVIDENDS. The directors of the company, after paying the expenses and
+laying by a certain amount for contingencies, divide the profits among
+the shareholders. These profits are called dividends, and in
+successful concerns such dividends as are declared quarterly,
+semiannually, or annually usually amount to good interest on the
+shareholders' investments.
+
+TREASURY STOCK. It often occurs that a new company finds it necessary
+to set aside a certain number of shares to be sold from time to time
+to secure working capital. Such stock is held in the treasury until it
+is needed, and is called treasury stock.
+
+PREFERRED STOCK. Preferred stock is stock which is guaranteed certain
+advantages over ordinary stock. It is usually given to secure some
+obligation of the company, and upon it dividends are declared in
+preference to common stock. That is to say, if a man holds a share of
+preferred stock he will receive interest thereon out of the profits
+of the business before such profits are given in the form of dividends
+to shareholders generally. Preferred stock can be issued only when
+authorised by the charter of the company. The interest on the
+investment in the case of preferred stock is more sure, but the
+security itself is not any more secure than in the case of common
+stock.
+
+GUARANTEED STOCK. Guaranteed stock differs from preferred stock in
+this--that it is entitled to the guaranteed dividend (interest) before
+all other classes of stock, whether the company earns the necessary
+amount in any one year or not. This right is carried over from year to
+year, thus rendering the shares absolutely secured as to interest.
+
+WATERED STOCK. When stock is issued to the shareholders without
+increase of actual capital the stock is said to have been _watered_. A
+company may organise for, say, $10,000, and may want to increase to
+$50,000 without adding to the number of its shareholders. Each holder
+of _one_ share will, in this instance, receive _four_ new shares, and
+in future instead of receiving a dividend on one share will receive a
+dividend on five shares. The object of this is, quite commonly, to
+avoid State laws requiring certain corporations to pay excess of
+profit over a stated rate per cent. into the State treasury.
+
+FORFEITED STOCK. Stock is usually sold on certain explicit conditions,
+such as the paying of ten per cent. down and the balance in
+installments at stated intervals. If the conditions which are agreed
+to by the shareholder are not met his stock is declared _forfeited_,
+or he can be sued in the same manner as upon any other contract.
+
+ASSESSMENTS. Some companies organise with the understanding that a
+certain percentage of the nominal value of the shares is to be paid at
+the time of subscribing, and that future payments are to be made at
+such times and in such amounts as the company may require. Under
+these conditions the stockholders are assessed whenever money is
+needed. Such assessments are uniform on all stockholders.
+
+SURPLUS FUND. It is not customary to pay a larger dividend than good
+interest. The profits remaining after the expenses and dividends are
+paid are credited to what is called a surplus fund. This fund is the
+property of the shareholders and is usually invested in good
+securities.
+
+FRANCHISE. A franchise is a right granted by the State to individuals
+or to corporations. The franchise of a railroad company is the right
+to operate its road. Such franchise has a value entirely distinct from
+the value of the plant or of the ordinary property of the corporation.
+
+SINKING FUND. A sinking fund is a fund set aside yearly for the
+purpose at some future time of sinking--that is, paying a debt.
+
+
+XIII. PROTESTED PAPER
+
+When a note is presented for payment at maturity and is not paid it is
+usually PROTESTED; that is, a notary public makes a formal statement
+that the note was presented for payment and payment was refused.
+Notice of such protest is sent to the maker of the note and to each
+indorser.
+
+The bank should never hand to its notary any paper for protest until
+it has made sure that its non-payment has not been brought about by
+some error or misunderstanding. Quite often, even though the paper has
+been made payable at a bank, the notary sends a messenger with the
+note to the maker to make a formal demand for payment.
+
+In taking in collection paper, banks should obtain clear instructions
+from its owners as to whether or not it should be protested in case
+of non-payment. It by no means follows that a formal protest is not
+desired because the paper bears no indorsements. Many banks make it a
+rule to protest all unpaid paper unless otherwise ordered.
+
+We often see attached to the end of a draft a little slip with the
+words: "_No protest; tear this off before protesting._" This is simply
+private advice to the banker informing him that the drawer does not
+wish to have the draft protested. It may be that he does not wish to
+wrong or injure the credit of or add to the expense of his debtor; or
+it may be that he considers the account doubtful and does not wish to
+add to his own loss the cost of protest fees.
+
+To hold an indorser, he must be properly notified of the non-payment
+of the note; and whether this has been done is a question of fact. If
+he was not properly notified this defence will avail whenever it is
+clearly proved. A great variety of defences may be successfully made
+by an indorser. A few of these defences are here briefly noticed: One
+is usury; another is the maker's discharge by the holder; nor can he
+be held when he has paid the note; nor when its issue was unlawful,
+nor when the note was non-negotiable, nor when his indorsement was
+procured by fraud. Finally, an indorser may avail himself of any
+defence existing between the holder and the maker or principal debtor.
+This is evidently a just principle, for the holder should have no more
+rights against an indorser than he has against the maker. If,
+therefore, the maker can interpose some just claim as a partial or
+complete defence the indorser should be permitted to avail himself of
+this claim.
+
+In order to recover from an indorser it must be proven that a formal
+and proper demand for payment was made upon the maker. The formal
+protest is usually undisputed evidence of this. The maker is liable in
+any event.
+
+[Illustration: A protest.]
+
+To make the indorser's liability absolute it is necessary to demand
+payment at the specified place on the last day of the period for which
+the note was given, and to give due notice of non-payment to the
+indorser. For, as the contract requires the maker to pay at maturity,
+the indorser may presume, unless he has received a notice to the
+contrary, that the maker has paid the obligation.
+
+Ordinarily a notice of an indorsement by a partnership need not be
+sent to each member. Even after the partnership has been dissolved a
+notice to one partner is sufficient to bind the other members. If the
+note is owned jointly (that is, by parties who are not business
+partners) the indorsers are not liable as partners but as individuals.
+In such a case the notice of non-payment should be sent to each.
+
+Our illustration shows a facsimile of a protest notice.
+
+
+XIV. PAPER OFFERED FOR DISCOUNT
+
+One of the most valuable parts of a banker's education is to learn
+whom to trust. Every bank should have a well-organised and thoroughly
+equipped credit department, in charge of some one who can be relied
+upon to investigate carefully all names referred to him by the
+officers. A banker has the right to expect the fullest confidence on
+the part of the borrower, and the borrower should furnish him with a
+complete and detailed statement of the condition of his affairs. It is
+safe to conclude that when a borrower refuses absolutely to give any
+information as to his financial condition his credit is not in the
+most favourable shape.
+
+Many of the banks have blank forms which they, from time to time, ask
+borrowers to fill out. These statements show in detail the assets and
+liabilities of the firm in question; they show the notes which are
+outstanding, the mortgages on real estate, and many other particulars,
+including the personal or individual credit of members of the firm, if
+a partnership.
+
+In estimating the value of paper offered for discount the following
+points should be considered:
+
+1. The total net worth of the borrower.
+
+2. The character of his business; whether it is speculative or staple.
+
+3. The borrower's record and standing in the community and his
+   business habits.
+
+4. Whether he is in enterprise abreast with modern ideas and methods.
+
+5. The character of the merchandise owned by the borrower. What would
+   it bring under the hammer? Groceries and raw material can usually be
+   turned into cash at a forced sale at very small discount from current
+   prices. Not so with hardware, glass, dry goods, boots and shoes,
+   books, etc. Machinery and fixtures are not a bankable asset upon
+   which to base credit.
+
+The banker should note his borrower's bills payable. Why did he give
+notes? Are they met promptly? Many houses prefer to sell their own
+paper in the open market, and keep their banks open for accommodations
+when they are unable to secure outside credit. The insurance carried
+should be considered; also the volume of business done. A large
+business on moderate capital, with long credits, will naturally have
+large liabilities, while a small business with a liberal capital and
+short credits should have small liabilities.
+
+Paper offered for discount is of a variety of kinds. The larger
+proportion of it is from customers of the borrower who have extended
+their credit by paying their accounts in notes instead of in cash.
+Such paper is really, though having two names, very little better
+than single-name paper, for it is not the maker's credit, but the
+payee's, which the bank usually considers. Many very small notes
+offered for discount usually indicate a very needy condition.
+
+There are many firms which carry two or more bank accounts, and others
+who sell their paper to out-of-town banks. In buying paper it is
+important to ascertain whether the firm is in the habit of taking up
+paper at one bank by floating a loan at another.
+
+Paper may be classified for purposes of discount as follows:
+
+1. Bills drawn by shippers on the houses to which the goods are
+   shipped.
+
+2. Bills drawn by importers against commodities placed in brokers'
+   hands for sale.
+
+3. Bills arising out of our manifold trades and industries.
+
+4. Drafts with bills of lading attached.
+
+5. Paper having personal indorsements.
+
+6. Paper secured by collateral.
+
+7. One-name paper.
+
+
+XV. CORPORATIONS
+
+Stock companies are in a sense corporations, but the name CORPORATION
+has in its common application a broader meaning. PUBLIC CORPORATIONS
+are those which are created exclusively for the public interest, as
+cities, towns, counties, colleges, etc. PRIVATE CORPORATIONS are
+created wholly or in part for the pecuniary benefit of the members, as
+railroad companies, banks, etc. Corporate bodies whose members at
+discretion fill by appointment all vacancies occurring in their
+membership are sometimes called _close corporations_. In this country
+the power to be a corporation is a franchise which can only exist
+through the legislature.
+
+In municipal corporations the members are the citizens; the number is
+indefinite; one ceases to be a member when he moves from the town or
+city, while every new resident becomes a member when by law he becomes
+entitled to the privileges of local citizenship.
+
+The laws which corporations may make for their own government are made
+under the several heads of by-laws, ordinances, rules, and
+regulations. These laws may be made by the governing body for any
+object not foreign to the corporate purposes. A municipal corporation,
+for example, makes ordinances for the cleaning and lighting of its
+streets, for the government of its police force, for the supply of
+water to its citizens, and for the punishment of all breaches of its
+regulations. A railway corporation establishes regulations for
+signals, for the running of trains, for freight connections, for the
+conduct of its passengers, and for hundreds of other things. But such
+by-laws and regulations must be in harmony with the charter of the
+corporation and with the general law of the land. For instance, a
+municipal corporation could not enforce a by-law forbidding the use of
+its streets by others than its own citizens, because by general law
+all highways are open to the common use of all the people. Again, a
+railway corporation could not make a rule that it would carry goods
+for one class of persons only, because as a common carrier the law
+requires that it carry impartially for all.
+
+As a general rule private corporations organised under the laws of one
+State are permitted to do business in other States. It is quite often
+to the advantage of a company to organise under the laws of one State
+for the purpose of doing business in another. For instance, there are
+many companies chartered under the laws of Maine with headquarters in
+Boston. The Massachusetts laws require that a large proportion of the
+capital be actually paid in at the time of organising, while the Maine
+law has no such provision. For similar reasons many large companies
+doing business in New York or Philadelphia are organised under the
+laws of New Jersey.
+
+A corporation may make an assignment just as may an individual. If all
+the members die the property interests pass to the rightful heirs, and
+under ordinary conditions the corporation still exists.
+
+A FRANCHISE is a right granted by the State or by a municipal
+corporation to individuals or to a private corporation. The franchise
+of a railroad company is the right to operate its road. Such franchise
+has a value entirely distinct from the value of the plant or the
+ordinary property of the corporation.
+
+An UNLIMITED LIABILITY corporation is one in which the stockholders
+are liable as partners, each for the full indebtedness.
+
+A LIMITED LIABILITY corporation is one in which the stockholders, in
+case of the failure of the corporation, are liable for the amount of
+their subscriptions. The name _limited_ is required by law to appear
+after the name of the company. If a subscription is entirely paid up
+there is no further liability--that is to say, the property of a
+shareholder cannot be attached for any debts of the company.
+Understand clearly that the name _limited_ printed after the name of a
+company does not indicate in any way that the capital or credit of the
+company is limited, only that the liability of the shareholders of the
+company is limited to the amounts of their shares.
+
+A DOUBLE LIABILITY corporation is one in which, in case of failure,
+the stockholders are further liable for amounts equal to their
+subscriptions. All national banks are double liability companies. If A
+owns $5000 stock in a national bank, and the bank fails, he loses his
+stock; and if the liabilities of the bank are large he may be obliged
+to pay a part or the whole of an additional $5000.
+
+
+XVI. BONDS
+
+When a railroad company, or a city or any other corporation desires to
+borrow money it is a common practice to issue instruments of credit
+called BONDS. A bond means something that binds. Bonds bear the same
+relation to the resources of a corporation that mortgages do to real
+estate.
+
+Corporation bonds are issued for a period of years. They usually have
+coupons attached which are cut off and presented at regular intervals
+for the payment of interest. A bondholder of a corporation runs less
+risk than a stockholder, first, as to interest: the corporation is
+obliged to pay interest on its bonds, but may at its own pleasure
+_pass_ its dividends; secondly, the bondholder is a creditor, while
+the stockholder of the corporation is the debtor. On the other hand,
+if a concern is very successful, a shareholder may receive large
+dividends, while the bondholder receives only the stipulated interest.
+A _bond_ is evidence of debt, specifying the interest, and stating
+when the principal shall be paid; a _certificate of stock_ is evidence
+that the owner is a part-owner in the corporation or company, not a
+creditor, and he has no right to regain his money except by the sale
+of his stock, or through the winding up of the company's business.
+
+The name DEBENTURES is given to a form of municipal bond in common
+use. Nearly all the large sums of money used by States and cities for
+the building of State or municipal buildings, bridges, canals,
+water-works, etc., are raised through the issue of bonds
+(_debentures_), which are sold, usually at a price a little below par,
+to large financial institutions, banks, and insurance companies.
+Generally speaking, such bonds are good _securities_, and are
+marketable anywhere.
+
+[Illustration: A private bond.]
+
+At different times the United States government has issued bonds to
+relieve the treasury. These bonds are absolutely safe and are always
+marketable. _Registered bonds_ have the name of the buyer
+_registered_; _unregistered bonds_ are payable to _bearer_. _Municipal
+bonds_ are issued by cities and other municipalities to raise money
+for local improvements. If proper precautions are taken by buyers,
+municipal securities may be considered among the safest and most
+remunerative investments.
+
+When a new railroad enterprise is undertaken its promoters often
+expect to make the road not only supply the money for its construction
+but also give working capital in addition. This is done by the issue
+of mortgage bonds. Default in the payment of interest throws the road
+into the hands of a receiver. The securities immediately fall in value
+and are perhaps bought up by a syndicate of crafty speculators who are
+permitted to reorganise the road and its management. This is the
+history of many of our roads. There are exceptional cases, of course,
+but the investor should be familiar with the facts before buying
+railroad mortgages.
+
+A BOTTOMRY BOND is a kind of mortgage peculiar to shipping. It is a
+conveyance of the ship as security for advances made to the owner. If
+the ship is lost the creditor loses his money and has no claim against
+the owner personally. It is allowable for a loan made upon such a bond
+to bear any rate of interest in excess of the legal rate. A vessel
+arriving in a foreign port may require repairs and supplies before she
+can proceed farther on her voyage, and in occasions of this kind a
+bottomry bond is given. The owner or master pledges the keel or
+_bottom_ of the ship--a part, in fact, for the whole--as security.
+
+We have now upon the market stocks and bonds representing all
+conceivable kinds of property. Not only are properties of many kinds
+used to issue bonds upon, but many kinds of bonds are often issued
+upon the same property. Thus we find among our railroads not only
+first, second, and third mortgage bonds, but income bonds, dividend
+bonds, convertible bonds, consolidated bonds, redemption bonds,
+renewal bonds, sinking-fund bonds, collateral trust bonds, equipment
+bonds, etc., until they lap and overlap in seemingly endless
+confusion.
+
+RECEIVER'S CERTIFICATES are issued by receivers of corporations,
+companies, etc., in financial difficulties, to secure operating
+capital; they are granted first rights upon the property and are
+placed above prior lien and first mortgage bonds.
+
+
+XVII. TRANSPORTATION
+
+The most common effect of cheapened transportation is to increase the
+distance at which it is possible for producer and consumer to deal
+with each other. To the producer it offers a wider market and to the
+consumer a more varied source of supply. On the whole, cheapened
+transportation is more uniformly beneficial to the consumer; its
+temporary advantage to the producer very often leads to
+overproduction. It has the effect also of bringing about nearly
+uniform prices the world over.
+
+The time was when nearness to market was of the greatest possible
+advantage. At the present time a farmer can raise his celery in
+Michigan or his beets in Dakota and market them in New York City about
+as easily as though he lived on Long Island. It is no longer location
+which determines the business to be carried on in a particular place,
+but natural advantages more or less independent of location. But the
+railroad or the steamboat very often determines where a new business
+shall be developed. It is this quickening and cheapening of
+transportation that has given such stimulus in the present day to the
+growth of large cities. It enables them to draw cheap food from a far
+larger territory, and it causes business to locate where the widest
+selling connection is to be had, rather than where the goods or raw
+materials are most easily procured. It is the quick and comfortable
+transportation facilities which our large cities possess that have
+given strength to the great shopping centres. Shoppers for thirty or
+forty miles around can easily reach these centres, and the result is
+that trade gathers in centres rather than at local points. A city of a
+million population in the most productive agricultural section of
+country could not be fed if the food had to reach the city by teaming.
+With this growth of trade centres comes the increased gain of large
+dealers at the expense of the small; with it comes organised
+speculation and its attendant results, good and evil.
+
+Prior to the completion of the organisation of trunk or through lines,
+freight was compelled to break bulk and suffer trans-shipment at the
+end of each line, where a new corporation took up the traffic and
+carried it beyond. To prevent this breaking of bulk and to expedite
+the carriage of freight, fast freight lines on separate capitalisation
+were organised. The purpose of the interstate-commerce law is largely
+to prevent discrimination and corruption in freight charges, to secure
+for every person and place just and equal treatment at the hands of
+the transportation companies. The freight rates are arranged and
+regulated by the traffic associations, and the various conditions and
+compromises necessary have made both classifications and rates about
+as complicated as anything possibly could be.
+
+The name DIFFERENTIAL as applied to freight rates refers to the
+differences which are made by railroad companies. Certain roads are by
+agreement allowed to charge a lower rate than others running to the
+same points. To and from each of the eastern cities there are two
+classes of roads--the _standard_ lines and the _differential_ lines.
+The standard lines have the advantage of more direct connections; the
+differential lines reach the freight destinations by circuitous
+routes, in some instances by almost double the mileage. With a view to
+equalising these conditions the general traffic associations allow the
+differential lines to carry freight at a lower rate per mile than the
+rate charged by the standard lines.
+
+The transportation business of the United States is so varied and
+complicated that a proper study of its freight tariffs and
+classifications would require much more space than can be given the
+subject in these lessons.
+
+
+XVIII. TRANSPORTATION PAPERS
+
+The common transportation papers, familiar to all shippers, are the
+(1) _shipping receipt_, (2) _bill of lading_, (3) _waybill_.
+
+ORIGINAL RECEIPTS, stating marks and quantities of goods, go with each
+separate lot of merchandise to the freight sheds or vessels, and these
+are summed up in a formal bill of lading, for which they are exchanged
+when all the cases or bundles belonging to the particular shipment
+have been delivered. The duplicate receipt, or the part commonly
+marked _invoice_, is kept by the receiver of the freight, and the
+other end, commonly marked _original_, is given to the drayman. In
+making ordinary shipments it is not usual or necessary to make out a
+formal bill of lading. Of course, when no bill of lading is made out,
+the receipt should be preserved by the shipper. The full contract is
+usually printed on the receipt, but it must be remembered that a
+receipt is not a negotiable instrument and cannot be used as security
+for money.
+
+[Illustration: A shipping receipt (original).]
+
+A BILL OF LADING is an acknowledgment by a transportation company of
+the receipt of goods specified, and contracts for their delivery at a
+certain place, under conditions stated thereon, upon payment of
+freight and expenses. Bills of lading are negotiable and maybe
+transferred by indorsement, but are of no value apart from the goods
+to which they give title. A bill of lading goes with certain _named_
+goods and cannot be transferred to other goods, even though of
+precisely the same kind and price. Marine bills of lading are usually
+made in triplicate; one is kept by the shipper, another by the
+vessel, and the third is sent by mail to the person to receive the
+goods.
+
+[Illustration: A steamship bill of lading.]
+
+The parties to a bill of lading are three--the shipper, the consignee,
+and the transportation company. The declaration of having received the
+goods in good order and condition, and the consequent obligation,
+subsequently expressed, of delivering them in like good order and
+condition, is sensibly lessened in its importance by the additional
+clause now adopted by almost all transportation companies--namely:
+"Contents and condition of contents of packages unknown." Should the
+goods or part of them be shipped in a damaged condition, or in a bad
+condition of packing, a note to that effect should be made by the
+transportation company on the bill of lading, which ceases then to be
+a _clean bill of lading_.
+
+[Illustration: A local waybill.]
+
+Like any other instrument of credit, a bill of lading may be deposited
+with a creditor as security for money advanced (or it may be
+transferred to a buyer) by means of indorsement, and the property or
+goods will be thereby either mortgaged or assigned. Acting upon this
+principle, the shipper declares in the bill of lading that the goods
+shall be delivered unto the consignee or his assigns. When a shipper
+is unable to insert the name of the consignee at the time the bill of
+lading is made out, a _bill to order_ is drawn up wherein the
+consignee's name is superseded by the words _shipper's order_, or
+simply _order_; it being thus understood that the goods shall be
+delivered to whomsoever presents, at point of destination, the bill of
+lading duly indorsed by the shipper. By such a simple arrangement as a
+_bill to order_ the merchant is enabled to sell the goods while they
+are at sea, or in transit, and a consignment of merchandise may change
+hands several times before arriving at its destination.
+
+When a case of merchandise to be shipped has been properly entered and
+weighed it is then ready to be _manifested_ or _waybilled_, as no
+shipment is allowed to go forward without a waybill. The WAYBILL is
+simply a memorandum of the consignment, together with full and
+complete shipping directions, giving also the number of the car into
+which the case has been loaded, and the point to which the car is
+"carded." The freight conductor has waybills for all goods which he
+carries. They are turned over with the merchandise to the agent of the
+railroad at the point of destination.
+
+Our illustrations show (1) _a shipping receipt_--the half marked
+"_original_"; (2) _a steamship bill of lading_; (3) _a local
+waybill_.
+
+
+EXAMINATION PAPER
+
+NOTE.--_The following questions are set as an indication of the sort
+of knowledge a student should possess who has carefully read the
+several papers of this course. The paper covers only about the first
+half of the course. The student is recommended to write out the
+answers carefully. Only such answers need be attempted as can be made
+from a study of the lessons._
+
+ 1. What in a general sense is meant when we speak of the currency of a
+    country?
+
+ 2. Enumerate some of the advantages afforded to the community and to
+    commerce in general by banking institutions.
+
+ 3. A bank cheque is a demand order for money, drawn by one who has
+    funds in the bank. How does a cheque differ from an order on John
+    Smith to pay bearer a certain sum of money?
+
+ 4. Why is it important that cheques should be very carefully drawn?
+
+ 5. (_a_) A cheque has no date. Does this make it void? (_b_) How about
+    a cheque dated months ago? (_c_) Is a cheque dated on Sunday good?
+    (_d_) Why are cheques sometimes dated ahead? (_e_) Are you at liberty
+    to print your own form of cheque? (_f_) Is it necessary that your
+    cheque be written on the prescribed blank form? (_g_) How would you
+    write a cheque for 75 cents?
+
+ 6. How would you word a cheque to give to a person who is unknown at
+    your bank, but who wishes to draw the money over the counter?
+
+ 7. You are sending a cheque through the mails to John Brown,
+    Philadelphia. How will you prevent the cheque from falling into
+    the hands of the wrong John Brown?
+
+ 8. You identify A. B. at your bank. The cheque A. B. presented turns
+    out to be a forgery. Are you responsible?
+
+ 9. A. B. transfers a cheque to you by a blank indorsement. It is then
+    payable to bearer. How can you legally make it payable to your own
+    order?
+
+10. What is meant by power-of-attorney? How should an attorney indorse
+    cheques for any person for whom he is acting?
+
+11. If a note were about to be transferred to you by indorsement and
+    delivery in payment of a debt, would it make any difference to you
+    whether or not it was overdue? Explain in full.
+
+12. Tell how you would receipt for a payment of a note. Why is not an
+    ordinary separate receipt sufficient?
+
+13. Why are notes protested? Why is a formal protest sometimes desired
+    even though the paper bears no indorsements?
+
+14. If an indorser is compelled to pay a note, against whom has he a
+    good claim?
+
+    NOTE TO THE FOREGOING EXAMINATION PAPER
+
+    It is a mistake to answer questions for a student if he is able
+    of himself to find the answers. A question which sets a student
+    thinking, even though he cannot immediately find a satisfactory
+    answer, affords educational training of considerable value. A
+    few of the answers to the foregoing questions are as follows:
+
+    5. (_a_) Not necessarily so. (_b_) Such a cheque would under
+    ordinary conditions be all right. Cheques should be presented as
+    soon after date as convenient. (_c_) Cheques dated on Sunday
+    are very commonly paid. Cheques or notes delivered on Sunday are
+    void. The delivery makes the contract, not the dating. (_d_)
+    That the maker may have a few days in which to deposit
+    sufficient money to meet them. (_e_) You are at liberty to print
+    your own form of cheque or to write it out in full if you wish.
+    (_g_) Write the words "_Seventy-five cents_" plainly along the
+    money line.
+
+    8. Yes.
+
+
+
+
+BUSINESS GEOGRAPHY
+
+THE TRADE FEATURES OF THE GREAT COMMERCIAL NATIONS
+
+
+I. THE TRADE FEATURES OF THE BRITISH ISLES
+
+LONDON AS A FOOD CONSUMER
+
+London is the greatest seat of trade and commerce in the world. Its
+commercial greatness is evidenced by its greatness of population. Its
+inhabitants number over 6,000,000. The houses in which this vast
+population lives, would, if placed end to end, make a continuous
+street that would stretch across all Europe and Asia. The mere effort
+of providing food for this vast population necessitates an enormous
+commerce. Half a million of beeves are required every year to supply
+its meat market; also 2,000,000 sheep and 8,000,000 fowls. To supply
+its fish market 400,000,000 pounds of fish are required, and
+500,000,000 oysters. Grain, flour, fruit, butter, eggs, cheese, sugar,
+tea, and coffee, are brought to London daily in such quantities that
+the prices of these commodities all the world over are based upon what
+they will fetch in London. Whole nations and provinces and districts
+get their subsistence from industries that have for their end the
+supplying of some of this enormous food demand. Denmark, for example,
+owes its entire prosperity of recent years to its profitable
+manufacture of butter for the London market. Brittany and Normandy, in
+France, are almost wholly occupied in supplying that market with
+poultry and eggs. The islands of Jersey and Guernsey derive their
+principal wealth, not, as might be supposed, from the sale of milk and
+butter, but from the supplying of London with potatoes. Canada during
+the last six or eight years has built up with London an immense trade
+in cheese, a trade that exceeds in importance any other that Canada
+has, while even our own home States--Illinois, Iowa, and Wisconsin,
+for example--have found new sources of wealth in catering to the
+London dairy trade. "Elgin" and "Ames" creamery butters are products
+well known to the London consumer.
+
+LONDON THE COMMERCIAL CENTRE OF THE WORLD
+
+What is the reason of London's wonderful prosperity? Already its
+population is one fifth the entire population of England and Wales,
+and it is increasing at the rate of about 20 per cent. per decade.
+Three hundred people are added to the number every day in the year, a
+rate of 110,000 inhabitants in the course of the year. It is now one
+half greater than the total population of all Ireland. London's Scotch
+population is almost as numerous as that of Edinburgh, while its Irish
+population is quite as numerous as that of Dublin. Every civilised
+country is represented among its people, and every civilised tongue is
+spoken among them. A sea of brick and mortar, even now fifteen miles
+long and ten miles broad, it is growing at the rate of a new house
+every hour of its existence. Its streets are already 28,000 miles in
+length, and these are spreading out so rapidly that every year many
+whole villages and townships are enmeshed by them. Every day 1,000,000
+people enter London by railway, and at least 500,000 people have
+occupations in it in the daytime who reside beyond its limits at
+night. Fifty thousand people have occupations in it in the night-time
+who reside beyond its limits during the day. It is the largest
+importing centre in Great Britain, and the largest in the world, and
+its exports are exceeded only by Liverpool, and not always by
+Liverpool. It is also the centre of the world's financial business.
+For example, traders in the East Indies who ship cargoes of spices and
+other Eastern produce to America, draw in settlement on London rather
+than on New York, while traders in America who ship cargoes of cotton
+to Marseilles or Riga, draw in settlement on London rather than on
+Paris or St. Petersburg. What is it that thus makes London the chief
+seat of population in the world, the commercial metropolis of the
+world, the great financial clearing-house of the world?
+
+LONDON THE CENTRE OF THE LAND SURFACE OF THE GLOBE
+
+[Illustration: London the natural centre of the world's trade.]
+
+London stands as nearly as possible in the centre of the land surface
+of the globe. Its situation, therefore, eminently adapts it to be the
+great centre of the world's trade--the great distributing centre of
+the world's products. Its ships can go to the farthest parts of the
+earth, and, loading themselves with the natural products of these
+parts, can bring them to its docks without breaking bulk, deposit them
+there for assortment, and then take them away again to other parts of
+the earth, and do this more economically than the ships of almost any
+other port in the world. But a greater reason is to be found in the
+fact that for centuries the British people have pursued a definite
+policy of manufacture, trade, and commerce, and have had the good
+fortune to have had that policy interfered with in a less degree than
+any other nation in the world by commerce-destroying war, whether
+internal or external. And whenever Britain has been in external wars
+her navy has been able to protect her commercial interests. London,
+being the capital of the kingdom and its chief seat of trade, has
+naturally derived the principal benefit from these many years of
+peaceful industry and commerce. Then, again, London is favourably
+adapted to trade in respect to its own country. It is a seaport, sixty
+miles inland, and is connected by navigable canals with all the other
+chief manufacturing and commercial centres of the country. Its railway
+facilities, too, are so complete that there is not a manufacturing
+town in the whole island that is not within fifteen hours of
+freightage from it. Then, too, the peculiar configuration of the
+coast-line of Great Britain makes every point on the island within an
+hour or two of carriage from a seaport. Finally, all British seaports
+are in trade connection with London by a coasting service unequalled
+in the world for cheapness, completeness, and efficiency. In a word,
+London stands not only in the centre of the land surface of the globe,
+but also at the commercial centre of its own home territory--that is
+to say, within easy reach both by water and by land of all the trading
+and producing interests of a people that for centuries have been
+leaders in commercial and manufacturing industry and enterprise.
+
+GREAT BRITAIN'S COMMERCIAL POLICY
+
+But that which more than anything else has made London the great trade
+centre of the world has been the policy, now for many years adopted by
+the British people, of allowing the goods and products of all other
+nations to enter their ports untaxed. Every port in Britain is a free
+port of entry for all imported merchandise except spirits, tobacco,
+wine, tea, coffee, cocoa, and chicory; and ships of all nations are
+allowed to trade at British ports upon terms exactly the same as those
+laid down for British ships. The result is that Britain has become the
+entrepôt or distributing mart for the produce of the world. Ships of
+all nations are found at her wharves, and commodities from all parts
+of the world brought in those ships are found in her warehouses. Her
+mercantile navy numbers 21,000 vessels, and 8000 of these are
+steamships. The tonnage of these vessels amounts to over 8,750,000
+tons, and of this nearly 8,000,000 is engaged in the foreign trade
+alone. Her mercantile sailors number over 250,000 men, and over
+150,000 of these are engaged in the foreign trade. London is, of
+course, the chief gainer from this perfect unrestriction of trade.
+Twenty-seven per cent. of the whole trade of the country is in its
+hands. Its merchants do business in every seaport on the globe, and
+the trade of Great Britain with ports in Europe, the Levant, Egypt,
+India, the East Indies, China, Japan, and Australasia, is almost
+wholly controlled by them. Its shipping embraces the finest trading
+fleets known to commerce. Its docks and wharves extend on either side
+of the Thames for twenty-four miles from London Bridge down to
+Gravesend, and are the largest and finest in the world.
+
+[Illustration: British mercantile marine. Compared with that of other
+countries.]
+
+LONDON THE CLEARING-HOUSE OF THE WORLD
+
+A similar explanation is to be given of the fact that London is the
+great financial centre of the world. The same policy which has made
+Britain a great trading country has also made her a great
+manufacturing country. The food products of all the world pour in upon
+her shores, and Britain has become a cheap place to live in. Her
+artisans are supplied with the best food that the world can produce,
+and this at prices that are practically what the British demand makes
+them to be. The British artisan is therefore both well fed and cheaply
+fed. As a consequence of this, British manufactures are produced more
+efficiently and more cheaply than those of most other nations, and
+they are therefore exported enormously to every quarter of the globe.
+London, from its accessibility with respect to the great manufacturing
+centres at home, and from its trade connections and facilities for
+trade abroad, is the great distributing centre of this enormous
+manufacture. London exporters have accounts for goods sold by them all
+the world over. There is, therefore, no quarter of the world where
+money is not constantly owing to London; or, if not to London, then to
+Manchester, Birmingham, Sheffield, Leeds, Glasgow, or some other
+manufacturing centre in close financial touch with London. In this,
+then, lies the explanation of the financial supremacy of London. No
+matter in what quarter of the world money is owed by any place, the
+final destination of that money is London; for in almost all cases it
+will be found that the locality to which the money is owed, if it be
+not London, will itself be a debtor to London. London, therefore, from
+necessity, and as a matter of custom and convenience, has become the
+great clearing-house of the world. The final adjustments of the
+indebtedness of all the commercial centres of the world are made
+there.
+
+[Illustration: London bridge.]
+
+GREAT BRITAIN THE CREDITOR NATION OF THE WORLD
+
+One other reason for the financial supremacy of London lies in the
+enormous wealth of Britain. For now almost half a century Britain has
+been importing far more than she has been exporting, and the total
+volume of her import and export trade is more than quadruple what it
+was in 1850. The consequence is that not only has Britain been
+accumulating wealth, but she has been accumulating it enormously. Her
+accumulated savings, therefore, have been at the world's disposal, and
+she has had so much money to invest that she has become the creditor
+nation of the world. The total investments of British capital in
+foreign countries (in loans, railways, manufacturing syndicates, etc.)
+is estimated to be the enormous sum of over $10,500,000,000. London,
+of course, is the investing, controlling, and supervising
+counting-house for all this capital. And as so much British capital
+finds in London its place of investment, it naturally follows that
+nearly all the remaining unemployed capital of the world, that seeks
+investment, either is sent to London as a market, or else assumes a
+price for investment elsewhere which the current price of capital in
+London warrants it to assume. The London market rate of capital,
+therefore, determines its market rate in every other commercial centre
+of the world.
+
+GREAT BRITAIN A BEEHIVE OF MERCANTILE AND MANUFACTURING INDUSTRY
+
+Britain like all other civilised countries, was originally an
+agricultural country. Although for some centuries she has been one of
+the chief manufacturing and mercantile countries of the world, it has
+been only during the past one hundred years, and especially during
+the past fifty years, that her development in manufactures and in
+commerce has been remarkable. Britain is still, in respect of quality,
+the foremost agricultural country on the globe. Her breeds of horses,
+cattle, sheep, and swine are the standard breeds from which almost all
+other breeds derive their origin, and by which from time to time they
+are improved. And nowhere is the raising of grains and roots for food
+of man and beast pursued with more skill and success than in Britain.
+But agriculture is fast ceasing to be an important industry of
+Britain. Two million acres less are under cultivation now than were
+cultivated fifty years ago. The total amount of wheat raised is
+sufficient only for three months' consumption of the people; the
+remaining quantity needed must be supplied by importation. Three
+fifths of the total population of the island live in towns, and only a
+small proportion of the population that live in the country is
+actually supported by agriculture. Agriculture, in fact, supports only
+fifteen per cent. of the population in all Britain, and in England
+only ten per cent. Three and a half times as many people are
+personally engaged in manufactures as in rural pursuits. For three
+quarters of a century the population in towns and cities has been
+growing four times faster than the population of the rural parts. At
+the same time the working power of the urban population has been
+constantly growing more effective. In fifty years, by the general
+adoption of machinery, the effective working power of the British
+workman has been increased sixfold. In England eighty-six per cent. of
+the total work of the country is done by steam, and in Scotland ninety
+per cent. Great Britain, therefore, has become practically one great
+beehive of mercantile and manufacturing industry. Agriculture as a
+general occupation of the people, except in the production of the
+finer food products, such as choice beef and mutton and high-grade
+dairy products, is no longer profitable. Indeed, during the last
+fifteen years the plant (including land) employed in agricultural
+industries has been depreciating in value at the rate of $150,000,000
+yearly; that is, in these fifteen years the enormous sum of
+$2,250,000,000 of capital employed in agriculture has been
+obliterated. But the gain to capital employed in profitable mercantile
+and manufacturing pursuits has much more than compensated for this
+enormous loss in agriculture.
+
+GREAT BRITAIN'S COAL-FIELDS AND IRON DEPOSITS
+
+One reason for the great development which Britain has made as a
+manufacturing and trading nation lies in the fact that Britain was the
+first nation to utilise on a large scale the power of steam as a help
+to manufacture and trade. The steam-engine was a British invention.
+The first railways were built in Britain. The first steamship to cross
+the Atlantic was a British enterprise. A second reason lies in the
+fact that when Britain began to use steam as a motive power she found
+her supplies of coal so near her iron mines, and so near her clays and
+earths needed for her potteries, that from the very first she was able
+to manufacture cheaply and undersell most of her competitors. Her
+coal-fields have an area of over 12,000 square miles, and wherever her
+coal-beds are other natural products have been found near by, so that
+her manufacturing areas and her coal areas are almost identical.
+Taking Liverpool, Manchester, Birmingham, Wolverhampton, Sheffield,
+Leeds, Newcastle, Durham, Bristol, Stoke, Carlisle, Cardiff, Swansea,
+Glasgow, Paisley, and Dundee as centres, around each of these lies a
+coal area of such richness as amply sustains it in its commercial and
+manufacturing pre-eminence. London is almost the only great
+commercial centre of Britain that does not lie in the midst of or
+quite adjacent to a rich coal and other mineral region. But London is
+within easy distance, not only by rail, but also by canal and by
+coastwise sailing, of every coal-field and mineral deposit of Britain.
+London, however, is an importing and exporting centre rather than a
+manufacturing centre.
+
+[Illustration: The coal-fields of England.]
+
+LONDON'S SPECIAL TRADE FEATURES
+
+The commercial supremacy attained by many of the large cities of
+Britain is not wholly due to natural causes, or even to ordinary
+causes. Much of it is due to extraordinary enterprise and forethought
+on the part of their citizens. London, for example, is the centre of
+the wool trade of Britain. The woollen manufacturers of Britain use
+about 250,000 tons of wool annually, and three fourths of this is
+imported. Other cities that lie near the seats of the great woollen
+manufactures--Liverpool, for example--have tried to secure a share of
+this vast importation of wool, but London, because of the special
+attention it gives to this trade, manages to keep almost the whole of
+the trade in its own hands. Similarly, London almost wholly
+monopolises the trade of England with Arabia, India, the East Indies,
+China, and Japan. It is therefore the great emporium for tea, coffee,
+sugar, spices, indigo, and raw silk. It also enjoys the bulk of
+Britain's trade in fruits (oranges, lemons, currants, raisins, figs,
+dates, etc.) and in wines, olive oil, and madder, with the countries
+that lie about the Mediterranean. By virtue partly of its situation,
+but largely because of the enterprise of its merchants, it absorbs
+nearly the whole of Britain's French trade, and of England's trade
+with Germany, Belgium, Holland, and Denmark. This includes principally
+wines (from France), and butter, eggs, and vegetables. Another great
+branch of its trade is that with the ports of the Baltic, including
+those of Russia, the imports comprising, besides wheat and wool,
+tallow, timber, hemp, and linseed. The tobacco imported from Virginia
+into England goes almost wholly to London; so does almost the whole of
+the Central American and South American trade in fine woods,
+dye-stuffs, drugs, sugar, hides, india-rubber, coffee, and diamonds.
+Quite a large share of the trade of Britain with Canada is
+concentrated in London; also, more than one half of the trade of
+England with the West Indies, the imports from the latter country
+comprising principally sugar, molasses, fruit, rum, coffee, cocoa,
+fine woods, and ginger.
+
+THE SPECIAL TRADE FEATURES OF GLASGOW, LIVERPOOL, AND MANCHESTER
+
+The great commercial centres of Britain after London are GLASGOW
+(800,000), LIVERPOOL (700,000) and MANCHESTER (640,000, including
+SALFORD). All these cities have derived the greater portion of their
+size from the progress they have made during the present century. All,
+of course, owe their progress and their prosperity largely to their
+natural advantages of situation, etc. LIVERPOOL stands on the margin
+of the Atlantic, "the Mediterranean of the modern world," and thus
+enjoys the principal share of the trade with America, especially that
+with the United States. Great Britain's imports from the United States
+amount to over $500,000,000 per annum, and her exports to the United
+States (exclusive of bullion, etc.) to over $100,000,000. (Formerly
+the exports to the United States were twice this amount.) Of this vast
+trade, amounting to one fifth of Britain's total trade with the world,
+Liverpool enjoys the lion's share. Nearly all the cotton, not merely
+of the United States but of the world, that is used in Europe is sent
+to Liverpool for distribution. Similarly, GLASGOW, situated with its
+aspect directed toward the same maritime routes, enjoys also an
+immense transatlantic trade both north and south. And MANCHESTER,
+situated in the very heart of the richest coal districts of the
+kingdom, and within easy reach of the great cotton port, Liverpool,
+has built up a cotton-manufacturing industry surpassing that of all
+the rest of the world.
+
+THE BUSINESS ENTERPRISE OF GLASGOW, LIVERPOOL, AND MANCHESTER
+
+But the natural advantages of situation possessed by these great
+cities have been grandly supplemented by the enterprise of their
+inhabitants. GLASGOW is only a river port. For twenty miles below its
+site the Clyde is naturally narrow, shallow, and shoal-encumbered. In
+places it is naturally not more than fifteen inches deep. By the
+expenditure of no less a sum than $60,000,000 this shallow stream has
+been converted into a continuous harbour, lined on either side for
+miles with wharves and docks, and easily capable of accommodating the
+largest and finest merchant ships afloat. As a consequence of this
+enterprise Glasgow has become the greatest ship-building port in the
+world. No less than twenty shipyards--in efficiency and magnitude of
+the very highest class--are to be found along the banks of the once
+shallow, impassable Clyde, between Glasgow proper and the river's
+mouth.
+
+Similarly, the enterprise of the ship merchants of LIVERPOOL has
+converted a port, that high tides and impassable bars would naturally
+render unfit for modern ships, into the greatest shipping port in the
+world. One hundred million dollars were spent in making the
+improvement, but $5,000,000 is the annual revenue derived therefrom
+in dock dues alone. And because of this enterprise Liverpool can now
+boast of controlling one fourth of all the imports of the kingdom, and
+two fifths of all the exports, and of handling three fourths of all
+the grain and provision trade of the kingdom, and of having the
+largest grain warehouses in the world.
+
+[Illustration: The Manchester ship canal.]
+
+But MANCHESTER, a wholly inland city, forty miles distant from
+Liverpool, its nearest port, has outdone even Glasgow and Liverpool in
+its endeavour to bring the sea to its own doors. It also has spent
+$100,000,000--not, however, in amounts spread over a number of years,
+and as occasion seemed to demand, but all at once, in one lump sum, in
+one huge enterprise. It has built a canal to the Mersey where it is
+navigable, thirty-five and one half miles in length, and sufficiently
+deep and wide, so that the whole of its vast importation of cotton,
+and the whole of its vast manufacture of cotton and other textile
+fabrics, and as much else as may be desired, may be brought in from
+the sea or taken to the sea in merchant vessels of the very largest
+size now afloat. And it has done this in the face of engineering
+difficulties, and of obstacles raised against it by jealous competing
+interests that were almost insurmountable.
+
+GREAT BRITAIN'S SPECIALISATION OF HER INDUSTRIES IN DEFINITE CENTRES
+
+In no part of the world are manufacture and trade carried on with such
+strict regard to the conditions of economic production and the
+economic handling of goods as in the British Isles. The free-trade
+policy of the empire permits everywhere within its borders not merely
+national but world-wide competition; and yet it is but truth to say
+that wherever Great Britain attempts to sell her goods abroad every
+nation and every community in the world rises against her. Even her
+colonies are against her. Her markets are open to every one's trade,
+and yet in almost every market in the world which she does not
+absolutely control barriers are raised against her trade. She is able
+to sell goods in foreign markets only because, despite these barriers,
+she is able to undersell all competitors in them, or to give better
+value for the same money than they. Even when she obtains the control
+of new markets, as she has in India, China, Egypt, West Africa, etc.,
+she allows every nation to trade in these markets on precisely the
+same terms as she herself trades in them. In the face of this
+world-wide competition, therefore, the industries of Britain would
+cease to exist if every condition conducive to economy of
+production--climatic suitability, availability of cheap motive power,
+accessibility to cheap raw material, and accessibility to natural and
+cheap means of transportation--were not taken advantage of to the
+utmost. But this is just what Britain does. She does take advantage to
+the utmost of conditions conducive to economy of production; and this
+is why, to a degree nowhere else attempted in the world, she has
+specialised her industries in definite favouring localities.
+
+THE NATURAL APTITUDES OF COMMUNITIES IN GREAT BRITAIN FOR SPECIAL
+INDUSTRIES
+
+A result of this specialisation of industries in definite centres is
+that a natural aptitude for the industry specialised in a locality is
+developed among the inhabitants of the locality, and this, being
+stimulated by association, is transmitted from generation to
+generation with ever-increasing efficiency. Again, this inherited
+aptitude of the community for the industry historically associated
+with it is a prime element in the economic prosecution of the
+industry. Also, in turn, it acts as an important influence in
+continuing the industry in the locality where once it has been
+successfully specialised. In no country in the world, outside of Asia,
+have great industries had such long-continued successful existence in
+definite localities as in Britain. And therefore in no country in the
+world do the natural aptitudes of communities for special industries
+constitute such an important element of economic industrial
+production. A community of efficient "smiths," for example, has
+existed in and about Birmingham since the fifteenth century. As a
+consequence of this the Birmingham country has for several centuries
+been the greatest seat of the metal or hardware industries in the
+world. Again, the manufacture of woollen cloths has been an industry
+successfully specialised in West Yorkshire from the fourteenth
+century. It results that nowhere in the world is the woollen
+manufacture carried on more prosperously than in West Yorkshire
+to-day. The potteries of Staffordshire have been in existence time out
+of mind, and in the eighteenth century they took a pre-eminent place
+among the industries of the world. They hold that place of
+pre-eminence now, even though since then the methods of manufacture
+have been several times revolutionised.
+
+THE COTTON MANUFACTURES OF GREAT BRITAIN
+
+But the influence which more than anything else has determined the
+specialisation of industries in certain places in Britain rather than
+in others has been the presence of coal-fields. In only a very few
+instances have great industries been maintained in districts that are
+not coal-producing. The busiest industrial centre in all Britain is,
+perhaps, South Lancashire, the great seat of the COTTON MANUFACTURE.
+South Lancashire is one great coal-field. LIVERPOOL, the great cotton
+port of the world, is at one edge of this field. MANCHESTER, the
+cotton metropolis of the world, is at the other edge. Between and near
+these two chief towns is a whole nest of large towns and
+cities--PRESTON, BURNLEY, BLACKBURN, ROCHDALE, BOLTON, BURY, ASHTON,
+STOCKPORT, OLDHAM, etc.--every one of which is wholly devoted to the
+cotton interest. From their position all these towns obtain both their
+motive power and their raw material at the lowest possible cost. But,
+in addition to its advantages of cheap coal and cheap raw material,
+South Lancashire has one other great advantage in favour of its
+special industry--its climate is eminently suited to the industry. Its
+atmosphere is moist, and not too moist, and its temperature is not too
+cold. Cotton thread can be spun and woven in Lancashire which
+elsewhere would break. In scarcely any other place in England has
+cotton-weaving or cotton-spinning ever proved a success. The cotton
+industry of Scotland is not so localised as it is in England, but
+PAISLEY (65,000) is famous all the world over for its identification
+with the manufacture of cotton thread. Ireland has no important cotton
+manufactures except in BELFAST. One third of the cotton manufactured
+in the world is manufactured in the United Kingdom. The total product
+is about 14,000 miles of cloth daily. The number of separate mills is
+over 2500. The annual product is $500,000,000, which is one hundred
+times what it was one hundred years ago. The quantity of raw cotton
+imported annually to sustain this immense production is 1,750,000
+pounds.
+
+[Illustration: The great manufacturing districts of England.]
+
+THE WOOLLEN MANUFACTURES OF GREAT BRITAIN
+
+A second great industry of Great Britain is its WOOLLEN MANUFACTURE.
+This industry is specialised in England, principally in West
+Yorkshire, a district which is as well supplied with coal as is South
+Lancashire. LEEDS (410,000) and BRADFORD (232,000) are the two
+principal seats of the industry, but HUDDERSFIELD and HALIFAX are also
+important "cloth towns," and many other communities are identified
+with the manufacture of woollens. The noted "West of England" cloths
+are made principally in Gloucestershire, where their manufacture in
+the town of STROUD is a survival of an ancient industry once general
+throughout the whole county. In Scotland there are two centres of the
+woollen industry. The first and most important is in southeast
+Scotland, where, in the valley of the Tweed (in GALASHIELS, HAWICK,
+JEDBURGH, etc.), the celebrated "Scotch tweeds" are manufactured. The
+second is in the valley of the Teith (STIRLING, BANNOCKBURN, etc.). At
+one time the sheep that were pastured on the wolds of Yorkshire were
+the chief supply of the raw material for this industry in the whole of
+Britain, but that time is now long past. The total annual import of
+wool into the United Kingdom is about 750,000 pounds, of which about
+one half is retained for home manufacture. Two thirds of this import
+comes from Australia. The number of wool and worsted factories in the
+kingdom aggregates over 2750. The value of the woollen goods produced
+annually is about $250,000,000, which is about one fourth of the total
+product of the world.
+
+THE LINEN MANUFACTURES OF GREAT BRITAIN
+
+The third great textile manufacture of the United Kingdom is that of
+LINENS. This is the one manufacture in which Ireland surpasses her
+sister kingdoms, England and Scotland. The cultivation of flax and the
+spinning of linen yarn have been domestic industries throughout all
+Ireland from time immemorial. But at the present time the
+linen-manufacturing industry of Ireland is almost wholly concentrated
+in BELFAST. In Scotland, which now almost rivals Ireland in the extent
+and perfection of her linen manufactures, the industry is principally
+located in Fifeshire and Forfarshire, especially in the towns of
+DUNDEE and DUNFERMLINE, the latter town being greatly famed for its
+napery and table linens. Linen, like cotton, requires a peculiar
+atmospheric condition of temperature and moisture for its manufacture,
+and only in few localities has the linen industry been successfully
+established. The total value of the annual linen manufacture of the
+United Kingdom is $100,000,000.
+
+OTHER TEXTILE MANUFACTURES OF GREAT BRITAIN
+
+The annual value of the total manufacture of textile fabrics in the
+British Isles is about $1,000,000,000--not far short, indeed, of one
+fourth of the total manufacture of textile fabrics in all the world.
+Great Britain has over $1,000,000,000 invested in her textile
+industry, and one half of her total exports consists of textile
+manufactures. Cotton, woollen, and linen cloths are the chief staples
+of this industry, but there are many other branches of it and many
+other localities in which it is specialised besides the ones already
+mentioned. LEICESTER (204,000), which, like so many other
+manufacturing cities of England, lies at the centre of a coal-field,
+is the chief seat of the WOOLLEN HOSIERY manufacture. DUMFRIES is the
+chief seat of the woollen hosiery manufacture in Scotland.
+KIDDERMINSTER, in Worcestershire, is the chief seat of the "Brussels"
+carpet industry; WILTON, in Wiltshire, of the Wilton carpet industry.
+KILMARNOCK, in Ayrshire, is the chief seat of the carpet manufacture
+in Scotland. NOTTINGHAM (233,000) is the metropolis of the cotton
+hosiery and lace manufacture of England. NORWICH (110,000), in eastern
+England, has a noted manufacture of muslins and fine dress-goods. The
+Norwich textile manufacture is an instance of the continuance of an
+industry in a community historically associated with it, although its
+seat is far removed from a coal-field. The SILK manufacture of Great
+Britain is almost entirely confined to the county of Derby and
+adjacent districts in England. MACCLESFIELD, in Cheshire, is the chief
+centre. COVENTRY is noted for its silk ribbons and gauzes. But the
+manufacture of silk in Britain is not prospering like that of her
+other textile fabrics. In fact, in forty years it has depreciated
+three fourths. British silk manufacturers are not as adept in
+weighting their products with dyes as their French competitors are,
+and in consequence English silks, though intrinsically better than
+French silks, look inferior and therefore cannot be sold at profitable
+prices. But, on the other hand, the JUTE manufacture of Great Britain
+is increasing by leaps and bounds. Established only sixty years ago,
+the value of its annual output is now twice that of the whole
+manufacture of silk, and in twenty-five years has tripled. The chief
+seat of this industry is DUNDEE (160,000), in Scotland.
+
+THE HARDWARE MANUFACTURES OF GREAT BRITAIN
+
+The textile manufactures of Great Britain are in the aggregate
+first in importance, but the HARDWARE manufactures come a close
+second. The total amount of Great Britain's hardware products is
+about $750,000,000, or one fourth of the total product of the
+world, and of this about one third is exported. Even more than her
+textile fabrics, the hardware manufactures of Great Britain are
+associated with her coal-fields. The most distinctive "hardware
+centre" is that one which is identified with the great coal-field
+in the middle of England known as the "Black Country." BIRMINGHAM
+(506,000), the chief place in this centre, is unrivalled in
+the world for the multifariousness and extent of its metal
+manufactures. It is literally true that everything from a "needle
+to an anchor" is made within its limits. But though its industries
+comprise principally those of iron and steel, its manufactures in
+gold, silver, copper, zinc, lead, and aluminium are also very
+important. Birmingham, too, is unrivalled in the world in the
+application of art to metal work. Its manufacture of jewellery, and
+gold and silver ornaments, is enormous. Its manufacture of small
+wares is also enormous. For example, it turns out 15,000,000 pens
+weekly. Its manufacture of buttons runs into the hundreds of
+thousands of millions. WOLVERHAMPTON (88,000), also in the Black
+Country, is noted for its manufacture of heavy hardware and
+machinery. So also in OLDHAM, in the Lancashire district. So also
+in LEEDS, in the West Yorkshire district. SHEFFIELD (352,000), also
+in Yorkshire, is historically identified with its celebrated
+cutlery manufacture, an industry that first began there because of
+the quality and abundance of the grindstones found near by. With
+the coal-beds of Durham and Cumberland are identified the great
+ship-building and locomotive-building industries of NEWCASTLE
+(218,000), SUNDERLAND (142,000), and DARLINGTON, on the northeast
+side of England, and the great steel manufactures (the largest in
+the kingdom) and ship-building industries of BARROW-ON-FURNESS,
+on the northwest side. With the coal-fields of South Wales (noted
+for its smokeless coal) are identified the smelting industries of
+SWANSEA (70,000). Ores of copper especially, but also of silver,
+zinc, and lead, are brought from all over the world to Swansea to
+be smelted. These South Wales coal-fields also account for the fact
+that in respect to amount of tonnage CARDIFF (160,000) is one of
+the chief ports for exports in the world, ranking in this respect
+next after New York. The exports of coal from Cardiff are now
+12,000,000 tons annually.
+
+
+II. THE TRADE FEATURES OF FRANCE
+
+FRANCE A RICHLY FAVOURED COUNTRY
+
+France by nature is one of the most highly favoured countries in the
+world. Its climate is genial. Its temperature is so varied that almost
+every vegetable, grain or fruit needed for the sustenance of man may
+be raised within its borders. Its soil, though not surprisingly
+fertile, yet yields abundantly such products as are suited to it. Its
+mineral resources, especially in coal, iron, lead, marble, and salt,
+are very considerable. Its area is compact. Its facilities for foreign
+commerce are unsurpassed. It lies between the two bodies of water--the
+Atlantic and the Mediterranean--of greatest commercial importance in
+the world. And its people, especially those in rural parts, are
+exceptionally frugal and industrious. But France as a nation has not
+made the progress in the world that its natural advantages call for.
+It has been cursed with expensive and unstable governments and
+sanguinary wars. Its upper classes, the natural leaders of its
+peoples, are excessively fond of pleasure and military glory, and the
+energies of the nation have been much misdirected. As a consequence,
+despite its natural advantages, France is losing ground among the
+nations of the world. Its national debt amounts to nearly
+$7,000,000,000, the largest national debt known in history, being per
+head of population seventeen and one half times as great as that of
+Germany, six times as great as that of the United States, and much
+more than one and one half times as great as that of Great Britain.
+But, what is of more serious consequence, the vitality of its people
+seems debilitated. For years the annual number of births in France has
+been steadily decreasing, while the annual number of deaths has been
+more or less increasing. Over a great part of the country the number
+of deaths annually exceeds the number of births. In numerous years
+this is so for the whole country. The birth rate is the lowest in
+Europe. The death rate, while not the highest, is yet higher than in
+many other countries. As a consequence of all this the population of
+France is almost stationary. During the last seventy years it has
+increased only 18 per cent., while that of Great Britain has increased
+63 per cent., Germany 75 per cent., Russia 92 per cent., and Europe as
+a whole 62 per cent. And even this increase, small as it is, is
+largely due to immigration from other countries. Nor is the emigration
+of Frenchmen to their colonies or to other countries to be set down as
+a sufficient explanation. The French are averse to emigration. At the
+present time the number of Frenchmen residing abroad is only a little
+more than half a million, while of foreigners residing in France the
+number is not far short of a million and a quarter.
+
+[Illustration: France, compared in size with the States of Illinois
+and Texas.]
+
+THE FRENCH A THRIFTY, FRUGAL PEOPLE
+
+When France is compared with other countries in respect of commercial
+development and progress, the results will in almost every particular
+turn out unfavourable to France. For example, since the close of the
+Napoleonic wars eighty-three years ago the national trade of Great
+Britain has quadrupled, while that of France has only trebled. At the
+close of the Franco-German war France was eighteen per cent. ahead of
+Germany in the carrying power of her shipping. Now Germany is seventy
+per cent. ahead of France in that respect. But it must be remembered
+that the Franco-German war cost France in army expenses and in
+indemnity no less a sum than $3,250,000,000. The effect of that
+tremendous expenditure upon the prosperity of the nation can be
+estimated by one comparison. Since that war the annual average savings
+per inhabitant in France have been $17. For the same period the annual
+average savings per inhabitant in Great Britain have been $19.50. Had
+that war not occurred the average annual savings per inhabitant in
+France would have been $21.50. In short, no people in Europe are
+comparable with the working classes of the French people in frugality
+and thrift, and because of this characteristic, if France were well
+governed, its prosperity would be equal to that of any country in the
+world, and this would be so in spite of the fact that France's
+interest bill imposes a tax of $6.50 a year on every inhabitant of the
+country.
+
+[Illustration: Street scene in Paris, showing the Bourse.]
+
+THE IMPORTANCE OF AGRICULTURE IN FRANCE
+
+France has one element of stability, one characteristic inducive of
+thriftiness, that most other countries of Europe lack. In most
+other European countries the land is held by few proprietors. In
+France it is held by many. In Great Britain and Ireland, for
+example, the land that is devoted to agriculture is held by only
+19,000 proprietors. In France it is held by 3,500,000 proprietors.
+There are also 3,500,000 district farms in France, though only
+sixty per cent. of the farm land of the country is cultivated by
+the owners. It follows from this that agriculture has in France a
+hold upon the affections and self-interest of the people that it
+has in no other country in the world. About forty-two per cent. of
+the total population of the country able to work are employed in
+agricultural pursuits. Agriculture, therefore, is one of the most
+important industries of France. One fifth of the total earnings of
+her people are made in agriculture. It cannot be said, however,
+that agriculture in France is pursued as successfully as it is in
+some other countries--in Great Britain, for example. France, with
+sometimes the exception of Russia, is the largest wheat-grower of
+all the nations of Europe, but its production of grain per acre is
+not more than four sevenths that of Great Britain, while its
+production of grain per farming hand is only two thirds that of
+Great Britain. But so much of the agricultural effort of France is
+devoted to such industries as can be carried on in small farms or
+holdings--potato-raising, for example, and fruit-raising and
+poultry-raising--that the total money product per acre in France
+is not far short of what it is in Great Britain. That is to say,
+while agriculture is more profitably carried on in Great Britain
+than in France, it proportionately supports a larger number of
+people in France than in Great Britain.
+
+FRANCE'S WATERWAYS AND RAILWAYS
+
+France, like Germany, is well supplied with navigable rivers, and
+these, with its canals, constitute a complete network of navigable
+waterways that cover all the country and greatly promote the internal
+commerce of the nation. These navigable rivers aggregate 5500 miles,
+and the navigable canals over 3100 miles. The tonnage of goods carried
+on these waterways compares quite favourably with that carried by the
+railways. The railways aggregate 25,000 miles.
+
+THE DISTINCTIVE AND IMPORTANT MANUFACTURES OF FRANCE
+
+The most distinctive manufacture of France, the one in which she
+surpasses all other countries of the world, is the SILK MANUFACTURE.
+France's total production of silk is not far short of one third of the
+total production of the world. LYONS (466,000), on the Rhone, is the
+chief seat of the industry, having had this pre-eminence ever since
+the Jacquard loom was invented there at the beginning of this century.
+Its production is not far short of three fourths of the total
+production of the country. The most important manufacture of France,
+however, is her manufacture of WOOLLENS. In this manufacture she comes
+next after Great Britain, her total production being a little ahead of
+that of both Germany and the United States. Her woollen mills number
+over 2000. Her consumption of wool for this industry is about three
+fourths that of Great Britain, but the value of her production is only
+two thirds that of Britain. LILLE (216,000) and RHEIMS (108,000) are
+the chief seats of the woollen industry. Of about equal value with the
+woollen manufacture of France is its HARDWARE manufacture, but the
+importance of France's hardware manufacture is national rather than
+international. Of next importance is the manufacture of COTTONS and
+LINENS. The chief seats of these industries are, for cottons, ROUEN
+(113,000), the "Manchester of France," and for linens, LILLE. Near
+Lille is CAMBRAI, the chief place of manufacture for that finer class
+of linens known as cambrics. A second distinctive manufacture of
+France is that of GLASS and PORCELAIN. In this manufacture France
+quite equals Great Britain in respect of value, and surpasses her in
+respect of the artistic character of the wares. LIMOGES (77,000) and
+ST. CLOUD (near Paris) are the chief seats of the French porcelain
+manufacture. It is at St. Cloud that the celebrated "Sèvres" porcelain
+is made.
+
+PARIS AND THE GREAT SEAPORTS OF FRANCE
+
+Paris (2,536,834) is, of course, the chief trade centre of all France,
+but the trade interests of Paris are general rather than special. The
+manufactures that are most localised in Paris are those of articles of
+luxury, such as jewellery, perfumery, gloves, fancy wares, novelties,
+and fashionable boots and shoes. Paris is also a great financial
+centre. MARSEILLES (442,000), one of the oldest cities in Europe, is
+the great seaport of France. Its trade amounts to over $350,000,000
+annually, and it ranks next after Hamburg among the great seaports of
+central Europe. Its specialty is its great trade with the
+Mediterranean and the East. The opening of the Suez Canal has been of
+incalculable advantage to Marseilles. Next as shipping port comes
+HAVRE (119,000), at the mouth of the Seine, with a total trade not far
+short of that of Marseilles. Havre is in reality the port or "haven"
+of Paris. It is the great depot for French imports from North and
+South America. These comprise principally cotton, tobacco, wheat,
+animal produce, and wool. Its import of South American wool is
+enormous, for three fourths of the wool used in France now comes from
+the region of the La Plata. Recently the Seine has been deepened and
+now both Rouen and Paris may be considered seaports. By this means
+Paris has direct water communication with London, and is, indeed, the
+third seaport in the country. Next comes BORDEAUX (257,000), the chief
+place of export for French wines and brandies. About twenty years ago
+the wine industry of France suffered tremendous loss from the ravages
+of the insect phylloxera. Over 4,000,000 acres of vineyard,
+representing a value of $1,000,000,000, were wholly or partially
+ruined by this terrible pest. The plague, however, has now been
+stamped out, but nearly 2,000,000 acres of vineyards have been
+permanently destroyed and have been devoted to potatoes and the
+sugar-beet root. The result is that the production of wine in France
+is now less than what is needed for home consumption, and over fifty
+per cent. more wine is imported than is exported. The remaining great
+shipping ports are DUNKERQUE (40,000) and BOULOGNE (37,500). CALAIS
+(57,000) has a great passenger trade with England.
+
+
+III. THE TRADE FEATURES OF GERMANY
+
+GERMANY THE MOST PROSPEROUS NATION IN CONTINENTAL EUROPE
+
+The greatest and most prosperous commercial nation in the old world
+after Great Britain is Germany. Its population is 52,000,000, as
+against France's 38,500,000; and while France's population is scarcely
+increasing at all, Germany's population is increasing the most rapidly
+of any in Europe. Since the Franco-Prussian war France has gained in
+population only a little over 2,000,000, while Germany in the same
+time has gained 12,000,000. In the middle of the present century the
+populations of Germany and France were equal, being each about
+35,000,000. Since that date Germany's population has increased by
+about fifty per cent. and France's by only about ten per cent.
+Similarly, the commerce of Germany not only greatly exceeds that of
+France, but is growing much faster than that of France. The total
+exports and imports of Germany, exclusive of bullion, now foot up to
+nearly $2,000,000,000 a year. The total exports and imports of France,
+exclusive of bullion, foot up to only $1,500,000,000 a year. The total
+commerce of Germany is therefore about one third more than that of
+France. At the close of the Franco-Prussian war the total commerce of
+France considerably exceeded that of Germany.
+
+THE CHARACTER OF GERMANY'S INDUSTRIES CHANGING
+
+Germany, like England, is rapidly changing the character of her
+industries and becoming a manufacturing and commercial nation instead
+of an agricultural nation. This is the cause of her well-known anxiety
+to secure control of territories in Africa, Asia, etc., as exclusive
+markets for her manufactures, for, unlike England, Germany is at
+present a believer in exclusion in trade, both at home and in her
+colonies. Fifty years ago about four sevenths of the people of Germany
+were engaged in agriculture; now only about one third of the people
+are so employed. The growth of the great cities of Germany is eight
+times faster than that of the rural districts, and in fifty years the
+aggregate population of the six largest cities of the empire--Berlin,
+Hamburg, Leipzig, Munich, Breslau, and Dresden--has grown sixfold,
+namely, from 600,000 to 3,600,000. In fifty years, too, the
+manufactures of Germany have nearly doubled, the commerce nearly
+trebled, the shipping increased more than fivefold, and the mining
+output more than sixfold. While all this is true, it nevertheless is
+also true that the area of cultivated soil in Germany is double what
+it was fifty years ago. But this is because much land, formerly waste
+or in pasture, has been brought under cultivation. Yet even now only
+one half of the land of Germany is cultivated, and thirty-three per
+cent. of the total food consumption of the people has to be imported.
+Fifty years ago only five per cent. of the total food consumption was
+imported, and this small fraction consisted almost wholly of
+luxuries.
+
+GERMANY'S SUCCESS IN TECHNICAL EDUCATION
+
+[Illustration: Approximate size of the German Empire.
+
+NOTE.--The population of that part of the United States included
+within the circle is about 10,000,000. The population of the German
+Empire is about 52,000,000.]
+
+Germany's prosperity and progress cannot wholly be measured by
+statistics. No one can predict what it will be, for it is partly
+based upon elements that unfortunately other countries have not
+taken much account of. Germany pays greater attention to the
+PRACTICAL EDUCATION of her people than any other nation in the
+world. Her system of technical education extends over the whole
+empire, and provides technical instruction for every class of the
+people and for every occupation of the people--night schools for
+those already engaged in life's work, agricultural schools, forestry
+schools, commercial schools, mining schools, naval schools, and
+schools in every branch of manufacturing industry, besides, of
+course, schools for the education of those intending to follow the
+learned professions. As a consequence of this very general provision
+of technical education, there is engaged in German manufacturing
+pursuits a class of workmen not found in the workshops of any other
+country--men of industrial skill and experience, and at the same
+time of the highest scientific technical attainments in the branches
+of science that bear particularly upon their work. These men work at
+salaries that in other countries would be considered absurdly low.
+In almost all other countries the possession of a sound scientific
+education is a passport to social distinction, and every profession
+is open to him who is deserving to enter it. In Germany, however,
+the learned professions, and especially the official positions of
+the army and navy, are almost the exclusive preserves of those who
+are born to social rank. The educated commoner, therefore, has to
+betake himself to manufacture, trade, or commerce. It follows that
+scientific skill and intelligence are more generally diffused in
+German commercial industries than in those of all other nations. So
+far, however, the German artisan has not been the equal in special
+technical skill of his more rigidly specialised English competitor,
+and as a consequence of this more than one sixth of Germany's total
+imports consist of goods brought from England--principally the finer
+sort of textile fabrics and articles of iron and steel. This
+inferiority in specialisation in the German workmen cannot continue
+long, and the successful rivalry of Germany with the manufacturing
+pre-eminence of Great Britain may soon be a startling fact.
+
+GERMANY'S MINES AND HARDWARE MANUFACTURES
+
+It is in the development of her mines and of manufactures in which
+MINERALS are employed that Germany has made most noticeable progress.
+She produces four times as much coal as France, and she has over 1000
+separate iron-mines. Her production of iron has increased tenfold in
+fifty years. She employs over 400,000 men in her mines, and by the
+use of labour-saving machinery one man can now produce as much as
+three men could produce fifty years ago. Her HARDWARE manufactures
+are one sixth of her total manufactures, and in the past half century
+they have increased sixfold. They are now double those of France, and
+are only one fourth less than those of Great Britain. She has 750
+factories devoted to the making of machinery alone. Two of
+these--Krupp's at Essen, and Borsig's at Berlin--are among the
+largest in the world. Krupp's employs 20,000 men, has 310
+steam-engines, and covers an area of 1000 acres. Borsig's employs
+10,000 men, and in fifty years, starting from nothing, has turned out
+nearly 4000 locomotives. One of Krupp's hammers (a fifty-ton hammer)
+cost $500,000.
+
+GERMANY'S INTERNAL TRADE
+
+Germany's commercial energies up to the present have been mainly
+concentrated on her INTERNAL TRADE. The total amount of this trade
+foots up to $7,000,000,000, against France's $6,000,000,000, and in
+fifty years it has trebled, while that of France has scarcely
+doubled. Germany has more miles of railway than any other country in
+the world except the United States, her mileage being nearly 30,000,
+against France's 25,000 and Great Britain's 21,000. Her natural and
+artificial waterways are also the best in Europe, and her vast
+production of mineral wealth is transported from mine to foundry and
+factory, and her vast production of lumber and grain is transported
+from forest and field to seaport, largely by means of water carriage.
+The Rhine, the Elbe, the Oder, and the Vistula are all navigable
+throughout their whole courses through German territory, while the
+Weser and the Danube are also navigable throughout great parts of
+their courses. All these navigable rivers are interconnected by
+canals. The total length of possible river navigation is nearly 6000
+miles, while the total length of canals and canalised rivers is 2700
+miles. Besides, in 1895 there was completed the Kaiser Wilhelm Canal,
+a lockless sea-going vessel canal, twenty-nine feet six inches deep
+and sixty-one miles long, connecting the North Sea and the Baltic,
+and constructed at a cost of nearly $40,000,000. This canal effects
+a saving of almost one whole day for commercial steamers, and of
+three days for all sailing-vessels, engaged in the Baltic and North
+Sea trade.
+
+GERMANY'S FOREIGN TRADE
+
+But while it is true that Germany's internal trade is her most
+important trade, it is also true that her FOREIGN TRADE has during the
+last half century made more progress than that of any other European
+country, and during the last three or four decades more progress than
+even that of the United States. Since 1840 it has increased six and
+two third times, while that of Great Britain has increased six times,
+and France only four and one fifth times. It is now second in the
+world, being more than half of that of Great Britain, ahead of that of
+the United States,[1] and very considerably ahead of that of France,
+while in 1860 it was much less than half of that of Great Britain,
+less than that of the United States, and considerably less than that
+of France. Germany, however, is not well favoured with respect to
+seaports, for in its transmarine trade it is largely dependent on
+foreign seaports--namely, ports in Belgium, Holland, France, Italy,
+and Austria. Rotterdam in Holland and Antwerp in Belgium are much more
+favourably situated with respect to the commerce of its chief mining
+and manufacturing regions than any of its own ports. There are only
+two German seaports with water of depth sufficient to accommodate the
+deep-drawing vessels in which foreign commerce is now mainly carried
+on--namely, CUXHAVEN, the outport of Hamburg, sixty-five miles from
+Hamburg, and BREMERHAVEN, the outport of Bremen, thirty-five miles
+from Bremen, though recent improvements in the navigation of the Elbe
+allow vessels of even twenty-six feet draught to ascend the Elbe
+wholly to Hamburg. But HAMBURG (625,000), for the reason that for
+centuries it was a free port of entry, has built up a very large
+foreign trade, being the fifth in the world in this respect, London,
+New York, Liverpool, and Rotterdam, alone being ahead of it. Hamburg's
+foreign trade is almost one half greater than the whole foreign trade
+of all other German ports put together, while the foreign trade of
+Bremen is about one fourth that of Hamburg. BREMEN, like Hamburg, was
+for centuries a free port of entry, but in 1888 both Hamburg and
+Bremen gave up in great part their free port privileges and entered
+the general customs union of the empire. Both cities were extremely
+loath to give up their ancient unique commercial privileges, for they
+feared an immense loss of trade in doing so, but it was hoped that
+what they lost in foreign commerce would be made up to them in
+increased commerce with other parts of the empire. One reason for the
+great development of Germany's foreign trade in late years is found in
+the facilities that it possesses for rapid transit to and from Italy
+by means of tunnels through the Alps.
+
+[Illustration: North central Germany, showing the ship canal and the
+leading commercial arteries.]
+
+FOOTNOTE:
+
+[1] During the last two or three years the foreign trade of the United
+States has greatly expanded and has exceeded that of Germany, and is
+making a close push upon that of Great Britain. The above statement
+was intended to represent the situation as existing during a period of
+some years.
+
+THE SPECIAL TRADE CENTRES OF GERMANY
+
+BERLIN (1,700,000), the capital of the empire, is a chief seat of
+machinery manufacture. For many years FRANKFORT-ON-THE-MAIN enjoyed
+the pre-eminence of being next to London the greatest money market in
+the world; but since the establishment of the German Empire
+Frankfort's financial business has been absorbed by Berlin. LEIPZIG
+(400,000) has the distinction of being the seat of a book-publishing
+trade that turns out over 60,000,000 volumes in a year, amounting in
+value to $30,000,000. Leipzig has also the honour of being the
+greatest fur market in the world. DANTZIG (120,000) is Germany's chief
+port on the Baltic, and the chief seat of its great export trade in
+timber, grain, flax, hemp, and potatoes. Its harbour, however, is
+closed in winter because of ice. DRESDEN (330,000) is noted for its
+porcelain manufacture, but the porcelain is not manufactured chiefly
+in Dresden, but in MEISSEN, fifteen miles from Dresden. MUNICH
+(407,000) manufactures largely the national beverage, beer. Finally,
+NUREMBERG (162,000), in southern Germany, is remarkable for its
+continuance into modern days of manufactures for centuries carried on
+domestically. Of these the most noted are watches, clocks, pencils,
+and toys.
+
+
+IV. TRADE FEATURES OF SPAIN AND ITALY
+
+ITALY, TURKEY, AND SPAIN, THE THREE DECADENT NATIONS OF EUROPE
+
+The Mediterranean from the very earliest epochs of civilisation has
+been a chief highway of trade, and along its shores every sort of
+commercial activity has been prosecuted. For centuries and centuries
+the nations upon the borders, especially those upon its northern
+borders, were the leading nations of the world, and their empire,
+indeed, comprised the empire of the world. But during the last two or
+three centuries, and especially during the nineteenth century,
+commercial pre-eminence and pre-eminence in empire have departed from
+the Mediterranean. Italy, the ruler of the whole ancient world, and
+even in modern times a ruler of almost equal potency; Turkey, during
+the middle ages a chief power both in Europe and in Asia; Spain, for
+two centuries at the beginning of our modern epoch a chief power in
+Europe and the mistress of almost the whole Western world as
+well,--these countries have all sunk to positions of comparative
+insignificance, and Italy alone shows signs of effectual regeneration.
+And yet on the whole earth's surface there are no lands more richly
+endowed by nature as abodes for man than Italy, Turkey, and Spain.
+
+SPAIN: ITS TRADE AND ITS SPECIAL TRADE CENTRES
+
+Spain, because of the varied climate of her several parts, is capable
+of producing almost all the edible fruits and grains known to both
+temperate and tropical regions. Though there are some desert areas, a
+great portion of the soil is abundantly productive, and were
+agriculture pursued with the same skill as it is in other
+countries--in England and Scotland, for example--Spain would be one of
+the richest agricultural regions on the globe. But not only is
+agriculture very inefficiently pursued, but the country is also
+sparsely inhabited (only 90 to the square mile, as compared with 270
+to the square mile in Italy) and only one fourth of it is cultivated.
+As a consequence only those products are raised in Spain in which,
+because of her advantages of climate, etc., she has least competition.
+The principal commercial agricultural product is WINE, the vine being
+cultivated in every province in the kingdom. Six hundred million
+gallons of wine are raised annually, which is more in value than the
+total quantity of grain raised. Only one fifth of this, however, is
+exported (principally to France), and even of this the greater portion
+is wine of inferior grade, used for mixing. The remaining agricultural
+products of Spain exported are chiefly oranges, lemons, grapes,
+raisins, nuts, olives, and onions. Of these over $15,000,000 worth go
+to England annually. England and France, indeed, enjoy the great bulk
+of Spain's foreign trade, but of late years Germany and the United
+States are taking a small share of it. The MINERAL WEALTH of Spain is
+enormous, and as the mines are often controlled by foreign capital
+they are worked with energy. The iron ore of the Basque provinces of
+the north and the copper ore of the district about Cadiz have been
+renowned for ages. Thirty-five million dollars' worth of copper, iron,
+lead, silver, and quicksilver are exported to Great Britain annually.
+There are manufactures of cottons, woollens, linens, and silks, but
+none of these can be said to be very prosperous, although during the
+last twenty-five years, owing to a high protective tariff, the
+quantity of raw material used in textile manufacture in Spain has
+doubled. Spain produces excellent wool, but her woollen manufacture is
+unable to use it all and one fourth is exported. Similarly, although
+Spain is especially rich in iron-fields, she gets about one third of
+the hardware she needs for her own consumption from England. The total
+area of Spain's COAL-FIELDS is estimated at 5500 miles, but hitherto
+little coal has been mined, partly because it is somewhat
+inaccessible. Four million dollars' worth of coal is annually imported
+from England. Whole mountains of ROCK SALT exist, but little is mined
+and none is exported, although bay salt obtained in the south is
+exported to the fishermen of Cornwall. Another important export is
+ESPARTO GRASS, which is sent to England to be used in paper-making.
+And still another is CORK, although Portugal, which adjoins Spain, is
+the chief seat of the cork-producing industry. MADRID (470,000) is the
+capital and largest city. BARCELONA (250,000) is the chief seaport of
+Spain and the chief manufacturing centre. VALENCIA (145,000), in the
+southeast, and SEVILLE (135,000) and MALAGA (115,000), in the south,
+are the principal seats of the fruit export trade of the country.
+CADIZ (65,000), Spain's principal naval seaport, has a famous export
+trade in sherry wines. The total population of Spain is 17,500,000.
+
+[Illustration: Spain compared in size with California.]
+
+ITALY'S LAMENTABLE CONDITION
+
+Italy's condition is in some respects better than that of Spain, but
+in others worse. Its population is 30,500,000, being three times more
+to the square mile than that of Spain, and fifty per cent. more to the
+square mile than that of France. Since 1830 the population has
+increased forty-five per cent., and this notwithstanding the fact that
+the loss by emigration is equal to one half of the natural increase
+from the surplus of births over deaths. Two million people of Italian
+birth are to-day residing in foreign countries. Again, the Italians,
+except those in the southern parts (the Italians of Naples and
+vicinity, for example), are the MOST INDUSTRIOUS PEOPLE in Europe,
+with a special aptitude for gardening and tillage. In fifty years they
+have reclaimed 20,000,000 acres from forest, and increased the area of
+land under cultivation by one hundred per cent. In fifty years, too,
+they have trebled the amount of capital invested in agriculture. Since
+1860 they have increased the amount of material which they use in
+their textile manufactures (cotton, wool, silk, and linen) nearly
+fivefold. Since 1850 they have increased their external commerce two
+and one half times. Finally, since 1830, they have increased their
+internal trade two and one quarter times. But all these signs of
+prosperity in Italy are negatived by the constantly increasing
+magnitude of her NATIONAL DEBT. This now amounts to more than
+$2,500,000,000, or more than two and one half times the total net
+national debt of the United States, and about one fourth more than the
+total national, state, county, municipal, and school-district debts of
+the United States. And this vast debt for a people of 30,500,000 is
+exclusive of the provincial and communal debts, which amount to
+$275,000,000 additional. Italy since her reorganisation as a kingdom
+in 1870 has set out to be a first-class military and naval power, and
+the cost is more than she can stand. She has a permanent army of
+nearly 800,000 men, 250,000 of whom she keeps under arms constantly.
+She has a fleet of seventeen battleships, two coast-defence ships,
+eighteen cruisers, and 272 torpedo craft, most of these being of
+modern type and first-class rating. She spends on her army nearly
+$50,000,000 annually, and on her navy nearly $20,000,000 annually.
+This, with an annual interest payment of $115,000,000, all
+unproductive expenditure, makes a demand upon her revenue that is
+draining her people of their life's blood. EVERY SORT OF TAXATION is
+resorted to--direct and indirect; land, house, and income; succession
+duties, registration charges, and stamps for commercial papers;
+customs, excise and octroi; besides government monopolies; and all
+this exclusive of communal taxation. And yet since 1891 there has been
+an annual deficit of national revenue under national expenditure
+averaging $2,250,000. As a consequence of these taxes, and of the
+repressive effect they have upon industrial enterprise, the net
+earnings of the country per inhabitant are lower in Italy than in any
+other European state except Turkey, Russia, and Greece--lower, even,
+than in the Danubian states and Portugal and Spain.
+
+ITALY'S TRADE AND SPECIAL TRADE CENTRES
+
+The most distinctive natural product of Italy is SILK, and the amount
+of raw and thrown silk exported is about $57,500,000 annually. Silk
+culture is carried on all over the kingdom, though the industry
+flourishes most extensively in Piedmont and Lombardy, in the north.
+Over 550,000 people are engaged in rearing silkworms, and the annual
+cocoon harvest approximates 100,000,000 pounds. Silk-"throwing,"
+or-spinning, is the principal manufacturing industry, and the amount
+of silk spun and exported is about 45,000 tons, most of which goes to
+France. After silk the products of the country that constitute the
+principal exports are OLIVE OIL, FRUIT (oranges, lemons, grapes,
+almonds, figs, dates, and pistachio nuts), and WINE (in casks). The
+olive-oil export and the fruit export are each about a fifth of the
+export of silk, and the wine export about a sixth. Other important and
+characteristic exports are raw hemp and flax, sulphur, eggs,
+manufactured coral, woods and roots used for dyeing and tanning, rice,
+marble, and straw-plaiting. The principal import is WHEAT, for
+agriculture, though generally pursued, is still in a backward state
+of efficiency, and the average grain crop is only one third what it is
+in Great Britain. One eighth the total amount of wheat needed to
+support the people has to be imported. In fact, the total amount of
+food-stuffs raised in the kingdom is much less than the amount
+required, being, for example, per inhabitant, not more than one half
+of what is raised in France. In particular, there is a deficiency of
+meat, and the amount of meat raised per inhabitant is the lowest in
+Europe. As a consequence the Italians are poorly fed, and it is
+estimated that four per cent. of the annual death loss is occasioned
+by impoverishment of blood due to insufficiency of wholesome food.
+After wheat and raw cotton, the next principal import is COAL, for
+Italy has no workable coal-fields. As far as possible water power is
+used as a motive power instead of coal, especially in the iron
+industries. An important import also is FISH, for, owing to the great
+number of fast days which the Italian people observe, and to the
+dearness and scarcity of meat, fish is a very general article of
+consumption. Six million dollars' worth is imported annually, and
+perhaps an equal amount is obtained from local fisheries, for there
+are over 22,000 vessels and boats and over 70,000 men engaged in this
+industry. After silk-throwing, the most characteristic Italian
+manufacturing industries are those which are of an artistic or
+semi-artistic nature, such as the making of fine earthenware,
+porcelain, glassware, mosaics, and lace. VENICE (154,000) and GENOA
+(225,000) are still the principal seaports and trade centres of Italy,
+but in commercial importance these famous cities are only the mere
+shadows of what they once were. NAPLES (529,000), the largest city, is
+a place of little enterprise, for its imports, principally cereals,
+are three or four times the value of its exports, which are mainly
+cheap country produce. MILAN (457,000) and TURIN (348,000) are the
+great trade centres of the north interior, and the most prosperous
+places in the kingdom, being the chief seats of the silk-throwing
+industry. Milan is also the chief seat of the Italian cutlery
+manufacture. PALERMO (284,000) and MESSINA (150,000), in Sicily, are
+the chief ports for the export of Italian fruits, and also of Italian
+fish (anchovies, tunnies, etc.). ROME (474,000) and FLORENCE (207,000)
+owe their chief importance to their art interest and to their historic
+associations, but Florence has an important manufacture of fine
+earthenware and mosaics. Rome is the chief seat of government. CATANIA
+(127,000), in Sicily, is the chief seat of the Italian sulphur export
+trade. LEGHORN (104,000), the port of Florence, is the chief seat of
+the export straw-plaiting trade. It should be noted that
+notwithstanding Italy's extent of coast-line a large part of her
+foreign commerce is transacted northward by means of the railways that
+tunnel the Alps.
+
+[Illustration: Italy and its chief commercial centres.]
+
+
+V. THE TRADE FEATURES OF RUSSIA
+
+RUSSIA, A COUNTRY WHOSE FUTURE IS A PROBLEM
+
+The position of Russia in the world is a sort of problem. Its area is
+immense. More than one seventh of the land surface of the globe is
+included within its compact borders. Of this vast territory the area
+of European Russia alone is only a fourth; but even so it is larger
+than the area of all other European states put together. The
+population of Russia is over 129,000,000, of which over 106,000,000
+belong to European Russia. But taking even European Russia this is a
+population of only fifty-four to the square mile, the lowest
+proportion in Europe, except in Sweden and Norway. And the population
+is increasing. The birth rate is the highest in the world. And though
+the death rate is very heavy, being fifty per cent. more than it is in
+England, the increase from births is so great that the population
+doubles in forty-six years. There is thus apparently a prospect that
+Russia will, in the near future, play an important part in the drama
+of nations, her capacities and capabilities for growth seem so
+prodigious. And yet there is a reverse side to the picture. Of the
+106,000,000 inhabitants of European Russia 10,000,000 belong to a
+cultured, progressive class, quite the equal of any people in Europe.
+But the remainder are principally a low grade of peasantry, not long
+removed from slavery. The principal occupation of these peasantry is
+farming. But their farms are small, not more than ten acres apiece,
+and the total revenue they get from them does not average more than
+$65 a year per farm. The food of these peasantry is the poorest in
+Europe. In the main it consists of rye bread and mushroom soup, worth
+about four cents a day. The houses are often mere huts, not more than
+five feet square. Women as well as men work in the fields, and yet the
+total amount of food raised is not more per head of population than
+one tenth of what is raised by the peasantry of France. The value of
+food raised per acre, too, is but little more than one third of the
+average per acre for all Europe.
+
+[Illustration: Russia, the British Empire, the United States
+compared.]
+
+RUSSIA A COUNTRY OF SOCIAL EXTREMES
+
+The degradation of the peasantry of Russia is not simply material. It
+is also moral. In the language of a recent traveller, "they are the
+drunkenest people in Europe." The principal intoxicant is a sort of
+whisky called "vodka." With drunkenness exist also dirtiness,
+idleness, dishonesty, and untruthfulness. And as yet little has been
+done to ameliorate this degradation. Ignorance prevails everywhere.
+Even of the young people of the peasant class more than eighty per
+cent. can neither read nor write. There is no middle class. The gulf
+between the upper class and the lower is so wide as to be absolutely
+impassable. And for the most part the upper class is quite content to
+have this state of affairs continue.
+
+THE "ARTELS" OF THE RUSSIAN PEASANTS
+
+There is, however, some hope for the lower classes of Russia. This is
+because of the prevalence among them, especially in villages, towns,
+and cities, of a communal custom in which self-restraint and
+self-government are necessary conditions of existence. In every branch
+of common industry "artels" are found; that is, communistic
+organisations, where all labour for a common purse in accordance with
+rules and regulations determined by the members of the organisations.
+These "artels" have done much toward increasing the industry, the
+honesty, the truthfulness, the thrift, and also the sobriety of their
+members. They exist throughout all Russia, but in some parts more
+prevalently than in others. As yet, however, they scarcely affect the
+character and condition of the rural peasantry, and it is these who
+are most in need of elevation. It should be said, too, that the
+government is doing something to lessen the evil of drunkenness.
+
+RUSSIA PRINCIPALLY AN AGRICULTURAL COUNTRY
+
+Russia's principal business is AGRICULTURE. More than one half her
+whole internal trade is agricultural. Her agricultural products are
+one and one half times greater than the products of her manufactures
+and ten times greater than her mining products or her imports. And
+though her production of grain per acre is the lowest in all Europe
+except Italy, Spain, and Portugal, and her total production of all
+food products per acre by far the lowest in Europe (not more than one
+third that of Spain, which is next lowest), yet she manages to export
+a larger quantity of GRAIN than any other country in Europe, France
+only sometimes excepted. Russia's export of grain for some years past
+has averaged 266,000,000 bushels a year. Her export of WHEAT alone has
+averaged 94,000,000 bushels a year, or considerably more than a fifth
+of the total wheat export of the world. The explanation of this
+enormous export of wheat from so poor a country is that three fourths
+of the people live on rye. Among the peasants wheat bread is
+practically unknown, and nothing could be more pathetic than the hard
+rye lumps which passed as bread during the last famine. Other
+agricultural exports (besides grain) are flax, hemp, oil-seed cake,
+linseed and grass seed, butter, eggs, wool, hides, and hogs' bristles.
+Wood, lumber, and timber are also extensively exported. England is
+Russia's best customer. The amount of England's annual importation of
+the above products (including grain) exceeds $112,000,000.
+
+RUSSIA'S MINERAL WEALTH
+
+In MINERALS Russia is enormously wealthy, but the mining lands are not
+diffused throughout the empire but confined to definite areas. Nor can
+they be said to be energetically worked. The great gold-fields of the
+Ural mountains would not pay expenses as worked at present were they
+not supplied with convict labour. Owing to the heavy import duty which
+is imposed on pig-iron nearly all the iron now needed for the IRON
+manufactures of the empire is obtained at home, but this amounts to
+only 46 pounds per inhabitant, as against 810 pounds per inhabitant
+used in Britain. COAL is very abundant, especially in the valley of
+the Donetz, but fire-wood is so plentiful for domestic purposes, and
+water power so plentiful for heavy manufactures, that the amount of
+coal mined in all Russia is only one twelfth that mined in Germany,
+and only one twenty-fourth that mined in Britain. Over 2,250,000 tons
+of coal are imported despite very heavy protective duties. There is
+one mineral product, however, in which Russia excels all other
+European countries. This is PETROLEUM. The oil-springs on the Caspian
+Sea produce an annual yield of crude petroleum of an average value of
+$15,000,000. The value of the petroleum and petroleum products
+exported in 1896 was over $22,000,000.
+
+RUSSIA'S TRADE AND MANUFACTURES
+
+Despite Russia's resources in farm products and in minerals, yet,
+owing to the ignorance and degradation of her people, she is a poor
+country, and her exports are always more than her imports. Her total
+wealth per inhabitant is only $305, as against $780 per inhabitant
+for Germany, $1260 for France, and $1510 for Great Britain and
+Ireland. Her total foreign trade is only $5 per inhabitant, whereas
+the foreign trade of her neighbour, Germany, is $35 per inhabitant.
+Her total internal trade is only $50 per inhabitant, whereas even in
+Greece the internal trade is $65 per inhabitant, while in Germany it
+is $130 per inhabitant, and in the United States $215 per inhabitant.
+The reason of all this is the lack of energy and industry in the
+people. Their earnings per inhabitant average only 12 cents a day.
+Another reason is the lack of modern labour-saving devices. Comparing
+inhabitant with inhabitant, Russia has only one sixth of the steam
+power which Germany has. One half of all the manufactures of the
+country are produced domestically--that is, without motive power or
+machinery. No industry in Russia is fully up to the needs of the
+people when judged by the standards of other countries. For example,
+notwithstanding the severity of the climate, only two pounds of raw
+wool per inhabitant are consumed in Russia's woollen manufactures, as
+against seven pounds consumed in Germany, and the total annual value
+of all manufactures is only $20 per inhabitant, as against $56 in
+Germany, and $88 in Britain. Notwithstanding these unfavourable
+comparisons, the factory industries of Russia are making progress. In
+seventy years the textile factories have increased fivefold and in
+thirty years twofold. In sixty years the cotton-manufacturing industry
+has increased sevenfold, and in fifteen years twofold. Until recently
+Russia exported wool. Now she imports more wool than she exports.
+Ninety years ago in Russia iron was dearer than bread, and the
+peasants used wooden plough-shares and left their horses unshod. Now
+the consumption of hardware, though still per inhabitant the smallest
+in Europe, is yet in the aggregate the fourth in Europe, although even
+so it is only two ninths what it is in Britain. Beet-root
+sugar-making is also a new industry, and 500,000 tons are made
+annually, the number of sugar works being 235. The beet-root crop of
+the country amounts to nearly 6,000,000 tons annually. But the
+consumption of sugar per inhabitant is only seven pounds annually, as
+against eighteen pounds per inhabitant in Germany. A universal
+industry throughout Russia is TANNING, and Russia leather, with its
+fragrant birch-oil odour, is a highly prized commodity the world over.
+But the amount manufactured is only 114,000 tons yearly, and the
+quantity exported is inconsiderable.
+
+RUSSIA'S RAILWAYS AND NAVIGABLE RIVERS
+
+The most characteristic physical feature of European Russia is its
+_flatness_. In consequence its rivers are almost all navigable, and,
+as the most important of them are interconnected by canals, the
+facilities for transportation which they afford are very considerable.
+Altogether the length of inland navigation thus afforded amounts to
+nearly 47,000 miles. This abundance of navigation facilities has
+retarded the growth of railways, but there are already 25,756 miles of
+finished railway in European Russia alone. The total length of railway
+in all Russia built and in building is 34,849 miles. The most
+important railway enterprise in the empire is the Trans-Siberian
+Railway, which will afford through communication from the Baltic to
+the Pacific. The shortest possible distance between these two bodies
+of water is 4500 miles. The length of the railway will be 4950 miles,
+and its cost, it is supposed, will be $120,000,000. It is to be
+completed by 1905.
+
+RUSSIA'S CITIES AND TOWNS
+
+[Illustration: Moscow.]
+
+ST. PETERSBURG (with suburbs 1,267,000), the capital of Russia, is,
+like most European capitals, an important trade centre as well as the
+seat of government. Its manufactures are general and numerous, but the
+chief ones are those concerned in making munitions of war. Until 1885
+St. Petersburg was not a seaport, but in that year a canal was built
+which now permits vessels drawing twenty-two feet of water to enter
+its docks. Its harbour, however, is closed with ice from November to
+May. Near St. Petersburg is REVAL, the chief cotton port of Russia.
+The raw cotton importation of Russia averages about $60,000,000
+annually, most of which comes direct from the United States. MOSCOW
+(988,000), the ancient capital of Russia, is also a great
+manufacturing city, but its principal importance is derived from the
+fact that it is the great centre of the internal trade of Russia.
+WARSAW (615,000), the capital of Polish Russia, is a great railway
+centre, and the principal entrepôt of railway traffic between Russia
+and the rest of Europe. LÓDZ (315,000), also in Polish Russia, is the
+great cotton-manufacturing centre of the empire. ODESSA (405,000) is
+the chief seaport of Russia. It has an immense export trade in grain,
+tallow, iron, linseed, wood, hides, cordage, sailcloth, tar, and
+beef. RIGA (283,000), the chief port of Russia on the Baltic, has a
+large export trade with England in characteristic Russian produce.
+KIEFF (249,000) is the centre of the Russian sugar-refining industry.
+ASTRAKHAN (113,000), on the Volga delta, is noted for its sturgeon
+fisheries, and its export of caviare, amounting, it is said, to
+$1,500,000 yearly. TULA (111,000) is the Sheffield of Russia. Even in
+1828 there were 600 cutlery establishments in Tula, but the
+manufacture was then principally domestic. It is now a city of
+factories, for it stands on a large coal and iron field.
+NIJNI-NOVGOROD (99,000) is noted for its fair, an Asiatic institution
+which modern civilisation will no doubt soon disestablish. Once a year
+merchants to the number of 200,000 come to Nijni-Novgorod from all
+over Russia, and even from India and China, to exchange their wares.
+The value of the exchange sometimes amounts to $100,000,000. ORENBURG
+(73,000), on the Ural, is the terminal depot of the caravan trade of
+Asiatic Russia. ARCHANGEL (25,000), on the White Sea, is the chief
+emporium of trade in the north, with exports of characteristic
+northern produce. BAKU, on the Caspian Sea, is the chief seat of the
+petroleum industry of Russia. All the towns and cities above named
+have grown enormously during the last twenty years.
+
+
+VI. THE TRADE FEATURES OF INDIA
+
+INDIA'S PAST AND PRESENT COMPARED
+
+To the student of civilisation India is one of the most interesting
+countries in the world. It has always been one of the most fertile and
+populous regions of the globe. For centuries it was thought to be one
+of the richest. In consequence it has, time and time again, been the
+scene of invasion, conquest, and spoliation. But its riches never
+consisted so much in natural treasure as in the savings of an
+industrious and frugal people. Since the year 1600 European nations
+have had much to do with India, especially England, France, Portugal,
+and Holland. During the last 140 years, however, England has been the
+dominant power there. Whatever may be said as to the motive of
+England's interference in India's affairs in the first place, it can
+only be said that the present influence of England in India is
+immensely beneficial to the country. India's prosperity on the whole
+is now comparable with that of any civilised nation on the globe. And
+a people that once, because of repeated conquest and spoliation, had
+lost all sense of honour and self-respect, are now, under the benign
+influence of peace, law, order, and security, rapidly becoming
+honourable, self-reliant, and enterprising, and ambitious to possess
+all the rights and privileges of modern civilisation.
+
+INDIA'S SIZE AND POPULATION
+
+India is a much larger and more populous country than most people
+think it to be. In shape it is somewhat like a huge kite, each of
+whose diameters is over 2000 miles long, or more than the distance
+across the Atlantic from Ireland to Newfoundland. Its TERRITORY is
+about 1,700,000 square miles. Of this area, over 1,000,000 square
+miles, a territory considerably greater than the territory of all the
+states of Europe (including the British Isles) except Russia, is
+directly under British control. The remainder is indirectly under
+British control. The POPULATION is 308,000,000, of which 236,000,000
+are directly under British control and 72,000,000 indirectly so. This
+population is made up of people who speak seventy-eight different
+languages, of which twenty languages are spoken by not less than
+1,000,000 persons each.
+
+INDIA'S GREAT FERTILITY
+
+India owes much of its fertility to the fact that its soil is
+constantly being replenished by alluvium brought down from its high
+mountains by its immense rivers. The valleys of the Indus (1800 miles
+long), the Ganges (1600 miles long), and the Brahmapootra (1500 miles
+long) include an area of 1,125,000 square miles, a part of which, the
+Indus-Ganges plain, consists of a great stretch of alluvial soil whose
+fertility is as rich as that of any portion of the globe. One hundred
+and eighty millions of people live in this plain. So finely pulverised
+is its soil that for a distance of almost 2000 miles not even a pebble
+can be found in it. And so fertile is it that there are some
+agricultural districts in the plain where the population exceeds 900
+to the square mile. In that part of the plain which the Ganges waters,
+60,000,000 of people find support on the soil by agriculture, at a
+density of over 700 persons to the square mile, which is 140 persons
+more to the square mile than the density of Belgium, the most thickly
+populated country in Europe.
+
+INDIA'S IRRIGATION CANALS AND RIVER EMBANKMENTS
+
+But, fertile as is the soil of India, and propitious to agricultural
+industry as is its climate generally, its climate is not always
+favourable. It suffers periodically from excess of drought. As a
+consequence artificial irrigation has to be resorted to, or much of
+this fertile country would oftentimes be a desert. In British India
+alone 28,000 miles of irrigation canals are under the control of the
+government, 14,000 of which have been constructed by the present
+(British) government--works of vast dimensions and the highest
+engineering skill. Altogether 28,000,000 acres in British India are
+dependent for their necessary supply of moisture upon general
+irrigation, and 8,000,000 upon irrigation canals. Were it not for
+these irrigation canals, 2,000,000 acres in Scinde (northwestern
+India) would be a perpetual desert, for Scinde is almost wholly
+rainless. On the other hand, in a great part of India the rainfall is
+excessive. Some districts indeed are the wettest on the globe. In
+Assam, for example (which is also one of the hottest places in India),
+the rainfall is 600 inches yearly, and it has been 650. As a
+consequence rivers in India often overflow their banks. Therefore to
+protect the country on the lower river reaches from floods the British
+government has built over 1500 miles of embankments.
+
+INDIA'S MINERAL RESOURCES
+
+At one time India was famed for its wealth in precious minerals and
+precious stones. Poets often celebrated its golden resources. But its
+wealth in this respect was always fabulous rather than real. India is
+in reality poor in minerals. It has a good deal of iron--iron of the
+choicest quality. It has also a good deal of coal, but its coal is
+poor, owing to its superabundance of ash. It has also a little copper
+and tin. It has gold-mines that are worked. Diamonds, too, are found
+in southern India, and numerously so. The celebrated Koh-i-nur (280
+carats) was an Indian product. But neither diamond-hunting nor
+gold-mining is any longer a profitable industry in India. The
+principal mineral industry of India is salt-mining, pursued in the
+Punjaub, where there are solid cliffs of pure salt. Owing to the fact
+that the people of India are mostly vegetarians (250,000,000 of
+Hindoos would rather die than eat flesh), salt is a necessary article
+of diet and a universal commodity. Its production, therefore, is
+controlled by the government as a means of raising revenue.
+
+INDIA'S WONDERFUL AGRICULTURAL RESOURCES
+
+[Illustration: Comparative sizes of India and the United States.]
+
+The real wealth of India lies in the luxuriance and economic value of
+its VEGETATION. As a consequence the principal industry is
+AGRICULTURE. Only one tenth of the people live in towns. Two thirds of
+the adult males in the country are engaged wholly in tilling the soil.
+Every sort of agricultural product known to commerce is raised in
+India; for from the high levels on the mountain sides to the low
+levels on the coasts the vegetation of the whole world is produced
+within its borders. Even in WHEAT India competes in the world's
+markets with countries like Russia and Argentina. In 1896 British
+India had 19,000,000 acres of wheat under cultivation, and (though a
+dearth year) an exportation of $4,000,000. In 1892 the exportation was
+$25,000,000. The district known as the Central Provinces of India has
+become one of the most important wheat areas in the world. But the
+principal agricultural product of India is RICE. British India alone
+has 70,000,000 acres of rice under cultivation, and an annual
+exportation of $60,000,000. In all the coast regions rice is grown
+universally, and also in the lower parts of the river plains,
+especially in the Ganges valley. It is the staple food of the people
+everywhere except on the higher levels. On the higher levels millet
+and maize (corn) are the staple foods. The next important agricultural
+product of India is COTTON, of which $47,000,000 worth in the raw
+state is exported annually, besides what is used at home. The American
+civil war was the great cause of the starting of the cotton-growing
+industry in India. The next important agricultural product is JUTE, of
+which the export in the raw state is about $35,000,000. No country in
+the world can compete with India in the production of this fibre, for
+jute is very exhaustive of the soil, and in the Ganges valley, where
+it is principally raised, the soil is annually replenished by
+alluvium. A fifth great agricultural product is TEA, in which India
+now leads the world. England uses twice as much India tea as China
+tea, the reason being that India teas are produced with all the
+economic care of a high-class English or American manufactured
+product. The value of the tea export of India is about $27,000,000.
+Other chief agricultural products are OPIUM (which is a government
+monopoly), oil seeds, hides, and skins, INDIGO (in which India excels
+the world, the value of the export being $14,000,000), COFFEE (the
+best grown anywhere--except perhaps that of Arabia and Java--though
+the bean is sometimes injured in transit), raw wool, lac (for dyeing),
+cinchona or Peruvian bark (which since it has been raised in India,
+has greatly reduced the price of quinine), raw silk, raw sugar,
+tobacco, and spices. Spices are produced abundantly in India, but
+their quality is not equal to East Indian spices. Also the cotton,
+rice, sugar, and tobacco of India, though produced plentifully, are
+inferior in quality to those of the United States. Nor are the wheat
+and corn of India so good as the wheat and corn of the United States
+and Canada. Improved cultivation will, however, in time improve the
+quality of all these products. Of exports of natural products not
+agricultural the principal are WOOD (chiefly TEAK, the most valuable
+timber known for ship-building, and sal, a most valuable wood for
+carpentry) and saltpetre.
+
+INDIA'S GROWING MANUFACTURES
+
+Though India is now chiefly an agricultural country her people from
+time immemorial have been adepts in manufacturing. The domestic
+textile manufactures and the domestic metal manufactures of India were
+for ages among the most beautiful and ingenious in the world. These
+DOMESTIC MANUFACTURES are principally pursued in small villages, of
+which there are over half a million in India. But under the influences
+of modern civilisation introduced by British rule, the domestic
+industries of the country are now giving way to FACTORY INDUSTRIES.
+These have already become well established, and are rapidly increasing
+in number and importance. The stability of India as a nation is now so
+well assured that capital can be had there as cheaply as in England or
+the United States. Besides, co-operative or joint-stock enterprises
+are becoming common. The Indian people, with their natural aptitude
+for weaving, make the best of textile operatives, and India bids fair
+soon to become a formidable rival of Western nations in TEXTILE
+MANUFACTURES. In twenty years the cotton spindles have increased
+sixfold. In ten years the COTTON OUTPUT has increased twofold. Bombay
+has become one of the greatest cotton centres in the world, a sort of
+Liverpool and Manchester combined. It has practically shut the doors
+of India to English manufactured cottons of the cheaper grades. Bombay
+manufactured cotton is even sent to England in immense quantities, but
+the principal export is to China. The total export of Indian
+manufactured cotton is $23,000,000. Another important modern
+manufacture is that of JUTE. The jute factories of Bengal are now
+competing with those of Scotland, and the total export is $17,500,000.
+A similar development is expected in iron manufactures, for already
+iron-smelting has begun. But, notwithstanding these developments,
+India still remains a tremendous market for the manufactured goods of
+England, especially in cottons and hardware and machinery. The value
+of the annual cotton importation from England is $100,000,000, equal
+to the total of England's exportation of goods of every sort to the
+United States. The value of the annual hardware and machinery
+importation from England is $35,000,000.
+
+INDIA'S EXTERNAL AND INTERNAL TRADE
+
+The total yearly value of the EXPORTS of India amounts to the enormous
+sum of $350,000,000, more than a third of the total exportation of the
+United States for the banner year 1897.[2] Of this England receives
+about one half. The total yearly value of the IMPORTS of India
+(exclusive of bullion) amounts to $255,000,000, which is considerably
+more than a third of the total importation of the United States. Of
+this England sends out about two thirds. (India is therefore England's
+best customer, although from the United States England purchases
+vastly more.) Of the internal trade of India no statistics are
+available, but with the rapid advances in modern conveniences for
+doing business which the country is adopting, the internal trade is
+also enormously increasing. Already 20,290 miles of railway are built
+and opened, and 13,000 miles of canals and canalised river
+navigation. Railways are rapidly being constructed in every part of
+the country. Over 31,000 miles of metalled roads for highways and
+106,000 of unmetalled roads are now maintained by the government as
+public works. There are 38,000 miles of telegraph routes. The
+government highways and canals as well as the railways are all
+splendidly engineered and solidly built works. The greatness of India
+is only just beginning.
+
+FOOTNOTE:
+
+[2] The total exports of the United States for the years 1898 and 1899
+have exceeded $1,200,000,000, each year. In the year 1897 they were
+about $1,050,000,000.
+
+INDIA'S CITIES AND TOWNS
+
+CALCUTTA (862,000) is the capital of the empire of India and the
+second city in the British Empire. Although situated on an arm of the
+delta of the Ganges, eighty miles inland, Calcutta is an immense
+seaport, but its sea-going privileges can be maintained only by great
+engineering works, because of the silt which the Ganges is constantly
+bringing down and depositing in its seaward channels. Calcutta enjoys
+almost a monopoly of the whole trade of the Ganges and Brahmapootra
+valleys, and until the building of the Suez Canal it had almost a
+monopoly of the outward trade of the whole Hindustan peninsula. Its
+total trade is even yet very large, aggregating for outward and inward
+business together about $700,000,000 per annum, a sum which can be
+appreciated from the fact that it is about equal to the total import
+trade of the whole of the United States. BOMBAY (822,000), the second
+city of the Indian Empire, owes its eminence to three things: (1) the
+opening of the Suez Canal, which has made it the port of India nearest
+England; (2) the starting of the cotton-growing industry in India,
+owing to the American civil war (the cotton-growing district of India
+is adjacent to Bombay); and (3) the development of the railway system
+of India, which is making Bombay rather than Calcutta the natural
+ocean outlet for the trade of the country. MADRAS (453,000), the
+third city of India, is also the third seaport. But it has no natural
+harbour, and its shore is surf-beaten and for months together exposed
+to the full fury of the northeast monsoons. An artificial harbour,
+however, has recently been built. Besides the cities above mentioned
+there is one (HYDERABAD) with a population of over 400,000; there are
+two (LUCKNOW and BENARES) with a population of over 150,000 each, and
+eleven more with a population of over 100,000 each. There are besides
+forty-seven towns with a population more than 50,000 each, and over a
+thousand towns with a population of about 10,000 each.
+
+
+VII. THE TRADE FEATURES OF CHINA
+
+THE VASTNESS OF CHINA'S AREA AND POPULATION
+
+China, to the student of commerce, is the most interesting country on
+the globe. The reason for this is that its area is so large, its
+population so vast, and its chances for development so magnificent.
+The total area of the empire, according to late estimates, is
+4,218,401 square miles. Other estimates make it 4,468,470 square
+miles. The greatness of this area may be understood from a few
+comparisons. It is about one twelfth of the total land surface of the
+globe. It is two and one fourth times the size of European Russia. It
+is almost one and one half times the total area of the United States,
+exclusive of Alaska. But all of this territory is not of equal
+commercial interest. The Chinese Empire consists of six parts: China
+Proper, Manchuria, Mongolia, Tibet, Jungaria, and Eastern Turkestan.
+Because of recent treaties, which give to Russia the right to build
+and "control" railways in Manchuria--ostensibly for the purpose of
+securing for the great Russian Trans-Siberian Railway a shorter route
+to Vladivostok, its Pacific terminus--MANCHURIA becomes practically a
+RUSSIAN POSSESSION. Turkestan, Jungaria, Tibet, and Mongolia are
+thinly inhabited countries, scarcely semi-civilised. But the part
+which remains when these "dependencies" are left out of
+consideration--CHINA PROPER--is at once one of the largest, most
+thickly populated, and most fertile countries on the face of the
+globe, and one also of the most richly endowed in mineral products.
+Its area is 1,336,841 square miles. Its population is 386,000,000. Its
+population per square mile is not far short of 300. That is to say,
+its area is more than eleven times that of Great Britain and Ireland,
+and almost one half that of the United States, exclusive of Alaska;
+its population is ten times that of Great Britain and Ireland, and
+more than six times that of the United States; while its population
+per square mile is greater than that of any European or American
+country except Great Britain (which, however, it nearly equals),
+Holland, and Belgium. In fact, more than one fourth of the total
+population of the globe is concentrated within the boundaries of
+China Proper.
+
+CHINA A COUNTRY OF GREAT TRADE POSSIBILITIES
+
+The great commercial nations of the world are now all trying to get
+shares of the trade of this VAST AND POPULOUS COUNTRY. For not only is
+China (Proper) large and populous, but it is also wealthy, for its
+inhabitants are both industrious and frugal, and, besides, as compared
+with the people of European countries they have been greatly spared
+the disastrous commerce-destroying effects of war, both foreign and
+internecine. Centuries ago the Chinese had made great progress toward
+civilisation. Their skill in the manufacturing arts, and in
+agriculture and horticulture, was for ages superior to that of Western
+nations. But, unfortunately for their advancement, they are
+conservative, self-conceited, and averse to improvement, especially if
+they have to learn improvement of others. As yet they have almost
+wholly ignored the ideas and methods of modern Western civilisation.
+They have scarcely any railways, but few steamships, almost no
+steam-power manufactories, and no telephones. The only modern
+improvement which they have made much use of is the telegraph. Some
+years ago (in 1876) a European company secured the privilege of
+building a short railway from Shanghai, but it was scarcely built
+before the government got fearful of its influence and bought it up
+and stopped its running. But the Chinese people are not averse to
+foreign trade; on the contrary, they are rather fond of it. If only
+the thing could happen in China that happened in Japan--that is to
+say, if only the government could fall into the hands of rulers who
+were open-minded to improvement and inclined to be progressive--the
+rush that China would make toward civilisation and the adoption of
+modern trade methods and modern processes of manufacture would be
+startling.
+
+CHINA'S FOREIGN TRADE
+
+At present the foreign trade of China is largely in the hands of the
+English. In the year 1896 the foreign export trade of China amounted
+to $167,000,000. Of this amount $132,500,000 was with Great Britain
+and her dependencies; $10,000,000 with the United States; something
+over $8,000,000 with the continent of Europe exclusive of Russia, and
+less than $2,000,000 with Russia. In the same year the foreign import
+trade of China was $102,500,000, of which $56,000,000 was with Great
+Britain and her dependencies; a little over $9,000,000 with the United
+States; $15,000,000 with the continent of Europe exclusive of Russia,
+and $12,500,000 with Russia. (The rest of her trade was principally
+with Japan.) The policy of the government of China has always been to
+prevent or restrict foreign trade; and even to-day foreign trade can
+be carried on in only twenty-six Chinese ports--the so-called "TREATY
+PORTS." The policy of Great Britain has been to secure by treaty as
+large a privilege of trading with China as possible; then to throw
+open the privilege to the world, but to follow it up with such
+commercial activity on her own part as would secure to her the lion's
+share of the resulting trade. Of the twenty-six ports now by treaty
+open to the world for trade, twenty-three have been secured by Great
+Britain and three by Japan.
+
+CHINA'S EXPORTS, IMPORTS, AND RESOURCES
+
+China's principal exports are TEA and SILK, tea constituting about one
+third and silk (principally raw silk) fully one half of her total
+export trade. Other principal exports are sugar, STRAW BRAID (one
+twentieth of her total exportation), hides, paper, chinaware, and
+pottery. Her principal imports are OPIUM and COTTON GOODS, opium
+constituting a fifth, and cotton goods considerably more than a half,
+of her total import trade. Other principal imports are woollen goods,
+metal goods and machinery, coal, and kerosene oil. A considerable
+importation is also made of raw cotton. But if China only had the
+blessing of an enlightened and progressive government this disposition
+of exports and imports would not long continue. China's resources of
+COAL are among the finest and certainly among the largest in the whole
+world. Her coal-fields, indeed, are estimated to be twenty times as
+great as those of all Europe combined. Much of this coal, too, is of
+the purest quality, and much of it very accessible to the miner. And
+near her coal-fields are vast deposits of some of the richest IRON
+ORES in the world. Again, a great portion of the soil of China is
+extremely fertile. There are indeed two regions, one of "RED SOIL" and
+another, much vaster, of "YELLOW SOIL," that are among the most
+fertile in the world. It is because of the extent and fertility of the
+yellow soil of China that "yellow" is the imperial colour, and the
+emperor called the "yellow lord." The climate, too, of China permits
+almost the whole range of useful vegetable products to be raised. The
+growth of COTTON is already very great, because for seven centuries
+cotton has been the staple cloth for the clothing of the people. And
+already it is being manufactured by modern machinery. But both the
+growth of cotton and its manufacture by modern methods would be
+enormously increased if only facilities for internal transportation
+existed, and freedom from unjust taxation could be secured. If, in
+short, China only had railways and a good and enlightened system of
+government her progress and prosperity would soon make the Western
+world envious. But her government is not only stupidly unprogressive,
+it is also disastrously wasteful. About seventy per cent. of the whole
+revenue of the country is lost to the public use through the
+malfeasance of officials. And only about 85 miles of railway have as
+yet been opened, although it must be said that 200 or 250 miles more
+are under construction.
+
+POSSIBILITIES OF INCREASED FOREIGN TRADE WITH CHINA
+
+There are, however, even now several ways in which foreign trade with
+China may be increased. Two of these are the supplying her people with
+WOOLLEN GOODS, and the supplying them with WHEAT and FLOUR. The
+winters of a great part of China are so cool that warm garments are
+necessary. At present these are made principally of padded cotton.
+Owing to the density of the population pasturage is scarce, and sheep
+are almost unknown. For an indefinite time, therefore, there will be
+a demand for woollen goods in China, a demand that will constantly
+increase as the superior convenience of woollen garments over garments
+of padded cotton becomes more and more known to the people. And though
+rice is now the staple food of the people even of all classes, the
+wealthy classes are fond of wheat bread and obtain it when possible.
+But the agriculture of the country does not permit of the profitable
+growth of wheat and flour, and wheat if used must be imported.
+
+THE PRINCIPAL TRADING CITIES OF CHINA
+
+The cities of China are large and numerous. PEKING (1,500,000?), the
+capital, is not open to foreign trade. In fact, it has no trade of any
+sort, and derives its whole importance from being the seat of
+government. But TIENTSIN (750,000), the port of Peking, and an
+important "treaty port," has a large trade, both foreign and local.
+Tientsin and Peking are connected by rail, and since the Russian
+government has obtained the right of connecting Peking with the
+Trans-Siberian Railway, it is more than likely that in time Tientsin
+will become a terminus of that railway. Of "treaty ports" other than
+Tientsin the principal are Shanghai, Hankow, Foochow, Hangchow, Amoy,
+and Canton. SHANGHAI (405,000) exceeds all other ports of China put
+together in the amount of its foreign trade. Its foreign trade is,
+indeed, almost three fifths of that of the whole empire. And of the
+total number of foreigners residing in China (in 1896 said to be
+10,855, of whom 4362 were British subjects and 1439 Americans) about
+one half reside in Shanghai. Shanghai is, indeed, the New York of
+China, and if railways were only built from it (as has been proposed)
+to the capital, Peking, and up the Yang-tse-kiang to Hankow, and by
+way of the coast cities to Canton, China would begin a new era in
+her career. HANKOW (800,000), on the Yang-tse-kiang, about 700 miles
+from its mouth, is the chief emporium of the tea-producing area of
+China. Ocean-going steamships ascend the river to Hankow for their
+cargoes. FOOCHOW (650,900) also has a great tea export trade. HANGCHOW
+(700,000), one of the most beautiful cities in China, is also the
+chief city for the manufacture of silks, and of gold and silver ware,
+lacquered ware, and fans. AMOY (100,000) has the best harbour in China
+and an immense import trade, ranking in that respect next after
+Shanghai. CANTON (2,000,000?) is the largest city in the Chinese
+Empire. A considerable portion of its inhabitants live in boats. Of
+these "house-boats" there are said to be 40,000. The foreign trade of
+Canton is next to that of Shanghai. Once it was superior, now it is
+much inferior. Its manufactures, however, are still important and
+include silk, cotton, glass, porcelain, paper, sugar, lacquered ware,
+and ivory goods and metal goods. NANKING (150,000), once the capital
+of China and once the largest city in the world, is now comparatively
+a small city. Although a treaty port, its commerce is not important.
+It was once famous for its beautiful tower of porcelain, 200 feet
+high, but that is now destroyed. There are many other large cities
+in China.
+
+[Illustration: China and its chief trade centres.]
+
+HONGKONG
+
+HONGKONG (245,000) is a small island belonging to Great Britain
+situated in the mouth of the Canton River, seventy-five miles from the
+city of Canton. Its population is made up principally of Chinese, who
+have been attracted there by its trade privileges. The British
+population is only 13,000, even including the garrison of 2800. Almost
+the whole population reside in the capital, VICTORIA, for the island
+itself is a barren rock. Forty-four per cent. of the total foreign
+trade of China passes through Hongkong. Its harbour is one of the
+finest in the world. It has magnificent docks. Its port is entirely
+free, and there is even no custom-house. It is calculated that the
+foreign trade transacted by its merchants amounts to $100,000,000 a
+year, exclusive of what passes through its port without breaking bulk.
+The whole of the vast export trade of China in silk and tea is largely
+handled by Hongkong firms. Other commodities of which Hongkong is the
+chief trade centre for China are opium, flour, salt, earthenware, oil,
+cotton, and cotton goods and woollen goods, which it imports from
+other countries and exports to China; and sugar, rice, amber,
+sandal-wood, ivory, and betel, which it imports from China and exports
+to other countries. Its trade is not confined to Great Britain, but
+includes France, Germany, the United States, and all other trading
+nations. But of course Great Britain has the greatest share.
+
+
+VIII. THE TRADE FEATURES OF JAPAN
+
+JAPAN THE GREAT BRITAIN OF ASIA
+
+Japan consists of a group of islands situated to the east of the
+continent of Asia, somewhat as the British Isles are situated to the
+west of the continent of Europe. But the Japan islands are of volcanic
+origin and are very numerous. There are said to be 4223 of them.
+However, there are only four that are of important size, and it is
+these that are usually thought of when Japan is spoken of. The area of
+these four islands is 147,655 miles, which is almost a fourth more
+than that of Great Britain and Ireland. The population (census of
+1895) is 42,270,620, which is 4,000,000 more than that of Great
+Britain and Ireland. The population per square mile is 286, which,
+though large, is not quite so large as that of Great Britain. If,
+however, we do not take into consideration the northern island (Yezo),
+which is still partly inhabited by uncivilised aborigines, the
+population per square mile is 375, which is considerably in excess of
+that of both China and Great Britain and Ireland, though still
+considerably less than that of England alone. The above statistics do
+not include the island of Formosa (area 13,500 miles, population
+almost 2,000,000), which was transferred from China to Japan in 1895,
+at the close of the late Chino-Japanese war.
+
+JAPAN'S WONDERFUL TRANSFORMATION
+
+The significant thing about Japan is the rapidity with which it has
+become transformed from a semi-civilised nation into one of the great
+nations of the modern world. Until the year 1868 Japan was an
+unprogressive, unenlightened country of the usual Asiatic type,
+scarcely differing in any way from an inland province of China of
+to-day. In that year a revolution took place which put the whole power
+of the empire into the hands of the present Mikado, or Emperor.
+Immediately Japan began to assimilate Western ideas of civilisation
+and to adopt Western methods of trade, commerce, manufacture,
+government, and education. Until 1889 the government remained an
+absolute monarchy. In that year the Mikado voluntarily promulgated a
+constitution by which a legislative Parliament, or "Imperial Diet,"
+and an executive Cabinet of State Ministers were instituted, so that
+the government of Japan is now as "constitutional" as that of Germany
+or Great Britain. The government is in other ways thoroughly modern.
+Education, for example, is almost as well looked after as in Germany
+or New England. There are 220 kindergartens established, 97 technical
+schools, and 49 normal schools for the training of teachers (one being
+for the training of high-school teachers), besides elementary schools,
+middle schools, high schools, special schools (1263 of these), and
+universities. The University of Tokio is an imperial institution,
+supported entirely by the government, with colleges in law, science,
+medicine, literature, engineering, and agriculture. Education, between
+the ages of six and fourteen, is compulsory. The army, too, is wholly
+a modern affair. It consists of 285,000 men, and an idea of its
+modernness may be gathered from the fact that an important part of its
+organisation is its training schools and colleges. Even the
+non-commissioned officers are specially trained and educated.
+Altogether the students in the military schools and colleges of Japan
+number 2400. The navy, too, as is well known, is both modern and
+efficient. It consists of 5 battleships and 15 high-class cruisers,
+besides 46 other vessels,--torpedo craft, gunboats, convoy ships,
+etc.,--and it is intended to build an immense fleet of 19 battleships
+and cruisers, and 100 torpedo craft in addition.
+
+JAPAN'S AGRICULTURE
+
+Japan being of volcanic origin, much of its soil is unfit for
+cultivation. The total productive area amounts to less than thirty per
+cent., and even of this only a small portion is capable of being
+tilled by modern methods. At present only twelve per cent. of the
+whole surface of the country is devoted to agriculture, even including
+pasturing. There is, however, but little pasturing, and the principal
+implement of cultivation is the spade. The modern plough is unknown.
+But manure (principally domestic manure and fish refuse) is very
+generously used, and by this means the returns are abundant. The
+principal food crop is RICE. Other food crops are wheat, barley, and
+the soya bean, but these not numerously so. The principal cultivated
+products for purposes of commerce are the mulberry tree (for
+supporting the silkworm), the tea plant, the lacquer tree, and the
+camphor tree. Rice also is grown for export as well as for home
+consumption, and COTTON is very largely grown for home manufacture. No
+milk, butter, or cheese is produced, scarcely any meat, no wood, and
+scarcely any leather. (For boots and shoes paper is used instead of
+leather.) Of cattle there are only 1,000,000, as compared with
+10,000,000 in the British Isles, although the population of Japan is
+considerably the greater. Of horses there are 1,500,000, and the
+raising of horses is much encouraged by the government, but
+principally for military purposes. Horses, indeed, are but little
+employed. In cities, for purposes of carriage and cartage, men are
+used instead of horses. Even in rural districts horses are unknown for
+farming purposes, and not even the hand-cart or wheelbarrow is used.
+Everything is carried. Fruit is much raised,--oranges, apples,
+walnuts, plums, peaches, and grapes,--but Japanese fruits are of very
+inferior quality. FLOWERS are raised everywhere in great variety and
+in great abundance, and the chrysanthemum is the emblem of the country
+and is used on postage stamps.
+
+JAPAN'S MANUFACTURES: THEIR FUTURE POSSIBILITIES
+
+The future of Japan depends upon its MANUFACTURES, but these also are
+not without their difficulties. The mineral wealth of the country is
+very great, principally in COAL and IRON. On the northern island alone
+(Yezo) the coal deposits are two thirds those of all Great Britain.
+Unfortunately, however, owing to the mountainous character of the
+country, railways in Japan are difficult to construct, and the
+transportation of coal or of ore is difficult and expensive. As the
+coal deposits and iron deposits are not near together charcoal has
+been used for smelting purposes. Iron, therefore, so far, has not been
+produced profitably, and its production has decreased. But silver is
+mined abundantly, and also KAOLIN, or the raw material used in the
+manufacture of the beautiful porcelain of the country. Copper and
+antimony are also large articles of export. The principal manufactures
+of Japan as yet are the TEXTILES, especially SILK and COTTON. In
+these modern methods are used, although so far the productions of the
+native domestic looms are superior to those of the factory looms. The
+production of textiles by machinery has increased fourfold in ten
+years, and now amounts to about $40,000,000 annually. This, however,
+is not a large amount, being less than the textile production of any
+important state in Europe, even Switzerland, or Sweden and Norway, and
+is only one twentieth that of the United States. Until recently the
+factory owner in Japan has had the advantage of cheap labour. But the
+Japanese artisan is also becoming "modernised," and is now demanding
+higher wages, and enforcing his demand by "strikes." And for all their
+deftness in domestic manufacture Japanese workmen are not yet as
+skilful in machine labour as British or American workmen. It follows,
+therefore, that textile manufacturing in Japan, especially the
+manufacture of cotton and wool, is not yet out of its tentative or
+probationary stage. But Japan, having the advantage of an extensive
+home market for cotton goods (like the Chinese, the Japanese common
+people wear cotton garments all the year round, in winter padding them
+for warmth), and having the raw material at her own door (she already
+grows a large proportion of all the raw cotton she needs), and having,
+too, an abundance of coal at hand, must needs become a great
+cotton-manufacturing country. The same conditions hold with regard to
+the possibilities of Japan's silk manufactures.
+
+POSSIBILITIES OF INCREASED FOREIGN TRADE WITH JAPAN
+
+As in the case of China, the possibilities of increased trade with
+Japan lie principally in WOOLLEN MANUFACTURES and in BREADSTUFFS. In
+addition there is a fair chance of increased trade in metal
+manufactures. The use of woollen garments in Japan in winter is
+extending even to the middle and working classes. And inasmuch as the
+country does not raise sheep, and is, indeed, not well able to raise
+sheep, such woollen clothing, woollen cloth, or raw wool as is used
+must be imported. Hitherto the woollen manufactures which have been
+established in the country have not been very successful, and the
+probability is that Japan's import trade in woollen clothing and
+woollen cloths will increase year by year. Similarly, from the fact
+that the agriculture of the country is not adapted to the growth of
+wheat, nor seems ever likely to be so adapted, and also from the fact
+that both the higher and the middle classes of Japan are rapidly
+adopting European and American habits of living, it is very probable
+that the importation of wheat and wheat flour into Japan will also
+continue to increase year by year. And from the difficulty there is of
+smelting iron cheaply it is probable that the importation of iron and
+iron goods (which in raw iron, iron and steel rails, iron small wares
+and nails, spinning and other machinery, and steel ships, already
+amounts to $8,000,000 a year) is likewise likely to increase greatly
+year by year also.
+
+JAPAN'S MODERN TRADE FACILITIES
+
+Owing to the irregular conformation of the surface of the country,
+good roads in Japan can scarcely be said to exist. But 20,000 miles of
+roads have been built, of which the state maintains about one fourth.
+There are also 2505 miles of railway, of which the state owns and
+maintains about one fourth also. There are 11,720 miles of telegraph
+routes, with 37,000 miles of wire; 520 miles of telephone routes, with
+6347 miles of wire; and 387 miles of submarine cable routes, with 1481
+miles of wire. The country also has a merchant navy of 827 steam
+vessels of modern type and 702 sailing-vessels of modern type, besides
+668 native craft. Owing to the irregular and rocky nature of the
+coast-line and the great number of small islands which exist, numerous
+lighthouses are needed; but Japan's lighthouse system is one of the
+best in the world.
+
+JAPAN'S FOREIGN TRADE
+
+Japan has a foreign trade of $60,000,000 annually in exports and
+$86,000,000 annually in imports. Of the export trade the principal
+part, running from a fourth to a third, is with the United States. The
+next largest part is with France, the next with Hongkong, the next
+with China, and the next with Great Britain. But Great Britain's
+direct share is not more than a twelfth. Of the import trade the
+principal part, almost one third, is with Great Britain. The United
+States' share is about a twelfth, and that of France about one
+twenty-fifth. The principal exports are RAW SILK (about one third of
+the whole), SILK GOODS (about one tenth of the whole), TEA, coal,
+copper, rice, and matches. The export of matches amounts to $2,500,000
+annually. Characteristic exports, though they do not figure largely in
+the total amount, are floor rugs, lacquered ware, porcelain ware,
+fans, umbrellas, bronze ware, repoussé work, paper ware and
+papier-mâché, fibre carpets, and camphor. There is also a large export
+of fish, shellfish, cuttlefish, edible seaweed, and mushrooms to China
+and other Asiatic countries. The chief import is RAW COTTON (almost
+one fifth of the whole). Other important imports are sugar (although
+she raises almost 100,000,000 pounds of sugar herself annually),
+cotton yarn, cotton goods, woollen cloths, flannels and blankets,
+kerosene oil, watches, and articles of iron and steel as above
+enumerated. The fishing industry is a very important one and over
+2,500,000 people are engaged in it. The number of fishing-boats is
+about 400,000. The fish trade, which includes seaweed, is (when not
+for home consumption) principally with China.
+
+[Illustration: Japan's relation to eastern Asia.]
+
+JAPAN'S SPECIAL TRADE CENTRES
+
+The foreign commerce of Japan, like that of China, is allowed to be
+carried on only at certain ports, called "treaty ports," of which
+there are nineteen, the principal being Yokohama, Osaka, Nagasaki,
+Hakodate, Niigata, and Kobe. The two principal cities, not treaty
+ports, are Tokio and Kioto. TOKIO (1,300,000) is the capital and chief
+centre of the political, commercial, and literary activity of the
+empire. In many respects Tokio is a "modern" city. Its educational
+features are excellent. Its sanitation also is good. KIOTO (340,000)
+was formerly the capital, but after the revolution of 1868 it was
+superseded in this respect by Tokio. YOKOHAMA (170,000), distant from
+Tokio eighteen miles, is the chief place of the empire for foreign
+trade. Its foreign trade, indeed, is more than half that of the whole
+empire, being about $75,000,000 annually. OSAKA (487,000) is in
+respect to population the second city of the empire, but its foreign
+trade is not large and is carried on principally at HIOGO, a port near
+it. NIIGATA (50,000) is the only treaty port on the west side of
+Japan, the surf caused by the winter monsoon making the flat west
+coast of the country very dangerous for shipping for half the year.
+Other important ports are KOBE (161,000) and NAGASAKI (72,000). NAGOYA
+(215,000) is an important inland town.
+
+
+IX. THE TRADE FEATURES OF AFRICA
+
+AFRICA FIFTEEN YEARS AGO
+
+Within a period of about fifteen years the continent of Africa has
+been the scene of a vast partition. At the beginning of that period
+the amount of African territory that was subject to European control
+was comparatively small. The British were firmly established in South
+Africa, and had possessions along the coasts elsewhere principally in
+the west. The French were firmly established in Algeria and in
+Senegal. The Portuguese had their ancient settlements in Mozambique
+and Lower Guinea. Morocco on the northwest and Abyssinia in the
+northeast were more or less well-established governments that were
+independent. Egypt in the extreme northeast, with tributary
+possessions extending along the Nile into the far interior of the
+continent, was also a more or less well-established government that
+possessed a quasi-independence, though it was nominally dependent upon
+Turkey. But elsewhere, except in a few other places controlled by
+European authority, the whole continent may be described as having
+been in its original state of savagery or semi-savagery. No government
+existed anywhere that was either beneficent or stable. The
+slave-traffic abounded everywhere.
+
+EUROPEAN SPHERES OF INFLUENCE IN AFRICA
+
+The European governments that had possessions in Africa were all doing
+their best to suppress the slave-traffic. But they could not take very
+salutary steps in this direction without exercising authority beyond
+the territorial limits they were supposed to occupy. Gradually, for
+these reasons, and also for the reason that they were all anxious to
+extend their commercial dealings in Africa, they began to exercise
+authority beyond their old-time territorial limits. In this way began
+the establishment on the part of European nations of what are known as
+"spheres of influence" in Africa. At first England and France were the
+only nations that were at all active in establishing these spheres of
+influence. Later on Germany and Italy and other nations began to
+establish them also. Beginning, therefore, with the years 1883 and
+1884 there has been a general establishment and gradual extension of
+these spheres until now the whole continent has been practically
+parcelled out among a few European powers.
+
+THE GREAT PARTITION OF AFRICA
+
+[Illustration: The partition of Africa.]
+
+The ancient empire of Morocco still exists in an independent state.
+Abyssinia, though Italy attempted to subjugate it, is again also
+independent. The little republic of Liberia is nominally independent.
+Some territory in the very heart of the Sahara or Great Desert is yet
+in its aboriginal independence. But elsewhere, throughout the whole
+continent, Africa is either British, or French, or German, or Belgian,
+or Portuguese, or Italian. Spain's holding is not worth mentioning.
+Italy's holding also is scarcely worth mentioning. Portugal's holding
+has not been increased in the recent "scramble"--only made more
+definite. France's holding, however, has been enormously increased,
+and is now the largest (3,300,000 square miles), although much of the
+French area is barren desert, and much of the rest of it
+uninhabitable by white people. Great Britain's holding also has been
+greatly increased, but not nearly so much so as it would have been if
+in the earlier years of the scramble the British government had not
+been singularly blind to the actions of other governments in the
+matter. Germany, too, has got a substantial holding (925,000 square
+miles). The Kongo Free State, which, though nominally independent, is
+practically under the suzerainty of Belgium, and must look to Belgium
+for the funds with which to promote its development, is also a
+substantial possession, being a little less than Germany's
+holding--900,000 square miles.
+
+GREAT BRITAIN IN AFRICA
+
+Great Britain's holding, however, in the partitioned continent
+comprises its best portions. Much of Africa is uninhabitable by white
+men. Wherever, however, white men can live--except in northern
+Africa--there Great Britain has managed to get control. Excluding the
+shore of the Mediterranean, the best part of Africa, considered from
+the view points of colonisation and commerce, is what is now known as
+"British South Africa." This is an immense area--an area of almost
+1,000,000 square miles. It comprises (1) that whole southern portion
+of the continent known as Cape Colony, and (2) that portion of the
+great central plateau of the continent which extends from Cape Colony
+northward to Lakes Nyassa and Tanganyika--all except the two Boer
+republics, the Orange Free State and the South African Republic.
+British East Africa (800,000 square miles) includes the territory of
+Uganda, north of Lake Victoria, a territory which from the character
+of its native population and its possibilities of trade has been
+called the "pearl of Africa." British West Africa (500,000 square
+miles) includes the basin of the lower Niger, the most densely peopled
+area in all Africa, the seat of the great Fula-Hausa empire of
+Sokoto-Gandu, the wealthiest and greatest trading nation in the
+continent. Furthermore, in the northeast, Great Britain exercises
+"protectorate control" over Egypt--a control that is likely to be
+instrumental in reclaiming for Egypt, and thus for civilisation and
+commerce under British authority, the whole of Egypt's ancient
+possessions along the Nile as far at least as Uganda. The total area
+of the British possessions in Africa, exclusive of the two Boer
+republics and Egypt, is over 2,300,000 square miles.
+
+THE "DOMINION OF SOUTH AFRICA"
+
+"South Africa" is practically "British South Africa." The German
+portion is either largely barren or else inaccessible. The Portuguese
+portion is only a narrow strip along the east coast, much of which is
+too unhealthy for habitation other than by natives. The two Boer
+republics are rapidly filling up with British people, are being
+developed by British capital, and must in time become confederated
+with the states that environ them. One of them, too, is already under
+British suzerainty. British South Africa, however, is as yet only a
+name. It has no real existence except in hope. The aspiration of
+statesmen in southern Africa is that all the territories of southern
+Africa under British control shall form one confederation, and that in
+this confederation the Orange Free State and the South African
+Republic shall join. The territories entering into this confederation
+would therefore be as follows: The self-governing colonies of Cape
+Colony and Natal, the crown colony of Basutoland, the protectorates of
+Bechuanaland and Zululand, the territory now administered by the
+British South Africa Company, popularly known as "Rhodesia," and the
+British Central Africa protectorate, with in addition the two Boer
+republics previously mentioned. The length of this proposed South
+African dominion would be 1800 miles. Its width would be from 600
+to 800 miles. And, as said above, its area would be about 1,000,000
+square miles. Mr. Stanley predicts that in a hundred years the
+"Dominion of South Africa" will have a white population of 8,000,000,
+and a coloured population of 16,000,000.
+
+SOUTH AFRICA'S AGRICULTURAL POSSIBILITIES
+
+Of South Africa as above defined Cape Colony and Natal are at present
+the most important portions. Their climate is in some respects the
+finest in the world. Their soil is of remarkable richness. The number
+of distinct species of indigenous plants found upon it is greater than
+for any other equal area on the globe. The same remark was once true
+of the animals found in South Africa, which again is testimony to the
+great fertility of the soil. But a serious drawback is the
+insufficiency and uncertainty of the rain supply. Irrigation, however,
+is practised, and wherever irrigation is possible the land may be made
+to blossom like the rose. Agriculture, however, is only indifferently
+pursued. The VINE in Cape Colony produces more abundantly, very much
+more abundantly than anywhere else in the world, and yet neither
+grape-raising nor wine-making can be said to be successful. PASTURING
+is the principal occupation of the people in rural districts. There
+are 17,000,000 sheep in Cape Colony, and 6,000,000 goats. Natal, which
+is warmer, has 500,000 sheep. Another principal occupation is
+OSTRICH-FARMING. The ostrich, once wild in South Africa, is now bred
+domestically. Cape Colony has 230,000 ostriches. Ostrich feathers
+fetch from $150 to $300 a pound. The RAISING OF CATTLE is another
+principal occupation, and draught cattle are much used for transport
+purposes. Cape Colony has 2,000,000 cattle; Natal, 1,000,000. The
+principal food crops are wheat and maize, but little is raised for
+export. In Natal, sugar is an important product, and also tea. Many
+magnificent timber woods are found, but the trees are stunted and
+little timber is exported. Much has been wasted by fires. The great
+agricultural possibilities of South Africa are WOOL, MOHAIR (the hair
+of the Angora goat), fruit, wine, and skins. The breadstuffs of South
+Africa will probably all be needed for home consumption.
+
+SOUTH AFRICA'S GREAT MINERAL WEALTH
+
+All the world over South Africa is famous for its DIAMOND-MINES and
+its GOLD-MINES. The diamonds are found principally in Griqualand,
+north of the Orange River, now a part of Cape Colony, but they are
+also found in the Orange Free State. The diamond areas are very
+circumscribed, the diamond-bearing "pipes" being supposed to be
+craters of extinct volcanoes. The principal "pipes" are at KIMBERLEY
+(28,718), in Griqualand. These constitute the richest diamond-fields
+in the world. It is estimated that over $350,000,000 worth of diamonds
+have been taken out of Kimberley since their first discovery there in
+1867. The largest South African diamond yet found was worth $300,000,
+but many other large ones have been found. The annual diamond export
+now is about $20,000,000. For 1896 the export was $23,200,000; for
+1897 a little less. The production and export are strictly limited, so
+that prices may not depreciate. Next in interest to the diamond-fields
+are the gold-mines. These so far have been found principally in the
+South African Republic, or "Transvaal" as it is popularly called, in
+the "rand," or "reef," near the far-famed town of JOHANNESBURG
+(102,078). Since gold was first discovered in the rand (1871)
+$250,000,000 worth has been taken out. The annual output now is nearly
+$50,000,000, but it is estimated that before the rand can be exhausted
+$2,250,000,000 worth of gold must be taken out--an amount much greater
+than the total public debt of the United States, national, state, and
+municipal. But north of the Transvaal, in Rhodesia, especially in
+Mashonaland, is a territory popularly called the "Land of Ophir,"
+where mining operations are only just begun, but where gold is
+supposed to be even more richly stored than in the Transvaal. Of this
+district the newly built town of SALISBURY is the centre. Other
+mineral products of South Africa are coal in Natal, mined at
+NEWCASTLE, and copper in the northwest of Cape Colony, shipped at PORT
+NOLLOTH.
+
+SOUTH AFRICA'S FOREIGN TRADE
+
+The import trade of South Africa so far consists of almost everything
+needed by the inhabitants except meat, flour, vegetables, and fruit,
+for there are as yet almost no manufactures. The principal exports
+are: (1) gold, $60,000,000 per annum, including that from the
+Transvaal; (2) diamonds, $22,500,000; (3) wool, $12,500,000; (4)
+mohair, the hair of the Angora goat, $3,000,000; (5) ostrich feathers,
+over $2,500,000; (6) hides and skins, $2,200,000; and (7) copper ore,
+$1,250,000. The export of wine and fruit, for the production of which
+the country is so well suited, and also of grain, is inconsiderable.
+
+SHIPPING PORTS AND RAILWAYS OF SOUTH AFRICA
+
+British South Africa, like all of Africa, is wanting in seaports. In
+fact, it has but few. However, it has one, WALFISH BAY, which
+territorially does not belong to it, inasmuch as it is in the middle
+of the coast of German Southwest Africa--the only port in that coast.
+The principal port in British South Africa is CAPE TOWN (83,718),
+which is also the capital and principal place. The next principal
+ports are, for Cape Colony, PORT ELIZABETH (23,266) and EAST LONDON,
+and for Natal, DURBAN. LORENZO MARQUEZ, on Delagoa Bay, and BEIRA, at
+the mouth of the Pungwe, both in Portuguese East Africa, are natural
+ports for northern British South Africa, and are used as such,
+railways being constructed from them into the interior.
+Railroad-making, indeed, is now the all-important matter in South
+Africa. Lines are already built from Cape Town, Port Elizabeth, East
+London, Durban, and Lorenzo Marquez to the diamond-fields of Kimberley
+and the gold-mines of Johannesburg. These also give to the pastoral
+and agricultural parts of the interior facilities of access to the
+sea. But the line from Cape Town to Kimberley is being rapidly
+extended northward to Salisbury, the central point of the gold-fields
+of Rhodesia, and already has reached BULAWAYO, 1600 miles from Cape
+Town. The line from Beira is also to end at Salisbury. Already a
+telegraph line extending from Salisbury northward has reached the west
+shore of Lake Nyassa, and by the close of this year (1898) it will
+reach the south end of Lake Tanganyika. It is proposed that the
+railroad from Bulawayo shall follow this same route, and it is the
+dream (or shall we say the hope?) of the empire-builders of South
+Africa that this railway shall before many years be so far advanced
+northward that it will meet the railway that is now being built from
+Cairo southward through the continent along the Nile. Mr. Stanley
+predicts that the "Cape to Cairo" railway will be an accomplished fact
+before 1925. The white population of South Africa, even including the
+Boer republics, is still less than 750,000.
+
+
+X. THE TRADE FEATURES OF AUSTRALIA
+
+AUSTRALIA AND AUSTRALASIA
+
+The term AUSTRALASIA, as now generally used, comprises Australia
+(including Tasmania) and New Zealand, and a number of small
+neighbouring islands. So used it practically denotes a British
+possession; for such islands as are comprised by the term and yet do
+not belong to Great Britain are comparatively unimportant. But when we
+speak of Australasia, we are generally thinking of AUSTRALIA, for
+Australia is so large and important that it seems to overshadow the
+other parts of Australasia. But in respect to politics or commerce
+Australia is not one country; it is divided into several
+self-governing colonies. These are, in order of importance, Victoria,
+New South Wales, South Australia, Queensland, and West Australia. But
+a movement is now being made to unite all these colonies, and Tasmania
+as well, into one "Australian Confederation," just as the several
+provinces of Canada, which were once independent colonies, have been
+united into one "Dominion of Canada." This confederation scheme,
+however, has not yet been accomplished.[3] New Zealand, because of
+its distance (1200 miles) from Australia, has so far shown no desire
+to enter into this confederation.
+
+FOOTNOTE:
+
+[3] Since the above was written the scheme has been developed a very
+considerable way toward completion. The name of the confederation is
+to be "The Commonwealth of Australia."
+
+THE AREA AND CLIMATE OF AUSTRALIA
+
+Australia is a continent not only in name but in fact. Its area,
+including Tasmania, is almost 3,000,000 square miles, which is about
+the area of the United States exclusive of Alaska, and only about one
+fourth less than the area of the continent of Europe. Fully two fifths
+of this area lie within the torrid zone, and of the rest, even in
+Victoria, the part farthest from the equator, the climate is so warm
+that it corresponds with that of Spain, southern France, and Italy.
+But over so vast a territory great differences of climate must occur,
+and consequently of products also. A general description of the
+climate and products of Australia is therefore impossible. Yet there
+are several characteristics which appertain to the whole continent.
+The chief of these are (1) the great DRYNESS of the ATMOSPHERE--not
+merely its lack of rain, but its absolute freedom from moisture; (2)
+the remarkable INEQUALITY, or want of regularity, in the RAINFALL.
+Occasionally the rainfall is excessive, but a more frequent and
+serious cause of trouble is excessive drought. The continent on every
+side has a low coast region, where the rainfall is heavier and the
+temperature generally hotter than in the corresponding table-land
+interior to it. But the vast table-land of the interior has
+comparatively little rain, and indeed in some parts of it, especially
+in the centre and west, the rainfall is so slight that the country is
+practically a desert.
+
+But even when all the desert areas of Australia are excluded from
+calculation there still remains in the interior plateau, toward the
+east and south, an immense area of country of great fertility and
+productiveness. The Murray River alone drains an area of 500,000
+square miles, one sixth of the whole continent, a great part of which
+is of exceeding richness. In these fertile parts irrigation by
+artesian wells has been tried, and always with great success. And it
+is thought that almost the whole continent can be regained for
+agriculture, or at least for sheep-pasturing, by similar means; for
+even in the arid and so-called desert parts of the interior, there is
+very little soil that is not really fertile, for all of it is covered
+with thick brushwood. Moisture alone is needed to make it bear crops
+abundantly. And this dryness of the atmosphere which prevails
+throughout the whole continent is not without its compensations. It
+renders the climate exceedingly healthful.
+
+AUSTRALIA A CONTINENT OF PECULIARITIES
+
+Australia has MANY PECULIARITIES. It has only one large river, and
+even that in summer becomes a series of isolated pools. It has no high
+mountain range, its principal mountains being only a series of
+ramparts marking off the lower coast lands from the interior plateau.
+Again, its native quadrupeds are entirely different from those of
+other continents, being almost all, whether little or big,
+"marsupials," or "pouch-bearers," like the kangaroo. Its birds are
+mostly songless. Its flowers, for the most part, have no scent. Its
+trees are leaved vertically and cast no shade. Its indigenous
+inhabitants have made no progress toward civilisation. When Europeans
+first came to the country they found no native animal that could be
+put to any use, nor any native fruit, vegetable, or grain that could
+be utilised for food. Still, all European domestic animals thrive
+abundantly in the country, and so do all European fruits, grasses,
+grains, and vegetables. The English rabbits, indeed, have become a
+terrible pest. As many as 25,000,000 of them have been killed in a
+year without any apparent diminution in their numbers. Over $1,000,000
+a year has at times been spent to exterminate them, all to no effect.
+
+VICTORIA
+
+Victoria, the smallest of the Australian colonies, had until recently
+the largest population (June, 1897, 1,177,304) and also the largest
+trade. In both respects, however, it is at present surpassed by New
+South Wales. Victoria has owed its past pre-eminence to its GOLD
+PRODUCTION. Gold was discovered in the colony in 1851, and for years
+the output of the precious mineral was not less than $50,000,000 per
+annum. The present output of gold in Victoria, however, is only
+$10,000,000 per annum. Richer, however, than the gold-mines of
+Victoria is the fertility of its soil. A large part of the soil is
+exceedingly fertile--with irrigation one of the finest fruit-bearing
+soils in the world. The arboreal vegetation of the country is
+magnificent. Trees thirty feet in diameter rise to the height of 200
+feet without a single lateral branch, and then 100 feet to 200 feet
+higher still. Pear-trees grow to the height of eighty feet, with
+trunks three feet in diameter. But as yet wool-growing, wheat-raising,
+and vine-growing are the principal agricultural occupations of the
+people. The principal agricultural export is WOOL--$25,000,000 worth
+per annum. But a considerable portion of this comes from New South
+Wales. The SHEEP kept number 15,000,000, the cattle 2,000,000. But the
+colony still remains principally a mining community. Five ninths of
+the population live in towns. Yet there are few towns, and two fifths
+of the whole population live in Melbourne--a city almost exactly as
+large as Boston.
+
+MELBOURNE
+
+MELBOURNE (451,110; with suburbs, 500,000), the capital city of Victoria
+and the chief city in Australia, is also one of the most beautiful
+cities in the world. Its parliament buildings, town hall, post-office,
+treasury, mint, law courts, public libraries, picture galleries,
+theatres, churches, and clubs are all edifices of architectural
+magnificence and beauty, while its boulevards, parks and gardens are
+equally splendid. At one time money flowed freely and great commercial
+recklessness prevailed. But though Melbourne has sustained several
+severe depressions its present condition is prosperous and its future is
+assured. It is, however, a pleasure-loving city, and it is as much on
+this account as on account of its great beauty that it is called "the
+Paris of the southern hemisphere." Nowhere else in the world, perhaps,
+are indoor amusements--the theatre, concerts, etc.--or outdoor
+amusements--cricket, football, horse-racing, etc.--more devotedly
+patronised than in Melbourne. Other important places in Victoria are
+BALLARAT (40,000) and SANDHURST (37,000), both mining towns, and
+GEELONG (25,000) locally noted for its manufacture of "tweeds."
+
+NEW SOUTH WALES
+
+[Illustration: Australia. Shaded portions show where the rainfall is
+sufficiently abundant.]
+
+New South Wales (population 1,311,440) is the oldest colony of
+Australia and the parent of both Victoria and Queensland. Of all the
+colonies, it has, perhaps, the greatest range of productions. On the
+low coast lands its soil is of extraordinary fertility, and even in
+the dry interior, when irrigation is employed, the fertility is still
+extraordinary. As yet, however, but one acre out of every two hundred
+is under cultivation, the chief agricultural occupation being
+pasturing. Over 50,000,000 SHEEP are kept, principally the MERINO.
+Grass grows everywhere, and even the summits of the mountains are
+covered. Drought, however, is a terrible drawback, and sometimes
+tremendous losses occur. In 1877 over 8,000,000 sheep perished, and in
+1884 over 12,000,000. The total WOOL PRODUCTION is very large,
+averaging $50,000,000 a year. The export of hides, skins, leather, and
+chilled meat, principally mutton, amounts to $10,000,000 annually.
+Chilled mutton and beef are sent direct to London, though the passage
+takes five or six weeks by steamer and twelve to sixteen weeks by
+sailing-vessel. Scarcely less important than its agricultural products
+are the mineral products of New South Wales. Its COAL-MINES are the
+finest on the continent, and $4,500,000 worth of coal is exported
+annually, besides what is consumed locally. Its gold production,
+though not very large, is general throughout the whole colony. Its
+SILVER-MINES in SILVERTON and BROKEN HILL are among the most famous in
+the world, and its tin-bearing lands comprise over 5,500,000 acres.
+The foregoing comprise the staple products--the production of
+industries already well established. But fruit-growing, including all
+fruits, from apples, pears, and peaches, to olives and oranges, is a
+rapidly developing industry, no country in the world being better
+suited to it. Wine-making, too, is quickly coming forward, the New
+South Wales wines equalling in flavour those of France and Spain.
+Wheat-growing, cotton-growing, and even rice-growing are also in their
+several districts rapidly extending and prosperous pursuits. The
+development of New South Wales has only just begun. SYDNEY (including
+suburbs 410,000) is the capital and by far the largest city. Sydney,
+like Melbourne, is a beautiful city, but its beauty is natural rather
+than artificial, and it is well entitled to its name, "Queen of the
+South." It is situated on Port Jackson, one of the finest and most
+beautiful harbours on the globe. Sydney is the headquarters of all the
+various lines of steamships--British, American, French, Italian,
+etc.--that trade with Australia, and is indeed one of the great
+seaports of the world.
+
+SOUTH AUSTRALIA
+
+South Australia (358,224 in 1897) occupies the whole central part of
+the continent from north to south. But as only a very small portion
+of this vast area is settled--the southeast corner--it may be
+described as in characteristics resembling Victoria. Its principal
+industry is WHEAT-GROWING. South Australia is indeed the great granary
+of the continent, and is destined to be one of the great granaries of
+the world. Like the other divisions of Australia, South Australia,
+when once drought has been overcome by irrigation, is destined to
+become a great fruit country, its warm, moistureless climate being
+peculiarly well suited to the ripening of fruits of exquisite
+flavours. Already its olives are pronounced the finest in the world.
+The principal city and chief port is ADELAIDE (with suburbs 144,352).
+Like other Australian ports, Adelaide possesses excellent steamboat
+shipping facilities. In the north, on the Timor Sea, is PORT DARWIN,
+likely to be an important trade centre.
+
+QUEENSLAND
+
+The most interesting of all the Australian colonies is Queensland
+(population 472,179), for it is a tropical country with a climate so
+salubrious that white people can live in it and be comfortable and
+healthy. The heat, instead of being enervating, is stimulating and
+bracing. A great portion of its soil is of unsurpassed fertility. The
+only drawback is the unequal distribution throughout the year of the
+rainfall. But wherever irrigation wells are sunk the climate becomes
+highly suitable for SHEEP-RAISING, and also for the growing of many
+kinds of FRUIT. There are already 15,000,000 sheep and 5,000,000
+cattle in the colony, and wool is exported to the amount of
+$15,000,000 annually. Other agricultural exports are frozen beef and
+mutton, and hides and skins. WOOL is the chief export. The second
+export in importance is GOLD, which reaches $10,000,000 per annum. Tin
+is also exported, and coal, though little worked, is abundant.
+Developing exports are sugar ($2,500,000 per annum), arrowroot,
+cotton, tobacco, rice, and coffee. A difficulty, however, in the
+development of these products is the labour question. White men cannot
+work in the plantations. Chinese prefer to work in the mines. The
+natives won't work anywhere. No negroes are obtainable. As a
+consequence Polynesians have to be imported. BRISBANE (100,913) is the
+capital and chief city and port.
+
+WEST AUSTRALIA
+
+West Australia (population 162,394), the largest of all the Australian
+colonies, has only been recently settled, and its constitution as a
+self-governing colony dates only from 1890. A large part of its area
+has never been explored, and a large part is known to be scrub desert.
+But there is scarcely any part of it, even of its "scrub" areas, but
+that will support sheep when once artesian wells have been sunk, and
+large portions of the colony, especially along the coasts, are as
+fertile as need be. And the climate, though very dry, is exceedingly
+healthful. PERTH (43,000) is the capital. ALBANY is the principal
+port.
+
+THE IMMENSE RESOURCES OF AUSTRALIA. ITS PROBABLE FUTURE
+
+Australia is undoubtedly on the eve of a period of great development.
+Its resources are known to be immense. Its climate has been found most
+favourable to human health, and the objectionable feature of the
+climate, the smallness and irregularity of the rainfall, has been
+studied and become understood and found remediable. Once the
+confederation that is now in process of formation takes place, there
+is no doubt that Australia will enter upon a new and prosperous
+commercial era. Owing to the fact that its chief opportunities for
+wealth lie in the development of its natural resources, it is probable
+that for some time to come almost all the manufactured goods Australia
+needs will have to be imported. Already its importation amounts to
+$275,000,000, of which, of course, Great Britain supplies the
+principal share. This importation is principally clothing and
+materials for clothing, but it also comprises hardware and machinery,
+and in fact everything required by a highly civilised and
+money-spending people, except breadstuffs and provisions. The
+magnitude of this importation may be comprehended from the fact that
+it is more than one third of the total exportation of the United
+States for any year save one up to 1896, including our immense export
+of breadstuffs, provisions, and cotton. And besides the articles of
+export already mentioned--WOOL, MEATS, HIDES, SKINS, MINERALS, FRUITS,
+etc.--there is one other Australian resource that is capable of almost
+indefinite development. This is its TIMBER. The eucalyptus or gum-tree
+prevails almost universally in Australia, and some of its commonest
+varieties, being both strong and indestructible by insects, are of
+almost unequalled value for ship-building, railway ties, and dock and
+harbour construction. That the Australians are fully alive to the
+importance of developing their foreign trade is seen in the efforts
+they have made to provide facilities for bringing their products to
+ocean ports. There are 11,980 miles of railway, almost every mile of
+which has been built by the governments. This is one mile of railway
+for every 300 inhabitants, as against one mile for every 400
+inhabitants in the United States. These railways run wholly to and
+from the seaboard. There are no manufacturing towns to be catered to.
+Australian trade consists wholly in exchanging home-raised natural
+products for imported manufactures. Equally remarkable with the
+railroad enterprise of the Australians is their enterprise in
+telegraphic construction and the establishment of cable
+communications. For example, a telegraph line 2000 miles long, running
+across the continent from Adelaide to Port Darwin, has been built by
+the province of South Australia so as to connect with a cable from
+Port Darwin to Java, Singapore, etc., and thus with Europe and
+America. For at least 1500 miles this telegraph line runs through one
+of the most desolate and inaccessible regions in the world.
+
+
+XI. THE TRADE FEATURES OF SOUTH AMERICA
+
+SOUTH AMERICA, A FERTILE CONTINENT WITH DRAWBACKS
+
+South America is an immense but very fertile continent, whose natural
+resources are as yet scarcely begun to be utilised. Though not so
+large as North America, it has a far greater area of productive
+soil--and, indeed, much of its soil is quite unsurpassed in fertility.
+It suffers, however, from two great drawbacks. 1. A great portion of
+its area (four fifths) lies within the torrid zone. In the low coast
+regions of this torrid area, and also in the low forest regions
+watered by the great flat rivers of the interior, the climate is for
+the most part unendurable to white men. 2. South America has been
+unfortunate in its settlement and colonisation. Until in recent years
+colonisation as understood in Anglo-Saxon communities has scarcely
+been attempted in South America at all. All the earlier immigrations
+from the Old World were prompted by the thought of getting gold and
+silver and precious stones--if need were by the spoliation and
+enslavery of the natives. Only a small proportion of the
+population--not more than a quarter of the whole--consists of whites,
+and these are principally from Spain and Portugal. These conquerors
+of the continent have not in the main succeeded in establishing either
+stable forms of government or high types of civilisation. Furthermore,
+the mixed races--the MESTIZOS or METIS, as they are called, the
+descendants of the earlier Europeans and the natives--instead of
+advancing in civilisation have for some time past been retrograding.
+Then, again, there is a large negro element, the descendants of
+Africans once imported as slaves, to still further complicate the race
+question; and there is a considerable element partly negro and partly
+Indian. In only one state, Argentina, can affairs be said to be really
+prosperous, and even in Argentina the civilisation developed by its
+prosperity is gross and material rather than refined and intellectual.
+The next most prosperous and important states are Brazil and Chile.
+Perhaps Uruguay, though the smallest of all the states, should be
+placed after Argentina. The remaining independent states of the
+continent--Venezuela, Colombia, Ecuador, Peru, Bolivia, and
+Paraguay--are all states of the prevailing South American type. Their
+governments are more or less unstable. They are terribly burdened with
+debt, and their credit is such that they must pay high rates of
+interest. The civilisation once introduced among their native races by
+the zeal of Spanish missionaries is deteriorating if not vanishing.
+And even among their leading classes there is much to be desired in
+the observance of the ordinary principles of right and wrong.
+
+EUROPEAN IMMIGRATION IN SOUTH AMERICA
+
+All the South American states enumerated above, with the exception of
+Brazil, were first taken possession of and "settled" by the Spanish,
+and the Spanish language still remains in them the language of
+government, education, and society. Brazil was first taken possession
+of and "settled" by the Portuguese, and in Brazil the Portuguese
+language prevails, just as elsewhere in the continent the Spanish
+language prevails. Among the natives many different languages are
+found, but in Brazil a "common language" is used, one introduced by
+the original Portuguese missionaries, and understood by nearly all the
+tribes. Between Brazil and Venezuela is a triangular piece of country
+called Guiana, which, unlike the rest of South America, is still under
+the control of European powers. It consists of three parts--French
+Guiana, Dutch Guiana, and British Guiana--colonies of France, Holland,
+and Great Britain, respectively. Leaving out Guiana, South America has
+received its entire civilisation from Spain and Portugal, and, with
+the exception of Argentina, Uruguay, and Brazil, there has been little
+or no emigration to any South American country except from these two
+European countries. To Argentina, however, there has been a large
+emigration from Italy especially, but also from France, Great Britain
+(mainly from Ireland and Wales), Germany, and Sweden. A similar
+emigration has taken place to Uruguay, though the foreigners in
+Uruguay are principally Basques, a people that live on the border-land
+between Spain and France, but are neither Spanish nor French. In
+Brazil the immigration, where it has not been Portuguese, has been
+chiefly Italian and German, and in the temperate region of the extreme
+south of Brazil a large German population exists. Everywhere in South
+America the parts most prosperous are the parts that have come most
+directly under the influence of recent European emigration.
+
+THE ARGENTINE REPUBLIC
+
+The Argentine Republic, or "Argentina," as it is popularly called, is
+the most prosperous and most important of all the South American
+states. Its area (1,319,247 square miles) is equal to the total area
+of the States of the United States east of the Mississippi and
+Missouri, including the Dakotas, Missouri, Arkansas, and Louisiana.
+Although a portion of this vast area is not of much value for
+agricultural purposes, especially in Patagonia, a very large portion
+of it does consist of soil of great fertility, while the climate,
+which for the most part is a temperate one, is such as is well suited
+to Europeans and white people generally. The population May 10, 1895,
+was 4,094,911. Of this population it is estimated that over 850,000
+are Italians, 183,000 French, 161,000 recently emigrated Spaniards,
+60,000 English, and 54,000 Germans and Swedes. The language of the
+government and of the schools is Spanish. At one time in Argentina
+there was a disposition to take the United States as a model in
+everything, but of late years there has been a tendency toward taking
+France as a model in manners and customs. This disposition to imitate
+European peoples is particularly true of the wealthy classes.
+
+ARGENTINA'S RAPID PROGRESS
+
+The pride and boast of Argentina has been its rapid progress. In the
+thirty years ending 1886 the immigration was over a million. From 1886
+to 1889 it was from 100,000 a year to 200,000 a year. In 1890, owing
+to the financial crisis of that year, it fell away almost to nothing.
+Since 1890 it has gradually increased until now it is about 100,000 a
+year again. In 1869 the population was only 1,837,000. Now it is over
+4,000,000. Similarly the capital city, Buenos Ayres, has made an
+increase not easily paralleled. In 1869 its population was only
+187,126. In 1887 it was 423,996. By the census of 1895 it was 663,854.
+To-day it is said to be 750,000. Of this number about one half are
+foreigners. The high protective tariff established by Argentina in
+1878 had the effect of instituting many small industries in Buenos
+Ayres, and to this cause the exceedingly rapid growth of its
+population is partly attributable.
+
+ARGENTINA'S AGRICULTURE AND MANUFACTURES
+
+The great prosperity of Argentina has been due to the extent and
+immediate availability of its agricultural resources, for its forest
+wealth remains undeveloped, and its mineral resources are
+comparatively scanty. Its vast treeless and stoneless plains have
+needed no "improvements" to make them fit for settlement, and the soil
+which covers them being of virgin richness bears crop after crop
+without fertilising and with very little cultivation. Immigrants
+arrive in the country without a dollar and in twenty years are owners
+of estates of 5000 acres each. In no country in the world has
+agricultural extension been more rapid. In twenty years the acreage
+under cultivation increased 1400 per cent. The amount under
+cultivation in wheat alone increased 2600 per cent. The WHEAT
+PRODUCTION averages 40,000,000 bushels, which is not far short of one
+fourth of the total wheat export of the United States. The production
+for 1897 was 60,000,000 bushels, although the amount exported was much
+less than that. The wheat product is indeed very variable, owing to
+droughts and locusts, for, like Australia, Argentina is uncertain in
+its rainfall. The CORN CROP is steadier, and in 1896 amounted (for
+export alone) to 60,000,000 bushels. More important in the aggregate
+than the direct products of the soil are the indirect products. There
+are 22,000,000 CATTLE kept in Argentina, 75,000,000 SHEEP, and
+4,500,000 HORSES. The total exportation of animals and animal products
+amounts to $70,-000,000. Of this exportation the principal item is
+WOOL, the wool-clip of Argentina being, in weight, one seventh of the
+total wool-clip of the world. Unfortunately, however, Argentina wool
+is very dirty, and when washed reduces to one third, while Australian
+wool reduces only to two thirds or three fifths and is free from
+seeds. The profit accruing to the Argentina wool-grower is thereby
+lessened. But, nevertheless, wool-growing in Argentina is a very
+profitable industry, and many farmers (principally Irish settlers)
+have from 50,000 to 100,000 sheep each. Cattle-farming is carried on
+mostly by native Argentines, and many cattle farms are stocked with as
+many as 10,000 cattle and 2000 horses each. The great exports of
+Argentina, therefore, after wheat and corn and wool, are HIDES and
+SKINS, TALLOW, CHILLED BEEF, and MUTTON and bones. There are five
+factories in Buenos Ayres engaged wholly in chilling mutton, and the
+export of chilled mutton to Great Britain alone is $5,000,000 a year.
+Another growing agricultural product is WINE, the yearly production
+being 1,500,000 gallons. Notwithstanding Argentina's magnificent
+forest areas, but little timber is exported or even manufactured for
+home consumption. The other principal manufacturing industries are
+carriage-, cart-, and harness-making, cigarette- and match-making,
+preserving and tinning meat, brewing, flour- and corn-milling, and the
+making of macaroni.
+
+BUENOS AYRES
+
+[Illustration: The most prosperous part of South America.]
+
+BUENOS AYRES, the capital of Argentina, is the largest city not only
+in South America but in the whole southern hemisphere. The La Plata,
+at whose mouth it stands, affords navigation into all the northern
+parts of the republic, as well as into the neighbouring states of
+Uruguay, Paraguay, Brazil, and Bolivia. The riverside at Buenos Ayres
+is at all times of the year a perfect forest of masts and smoke-stacks
+belonging to the shipping that supplies this navigation. Recently, at
+a cost of $25,000,000, the river, which here is shallow, has been
+deepened and new wharves and docks have been built, and ocean-going
+vessels of the deepest draught (which formerly used to be lightened
+fourteen miles away) can now unload or be loaded right in the very
+heart of the city. The total commerce of the republic amounts to
+$200,000,000 or $225,000,000 a year, and of this trade Buenos Ayres
+transacts seven eighths in imports and three fifths in exports. The
+amount of this trade secured by the United States is about a tenth,
+running from $12,000,000 to $24,000,000. In 1896 it was only
+$12,500,000. The principal export trade is with France ($24,000,000),
+Great Britain ($14,000,000), Germany ($13,000,000), and Belgium. Great
+Britain does not buy Argentina wool. The principal import trade is
+with Great Britain ($45,000,000), Germany ($14,000,000), France
+($12,000,000), and Italy. The Buenos Ayreans are fond of display and
+of dress and of ornamentation, and the importations from France and
+Italy are principally of goods to gratify this fondness. There is a
+considerable exportation of wheat, flour, tobacco, and maté (Paraguay
+tea) to Brazil and other South American states. Buenos Ayres is the
+centre of the Argentina railway system, which consists of about 9000
+miles of road. There are 25,500 miles of telegraph routes. The
+national debt amounts to $430,000,000. The provincial debts amount to
+about $140,000,000. The taxation amounts to nearly ten per cent. of
+the earnings of the people, as against four and one half per cent. in
+Canada and five per cent. in Australia.
+
+BRAZIL
+
+Brazil is a much larger and more populous country than Argentina. Its
+area (3,209,878 square miles) is as large as that of all the United
+States, less half of Alaska. A great portion of this area is of
+superlatively tropical richness of production. But, unfortunately, the
+most fertile parts of Brazil are the parts least fit for settlement by
+white men. The population by the last census is approximately
+14,500,000, but less than 4,000,000 of this population are pure
+whites. The negroes that were lately slaves number over 2,000,000, and
+there are supposed to be about 1,000,000 Indians. Intermediate between
+the Indians and negroes and the white population are the numerous
+mixed races or half-breeds. Agriculture is the chief industry, but is
+of two kinds: the tropical agriculture of the central and south
+central seaboard, which is carried on principally by negro and mulatto
+labour, and the agriculture of the temperate region of the extreme
+south, which is carried on mainly by colonists from Europe, the recent
+European emigration being almost wholly directed toward that region.
+Almost the whole of the interior of Brazil still remains unsettled and
+untilled. The COFFEE yield of Brazil is enormous and is its principal
+product. The production amounts to 8,000,000 bags or over
+1,000,000,000 pounds annually, which is more than two thirds of the
+total amount of coffee used in the world. Labour for coffee
+cultivation is scarce and dear, and in the earlier stages of the
+production of the berry the Brazilian coffee gets badly treated. But
+machinery is used wherever possible, and in the later stages of the
+production the Brazilian coffee gets the best attention that skill can
+devise. As a consequence the coffee product of Brazil is rising in the
+estimation of coffee-users. The shrubs are cultivated under palm-trees
+so as to keep them from the intense heat of the sun. Three or four
+harvests of berries are obtained in a year. Rio Janeiro and SANTOS are
+the two chief centres of the coffee industry. Next to coffee the chief
+tropical product is SUGAR, the export of which is about 250,000 tons
+annually, principally from Pernambuco. Other products of the tropical
+area of Brazil are COCOA and COTTON, from the cultivated coast
+regions, and RUBBER and Brazil-nuts, from the dense forests of the
+lower Amazon; also DYEWOODS and CABINET WOODS, drugs, and diamonds.
+For many years Brazil was celebrated for its diamonds--obtained
+chiefly from a town in the interior named Diamantina. The present
+diamond production is not large. From the temperate agricultural
+region of the south, dried beef, hides, and tallow are the chief
+exports. The greatest customer of Brazilian produce is the United
+States, which takes $70,000,000 worth. Great Britain is next, with
+$35,000,000 worth (in rubber alone in 1896 $15,000,000). Brazil gets
+her goods principally from Great Britain, the United States, France,
+and Germany--from Great Britain $20,000,000, from the United States
+$13,000,000. The imports include almost all articles needed for
+domestic and manufacturing purposes--particularly cottons and
+woollens, ironware, machinery, lumber, flour, rice, dried meats,
+kerosene, butter, and fish. There are, however, 155 cotton factories
+established in Brazil, with capital to the value of $50,000,000, and
+cotton manufacturing is protected by very heavy duties. But
+agricultural machinery and such like manufactures are very lightly
+taxed. The principal food of the people is manioc flour (tapioca).
+
+RIO JANEIRO
+
+RIO JANEIRO (674,972), the capital and principal city, though a
+poor-looking place, is situated on a magnificent harbour--one of the
+very finest in the world. About 1500 vessels, with tonnage amounting
+to 2,500,000 tons, enter Rio Janeiro with foreign trade annually. Nine
+thousand miles of railway have been built in Brazil and 3500 more are
+in course of construction, and 12,000 miles of telegraph routes have
+been built. Rio Janeiro is the chief railway centre, but other centres
+are RIO GRANDE DO SUL, in the temperate regions of the south, and
+BAHIA and PERNAMBUCO, in the tropical regions. The public (national)
+debt of Brazil is not far short of $1,000,000,000, bearing interest
+(a great part of it) at from four to six per cent. per annum.
+
+
+XII. THE TRADE FEATURES OF CANADA
+
+CANADA, PRACTICALLY AN INDEPENDENT FEDERAL REPUBLIC
+
+The dominion of Canada comprises all that portion of the continent
+of North America north of the United States--except Alaska and
+Newfoundland and the coast of Labrador. (Newfoundland and the Labrador
+coast is a colony in direct relationship to Great Britain.) Canada is
+entirely self-governing and self-maintaining, and its connection with
+Great Britain is almost wholly a matter of loyalty and affection. It
+consists (1) of seven Provinces: Ontario, Quebec, Nova Scotia, New
+Brunswick, Prince Edward Island, Manitoba, and British Columbia,
+which, in their self-governing powers and their relation to the
+general government, correspond very closely to our States; (2) of
+four Territories--Assiniboia, Alberta, Saskatchewan, and Athabasca,
+which correspond somewhat to our Territories; (3) of four other
+Territories--Ungava, Franklin, Mackenzie, and Yukon, which are
+administered by the general government; and (4) the District of
+Keewatin, which is under the jurisdiction of the lieutenant-governor
+of Manitoba. The capital of the whole dominion is Ottawa. Each
+province has its own capital.
+
+SIZE, SOIL, CLIMATE, AND POPULATION OF CANADA
+
+The area of Canada is immense. It figures up to 3,456,383 square
+miles, which is almost 500,000 square miles more than the total area
+of the United States exclusive of Alaska, and not far short of being
+equal to the area of all Europe. But almost 150,000 square miles of
+this area are taken up by lakes and rivers; and a much greater portion
+than this, under present conditions of civilisation, is wholly
+uninhabitable, being either too cold or too barren. Yet when all the
+necessary allowances have been made there still remains in Canada an
+immense area with soil fertile enough and climate favourable enough
+for all the purposes of a highly civilised population. Over 900,000
+square miles are already occupied, and of the occupied area fully one
+half has been "improved." The older provinces are, acre for acre, as
+suitable for agricultural pursuits as the adjoining States of the
+Union. Manitoba, the "Prairie Province," is almost one vast wheat
+field, with a productivity for wheat unequalled anywhere except in the
+Red River valley of Minnesota and Dakota. The Manitoba grain harvest
+foots up to 50,000,000 bushels. British Columbia is a land of almost
+infinite possibilities, not only because of its mineral and timber
+resources, but also because of its capabilities for agriculture and
+fruit-growing. The Territories are so vast an area that no general
+description of them is possible, but it may be said that the great
+wheat valley of the Saskatchewan, the sheltered grazing country of
+Alberta, and the great wheat plains of the Peace River valley in
+Athabasca, are regions adapted in soil and climate to sustain a hardy
+and vigorous people. The population of Canada is comparatively small.
+It is estimated at 5,250,000. Over 1,000,000 people of Canadian birth
+reside in the United States, and the number of Americans residing in
+Canada is only 80,000. Out of the 2,425,000 persons who came to Canada
+as immigrants in a period of forty years, no fewer than 1,310,000, or
+fifty four per cent., came over into the United States. It is stated
+that this exodus has ceased, and that if any great movement of
+population now exists it is toward Canada.
+
+CANADA'S FOREST WEALTH
+
+Canada, like all new countries, depends for her prosperity upon the
+development and exportation of her natural products. These are of four
+great classes: (1), the products of her forests; (2), the products of
+her mines; (3), the products of her fisheries; (4), her agricultural
+products. Canada's forest resources, when both extent and quality are
+considered, are the finest in the world. The forest area uncut was in
+1891 nearly 1,250,000 square miles, or more than one third of the area
+of the whole country. The annual value of the timber and lumber
+produced is about $82,500,000. The annual value of the timber and
+lumber exported is about $32,000,000. Two thirds of this goes to Great
+Britain, and over $9,000,000 in lumber and logs goes to the United
+States. Quebec and Ontario have unlimited supplies of spruce for
+wood-pulp manufacture, the annual output of which reaches 200,000
+tons. The uncut lumber of British Columbia, which includes Douglas
+pine, Menzies fir, spruce, red and yellow cedar, and hemlock, is
+estimated to be 100,000,000,000 cubic feet.
+
+CANADA'S MINERAL RESOURCES
+
+Canada is just beginning to realise the largeness of her mineral
+resources. The most talked of gold-mines are those of the Klondike
+district, the extent of which is still uncertain. Much more definitely
+known and almost as productive are the gold-mines of British Columbia
+and the newly discovered gold-fields of the Rainy River district in
+northern Ontario. More important than the gold-mines of Canada are its
+coal-fields. These are principally in Nova Scotia and British
+Columbia. The latter province is destined to be the coal-supplying
+region for the whole Pacific coast of North America. The yearly output
+at present is about 1,000,000 tons; the yearly output of Nova Scotia
+is about 2,000,000 tons, principally produced by American capital. In
+Alberta there are said to be coal-fields having an area of 65,000
+square miles. Iron is found in abundance in both British Columbia and
+Ontario. Ontario has in its nickel-mines of Sudbury a mineral treasure
+not found elsewhere in equal abundance in the world. Experts have
+estimated that 650,000,000 tons of this ore are actually in sight.
+Ontario produces petroleum and salt. Silver, copper, lead, asbestos,
+plumbago, mica, etc., are found in varying quantities. Canada imports
+annually from the United States nearly $10,000,000 worth of coal and
+coke.
+
+CANADA'S FISHERIES
+
+The fisheries of the Gulf of St. Lawrence and of the shallow waters
+bordering on Nova Scotia and Newfoundland have for centuries been the
+most productive in the world. The Canadian fishing interest in these
+waters is very great. Cod, mackerel, haddock, halibut, herring,
+smelts, and salmon, are the principal fish, and the annual "take" is
+about $15,000,000. About $2,500,000 worth of whitefish, salmon-trout,
+herring, pickerel, and sturgeon are produced annually from the
+Canadian lakes. The salmon-fishing of the rivers and great sea-inlets
+of British Columbia brings about $4,500,000 annually. About one half
+of the total product is exported to Great Britain and the United
+States.
+
+CANADA'S AGRICULTURAL PRODUCE
+
+Agriculture, including stock-raising, dairying and fruit-growing, is
+Canada's greatest industry. Over 23,000,000 acres are under crop and
+about 20,000,000 under pasture. Over 3,000,000 acres are under wheat
+cultivation. Ontario exports more than twice as much cheese as the
+whole of the United States, and her cheese product is recognised as
+the finest in the world. Canada exports to Great Britain alone
+$15,000,000 worth of cheese annually. In 1896, in Ontario alone, 170
+creameries turned out over 6,000,000 pounds of butter at an average
+net receipt of 18-1/4 cents a pound. By the cold-storage facilities
+provided by the government Canadian butter can be sent even from far
+inland points to Liverpool or London without the slightest
+deterioration. England buys $6,000,000 worth of Canadian bacon and
+hams annually, and Canadian beef is already famous on the London
+market. American corn for stock-feeding is admitted to Canada free
+of duty and about $10,000,000 worth is imported annually. A great
+deal of eastern and southern Canada is well adapted to fruit-raising.
+The Niagara-St. Clair peninsula of Ontario is especially famous for
+its peaches and grapes.
+
+CANADA'S TRADE WITH THE UNITED STATES
+
+Canada has made a great effort in the direction of encouraging home
+manufactures, but her most progressive and most staple industries are
+those concerned in the conversion of the raw products of the country
+into articles of common merchandise. Her steam horse-power in
+proportion to population is the largest in the world. The capital
+invested in factories as a whole amounts to over $400,000,000, with an
+annual output of over $500,000,000. Her total annual importation is
+now over $130,000,000. More than half of this is from the United
+States. Canada's total annual exportation is about $160,000,000. Of
+this over one third goes to the United States. Canada's total trade
+with the United States is about forty one per cent. of her total trade
+with all countries, and almost equal to her total trade with Great
+Britain. Canada's total trade with the United States is exceeded only
+by that of Great Britain, Germany, and France, and her import trade
+with the United States is exceeded only by that of Great Britain and
+Germany.
+
+[Illustration: Trade centres of Canada and trunk railway lines.]
+
+CANADIAN CITIES
+
+MONTREAL (250,000) is the commercial metropolis of Canada. It is
+situated on an island in the St. Lawrence River, and, though 1000
+miles from the open ocean, the largest sea-going vessels reach its
+wharves with ease. It is the headquarters of Canada's two great
+railways--the Canadian Pacific system, with its 8000 miles of road,
+and the Grand Trunk system, with its 5000 miles of road. Through
+passenger-trains run from Montreal to Vancouver on the Pacific coast,
+a distance of nearly 3000 miles. Montreal is the centre also of the
+great inland navigation system of Canada.
+
+TORONTO (200,000), the capital of the province of Ontario, is the
+second city of Canada. While Toronto has a great local trade and many
+important manufactures, it is specially noted as an educational
+centre. QUEBEC (80,000) is the oldest city of Canada and one of the
+oldest upon the continent. HALIFAX (50,000), the eastern terminus of
+the Canadian railway system, has one of the finest harbours in the
+world. WINNIPEG (35,000) is destined to be the centre of the great
+inland trade of Canada.
+
+
+XIII. THE TRADE FEATURES OF THE UNITED STATES
+
+THE CHARACTER OF OUR EXPORT TRADE
+
+Having reviewed the industrial and trading conditions of the other
+great commercial nations of the world, it should now remain for us to
+review these conditions in the United States. But the United States is
+so large a country, and its trading and industrial interests are so
+diversified and extensive, that it would be impossible for us in the
+limits of our space even barely to touch upon all these interests. So
+that with respect to the "Trade Features of the United States" we
+shall simply confine ourselves to one part of the subject--namely, the
+character, extent, and importance of our foreign trade. And we shall,
+further, have to restrict ourselves in the main to our exports. These
+will be found to be principally not manufactures, but the products of
+our great agricultural, mining, and forest industries. The total value
+of the manufactures of the United States amounts in round numbers to
+the immense sum of $10,000,000,000 annually, a sum considerably more
+than a third (it is thirty five per cent.) of the total value of the
+annual manufactures of the world. But only a very small portion of
+this vast output is exported. The greater portion of it is used to
+sustain the still vaster internal trade of our country, a trade which
+amounts to more than $15,500,000,000 annually, an amount not far short
+of being one third of the total internal trade of the world, and not
+far short of being twice the internal trade of Great Britain and
+Ireland, the country whose internal trade comes next to ours. Our
+exports, therefore, are not in the main manufactured goods, but
+breadstuffs, provisions, and raw materials, the production of our
+farms, our plantations, our forests, and our mines. But principally
+they are the products of our farms and our plantations, for with the
+exception of cotton we do not export much raw material. Nearly all the
+raw material we produce (other than cotton) we use in our own
+manufactures. And even this is not enough, for in addition we have to
+import considerable quantities of raw material for our manufactures
+from other countries, the principal items being raw sugar, raw silk,
+raw wool, chemicals of various kinds including dye-stuffs, hides and
+skins, lumber, tin, nickel, and paper stock.
+
+OUR EXPORT TRADE IN DETAIL
+
+Our total exportation for the twelve months ended June 30, 1898,
+amounted to the unprecedented sum of nearly $1,250,000,000
+($1,231,329,950).[4] This is an amount almost a quarter of a billion
+dollars greater than ever before, the only years when the export even
+approximated this amount being 1897 and 1892, when the exportation was
+slightly over a billion dollars in each case. Of this exportation the
+sum of $855,000,000, or seventy one per cent. of the whole, was for the
+PRODUCTS OF AGRICULTURE, the principal items being (1) "breadstuffs,"
+including wheat and wheat flour, corn and cornmeal, oats and oatmeal,
+rye and rye flour, $335,000,000; (2) cotton, $231,000,000; (3)
+"provisions," including beef and tallow, bacon and hams, pork and lard,
+oleomargarine, and butter and cheese, $166,000,000; (4) animals,
+including cattle, horses, sheep, and hogs, $47,000,000; (5) raw tobacco,
+$23,000,000; (6) oil-cake, $12,500,000, and (7) fruits and nuts,
+$9,000,000. The exports of the products of our mines amounted to only
+1.6 per cent. of the total export, or scarcely $20,000,000, the
+principal items being (1) coal and coke, $12,500,000; (2) crude
+petroleum, $4,000,000, and (3) copper ore. The exports of the products
+of the forest amounted to only three per cent. of the total export, or
+$38,000,000, the principal items being (1) sawed and hewn timber, logs,
+lumber, shingles, and staves, $28,500,000, and (2) naval stores,
+including resin, tar, turpentine, and pitch, $9,000,000. The exports of
+the products of our fisheries amounted to only $4,500,000, or less than
+one half of one per cent. of the total exports. The exports of the
+products of our manufactures, according to the official returns,
+amounted to $289,000,000, or twenty four per cent. of the total export.
+But this sum included many items which represent raw natural products
+converted merely into material for subsequent manufacture, as, for
+example, pig- and bar-iron, planed boards, sole leather, ingot- and
+bar-copper, cotton-seed oil, and pig- and bar-zinc. The principal items
+in the true "manufactures" list are (1) machinery, including
+metal-working machinery, steam-engines and locomotives, electrical
+machinery, pumping machinery, sewing-machines, typewriting-machines and
+printing-presses, and railway rails, hardware, and nails, $65,000,000;
+(2) refined petroleum, $50,000,000; (3) manufactures of cotton,
+$17,000,000; (4) vegetable oils and essences, $12,000,000; (5)
+agricultural implements, $7,000,000; (6) cycles, $7,000,000; (7) paper
+and stationery, $5,500,000; (8) furniture and other manufactures of
+wood, $5,000,000; (9) tobacco and cigarettes, $5,000,000; (10)
+fertilisers, $4,500,000; (11) boots and shoes, harness, and rubber
+shoes, $3,500,000; (12) telegraph, telephone, and other instruments,
+$3,000,000; (13) bags, cordage, and twine, $2,500,000; (14) books and
+pamphlets, $2,500,000; (15) sugar, syrup, molasses, candy, and
+confectionery, $2,000,000; (16) spirits, including brandy and whisky,
+$2,000,000; and (17) clocks and watches, $2,000,000.
+
+FOOTNOTE:
+
+[4] For the year ending June 30, 1899, the total exportation amounted
+to $1,204,123,134.
+
+OUR EXPORTS AND THOSE OF GREAT BRITAIN COMPARED
+
+The significance of these figures descriptive of our export trade will
+be better understood from a few comparisons. Our total exportation for
+the year 1897-8 was, as said before, in round numbers, $1,250,000,000.
+For the year previous it was over $1,000,000,000. The exportation of
+Great Britain for the year 1896 was $1,500,000,000. For the year 1897
+it was almost the same amount. For the year 1895 it was
+$1,450,000,000. But whereas our exportation of breadstuffs,
+provisions, animals, fruit, etc., and of raw materials, such as
+cotton, lumber, ores, etc., amounts to probably 77 or 78 per cent. of
+our total exportation, while our exportation of manufactured goods
+amounts to not more than 22 or 23 per cent., the exportation of
+breadstuffs, provisions, raw material, etc., which Great Britain makes
+is not more than one sixth, or 17 per cent., of her total exportation,
+while her exportation of manufactured goods is five sixths, or 83 per
+cent., of her total exportation. For example, Great Britain's export
+of textiles alone amounts to over $500,000,000 a year (for 1896
+$526,647,525), while our total export of textiles, including cottons,
+woollens, silks, and fibres, is not more than $19,000,000 a year.
+Great Britain's total export of hardware and machinery amounts to over
+$250,000,000 a year; our total export of these articles does not
+amount to more than a third of this sum. On the other hand, Great
+Britain's total export of raw materials of all sorts is not more than
+$100,000,000 a year, while ours of cotton alone is almost two and
+one-third times that sum. And while Great Britain exports no
+breadstuffs or provisions to speak of, our exportation of these
+articles (including animals) amounts to the enormous sum of
+$855,000,000 a year.
+
+OUR IMPORTS AND THOSE OF GREAT BRITAIN COMPARED
+
+[Illustration: Export trade of the United States and Great Britain
+compared.]
+
+Similar differences with respect to our import trade and that of Great
+Britain are observable. Our imports do not amount to more than from
+$600,000,000 to $800,000,000 a year. For the year ended June 30, 1897,
+they were $765,000,000. For the year ended June 30, 1898, they were
+$616,000,000. The imports of Great Britain, on the other hand, amount
+to over $2,000,000,000 a year. For the year 1896 they were
+$2,210,000,000. For the year 1897 they were $2,225,000,000. But, while
+our imports, with the exception of coffee, sugar, tea, fruits, and
+fish, consist chiefly of manufactured articles, such as woollen goods,
+cotton goods, silk goods, and iron and steel goods, with only moderate
+amounts of raw material (for example, hides, skins, and furs,
+$41,000,000; raw silk, $32,000,000; raw wool, $17,000,000), Great
+Britain, besides importing coffee, sugar, tea, fruits, and fish, the
+same as we do, and manufactured goods to a far greater amount than we
+do (not less than $500,000,000 annually), imports likewise an enormous
+quantity of raw material for her manufactures, all duty free, and a
+still more enormous quantity of breadstuffs, provisions, etc., also
+all duty free. For example, for the year 1897 her imports of raw
+materials for her manufactures were not less than $750,-000,000,
+while her imports of duty-free food products were not less than
+$825,000,000. The difference between the two countries, therefore, so
+far as their foreign trades are concerned is simply this: The United
+States is an immense exporter of food-stuffs, and also of raw
+materials for foreign manufacture; but for the raw materials for her
+own manufacture she depends principally upon her own products. In
+comparison she is only a moderate exporter of manufactured goods.
+Great Britain, on the other hand, is an enormous importer and consumer
+of food-stuffs and also of raw materials for her manufactures. She, in
+fact, depends very largely upon other countries for her food products
+and her raw materials, and obtains them wherever she can, very largely
+from the United States. She is also an enormous exporter of
+manufactures.
+
+[Illustration: The United States manufactures and internal trade
+compared with the manufactures and internal trade of all other
+countries.]
+
+OUR COTTON PRODUCTION AND COTTON EXPORT
+
+The one article of export that is of greatest importance in our
+commerce is COTTON. The production of cotton in the United States is
+enormous. It is not far short of 5,000,000,000 pounds per annum. This
+is probably four times the amount produced upon the whole globe
+elsewhere. Our export amounts annually to about 4,000,000,000 pounds,
+with a total value of about $240,000,000. Our greatest competitors in
+the world's cotton markets are Egypt and India. The export of cotton
+from Egypt amounts to $50,000,000 annually. The export of cotton from
+India amounts to $45,000,000 annually. At least one half of our export
+of cotton goes to Great Britain. Our next greatest customers are (in
+order) Germany, France, Italy, Spain, and Russia. We send about
+$7,500,000 worth annually to Japan, and $4,000,000 worth annually to
+Canada. All our southeastern States produce cotton, but the States
+that produce it most plentifully are (in order) Texas (about one third
+of the whole), Georgia, Mississippi, and Alabama. The area under
+cultivation in the whole country is about 21,000,000 acres, which is
+about one sixth of the area devoted to corn, wheat, and oats, or one
+half the area devoted to hay. The areas of greatest cotton production
+are (1) the "Yazoo bottom," a strip on the left bank of the
+Mississippi extending from Memphis to Vicksburg, and (2) the upper
+part of the right bank of the Tombigbee. The productivity of cotton is
+much higher in the United States than it is in India, averaging not
+far short of 200 pounds per acre, as against less than 100 pounds in
+India. In India, however, the cotton crop has been grown on the same
+soil for ages, whereas in the United States the practice is to
+substitute new soils for old ones as soon as crops begin to fail. On
+the other hand, the United States cotton crop is much less per acre
+than the crop in Egypt. There the yield per acre is from 300 pounds to
+500 pounds. The remedy for this defect of productivity in our cotton
+crop as compared with that of Egypt is manuring. Where the manuring is
+properly attended to our cotton crop is comparable with Egypt's. But
+the cotton of Egypt is of better quality than the great mass of the
+cotton crop of the United States (the "upland" cotton crop). On the
+other hand in the low, flat islands off the coast of Georgia and South
+Carolina a species of cotton grows ("sea-island" cotton) which is the
+finest in the world, its fibres being the longest, finest, and
+straightest, of all cotton fibres produced anywhere, and the most
+beautiful in appearance in the mass. Of this "sea-island" cotton about
+three to four million dollars' worth is exported annually at a price
+averaging from two and one fourth to two and three fourth times the
+value per pound of the "upland" cotton. The great cotton ports of our
+country are (in order of amount of exportation) NEW ORLEANS,
+GALVESTON, SAVANNAH, NEW YORK, CHARLESTON, MOBILE, and WILMINGTON. New
+Orleans' export is about a third of the whole, and Galveston's about a
+fifth.
+
+OUR PRODUCTION AND EXPORT OF BREADSTUFFS
+
+The item in the official returns that figures largest for exports is
+that which is set down as BREADSTUFFS. This term includes wheat, corn,
+oats, rye, and other grains, and the flours or meals made from these.
+For the year ending June 30, 1898, our total export of breadstuffs was
+$334,000,000. This is an enormous increase over the year before, when
+the amount was not quite $200,000,000.[5] A large part of this
+increase was due to the high prices for breadstuffs which prevailed in
+the European markets during the past autumn and winter, but a part of
+the increase was due to an increased acreage and to good crops. The
+main products that composed this vast exportation were: wheat,
+$146,000,000; wheat flour, $70,000,000; corn, $75,000,000; cornmeal,
+$2,000,000; oats and oatmeal, $22,500,000; rye and rye flour,
+$9,000,000, and barley, $5,500,000. The magnitude of our breadstuffs
+exportation can be judged from the magnitude and importance of our
+exports of wheat and flour as compared with those of other countries.
+Our average WHEAT EXPORT is two and one half times that of Russia,
+four and one third times that of Argentina, five and one half times
+that of India, and almost twenty-five times that of Canada, while it
+is also four and one half times that of all other countries in the
+world combined. Our FLOUR EXPORT ($70,000,000) is without a rival. The
+export from Canada is now not much more than $1,500,000 a year, and
+the export from Hungary not more than $2,500,000 a year, and these
+are the only countries with which we have to compete in the western
+European markets. Still it must be remembered that Hungarian flour,
+owing to the dryness of the climate in which it is made, is the best
+in the world, while the flour of Canada made from Manitoba hard wheat
+is alike unsurpassed. As a rule much more than one half of our total
+exports of breadstuffs goes to Great Britain. Germany is our next best
+customer, but her imports of our breadstuffs are not more that a fifth
+to a tenth of those of Great Britain. France comes next, but her
+importation of our breadstuffs is still more uncertain, ranging from a
+half to a hundredth of that of Great Britain. Our other principal
+customers for our breadstuffs are (1) the other states of Europe, (2)
+Canada, (3) the countries of South America, (4) the West Indies, (5)
+Hongkong, (6) the islands of the Pacific, and (7) British Africa. Our
+exportation of breadstuffs to Japan and China (direct)[6] is still
+inconsiderable. Since the close of the War of the Rebellion our
+exportation of wheat has increased thirtyfold and our exportation of
+flour fifteenfold. Our chief wheat-growing States are Minnesota and
+California, each with about 50,000,000 bushels a year; then Kansas,
+North Dakota, Illinois, and South Dakota, each with about 30,000,000
+bushels a year; and then Ohio, Indiana, Nebraska, Pennsylvania,
+Missouri, and Michigan. The best wheat is grown in the deep black
+soil, rich in organic matter, of the Red River valley of Minnesota,
+and in the dry, sunny climate of California. The total yield for 1897
+was 530,000,000 bushels, which was about 70,000,000 bushels more than
+recent averages. The estimate for this year (1898) is over 600,000,000
+bushels, which was also the yield for 1891. The total area sown to
+wheat was for several years about 35,000,000 acres, but the average
+is now increased to about 40,000,000 acres. Large as is the gross
+production of our wheat, however, the yield per acre is somewhat
+small, being only from 12 to 13 bushels as against 18 bushels in
+Ontario, 20 in Manitoba, 26-1/2 in New Zealand, and 30 in Great
+Britain. In fact, the wheat yield per acre is lowest in the United
+States of all the great wheat-producing countries of the world, except
+Australia (7 to 11-1/2), Italy (10-1/2), Germany (10-1/4), India
+(9-1/4), and Russia (8). But far greater than our production of wheat
+is our production of CORN. Of corn we have nearly 85,000,000 acres
+under cultivation and a production of nearly 2,500,000,000 bushels.
+Our export of corn, however, is proportionately not large, and figures
+only to about 210,000,000 bushels a year, with a value (including
+cornmeal) of about $76,000,000. As is well known, CHICAGO is the great
+commercial centre of the continent for breadstuffs. NEW YORK is the
+great port of export for the Atlantic seaboard, SAN FRANCISCO for the
+Pacific seaboard. DULUTH is the great receiving point for the wheat of
+the Red River valley and the northern Mississippi. BUFFALO is the
+great point where the wheat brought down from Chicago, Duluth, etc.,
+in barges, "whale-backs," and immense propellers, is trans-shipped to
+the small boats of the Erie Canal for carriage to New York.
+MINNEAPOLIS is the great milling point of the continent, its mills
+being the largest and most capacious in the world.
+
+FOOTNOTES:
+
+[5] For the year ending June 30, 1899, the amount was $274,000,000.
+
+[6] A portion of the exportation of breadstuffs made to Hongkong is no
+    doubt intended for consumption in China and Japan.
+
+OUR EXPORT OF PROVISIONS AND ANIMALS
+
+[Illustration: Principal articles of domestic exports of the United
+States. (For the year ended June 30, 1898.)]
+
+The next most important item in our list of exports is PROVISIONS.
+But, like "breadstuffs," "provisions" also is a composite term,
+including two main divisions, "meat products" and "dairy products."
+Practically there are three main divisions, "beef products," "hog
+products," and "dairy products." We have in these great products of
+our country an export trade of $165,500,000 per annum, and if we add
+"animals," a similar item, we have $46,500,000 more, or a total of
+$212,000,000 per annum. Our export of fresh beef is nearly 300,000,000
+pounds a year. Almost the whole of this goes to Great Britain. Our
+export of canned beef runs from 40,000,000 to 60,000,000 pounds a
+year. About three fifths of this goes to Great Britain, the remainder
+going principally to Germany and other parts of Europe and to British
+Africa. We have about 50,000,000 cattle upon our farms and ranches,
+and our production of beef is estimated to be the enormous amount of
+5,400,000,000 pounds a year, which is between a third and a fourth of
+the total quantity produced throughout the world. Of course the
+greater portion of this is retained for our own home consumption, for
+we eat more meat per inhabitant than any other people in the world
+except the English. In addition to our beef we export about 400,000
+cattle annually, more than seven eighths of which are taken by Great
+Britain, our other principal customers being the West Indies and
+Canada. The principal export, however, among our "provisions" is our
+HOG PRODUCTS. We export annually of these products 100,000,000 pounds
+of pork, 850,000,000 pounds of bacon and hams, and 700,000,000 pounds
+of lard, with a value greater than $110,000,000. As with our beef
+products, so with our hog products--by far the greatest share goes to
+Great Britain. Great Britain, however, does not import largely of our
+pork or of our lard. And though she purchases from us over four fifths
+of our total export of bacon and hams, she does not pay for them so
+much as she does for the bacon and hams of Ireland, Denmark, and
+Canada. The reason for this is that as a rule our corn-fed bacon and
+hams are too fat--a fault that could be easily remedied. After Great
+Britain our next best customers for our hog products are Germany
+(principally in lard), the Netherlands, Sweden, and the West Indies
+(the latter principally in pork). We keep on our farms from 40,000,000
+to 50,000,000 hogs, and our production reaches nearly to 4,600,000,000
+pounds of pork, bacon, hams, lard, etc., per annum. A great drawback
+to our swine-raising industry is the terrible swine plague which so
+frequently devastates our swine herds. Were this plague stamped out by
+thorough preventive measures our swine industry would soon become very
+much larger and more profitable. The third principal item in our
+provisions export trade is "dairy produce." Our export of butter now
+amounts to 30,000,000 pounds a year. Our cheese export, once much
+greater, is now about 50,000,000 pounds a year. As in our beef
+products and in our hog products so again in our dairy products Great
+Britain is our chief customer. But our butter export to Great Britain
+is only one twelfth of her total importation of butter, and our cheese
+export to Great Britain is only about one eighth of her total
+importation of cheese. Our cheese has lost its hold on the English
+market because of its relative deterioration of quality, and its
+export is not more than a half or a third of what it once was. Much of
+our butter also is not suited to the English taste. But both our
+cheese and our butter are now improving in quality. Our great
+competitor in the cheese export trade is Canada. Canada's export of
+cheese to Great Britain is $15,000,000 annually, while ours is only a
+fifth of that amount. Our great competitor in butter is Denmark.
+Denmark's export of butter to Great Britain is $32,000,000 while ours
+is not more than a fourteenth of that sum. Our competitors in the
+markets of Britain for cattle are Canada and Argentina, but their
+exports together, however, are less than a third of ours. Our
+competitors in the British markets for the sale of meats are
+principally the Australasian colonies and Argentina, but their
+principal exportation so far is chilled mutton, which they send to
+Britain to the amount of many million dollars annually (Argentina
+alone $5,000,000 a year, New Zealand alone $10,000,000 a year), while
+our exportation of mutton is practically nil. We do, however, export
+$1,000,000 worth of sheep a year, but in this item we are frequently
+far exceeded by Canada. CHICAGO is, of course, the great commercial
+centre of the continent for "provisions" and "live stock," and NEW
+YORK the great shipping port. Of the entire export trade of the whole
+country New York does two fifths. BALTIMORE comes next with about one
+ninth. Then (in order) come PHILADELPHIA, BOSTON, and NEW ORLEANS. The
+chief centres of our great provision and live-stock trade, other than
+Chicago, are CINCINNATI, KANSAS CITY, INDIANAPOLIS, BUFFALO, and
+OMAHA.
+
+OUR FOREIGN CARRYING TRADE
+
+One aspect of our foreign trade is not so well understood as it ought
+to be. Our foreign commerce is carried on largely in foreign ships.
+The reason is that no vessel is allowed to be registered as belonging
+to a United States owner unless she is built in the United States, and
+it therefore seems as if our ship-builders could not compete (in
+price) in the building of steel and iron ships with those of Great
+Britain and Germany. Formerly, when wooden ships were used, our
+foreign trade was carried on in our own vessels, and our "clipper"
+sailing vessels beat the world. In 1859 seventy per cent. in value of
+our foreign trade was carried in American vessels. Since that date the
+proportion has decreased steadily until in 1896-97 it was only eleven
+per cent., and for 1897-98 it was even less than this. During the five
+years 1881-85 it averaged barely twenty per cent. Taking into
+consideration tonnage only the proportion at present varies from
+twenty five to thirty per cent., showing that the American vessels are
+used for carrying the cheaper sorts of goods. The aggregate tonnage
+burden of vessels belonging to the United States registered as engaged
+in the foreign trade 1896 was for 792,870 tons. For the same year the
+aggregate tonnage burden of vessels belonging to Great Britain
+engaged in the foreign trade was considerably more than ten times that
+amount. Of our export trade to Europe United States vessels carry only
+five and one half per cent., and of our export trade to Africa only
+four and one half per cent. But of our export trade to Asia and
+Oceanica our own vessels carry twenty six and one half per cent.,
+while of our export trade to other countries on the American continent
+our own vessels carry nearly forty per cent. But as our Atlantic trade
+is seventy six per cent. of the whole, and as our trade elsewhere than
+on the Atlantic is more than one third carried by sailing-vessels, it
+is evident how largely our steamship ocean carrying trade has been
+allowed to fall into the hands of foreigners. Seven tenths of our
+total export trade, and nearly two thirds of our total foreign trade,
+both export and import, are carried in British vessels. The next
+greatest carriers of our foreign trade are, first, the Germans, then
+ourselves, then the Norwegians, then the Dutch, then the French, then
+the Belgians.
+
+
+EXAMINATION PAPERS
+
+    NOTE.--_The following questions are given for the purpose of
+    indicating to the student the sort of knowledge he ought to be
+    possessed of after he has made a careful study of the papers of
+    the course. The student is recommended to write out carefully
+    the answers to the questions asked. Only such answers need be
+    attempted as can be made from a careful study of the papers._
+
+_PART I_
+
+ 1. GREAT BRITAIN. Give as full an account as you can of the causes
+    which have made London the great commercial centre of the world.
+
+ 2. GREAT BRITAIN. England is said to be "a beehive of mercantile and
+    manufacturing industry." Give reasons for this statement and also show
+    how England has become such.
+
+ 3. GREAT BRITAIN. (_a_) Describe the foreign trade of Great Britain.
+    (_b_) Describe the steps taken by Liverpool, Manchester, and Glasgow
+    to improve their natural facilities for external trade.
+
+ 4. FRANCE. (_a_) Describe the conditions which (1) conduce toward, and
+    (2) militate against, France's being a great commercial nation. (_b_)
+    Give an account of the distinctive manufactures of France.
+
+ 5. GERMANY. (_a_) Give an account of what Germany has accomplished in
+    technical education. (_b_) Compare Germany and France as commercial
+    nations. (_c_) Give a brief account of Germany's foreign trade.
+
+ 6. SPAIN AND ITALY. (_a_) Why are Spain, Italy, and Turkey sometimes
+    called "the three decadent nations of Europe"? (_b_) Give some account
+    of Spain's foreign trade. (_c_) Give an account of the conditions that
+    militate against Italy's prosperity as a trading nation.
+
+ 7. RUSSIA. (_a_) Describe the social condition of the Russian people.
+    (_b_) What are the "artels" of Russia? (_c_) Describe Russia's export
+    trade.
+
+ 8. INDIA. (_a_) Describe the present condition of the manufactures of
+    India. (_b_) Give a brief account of India's trade--(1) external, (2)
+    internal.
+
+ 9. CHINA. (_a_) Give an account of China's size, population, and trade
+    resources. (_b_) Give an account of China's present foreign trade.
+    (_c_) Give an account of the trade possibilities of China, and show in
+    what manner an increase of the foreign trade of China is most likely
+    first to occur.
+
+10. JAPAN. (_a_) Describe the transformation which in recent times has
+    been witnessed in the Japanese nation. (_b_) Describe Japan's
+    manufactures. (_c_) Show in what respects an increase in the foreign
+    trade of Japan is presently possible.
+
+_PART II_
+
+ 1. AFRICA. (_a_) Describe the "partition of Africa." (_b_) Describe
+    more particularly Great Britain's possessions in Africa. (_c_)
+    Describe South Africa's mineral wealth.
+
+ 2. AUSTRALIA. (_a_) Describe Australia's "peculiarities." (_b_)
+    Enumerate the political divisions of Australia, and for each describe
+    briefly (1) its climate, (2) its resources and trade.
+
+ 3. SOUTH AMERICA. (_a_) Describe the social and political condition of
+    the various peoples of South America. (_b_) Describe the agricultural
+    resources and export trade of Argentina. (_c_) Describe (1) the
+    resources, and (2) the export and import trade, of Brazil.
+
+ 4. CANADA. (_a_) Describe Canada's resources (1) in forest wealth, (2)
+    in minerals, (3) in fisheries. (_b_) Describe Canada's agricultural
+    trade. (_c_) Describe Canada's trade with the United States.
+
+ 5. THE UNITED STATES. (_a_) Describe the export trade of the United
+    States. (_b_) Compare our export trade with that of Great Britain.
+    (_c_) Compare our import trade with that of Great Britain.
+
+ 6. THE UNITED STATES. (_a_) Describe our cotton production and our
+    cotton export trade. (_b_) Describe briefly our export trade in
+    "breadstuffs." (_c_) Describe briefly our export trade in "provisions"
+    and "animals."
+
+
+
+
+FINANCE, TRADE, AND TRANSPORTATION[8]
+
+
+I. NATIONAL AND STATE BANKS
+
+ORIGIN OF BANKING INSTITUTIONS
+
+[Illustration: The Bank of England, showing the Threadneedle Street
+entrance.]
+
+The world has had its bankers and money-changers for thousands of
+years. Babylonian tablets have been found which record banking
+transactions which took place in the reign of Nebuchadnezzar. Modern
+banking institutions, however, had their origin in the twelfth
+century. The first institution of this character in Europe was the
+Bank of Venice, founded A. D. 1171. It was based upon a forced loan of
+the republic. Funds deposited in it could not be withdrawn, but were
+transferable on the books at the pleasure of the owners. The Bank of
+Genoa was founded in 1407, and for many years was one of the
+principal banks of Europe. It was the first to issue circulating
+notes; these were negotiable only by indorsement--that is to say, they
+were not made payable to bearer. This was a long step in advance of
+the earlier system of deposit transfers which was also employed by
+this bank. The Bank of Amsterdam, established in 1607, was the
+earliest considerable institution of the kind which looked to the
+promotion of commerce. The Bank of Hamburg, established in 1619, was a
+bank of deposit and circulation based upon fine silver bars. The
+deposits were confined to silver. The Bank of England is more than 200
+years old and is to-day acknowledged to be the greatest financial
+institution in the world. Nearly all the paper money of England is
+issued by this bank. This currency is based partly upon securities
+and partly upon deposits of coin. There are three or four banks in the
+United States more than one hundred years old. In 1781 Robert Morris,
+then superintendent of finance, submitted to Congress a plan for the
+establishment of the Bank of North America at Philadelphia. In 1784
+the State of Massachusetts incorporated the Massachusetts Bank. The
+Bank of New York was chartered in 1791.
+
+FOOTNOTE:
+
+[8] SUGGESTIONS AS TO METHOD OF STUDY
+
+1. Read the lessons as printed very carefully. The aim will be to give
+   fundamental knowledge as to the organisation and conduct of modern
+   business.
+
+2. Books will not be necessary. The student, however, who wishes to
+   make a more thorough study of the national banking system will find
+   excellent chapters on the subject in "Carroll's Principles and
+   Practice of Finance" (New York: Putnams) and "White's Money and
+   Banking" (Boston: Ginn & Co.).
+
+3. Take up the papers of the course paragraph by paragraph and ask
+   yourself the reason why each is introduced. Discuss with your friends
+   the advantages or disadvantages of particular requirements.
+
+OUR NATIONAL BANKING SYSTEM
+
+The national banking system of the United States was established by an
+act of Congress in 1863, revised in 1864, and amended by later
+legislation. The great advantage of the system, it is said, is the
+feature of uniformity, the fact that it brings the banking business of
+the whole United States under one authority and under the supervision
+of one set of administrative officers. The note-issuing department is
+subordinate in its public usefulness to the facilities afforded by
+banks and clearing-houses for the interchange of credits. The
+essential features of national banks are briefly set forth as follows:
+
+ 1. There is a bureau of the Treasury Department having charge of all
+    matters relating to national banks, the chief officer of which is the
+    comptroller of the currency.
+
+ 2. Any number of persons, not less than five, may form an association
+    for banking purposes, to continue not more than twenty years, but
+    renewable for twenty years with the approval of the comptroller.
+
+ 3. The powers of the bank are limited to the discounting of promissory
+    notes, drafts, bills of exchange, and other evidences of debt;
+    receiving deposits, dealing in exchange, coin, and bullion, loaning
+    money on personal security, and issuing circulating notes. It cannot
+    hold real estate except such as may be necessary for the transaction
+    of its business, or such as may have been taken as security for debts
+    previously contracted in good faith.
+
+ 4. There can be no national banks anywhere of less capital than
+    $50,000, and these small ones are restricted to places of not
+    more than 6000 inhabitants. In cities of more than 6000 and less
+    than 50,000 inhabitants there can be no bank of less than
+    $100,000 capital, and in cities of 50,000 inhabitants or more
+    none of less than $200,000. One half of the capital must be paid
+    in before the bank can begin business and the remainder must be
+    paid in monthly instalments of at least ten per cent. each.
+
+ 5. Shareholders are liable for the debts of the bank to an amount
+    equal to the par value of their shares in addition to the amount
+    invested therein.
+
+ 6. Each bank having a capital exceeding $150,000 must deposit in the
+    treasury of the United States registered interest-bearing bonds
+    to an amount not less than $50,000. Those having a capital of
+    $150,000 or less must deposit bonds equal to one fourth of their
+    capital stock. Each bank may issue circulating notes to the
+    amount of ninety per cent. of the market value of the bonds
+    deposited by it, but not exceeding ninety per cent. of the par
+    value of the same, and not exceeding ninety per cent. of the
+    paid-in capital of the bank; but no bank is compelled to issue
+    circulating notes. No bank-notes shall be issued smaller than $5.
+    The notes are receivable at par for all dues to the United States
+    except duties on imports, and are payable for all debts owing by
+    the United States within the United States except interest on the
+    public debt and in redemption of the national currency.
+
+ 7. Every bank in certain designated cities, called reserve cities,
+    must keep a reserve of lawful money equal to twenty five per
+    cent. of its deposits. All other banks must keep a like reserve
+    of fifteen per cent., but three fifths of the said fifteen per
+    cent. may consist of balances on deposit in banks approved by the
+    comptroller in the reserve cities.
+
+ 8. Each bank must keep on deposit in the treasury of the United States
+    lawful money equal to five per cent. of its circulation as a fund
+    for redeeming the same. This five per cent. may be counted as
+    part of its lawful reserve. This does not relieve banks from the
+    duty of redeeming their notes at their own counters on demand.
+
+ 9. One tenth of the net profits must be carried to the surplus fund
+    until it is equal to twenty per cent. of the capital.
+
+10. A bank must not lend more than one tenth of its capital to one
+    person, corporation or firm, directly or indirectly, nor lend
+    money on the security of its own shares, nor be the purchaser or
+    holder of its own shares unless taken as security for a debt
+    previously contracted in good faith, and if so taken they must
+    be sold within six months under penalty of being put in
+    liquidation.
+
+11. Each bank must make to the comptroller not less than five reports
+    each year, showing its condition at times to be designated by
+    him, and he may call for special reports from any particular
+    bank whenever he chooses to do so.
+
+12. Each bank must pay to the treasurer of the United States a tax
+    equal to one per cent. per annum on the average amount of its
+    notes in circulation. The shares are liable to taxation by the
+    States in which they are situated at the same rate as other
+    moneyed capital owned by the citizens of such States.
+
+13. Any gain arising from lost and destroyed notes inures to the
+    benefit of the United States.
+
+14. The comptroller has the absolute appointment of all receivers and
+    fixes their compensation. All moneys realised from the assets
+    are paid into the treasury to the credit of the comptroller, and
+    all dividends are paid out by him.
+
+15. Over-certification of cheques is strictly prohibited, rendering
+    officers or clerks liable to imprisonment.
+
+16. National bank directors are by law individually liable for the
+    full amount of losses resulting from violations of the national
+    banking laws.
+
+STATE BANKS
+
+Upon the establishment of the national banking system the greater
+number of the banks incorporated under the laws of the several States
+were organised as national banks. With others, however, the rights of
+issue did not outweigh some inconveniences of the national system, and
+as a result there is now an important class of banks, and loan and
+trust companies, organised under State legislation and carrying on a
+deposit and loan business. The regulations under which they work are
+necessarily diverse, and the amount of public supervision over them
+varies in different states. The State banks in existence when the
+national banking system was organised were obliged to retire their
+note circulation, owing to the fact that the government imposed a tax
+of ten per cent. on their circulation. The object of the tax was to
+secure the retirement of the State bank-notes to make room for the
+circulation of the national banks. The internal mechanism of State
+banks differs but slightly from that of national banks.
+
+
+II. SAVINGS BANKS AND TRUST COMPANIES
+
+SAVINGS BANKS
+
+Nearly $2,000,000,000 is deposited in the savings banks of the United
+States. This large sum represents the savings of about 5,000,000
+people. The primary idea of a savings bank and of the post-office and
+other forms of saving institutions in foreign countries is to
+encourage thrift among the masses of the people.
+
+The older savings banks, especially those in the eastern States, have
+no capital stock. That is to say, they are mutual in their form of
+organisation. Their capital is the accumulated deposits of a large
+number of people. The depositors are the owners. When taxes and other
+expenses are paid and a proper reserve set aside, the remaining
+profits go in the form of interest to the depositors. Many of the
+savings banks in the western States are capitalised as are other
+financial institutions, and on the Pacific coast they have capital
+stock or its equivalent in the form of a reserve fund in which the
+majority of the depositors are not interested otherwise than so far as
+it affords security for their deposits.
+
+As these banks are the custodians of the surplus savings of large
+numbers of people the laws of the several States have hedged them
+about with many safeguards, not only for the protection of the
+depositors but of the institutions themselves. It is eminently right
+and proper that the State, through its bank commissioners or
+otherwise, should so far supervise the operations of savings banks as
+to see that they perform their part of their contract with depositors.
+
+    Safety, at best, is relative only; there is no absolute safety
+    for the twenty-dollar piece a man has in his pocket, whether he
+    is on the street, at his office, or by his own fireside. We are
+    reminded that 'riches take to themselves wings' and that
+    'thieves break through and steal.' No savings bank can keep
+    money on hand or deposit it or loan it with absolute safety. All
+    is comparative. It is a peculiarity of money that each dollar
+    requires watching; general supervision is insufficient; hence it
+    is that the safety of moneyed institutions depends upon the
+    capacity and honesty of those in control, and not upon adherence
+    to arbitrary rules. No set of rules can be adopted that will
+    bind dishonest men nor that will compensate for want of
+    experience and ability of honest ones.
+
+There is really no conflict between commercial and savings banks. In
+fact, a large number of the commercial banks of a country allow
+interest upon average balances and standing deposits in the same
+manner as savings banks. Primarily the savings bank creates wealth,
+while the commercial bank handles it; the savings banks are creative,
+while the commercial banks are administrative. The aim of the savings
+bank is to gather money and invest it safely and thus bring profit to
+the depositor; the aim of the commercial bank is to lend money at
+fixed charges and thus bring profit to the institution. The former
+opens its doors to savers, the latter to borrowers. One serves by
+receiving and keeping and the other by lending. The savings bank aims
+at making men savers as well as producers. It offers the aid of the
+strong, who can manage well, to the weak and inexperienced. If the
+5,000,000 depositors of savings in the United States were to hide
+away their own savings nearly $2,000,000,000 would be withdrawn from
+circulation. The savings bank invests its money. Its managers are as a
+rule intelligent men, competent to make safe investments in solid
+securities. The best savings banks are conservative and do not
+encourage speculation.
+
+The rules and regulations of savings banks differ largely. In some
+institutions deposits of a dime at a time are accepted; in others a
+dollar is the limit. Deposits usually begin to draw interest on the
+first day of each quarter, but they are entitled to it only if they
+remain until the end of the half-year. Thus money deposited on the 1st
+of January is entitled to six months' interest on the 1st of July,
+though it is not entitled to any interest if withdrawn in June. Some
+few banks allow interest to begin on the 1st of each month. Most
+savings banks do not permit money to be withdrawn short of thirty
+days' notice. Students of this course who are interested in securing
+definite information upon this subject regarding any particular bank
+should apply to that bank for a set of its rules and regulations for
+the information of depositors.
+
+TRUST COMPANIES
+
+There has grown up in this country a class of financial institutions
+which take a sort of middle ground between the commercial bank and the
+savings bank, so far as their service to the public is concerned.
+These are what are known as trust companies. National banks are
+prohibited by law from making loans on real estate, and though State
+banks are not hedged in this way, as a matter of good banking they
+usually avoid loans of this character. The policy of commercial banks
+is to make a great many comparatively small loans on short-time paper,
+while that of the trust company is to make large loans on long-time
+securities. The deposits of trust companies consist largely of
+undisturbed sums such as might be set aside by administrators,
+executors, trustees, committees, societies, or from private estates.
+They are such as are not likely to fluctuate greatly in amount. From
+the very nature of their deposits trust companies find it convenient
+and profitable to make larger loans and at longer periods than do
+ordinary banks. Trust companies not only receive moneys upon deposit
+subject to cheque and for savings, and loan money on commercial paper
+and other securities, as do commercial banks; but they also act as
+agents, trustees, executors, administrators, assignees, receivers for
+individual properties, and corporations. They frequently assist as
+promoters or reorganisers of corporations and in the sale of stocks,
+bonds, and securities. They act also as agents for the payment of
+obligations maturing at future dates, such as the premiums on
+insurance, interest on mortgages and bonds, etc. Trust companies are
+organised under the laws of the State in which they exist and are
+usually subject to all the supervision required in the case of State
+banks.
+
+
+III. CORPORATIONS AND STOCK COMPANIES[9]
+
+CORPORATIONS
+
+Stock companies are usually referred to as corporations, though all
+corporations are not stock companies. A corporation is a body
+consisting usually of several persons empowered by law to act as one
+individual. There are two principal classes--(1) public corporations
+and (2) private corporations. Public corporations are not stock
+companies; private corporations usually are. Public corporations are
+created for the public interest, such as cities, towns, universities,
+hospitals, etc.; private corporations, such as railways, banks,
+manufacturing companies, etc., are created usually for the profit of
+the members. Corporate bodies whose members at discretion fill by
+appointment all vacancies occurring in their membership are sometimes
+called close corporations.
+
+POWER TO BE A CORPORATION IS A FRANCHISE
+
+In the United States the power to be a corporation is a franchise
+which can only exist through the legislature. There are two distinct
+methods in which corporations may be called into being: First, by a
+specific grant of the franchise to the members, and, second, by a
+general grant which becomes operative in favour of particular persons
+when they organise for the purpose of availing themselves of its
+provisions. When the specific grant is made it is called a charter. In
+the case of private corporations the charter must be accepted by the
+members, since corporate powers cannot be forced upon them against
+their will; but the charter is sufficiently accepted by their acting
+under it. When special charters are not granted individuals may
+voluntarily associate, and by complying with the provisions of certain
+State laws may take to themselves corporate powers. In some of the
+States private corporations are not suffered to be created otherwise
+than under general laws, and in others public corporations are created
+in the same way.
+
+FOOTNOTE:
+
+[9] For a preliminary treatment of the subject of this lesson the
+student is referred to Part I. of this book, entitled "General
+Business Information," especially Lessons XII. and XV.
+
+A CORPORATION MUST HAVE A NAME
+
+A corporation must have a name by which it shall be known in law and
+in the transaction of its business. The name is given to it in its
+charter or articles of association and must be adhered to. The
+necessity for the use of the corporate name in the transaction of
+business follows from the fact that in corporate affairs the law knows
+the corporation as an individual and takes no notice of the
+constituent members.
+
+CORPORATE INTERESTS
+
+In municipal corporations in the United States the members are the
+citizens; the number is indefinite; one ceases to be a member when he
+moves from the town or city, while every new resident becomes a member
+when by law he becomes entitled to the privileges of local
+citizenship. In corporations created for the emolument of their
+members interests are represented by shares, which may be transferred
+by their owners, and the assignee becomes entitled to the rights of
+membership when the transfer is recorded; and if the owner dies his
+personal representative becomes a member for the time being. In such
+corporations also shares may be sold in satisfaction of debts against
+their owners.
+
+ADVANTAGES OF CORPORATIONS AND JOINT-STOCK COMPANIES OVER PARTNERSHIPS
+
+The following are given as a few of the advantages which are claimed
+for corporations and joint-stock companies over partnerships:
+
+1. Union of capital without the active service of the investors.
+
+2. Better facilities for borrowing. It is a common thing for a
+   partnership to be changed to a stock company for the express purpose
+   of raising money by the issue of bonds or stock.
+
+3. Limited agency of directors. A partner may pledge and sell the
+   partnership property, may buy goods on account of the partnership,
+   may borrow money and contract debts in the name and on the account
+   of the partnership. Directors of a joint-stock company must act in
+   accordance with the provisions of the by-laws of the company.
+
+4. The continuous existence of a company.
+
+5. New shareholders are admitted more easily than new partners.
+
+6. A retiring partner is still liable for existing debts. A
+   shareholder may retire absolutely by selling his stock and
+   having it legally transferred.
+
+
+IV. BORROWING AND LOANING MONEY[10]
+
+THE MONEY MARKET
+
+Money, like other articles of commerce, has for hundreds of years had
+its fields for the production of the raw products, its manufacturing
+establishments, its markets and exchange centres, its sellers and
+buyers, its wholesale and retail dealers, and its brokers and
+commission merchants. Out of this trade in actual coin has grown a
+trade in paper notes, which are really only promises to pay coin, and
+out of this latter trade has grown up during recent years a still
+further enormous trade in securities representing all kinds of
+property. Very often these securities are based solely upon the credit
+of the names attached to them, so that our modern system of borrowing
+and loaning money is really a system of borrowing and loaning credit.
+When our government borrows $100,000,000, as it did a few years ago,
+it gives "its bond" that the money will be paid. When States, or
+cities, or railroads, or other corporations borrow money they issue
+bonds guaranteeing payment at a particular time. When an individual
+borrows money he gives his "bond" in the form of a promissory note.
+These bonds pass from hand to hand and have a fairly constant value
+in the money market. They really represent the money trade to a much
+larger extent than does actual coin, so that the borrowing or loaning
+of money really means, to a very large extent, simply the borrowing or
+loaning of credit. If we borrow a $10 gold piece we borrow money; if
+we borrow a $10 bill or an indorser's name for the back of our note we
+simply borrow credit--in the one instance the credit of the United
+States and in the other the credit of the man who indorses our paper.
+
+FOOTNOTE:
+
+[10] The student is also referred to Part I. ("General Business
+     Information"), Lesson IX.
+
+BORROWING FROM BANKS
+
+It is the business of a bank to loan money to responsible persons
+within reasonable limits. The regular customer of the bank is entitled
+to and will receive the first consideration if the demand is larger
+than the bank can safely meet. A business man should not hesitate,
+when occasion requires, to offer his bank any paper he may want
+discounted, if in his opinion it is good, nor should he be offended if
+his banker refuses to take it even without giving reasons. A portion
+of the loans of many banks consists of investments in solid bonds, but
+the bulk of the loans of banks is made on commercial paper. Time and
+demand loans are made upon collaterals of many descriptions. The
+larger banks loan on an average from $50,000 to $100,000 a day. Banks
+_discount_ paper for their depositors--and simply term the operation
+discounting; but when they go outside of their line of depositors in
+making investments in time paper they call it _buying_ paper. They
+generally buy from private bankers and note brokers. National banks
+are prohibited from loaning over ten per cent. of their capital to any
+one individual or corporation except upon paper representing actually
+existing merchandise.
+
+WHAT ARE COLLATERALS?
+
+If a business man borrow $1000 from a bank on his note and give ten
+shares of stock to the bank, to be held by it simply as security, the
+stock thus given would be termed collateral. These collaterals are not
+the bank's property and the bank is responsible for their safe
+keeping. If coupons mature while bonds are being held as collateral,
+the owners are usually allowed to collect the amount for which they
+sell. Sometimes one note is given as collateral security for another
+which is discounted.
+
+ACCOMMODATION PAPER
+
+Notes and acceptances that are made in settlement of genuine business
+transactions come under the head of regular, legitimate business
+paper. An accommodation note or acceptance is one which is signed or
+indorsed or accepted simply as an accommodation and not in settlement
+of an account or in payment of an indebtedness. With banks
+accommodation paper has a deservedly hard reputation. However, there
+are all grades and shades of accommodation paper, though it represents
+no actual business transaction between the parties to it and rests
+upon no other foundation than that of mutual agreement. No contract is
+good without a consideration, but this is only true between the
+original parties to a note. The third party, or innocent receiver or
+holder of a note, has a good title and can recover its value even
+though it was originally given without a valuable consideration. An
+innocent holder of a note which had been originally lost or stolen has
+a good title to it if he received it for value, the law justly
+protecting such a holder against the fault or carelessness of others.
+
+NOTE BROKERS
+
+Merchants sell a great many of their notes in the open market--that
+is, to note brokers. The banks buy these notes from the note brokers.
+The assistance of the broker who handles commercial paper is a
+necessary and valuable aid to the purchasing bank. Fully three fourths
+of all the paper purchased by banks in large cities is purchased upon
+the simple recommendation of the note brokers. As a rule these brokers
+simply transfer the paper without guaranteeing by indorsement its
+payment. Notes bought by banks from note brokers without their
+indorsement are held to be guaranteed by them to be all right in all
+points except that which covers the question of whether they will be
+paid or not. The bank uses its best judgment in taking the risk. If
+the note dealer in selling notes to a bank makes what he believes to
+be fair and honest representations regarding any particular
+paper--statements of such a straightforward type that upon them no
+charge of false pretenses can be made to rest--he simply guarantees
+the note genuine as to names, date, amount, etc., and that in selling
+it he conveys a good title to the paper. As business men, however,
+they are very cautious and are exceedingly anxious that the paper they
+sell shall be paid, and as a rule they make good any losses which grow
+out of apparent misrepresentations on their part.
+
+BANKERS' RATES FOR LOANS
+
+In loaning money on demand, when it is strictly understood between
+bank and borrower that the money so advanced is positively minute
+money--money returnable at any minute when the bank calls for
+it--banks usually charge low rates of interest. When interest rates
+are high bankers prefer to deal in long-time paper. This general rule
+is reversed when the situation is reversed. Bankers aim also to
+scatter and locate their maturities so that as the seasons roll around
+they will not have very large amounts maturing at one time and very
+small amounts at another. They plan also to be "in funds" at those
+seasons when there is always a large and profitable demand for money.
+For instance, in the centres of the cotton-manufacturing interest the
+banks count on a large demand for money between October and January,
+when the bulk of the purchases to supply the mills are made. Again,
+among those who operate and deal in wool there is an active demand for
+money in the wool-clip in the spring months. The wheat and corn crops
+are autumn consumers of money. Midwinter and midsummer in the north
+are usually periods of comparative stagnation in the money market. All
+these things affect rates, and the successful banker is he who from
+observation and large experience shows the most skill in timing his
+money supply.
+
+
+V. COLLATERALS AND SECURITIES
+
+TWO DISTINCT CLASSES OF SECURITIES
+
+There are two distinct classes of mortgage securities--one class based
+upon the actual value and the other upon the earning value of the
+property. When a man lends money upon a dwelling-house he bases his
+estimate of security upon (1) the cost of the property, (2) its
+location, (3) the average value of adjoining properties, and (4) the
+general character of the locality; that is to say, the value of the
+property is the basis of the security. On the other hand, the lender
+of money upon railway mortgages, for instance (that is, the buyer of
+securities known as railway mortgages), considers the general earnings
+of the road rather than the cost of building and equipping the road as
+the correct basis upon which to estimate the value of the security.
+These two classes of securities differ in other particulars. The value
+of the mortgage upon ordinary real estate is constant and the security
+itself is not so likely to change ownership, while the value of the
+railway mortgage may vary with the success or failure of the road, and
+the security itself is in the market constantly as a speculative
+property. The whole property of a railroad company, considered simply
+as real estate and equipment, is usually worth but a small fraction
+of the amount for which it is mortgaged. The creditors, as a rule,
+depend for the security of their money upon the business of the
+company.
+
+We have already learned that collaterals are mortgages, stocks, bonds,
+etc., placed temporarily in the hands of lenders as additional
+security for money borrowed. The student will note, further, that the
+borrowing value of such securities depends very largely upon the
+character of the property represented.
+
+MORTGAGES AS SECURITIES
+
+A MORTGAGE is a conveyance of property for the purpose of securing
+debt, with the condition that if the debt is paid the conveyance is to
+become void. A mortgage in form is really a deed of the land, with a
+special clause stating that the grant is not absolute but only for the
+security of the debt. It is usual for the debtor at the time of
+executing the mortgage to execute also a bond or promissory note in
+favour of the creditor for the amount of the debt. This is called a
+MORTGAGE NOTE. Mortgages are frequently given in cases where there is
+a debt existing to secure or indemnify the mortgagee against some
+liability which he may possibly incur on behalf or for the benefit of
+the mortgagor. For instance, when a man has indorsed another's note
+for the latter's accommodation or gone on his bond as surety the
+latter may execute to the former a mortgage of indemnity. The power of
+a corporation to mortgage its property is usually regulated by its
+character or by the general law under which it is organised. All
+mortgages must be recorded in the office of the register of deeds for
+the county in which the property is located. The object of recording
+is to give notice of the existence of the mortgage to any one who
+might wish to purchase the land or to take a mortgage upon it. There
+may be several mortgages upon the same property. The first mortgagee
+is entitled to be paid in full first, then the second, and so on. The
+mortgagee may use his mortgage as security for loans or he may assign
+it as he pleases. When the requirements of a mortgage are not met the
+holder has under certain conditions the right to FORECLOSE--that is,
+to advertise the property for sale and, within a time fixed by law, to
+sell it to satisfy the mortgage. It is usual for the mortgagor to
+insure the property for the benefit of the mortgagee.
+
+Although the terms of corporation mortgages are similar to those on
+real estate such as is represented by dwelling-houses, the commercial
+conditions make it inconvenient or impossible to foreclose and sell
+such properties. To stop all business of a railway or to shut down the
+work of a manufacturing concern would not only result in injury to the
+public but would reduce largely the earning value of the property. To
+overcome this difficulty where an active concern is financially
+embarrassed, the court appoints a receiver, who is responsible for the
+proper conduct of the business until a satisfactory reorganisation or
+sale is accomplished.
+
+Mortgages upon improved property, if properly graduated in amount,
+should be safe and profitable investments. The buyer, however, must
+exercise great care and good judgment. Should there be collusion
+between the loaning agent and the land-owner, the money advanced may
+be largely in excess of the actual property value. Villages with less
+than a dozen houses are often the sites of investment companies doing
+business under pretentious names and offering mortgage investments at
+interest rates which by the local conditions are impossible. One of
+the devices of these enterprising companies is to offer their own
+guarantees as to both principal and interest of all mortgages
+negotiated by them. The investor should be sure of two things: (1) The
+safety of the principal, and (2) regularity in the payment of the
+interest. There is great danger of default from causes not anticipated
+by the mortgagor and over which he has no control.
+
+STOCKS AS SECURITIES
+
+To make a profitable investment in stocks the buyer must anticipate
+the future. A mill that may be working day and night this year may be
+obliged to shut down entirely next year. A business which is open to
+public competition must take its chances on its future success. The
+greater the earnings, the more certain the competition. Many
+corporations owning monopolies by virtue of patent rights have made
+large fortunes, but there is always the possibility of new discovery.
+Electricity has succeeded gas; the telephone is competing with the
+telegraph; the trolley is cutting into the profits of railways. A good
+thing in stocks to-day does not necessarily mean a good thing next
+year. Railroad stocks are of such varied character that it is
+impossible here to make more than general statements. Many of our
+railroad stocks bring prices far above par and pay liberal interest on
+investments. Some of them are so profitable that they are really not
+on the market and cannot easily be bought. Others represent roads
+loaded down with mortgages and other obligations so heavy as to make
+the stock really a liability rather than a resource to its owner. The
+stock quotations represent in a general way the comparative value of
+these securities. Of recent stock electric-railway stock is the most
+popular and in many instances the most profitable. The introduction of
+electric power has reduced the working expense one half and in most
+instances has doubled the traffic without any reduction in fares. The
+buyer should make sure that the road is in a busy community able to
+sustain it, that its franchise will protect it from dangerous
+competition, and that the securities have been legally issued.
+
+SUBSTITUTION SECURITIES
+
+There have recently been formed several large companies whose business
+it is to issue bonds on the security of other bonds. The idea is
+similar to that of real-estate title insurance. Such companies are
+supposed to have superior facilities for investigating securities.
+They purchase those which they consider good and at the best prices
+possible. These they deposit with some trust company or banking
+institution. With these bonds which they buy as their original
+property they issue new bonds of their own, which they sell to the
+public and which they guarantee. The differences in prices and in
+interest make up their profits.
+
+LOANS AND INVESTMENTS
+
+With the growth of wealth we find increasing numbers of persons who
+want to invest their means in good securities. To do this successfully
+and safely is a very difficult question. It is even more difficult to
+keep money profitably employed than to make it. Changes and
+innovations are of continual occurrence. Not only are new securities
+constantly coming upon the market, but new subjects as a basis of
+their production are industriously sought after. Every newly
+discovered force or process in mechanics means the appearance of
+another detachment of paper securities. The War of the Rebellion
+popularised the _coupon bond_, in consequence of its adoption by the
+government, and made it the favourite form of investment paper.
+Railroads and other corporations soon availed themselves of the
+confidence which that species of paper inspired, and States, cities,
+and counties were soon flooding the country with obligations carrying
+long coupon attachments. Many persons have purchased and paid good
+prices for mortgage coupon bonds, giving them no control over their
+security, who would have rejected share certificates standing for an
+equal interest in the property pledged and giving them the right to
+participate in its management, with the possibility of a greater
+return for their money. Many of the States through careless
+legislation have permitted corporations to decide for themselves the
+amounts of obligations they might put out, and the privilege has been
+very much abused. We now have stocks and bonds upon the market
+representing nearly all conceivable kinds of property--telegraph and
+telephone companies, mining companies, cattle ranches, grain farms,
+water-works, canals, bridges, oil- and gas-wells, electric lighting,
+trolley companies, factories and mills, patent rights, steamboat
+lines, apartment-houses, etc. Not only are properties of many kinds
+used to issue bonds upon, but many kinds of bonds are often issued
+upon the same properties. One issue of bonds is sometimes made the
+basis of other issues. Some one has said that there never was a time
+in the history of the world when it was so easy to invest money--and
+to lose it. Of the securities that are offered with first-class
+recommendations it is probable that about one third are actually good,
+one third have some value, and one third are practically worthless. In
+making investments the first and main thing to be studied is safety.
+Never buy a security of any kind without having read it. Do not buy
+what are commonly known as _cheap securities_. Do not rely solely upon
+the advice of a broker; he may have personal interest to serve. By far
+the greater number of losses to investors have been in securities
+purchased exclusively on the recommendation of interested commission
+men. It is a mistake to give preference to _listed_ securities--that
+is, those reported on the stock-exchange lists. Stocks are too often
+listed simply for speculative purposes, and the price represents not
+so much the value of the property as the pitch of the speculation at
+the time. Securities in the long run must stand upon their merits. As
+a rule the best time for an experienced investor to buy is when others
+are unloading.
+
+
+VI. CHEQUES, DRAFTS, AND BILLS OF EXCHANGE[11]
+
+BANK CHEQUES
+
+[Illustration: Showing cheque raised from $7.50 to $70.50.]
+
+A CHEQUE is an order for money, drawn by one who has funds in the
+bank, payable on demand. Banks provide blank cheques for their
+customers and it is a very simple matter to fill them out properly. In
+writing in the amount begin at the extreme left of the line. The
+illustrations given here show a poorly-written cheque and a copy of
+the same cheque after it has been "raised." The original cheque was
+for $7.50 and shows very careless arrangement. It was a very easy
+matter for the fraudulent receiver to change the "seven" to "seventy"
+and to add a cipher to the amount in figures. The running line was
+written in on the raised cheque to deceive the bank. In this case Mr.
+Carter and not the bank must suffer the loss. Mr. Carter cannot hold
+the bank responsible for his carelessness. Drawers of cheques should
+exercise the greatest care in writing in the amount to prevent changes
+or additions. Draw a running line, thus: ~~~_Nine_~~~ before and after
+the amount written in words. If the words are commenced close to the
+left margin the running line will be necessary only at the right. The
+signature should be in your usual style familiar to the paying teller.
+The plain, freely written signature is the most difficult to forge.
+Usually cheques are drawn "to order." The words "Pay to the order of
+John Brown" mean that the money is to be paid to John Brown or to any
+person he "orders" it paid to. By indorsing the cheque in blank (see
+indorsements) he makes it payable to bearer. If a cheque is drawn "Pay
+to bearer" any person--that is, the bearer--can collect it. The paying
+teller may ask the person cashing the cheque to write his name on the
+back, simply to have it for reference. Safety devices to prevent the
+fraudulent alteration of cheques are of almost endless variety, but
+there has not been a preventive against forgery and alterations yet
+invented, which has not been successfully overcome by swindlers. A
+machine for punching out the figures is in common use, but the
+swindler has successfully filled in the holes with paper-pulp and
+punched other figures to suit his purposes. The safest cheques are
+those carefully written upon what is known as safety paper.
+
+FOOTNOTE:
+
+[11] A part of the matter of this lesson has already appeared in Part
+I. of this book ("General Business Information"), but it is here
+repeated to preserve the connection.
+
+IDENTIFICATION WHEN CHEQUES ARE PAID
+
+The banks of this country make it a rule not to cash a cheque that is
+drawn payable to order unless the person presenting the cheque is
+known at the bank--or unless he satisfies the paying teller that he is
+really the person to whom the money is to be paid. It must be
+remembered, however, that a cheque drawn to order and then indorsed in
+blank by the payee is really payable to bearer, and if the paying
+teller is satisfied that the payee's signature is genuine he probably
+will not hesitate to cash the cheque. In England all cheques
+apparently properly indorsed are paid without identification. In
+drawing a cheque in favour of a person not likely to be well known in
+banking circles, write his address or his business after his name on
+the face of the cheque. For instance, if you should send a cheque to
+John Smith, Boston, it may possibly fall into the hands of the wrong
+John Smith; but if you write the cheque in favour of "John Smith, 849
+Tremont Street, Boston," it is more than likely that the right person
+will collect it. If you wish to get a cheque cashed where you are
+unknown, and it is not convenient for a friend who has an account at
+the bank to go with you for the purpose of identification, ask him to
+place his signature on the back of your cheque and it is likely you
+will not have trouble in getting it cashed. By placing his signature
+on the back of the cheque he guarantees the bank against loss. A bank
+is responsible for the signatures of its depositors, but it cannot be
+supposed to know the signatures of indorsers. The reliable identifier
+is in reality the person who is responsible.
+
+CHEQUES FOR SPECIAL PURPOSES
+
+If you wish to draw money from your own account the most approved form
+of cheque is written "Pay to the order of _cash_." This differs from a
+cheque drawn to "_bearer_." The paying teller expects to see you
+yourself or some one well known to him as your representative when you
+write "_cash_." If you write "Pay to the order of (your own name)" you
+will be required to indorse your own cheque before you can get it
+cashed. If you wish to draw a cheque to pay a note write "Pay to the
+order of _bills payable_." If you wish to write a cheque to draw money
+for wages write "Pay to the order of _pay-roll_." If you wish to write
+a cheque to pay for a draft which you are buying write "Pay to the
+order of _N. Y. draft and exchange_," or whatever the circumstances
+may call for.
+
+CHEQUE INDORSEMENTS
+
+In indorsing a cheque remember that the left end of the face is the
+top when you turn it over. Write your name as you are accustomed to
+write it. If you are depositing the cheque, a blank indorsement--that
+is, an indorsement with simply your name--will answer; or you can
+write or stamp "Pay to the order of (the bank in which you deposit)"
+and follow with your signature. Either indorsement makes the cheque
+the absolute property of the bank. If you wish to transfer the cheque
+by indorsement to some particular person write "Pay to the order of
+(naming the person)" and follow with your own signature; or you may
+simply write your name on the back. The latter form would be
+considered unwise if you were sending the cheque through the mail, for
+the reason that a blank indorsement makes the cheque payable to
+bearer. An authorised stamped indorsement is as good as a written one.
+Whether such indorsements are accepted or not depends upon the
+regulations of the clearing-house in the particular city in which they
+are offered for deposit.
+
+THE NUMBERING OF CHEQUES
+
+[Illustration: A certified cheque.]
+
+Cheques should be numbered, so that each can be accounted for. The
+numbers are for your convenience and not for the convenience of the
+bank. It is important that your cheque-book be correctly kept, so that
+you can tell at any time how much money you have in the bank. At the
+end of each month your small bank-book should be left at the bank, so
+that the bookkeeper may balance it. It may happen that your bank-book
+will show a larger balance than your cheque-book. You will understand
+by this, if both have been correctly kept, that there are cheques
+outstanding which have not yet been presented at your bank for
+payment. You can find out which these are by checking over the paid
+cheques that have been returned to you with your bank-book. The unpaid
+cheques may be presented at any time, so that your actual balance is
+that shown by your cheque-book. Cheques should be presented for
+payment as soon after date as possible.
+
+CERTIFIED CHEQUES
+
+[Illustration: A bank draft.]
+
+If you wish to use your cheque to pay a note due at some other bank
+than your own, or in buying real estate or stocks or bonds you may
+find it necessary to get your cheque certified. This is done by an
+officer of the bank, who writes or stamps across the face of the
+cheque the words "Certified" or "Good when properly indorsed" and
+signs his name. (See illustration, p. 244.) The amount will
+immediately be deducted from your account, and the bank by
+guaranteeing your cheque becomes responsible for its payment. If you
+should get a cheque certified and then not use it deposit it in your
+bank, otherwise your account will be short the amount for which it is
+drawn.
+
+BANK DRAFTS
+
+[Illustration: A bill of exchange.]
+
+Nearly all banks keep money on deposit in other banks in large
+commercial centres--for instance, in New York or Chicago. They call
+these banks their New York or Chicago correspondents. A bank draft is
+simply the bank's cheque drawing upon its deposit with some other
+bank. (See illustration, p. 245.) Banks sell these cheques to their
+customers, and merchants make large use of them in making remittances
+from one part of the country to another. These drafts or cashiers'
+cheques, as they are sometimes called, pass as cash anywhere within a
+reasonable distance of the money centre upon which they are drawn.
+
+BILLS OF EXCHANGE
+
+A draft on a foreign bank is commonly called a bill of exchange. Bills
+of exchange are usually drawn in duplicate and sometimes in
+triplicate. (See illustration, p. 246.) Only one bill is collected,
+the others simply serving in the meantime as receipts. These bills are
+used to pay accounts in foreign countries, just as drafts on New York
+or Chicago are used to pay indebtedness at home.
+
+
+VII. THE CLEARING-HOUSE SYSTEM[12]
+
+THE CLEARING-HOUSE SYSTEM A MODERN INSTITUTION
+
+The clearing-house is a comparatively modern institution, the
+Edinburgh bankers claiming the credit of establishing the first one.
+The earliest clearing-house of whose transactions we have any record
+is that of London, founded about 1775. For fully seventy-five years
+the London clearing-house and that of Edinburgh were the only
+organisations of the kind known to exist. The monetary systems of most
+European countries centring around one great national bank located at
+the capital of each, found in this a means of effecting mercantile
+settlements. The New York clearing-house was established in 1853, from
+which date the American clearing-house system has grown to enormous
+proportions. No country in the world has so large a need of
+clearing-houses, for in no country is the bank cheque so generally
+used in the payment of ordinary accounts.
+
+TRANSFER OF CREDITS IN CLEARING-HOUSES
+
+The purpose of the clearing-house is largely to facilitate the
+transfer of credits. This is explained by the following illustration:
+Suppose that Brown and Smith keep their money on deposit in Bank A and
+that Brown gives Smith his cheque for $100 and Smith deposits it in
+the bank to his (Smith's) credit. The officers of the bank will
+subtract $100 from Brown's account and add the same amount to Smith's
+account. No actual money need be touched. It is simply a matter of
+arithmetic and bookkeeping. Credit has been transferred from Brown to
+Smith. If all the people of a city kept their money in one central
+bank there would be no need of a clearing-house. The bookkeepers of
+the bank would be kept busy transferring credits from one customer to
+another on the books of the bank. But if Brown keeps his money in Bank
+A and Smith keeps his money in Bank B it is necessary that Bank A and
+Bank B come together somewhere to conveniently make the credit
+transfer, and this is practically what they do in the clearing-house.
+Then, again, if Bank A should be located in San Francisco and Bank B
+in Boston, the difficulty of transfer of credit is greatly increased.
+
+Through the agency of clearing-houses located in money centres and of
+co-operation between banks at distant points, the transfer of credits
+between business men located anywhere in the United States, or for
+that matter in the world, has become a comparatively simple matter. If
+it were not for the agency of this system it would be utterly
+impossible for a great city to do the business of a single day. All
+the actual money in all the banks and stores and safes and pockets of
+New York City to-day would fall far short if used to pay to-day's
+transactions. It is estimated that the cash transactions of a single
+day are fifty times greater than the actual cash changing hands in one
+day. So that the great bulk of the business of the country, both cash
+and credit, is done on a system of credit transfers made possible
+wholly through the agency of our banking system.
+
+FOOTNOTE:
+
+[12] See also Lesson VIII. of Part I. of this book ("General Business
+     Information").
+
+ORGANISATION OF CLEARING-HOUSES
+
+Each large city has its clearing-house system. To establish a
+clearing-house a number of banks associate themselves together, under
+certain regulations, for the purpose of exchanging daily at one time
+and place the cheques and other commercial paper which they hold
+against each other. The usual officers are a president, a secretary, a
+treasurer, and manager, and a clearing-house committee. The cheques,
+etc., which the banks take to the clearing-house are called the
+clearing-house exchanges, and the total amount of paper exchanged is
+called the day's clearings. Those banks which bring a less amount than
+they take away are obliged to make the difference good in cash or its
+equivalent within a fixed time upon the same day. Suppose, for
+illustration, that a clearing-house association consists of five
+banks--A, B, C, D, and E--and that Bank A took to the clearing-house
+cheques against B, C, D, and E amounting to $20,000, and that B, C, D,
+and E took to the clearing-house cheques against A amounting to
+$21,000. Then A is on this particular day a debtor bank, and owes the
+clearing-house, or the other banks through the clearing-house, $1000.
+The payment of the balances by the debtor banks and the receipt of the
+balances by the creditor banks complete each day's transactions. As
+the total amount brought to the clearing-house is always the same as
+the amount taken away, so the balances due from the debtor banks must
+be exactly equal to the amounts due the creditor banks. The clearings
+in New York City in one day amount to from $100,000,000 to
+$200,000,000, and the actual cash handled, if any, need only be for
+the actual debit balances. Usually once a week (in some cities
+oftener) the banks of a city make to their clearing-house a report,
+based on daily balances, of their condition. The clearing-house
+establishes a fellowship among banks that has already proved in times
+of money panics of the greatest service to themselves and the
+community.
+
+PAYMENT OF BALANCES IN CLEARING-HOUSES
+
+Clearing-house certificates are made use of in many cities for the
+payment of balances by debtor banks. These are issued against gold
+deposited with one of the associated banks. They are numbered,
+registered, and countersigned by the proper officer, and are used only
+in settlements between the banks. Various methods of making
+settlements are in use. In some of the cities the balances are paid by
+drafts on New York or other money centres. The debtor bank sells some
+creditor bank New York exchange, and receives in return a cheque or
+order on the clearing-house, which when presented makes the debits and
+credits balance. It is estimated that the actual cash employed in New
+York clearings is less than one half of one per cent. of the balances.
+
+HOW DISTANT BANKS ARE CONNECTED BY THE CLEARING-HOUSE SYSTEM
+
+[Illustration: Illustrating cheque collections.]
+
+To illustrate the connection between banks at distant points let us
+suppose that B of Haverhill, Mass., who keeps his money on deposit in
+the First National Bank of that city, sends a cheque to S of Waconia,
+Wis., in payment of a bill. S deposits the cheque in the Farmers' Bank
+of Waconia and receives immediate credit for it in his bank-book,
+just the same as though the cheque were drawn upon the same or a
+near-by bank. The Farmers' Bank deposits the cheque, with other
+cheques, in, say, the First National Bank of Minneapolis, or it may
+send the cheque to its correspondent in New York--say the Ninth
+National--asking to be credited with the amount. For sake of
+illustration, suppose that the cheque is deposited with the First
+National of Minneapolis. Now, this bank has a correspondent in
+Chicago--the Commercial National--and a correspondent in New York--the
+National Bank of the Republic. If sent to the Commercial National,
+this bank has a correspondent in Boston--the Eliot Bank, where the
+cheque would be sent. Now, the First National of Haverhill has a
+correspondent in Boston--the National Revere Bank. The Eliot Bank
+would likely take this cheque to the Boston clearing-house as a charge
+against the Revere Bank. The Revere Bank would deduct the amount from
+the First National of Haverhill's deposit and send the paid cheque to
+the Haverhill Bank, where at the close of the month it would be handed
+to B, showing on the back the indorsement of S, and stamping
+representing all the banks through whose hands it passed. If the
+Farmers' Bank of Waconia had sent direct to its New York
+correspondent, the Ninth National, this bank would have sent to its
+Boston correspondent, the North National, and the cheque would have
+been charged up through the clearing-house against the Revere Bank. If
+the First National of Minneapolis had sent direct to its New York
+correspondent, the National Bank of the Republic, this bank would have
+sent to its Boston correspondent, the Shawmut National, etc. As a
+rule, banks collect by whatever route seems most convenient or
+advantageous. It is estimated that millions of dollars are lost to the
+banks each year on account of the time consumed by cheques en route.
+
+
+VIII. COMMERCIAL CREDITS AND MERCANTILE AGENCIES
+
+HOW THE WORLD'S TRADE IS LARGELY TRANSACTED UPON CREDIT
+
+It is estimated that about ninety per cent. of the world's trade is
+transacted upon credit. And in no country of the world are commercial
+credits so freely granted as in the United States. This is a land of
+seemingly unlimited faith in humanity, and yet a land in which
+hazardous speculation, extravagance, and bankruptcy have often
+prevailed. Statistics show that about ninety-five per cent. of our
+merchants "fail to succeed," and yet no other country can boast of
+such wealth, industrial energy, and generous confidence in business
+integrity. While credit is not money, in that it cannot settle a debt,
+it must be considered a very powerful agent in the creation of
+capital. Credit is another name for trust. The business world bases
+its confidence or trust in men upon their character and resources. And
+the extent of this trust becomes the only limitation of the business
+man's purchasing power. He who can show conclusively the ability and
+disposition to fulfil obligations, has it within his power to command
+the capital or merchandise of others. Credit is one of the fruits of a
+higher civilisation and a settled condition of a country's business.
+It bespeaks a quality of government, too, that is not to be
+depreciated. The nations that are most successfully and equitably
+governed and show the most stable conditions of currency also show us
+the most extensive and efficient credit systems. It is abundantly true
+that these same nations have on many occasions passed through periods
+of great distress from failures widespread and panics severe, but it
+must also be borne in mind that these very bankruptcies are more often
+the abuse of prosperity than the product of adversity. Over-confidence
+in men and things has resulted in speculation and precipitated
+bankruptcy. And if it be urged that to the undue expansion of credit
+is traceable the greater number of our financial disasters, it may be
+said with still greater force that all our impetus to industrial
+achievement has been and still is dependent upon the generous exercise
+of credit. The construction of our railroads and canals, the operation
+of our mines, the improvement of our great farm areas, the building of
+our towns and cities, and the development of our extensive
+manufacturing interests are all the result of the trust reposed in men
+and the industrial interests they represent.
+
+THE IMPORTANCE OF A HIGH STANDARD OF CREDIT TO BUSINESS MEN
+
+Reticence on the part of business men respecting their financial
+position may seriously impair their credit. It is universally regarded
+by the intelligent business man to be good policy to make known his
+condition. A refusal to do so throws a suspicion and doubt upon his
+financial ability, and at some future time when confidence in his
+integrity may be essential to the very life of his business, he may
+find the necessary help unobtainable. An applicant for credit should
+be willing to prove himself worthy of it. But the keen competition
+among merchants eager for sales often enables the buyer to obtain
+credit without the necessity of giving very much evidence as to his
+commercial standing. Since some risks must be taken merchants
+frequently conclude to accept an account because of its possible
+acceptance by some competitor. If business is to be had risks must be
+taken, is the theory.
+
+When former customers apply for credit the merchant is guided by the
+record made in previous dealings. A business man's ledger is a very
+valuable history of credits. It is his compass in a sea of doubt. If
+upon the inspection of an old account it be discovered that in former
+years the customer paid cash and discounted his bills, and that later
+his method of payment was by promissory notes, and that on several
+occasions he asked for special favours, such as dating bills ahead or
+the privilege of renewal of notes, one is able to read a certain
+unmistakable sign of degeneracy in the customer's credit. New orders
+from such a customer will bear scrutiny; and a closer attention to the
+present condition of the account may save the firm from some bad
+debts.
+
+While it is possible to-day to determine the average losses from bad
+debts in the various lines of business, individual risks cannot be
+accepted on that basis. Each requires special study. If an applying
+customer paints his financial condition in roseate colours, let him be
+willing to reduce his statement to writing, and when his signature is
+affixed his statement is much more reliable, because he knows of the
+impending liability of fraud if he has misrepresented. Men averse to
+transforming an oral statement to writing have discredited themselves
+immediately. Men who mean to be honest may be optimistic in picturing
+prospects and be inclined to set an unreasonable value upon their
+property and extent of business. It may be easier to tell the absolute
+truth about one's liabilities, because they are such persistently real
+things; but assets have elastic qualities in many men's minds and seem
+capable of any extension in an emergency. Buyers who impress
+themselves most favourably upon the business house are frank in their
+statements. The explicit, candid man of few words will merit
+consideration. The cringing or pleading kind predisposes one
+unfavourably. Stephen Girard said of one who in tears asked for a
+loan: "The man who cries when he comes to borrow will cry when he
+comes to pay."
+
+To determine the right of a buyer to credit and the safe limit of
+credit to be extended to him is the seller's serious problem. It is
+customary to request references in order to discover how other firms
+regard the applicant's credit. But these references may be cautious of
+reply. A selfish desire to retain the customer for themselves, or the
+higher motive of a desire to be true to the interests of both the
+inquirer and the customer may produce dubious or very incomplete
+reports. If a bank be among the references one does not place too much
+stress upon a very favourable reply from it, because a merchant
+usually learns the lesson of expediency in making a friend of his
+banker. And, moreover, one endeavours to reveal only the best side of
+his business affairs to the bank. Favourable replies from several
+firms showing a uniform line of credit go a great way toward reaching
+a safe conclusion. But in these days of vast and multifarious
+interests there has developed, as a result of this desire for adequate
+knowledge respecting men's credit, an agency for the exclusive
+purpose of arriving at definite and reliable evidence upon financial
+matters; and after years of experience men have learned to depend upon
+these mercantile agencies as the most valuable and trustworthy
+assistants.
+
+MERCANTILE AGENCIES
+
+Mercantile agencies had their origin in the system adopted by several
+prominent firms of keeping on record all the information obtainable
+relating to their customers. In 1841 "The Mercantile Agency of New
+York City" began its history, and was the forerunner of the present
+great agencies whose record books of credits and ratings include the
+names of all the business houses and corporations in this country and
+Canada. The pioneer institution of this character in the United States
+was the one bearing at present the name of "R. G. Dun & Co.," an
+outgrowth of "The Mercantile Agency of New York City." Since 1860 it
+has borne the name of Mr. Dun, who was formerly a partner with Mr.
+Douglass when the agency was known as "B. Douglass & Co." Another
+popular and influential concern is the one known as "The Bradstreet
+Company," familiarly spoken of as "Bradstreet's." Besides these two
+leaders there are many others, whose reports on credits are limited to
+particular lines of trade. The larger agencies soon found it necessary
+to establish branches in all the business sections of the country. A
+particular field of investigation is allotted to each branch, and an
+interchange of information is in constant progress.
+
+[Illustration: A mercantile agency inquiry form.]
+
+To be a recipient of the valuable information afforded by these
+agencies business men, by paying an annual fee, are enrolled as
+subscribers and furnished with books of ratings, as they are called.
+Besides this book special type-written reports with elaborate details
+respecting a firm's credit are sent upon the request of the
+subscriber. The volume of information recorded in these agencies
+concerning any one's credit is obtained through the effort of
+officials of the agencies known as reporters. These men of experience,
+integrity, and discernment are seekers after truths. Usually each
+reporter has a distinct line of trade assigned him for research and
+investigation. This brings him into intimate acquaintanceship with
+every trader in his particular field. He is a constant solicitor of
+the banker and merchant for facts. His business is not merely to
+gather information respecting the resources of business men, but to
+investigate rumours that in themselves may be detrimental to one's
+credit, and to disprove them where possible and sustain and support
+the credit of a house. Too often it is supposed that the reporter is
+seeking evidences of weakness when in reality his business is most
+frequently that of discovering elements of strength. Information is
+freely given him as he interviews men whose businesses and experiences
+are the depositories for a wealth of credit information. He soon
+becomes a confidant of the merchant himself, who not only tells him
+all he knows about the customers and their accounts upon his books,
+but his own business affairs as well. Indeed, the relation becomes so
+very reciprocal that the reporter often furnishes information to the
+merchant in the interview on some matter of credit of pressing notice.
+In this way a corroboration of facts or the denial of a rumour may be
+effected. He inspects the books of the offices of public record to
+find the evidence of mortgages, judgments, and transfers of property,
+and have the same recorded on the agency's books. It is the reporter
+who finally has gathered the information that determines a firm's
+ability to have and to hold a line of credit.
+
+It is essential to the life of the agency that its reports be honest
+and free from any element of doubt. The public confidence in the
+reliability of the reports will determine the prosperity of the
+company. Perhaps at first glance it would seem as if the system of
+reporting financial information was a serious discrimination against
+the men of smaller capital and in favour of the wealthy. But mere
+capital is not the only element entering into an estimate of one's
+ability to pay. Character and reputation are powerful forces in
+assisting a merchant in determining credit. An agency discloses facts
+and not opinions. And it is within the range of possibility of any one
+to create and maintain his credit. Capital may grow gradually but
+credit is sometimes established or destroyed by a single act.
+
+The facts obtained by mercantile agencies are not public property.
+They are given in confidence and for the sole purpose of aiding the
+business with respect to the propriety of granting credit. The private
+reports are for the eyes of the interested inquirer and not the
+curious. Whenever some particular item of interest finds its way to an
+agency that would affect one's credit seriously, such as the giving of
+chattel mortgage or the confession of a judgment or the sale and
+transfer of property, it is customary to send unsolicited a special
+report of these facts to all subscribers on the agency's books who
+have ever at any time made inquiry concerning the firm. One might
+expect that these agencies expose themselves to risk of prosecution
+for libel, but since no malice is ever intended in any report
+circulated, and since it rarely occurs that damaging reports are sent
+out by these institutions unless abundantly confirmed, there is little
+opportunity for litigation of this sort.
+
+Another field of usefulness of the mercantile agency is in the
+exposure of the absconding debtor and his whereabouts, and also the
+dishonest trader who in arranging a fraudulent failure may be striving
+to open many new accounts. The unusual demands for reports respecting
+such a one lead to careful investigation. Instead of a restrictive
+tendency a mercantile agency promotes the expansion of credit and yet
+permits of proper conservatism. It opens to the trader as a market for
+his merchandise every new and trustworthy account. It curbs
+speculation, stimulates diligence in business, habituates punctuality,
+and develops character. When we remember that the present annual
+internal commerce of our country is estimated at about 800,000,000
+tons of merchandise carried an average distance of 120 miles, and that
+this volume of trade is worth over $10,000,000,000, we are forced to
+admit that the unique system of these credit agencies has done much to
+further and make possible this commercial prosperity.
+
+
+IX. BONDS
+
+UNITED STATES, STATE, AND MUNICIPAL BONDS
+
+When a country borrows money it gives a guaranty that the money will
+be returned at a particular time and that interest will be paid at
+regular intervals at a fixed rate. This guaranty is called a bond. In
+actual practice, instead of borrowing the money required and then
+giving bonds for its return, countries usually issue the bonds first,
+and sell them to the highest bidder. For instance, if our government
+needed to borrow $1,000,000 it would issue bonds for this amount,
+stating definitely the rate of interest to be paid, and call for bids.
+If the rate of interest were four per cent. and a buyer paid more than
+$1000 for a $1000 bond he would, of course, make less than four per
+cent. upon his investment. Such bonds are absolutely safe and always
+marketable on account of our strong financial standing among the
+nations of the world. Similar bonds are issued by States, cities,
+towns, school districts, etc. They are not mortgages in the ordinary
+sense, and their worth consists entirely in the ability of the issuer
+through its taxing power to meet the obligations incurred. Municipal
+bonds are issued by cities and other municipalities to raise money for
+local improvements.
+
+BONDS AND CERTIFICATES OF STOCK
+
+A bond is evidence of debt, specifying the interest and stating when
+the principal shall be paid; a certificate of stock is evidence that
+the owner is a part owner in the company, not a creditor of the
+company, and having no right to regain his money except by the sale of
+the stock or the winding up of the company's business. Bonds issued by
+stock companies and corporations are really mortgages upon their
+resources. Such a bond is usually secured by a mortgage upon the
+company's plant, franchises, and assets, or some part thereof.
+Corporate bonds can only be issued by the consent and direction of the
+shareholders of the company or corporation.
+
+    At the present time a mortgage securing the payment of corporate
+    bonds is usually placed in the hands of a trustee--generally
+    some trust company--which is supposed to act in behalf of the
+    bondholders as a unit and which is empowered by the language of
+    the bond, in the event of the failure of the corporation to
+    perform the obligations it assumes in said bond, to foreclose
+    the mortgage and divide the proceeds of sale among the
+    bondholders.--CARROLL.
+
+CLASSES OF CORPORATION BONDS
+
+Corporation bonds are of many classes, differing widely in their value
+as securities. Only a few of the more important classes can be
+mentioned here. FIRST MORTGAGE BONDS constitute, as the name implies,
+a first lien upon the property of the company issuing them. It is
+important in estimating the value of such securities to know whether
+they include only the property of the corporation at the time the
+bonds were issued or whether they are so worded as to include all
+property owned or acquired by the corporation. Second and third
+mortgage bonds are second and third liens. The interest upon second
+and third mortgage bonds is paid only after the interest upon first
+mortgage bonds is satisfied.
+
+When bonds are issued to take up and put into one fund all previously
+issued mortgage bonds, the new bonds are sometimes called CONSOLIDATED
+MORTGAGE BONDS. Holders of previously issued bonds are not obliged to
+exchange them for any new securities.
+
+INCOME BONDS are usually secured by a mortgage on the earnings of the
+corporation issuing them. Interest on such bonds must be paid before
+dividends are declared to stockholders. It is customary when such
+bonds are issued to set aside a percentage of the earnings as a
+sinking fund to meet the bonds at maturity.
+
+Bonds are issued against all conceivable kinds of securities. Not only
+are properties of many kinds used to issue bonds upon, but many kinds
+of bonds are often issued upon the same properties. This is especially
+true of railways, where mortgages of various kinds often lap and
+overlap in almost endless confusion.
+
+SINKING FUNDS
+
+Money set aside by a municipality or corporation to _sink_ a debt at a
+certain future time is called a SINKING FUND. For instance, if a city
+should issue twenty-year bonds for $100,000 to secure money for street
+improvements the entire debt would fall due in twenty years, but to
+avoid having such a large amount fall due in one year, a proportional
+sum is set aside each year as a sinking fund--that is, to _sink_, or
+reduce, or wipe out the indebtedness when the bonds mature. Bonds are
+not paid in advance of maturity.
+
+INTEREST COUPONS
+
+[Illustration: Specimens of interest coupons.]
+
+Most bonds have INTEREST COUPONS attached. These are cut off and
+presented for payment as they mature. For instance, a four per cent.
+bond for $1000 would draw $40 interest yearly. This sum would be paid
+in two instalments of $20 each. If the bond were for twenty years
+there would be at the date of issue forty interest coupons, each
+calling for $20 and collectable at intervals of six months.
+
+
+X. TRANSPORTATION BY RAIL
+
+THE GROWTH OF OUR RAILROAD SYSTEM
+
+A railway map of the United States shows that most parts of our
+country have a thickly woven net of railroads. The mileage of our
+railroad lines is now 184,000 miles, the actual length of track on
+these roads being about 245,000 miles. The significance of these large
+figures becomes more manifest when a comparison is made between the
+length of our railroads and the length of those of Europe and those of
+the world. The railroads in the United States comprise over four
+ninths of the total railway mileage of the world, and are considerably
+longer than the railroads of all the countries of Europe combined. The
+facts are shown graphically by the following diagram:
+
+    Mileage in Europe     155,000
+    Mileage in U. S.      184,000
+    Total for the World   434,000
+
+The history of the construction of American railroads covers a period
+of seventy years. The greater part of our mileage has been built
+since 1870. The following table and diagram illustrate the growth of
+our railway net during each decade:
+
+    Year  |  Miles
+    ------|--------
+    1830  |      23
+    1840  |   2,800
+    1850  |   9,000
+    1860  |  30,600
+    1870  |  53,000
+    1880  |  90,300
+    1890  | 163,600
+    1898  | 184,000
+
+It will be noted that the decades of most rapid railway development
+were the one from 1850 to 1860, following the discovery of gold in
+California, and the two between 1870 and 1890. We added 70,000 miles
+to our railway net between 1880 and 1890--a record that no other
+country has equalled. By 1892 we seem to have met the more urgent
+demands for new lines, and we are now annually building less than 2000
+miles of new roads. The face value of the capital now invested in
+American railroads is $11,000,000,000. The number of persons employed
+in the railway service is 850,000.
+
+THE RAILWAY CORPORATION
+
+The agents that do the work of transportation by rail are the railway
+corporations. These "artificial persons" are created by the several
+States and intrusted with the performance of services of a public
+nature. In all the German states and to a large degree in many other
+European states, the governments themselves provide the means of
+transportation by rail; but in the United States the ownership and
+management of the railroads is rightly regarded to be a task of
+greater magnitude than the administrative department of our government
+is as yet able to cope with.
+
+The growth of the railway corporations of the United States has been
+typical of the evolution of industrial organisation in this country.
+The early railway corporations were small. The Philadelphia,
+Wilmington and Baltimore Railroad, for instance, comprised the lines
+of four companies. In 1850 the road connecting Albany and Buffalo
+included the lines of seven companies. During the last fifty years
+most of the small companies have united to form the corporations which
+now operate our large railway systems. Though the last statistical
+report of the Interstate Commerce Commission--the one for the year
+ended June 30, 1896--contains financial reports from 1985 companies,
+there were only 782 "independent operating roads," the remainder of
+the companies being subsidiary organisations. This report shows that
+forty-four of these operating companies have an aggregate mileage that
+equals nearly six tenths of the total railway mileage of the United
+States. Indeed, the statistician to the Interstate Commerce Commission
+declared in 1894 that "over 83 per cent. of the business of the
+railways and 82 per cent. of their earnings fall under the control of
+less than forty associations of business men."
+
+The Pennsylvania system affords a good concrete illustration of
+railway consolidation. That corporation, with its 9000 miles of road,
+was built up by the union of over 200 railroad companies, and it now
+comprises within its organisation 177 corporations--most, though not
+all, of which are subsidiary railroad companies. This one railway
+system does one seventh of the entire freight business performed by
+all the railroads of the United States and handles one eighth of all
+the passenger traffic.
+
+THE FREIGHT SERVICE OF RAILROADS
+
+The freight business of the railroads of the United States is much
+larger than their passenger service, the earnings from freight being
+nearly three times that from the passenger traffic. It is only in some
+of the New England States, the most densely populated parts of the
+United States, that the passenger receipts equal the freight earnings.
+The industrial conditions of the United States necessitate the
+movement of great quantities of bulky freight long distances. Our
+principal grain-fields are from 1000 to 1500 miles from the
+manufacturing districts and seaboard cities. Our richest iron deposits
+are in the States adjacent to Lake Superior hundreds of miles from the
+coal-beds of Illinois, Ohio, and Pennsylvania. Most of the cotton crop
+is moved long distances to reach the mills of New England and Great
+Britain. In fact, most of the products of our fields, forests, mines,
+and factories are marketed over wide areas. The average distance
+travelled by each ton of freight moved during the year ended June 30,
+1896, was 124.47 miles; and, as the railroads carried 765,891,385 tons
+that year, the number of tons carried one mile was 95,328,360,278.
+
+A comparison of the revenues received from the freight and passenger
+services by the American, German, French, and British railways is
+instructive. For each dollar received from the passenger traffic the
+American railroads earn $2.95 from their freight business, the German
+roads $2.40, the French $1.31 and the British railways $1.17. The
+United Kingdom has the greatest volume of passenger traffic per
+population of any country in the world.
+
+AMERICAN PASSENGER TRAFFIC ON RAILROADS RELATIVELY UNDEVELOPED
+
+The long distances of the United States necessitate a large freight
+traffic but act as a hindrance to travel. It is a generally accepted
+but erroneous supposition that Americans travel more than any other
+people. A comparison of the passenger traffic in the United States
+with that in the United Kingdom, Germany, and France reveals some
+surprising facts. The figures are for 1896. The number of passengers
+carried one mile per mile of road upon the railroads of the United
+States was 71,705, in France the number was 273,315, in Germany
+315,399, and in the United Kingdom 440,000. The average distance which
+the Briton travels per year by rail is 244 miles; for the American the
+distance is 209 miles, for the Frenchman 176 miles, and for the German
+165 miles. The Englishman takes 24.4 trips per year on an average, the
+German 11.3, the Frenchman 9.6, and the American 8.2. Americans travel
+extensively, but it is evident from the foregoing comparisons that the
+possibility of developing the passenger service in this country has by
+no means reached its limit.
+
+RELATION OF TRANSPORTATION ON RAILROADS TO ECONOMIC ORGANISATION
+
+The economic changes which have accompanied the great development of
+transportation that has taken place during the last fifty years have
+revolutionised our industrial and social life. Among the effects of
+developed transportation upon the economic organisation may be noted:
+First, that relations of producers and consumers have been
+fundamentally changed by placing a larger market at the service of
+both. Many classes of commodities are now bought and sold in a world
+market that were formerly restricted to local trade. Second, improved
+transportation has made the prices of commodities more uniform for
+different producers and consumers. The variations due to situation
+have been lessened. In a like manner there has been a decrease in
+those time variations in prices that result from changes in the supply
+of commodities. Improved transportation also makes prices lower--not
+only because it reduces the costs of moving the raw materials of
+manufacture and the finished products of industry, but also because it
+enables the merchant to turn his stock oftener and thus do business
+with less expenses for capital.
+
+As a third effect of improved transportation may be mentioned the
+acceleration which it has given to the growth of cities. Cheap and
+efficient transportation has led manufacturers to locate their plants
+where they can command a large supply of labour and where they have
+the greatest advantages for the distribution of their products. The
+great manufacturing establishments are now located in Chicago, New
+York, Philadelphia, Pittsburg, and the other large cities. Conditions
+of transportation have become a stronger factor than even the location
+of the sources of raw materials in determining where an industry shall
+be established. The effect of the railroad upon the location of
+agriculture has been no less potent. The railroad has brought new
+agricultural regions into cultivation and destroyed the profits of
+cereal agriculture in many parts of the Eastern States.
+
+Another important consequence of improved transportation and
+communication has been that of bringing the nations of the world into
+closer economic and social relations. With the growing solidarity of
+the economic interests of the countries of the world, with the
+multiplication of the intellectual and other social ties that unite
+the nations, their political relations inevitably change, and for the
+better. Nothing is doing more to advance the attainments of the
+cherished ideal of international amity than is the development of
+transportation.
+
+
+XI. FREIGHT TRANSPORTATION BY RAIL
+
+THE ORIGIN OF RAILROAD TRAFFIC ASSOCIATIONS
+
+The performance of the transportation services necessitates the
+co-operation of carriers. When the government owns and operates the
+railroads of a country they are managed by a single authority, and the
+different parts of the railway system are fully co-ordinated; but when
+the railroads are operated by a large number of independent
+corporations, co-operation can be secured only by means of traffic
+associations composed of representatives of the railway companies, and
+intrusted with the power of making arrangements affecting joint
+traffic, and settling questions involving the interests of two or more
+companies.
+
+Two distinct causes brought about the establishment of railway traffic
+associations. The first cause was the necessity of co-operation to
+facilitate the joint business of connecting lines. Through tickets,
+joint fares and rates, through bills of lading, the interchange of
+cars between connecting roads, and the settlement of joint accounts
+led to the establishment of co-operative freight lines, car-service
+associations, claim associations, and various other general and local
+organisations for the promotion of the joint transportation business.
+
+The other cause of co-operation among the railways was the necessity
+of regulating competition. This cause first became potent after the
+process of consolidation had brought about the formation of numerous
+large railway systems, and had inaugurated the violent competition
+which led to discriminations in transportation charges, rate wars, and
+the other evils which have combined to produce "the railway question."
+The competitive struggles of rival railway systems began to be violent
+shortly after 1867, and soon led to the formation of railway traffic
+associations, with enlarged powers. The classification of freight, the
+determination of rates on competitive traffic, and the apportionment
+of that traffic, or of the earnings from it, among the competitors
+became functions of the associations.
+
+THE WORK OF ALBERT FINK
+
+The man who did more than any other person to develop traffic
+associations and to promote the co-operation of competing railroads
+was the late Albert Fink. It was his master mind that organised and
+put into successful operation in 1876 the Southern Railway and
+Steamship Association. The following year Albert Fink succeeded in
+organising the great trunk lines connecting the North Atlantic
+seaboard and the States north of the Ohio River. Though smaller
+traffic associations similar to these two organisations had been
+previously established where but few obstacles had to be overcome, it
+was Fink who first organised traffic associations including all the
+competing railroads serving large sections of the country.
+
+In discussing the work of traffic associations, which are to-day
+concerns of really enormous magnitude, railway pooling and the
+classification of freight especially demand consideration.
+
+RAILROAD POOLING
+
+Railroad pools are agreements entered into by competing carriers, by
+which the railroads provide for the division with each other of their
+competitive traffic, or of the earnings from that traffic in
+accordance with stipulated ratios. Thus there are traffic pools and
+money pools. During the decade preceding 1887, the year when the
+present interstate commerce law was enacted, most traffic associations
+had the pooling feature, and most of the competitive railway traffic
+was pooled, thus eliminating all competition in rates.
+
+Pooling agreements have never been legal in this country. Being
+illegal by the common law, they could not be enforced in the courts.
+Section 4 of the interstate commerce law made it unlawful for the
+carriers subject to the act to pool their freights or the earnings
+from their freight traffic, and made it necessary for the traffic
+associations to reorganise without the pooling agreements. Until March
+22, 1897, it was supposed that the associations, without pooling
+agreements, were legal; but, on that date, in the case of the United
+States _vs._ the Trans-Missouri Freight Association, the United States
+Supreme Court held that the law of July 2, 1890, popularly known as
+the Sherman anti-trust law, applied to railways, and made it illegal
+for railway companies to contract with each other to maintain rates.
+Thus at the present time traffic associations are permitted neither to
+contain a pooling feature nor to provide arrangements for the
+enforcement or maintenance of rates, although the charges may be
+reasonable and be sanctioned by all the carriers interested. The
+associations may now legally exercise those functions which are
+connected with the joint business of their members, and they may act
+as bureaus of information regarding the competitive traffic. They
+have no power to make or to maintain rates.
+
+TRAFFIC ASSOCIATIONS INCLUDING POOLING SHOULD BE LEGALISED
+
+The best performance of the service of transportation by rail requires
+the fullest possible co-ordination of the different parts of our
+transportation system and the largest attainable measure of
+co-operation among the agents who perform the service. Section 4 of
+the act of 1887 and the law of July, 1890, as far as the latter
+relates to railways, are based on an unsound theory. Provision having
+been made for that kind and measure of governmental regulation of
+railway rates that will insure reasonable charges, the railways should
+be permitted to co-operate in rate-making and be given power to pool
+their competitive business.
+
+CLASSIFICATION OF RAILROAD FREIGHT
+
+There are thousands of varieties of freight offered to the railroads
+for transportation. If each class of commodities were charged the same
+freight rate per ton per mile, the charges upon many articles of prime
+necessity, such as coal, lumber, and grain, would be so high as to
+prevent their being moved, while the rates on goods of high value per
+bulk would be much lower than they could readily pay. Classification
+must precede the fixing of rate schedules. The railroads are
+interested in adjusting their charges to services performed in such a
+manner as to insure the greatest possible amount of traffic at rates
+that are properly remunerative. The public is interested in having the
+necessary revenues of the railroads so levied as to make the burdens
+as light as possible. To accomplish this a careful grouping of
+commodities is necessary.
+
+The goods are usually classified in five or six large divisions. The
+official classification referred to below has six classes. The first
+class consists of articles of high value, the sixth class of bulky
+commodities of low value, such as iron ore, lumber, grain in bulk,
+etc. In practice, however, the number of classes is at least doubled.
+Goods of especially high value are made to pay once and a half,
+double, treble or quadruple the regular first-class rate. A commodity
+is also frequently placed in more than one class, the rating of
+classification being lower for car-load lots than for less than
+car-load shipments. The classification is further extended by omitting
+certain articles from the list of those classified. Live stock and
+coal are illustrations of articles to which so-called "commodity," as
+distinct from "classification," rates are given. The individual
+shippers are constantly endeavouring to have their goods given
+commodity rates, and the effort of the railroad companies is to reduce
+the number of articles excepted from classification. Commodity tariffs
+have been a fruitful source of unjust discrimination.
+
+From this description of freight classifications it will be perceived
+that the main basis upon which the grouping of commodities rests is
+the relative value of the goods. The gradations cannot, however, be
+made strictly according to value. The goods are frequently put into a
+lower class than their value would warrant in order to stimulate their
+production and shipment or to develop the industries depending upon
+those articles.
+
+At first each railroad worked out a classification of its own, and
+there were practically as many classifications as there were railway
+systems. The disadvantages of this soon became apparent with the
+development of long-distance traffic. The multiplicity of
+classifications made it difficult for shippers or purchasers to
+ascertain in advance what the charges on consignments would be; there
+was a constant tendency to increase the number of commodity tariffs,
+and unjust personal and local discriminations were in consequence made
+more numerous. It became evident that there would be great advantages
+in having one uniform classification for the whole United States. This
+ideal has not been reached yet, but the number of classifications has
+been practically reduced to three--the official, applying to the
+traffic north of the Potomac and Ohio and west of the Mississippi; the
+southern, in force among the railroads in the Southern States, and the
+western, which obtains in the territory west of the Mississippi River.
+This amalgamation of the classifications has been brought about
+chiefly by the traffic associations and as the result of the enactment
+of the interstate commerce law. In order to avoid the discriminations
+prohibited by that law it was necessary to abandon the system of a
+separate classification for each railway. It is to be hoped that the
+attainment of the ideal of uniform classification will not be long
+delayed.
+
+THE CONDUCT OF THE FREIGHT BUSINESS OF RAILROADS--TRANSPORTATION
+PAPERS
+
+The manner in which the freight business is conducted affords a good
+illustration of the high degree of development to which modern
+business methods have attained. Freight is accepted by each railroad
+for shipment not only to all points on its own system, but also
+practically to every railway station in the country, and even to many
+foreign cities.
+
+A waybill containing the initials of the number of the car used, the
+name of the consignor, the name and address of the consignee, the
+description and weight of the articles sent, the freight class and
+rate of the goods, and the total amount of freight charges,
+accompanies each shipment and is delivered to the agent at the place
+to which the goods are shipped.
+
+For the goods thus accepted for transportation, manifests, or "bills
+of lading," are issued to the consignor, which, like other
+representatives of property, may be transferred by the owner or may be
+deposited in a bank subject to draft. Bills of lading are of two
+general kinds--"straight consignment bills" and "order bills." When a
+straight consignment bill of lading is issued the goods must be
+delivered to the consignee or to the person to whom he may order them
+delivered. An order bill of lading is one that may be transferred upon
+indorsement. The following concise description of an order bill of
+lading is taken from the "Book of General Instructions to Freight
+Agents," issued by the Pennsylvania Railroad Company:
+
+    When freight is consigned to "Order" it is, as a rule, for the
+    purpose of securing the payment at destination of a draft for
+    the value of the property. The draft is usually attached to the
+    bill of lading and sent through a bank for collection from the
+    party at destination, who is to be notified of the arrival of
+    the freight. The payment of the draft secures to the payer the
+    possession of the bill of lading, which must be indorsed by the
+    party to whose order the property is consigned.
+
+
+XII. RAILROAD RATES
+
+Transportation charges have such a general and vital relation to
+industrial and social welfare that the problem of the just and
+equitable distribution of their assessment is one of paramount
+economic and political consequence. A consideration of the main
+factors which influence the railway companies in fixing charges should
+precede a discussion of the regulation of transportation by the
+government.
+
+GENERAL FACTORS WHICH DETERMINE RAILROAD RATES AND FARES
+
+The factors which have most weight in fixing schedules of rates and
+fares are what it will cost to perform the several services, what the
+services are worth to those for whom they are to be rendered, and the
+extent to which there is competition among rival carriers to secure
+the traffic concerned. Though on the face of things it would seem that
+the railways should fix the charges for their various services in
+accordance with the costs of performing those services, it is neither
+practicable for them to do so nor is it desirable from the standpoint
+of public welfare that such a criterion should be adopted. It is
+impracticable for the railroads to base their charges upon cost of
+service, because it is impossible to determine accurately the elements
+which enter into the cost of performing the particular transportation
+service. The modern railroad is a very complex mechanism, employed in
+the performance of a multitude of different services. No railroad
+official is able to say just how much of the company's total expenses
+are to be charged against any one particular freight or passenger
+service.
+
+The cost of service would be an undesirable basis of rates, because
+the railroads would derive such a small part of their total necessary
+revenues from the carriage of goods having a high value in proportion
+to bulk and weight, that they would be obliged to charge much higher
+rates than they now do upon the cruder products of the farm, forest,
+and mine. These products are the basic materials of industry, and the
+lowest possible rate for their transportation is essential to social
+and economic progress.
+
+VALUE OF SERVICE AND VALUE OF COMMODITIES
+
+Value of service is a more desirable basis for rates and fares than
+cost of service. By charging according to value of service is meant
+that the shippers of commodities and the passengers who travel shall
+contribute to the railroad's aggregate expenses in proportion to the
+value which they derive from the transportation service. The rates and
+fares may cover a part or all of the value of the service obtained. In
+either case they are fixed with reference to that value and not with
+regard to the cost involved in performing the work of transportation.
+The levy of rates and fares in accordance with this theory, which is
+usually called "charging what the traffic will bear," is considered by
+most people to distribute transportation charges properly, because it
+is claimed that the true measure of a shipper's or a passenger's
+ability to pay for a desired service is the value which he will
+thereby derive. That this theory, nevertheless, does not afford an
+altogether satisfactory basis of charges, particularly in the freight
+traffic, may be readily shown.
+
+While it is true that the amount of value added by transportation to
+goods of low value is less for each unit of weight or bulk than the
+amount of value which is acquired by an equal weight or bulk of
+high-priced commodities, yet the _percentage_ increase in value is
+greater in the case of the goods of low cost. Expensive articles can
+be carried long distances without adding very much to their cost to
+the consumers. Measured in their percentages, then, the value of the
+service of transportation is relatively much lower in the case of the
+higher-priced commodities. The freight charges on wheat range from
+twenty to forty per cent. of its farm value, while the rate on shoes
+is possibly two per cent. of their factory price. That these charges
+are levied in accordance with the real ability of the articles to pay
+would be hard to establish.
+
+A PARTIAL THEORY OF RAILROAD FREIGHT RATES
+
+Without attempting in this connection to formulate a complete theory
+of freight rates, it may be said that there are three factors to which
+weight should be given in fixing charges: First, _the cost of
+service_. The total costs of transportation, including a fair return
+on invested capital, must be covered by total receipts. Furthermore,
+the minimum rate charged any particular class of commodities ought to
+be sufficient to pay the operating expenses incurred in transporting
+the goods. Second, _the value of the service_. This fixes the maximum
+rate that may be charged. Were the railroads to charge more than the
+service is worth to the shipper the service would not be desired.
+Third, _the value of the commodities_. Between the minimum rate fixed
+by the operating expenses and the maximum charge determined by the
+value of the service actual rates may vary through a wide possible
+range. In determining what rates within this range will be
+theoretically most just and least discriminatory, consideration should
+be given both to the value of the service and--more than is the case
+at present--to the value of the articles transported. By doing this
+rates will be paid by the various articles of freight more nearly in
+proportion to their ability to pay.
+
+THE EFFECT OF COMPETITION ON RAILROAD RATES AND FARES
+
+Whatever theory of rates may be accepted as ideally best, it cannot be
+strictly adhered to under the existing conditions of active competition
+obtaining in the United States. Actual charges have to be fixed and
+revised to meet the varying circumstances under which railway traffic is
+conducted. This competition takes several distinct forms. One is that
+between railways and waterways. A large part of the domestic traffic of
+the United States has the choice of transportation by rail or by water
+on the great lakes and the tributary canals, by the navigable rivers, or
+by one of the many ocean routes followed by our coastwise commerce.
+There is also the competition of rival railways connecting common
+termini or serving the same cities. These forms of competition are the
+ones most frequently noted; but they perhaps exercise a less potent
+influence over rates than what is known as competition through the
+markets or through the channels of trade. The competition between rival
+centres of commerce and industry--between the Atlantic cities and the
+gulf ports, for instance, or between the manufactures of New York and
+Philadelphia and those of Chicago or Cincinnati for the markets of the
+Southern States, to cite another example--is a force that must be
+considered in making rates and fares. Even towns served by only one
+railway and by no waterway enjoy the benefits of this industrial
+competition. Unless the railroad can give the industries in these
+local towns rates that will enable them to market their products,
+the industries will decline and the railway will lose its traffic.
+
+An interesting result of the competition of roads connecting common
+termini or joining a common industrial region with seaboard points is
+that the road whose line is the longest and whose expenses of
+transportation are greatest is obliged to charge the lowest rate. The
+short lines can charge more because they compete for traffic under
+more favourable circumstances. The lower charge of the longer line is
+called a differential rate, and it is customary for the shorter or
+"standard" lines to agree to allow the "differential" line a
+stipulated differential rate. This is the concession which the
+standard lines are obliged to make to temper competition and to
+prevent rate wars. The Grand Trunk, running from Chicago to Boston by
+way of Montreal, is a good example of a differential line, and the New
+York Central is a good instance of a standard line.
+
+GOVERNMENTAL REGULATION OF RAILROAD TRANSPORTATION
+
+It is a maxim of common law that transportation charges must be
+reasonable, and the exaction of an unreasonable rate by a public
+carrier is a common-law misdemeanour punishable by the courts. But
+when, as the result of severe competition of railroads with waterways
+and with each other, unjust discriminations between persons, between
+places, and as regards classes of traffic--the abuses which constitute
+the railway question--became prevalent, the common-law provisions
+applying to railway charges were given statutory form and were
+supplemented and extended by such legislation as the circumstances
+peculiar to the situation seemed to demand. The comprehensive
+railway- and canal-traffic act passed by Great Britain in 1854 has
+been the model adopted for much of the railway legislation in the
+United States.
+
+The Constitution of the United States gives Congress power to regulate
+commerce "among the several States," but the jurisdiction over
+intrastate traffic lies with the State governments. The States began
+to pass general laws for the regulation of railroads fully twenty
+years before Congress acted, and two thirds of the States have
+established commissions to administer those laws.
+
+THE INTERSTATE COMMERCE LAW
+
+After fifteen years of agitation and investigation the existing
+interstate commerce law was enacted in 1887. The law prohibits
+unreasonable rates and unjust discriminations between persons, places,
+and classes of traffic, prohibits pooling agreements, provides
+penalties for the violation of the law, and establishes a commission
+of five men to administer and enforce the statute. Fortunately for the
+commission and for the country the first chairman of that body was the
+eminent jurist, Thomas M. Cooley, whose master mind did much to give
+vitality to the law.
+
+During the first five years after the law was passed it secured a
+fairly efficient regulation of interstate railway commerce, but recent
+decisions of the United States Supreme Court have so weakened the law
+that at present the commission has very little power. The commission
+can investigate complaints and make reports, it can collect
+statistical information, it can and does informally adjust many
+differences between shippers and carriers; but, to quote from the last
+report of the commission, "it has ceased to be a body for the
+regulation of interstate carriers." Legislation to amend and
+strengthen the interstate commerce law is urgently needed.
+
+[Illustration: Judge Thomas M. Cooley. (First chairman of the interstate
+commerce commission.)]
+
+
+XIII. STOCK AND PRODUCE EXCHANGES
+
+THE STOCK EXCHANGE
+
+The stock exchanges of the world must not be considered simply as
+noisy congregations of brokers speculating in securities under the
+guise of legitimate business. They really play an important and
+necessary part in the financial mechanism of the country, and are
+instruments of enormous value in subdividing and distributing capital,
+and in directing its employment in great commercial and industrial
+enterprises.
+
+The largest stock exchange of the world is that of London. It is not
+only the centre of the English market for stocks and securities but,
+like the Bank of England, it is linked internationally with nearly all
+the financial centres of the world. Almost every reputable security is
+marketable in London, either through the ordinary channels provided by
+arbitrage dealers, who buy in the cheaper and sell in the dearer
+markets, or through the agency of trusts and investment concerns. The
+magnitude and extent of the financial resources of the London Stock
+Exchange are enormous. Its advantages to the business public outweigh
+altogether the drawbacks imposed by the too-speculative spirit of
+mankind. It is a great business barometer, extremely sensitive to all
+conditions likely to disturb the world's finances. The London Stock
+Exchange has scarcely more than one hundred years of history. In the
+early part of the century the elder Rothschild was one of the giants
+"on 'change," and it was in this business that he amassed the great
+fortune which makes the name of his house a synonym for money power.
+The membership of the London exchange is not limited to a fixed
+number, as in Paris and New York. In the Paris Bourse all agents are
+strictly forbidden to trade on their own account.
+
+[Illustration: The Paris Bourse.]
+
+The New York Stock Exchange was formed in 1792. There are 1100
+members. Members are elected and must be nominated by two men who will
+say that they would accept the uncertified cheque of the nominee for
+$20,000. The initiation fee is $20,000. Memberships have sold as high
+as $32,500, and the market value of a seat on the Exchange varies only
+slightly from year to year.
+
+[Illustration: Interior view of New York Stock Exchange.]
+
+There are stock exchanges in all large cities, and scattered
+throughout the country in convenient centres are grain and produce
+exchanges, cotton exchanges, petroleum exchanges, etc. These exchanges
+are really the central markets for the commodities they represent.
+Commodity exchanges deal in actual products, even though the dealers
+handle nothing but warehouse receipts or promises to deliver. Stock
+exchanges deal in credits and securities, which may or may not have a
+tangible value back of them.
+
+There is no reason why bonds and shares should not be publicly dealt
+in--and in large quantities--as well as dry goods, corn or cotton;
+but, unfortunately, few stock exchanges confine their transactions
+wholly to legitimate business. You will look in vain in the quotations
+for the stock of dozens of corporations whose securities are among the
+choicest investments. It is upon fluctuations that stock speculations
+prosper, and it is often true that the largest profits are made on the
+poorest stocks.
+
+Transactions are quickly collected and reported to the world. In
+hundreds of offices in New York, Chicago, and other American cities
+may be seen a little instrument called a _ticker_, which automatically
+prints abbreviated names of stocks, with their prices, on a narrow
+ribbon of paper. These _tickers_ are rented to these offices by the
+telegraph companies, and as fast as the sales are made the quotations
+are ticked off in thousands of offices in all parts of the United
+States.
+
+TECHNICAL TERMS OF STOCK EXCHANGES
+
+The term _bull_ is applied to those who are purchasers of stock for
+long account, with the purpose of advancing prices, as the tendency of
+a bull is to elevate everything within his reach. The term _bear_ is
+applied to those who sell short stock, with the purpose of
+depreciating values. The _bear_ operates for a decline in prices. The
+broker's charge for his services is called a _commission_, which in
+the New York Stock Exchange is one eighth of one per cent. each way on
+a par value of the security purchased or sold. A _point_ means one per
+cent. on the par value of a stock or bond. _Stock privileges_ or
+_puts_ and _calls_ are extensively dealt in abroad and to some extent
+here. A _put_ is an agreement in the form of a written or printed
+contract filled out to suit the case, whereby the signer of it agrees
+to accept upon one day's notice, except on the day of expiration, a
+certain number of shares of a given stock at a stipulated price. A
+_call_ is the reverse of a _put_, giving its owner the right to demand
+the stock under the same conditions. A _put_ may serve as an insurance
+to an investor against a radical decline in the value of stocks he
+owns; a _call_ may be purchased by a man whose property is not
+immediately available, but who may desire to be placed in a position
+to procure the shares at the _call_ price, if they are not below that
+in the open market when he secures the necessary funds. The speculator
+usually trades on _margins_. If he has $500 to invest he buys $5000
+worth of stock, his $500 being ten per cent. of the total amount. He
+expects to sell again before the remaining amount falls due. The
+_margin_ is usually placed by the speculator in the hands of a broker
+as a guaranty against loss. Although these brokers are really agents
+for others, yet _on 'change_ they stand in the mutual relationship of
+principals. A _margin_ is merely a partial payment, but a broker
+buying stock for a client on _margin_ is compelled to wholly pay for
+it. If he has not the necessary capital his usual custom is to borrow
+from banks or money-lenders, pledging the stock as collateral
+security. In foreign exchanges the element of credit enters more
+largely into the conduct of business. Where the credit of the client
+in London is established his broker does not, ordinarily, call on him
+for any cash until the next "settlement day." A _wash sale_ is a
+fictitious transaction made by two members acting in collusion for the
+purpose of swelling the volume of apparent business in a security and
+thus giving a false impression of its value. Stocks sell _dividend-on_
+between the time the dividend is declared and the day the books of the
+company close for transfer; after that they sell _ex-dividend_, in
+which case the dividend does not go to the buyer. When a company
+decides not to declare a dividend it is said to _pass its dividend_.
+To sell stock _buyer 3_ is to give the buyer the privilege of taking
+it on the day of purchase or on any of the three following days,
+without interest; and to sell stock _seller 3_ is to give the seller
+the privilege of delivering it on the day of purchase or on any one of
+the three following days without interest. _Buyer 3_ is a little lower
+and _seller 3_ a little higher than _regular way_ when the market is
+in a normal condition. _Bucket shops_ are establishments conducted
+nominally for the transaction of a stock-exchange business but really
+for the registration of bets or wagers, usually for small amounts, on
+the rise or fall of the prices of stocks, there being no transfer or
+delivery of the commodities nominally dealt in. There are thousands of
+these counterfeit concerns throughout the country conducted without
+any regard for legitimate commercial enterprises.
+
+FUTURE DELIVERY
+
+Grain is stored in warehouses until needed for milling or shipment.
+When we speak of _December wheat_ we mean wheat that is to be
+delivered to the buyer in December. The carrying charges include
+storage, interest, and insurance, so that wheat sold for _May
+delivery_ would necessarily bring a higher price than wheat sold for
+December delivery. Carrying charges are in favour of the _short_
+seller. When sold for immediate delivery it is known as _cash grain_.
+
+
+XIV. STORAGE AND WAREHOUSING
+
+BONDED WAREHOUSES
+
+There is a government regulation that an importer who does not wish to
+pay immediately the customs duties on his goods may have them stored
+in a warehouse, provided he furnish a bond with a surety that he will
+pay the duty within three years or export the goods to some other
+country. It is also a requisite that the goods be deposited in a
+bonded warehouse in the care and custody of its proprietor, who also
+must furnish the government with a bond of indemnity. The bond of the
+proprietor is a general bond and usually covers what might be
+considered a fair amount of total values due the government at any
+time. Officers of the United States are stationed at the bonded
+warehouse during business hours. These are there in evidence of the
+government's proprietary interest in the merchandise stored. When an
+importer makes entry at the custom house for bonding his goods, he at
+that time provides the security required.
+
+By a recent decision of the Treasury Department at Washington goods in
+bond are in the joint custody of the United States government and the
+proprietor of the warehouse, and after the government has received its
+customs duties for the goods they are in the proprietor's sole
+possession. The government cannot interfere to enforce delivery of the
+goods to the importer. The claim of the warehouse proprietor for
+storage charges becomes a first lien after the government's claim is
+satisfied. When the importer has paid both customs and storage charges
+he is privileged to remove his goods.
+
+WAREHOUSE REGULATIONS
+
+It is the duty of United States storekeepers to check off the goods as
+they are received at the warehouse and to report the same to the
+custom house; and when goods are to be withdrawn to see that delivery
+is not made until a custom house permit is presented. Upon payment of
+the import duty on goods in bond at the custom house at any time after
+importation, the customs officials issue a warehouse permit to the
+importer ordering the United States storekeeper in charge of the
+bonded warehouse to deliver the goods to the importer, and upon
+presentation of the permit the goods are released unless the
+proprietor holds them subject to storage charges.
+
+Goods may be held in bond for three years with the duty unpaid, but
+after that time either the duty must be paid or the goods exported. If
+shipped to another country and afterward re-imported the goods would
+again be entitled to the three-year privilege. If goods are not
+exported and the customs charges are due and unpaid, the government
+may dispose of the goods at public sale to obtain its claim.
+
+Goods arriving by steamer and unclaimed lie at the wharf forty-eight
+hours. If the owner does not appear to make entry for them within that
+time, after the entry for the vessel has been made, the goods are sent
+to a bonded warehouse and remain there on what is known as a general
+order, and if they stand there unclaimed for a year they may, at the
+expiration of that time, be sold by the government.
+
+The capital of a warehouse is its storage space. The rates vary from
+1/4 to 3/4 of a cent per cubic foot. The charges may be based on the
+amount of space consumed and the weight of the merchandise. The latter
+often determines the floor elevation to which the goods may be
+assigned. The more convenient of access the storage location is, the
+greater the cost. Warehouse receipts are issued as evidence of
+storage. All merchandise is conveniently bulked for numbering and
+marking, and these distinguishing marks appear on the receipts.
+Negotiable and non-negotiable receipts are issued as the needs of the
+owner may require. The former permit advances to be made by bankers
+upon the merchandise as collateral security.
+
+FREE WAREHOUSES
+
+These differ from bonded warehouses only in the fact that the
+government has no control or interest in them. They are only for the
+storage of imported goods on which the customs duty has been paid or
+for goods imported free of duty or for merchandise of domestic
+production and manufacture. They are managed entirely by the
+proprietor, and the contracts for storage are, of course, between the
+proprietor of the warehouse and the owner of the goods. The storage
+rates in free warehouses are considerably lower than for goods stored
+in bonded warehouses--the latter being a much more expensive business
+to conduct. There is no time limit in free warehouses. Goods may
+remain indefinitely. When they remain from six months to a year the
+charges are collected usually at certain periods to avoid
+accumulation. Experience shows that goods in free warehouses do not
+stay so long as those in bond. The articles commonly found in these
+houses are domestic and imported wools, cotton, canned goods, peanuts,
+yarns, cotton piece goods, mattings, dry goods, etc. Perishable goods,
+of course, do not find their way into bonded or free warehouses. These
+are placed in cold storage.
+
+BANKING FEATURES OF WAREHOUSING
+
+Many of the warehouses find it advantageous to do a banking business
+in connection with the storage features. Very frequently, for the
+convenience of the importer, goods are consigned to the warehouse and
+sent subject to a sight draft for the amount of the invoice. The
+warehouse company will pay the draft with the exception of about
+twenty per cent., which the importer is expected to furnish. If the
+duty is paid then the value upon which a loan is estimated is based
+upon the market value of the goods in this country. After the draft
+has been satisfied the goods are placed in the stores of the warehouse
+company subject to the customs and storage charges. The amount
+advanced by the company bears interest at current money rates. In
+illustration let us suppose bonded goods to be shipped and invoiced at
+$10,000, customs duty $4000, and the goods consigned to a bonded
+warehouse. The draft ($10,000) is sent to the warehousing company,
+which advances $8000, and together with the $2000 received from the
+importer pays the draft. The $8000 loan made by the company is then
+charged to the importer at the usual interest rate, and when the
+borrower withdraws his merchandise from storage he will have to pay
+the government the $4000 customs duty and pay back his loan of $8000
+to the warehouse company, together with interest and storage charges.
+If any portion of the goods stored is withdrawn for use in the
+business of the importer, the company will rebate a proportionate
+amount of the interest. If goods decline in value as collateral in
+storage the company will demand additional margin for its protection.
+If goods appreciate in value the loan may be increased. The market
+value of the goods is ascertained by the appraisement of some expert,
+who receives a commission for his services.
+
+COLD STORAGE
+
+The cold-storage warehouse is the natural result of the necessities of
+our great agricultural interests in the preservation of perishable
+products so sensitive to the deteriorating effects of temperature. The
+solution of the problem of the preservation of dairy products, meats,
+fish, poultry, fruits, and vegetables has developed a system that has
+eliminated the seasons and made possible the equalisation of prices of
+the finer class of edibles. The cornering of products and the creation
+of unreasonable prices are avoided. No article becomes a glut on the
+market as formerly. When there is a surplus of eggs and fruit, prices
+may be maintained by putting them in cold storage for a few days and
+offering them on the market when the conditions of trade warrant.
+
+TEMPERATURE REQUIREMENTS FOR COLD STORAGE
+
+Prior to the year 1890 cold storage was dependent upon the employment
+of ice, but in the evolution of the cold-storage warehouse ice is no
+longer a requisite. In fact, the temperature obtained by the
+employment of ice precluded a thermometric register much below the
+freezing point. The accepted temperature for butter and eggs was
+formerly 40° to 50°; but through the introduction of mechanical
+refrigeration, which has revolutionised the business economically as
+well as physically, eggs now are held in storage at a temperature of
+31° and butter from 10° to 18°. Under the former method of ice
+storage, goods that were offered on the market as "held goods"--that
+is, as coming from a cold storage--always brought several cents under
+the prices of fresh merchandise. But the remarkable modern methods of
+cold storage permit the carrying of dairy products for a number of
+months and their successful sale afterward in competition with fresh
+goods. Eggs stored in March are taken out in the following November
+and have commanded as high and often higher prices than the fresh
+commodity. Eggs have been kept two years and found perfectly sweet
+when used. In freezing poultry and fish the temperature now frequently
+given is zero and under. Poultry does not carry so well as other
+merchandise. Although it is possible to keep it for two years, yet it
+loses its flavour. Five or six months' storage is its usual average
+limit.
+
+Certain temperatures are maintained in the various compartments of a
+cold-storage warehouse according to the requirements of the products,
+and these temperatures are made possible by forcing through pipes
+arranged around each compartment a brine composed of about ninety-five
+per cent. of pure salt whose temperature has been reduced by the
+action of the chemicals. When a shipper stores his goods there is an
+implied contract with the storage company that the temperature
+required for the product will be furnished and maintained. Failure to
+do this renders the company liable for any damage to property. So
+vital is this feature of the business, which is really the only
+liability assumed by the company, that the custom prevails of taking
+the temperature of each room as often as five times in every
+twenty-four hours, and keeping the record in temperature books open to
+the inspection of the shippers. A room filled with merchandise may not
+vary in temperature one degree in six months.
+
+COLD-STORAGE CENTRES
+
+Chicago very naturally is the leading cold-storage centre. Its
+situation in the heart of the productive area and its advantages as a
+distributing centre have given it its prestige. But in the last two or
+three years the Eastern cities, New York, Philadelphia, and Boston,
+have developed enormous cold-storage facilities, and Chicago no longer
+is absolute in her dictation to the markets of the world. When it is
+remembered that the dairy interests of our country during the last
+three years averaged an annual value of $650,000,000, and that the
+greater portion of this found its way into cold-storage warehouses,
+the importance of this new and very necessary business is readily
+appreciated.
+
+COLD-STORAGE CHARGES
+
+The cold-storage charges for eggs in thirty-dozen cases would be about
+15 cents per case for the first month and 9 cents for every additional
+month. Butter in sixty-pound tubs would be charged at the rate of 12
+cents per tub for each month. Cheese would cost one tenth of a cent a
+pound per month. The rates of Eastern cities are usually higher than
+in the West. About ninety per cent. of the storage business of the
+East is in goods shipped from the West. The refrigerator car is a
+valuable adjunct to the business. The temperature of the cars is
+about 45°.
+
+Although no ice is used in the modern cold-storage plant, yet the ice
+has become a very valuable by-product. Since all the facilities for
+its manufacture are at hand it has become a matter of commercial
+expediency to employ them to the company's profit in the production
+and sale of a commodity indispensable to modern life.
+
+
+QUESTIONS FOR REVIEW
+
+ 1. Give some particulars in which the Bank of England differs from our
+    larger national banks.
+
+ 2. A bank cheque is a demand order for money drawn by one who has
+    funds in the bank. How does a cheque differ from an order on A----
+    B---- to pay bearer a certain sum of money?
+
+ 3. You are sending a cheque through the mails to John Brown, Chicago.
+    How will you prevent the cheque from falling into the hands of the
+    wrong Brown?
+
+ 4. You identify A---- B---- at your bank. The cheque A---- B----
+    presented turns out to be a forgery. Are you responsible?
+
+ 5. What is meant by power of attorney? How should an attorney indorse
+    cheques for any person for whom he is acting?
+
+ 6. What is a certified cheque? Brown gives A an ordinary cheque for
+    $1000, and B a certified cheque for $1000. He fails before either
+    cheque is presented. Why is B's security for his claim considered
+    better than A's?
+
+ 7. Show how all the banks of the United States are connected through
+    the clearing-house system.
+
+ 8. How do State and national banks differ as to their organisation?
+
+ 9. A national bank has a capital of half a million. A customer asks
+    for a loan of $62,000 on indorsed paper. Can the bank legally grant
+    the loan?
+
+10. Give some particulars of the liabilities of the officers and
+    directors of national banks.
+
+11. What is meant by borrowing money on _collaterals_? How is this
+    done?
+
+12. Tell how it is possible for a young man of good character, but
+    without friends who have financial standing, to secure bonds for his
+    faithful conduct in a responsible position.
+
+13. When rates are high bankers prefer to deal in long-time paper.
+    Why?
+
+14. Account for the fact that London is the financial centre of the
+    world.
+
+15. Explain in detail the business of a note broker, giving some
+    particulars of his responsibility in connection with the paper
+    handled.
+
+16. Enumerate the leading items of resource and liability in a
+    national-bank statement.
+
+17. A bank receives from the comptroller of the treasury $100,000 in
+    new bank-notes of its own issue. What ledger entry? A bank retires
+    $10,000 of its own bank-notes. What entry?
+
+18. Discuss fully the points which should enter into a proper estimate
+    of the value of paper offered for discount.
+
+19. Give the successive and necessary steps in the formation of a
+    joint stock company.
+
+20. Why are companies which properly exist and belong in one State
+    sometimes organised under the laws of another State?
+
+21. Explain very fully the difference as to resource and liability
+    between a bondholder and a stockholder.
+
+22. How may a stock company be dissolved?
+
+23. What is the difference between a voluntary association, such as a
+    society or club, and a stock company?
+
+24. Explain very fully the meaning of _Limited_ when it forms part of
+    the legal title of a company.
+
+25. Is it legal to sell shares of stock and issue mortgage bonds upon
+    the same property? What relationship do they bear one to the other?
+
+
+EXAMINATION PAPER
+
+    NOTE.--_The following questions are given as a means by which
+    the student may test for himself whether he has attentively
+    pursued the lessons of the course or not. It is recommended that
+    each student as he finishes the course write out the answers to
+    the questions in full. Only such answers need be attempted as
+    the student can frame from a careful study of the course._
+
+1. (_a_) Give some particulars in which the Bank of England differs
+   from our larger national banks. (_b_) Enumerate some of the
+   advantages afforded to the community and to commerce in general
+   by banking institutions. (_c_) How do private banks and trust
+   companies differ from national banks?
+
+2. (_a_) What is a stock certificate? How does it differ from a
+   mortgage bond? (_b_) At what rate must United States 4 per cents
+   be bought to net 3.2465 per cent.? (_c_) Give the successive and
+   necessary steps in the formation of a stock company. How can the
+   stock of a company or corporation be increased?
+
+3. (_a_) What provision is usually made for the redemption of
+   municipal bonds which have a long period to run? (_b_) What is
+   meant when we say that a certain railway is in the hands of a
+   receiver? (_c_) Give some of the advantages which stock companies
+   have over partnerships.
+
+4. (_a_) Tell how you would receipt for a payment on a note. Why is
+   not an ordinary separate receipt sufficient? (_b_) Discuss fully
+   the points which should enter into a proper estimate of the value
+   of paper offered for discount. (_c_) Explain in detail the
+   business of a note broker, giving some particulars of his
+   responsibility in connection with the paper handled.
+
+5. (_a_) What are the advantages to the banks of a city of their
+   central clearing-house? (_b_) Show by a diagram how collections
+   are made between distant points. (_c_) What is a certified check?
+
+6. (_a_) Enumerate some of the abuses of rate discrimination in the
+   United States and tell how they are met. (_b_) What are the
+   advantages to the public of freight organisations which arrange
+   for through service? (_c_) Explain in detail the methods adopted
+   by leading and competing railway lines to regulate and adjust
+   freight rates. (_d_) What are _differentials_? How are (1)
+   through and (2) local passenger rates regulated?
+
+7. (_a_) Give the particulars in which a warehouse receipt resembles
+   and differs from (1) a promissory note, (2) a bill of lading.
+   (_b_) What are the advantages to the importer of bonded
+   warehouses? (_c_) What are the duties of our foreign consuls with
+   reference to the importation of goods?
+
+
+
+
+COMMERCIAL LAW
+
+
+I. THE DIFFERENT KINDS OF CONTRACTS
+
+Commercial law relates to CONTRACTS. These are made by almost every
+one. A person cannot ride in a street-car without making a contract
+with the company for carrying him. If he goes into a store and buys a
+cigar, a stick of candy, or a tin whistle, he has made a contract with
+the man behind the counter, who owns the store or is his salesman.
+Tramps and thieves are about the only persons who live without making
+contracts. In that respect they are like the birds of the air, getting
+whatever they desire whenever the chance is seen.
+
+A contract has been defined as an agreement to do or not to do some
+particular thing. These are the words used by one of the greatest of
+American judges. The reader may turn to his dictionary and find other
+definitions that contain more, if he pleases, but this will answer our
+purpose.
+
+All contracts may be put into three classes, and each of these will be
+briefly explained. First, SEALED AND UNSEALED CONTRACTS. What do we
+mean by a contract that is sealed? It is one to which the person who
+signs it adds, after his name, a seal. But what is a seal? It may
+consist of sealing-wax, stamped in a peculiar manner, or a wafer made
+of sealing-wax, or a paper wafer. In the olden times when people could
+hunt and fight but were not able to write their names, they put a
+seal at the end of a contract made by them; in other words, the seal
+supplied the place of a name. Each person's seal differed from the
+seal of every other. It had its origin really in the ignorance of the
+people. As they were unable to write their names these distinct signs
+or marks, called seals, were put on instead of their signatures.
+
+With the changes brought by time the form of this device or seal,
+required by law, is much simpler than it was centuries ago. Indeed, in
+every State persons use the letters "L. S.," with brackets around
+them, instead of a seal. They mean "the place of a seal," and are just
+as good in every way as any kind of seal that might be used. Here are
+two of the forms of seals in most common use:
+
+[Illustration]
+
+Any contract that has a seal after the name of the signer is a sealed
+contract, and every other is called an UNSEALED, ORAL, or VERBAL
+contract. If a contract was written and a seal was added after the
+signer's name, and there was another exactly like it in form, but
+without a seal, this would be called an unsealed or verbal contract,
+and in law would differ in some important respects from the other.
+This is true in every State except California, where the difference
+between sealed and unsealed contracts is no longer known.
+
+The second class of contracts are called EXPRESS AND IMPLIED
+CONTRACTS. By an EXPRESS CONTRACT is meant one that is made either in
+writing or in words. But the reader may ask, Are not all contracts of
+this kind? By no means. Many contracts exist between people which have
+not been put into words. Suppose A should ask B for employment and it
+should be given to him, but no word should pass between them about the
+price to be paid. The law would _imply_ that B must pay him whatever
+his work was reasonably worth. If A should come at the end of the week
+for his pay and B should say to him: "I never made any bargain with
+you concerning the price, and I am unwilling to pay you anything," A
+could, if he understood the law, say to B: "You told me to work, and
+the law _implies_ that you must pay me whatever my work is worth." How
+much would the law give him for his work? Just what the employer was
+paying other men for the same kind of work.
+
+Another class of contracts are called EXECUTED and EXECUTORY. An
+EXECUTED CONTRACT is one that is finished, done, completed. If I
+should go into a store and ask the price of a book and say to the
+salesman, "I will take it," and give him the money, and take the book
+with me, this would be an executed contract. An EXECUTORY CONTRACT is
+one that is to be completed. Suppose the salesman did not have the
+book and I should say to him, "Please get it for me and I will come in
+next week and pay you for it," this would be an executory contract;
+and it would remain so until I came in and got the book, as I had
+promised to do, and paid the price.
+
+These are the three most general classes of contracts made by persons
+in daily life. Almost all persons make contracts of each kind during
+their lives. Sealed contracts are not as common as unsealed ones, yet
+they are frequently made. Every deed for the sale of land or lease for
+the use of it is a sealed contract.
+
+
+II. THE PARTIES TO A CONTRACT
+
+To every contract there must be two or more persons or PARTIES. When
+Robinson Crusoe was on his island all alone, eating breadfruit and
+entertaining himself by throwing stones at the monkeys, he perhaps had
+a good time, but he could not make any contracts. But as soon as
+Friday came along they could make contracts, trade, and cheat each
+other as much as they pleased. A contract, therefore, is one of the
+incidents of society. A person sailing in a balloon alone could not
+make a contract, but if two were in the basket they might amuse
+themselves by swapping jack-knives or neckties, and these exchanges
+would be completed or executed contracts and would possess, as we
+shall soon see, every element of a contract.
+
+Again, persons must be able, or COMPETENT, to make contracts. What
+kind of ability or competency must a person have? Not every person can
+make a contract, even though he may wish to do so. A MINOR, or person
+less than twenty-one years of age, though he may be very wise and
+weigh perhaps two hundred and fifty pounds, can make very few
+contracts which the law regards as binding. In fact, the only
+contracts that a minor can make for which he is bound are for
+necessaries--clothing, food, and shelter. Nor can he make contracts
+even for these things in unlimited quantities. A minor could not go
+into a store and buy six overcoats and bind himself to pay for them.
+The storekeeper must have common sense in selling to him and keep
+within a reasonable limit. In one of the well-known cases a minor
+bought a dozen pairs of trousers, half a dozen hats, as many canes,
+besides a large supply of other things, and, refusing afterward to pay
+the bill, the merchant sued him, and the jury decided that he must
+pay. The case, however, was appealed to a higher court, which took a
+different view of his liability. The judge who wrote the opinion for
+the court said that the merchant must have known that the minor could
+not make any personal use of so many trousers, canes, and hats, and
+ought not to have sold him so many. In short, the court thought that
+the merchant himself was a young minor in intelligence and ought to
+have known better than to sell such a bill to a person under age.
+
+Of course it is not always easy to answer this question, WHAT ARE
+NECESSARIES? Much depends on the condition of the person who buys. A
+merchant would be safe in selling more to a minor living in an
+affluent condition of life than to another living in a much humbler
+way. Quite recently the question has been considered whether a
+dentist's bill is a necessity, and the court decided that it was a
+proper thing for a minor to preserve his teeth and to this end use the
+arts of the dentist. Again, is a bicycle a necessity? If one is using
+it daily in going to and from his work, surely it is a necessity. But
+if one is using it merely for pleasure a different rule would apply,
+and a minor could not be compelled to pay for it. Cigars, liquors,
+theatre tickets are luxuries; so the courts have said on many
+occasions.
+
+The courts, in fact, regard a minor as hardly able to contract even
+for necessaries, and he is required to pay for them for the reason
+that as he needs them for his comfort and health he ought to pay for
+them. In other words, his duty or obligation to pay rests rather on
+the ground of an implied contract (which has been already explained)
+than of an express one. The force of this reasoning we shall
+immediately see.
+
+Suppose a minor should say to a merchant who was unwilling to sell to
+minors,--having had, perhaps, sad experience in the way of not
+collecting bills of them,--"I am not a minor and so you can safely
+trust me. I wish to go into business and wish you would sell me some
+goods." Suppose that, relying on his statement, the merchant should
+sell him hats or other merchandise for which he would afterward
+decline to pay, on the ground that he was a minor. Suppose he proved
+that he really was one--could the merchant compel him to pay the bill?
+He could not compel him to fulfil his contract, because, as we have
+already said, the law does not permit a minor to make a contract
+except for necessaries. The court, then, would say to the merchant:
+"It is true that you sold the goods to this minor; he has indeed lied
+to you; still the court cannot regard a contract as existing between
+you and him." On the other hand, a court will not permit a person to
+defraud another, and the merchant could make the minor pay for the
+_deceit_ or _wrong_ that he had practised on him; and the measure of
+this wrong would be the value of the goods he had bought. Thus the
+court would render justice to the merchant without admitting that the
+minor could make a legal contract for the goods that he had actually
+bought and taken away.
+
+
+III. THE PARTIES TO A CONTRACT (_Continued_)
+
+In the former article we told our readers that there were some persons
+who could not make contracts, and among these were INFANTS or MINORS.
+In most of the States a person, male or female, is a minor until he or
+she is twenty-one years old. In some of the States, among them
+Illinois, a female ceases to be a minor at eighteen years of age.
+
+By the Roman law a minor did not reach his majority until the end of
+his twenty-fourth year, and this rule has been adopted in France,
+Spain, Holland, and some parts of Germany. The French law, though, has
+been changed, with one noteworthy exception. A woman cannot make a
+contract relating to her marriage without the consent of her parents
+until she is twenty-five. Among the Greeks and early Romans women
+never passed beyond the period of minority, but were always subject to
+the guardianship of their parents until they were married.
+
+MARRIED WOMEN are another class of persons who cannot make every kind
+of a contract like a man. Once a married woman had but very little
+power to make contracts. However great might have been her wealth
+before marriage, as soon as she entered into this blissful state the
+law kindly relieved her of all except her real estate, giving it to
+her husband. On the other hand, he was obliged to pay her bills,
+which was one of his great pleasures, especially if she was a constant
+traveller to the silk and diamond stores. She could still keep her
+real estate in her own name, but that was about all. Her husband took
+everything else; he could claim her pocket-book, if he pleased, and
+was obliged to support her in sickness or health, in sweetness or in
+any other "ness."
+
+The law has been greatly changed in all civilised countries in this
+regard, and to-day in most States she can make almost any kind of a
+contract. In some States, however, it is even now said that she cannot
+agree to pay the debt of another, but this is, perhaps, the only limit
+on her power to contract. She can engage in business, buy and sell,
+transfer notes, make contracts relating to the sale and leasing of her
+real estate, insure it, build houses, and do a thousand other things
+quite as freely as if there were no husband around. The most of these
+changes widening her authority to make contracts have come within the
+last fifty years. Of course, unmarried women can make contracts like
+men, and many of them know it.
+
+Another class who cannot make contracts are DRUNKEN PERSONS. Once the
+law regarded a drunken man as fully responsible for his acts, and if
+he made a contract he was obliged to execute or fulfil it. He could
+not shield himself by saying he did not know what he was doing at the
+time. The court sternly frowned on him and said: "No matter what was
+your condition at the time of making it, you must carry it out." This
+was the penalty for his misdeed. It may be the courts thought that by
+requiring him to fulfil his contracts he would be more careful and
+restrain his appetite. Whatever the courts may have thought, they have
+changed their opinions regarding his liability for his contracts made
+under such conditions. Now they hold that he need not carry them out
+if he desires to escape from them. There is, however, one exception
+to this rule. If he has given a note in the ordinary form, and this
+has been taken by a third person in good faith who did not know of the
+maker's condition at the time of making it, he must pay. But, we
+repeat, the third person must act in good faith in taking it, for if
+he knew that the maker was drunk at that time he cannot require him to
+pay any more than the person to whom it was first given.
+
+One other class may be briefly mentioned--the INSANE. They are
+regarded in the law quite the same as minors. For their own protection
+the law does not hold them liable on any contracts except those for
+necessaries. These are binding for the same reasons as the contracts
+of minors, in order that they may be able to get such things as they
+need for their health and comfort. For if the law were otherwise,
+then, of course, merchants would be afraid to sell to them. But as
+merchants can now safely sell to them whatever they truly need in the
+way of clothing, food, etc., to make themselves comfortable, so, on
+the other hand, the insane, like minors, must pay for these things,
+and it is right that they should.
+
+
+IV. THE CONSIDERATION IN CONTRACTS
+
+Having explained who can make contracts, we are now ready to take
+another step. Besides having parties, there must be a CONSIDERATION
+for every contract. This is rather a long word, but no shorter can be
+found to put in its place. What do we mean by this term? We mean that
+there must be some actual gain or loss to one or both parties to a
+contract, otherwise it is not valid. If, for example, A should say to
+B, "I will give you $100 to-morrow," B, perhaps, might go away very
+happy, thinking that with this money he could buy a bicycle or some
+other fine thing; indeed, it was just the sum for which he was
+longing; so on the morrow he goes to A for his money. He promptly
+appears, but A says to him: "I have changed my mind, and will not give
+you the $100." B asks: "Did you not promise to give me this money?"
+"Certainly." "Well, why will you not fulfil your promise?" A replies:
+"I was a fool when I made that promise; you are not going to give me
+anything for it, so I am unwilling to give the money to you." Suppose
+B in his sorrow should go to a lawyer, thinking, perhaps, that he
+could compel A by some legal proceeding to pay over the money. What
+would the lawyer tell him? Why, he would say: "Did you promise to give
+A anything for the $100?" "No, sir." "Then the law will not help you
+out. You cannot get the money from him by any legal method. Perhaps
+you can get $100 worth of fun in licking him for not giving you the
+money, but you cannot get the cash. But, mind, perhaps you had better
+not try to get your fun in that way, for this is contrary to law, and
+he might get much more than $100 out of you in the way of damages for
+licking him."
+
+In every case, therefore, there must be _something for something_. Now
+this something may be a thousand things. It may be money or
+merchandise or work. In short, there is no end of the things that may
+serve as a consideration of a contract. An example may be given to
+explain what is meant by this. A man had been speculating in stocks,
+and one of the rules of the stock board is that a margin or sum of
+money that is to be paid for stock must be paid in every case. It may
+be that an additional margin or sum must be paid under some
+circumstances. The speculator in this particular case was unwilling to
+pay this margin, and he said to the broker: "If you will do as I wish,
+and not put up this margin, I will save you from any loss that may
+result from such conduct." It was contrary to the rules of that stock
+exchange for the broker not to put up the margin, and the consequence
+was that he was put off the floor; in other words, the board would not
+permit him to act as a member. Of course, as he could not buy and sell
+any more stock, he lost money; and he went to his customer, the
+speculator, and told him that he was losing money in consequence of
+carrying out his order about the margin. The speculator said he was
+sorry, but he could not help it. The broker then insisted that the
+speculator must make good his daily loss in consequence of doing as he
+had promised. This the speculator would not do. The broker then sued
+him for the amount of his loss. The speculator defended on the ground
+that there was no consideration for the agreement he had made with
+the broker about the margin. The court said that the loss which the
+broker had suffered in consequence of carrying out his contract with
+the speculator was a good consideration for the contract and must be
+made good.
+
+_When a contract is sealed the law implies that there is
+consideration_, and there need not be an actual one consisting of
+money, labour, or any other thing. This seems like an exception to the
+rule requiring a consideration in all cases, but the reason is this:
+When a sealed contract is made, the law supposes or assumes that each
+party made it, clearly knowing its nature--made it carefully, slowly,
+and, consequently, that either a consideration had been or would be
+given. If, therefore, one of the parties should refuse to fulfil it
+the other could sue him in a court of law. The person who sought to
+have it carried out would not be obliged to show that he had given any
+consideration on his part for the undertaking, because the seal
+appended to his name would imply that a consideration had been given.
+A deed for a piece of land is a good illustration of a sealed
+instrument. The law assumes whenever such a deed is given that the
+seller received a consideration for his land. The money paid was a
+consideration received by the seller, and the land was the
+consideration received by the buyer. Each gives a consideration of
+some kind for the consideration received from the other; and this is
+true in all cases.
+
+
+V. THE ESSENTIALS OF A CONTRACT
+
+In our last paper we told our readers that there must be a
+_consideration in every contract_. Sometimes this is _illegal_, and
+when it is the effect is the same as would be the giving of _no
+consideration_.
+
+Suppose a robber having stolen money from a bank should afterward
+offer to return a certain portion if he is assured that he will not be
+arrested and compelled to change the style of his clothing and his
+place of residence for a season. He cannot endure the thought of
+missing a game of football; and as for striped clothes, though very
+comfortable, perhaps, he is sure they would not be becoming. Suppose
+this agreement to return a part should be put in writing, and after
+fulfilling it he should be sued by the bank for the remainder, and
+also prosecuted by the State for committing the theft. Very naturally
+he would present the writing in court to show that he had been
+discharged from the crime and also from the payment of any more money.
+But this writing would not clear him either from prosecution for the
+criminal offence or from liability to return the rest of the money.
+The bank would say that although he had returned a part, this was not
+a proper consideration for its agreement not to sue him; it had no
+right to make such an agreement, and consequently it could sue the
+robber for the remainder of the money just as though no agreement had
+ever been made.
+
+Another illustration may be given. Suppose a person having made a bet
+and lost is unable to pay the money and gives his note for the amount.
+When the note becomes due the holder or owner sues him for the money.
+He defends, as he is unwilling to pay, by saying there was no legal
+consideration for the note. The money he promised to pay was only a
+wager, which the law regards as illegal. And this would be a good
+defence.
+
+If the consideration is partly legal and partly illegal and can be
+divided then there can be a _recovery of the legal part_. Suppose a
+man owed another $1000 for borrowed money and also a wager for the
+same amount, and had given his note for $2000. When it became due if
+the owner sued him he could recover only the $1000 of borrowed money;
+this much and no more, for the reason that the consideration could be
+divided, the legal part from the illegal part. If no separation was
+possible then the note would be void and the owner could get nothing.
+
+A person cannot recover for a _voluntary service_ that he has rendered
+to another. A man would be very mean indeed who refused to pay another
+for any service rendered to him that was truly valuable; yet if he
+would not do so the man rendering the service could get nothing
+through the law. Suppose that a person when walking along a road
+should see some cattle astray in a corn-field having a good time with
+a farmer's corn. He knows they are in the field for business and in a
+short time, unless driven out, will get the best of nature and down
+her efforts in corn-raising. In the kindness of his heart he jumps
+over the fence and succeeds in driving them away. Suppose there
+happens to be among the number an unruly animal which is unwilling to
+leave such a tempting field of plunder and turns on him and gores
+him, and he is taken to a hospital. The farmer finds out who drove out
+the animals, and of his injury, but declines to give him any reward
+whatever. Can the man recover anything? The law says not, because the
+service is purely voluntary.
+
+The question has often been asked whether a person who has made a
+contract to work for another and has broken it can recover for the
+worth of his service during the period he was employed. Some courts
+have said that a person thus breaking his contract cannot afterward
+recover anything, because he does not come into court with clean
+hands. Other courts have said that though he can recover nothing on
+the contract he has broken, he can nevertheless recover on a contract
+which the law implies in such a case for the worth of his service
+during the period of his employment. On the other hand, the employer
+can set off against his claim any injury that he may have sustained.
+Suppose he could show that the service was of no worth to him; that he
+was injured rather than benefited by what he did; then the employé
+could get nothing. The courts have been inclined of late years to
+uphold an employé in recovering whatever his service was worth--not,
+however, as done by virtue of an express or actual contract with the
+employer. He cannot sue on that; in other words, he cannot take
+advantage of his own wrong to recover anything from his employer, but
+he may recover on the contract which the law implies, as we have
+explained, as much as his service was worth to his employer, and no
+more.
+
+Another element in a contract is the meeting of minds of both parties.
+_Both must understand the matter in the same sense._ For example, a
+person offered to sell another "good barley" for a stated price, and
+the other offered to buy "fine barley" at the price mentioned. There
+was no contract between these persons, because it was shown that "good
+barley" and "fine barley" were different things in the trade. This,
+therefore, is one of the essential elements of a contract--the meeting
+of the minds of the contracting parties. Whether they have assented or
+not is a question of fact, to be found out like any other question of
+fact.
+
+Sometimes offers are made on time, and when they are several
+interesting questions may arise. Suppose A and B are negotiating for
+the sale and purchase of a piece of land. A says to B: "I will give
+you a week to think the matter over." Soon after parting A meets C, to
+whom he mentions his offer to B. C says: "I will give you a great deal
+more for the land and pay you now." "Very well," says A; "the land is
+yours." And he at once writes a letter to B saying that he has
+withdrawn his offer, as another person has offered him more for the
+land and that he has sold it to him. Now B might be very much
+surprised by this letter. Very likely he would think A was a hard man
+and perhaps a dishonest one. Perhaps he would go to a lawyer and ask
+him if he could compel A to sell the land to him if he accepted his
+offer within the time mentioned and paid to him the money. The lawyer
+would tell him--if he understood his business--that A had a perfect
+right to withdraw his offer, even though it was made on time. This
+would probably be brand-new knowledge to B, but he would know what to
+do on the next occasion.
+
+Is this true in all cases? It certainly is of all offers made in that
+manner. How, then, can a person who makes an offer to another on time
+be compelled to regard it? The way is simple enough. The person to
+whom the offer is made should give something--a consideration--to A,
+who makes the offer, for the delay. Then he would be bound by it. But
+the courts would say to B, if nothing were given: "Why should A's
+offer bind him so long as he is to get no compensation or
+consideration for it?" And we shall see again and again in these
+papers _this element of consideration is ever present, and must be to
+make transactions legal_. So with respect to an offer on time--if the
+person to whom it is made is really desirous of having it continue, in
+order to find out whether he can raise the money to pay, or for some
+reason, he can make the offer binding by giving to the offerer a
+consideration for the specified time, whatever that may be.
+
+
+VI. CONTRACTS BY CORRESPONDENCE
+
+_A great many contracts are made by correspondence._ A person writes a
+letter to another offering to sell him merchandise at a stated price.
+The other replies saying that he will accept the offer. Is a contract
+made at the time of writing his letter and putting it into the
+post-office, or not until it is received by the person who made the
+offer? The law in this country is that a contract is made between two
+persons in that way as soon as the answer is written and put into the
+post-office beyond the reach of the acceptor.
+
+The post-office usually is the agent of the person who uses it, but
+when a person sends an offer to another by mail the post-office is
+regarded a little differently. It is the agent of the person who sends
+the offer and also his agent in bringing back the reply. Consequently,
+when this is put into the hands of the agent the law regards the
+offerer as bound by his offer. In like manner, if a creditor should
+send a letter to his debtor asking him to send a cheque for his debt
+and he should comply, the post-office would be the agent of the
+creditor in carrying that cheque, because he requested his debtor to
+use this means in sending his cheque to him. But when a request is not
+made and a debtor sends a cheque on his own account, the post-office
+is his agent for carrying it to his creditor.
+
+A person making an offer by letter can of course withdraw it through
+the telephone or telegraph if he likes at any time before the letter
+has been received by the other party. Suppose the price of things is
+rising and A, finding that his goods are also advancing, should, after
+making an offer of some of them by letter, send a telegram stating
+what he had written and withdrawing his offer. This would be a proper
+thing for him to do. If, on the other hand, A's offer had been
+received by B before his withdrawal and accepted, then A would be
+bound by it.
+
+Can B, after mailing his letter of acceptance and before it has been
+received by A, withdraw his acceptance? No, he cannot--for the reason
+above given, that the post-office is the agent of A, in carrying both
+his offer and B's reply. If this were not so, if the post-office were
+the agent of B in sending his reply, then of course it could be
+revoked or withdrawn at any time before it reached A.
+
+Suppose A should send an offer and afterward a withdrawal and the
+withdrawal should be received first. Notwithstanding this, however, if
+the person to whom the offer was sent should accept the offer, could
+he not bind A? One can readily see that all the proof would be in the
+possession of B, the acceptor. If he were a man without regard for his
+honour and insisted that he received the offer first, A might be
+unable to offer any proof to the contrary and fail to win his case
+should B sue him. But the principle of law is plain enough; the only
+difficulty is in its application. Doubtless cases of this kind
+constantly happen in which the acceptor has taken advantage of the
+other to assent to an offer actually received after its withdrawal.
+
+Suppose B should in fact receive A's offer first in consequence of the
+neglect of the telegraph company to deliver A's message of withdrawal
+promptly, which if delivered as it should have been would have reached
+B before the letter containing the offer, what then? A doubtless
+would be bound by his offer, but perhaps he could look to the
+telegraph company for any loss growing out of the affair. If he could
+show that he had been injured by fulfilling the contract the telegraph
+company might be obliged to pay this.
+
+Let us carry the inquiry a little further. Suppose the messenger on
+receiving the telegram took it to B's office and it was closed and he
+made diligent inquiry concerning B's whereabouts and was unable to
+find him. Suppose he had gone off to a horse race or to a football
+game, would it be the duty of the messenger boy to hunt him up at one
+of these places? By no means. If B was not at his place of business
+when he ought to have been, the company would not be bound to deliver
+the message to him elsewhere, except at his house, unless he had left
+a special direction with the company concerning its delivery.
+Generally a telegraph company states very clearly its mode of
+delivering messages and the time when it will do so, the place, etc.,
+to which it will take them, and it is not obliged to hunt all over
+creation to find the person to whom a message is addressed. That would
+be a very unreasonable rule to apply. Therefore, if the company did
+its duty A could not recover anything from it. Would A, then, it may
+be asked, be obliged to fulfil his contract with B? He has sent his
+withdrawal, which if delivered in time would have been received by B
+before the letter containing the offer. B, however, is away from his
+place of business, and perhaps is where he ought not to be--perhaps he
+is playing poker or doing something worse--ought A under such
+circumstances to be held by his offer? This is a closer question and
+one that we will leave our readers to think over. Surely A would have
+a strong reason for claiming that he ought not to be held under such
+conditions.
+
+A person who makes an offer cannot turn it into an acceptance. An old
+uncle offered by letter to buy his nephew's horse for $100, adding:
+"If I hear no more about the matter I consider the horse as mine." The
+uncle, not hearing from the nephew, proceeded to take the horse. At
+this stage of the proceedings, however, the nephew was not inclined to
+suffer his good old uncle to make the contract entirely himself, and
+refused to give up the horse. The court said that one person could not
+do all the contracting himself, and this is what he virtually
+undertook to do. If a person could, by correspondence or otherwise,
+make a contract in this manner, one can readily see the dangers that
+might follow. Some positive act must be put forth by the other party
+showing or indicating his assent before it will be regarded as given.
+A person, in truth, is not obliged to pay any attention to an offer of
+this kind.
+
+Rewards are often made. They are found almost every day among the
+newspaper advertisements. These are binding under various conditions.
+An interesting question has been raised in the case of a runaway horse
+whose owner has made an offer to any finder who returns him. Suppose a
+person at the time of catching the animal did not know of the reward
+but does know of it when returning the beast to his owner; can he
+claim the reward? This question has somewhat puzzled the judges, but
+the more recent opinion is that the catcher can claim the reward like
+a person who knew at the time of stopping the pleasure of the runaway.
+Of course, there is no question concerning these rewards when they are
+known at the time of acting on them.
+
+In one of the cases tried not long since, an old farmer offered a
+reward of $15 to any one who would find the person who had stolen his
+harness and also $100 to the man who would prosecute the thief. The
+harness, in truth, was worth not even this small sum and the thief
+still less. Yet he was caught and prosecuted, and then the prosecutor
+and finder claimed the rewards. The farmer's excitement had cooled off
+by this time and he was not so loud and liberal as he was at the time
+of finding out his loss. He refused to pay, saying that he did not
+really mean to offer these sums as rewards, and the court decided in
+his favour, declaring that his offer of reward could not be regarded
+strictly as one, but rather "as an explosion of wrath." In another
+case a man's house was burning up and his wife was inside, and he
+offered any one $5000 who would go in and bring her out--"dead or
+alive." A brave fellow went in and rescued her. Then he claimed the
+reward. Was the man who made the offer obliged to pay, and could he
+not have escaped by insisting that this was simply "an explosion of
+affection" and not strictly an offer or promise of reward? He tried to
+hold on to his money, but the court held that this was an offer he
+must pay. Possibly after the recovery of his wife his valuation of her
+had changed somewhat from what it was while his house was burning up.
+
+One or two more cases may be given. Some persons who prepared
+"carbolic-smoke balls" offered to pay £100 to any person who
+contracted influenza after having used one of the balls in the manner
+clearly set forth and for a stated period. This offer was in the form
+of a newspaper advertisement. A person bought one of them and followed
+carefully all the directions about its use. The influenza, though, did
+not disappear as advertised, so he sued to recover the offer; and,
+having proved clearly that he had complied faithfully with the
+directions and had not been cured, the court said that the owners must
+pay up and compelled them to give him the £100 offered.
+
+Another case may be briefly mentioned. A offered to sell B his farm
+for $1000. B offered $950, which offer was declined. Then B offered
+to pay $1000. By that time A had changed his mind and declined to
+accept B's offer. Then B sued to get the farm, offering to pay the
+money; but the court held that B had declined A's offer and
+consequently that, as A had not made any other offer, there was no
+contract.
+
+Finally, it may be added that the phrase "by return mail" does not
+always mean by the next mail, although the person to whom the offer is
+made cannot delay his answer long. On the other hand, the person to
+whom such a letter may be addressed can bind the other by an
+acceptance very quickly after the receipt of the offer, although not
+literally by the first mail going out.
+
+
+VII. WHAT CONTRACTS MUST BE IN WRITING
+
+_Some contracts must be in writing to be valid_; for instance,
+contracts relating to the sale and leasing of lands. This writing must
+be signed by the person who is charged with having made it. Suppose
+that A has sold his farm to B for an agreed sum and refuses to give
+him a deed on his payment of the amount or offer to pay, and B wishes
+to compel A to carry out or execute his agreement. B must show a
+writing signed by A to that effect, otherwise the court will not pay
+any attention to the matter. On the other hand, if A claims that such
+an agreement has been made with B, who is unwilling to pay the money
+and receive the deed, he must show in court a writing signed by B that
+he has agreed to purchase the farm at a stated price and to receive a
+deed of the same. If such a writing is not forthcoming when required,
+he cannot recover anything from him. This is the meaning of the
+phrase, therefore, that a writing must be signed by the party charged
+with having made the agreement.
+
+_The writing need not be very formal._ It need not specify the amount
+that is to be paid; in other words, it need not specify the
+consideration. Some courts say, however, that it must contain this
+fact or statement. It may be in pencil. I presume it would be
+sufficient if written on a blackboard with chalk. But it must be a
+writing of some kind signed by the party to be charged; that is the
+essential thing. The courts have also said that this writing need not
+be on a single piece of paper. If the two parties have made an
+agreement by a series of letters, an offer on the one side and an
+acceptance on the other, and the agreement can be fully shown from the
+series of letters, this is sufficient writing.
+
+If a man buys a farm and pays a part of the price and goes away saying
+that he will pay the remainder within a week, expecting then to do so
+and receive a deed, the seller, if he chooses, can escape giving that
+deed and parting with his farm. The payment of a part of the money
+does not bind the bargain, nor will the courts, though knowing this,
+compel the seller to give such a deed. The reader may ask, if this is
+the law, cannot the farmer practise a fraud on the buyer by receiving
+his money and keeping it and the farm too? He cannot do both things.
+If he refuses to give the deed he must, on the other hand, return the
+money; if he refuses to do this the buyer can compel him by a proper
+legal proceeding to refund the amount. In this way the buyer gets his
+money back again, but not the farm that he bought.
+
+It is said that this statute is as often used as a shield to protect
+men in doing wrong as in preventing frauds. In numberless cases
+persons, just like the farmer imagined, have used this statute as a
+means to protect them in not carrying out their agreements. This
+happens every day.
+
+This statute also relates to other matters. One clause says that an
+executor or administrator cannot be required to pay anything at all
+out of his own pocket on any promise that he has made unless it be in
+writing. Every one knows about the duties of an executor or
+administrator. An executor is one who settles the estate of a person
+who has died leaving a will directing what shall be done with his
+wealth. An administrator is a person who settles the estate of a
+deceased person leaving no will. He is appointed by the law, which
+fully states his duties. Let us suppose that an executor is employed
+to settle an estate, and that he employs a carpenter to make some
+repairs on a house belonging to the estate. The contract is fairly
+enough made between the carpenter and the executor. Let us also
+suppose that he has no lien on the house for the work that he has
+done, or that he has lost his lien by reason of not having filed it in
+time, as the law requires. Afterward he goes to the executor and
+demands payment for the repairs that he has made. Let us suppose that
+the estate is insolvent and cannot pay all of its debts in full. At
+the time of making this contract neither party supposed this would
+happen. But, unhappily, debts have come to light so large and numerous
+that there is not property enough to pay all the creditors everything
+that is due them. The executor says to the carpenter: "There is not
+property enough to pay all of the creditors and you, unfortunately,
+must fare like all of the rest, and you cannot be paid a larger
+percentage on your share than the others." To the carpenter this would
+be unwelcome news, and he would doubtless say to the executor: "I made
+this contract with you expecting that you would pay me, and if the
+property of the estate is not sufficient you ought to pay me this. I
+am a poor man and cannot afford to lose any of my hard-earned money."
+The executor might say to him: "I am as poor as you and I cannot
+afford to pay you out of my own pocket, and in law you cannot compel
+me to do this." And, in truth, the carpenter could not do this unless
+the executor had made a contract in writing, agreeing in any event to
+pay whether there was money enough belonging to the estate or not.
+
+Another clause says that _a person cannot be required to pay the debt
+of another unless the agreement is in writing_. If A went into a store
+to buy goods and B should be a little afraid to trust him, and C, a
+friend of A's, should happen to be present and say to the merchant,
+"Let A have these goods and if he does not pay you I will," this would
+be the promise to pay the debt of another; and if A should not pay it
+C could shield himself behind this statute and escape without paying
+anything.
+
+There is another clause relating to the sale of ordinary merchandise.
+The law says that _contracts for ordinary merchandise must be in
+writing if the amount is over_ $50. In some States the amount is $35.
+Long ago it was decided that this statute did not relate to contracts
+for work, and they therefore must be carried out or fulfilled in the
+same manner as though no statute existed, _for work is not
+merchandise_.
+
+
+VIII. CONTRACTS FOR THE SALE OF MERCHANDISE
+
+To make a contract of sale there must be, as we have seen, two or more
+parties, and a consideration must also be given. The sale is complete
+when the _property_, or _title_, or _ownership_ in the thing bought
+passes from the seller to the buyer. It is not necessary in order to
+make a valid sale to deliver the thing bought. If the _title_ or
+_ownership_ in the thing is not transferred, the sale still remains
+incomplete.
+
+The law supposes or assumes that a person will always pay for a thing
+purchased. If I should go into a store, inquire the price of a book,
+and, after learning the price, should say to the salesman, "I will
+take the book," and he should wrap it up and give it to me and I
+should then walk out with the book under my arm, he doubtless would
+come to me and say in his politest manner: "Why, sir, you have
+forgotten to pay me for it." Suppose I should say: "Oh, yes; but I
+will come in to-morrow and pay." But if I happened to be a stranger,
+and especially if there was a suspicious look about me, and he should
+say they did not give credit in that store, and I was still inclined
+to walk out with my book, he could insist that there had been no sale
+and that I must give the book to him. The law would protect him in
+taking it from me if he did not use undue force. The law assumes,
+unless some different rule exists, that the buyer will always pay for
+the thing purchased, yet in law there is no sale unless the purchase
+money is actually paid.
+
+Of course, credit may be given in a store--that may be the practice;
+and if it is understood between buyer and seller that credit is to be
+given, then a sale is complete as soon as the bargain is struck.
+Indeed, so complete is the sale that if the buyer should say to the
+salesman, "I will leave this here and return and take it in a short
+time," and during his absence the store should be burned up and
+everything perish, the buyer would be obliged to pay for the book. In
+other words, after it had been sold, if still kept there the seller
+would be merely the keeper, or bailee, which is the legal term, and he
+would be obliged to use only ordinary care in keeping it. Suppose a
+thief should come in and take it away--would the seller be responsible
+for the loss? Not if he had used the same care in protecting it as in
+protecting his own property.
+
+Another illustration may be used to bring out the nature of a sale
+more clearly. Suppose I have bought a particular work in a store,
+either paying cash or buying it on credit, if that be the practice of
+the store, and I should say to the salesman: "I am going down street
+and on my return will call and take the book." During my absence I
+meet a friend and tell him of my purchase, and he should say to me: "I
+am very desirous to get that work; I am sure there is no other copy in
+town. Will you not sell it to me?" Suppose I gave him an order,
+directed to the seller, requesting him to deliver the work to the
+person to whom I have sold it. If he should take the order to the
+store he could claim the book as his own and the original seller would
+be obliged to give it to him.
+
+_It is very important_, however, in many cases _to make a delivery of
+the thing sold_. As we have already stated, the title as between the
+buyer and seller is actually changed or transferred at the time of
+making the sale and it is therefore complete. But if a delivery of the
+thing sold is not actually made and another person should come along
+and wish to buy it, and the seller should prove to be, as he sometimes
+is, deceitfully wicked, and should sell and deliver it to him, the
+second buyer would get a good title and could hold it just as securely
+as though it had not been previously sold to another. Of course, the
+second buyer must be an innocent person, knowing nothing about the
+first or prior sale. If he did not know and pays the money for the
+thing he has bought and takes it away, he gets a perfectly good title
+as against the first buyer. If he was not innocent the first buyer
+could claim it and the second one would lose his money unless he was
+able to get it back again from the seller. Of course, such a
+transaction is a fraud on the part of the seller. Therefore it is
+safer in all ordinary transactions for the buyer to take the thing he
+has purchased unless he is sure that the seller is a perfectly honest
+man, who will not practise any such fraud upon him.
+
+Suppose the seller had things in his keeping that had been sold but
+not taken away, and should fail in business, or that persons to whom
+he owed money should sue him and try to hold not only all of the goods
+still owned by him but even those which he had sold. Could they
+succeed as against a person who had bought them in perfectly good
+faith? It is said that the buyer in such cases can get his goods after
+clearly showing that he had bought them and paid for them; but the
+evidence of his purchase must be perfectly clear, otherwise the court
+will not permit him to take them away and he will lose them.
+
+If a merchant is to deliver a thing as a part of the contract of sale,
+then, of course, he must do this; otherwise he is liable for his
+failure to carry out his contract. This rule applies to most purchases
+that are made in stores. The merchant intends to deliver the thing
+sold, the buyer purchases expecting this will be done, and the price
+paid for them is enough to cover the cost of taking them to the
+buyer's house; in other words, the price of the goods, whatever it may
+be, is intended to be enough to pay the merchant for his cost in
+delivering them, and in such cases the contract is not complete until
+a delivery has actually taken place.
+
+Again, if the thing purchased is a part of a mass of goods, a
+separation must be made to complete the contract. If a man should buy
+100 barrels of oil which were a part of 1000 barrels, a separation of
+some kind must be made of the particular ones sold. If one should buy
+trees in a nursery, to make the contract complete the particular trees
+must in some way be known, either by rows or every other tree--in
+short, in some way the trees must be clearly set apart. If part of a
+mass of timber is bought, the particular logs must be marked or in
+some way pointed out from the other part of the mass. This rule
+applies to all things bought that form a part of a large mass. The
+mode of pointing them out depends on the nature of the thing; a
+different kind of separation must be made in some cases from what is
+necessary in others.
+
+
+IX. THE WARRANTIES OF MERCHANDISE
+
+The rule of law in buying is, _the buyer must look out for himself_;
+and if things are not what he supposed they were he has no rightful
+claim against the seller. The maxim of the law is, "_Let the purchaser
+beware_"--let him take care of himself. The rule of the Roman law was
+different. It was the duty of the seller to tell the buyer of all the
+defects known by him in the thing sold, and if he did not he was
+responsible for any loss caused by any defect or imperfection found
+after purchasing that was known by the seller before.
+
+The modern principle may be looked at from two points of view. First,
+_the seller need not make known any defects which the buyer can find
+out himself_. Suppose a man is thinking of buying a horse that is
+(though he does not know it) blind in one eye. The law says that the
+buyer ought to be able to see such a defect quite as readily as the
+seller, and if he does not the fault is his own. Blindness in one eye
+is quite as easily seen as would be the lack of an ear or tail. And
+this principle applies very generally in all purchases. It covers all
+visible defects. Nor can any one find much fault with this rule,
+because the buyer generally has as good eyesight as the seller, and if
+he takes pains, as he should, he is able to discover all ordinary
+defects. Furthermore, the buyer doubtless often knows quite as much
+about the things he purchases as the seller.
+
+But the courts also say that it applies to other defects. Suppose a
+horse has the heaves or the rheumatism, which is known to the seller
+but of which the buyer has no knowledge whatever. The seller is not
+obliged to make known this defect to the buyer, and if he is silly
+enough to purchase on his own wisdom he must abide by the
+consequences. If he does inquire and is deceived, that is another
+thing. But if he asks no questions, or the seller does not deceive him
+in any way, the seller is not responsible for defects known by him at
+the time of the sale. This also is a well-understood rule.
+
+_The seller_, we repeat, _must not deceive the buyer_. In one of the
+well-known cases a man owned a ship that he was desirous of selling.
+She was unsound in several places and the seller put her in such a
+position that her defects could not be readily found out. He did this
+for the purpose of deceiving the buyer and succeeded. When the buyer
+learned how he had been tricked he began a legal proceeding to get
+back a part of the money that he had paid, and won his case. And
+rightfully, too, for the reason that the seller had deceived him,
+which he had no right to do.
+
+Another case may be stated of a man who was desirous of purchasing a
+picture, supposing that it was once in the collection of an eminent
+man. The seller knew perfectly well that the picture did not come from
+that collection and that the buyer was acting under a delusion. He did
+not say that the picture had belonged to the collection or had not; he
+was silent, although he knew that the buyer would not purchase it if
+he knew the truth about its former ownership. For some reason or other
+the buyer did not make any inquiry of the seller, or if he did was not
+told. But after purchasing the picture the buyer learned that he was
+mistaken and that the seller knew this at the time of making the sale.
+He sought to recover the money he had paid and succeeded, the court
+saying that a fraud had been practised upon him; that it was the duty
+of the seller, knowing what was passing in the mind of the buyer, to
+have told him the truth about the former ownership of the picture.
+
+It will be seen, therefore, that _the seller must not deceive the
+buyer in any way or practise any fraud on him_; if he does he will be
+responsible for the loss or injury befalling the other.
+
+What, then, ought a buyer to do in purchasing a horse, for example, in
+order to guard himself against the unwelcome discovery of disease or
+other defect? Clearly, _he ought to require the seller to give him a
+warranty_. A proper way is, if the transaction be an important one, to
+have the warranty in writing and signed by the seller. It need not be
+very long; a few words usually are enough.
+
+There is a very important difference that every one ought to
+understand between words that are spoken at a sale, which are mere
+representations, and words that form a warranty of the thing sold. If
+I should go into a store to buy a piece of flannel, and ask the
+salesman if it was all wool, and he should assure me that it was, and
+I, ignorant of the quality of the material, and desirous of buying a
+piece of all-wool flannel, should say to him: "I know nothing about
+it; I rely entirely on your statement," and he should say: "It is all
+right; all wool, and no cotton," his words would be a warranty, and if
+the flannel proved to be made partly of straw or cotton, or something
+besides wool, I could sue the seller on his warranty, and recover for
+the loss I had suffered, whatever that might be. But suppose I were a
+flannel manufacturer myself, and knew at the time he was saying this
+to me that the flannel was partly cotton; in short, knew a great deal
+more about it than he did, and was not deceived in any way by what he
+said, his words would not be a warranty, because my action in buying
+the flannel would not be influenced by them.
+
+What test, then, is to be applied? Evidently whether or not the buyer
+acts on the words spoken and is deceived by them. If, relying on them,
+he buys and is deceived or misled to his loss or injury, then the
+words will be taken as a warranty and protect the buyer. If, on the
+other hand, he is not deceived by what is told him, and he buys on his
+own knowledge and judgment, then the words are not a warranty.
+
+One or two other points may be briefly noticed. The law says that _the
+seller always warrants the title to the thing sold_--in other words,
+that he is the owner. He may not say one word about the matter, but
+the law implies that he is the owner and would not sell a thing that
+did not belong to him. If he should prove not to be the owner, the
+buyer could recover for his loss.
+
+_Another point about adulterations._ The common law does not regard an
+article as adulterated, giving the buyer the right to claim something
+back, unless it has been materially changed by the foreign substance.
+All, or nearly all, of the States have made statutes within recent
+years, or re-enacted old ones, holding sellers strictly responsible
+for the quality, especially of provisions, sold. These statutes
+generally require the seller to sell absolutely pure articles, and he
+cannot shield himself by saying that he was ignorant and innocent of
+their nature if they proved to be other than pure articles. If a
+grocer should sell cotton-seed oil for olive oil, even though doing so
+ignorantly, without any intention to deceive, he would nevertheless be
+held liable under the statutes that now exist in most of the States;
+and public opinion strongly favours the strict execution of these
+statutes.
+
+
+X. COMMON CARRIERS
+
+_What is meant by a common carrier?_ A person or company that is
+obliged to carry merchandise or passengers for a price or compensation
+from place to place. A common carrier cannot select his business, like
+a private carrier, but _must_ carry all merchandise that is offered;
+or, if he is a carrier of persons, all persons who desire to go and
+are willing to respect all reasonable regulations that relate to
+carrying them. _The principal common carriers are railroads,
+steamboats, and canal companies._
+
+The liability of common carriers is very important to all who travel
+or send merchandise. A common carrier is liable for all losses not
+happening by the act of God or by the public enemy. By "act of God" is
+meant unavoidable calamity, such as lightning and tempests, and by
+"public enemy" is meant a nation at war with another. Once these were
+the only exceptions. Carriers were therefore insurers of the goods
+left with them to be carried to some other place.
+
+This early rule of law fixing their liability has been greatly
+changed. Carriers can now make a contract relieving themselves of all
+liability for losses in carrying goods except those arising from their
+own negligence. The courts in a few cases have said that they can
+relieve themselves even from this, but this is not generally the law.
+They can, though, by special contract relieve themselves from all
+other liability. A railroad company, therefore, can make a contract
+for carrying wheat from Chicago to New York, relieving itself from all
+liability for loss by fire unless this shall be caused by its
+negligence. If a fire should occur without any negligence on the part
+of the company and goods on the way should be destroyed, it could not
+be held responsible for the loss if there was such a contract between
+the shipper and carrier. _A carrier is no longer an insurer for the
+safe carrying of goods._
+
+The courts have permitted carriers to thus lessen their liability
+because they are willing to take goods at lower prices than they would
+if they were to be responsible for all losses. They now virtually say
+to the shippers: "If you are willing to be your own insurers, or
+insure in insurance companies, and hold us for no losses except those
+arising from our own negligence, we are willing to carry your goods at
+a much lower rate." And, as shippers are willing to take the risks
+themselves for the sake of getting lower rates, the practice has
+become universal for lessening the liability of carriers in the manner
+described.
+
+Suppose that goods are burned up by fire. The shipper must be the
+loser unless he can show that it was caused by the negligence of the
+carrier. As he often can show this, he imagines that the carrier is
+still living under the old law and is liable as he was in the early
+days of railroad and steamboat companies. In truth, this is not so.
+His liability is measured by his contract, and there can be no
+recovery for any loss unless negligence on the carrier's part is
+clearly shown, and in many cases this is not easily done.
+
+Though common or public carriers are obliged to take and transport
+almost everything, _they may make reasonable regulations about the
+packing, etc., of merchandise_. Suppose a shipper were to come to a
+railroad company's clerk with a quantity of glass not in boxes, and
+should say to him, "I wish this glass to be carried to New York"; and
+the clerk should say to him that the rules of the company required all
+glass to be packed in boxes lined with straw, and that the rule could
+not be set aside, however short might be the distance. Very likely the
+shipper would say to the agent: "This is expensive; I wish you to take
+it as it is." And if he should say to the agent that he was willing to
+run the risk of breakage, then, perhaps, the clerk might take it in;
+yet, even on those terms, some carriers would not. At all events, if
+the clerk should insist on following the rules, the shipper could not
+justly complain, for this rule is a very reasonable one, as the courts
+have many times declared.
+
+Suppose a shipper should ask a carrier to take a load of potatoes or
+apples to Montreal in very cold weather. The carrier says to him:
+"There is danger of the apples being frozen. I am unwilling to carry
+them unless you will take the risk of their freezing." He could insist
+on these terms, because it would be unreasonable to require carriers
+to transport such merchandise and keep their cars heated. They are not
+made in that way and every shipper knows it, nor are carriers required
+to heat them.
+
+The courts have said that any reasonable regulations respecting the
+merchandise to be carried, the packing, etc., must be respected. A
+carrier could refuse positively to carry dynamite or powder unless it
+was packed in a very careful manner. Doubtless many things are carried
+in ways quite contrary to the regulations, without the knowledge of
+the carrying companies. Packages are rarely examined and things may be
+put within, out of sight, of which carriers know nothing.
+
+A carrier is not required to have cars enough to carry all goods on
+unusual occasions. But it must have enough to carry without delay all
+that come from day to day.
+
+
+XI. THE CARRYING OF PASSENGERS
+
+Millions ride on steamboats, in the street-cars, and by
+steam-railways, and the question is an important one with them. _What
+are the rights and duties of company and passenger? First, it is the
+duty of a company carrying passengers to provide every one with a
+seat._ This rule does not apply to street-cars but it does to
+steam-railways. In some cases it is said of the street-car passengers
+that those who use the straps pay the money from which dividends are
+paid. But the rule is otherwise that applies to railway companies.
+They must furnish seats for their passengers and cannot demand fares
+until seats are secured.
+
+Having taken him on board and seated him, what degree of care must the
+company use in carrying the passenger? It may seem strange to say that
+the company is not obliged to use as much care as in carrying a barrel
+of apples or an animal. Goods must be moved, kept dry, perhaps, and
+cared for in other ways. An animal must be fed. In carrying cattle
+stops must be made for rest. But the passenger takes care of himself.
+He gets in and out and provides his own rations. Therefore the law
+puts on the carrier the duty of using only a reasonable degree of care
+in taking him from place to place. In other words, the railway is not
+an insurer of life, as it is of goods or other merchandise. As
+passengers are of themselves able to get around and use some care
+with respect to their own movements, the law lessens the
+responsibility.
+
+Perhaps the reader would like to know _what the company must do in
+carrying a passenger's baggage_. This is a very practical question. If
+he takes his grip in the seat with him, he alone is responsible for
+its safety. If some one should get in the seat beside him and in going
+out should take the grip along with him, the owner could not ask the
+company to make good his loss. On the other hand, if he delivers his
+grip to the company, then the company is bound by the same rule as
+when carrying other goods and merchandise. The price paid for his
+ticket is also enough to pay the cost of carrying his trunk or other
+baggage, therefore the carrier cannot escape paying for its loss when
+having possession of it on the ground that the service is purely
+voluntary and without compensation. As the company gets compensation
+it must pay for any loss while taking baggage from one place to
+another unless the loss or damage should be due to no fault or
+negligence of the company.
+
+Every now and then we receive a cheque for a trunk or other piece of
+baggage stating that in the event of loss the company will not be
+responsible beyond a certain amount--$50, or $100, or other sum. Is
+that statement on the cheque worth anything? The courts have held that
+if one of these cheques is taken by a passenger and he reads it he is
+bound thereby. This is a contract between carrier and passenger,
+consequently he is bound by the figures mentioned under ordinary
+circumstances. This rule is just and is based on a good reason. As
+every one knows, whenever a trunk is lost it is very difficult for the
+carrier to get any proof of the real value of its contents. All the
+evidence is in the hands of the passenger. If he is without a
+conscience and apparently proves that the things in it were worth
+$200 or $300, he may succeed in getting this much, although it might
+have been full of shavings. It is because of much experience of this
+kind that carriers have tried to limit the amount for which they will
+be responsible, and so long as they do this in a fair, open way the
+law regards their conduct with favour. If, however, a passenger
+receives such a cheque and at once puts it in his pocket and does not
+know its true nature, then the courts have held that he was not bound
+by any limit of this kind.
+
+Again, a person has no business to put diamonds and rubies and
+jewellery and the like in his trunk. If he does and they are lost, he
+cannot compel the carrier to pay for them. The courts have said that
+passengers have no right to put such things in their trunks expecting
+to make carriers pay for them when they are lost. If there are things
+of unusual value in a trunk, the carrier should be informed or else
+the owner should assume the risk.
+
+One word more. An express company is a common carrier and is bound by
+the same rules as other carriers except so far as such rules may be
+changed by definite contract. When a definite contract is made, then
+the rules of ordinary carriers do not apply.
+
+
+XII. ON THE KEEPING OF THINGS
+
+There are some principles of every-day importance relating to the
+keeping of things.
+
+In our last lecture was mentioned the carriage of merchandise by
+common carriers. They not only carry merchandise--they also keep it.
+When merchandise reaches its destination and shippers have had a
+reasonable time to take it away, but neglect to do so, a common
+carrier is no longer liable for its safe keeping as a common carrier
+but only as a warehouseman. What do we mean by this? As we have seen,
+a common carrier, unless he makes a special contract for carrying the
+merchandise, is liable for everything lost or injured except "by the
+act of God or the public enemy"; or, as we have already said, he is an
+insurer for safely taking and keeping the merchandise while it is in
+his charge. When the merchandise has reached the final station, and
+the person to whom it is shipped or sent has had ample time to take it
+away and does not do so, the carrier still keeps the merchandise in
+his warehouse or depot, but he is no longer liable as a carrier for
+keeping it but simply as a warehouseman. In other words, if goods are
+kept by him for this longer period, he is liable for their loss only
+in the event of gross negligence on his part. If a fire should break
+out and the goods be burned, unless it happened by his own gross
+negligence, he would not be liable for the loss. So, too, if a thief
+should break into his warehouse and steal the goods, he would not be
+liable for the theft unless it was shown that he was grossly negligent
+in not providing a safer building. If the rats and mice should destroy
+the goods while they were in the common carrier's building, the same
+rule would apply; or if they were injured or destroyed in any other
+manner, he would not be responsible for the loss unless gross
+negligence was shown.
+
+Different rules apply, depending on whether the keeper, or bailee,
+gets any compensation for storage. In our lecture relating to sales we
+stated that the seller would not be liable for the loss of anything
+intrusted to his keeping after it had been bought of him unless he was
+grossly negligent, for the reason that no reward or compensation is
+paid to him for storage. There are, therefore, two rules which govern
+many cases. If a person keeps a thing for a reward or compensation,
+then he is bound by a stricter rule of diligence than in those cases
+in which he receives nothing for his service. This accords with the
+common reason of mankind. Evidently if a person keeps a thing simply
+as an act of kindness, he ought not to be responsible in the same
+sense that one is held responsible who is paid a fixed price for such
+service.
+
+Another good illustration is that of a bank which keeps the bonds of a
+depositor in its safe for his accommodation. The bank does not pretend
+to be a safe-deposit company or anything of the kind, but it has a
+large vault and wishes to accommodate its customers by keeping their
+stocks and bonds and other articles for them while they are off on
+vacations or for other reasons. It is a common thing for a customer to
+go to his bank, especially in the country, and ask the cashier to keep
+his valuables during his absence. The cashier is willing to comply,
+and the things are intrusted to him; but as the bank receives no
+compensation for this service it is not responsible for their loss
+unless it is grossly negligent in the matter. Suppose they are put in
+the safe among other valuables belonging to the bank and a robber
+breaks in and takes them away--is the bank responsible? Certainly not.
+On the other hand, if the customer should leave his valuables at a
+safe-deposit company, a different rule would apply, because that
+company charges him for keeping the articles. It is therefore bound by
+a stricter rule than the bank. It must use the greatest care, and if
+neglectful in any respect it is responsible for the consequences.
+
+Suppose a person should say to me: "Will you be good enough to leave
+this package with a jeweller on your way down street?" I say to my
+friend: "Certainly, with the greatest pleasure." What degree of care
+must I use in carrying that package? Only ordinary care. Suppose in
+going along the street a thief, without my knowledge, should walk
+beside me and slip his hand into my pocket and take the package, and
+on my arrival at the jewellery store I should find that it was gone.
+Should I be responsible for the loss? Certainly not, because I had
+neither received nor expected to receive any reward for taking the
+package to the store. Of course, if it could be shown that I was
+unnecessarily negligent in carrying the parcel, the owner might be
+justified in claiming damages.
+
+One thing more may be added. If a bailee should be a scoundrel and
+sell the thing left with him for safe-keeping and receive the money,
+the true owner could, nevertheless, claim the thing wherever he could
+find it. The owner would not get a good title. This rule of law
+applies to everything except negotiable paper. A person who buys that
+in good faith, honestly, not knowing that it was stolen, and pays
+money, gets a good title. _This is the only exception to the above
+rule in the law._
+
+
+XIII. CONCERNING AGENTS
+
+Very many persons act as agents for others. Much of the business of
+modern times is carried on by persons of this class. All the managers
+of corporations are agents of the railways, banks, manufacturing
+companies, and the like. They are to be seen everywhere. Every
+salesman is an agent. In short, _the larger part of the modern
+commerce of the world is done by agents_.
+
+AGENTS ARE OF TWO KINDS, SPECIAL AND GENERAL; and there are important
+differences between the two. A GENERAL AGENT is a person who transacts
+all the business of the person hiring or appointing him, called a
+principal, or all his business of a particular kind. A principal might
+have several general agents for the different kinds of business in
+which he was engaged. Suppose he has a cotton-factory and a store and
+a farm; he might have three general agents, each managing one of these
+enterprises.
+
+A general agent may be appointed in different ways. This may be done
+by a written contract. Very often, however, no such contract is made,
+and the person comes to act in a different way. A cashier of a bank,
+for example, is a general agent to transact its business, but the mode
+of appointing him rarely consists of anything more than a resolution
+of the board of directors. More often than otherwise his appointment
+is purely verbal, by word of mouth. And, again, the authority of an
+agent thus to act is often found out by his acts, known and approved
+by his principal, or in other ways. Suppose that A should manage B's
+store for him, buying and selling merchandise with A's knowledge; by
+thus putting him before the world as B's agent the law would say that
+he really was so, and B would be bound by his acts within a limit soon
+to be explained. This, perhaps, is the more common way in which the
+world learns of the authority of an agent's act. He does a great
+variety of things which it is well known must be within the knowledge
+of his principal or employer and, as they are known by the employer
+and the employer says nothing in the way of disowning or repudiating
+these acts, he is bound by them.
+
+Sometimes, indeed, persons pretend to be agents for others when really
+they have no authority to act. When this is done, and the person for
+whom they are pretending to act finds out what they are doing, then it
+is his immediate duty to take such action as the circumstances require
+to disown the acts of such pretenders. If this is not done he may be
+bound by them. His action in adopting or approving is called the
+RATIFYING of an agent's act; and when this is done the agent's action
+is just as valid as though authority had been given to him to act in
+the beginning. The principal's conduct in thus ratifying an agent's
+acts relates back to the time when the agent first began to act.
+
+A SPECIAL AGENT is appointed to do a particular thing and this is more
+often done in writing. Perhaps the most common illustration is the
+appointment of some one to act for another at the annual meeting of a
+corporation to vote on stock. Such a person is called a PROXY, and
+persons often act as through another in this manner. Sometimes one
+person serves as a proxy or agent for a very large number of
+shareholders.
+
+The liability of a principal for the acts of a general agent are very
+different from his liability for the acts of a special agent. In the
+former case the principal is said to be responsible for all the acts
+of his agent that are within the general scope of his business. In
+other words, if it is generally known that A is acting as the general
+agent of B in conducting his business,--we will say managing his
+cotton-factory,--A will bind his principal B for everything done by
+him as general agent in conducting that business.
+
+Suppose A was acting as a general agent of an insurance company and,
+among other things, was told by the president or board of directors of
+the company not to insure property in a given place below a stated
+rate. Suppose a person should go to this agent, desiring to have his
+property insured, but at a lower rate, and suppose that the agent
+should finally yield and make a lower rate as requested. Could his
+company repudiate the contract? Clearly not, for it was A's duty to
+make contracts for insuring properties. If the insured knew that the
+agent had been expressly limited in the rates for insuring and that he
+was going contrary to his instructions in making the lower rate, then,
+indeed, the company would not be bound by the contract. Otherwise it
+could not repudiate the act, for it would fall within the general
+principle that a principal is bound by the acts of his agent done
+within the general scope of his business or employment; and such a
+contract clearly would be within the limit. For, indeed, this is the
+very business of the agent--to effect insurance.
+
+The only thing necessary, therefore, for a person doing business with
+a general agent is to find out whether he is such an agent; and when
+this is learned then a person can safely transact business with him,
+doing anything within the general scope of his powers, unless the
+person actually knows that some limit or restriction has been put upon
+the agent. It is not his duty to find out what the powers of a general
+agent are, but simply whether he is a general agent or not.
+
+But the rule is very different that applies to the liability of a
+principal who employs a special agent. In such cases it is the duty of
+the person doing business with him to inquire what his powers are, for
+the principal will not be bound beyond these. Such an inquiry,
+therefore, must be made. He must ask the agent to show the authority
+under which he is appointed, or in some way clearly convince the other
+what his powers are before any business can be safely done.
+
+The authority of a special agent is often stated in writing, and the
+paper is called A POWER OF ATTORNEY. _In selling land an agent should
+always have such a power_, because a good title to land can only be
+given in writing, and this power of attorney should be copied in the
+records kept for this purpose with the deed itself to show by what
+authority the agent acted in selling the land. Every now and then when
+a person buys a piece of land and examines the title to find out
+whether it is perfect or not, he discovers that somewhere in the chain
+of title a deed was made by the agent of the seller instead of the
+seller himself, and the buyer had forgotten to put the power of
+attorney on record with his deed. The omission to do this is often
+serious. It is in truth just as important for an agent to have a
+proper power of attorney in such a case as to give a proper deed for
+his principal, and the one paper should be recorded quite as much as
+the other, as both are parts of the same story.
+
+_Sometimes an agent appoints a subagent._ This may be orally or in
+writing. A good illustration is that of the collection of a cheque
+deposited with a bank. Suppose a cheque is deposited in a bank in
+Chicago drawn on a bank in Newark, N. J. The Chicago bank is, in the
+first instance, the agent for collecting it. The bank would send the
+cheque to another in New York, which would be its subagent, and that
+bank in turn would send it to a third bank in Newark, which would be a
+subagent of the New York bank. Thus there would be two subagents,
+besides the agent, employed in collecting the cheque.
+
+There is an important question relating to the liability of one of
+these agents or subagents in the event of the negligent performance of
+the duty; which is responsible? Generally, it is said, if the general
+agent appoints a subagent he is nevertheless responsible for his act.
+Suppose a street contractor employs a subagent to repair a street and
+he digs a hole and improperly guards it and some one falls into the
+place and is injured, can the person thus injured look to the
+contractor or to the subcontractor for compensation for his injury?
+The contractor is liable in such cases. It may be added, however, that
+although he is liable to the person injured, he may be able to recover
+of the subcontractor or subagent. But this rule does not apply to the
+banks in every State. In some of them the first bank in which the
+cheque was deposited is liable for the negligence of others that may
+be afterward employed in collecting it, and this rule prevails in the
+federal courts. In a larger number of States the first bank fully
+performs its duty in selecting a proper or reputable agent, and in
+sending the cheque to it for collection. Should the second or subagent
+be neglectful, the depositor of the cheque could compel that agent,
+and not the first, to make its loss good.
+
+
+XIV. THE LAW RELATING TO BANK CHEQUES
+
+A CHEQUE has come to be one of the most common of all writings. Almost
+everybody receives more or less of them. There are some principles
+that ought to be understood by every holder or receiver of a cheque
+which, we fear, are not as well known as they should be.
+
+_First of all, a person ought to present his cheque for payment soon
+after receiving it._ Some people are quite negligent in this matter
+and carry cheques around in their pocket-books for several days before
+presenting them for payment. It may not be convenient to take them to
+a bank, and so they are carried around; perhaps their owners forget
+they have them. They ought not to do so, for the reason that the maker
+of a cheque really says to the holder: "This is an order that I give
+to you on my bank for the money mentioned. If you go at once you can
+get payment, but I do not promise to keep it there always for
+you--only for a short time." Now if a person is willing to accept a
+cheque at all, he ought to present it within the time the holder
+intended, and if he does not and the bank fails, the loss falls on the
+holder and not on the maker.
+
+_What time does the law fix for presenting cheques for payment?_ The
+rule everywhere is that the holder must present a cheque received by
+him, if drawn on a bank in the place where he lives, on the day of
+receiving it or on the next day. If the cheque is drawn on a bank at
+a distance, out of town, then he should send it to that bank, either
+directly or by leaving it with another bank for that purpose, on the
+same day as he received it or the next day. In other words, _he must
+take steps to collect the cheque either on the day of receiving it or
+the following one_.
+
+A friend of mine gave a cheque to a merchant in payment of a small
+bill. Both lived in the same town, where the bank on which the cheque
+was drawn was also located. About a week afterward the bank failed and
+the merchant wrote to him, stating the unwelcome fact and that the
+cheque had not been collected and desired him to send another. I asked
+my friend if he complied with the request, and he said: "Certainly." I
+told him that he ought not to have done so, for he was under no
+obligation either in law or morals to do such a thing. Had he known
+the above rule he would not have sent the second cheque, for it was
+pure negligence on the part of the merchant in not presenting it--in
+fact, on the same day it was received.
+
+A person may, of course, hold a cheque for a much longer period than
+the time above mentioned and present it and receive payment, but the
+point that we are trying to make clear is that _the risk of holding
+it_ during this period _is the holder's and not the risk of the maker
+of the cheque_. I suppose the merchant in the above case had, perhaps,
+lost the cheque. Every now and then one is mislaid and, consequently,
+is not presented for payment when it should be, but the maker ought
+not to suffer for the negligence of the receiver of his cheque. The
+rule of law that we have given is founded on justice, and if the
+receiver is negligent in not presenting it as he should, the holder
+ought not to suffer.
+
+_It is the duty of a bank to pay a cheque just as it is drawn, and if
+it makes any mistakes it must suffer._ The reason for this rule is
+that the maker does not expect to see his cheque again after it leaves
+his hand, and when he puts his money in a bank for safe-keeping the
+bank virtually says to him that it will pay only on his order just as
+he has written. It will guard his interests carefully and pay no
+forged cheques or cheques that have been altered in dates or amounts,
+to his injury. Now, it is quite a common thing for cheques to be
+forged, and still more common for them to be raised. A scoundrel gets
+a cheque that is genuine, ordering a bank to pay $18, and changes it
+to $1800. He presents it for payment and it is paid. By and by the
+depositor finds out that he has not as much money in the bank as he
+supposed he had there. What has happened? Some one has altered one of
+his cheques and drawn out too much. He goes to the bank and makes
+inquiry, learns that this is so, and then demands that it shall make
+the amount good to him. Usually a bank is obliged to pay.
+
+There is one limit to this rule. _A man making a cheque must be
+careful to write it in such a way that changes or alterations cannot
+easily be made._ If he is careless, leaving ample space so that
+changes can be made in the amount, then he will be considered
+negligent, and a bank would not be obliged to make good his loss. If,
+on the other hand, he is careful in drawing his cheques then a bank's
+duty to protect him is plain, and it is liable in the event of
+neglecting to do so.
+
+A few years ago a man drew a cheque for $250, dated it three days
+ahead, and left it with his clerk, directing him to draw the money on
+the day written in the cheque and pay the men who worked for him, and
+went away. The clerk thought that he would like to keep that money
+himself and take a little journey also, so he changed the date to one
+day earlier, went into the bank on that day and drew the money, and
+started for the Klondike or some other place. The maker of the cheque
+soon found out what had happened and demanded of the bank to make the
+amount good. The bank said to him: "Suppose the clerk had waited one
+day longer and then drawn the money, you would have been the loser
+just the same." The man admitted all this, but replied, nevertheless,
+that he had not changed the date; that the bank ought to have seen the
+alteration before paying, and as it did not it was negligent in that
+regard, and the bank was obliged to lose.
+
+When a person takes a cheque he naturally supposes that the bank on
+which it is drawn owes the money to him because he can truly demand
+it. _Suppose a bank refuses to pay, can the holder then sue the bank
+for money?_ In six States--Illinois, South Carolina, Missouri,
+Kentucky, Colorado, and Texas--the holder of such a cheque can sue the
+bank and get his money. The courts in those States say that a cheque
+is an assignment or transfer of the amount of money stated to the
+holder of the cheque from the time that the cheque was given him. The
+law in all of the other States is otherwise, and a bank for a good
+reason can decline to pay a cheque, and, in any event, the holder
+cannot sue the bank for the amount. If it will not pay he must look to
+the maker and not the bank for payment. Of course, _a cheque must
+always be drawn against a deposit, and it is a fraud on the part of a
+person to draw a cheque on a bank when he has no money there_.
+Sometimes mistakes are made by banks in their bookkeeping, and they
+think they have not the money to pay when in truth they have. In such
+cases they sometimes decline to pay, but even if they had the money
+the law says that there is no contract between the holder of a cheque
+and the bank on which it is drawn, and therefore the holder cannot
+sue it should it refuse to pay. This rule, however, is rather losing
+ground and the other is coming into more general favour--that a cheque
+does operate to transfer the money of the maker to the holder and,
+consequently, that he has a right to sue the bank for the money.
+
+Cheques are made payable either to bearer or order. If a cheque is
+made payable to bearer it can be transferred from one person to
+another simply by handing it to him--by delivery; but if a cheque is
+made payable to order, then the person who receives it, if wishing to
+transfer it to some one else, must write his name on the back. If he
+writes his name on the back it is called a blank indorsement, and this
+form is often used in transferring cheques. If, however, a person
+intends to send a cheque through the mail he should never write it
+payable to bearer, but always payable to the order of a particular
+person, so as to require his name to be written thereon in order to
+make a good transfer. This is a much safer way of sending cheques than
+simply by making them payable to bearer.
+
+
+XV. THE LAW RELATING TO LEASES
+
+A LEASE IS AN AGREEMENT, and, as every one knows, usually relates to
+the hiring of lands and houses. _If the agreement is to be for a
+longer period than one year it should be in writing_, for if it be not
+either party can avoid it, not morally but in law. The statute of
+frauds, which has been explained, would shield either party in not
+carrying out such an agreement if it were not in writing if by its
+terms it was to last for a longer period than one year.
+
+There is another very important reason for putting such an agreement
+in writing. Much of the law relating to the two parties, landlord and
+tenant, is one-sided and in favour of the landlord. Our law on that
+subject is based on the English law. It was imported in the early
+colonial days, and, though it has been greatly changed by statute and
+by decisions of the courts, it is still very one-sided, as we shall
+see before finishing this paper. For this reason, especially, all
+leases relating to houses and stores or other buildings, even for a
+short period, should be in writing, with the rights and duties of both
+parties fully stated, so that both may clearly know what to do and to
+expect.
+
+Unless something is said in the lease concerning repairs the landlord
+is not obliged to make any. This statement shows at once the need of
+having a written lease. If the house is out of order--the locks,
+blinds, doors, and windows are not in good order--the tenant cannot
+claim anything of the landlord or require him to put them in good
+condition. Even if a house should become unfit for habitation in
+consequence of fire, or is blown down, or is flooded with water, the
+landlord is not bound to do anything unless he has stated that he will
+in his lease.
+
+A fire broke out not long since in a large warehouse and burned it so
+completely as to render it wholly unfit for use; indeed, all the
+merchandise in it was wholly consumed. Nevertheless, when the lease
+expired and the tenants refused to pay as they had agreed to do, the
+landlord brought a legal proceeding against them to compel them to pay
+during the entire period, as though they had been staying there and
+selling goods and making money, and they were compelled to pay. _This
+is the common law on the subject_, and every tenant is bound to pay in
+such cases unless he has clearly stated in his lease that he is not to
+be holden in the event of the destruction of the building by fire,
+flood, lightning, or other cause.
+
+Furthermore, it may be added that leases nowadays are often furnished
+with blank spaces to be filled up with names, the amounts to be paid,
+times of payment, etc., and persons often sign them without even
+reading them. They should not do this. They should be careful to read
+them over two or three times or more, until they fully understand them
+and are sure of their nature before signing or executing them. People
+are still more negligent in taking out insurance policies without
+reading them. They are very long and parts of them are printed in fine
+type and, perhaps, are quite difficult, especially for old eyes, to
+read. In truth some of the most important parts are put in the finest
+print--some of the exceptions against loss and other matters, which,
+we are quite sure, if a person when taking out a policy should read
+over and understand he would insist on having changed.
+
+If a house becomes unfit for living therein by its own fault--for
+example, if it is overrun with rats, or becomes so decayed that the
+weather invades and is thereby rendered unfit--the tenant, so the law
+says, has indeed the privilege of quitting, if he did not know these
+things at the time of entering; but if he did, he would be required to
+live there, however much he might dislike the company of rats or the
+presence of the snow or rain, and also to pay his rent; or, if
+quitting for that reason, he would still be responsible for the rent
+as he would if living in the house. An eminent legal writer has stated
+the principle in this way: The tenant can leave if the defect was not
+known or anticipated by him, or known or anticipated if he had made a
+reasonable investigation or inquiry before he took the lease.
+
+A tenant is not required to make general repairs without an agreement,
+but he must make those that are necessary to preserve the house from
+injury by rain and wind. If the shingles are blown off or panes of
+glass are broken others must be put in their places; and it is said
+that he would be bound even for ornamental repairs, like paper and
+painting, if he made an agreement to return the house in good order.
+
+A tenant of a farm must manage and cultivate it by the same rules of
+husbandry as are practised in his vicinity, and if his lease ends by
+any event that is uncertain and could neither have been foreseen nor
+foretold, he is entitled to the annual crop sowed or planted by him
+while he was in possession.
+
+As we have stated, if the house is wholly destroyed the tenant must
+still pay the rent, for the reason, which to many may seem absurd,
+that the law regards the land as the principal thing and the house as
+secondary. It is true that a man, in the event of his house burning
+down, might pitch a tent on the ground and live there, but it would be
+a decidedly chilly way of living, especially in the winter-time, in
+the northern part of our country. If a tenant should agree to return
+and deliver the house at the end of the term in good order and
+condition, reasonable wear and tear only excepted, he would be obliged
+to rebuild the house if it burned down. Once more, we ask, in view of
+these things, ought he not to make a written lease and well understand
+its terms before signing it?
+
+The times for paying rent are usually specified in the lease, if one
+is made. When they are not the tenant is governed by the usage of the
+country or place where he lives.
+
+When nothing is said about underletting the whole or a part to some
+one else the tenant has a right to do this, but remains bound to the
+landlord for his rent. Generally when written leases are made there is
+a clause stating that the tenant cannot underlet any portion or all
+without the landlord's consent.
+
+_A tenant is not responsible for taxes unless it is expressly agreed
+that he shall pay them._
+
+If a lease be for a fixed time the tenant loses all right or interest
+in the land as soon as the lease comes to an end, and he must leave
+then or the landlord may turn him out at once, or, in other language,
+eject him. If, however, he stays there longer with the consent of the
+landlord he is then called a tenant at will and cannot be turned out
+by the landlord without giving a notice to him to quit. The statutes
+of the several States have fixed the length of time that a notice
+must be given by the landlord to his tenant before he can turn him
+out. In many States a notice of thirty days must be given; sometimes
+sixty days' notice is required, or even longer.
+
+It is an important question _what things a tenant may take away with
+him at the expiration of his lease_. Of course, there is no question
+whatever with respect to many things. Besides his wife and children he
+may take all his furniture and other movable property. But there are
+many things fixed to the house by the tenant that he desires to remove
+if he has the right to do so, and many questions have been asked and
+decided by the courts relating to this subject. The method of
+fastening them to the house is the test usually applied to determine
+whether they can be taken away or not. If they are fastened by screws
+in such a way as to show that the tenant intended to take them away,
+he can do so, otherwise he cannot.
+
+In modern times the rule has been changed in favour of the tenant, and
+whatever he can remove without injuring the house, leaving it in as
+good condition as it would otherwise be, he can take away; for
+example, ornamental chimney-pieces, coffee-mills, cornices that are
+furnished with screws, furnaces, stoves, looking-glasses, pumps,
+gates, fence rails, barns or stables on blocks, etc. On the other
+hand, a barn placed on the ground cannot be removed, nor benches
+fastened to the house, nor trees, plants, and hedges not belonging to
+a gardener by trade, nor locks and keys. Of course, all these things
+may be changed by the written lease, and it should be clearly stated
+what things may be removed concerning which any doubt may arise. We
+have heard of a case in which a tenant put a pier-glass into a house,
+fastening it by means of cement. He asked and was given the
+landlord's permission to do this at the time of putting it in, but
+when the lease ended the landlord would not allow him to take it out,
+and an appeal was made to a court, which decided in favour of the
+landlord. Doubtless this decision is correct. If the glass could have
+been taken away without injuring the wall then it belonged to the
+tenant. This shows the need of putting such matters in writing;
+otherwise the tenant will suffer unless the landlord be a man of the
+highest integrity.
+
+
+XVI. LIABILITY OF EMPLOYER TO EMPLOYÉS
+
+Persons who are employed in mills, in erecting buildings, by railroad
+companies, and others, are frequently injured while pursuing their
+employment, and the question has often arisen whether the employer was
+liable for the injury thus suffered by them. The more important of
+these questions we propose to answer in this and the following
+lecture, as they are matters of every-day importance to many people.
+
+First of all, an employé to recover anything for the loss that may
+have happened must show that in some way _his employer was negligent_.
+He cannot get something simply because he has been injured. The law in
+no country has ever said that he could. In all cases he must show that
+his employer failed in his duty in some way toward him to lay the
+foundation of an action against him. This is the first principle to
+keep clearly in mind.
+
+Again, it is said that an employé cannot recover if the injury has
+happened to him in consequence of the negligence of a fellow-servant.
+By this is meant a person engaged in the same common employment. It is
+not always easy to determine whether two persons employed by the same
+company are fellow-servants, as we shall soon see, but the principle
+of law is plain enough that in all cases where they are thus acting
+as fellow-servants they cannot recover for any injury. The law says
+this is one of the risks that a person takes when he enters the
+service of another. Suppose a person is at work mining coal and is
+injured by another person working by his side through his negligence.
+However severely injured he may be he cannot get anything, because the
+person through whose negligence he has been injured is a
+fellow-workman.
+
+But many employés may have the same common employer and yet not be
+fellow-servants. For example, a brakeman would be a fellow-servant
+with the conductor and engineer and other persons running on the same
+train or on other trains belonging to the same company, but he would
+not be a fellow-servant working in the same line of employment with
+those who are engaged in the repair-shop of the company.
+
+This statement is quite sufficient to show the difficulty there is
+sometimes in deciding whether a person is a fellow-servant or not. If
+a person is injured through the negligence of another employed by the
+same company who is not a fellow-servant, then he can recover if there
+are no other difficulties in the way, otherwise he cannot. It does not
+follow that fellow-servants are of the same grade or rank; the test is
+whether they are acting in the same line of employment. The brakeman's
+position is not so high as that of the engineer or conductor, yet all
+three are acting in the same line of employment, and if any one of
+them was injured by another in that part of the service the employer
+would not be liable.
+
+In a very large number of cases, therefore, employers are not liable
+for accidents happening to their employés, because they are injured
+through the negligence of other employés engaged in the same line or
+subdivision of the common service. Perhaps employers escape more
+frequently on this ground than on any other from paying anything for
+losses.
+
+Yet there is another ground on which they often escape paying
+anything. An employé is supposed when making his contract with his
+employer to take on himself all the ordinary risks arising from his
+employment. These in many cases are very numerous. He does not assume
+extraordinary risks, but he does assume all ordinary risks that are
+likely to happen to him. Employés are injured every day and yet can
+recover nothing, because their injury is simply a common one, the risk
+of which they have assumed.
+
+Would it not be possible to make an employer liable for them all?
+Undoubtedly an employé could make a contract of this kind if he wished
+and his employer was willing to do so, but if they did the employer
+would be unwilling to pay as high wages. The greater the risk assumed
+by the employé the larger is the compensation paid; the one thing is
+graded by the other. It was stated when considering the rights and
+duties of common carriers that they have been lessening their
+liabilities; on the other hand, they are carrying for smaller prices
+than they once did. Doubtless a carrier would be willing to assume
+more risks--every kind of risk, in short--if he were paid enough for
+it, but shippers ordinarily are willing to assume many risks for the
+sake of the lower rates and insure their risks in insurance companies.
+Just so the working-men prefer higher wages and assume many risks of
+their employment. There is nothing unfair in this. For example, the
+persons who are engaged in making white lead run an unusual risk in
+pursuing their employment. It is said nowadays that if they use the
+utmost care in protecting themselves from inhaling the fumes that
+arise in some stages of this process, they can live quite as long as
+other people. But unless they do exercise every precaution their
+system finally becomes charged with the poison that arises from this
+process and their lives are shortened. They well understand this
+before beginning the work; they are told of the risks and are paid
+high wages. If, therefore, they undertake such employment, well
+knowing the risks, they have no right to complain if their health
+after a time suffers. No fraud has been practised on them, and we do
+not know that they do complain if they suffer any ill effects from
+their work.
+
+
+XVII. LIABILITY OF EMPLOYERS TO EMPLOYÉS (_Continued_)
+
+In our last lecture we stated some of the principles relating to the
+liabilities of employers to their employés; in this lesson the subject
+will be continued. _An employer is bound to use some care or
+precaution, and if he does not will be responsible for his neglect._
+One of these is he must employ persons who are fit for the work they
+are set to do. If an employer in mining should put a man to work by
+the side of another to mine coal who he knew was not a skilful
+workman, and, in consequence of this unskilful workman's
+unskilfulness, other miners were injured, he would be responsible for
+hiring such a man. Every one will see the justice of this rule.
+
+_The employer must also give proper instructions to the person
+employed whenever he does not understand his duties._ If a person is
+employed to run a laundry machine who does not understand how to work
+it, and other employés are injured through his ignorance, the employer
+would be liable. He must, therefore, tell such a person what to do; he
+has no right to hazard the lives of others by putting any one who has
+no knowledge of a machine to work without instructing him properly.
+Again, if a person pretends to be capable, and the employer,
+believing him, engages him, and it is soon found out that he is not,
+then it is the duty of the employer either to dismiss him or to give
+him proper instructions. The rule, however, on this subject is not the
+same everywhere. It is sometimes said that if an employé continues to
+work by the side of another after knowing that this other is
+incompetent, it is his duty to give notice to the employer, and if the
+employer continues to employ him, to quit. If he does not he assumes
+the greater risk arising from his knowledge of the incompetency of the
+other.
+
+_It is the duty of the employer to furnish proper appliances for his
+workmen._ He must furnish proper tools and machinery and safe
+scaffolding, and in every respect must show a reasonable degree of
+care in all these particulars. But the courts say that he is not
+obliged to exercise the _utmost_ care, because the employé takes on
+himself some risk with respect to the tools and machinery he uses. For
+example, it is said that employers are not obliged to use the latest
+appliances that are known or appear in the market for the use of their
+workmen. If an employer has an older one that has been in use for
+years, and the employés have found out all the dangers attending its
+use, and a new one appears that is less dangerous to use, the law does
+not require the employer to throw the older one away and get the
+other. It is true that in many States within the last few years
+statutes have been passed by the legislatures requiring employers to
+be much more careful than they were formerly in protecting their
+machinery. Many injuries have happened from the use of belting, and
+the statutes in many cases have stated what must be done in the way of
+enclosing belts, and of putting screens around machinery, and in
+various ways of so protecting it that persons will be less liable to
+suffer. Furthermore, inventors have been very busy in inventing
+machinery with this end in view. The old-fashioned car-coupler was a
+very dangerous device, and many a poor fellow has been crushed between
+cars when trying to couple them. A coupler has been made in which this
+danger no longer exists; in truth, there has been a great advance in
+this direction.
+
+_An employer must also select suitable materials on which to work._
+This is a well-known principle. If he does not, then he is responsible
+for the consequences. In one of the cases a person was injured while
+erecting a scaffolding from the breaking of a knotty timber. The
+testimony was that the knot was visible on the surface and if the
+stick had been examined the defect would have been seen. That seemed a
+slight defect, surely, but the consequence of using the timber was
+very serious, and the court rightly held that as this defect could
+have been seen, had the timber been properly examined, the employer
+was responsible for the injury to a workman who was injured by the
+breaking of it.
+
+_An employer must also select suitable places for his employés._ In
+one of the cases a court said a master does not warrant his servant's
+safety. He does, however, agree to adopt and keep proper means with
+which to carry on the business in which they are employed. Among these
+is the providing of a suitable place for doing his work without
+exposure to dangers that do not come within the reasonable scope of
+his employment. In one of the cases a company stored a quantity of
+dynamite so near a place where an employé was working that he was
+killed by its explosion. The court held that it was negligence on the
+part of the company in requiring its employé to work so near the place
+where this explosive material was kept.
+
+It is said that if an employé knows that a machine which he is to
+operate is defective when accepting employment he can recover nothing
+for the consequences. He assumes the risk whenever he thus engages to
+work. If the service be especially perilous and yet he clearly
+understands the nature of it and is injured when performing it, he can
+get nothing. Doubtless in many of these cases he is paid a larger sum
+for working under such conditions. Whatever may be the truth in this
+regard, the principle of law is well understood that, if he has a full
+knowledge of the risk of his situation and makes no complaint about
+the nature of the machinery that he is to operate, he accepts the
+risks, however great they may be. In one of the cases an employé was
+injured by the kick of a horse belonging to his employer, but he
+recovered nothing, because he understood the vicious nature of the
+animal. The horse had kicked others; in fact, its reputation for
+kicking was well known, and the employé began work with his eyes wide
+open.
+
+This rule also applies if tools, machinery, etc., become defective and
+the employé continues to work after the defects are found out. Of
+course, every one knows that tools wear out and machinery becomes
+weaker, and that is one of the natural consequences of using them. And
+so it is regarded as one of the risks ordinarily taken by an employé,
+and therefore he can get nothing whenever he is injured through the
+operation of a defective machine caused by the natural wear and tear
+of time.
+
+
+EXAMINATION PAPER
+
+    NOTE.--_The following questions are given as an indication of
+    the sort of knowledge a student ought to possess after a careful
+    study of the course. The student is advised to write out the
+    answers. Only such answers need be attempted as can be framed
+    from the lessons._
+
+1. (_a_) What is a contract? (_b_) What is the difference between a
+   simple and a special contract? (_c_) What contracts can be made
+   by a minor? When and how can he ratify them? (_d_) If a person
+   makes a contract to work for one year and breaks it after working
+   six months can he collect six months' wages? (_e_) Give
+   illustrations of six different kinds of contracts.
+
+2. (_a_) When is it necessary that contracts be in writing? (_b_) In
+   what case is a failure of consideration a good defence to a
+   contract? (_c_) Is a consideration required to make an offer
+   binding? (_d_) Is the delivery of goods essential to make a sale
+   complete?
+
+3. (_a_) What are the different kinds of warranties? (_b_) Suppose A
+   should buy goods and pay for them, but not take them away, and
+   afterward B should buy them and take them away--could A recover
+   the goods from B?
+
+4. (_a_) What is the difference between a public and a private
+   carrier? (_b_) Must a public carrier take everything offered?
+   (_c_) What rules of liability apply to common carriers, and how
+   can they be modified?
+
+
+
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+
+I. PREPARING COPY
+
+Our purpose in these few lessons is to give some explicit directions
+as to the general make-up of manuscripts intended for printing. Every
+person who has even a business card or a circular to print should have
+a knowledge of the common phraseology of a printing house.
+
+As to paper, the size in most common use for manuscripts is what is
+known as _letter_. The sheets in any case should be of uniform size.
+Avoid all eccentricity and affectation in the preparation of your
+manuscript, or "copy," as printers call it. The more matter-of-fact
+and businesslike it is the better.
+
+If at all possible have your manuscript type-written, and under no
+circumstances should you roll the sheets when preparing them for the
+mails. There are a number of large publishing houses which positively
+refuse to touch rolled manuscripts. The very first impression created
+by such a manuscript is one of extreme irritation. A rolled proof is
+pretty nearly as discouraging, yet many printers still follow the
+annoying practice of rolling their proofs.
+
+Every printing establishment of any note has its methods and customs
+as regards orthography, the use of capitals and of punctuation. As a
+rule it is best to leave doubtful points to the printer. Any little
+deviation desired may be easily remedied in the proofs.
+
+Paragraphs should be boldly indicated by setting the line well back in
+the "copy." Extract matter included in the text should be clearly
+shown, either by marking it down the side with a vertical line from
+beginning to end or by setting the whole well back within the compass
+of the text. Such matter is commonly set in slightly smaller type.
+
+With regard to the corrections in the proofs it must be remembered
+that the more carefully an article is written the smaller the expense
+for author's corrections. This charge is often a great source of
+contention between the author and the printer, and, altogether, is an
+unsatisfactory item. A printer is bound, with certain reservations, to
+follow the "copy" supplied. If he does that and the author does not make
+any alterations there is no extra charge and nothing to wrangle about.
+A small correction, trivial as it may seem to the inexperienced, may
+involve much trouble to the printer. A word inserted or deleted may
+cause a page to be altered throughout, line by line, and a few words
+may possibly affect several pages. The charges made for corrections
+are based on the time consumed in making the necessary alterations.
+
+
+II. ON THE NAMES AND SIZES OF TYPE
+
+The beauty of printed matter depends very largely upon the selection
+of a suitable style of type. For books and newspaper work there are in
+use two general classes known as (_a_) _old style_, (_b_) _modern_.
+These names refer to the shape of the letter and not to its size. The
+several sizes of type commonly used in all plain work are as follows:
+
+     1. PEARL.
+     2. AGATE.
+     3. NONPAREIL.
+     4. MINION.
+     5. BREVIER.
+     6. BOURGEOIS.
+     7. LONG PRIMER.
+     8. SMALL PICA.
+     9. PICA.
+    10. ENGLISH.
+    11. GREAT PRIMER.
+
+PICA is universally considered as the standard type, just as the _foot_
+is the standard of measurement. The twelfth part of a pica is the unit,
+called a _point_, by which type bodies are measured. In many printing
+offices the type is known as _6-point_, _8-point_, _10-point_, _etc._,
+instead of as _nonpareil_, _brevier_, _long primer_, _etc._ The
+following specimens show the sizes of the type in common use:
+
+[Illustration: Sample type faces pearl, agate, nonpareil, minion,
+brevier, bourgeois, primer, small pica, pica, English, primer.]
+
+The student must bear in mind the fact that these names refer to the
+_size_ of the type. For instance, there may be a dozen different
+styles of brevier or of pica; a particular specimen of printing may be
+entirely in long primer, yet some words may be capitals, others
+italic, others boldface, and so on.
+
+AGATE is the size of type used in measuring advertisements. There are
+fourteen agate lines in an inch.
+
+A complete series of type of a particular size is called a _font_; as
+a font of brevier, or of pica. Such a font would include:
+
+    CAPITALS
+    SMALL CAPITALS
+    lower-case
+    _ITALIC CAPITALS_
+    _italic lower-case_.
+
+Also _figures_, _fractions_, _points_, _references_, _braces_,
+_signs_, _etc._ Printers divide a font of letters into two classes:
+
+    1. _The upper-case_ } _sorts._
+    2. _The lower-case_ }
+
+The _upper-case sorts_ are _capitals_, _small capitals_, _references_,
+_dashes_, _braces_, _signs_, etc.
+
+The _lower-case sorts_ consist of _small letters_, _figures_,
+_points_, _spaces_, etc.
+
+Type lines are often bulked out by the insertion of thin strips of
+lead, this being called _leading_. Where no leads are employed the
+matter is said to be _solid_.
+
+
+III. THE TERMS USED IN PRINTING
+
+COMPOSITION. This is the name given by printers to the work of setting
+the type. The compositor holds in his hand a _composing-stick_, into
+which he places the type letter by letter, adding the spaces where
+necessary. A great deal of the newspaper work of the present day is
+set by type machines.
+
+DISTRIBUTING. The type of a particular page or article after it has
+been used on the press or for electrotyping is distributed letter by
+letter in the _cases_. This work is much more rapid than composition.
+Type to be used a second time is said to be _standing_ or is called
+_standing matter_.
+
+SPACES. Spaces are short blank types and are used to separate one word
+from another. To enable a compositor to space evenly and to "justify"
+properly, these spaces are cast to various thicknesses. An _em
+quadrat_ is a short blank type, in thickness equal to the letter _m_
+of the font to which it belongs. Quadrats are of various sizes.
+
+CALENDERED PAPER. This name is given to very highly rolled or glazed
+paper such as is used in illustrated work. _Laid_ paper has a slightly
+ribbed surface. _Antique_ paper is rough and usually untrimmed at the
+edges. It is made in imitation of old styles.
+
+CAPS. and LOWER-CASE. These names are used to designate capitals and
+small letters.
+
+CLARENDON. This name is commonly given to a _bold_ and _black-faced
+type_, such as used in text-books to bring out prominently particular
+words.
+
+DUMMY. An imitation in style and size of a book or pamphlet that is
+wanted, usually made up with blank paper.
+
+ELECTROTYPE. Electrotype or stereotype plates are made from type.
+Books are usually printed from such plates.
+
+GALLEY PROOF. As the type is set up it is removed from the
+composing-stick to long forms called _galleys_. A proof taken of the
+whole galley at once is called a _galley proof_. Book work should be
+revised in galleys before it is made up into pages.
+
+IMPRESSION. A _flat-pull_ or first impression is a simple proof usually
+pulled in job offices by laying a sheet of damp paper on the inked type
+and pounding with a flat-surfaced weight to get the impression.
+
+INDENT. To set a line some distance forward, as in the case of a new
+paragraph.
+
+LETTERPRESS. Printed matter from type as distinguished from plate
+printing.
+
+MAKE-UP. To measure off type matter into pages.
+
+OFF-SET. It frequently occurs that as the result of insufficient drying
+or from other causes the impression of one sheet appears on the back of
+another; such work is said to _off-set_.
+
+OVERLAYS. In making ready for the press the pressman finds it necessary
+to add here and there, by pasting, thicknesses of paper to his roller to
+bring out properly the light and shade of an illustration or to get an
+even ink impression from the type or plates. This work is called _making
+overlays_. In expensive illustrated work specialists are engaged solely
+for the purpose of making overlays.
+
+PRESS PROOF. The final proof passed by the author or publisher.
+
+PROCESS-BLOCKS. Blocks produced by the photoengraving and other
+mechanical processes.
+
+QUERY. A mark made on a proof by the printer to call attention to a
+possible error, sometimes expressed by a note of interrogation (?).
+
+REGISTER. The exact adjustment of pages back to back in printing the
+second side of a sheet.
+
+SIGNATURE. The letter or figure at the foot of a sheet to guide the
+binder in folding; also used by printers to identify any particular
+sheet.
+
+The various marks and signs used by printers will be explained in the
+lesson on proof-reading.
+
+
+IV. MARKS USED IN PROOF-READING
+
+The most important of the signs used in making corrections for the
+printer are as follows:
+
+ 1. [Illustration] Delete or expunge.
+
+ 2. [Illustration] A turned letter.
+
+ 3. [Illustration] Wrong-font letter.
+
+ 4. [Illustration] Change capital to small letter, ("lower-case").
+
+ 5. [Illustration] Insert period.
+
+ 6. [Illustration] Transpose words or letters as indicated.
+
+ 7. [Illustration] Change roman to _italic_.
+
+ 8. [Illustration] Change _italic_ to roman.
+
+ 9. [Illustration] Space to be inserted.
+
+10. [Illustration] Matter wrongly altered to remain as it was
+    originally. Dots are placed under the matter.
+
+11. [Illustration] A bad or battered letter.
+
+12. [Illustration] Space to be reduced.
+
+13. [Illustration] Close up.
+
+14. [Illustration] Push down space or lead.
+
+15. [Illustration] New paragraph.
+
+16. [Illustration] Something foreign between the lines, or a wrong-font
+    space making the type crooked.
+
+17. [Illustration] Line to be indented one _em_ of its own body.
+
+When letters or words are set double or are required to be taken out a
+line is drawn through the superfluous word or letter and the mark No.
+1, called _dele_, placed opposite on the margin. (_Dele_ is Latin for
+_take out_.)
+
+A turned letter is noted by drawing a line through it and writing the
+mark No. 2 on the margin.
+
+If letters or words require to be altered to make them more
+conspicuous a parallel line or lines must be made underneath the word
+or letter--namely, for capitals, _three lines_; for small capitals,
+_two lines_; and for italic, _one line_; and on the margin opposite
+the line where the alteration occurs the sign _caps._, _small caps._,
+or _ital._ must be written.
+
+Where a letter of a different font is improperly introduced into the
+page it is noted by drawing a line through it and writing _w. f._
+(_wrong font_) on the margin.
+
+Where a word has been left out or is to be added a _caret_ must be
+made in the place where it should come in and the word written on the
+margin. A caret is made thus: ^
+
+Where letters stand crooked they are noted by a line, but where a page
+hangs lines are drawn across the entire part affected.
+
+Where a faulty letter appears it is denoted by making a cross under it
+and placing a similar mark on the margin.
+
+Where several words are left out or where new matter is to be added
+the added matter is written wherever convenient, and a line is drawn
+from the place of omission to the written words.
+
+In making a correction in a proof always mark the wrong letter or word
+through and insert the alteration in the margin, not in the middle of
+the printed matter, because it is liable to be overlooked if there is
+no marginal reference to the correction. To keep the different
+corrections distinct finish each off with a stroke, thus /; and to
+make the alterations more clear or less crowded mark those relating
+to the left-hand portion on the left margin and those relating to the
+right-hand portion on the right margin.
+
+       *       *       *       *       *
+
+The hints given here are intended for the general public and not for
+the printer, and to the student of these lessons let us say that the
+first essential of good proof-reading is clearness. Be very sure that
+the printer will understand the changes which you desire him to make.
+Quite often it is an advantage if you wish a particular style of type
+used to cut out a sample of that style and paste it on your copy or on
+your proof, indicating that you want it to be used. Instructions to
+the printer written either on the copy or on the proof should be
+surrounded by a line to separate them from the text, or to prevent
+any confusion with other written matter intended as copy or as
+corrections.
+
+When the corrections have been duly made and approved by the author or
+editor it is customary to write the word "press" on the top of the
+first page. If intermediate proofs are wanted, mark on the proofs
+returned to the printer "Send revise." The final or "press" proof is
+always retained by the printer in case of any dispute. It is his
+voucher, and he retains it for future reference.
+
+It is a good plan to make corrections in a different coloured ink from
+that used by the printer's proof-reader. If you are having a pamphlet
+or book printed the different proofs will reach you in the following
+order:
+
+    1. _Galley proofs._
+    2. _Revised proofs_ (if any).
+    3. _Page proofs._
+    4. _Foundry proofs._
+
+[Illustration: A printer's proof.]
+
+So far as possible, make all the necessary changes while the type is in
+galleys. Once made up into pages, a very slight change, particularly
+such a change as the crossing out or addition of a sentence, may make a
+great deal of trouble. When the pages are passed upon they are sent to
+the foundry for casting. The foundry proofs are the last proofs pulled.
+Corrections made on these make it necessary to alter the electrotype
+plates, which is rather an expensive process. To change a word, a piece
+of the metal plate has to be cut out and another with the new word
+soldered in.
+
+[Illustration: A printer's corrected proof.]
+
+A page is said to _overrun_ if it is too long. If the space to be
+occupied is limited it is a good plan to adapt your copy to it by
+counting the words and by comparing the count with that of some
+printed page in the same size of type.
+
+Return proofs to your printer or publisher as promptly as possible. As
+a rule printing houses cannot afford to keep type locked up and unused
+waiting for the return of proofs. There are many imperfections in
+typography, such as wrong-font and inverted letters, awkward and
+irregular spacing, uneven pages or columns, crooked words and lines,
+etc., which it is the business of the printing house to correct. No
+book or pamphlet, therefore, ought to go to press until it has been
+read and revised by an experienced reader.
+
+Strict uniformity should always be preserved in the use of capitals,
+in spelling, and in punctuation.
+
+Where authors have their manuscripts type-written and make two or
+three revises upon the type-written sheets before their copy is turned
+over to the publishing house, the labour of proof-reading and the
+expenses of corrections are reduced to a minimum.
+
+The errors shown in our illustration are more numerous than are likely
+to appear in any proof sent out from a publishing house.
+
+
++------------------------------------------------+
+|            Transcriber's Notes                 |
++________________________________________________+
+|                                                |
+| Page  35 favorable changed to favourable       |
+|       49 favor changed to favour               |
+|       65 (5) changed to 5.                     |
+|      115 contantly changed to constantly       |
+|      130 Ierland change to Ireland             |
+|      150 battle-ships changed to battleships   |
+|      152 BREAD-STUFFS changed to BREADSTUFFS   |
+|      162 duplicated "from" deleted             |
+|      163 bread-stuffs change to breadstuffs    |
+|      205 June, 1898 changed to June 30, 1898   |
+|      208 proportiona t changed to proportion at|
+|      223 duplicated "in" deleted               |
+|      258 typewritten changed to type-written   |
+|      350 everyday changed to every-day         |
+|      384 comma added after figures             |
+|      389 colored changed to coloured           |
+|      390 nessary changed to necessary          |
++------------------------------------------------+
+
+
+
+
+
+End of the Project Gutenberg EBook of Up To Date Business, by Various
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diff --git a/old/20531-8.zip b/old/20531-8.zip
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@@ -0,0 +1,10515 @@
+The Project Gutenberg EBook of Up To Date Business, by Various
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org
+
+
+Title: Up To Date Business
+       Home Study Circle Library Series (Volume II.)
+
+Author: Various
+
+Editor: Seymour Eaton
+
+Release Date: February 6, 2007 [EBook #20531]
+
+Language: English
+
+Character set encoding: ASCII
+
+*** START OF THIS PROJECT GUTENBERG EBOOK UP TO DATE BUSINESS ***
+
+
+
+
+Produced by Barbara Tozier, Bill Tozier, Jacqueline Jeremy
+and the Online Distributed Proofreading Team at
+http://www.pgdp.net
+
+
+
+
+
+
+
+
+
+UP-TO-DATE BUSINESS
+
+
+HOME STUDY CIRCLE LIBRARY
+
+EDITED BY
+
+SEYMOUR EATON
+
+
+UP TO DATE
+BUSINESS
+
+INCLUDING
+
+LESSONS IN BANKING, EXCHANGE, BUSINESS
+GEOGRAPHY, FINANCE, TRANSPORTATION
+AND COMMERCIAL LAW
+
+
+FROM THE CHICAGO RECORD
+
+
+NEW YORK
+THE DOUBLEDAY & McCLURE CO.
+
+1900
+
+
+Copyright, 1897, 1898, 1899, by the CHICAGO RECORD
+COPYRIGHT, 1899 by SEYMOUR EATON
+COPYRIGHT, 1899, 1900, by VICTOR F. LAWSON
+
+
+
+
+CONTENTS
+
+I
+
+GENERAL BUSINESS INFORMATION
+
+                                                          PAGE
+
+    I. Commercial Terms and Usages                           3
+
+   II. Commercial Terms and Usages (_Continued_)             4
+
+  III. Bank Cheques                                          6
+
+   IV. Bank Cheques (_Continued_)                            8
+
+    V. Bank Cheques (_Continued_)                           12
+
+   VI. Bank Drafts                                          15
+
+  VII. Promissory Notes                                     18
+
+ VIII. The Clearing-house System                            21
+
+   IX. Commercial Drafts                                    26
+
+    X. Foreign Exchange                                     31
+
+   XI. Letters of Credit                                    37
+
+  XII. Joint-stock Companies                                41
+
+ XIII. Protested Paper                                      46
+
+  XIV. Paper Offered for Discount                           49
+
+   XV. Corporations                                         51
+
+  XVI. Bonds                                                54
+
+ XVII. Transportation                                       57
+
+XVIII. Transportation Papers                                59
+
+Examination Paper                                           64
+
+
+II
+
+BUSINESS GEOGRAPHY
+
+TRADE FEATURES
+
+    I. The Trade Features of the British Isles              69
+
+   II. The Trade Features of France                         94
+
+  III.  "    "      "      " Germany                       102
+
+   IV.  "    "      "      " Spain and Italy               111
+
+    V.  "    "      "      " Russia                        120
+
+   VI.  "    "      "      " India                         129
+
+  VII.  "    "      "      " China                         139
+
+ VIII.  "    "      "      " Japan                         148
+
+   IX.  "    "      "      " Africa                        157
+
+    X.  "    "      "      " Australia and Australasia     166
+
+   XI.  "    "      "      " South America                 177
+
+  XII.  "    "      "      " Canada                        187
+
+ XIII.  "    "      "      " The United States             194
+
+Examination Paper                                          210
+
+
+III
+
+FINANCE, TRADE, AND TRANSPORTATION
+
+     I. National and State Banks                           215
+
+    II. Savings Banks and Trust Companies                  221
+
+   III. Corporations and Stock Companies                   225
+
+    IV. Borrowing and Loaning Money                        228
+
+     V. Collaterals and Securities                         233
+
+    VI. Cheques, Drafts, and Bills of Exchange             240
+
+   VII. The Clearing-house System                          248
+
+  VIII. Commercial Credits and Mercantile Agencies         254
+
+    IX. Bonds                                              263
+
+     X. Transportation by Rail                             267
+
+    XI. Freight Transportation                             274
+
+   XII. Railroad Rates                                     281
+
+  XIII. Stock and Produce Exchanges                        288
+
+  XIV. Storage and Warehousing                             294
+
+Examination Paper                                          301
+
+
+IV
+
+COMMERCIAL LAW
+
+    I. The Different Kinds of Contracts                    309
+
+   II. The Parties to a Contract                           312
+
+  III. The Parties to a Contract (_Continued_)             315
+
+   IV. The Consideration in Contracts                      318
+
+    V. The Essentials of a Contract                        321
+
+   VI. Contracts by Correspondence                         326
+
+  VII. What Contracts Must Be in Writing                   332
+
+ VIII. Contracts for the Sale of Merchandise               336
+
+   IX. The Warranties of Merchandise                       340
+
+    X. Common Carriers                                     344
+
+   XI. The Carrying of Passengers                          347
+
+  XII. On the Keeping of Things                            350
+
+ XIII. Concerning Agents                                   353
+
+  XIV. The Law Relating to Bank Cheques                    358
+
+   XV. The Law Relating to Leases                          363
+
+  XVI. Liability of Employers to Employes                  369
+
+ XVII. Liability of Employers to Employes (_Continued_)    373
+
+Examination Paper                                          377
+
+
+V
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+    I. Preparing Copy                                      381
+
+   II. On the Names and Sizes of Type                      382
+
+  III. The Terms Used in Printing                          384
+
+   IV. Marks Used in Proof-reading                         387
+
+
+
+
+ILLUSTRATIONS
+
+I
+
+GENERAL BUSINESS INFORMATION
+
+
+                                                          PAGE
+
+A Poorly Drawn Cheque                                        7
+
+A Carefully Drawn Cheque                                     8
+
+A Cheque Drawn so as to Insure Payment to Proper Party       9
+
+A Cheque Payable to Order                                   11
+
+A Blank Indorsement                                         11
+
+A Cheque Made to Obtain Money for Immediate Use             13
+
+A Certified Cheque                                          14
+
+A Cheque for the Purchase of a Draft                        16
+
+A Bank Draft                                                17
+
+Ordinary Form of Promissory Note                            18
+
+A Promissory Note Filled Out in an Engraved Blank           19
+
+A Special Form for a Promissory Note                        20
+
+The Advantages of the Clearing-house System                 22
+
+The Route of a Cheque                                       24
+
+Backs of Two Paid Cheques                                   25
+
+A Sight Draft Developed from Letter                         27
+
+A Sight Draft                                               28
+
+An Accepted Ten-day Sight Draft                             28
+
+An Accepted Sight Draft                                     29
+
+A Time Draft                                                29
+
+Foreign Exchange                                            32
+
+A Bill of Exchange (Private)                                35
+
+A Bill of Exchange (Banker's)                               36
+
+First Page of a Letter of Credit                            38
+
+Second Page of a Letter of Credit                           40
+
+A Certificate of Stock in a National Bank                   42
+
+A Certificate of Stock in a Manufacturing Company           43
+
+A Protest                                                   48
+
+A Private Bond                                              55
+
+A Shipping Receipt ("Original")                             60
+
+A Steamship Bill of Lading                                  61
+
+A Local Waybill                                             62
+
+
+II
+
+BUSINESS GEOGRAPHY
+
+London the Natural Centre of the World's Trade              72
+
+British Mercantile Marine                                   74
+
+London Bridge                                               76
+
+The Coal-fields of England                                  80
+
+The Manchester Ship Canal                                   84
+
+The Great Manufacturing Districts of England                88
+
+France Compared in Size with the States of Illinois and
+      Texas                                                 95
+
+Street Scene in Paris, Showing the Bourse                   97
+
+Approximate Size of the German Empire                      104
+
+North Central Germany, Showing the Ship Canal and
+      the Leading Commercial Centres                       109
+
+Spain Compared in Size with California                     113
+
+Italy and its Chief Commercial Centres                     117
+
+Russia, the British Empire, and the United States
+      Compared                                             121
+
+Moscow                                                     127
+
+Comparative Sizes of India and the United States           133
+
+China and its Chief Trade Centres                          145
+
+Japan's Relation to Eastern Asia                           155
+
+The Partition of Africa                                    159
+
+Australia                                                  171
+
+The Most Prosperous Part of South America                  183
+
+Trade Centres of Canada and Trunk Railway Lines            192
+
+Export Trade of United States and Great Britain Compared   198
+
+United States Manufactures and Internal Trade Compared
+      with the Manufactures and Internal Trade of all
+      Other Countries                                      199
+
+Principal Articles of Domestic Exports of the United
+      States                                               205
+
+
+III
+
+FINANCE, TRADE, AND TRANSPORTATION
+
+The Bank of England                                        216
+
+Showing Cheque Raised from $7.50 to $70.50                 241
+
+A Certified Cheque                                         244
+
+A Bank Draft                                               245
+
+A Bill of Exchange                                         246
+
+Illustrating Cheque Collections                            252
+
+A Mercantile Agency Inquiry Form                           259
+
+Specimens of Interest Coupons                              266
+
+Judge Thomas M. Cooley, First Chairman of the Interstate
+      Commerce Commission                                  287
+
+The Paris Bourse                                           289
+
+Interior View of New York Stock Exchange                   290
+
+
+V
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+A Printer's Proof                                          390
+
+A Printer's Corrected Proof                                391
+
+
+
+
+GENERAL BUSINESS INFORMATION
+
+
+I. COMMERCIAL TERMS AND USAGES
+
+[Illustration]
+
+There is a distinction between the usage of the names COMMERCE and
+BUSINESS. The interchange of products and manufactured articles
+between countries, or even between different sections of the same
+country, is usually referred to as _commerce_. The term _business_
+refers more particularly to our dealings at home--that is, in our own
+town or city. Sometimes this name is used in connection with a
+particular product, as the _coal_ business or the _lumber_ business,
+or in connection with a particular class, as the _dry-goods_ business
+or the _grocery_ business. The name _commerce_, however, seldom admits
+of a limited application. In the United States TRADE is synonymous
+with _business_. The word TRAFFIC applies more especially to the
+conveyance than to the exchange of products; thus we refer to
+_railroad_ traffic or _lake_ traffic. PRODUCTS, when considered
+articles of trade, are called _merchandise, goods, wares_. The term
+MERCHANDISE has the widest meaning, and includes all kinds of movable
+articles bought or sold. GOODS is applied more particularly to the
+supplies of a merchant. WARES is commonly applied to utensils, as
+_glassware_, _hardware_, etc.
+
+GROSS commonly means coarse or bulky. In trade it is used with
+reference to both money and goods. The _gross_ weight of a package
+includes the weight of the case or wrappings. The larger sum in an
+account or bill--that is, the sum of money before any allowance or
+deductions are made--is the _gross_ amount of the bill. The word NET
+is derived from a Latin word meaning neat, clean, unadulterated, and
+indicates the amount of goods or money after all the deductions have
+been made. To say that a price is _net_ is to indicate that no further
+discount will be made.
+
+The word FIRM relates to solidity, establishment, strength, and in a
+business sense signifies two or more persons united in partnership for
+the purpose of trading. The word HOUSE is very frequently used in the
+same sense. In mercantile usage _house_ does not mean the building in
+which the business is conducted, but the men who own the business,
+including, perhaps, the building, stock, plant, and business
+reputation. The name CONCERN is often used in a very similar way.
+
+The name MARKET expresses a locality for the sale of goods, and in
+commerce is often used to denote cities or even countries. We say that
+Boston is a leather market, meaning that a large number of Boston
+merchants buy and sell leather. In the same sense we call Chicago a
+grain market, or New Orleans a cotton market. In its more restricted
+sense the name _market_ signifies a building or place where meat or
+produce is bought and sold. We say that the _market is flooded_ with a
+particular article when dealers are carrying more of that article than
+they can find sale for. There is _no market_ for any product when
+there is no demand. The money market is _tight_ or _close_ when it is
+difficult to borrow money from banks and money-lenders.
+
+
+II. COMMERCIAL TERMS AND USAGES (_Continued_)
+
+THE NATURAL RESOURCES of a country are mainly the mineral commodities
+and agricultural produce that it yields. The lumber and fish produced
+in a country are also among its natural resources. The positions and
+industries of cities are usually fixed by natural conditions, but the
+most powerful agent is the personal energy of enterprising and
+persevering men, who, by superior education, or scientific knowledge,
+or practical foresight, have often been able to found industrial
+centres in situations which no geographical considerations would
+suggest or explain.
+
+COMMISSION MERCHANTS receive and sell goods belonging to others for a
+compensation called a commission. A SELLING AGENT is a person who
+represents a manufacturing establishment in its dealings with the
+trade. The factory may be located in a small town, while the selling
+agent has his office and samples in the heart of a great city. As
+regards the quantity of goods bought or sold in a single transaction,
+trade is divided into WHOLESALE and RETAIL. The wholesale dealer sells
+to other dealers, while the retail dealer sells to the consumer--that
+is, the person who _consumes_, or uses, the goods. A JOBBER is one who
+buys from importers and manufacturers and sells to retailers. He is
+constantly in the market for bargains. The names JOBBER and WHOLESALER
+are often used in the same sense, but a jobber sometimes sells to
+wholesalers. WHOLESALE has reference to the quantity the dealer sells,
+and not to the source from which he buys, or the person to whom he
+sells. The wholesaler, as a rule, deals in STAPLES--that is, goods
+which are used season after season--though of course there are
+wholesalers in practically all businesses.
+
+Wholesale dealers send out TRAVELLERS or DRUMMERS, who carry samples
+of the goods. Frequently the traveller starts out with his samples
+from six months to a year in advance of the time of delivery. It is
+quite a common thing for the retailer to order from samples
+merchandise which at the time of placing the order may not even be
+manufactured.
+
+By the PRICE of a commodity is meant its value estimated in money, or
+the amount of money for which it will exchange. The exchangeable value
+of commodities depends at any given period partly upon the expense of
+production and partly upon the relation of supply and demand. Prices
+are affected by the creation of monopolies, by the opening of new
+markets, by the obstructing of the ordinary channels of commercial
+intercourse, and by the anticipation of these and other causes. It is
+the business of the merchant to acquaint himself with every
+circumstance affecting the prices of the goods in which he deals.
+
+The entire world is the field of the modern merchant. He buys raw and
+manufactured products wherever he can buy cheapest, and he ships to
+whatever market pays him the highest price. Our corner grocer or
+produce-dealer may furnish us with beef from Texas, potatoes from
+Egypt, celery from Michigan, onions from Jamaica, coffee from Java,
+oranges from Spain, and a hundred other things from as many different
+points; and yet, so complete is the interlocking of the world's
+commercial interests, and so great is the speed of transportation,
+that he can supply us with these necessaries under existing conditions
+more easily and readily than if they were all grown on an adjoining
+farm.
+
+
+III. BANK CHEQUES
+
+A CHEQUE is an order for money, drawn by one who has funds in the
+bank. It is payable on demand. In reality, it is a _sight draft_ on
+the bank. Banks provide blank cheques for their customers, and it is a
+very simple matter to fill them out properly. In writing in the amount
+begin at the extreme left of the line.
+
+The illustration given below shows a poorly written cheque and one
+which could be very easily _raised_. A fraudulent receiver could, for
+instance write, "_ninety_" before the "_six_" and "9" before the
+figure "6," and in this way raise the cheque from $6 to $96. If this
+were done and the cheque cashed, the maker, and not the bank, would
+become responsible for the loss. You cannot hold other people
+responsible for your own carelessness. A cheque has been raised from
+$100 to $190 by writing the words "_and ninety_" after the words "_one
+hundred_." One of the ciphers in the figures was changed to a "9" by
+adding a tail to it. It is wise to draw a running line, thus ~~~~~~,
+after the amount in words, thus preventing any additional writing.
+
+[Illustration: A poorly drawn cheque.]
+
+The illustration on page 8 shows a cheque carefully and correctly
+drawn. The signature should be in your usual style, familiar to the
+paying teller. Sign your name the same way all the time. Have a
+characteristic signature, as familiar to your friends as is your face.
+
+A cheque is a draft or order upon your bank, and it need not
+necessarily be written in the prescribed form. Such an order written
+on a sheet of note-paper with a lead-pencil might be in every way a
+legally good cheque.
+
+[Illustration: A carefully drawn cheque.]
+
+Usually cheques should be drawn "_to order_." The words "_Pay to the
+order of John Brown_" mean that the money is to be paid to John Brown,
+or to any person that he _orders_ it paid to. If a cheque is drawn
+"_Pay to John Brown or Bearer_" or simply "_Pay to Bearer_," any
+person that is the bearer can collect it. The paying teller may ask
+the person presenting the cheque to write his name on the back, simply
+to have it for reference.
+
+In writing and signing cheques use good black ink and let the copy dry
+a little before a blotter is used.
+
+_The subject of indorsements will be treated in a subsequent lesson._
+
+
+IV. BANK CHEQUES (_Continued_)
+
+The banks of this country make it a rule not to cash a cheque that is
+drawn payable to order, unless the person presenting the cheque is
+known at the bank, or unless he satisfies the paying teller that he is
+really the person to whom the money should be paid. It must be
+remembered however, that a cheque drawn to order and then indorsed in
+blank by the payee is really payable to bearer, and if the paying
+teller is satisfied that the payee's signature is genuine he will not
+likely hesitate to cash the cheque. In England all cheques apparently
+properly indorsed are paid without identification.
+
+[Illustration: A cheque drawn so as to insure payment to proper
+party.]
+
+In drawing a cheque in favour of a person not likely to be well known
+in banking circles, write his address or his business after his name
+on the face of the cheque. For instance, if you should send a cheque
+to John Brown, St. Louis, it might possibly fall into the hands of the
+wrong John Brown; but if you write the cheque in favour of "John
+Brown, 246 West Avenue, St. Louis," it is more than likely that the
+right person will collect it.
+
+If you wish to get a cheque cashed where you are unknown, and it is
+not convenient for a friend who has an account at the bank to go with
+you for the purpose of identification, ask him to place his signature
+on the back of your cheque, and you will not likely have trouble in
+getting it cashed at the bank where your friend keeps his account. By
+placing his signature upon the back of the cheque he guarantees the
+bank against loss. A bank is responsible for the signatures of its
+depositors, but it cannot be supposed to know the signatures of
+indorsers. The reliable identifier is in reality the person who is
+responsible.
+
+INDORSING CHEQUES
+
+In indorsing cheques note the following points:
+
+ 1. Write across the back--not lengthwise.
+
+ 2. If your indorsement is the first, write it about two inches from
+    the top of the back; if it is not the first indorsement, write
+    immediately under the last indorsement.
+
+ 3. Do not indorse wrong end up; the top of the back is the left end of
+    the face.
+
+ 4. Write your name as you are accustomed to write it, no matter how it
+    is written on the face. If you are depositing the cheque write or
+    stamp "For Deposit" or "Pay to ______BANK______," as may be the
+    custom, over your signature. This is hardly necessary if you are
+    taking the cheque yourself to the bank. A cheque with a simple or
+    blank indorsement on the back is payable to bearer, and if lost the
+    finder might succeed in collecting it; but if the words "For Deposit"
+    appear over the name the bank officials understand that the cheque is
+    intended to be deposited, and they will not cash it.
+
+ 5. If you wish to make the cheque payable to some particular person by
+    indorsing, write "PAY TO ______(NAME)______ or ORDER," and under this
+    write your own name as you are accustomed to sign it.
+
+ 6. Do not carry around indorsed cheques loosely. Such cheques are
+    payable to bearer and may be collected by any one.
+
+ 7. If you receive a cheque which has been transferred to you by a
+    BLANK indorsement (name of indorser only), and you wish to hold it a
+    day or two, write over the indorsement the words "PAY TO THE ORDER OF
+    (yourself--writing your own name)." This is allowable legally. The
+    cheque cannot then be collected until you indorse it.
+
+[Illustration: A cheque payable to order and a blank indorsement.]
+
+ 8. An authorised stamped indorsement is as good as a written one.
+    Whether such indorsements are accepted or not depends upon the
+    regulations of the clearing-house in the particular city in which
+    they are offered for deposit. The written indorsement is considered
+    safer for transmission of out-of-town collections.
+
+ 9. If you are indorsing for a company, or society, or corporation,
+    write first the name of the company (this may be stamped on) and
+    then your own name, followed by the word "TREAS."
+
+10. If you have power of attorney to indorse for some particular
+    person, write his name, followed by your own, followed by the
+    word "ATTORNEY" or "ATTY.," as it is usually written.
+
+11. It is sometimes permissible to indorse the payee's name thus,
+    "BY ______(your own name)." This may be done by a junior member of
+    a concern when the person authorised to indorse cheques is absent
+    and the cheques are deposited and not cashed.
+
+12. Do not write any unnecessary information on the back of your
+    cheque. A story is told of a woman who received a cheque from
+    her husband, and when cashing it wrote "Your loving wife" above
+    her name on the back.
+
+
+V. BANK CHEQUES (_Continued_)
+
+If you wish to draw money from your own account, the most approved
+form of cheque is written "Pay to the order of _Cash_." This differs
+from a cheque drawn to "_Bearer_." The paying teller expects to see
+yourself, or some one well known to him as your representative, when
+you write "Cash." If you write "Pay to the order of (_your own
+name_)" you will be required to indorse your cheque before you can get
+it cashed.
+
+If your note is due at your own bank and you wish to draw a cheque in
+payment, write "Pay to the order of _Bills Payable_." If you wish to
+write a cheque to draw money for wages, write "Pay to the order of
+_Pay-roll_." If you wish to write a cheque to pay for a draft which
+you are buying, write "Pay to the order of _N. Y. Draft and
+Exchange_," or whatever the circumstances may call for.
+
+[Illustration: A cheque made to obtain money for immediate use.]
+
+If you wish to stop the payment of a cheque which you have issued you
+should notify the bank at once, giving full particulars.
+
+Banks have a custom, after paying and charging cheques, of cancelling
+them by punching or making some cut through their face. These
+cancelled cheques are returned to the makers at the end of each month.
+
+If you have deposited a cheque and it is returned through your bank
+marked "_No Funds_," it signifies that the cheque is worthless and
+that the person upon whose account it was drawn has no funds to meet
+it. Your bank will charge the amount to your account. The best thing
+to do in such a case is to hold the cheque as evidence of the debt,
+and write the person who sent it to you, giving particulars and asking
+for an explanation.
+
+If you wish to use your cheque to pay a note due at some other bank,
+or in buying real estate, or stocks, or bonds, you may find it
+necessary to get the cheque _certified_. This is done by an officer of
+the bank, who writes or stamps across the face of the cheque the words
+"_Certified"_ or "_Good When Properly Indorsed_," and signs his name.
+(_See illustration._) The amount will immediately be deducted from
+your account, and the bank, by guaranteeing your cheque, becomes
+responsible for its payment. Banks will usually certify any cheque
+drawn upon them if the depositor has the amount called for to his
+credit, no matter who presents the cheque, and this certifying makes
+it feasible for a man to carry in his pocket any amount of actual
+cash. If you should get a cheque certified and then not use it,
+deposit it in your bank, otherwise your account will be short the
+amount for which the cheque is drawn. In Canada all cheques are
+presented to the "ledger-keeper" for certification before being
+presented to the paying teller.
+
+[Illustration: A certified cheque.]
+
+THE USEFULNESS OF BANKS
+
+Banks are absolutely necessary to the success of modern commercial
+enterprises. They provide a place for the safe-keeping of money and
+securities, and they make the payment of bills much more convenient
+than if currency instead of cheques were the more largely used. But
+the great advantage of a banking institution to a business man is the
+opportunity it affords him of borrowing money, of securing cash for
+the carrying on of his business while his own capital is locked up in
+merchandise or in the hands of his debtors. Another important
+advantage is to be found in the facilities afforded by banks for the
+collection of cheques, notes, and drafts.
+
+
+VI. BANK DRAFTS
+
+A draft is a formal demand for the payment of money. Your bank cheque
+is your sight draft on your bank. It is not so stated, but it is so
+understood. A cheque differs from an ordinary commercial draft, both
+in its wording and in its purpose. The bank is obliged to pay your
+cheque if it holds funds of yours sufficient to meet it, while the
+person upon whom your draft is drawn may or may not honour it at his
+pleasure. A cheque is used for paying money to a creditor, while a
+draft is used as a means of collecting money from a debtor.
+
+Nearly all large banks keep money on deposit with one or more of the
+banks located in the great commercial centres. They call these
+centrally located banks their _correspondents_. The larger banks have
+correspondents in New York, Chicago, Boston, and other large cities.
+As business men keep money on deposit with banks to meet their
+cheques, so banks keep money on deposit with other banks to meet their
+drafts.
+
+A BANK DRAFT is simply the bank's cheque, drawn upon its deposit with
+some other bank. Banks sell these cheques to their customers, and
+merchants make large use of them in paying bills in distant cities.
+These drafts, or CASHIERS' CHEQUES, as they are sometimes called, pass
+as cash anywhere within a reasonable distance of the money centre upon
+which they are drawn. Bankers' drafts on New York would, under
+ordinary financial conditions, be considered cash anywhere in the
+United States. A draft on a foreign bank is usually called a BILL OF
+EXCHANGE.
+
+[Illustration: A cheque for the purchase of a draft.]
+
+Cheques have come to be quite generally used for the payment of bills
+even at long distances. If a business man desires to close an
+important contract requiring cash in advance he sends a bank draft, if
+at a distance, or a certified cheque, if in the same city. If he
+desires simply to pay a debt he sends his own personal cheque. Bank
+drafts are quite generally used by merchants in the West to pay bills
+in the East. A draft on New York bought in San Francisco is cash when
+it reaches New York, while a San Francisco cheque is not cash until it
+returns and is cashed by the bank upon which it is drawn. In the
+ordinary course of business cheques are considered cash no matter upon
+what bank drawn. The bank receiving them on deposit gives the
+depositor credit at once, even though it may take a week before the
+value represented by the cheque is in the possession of the bank.
+
+[Illustration: A bank draft.]
+
+All wholesale transactions and a large proportion of retail
+transactions are completed by the passing of instruments of
+credit--notes, cheques, drafts, etc.; a part only of the retail trade
+is conducted by actual currency-bills and "change." Banks handle the
+bulk of these transferable titles and deal to a very small
+extent--that is, proportionally--in actual money. The notes, drafts,
+bills of exchange, and bank cheques are representative of the property
+passing by title in money from the producers to the consumers. A small
+proportion--perhaps six or eight per cent.--of these transactions is
+conducted by the use of actual bank or legal-tender notes. This trade
+in instruments of credit amounts in the United States to fifty
+billions of dollars yearly.
+
+
+VII. PROMISSORY NOTES
+
+[Illustration: Ordinary form of promissory note.]
+
+A PROMISSORY NOTE is a written promise to pay a specified sum of
+money. At the time of the note's issue--that is, when signed and
+delivered--two parties are connected with it, the _maker_ and the
+_payee_. The maker is the person who signs or promises to pay the
+note; the payee is the person to whom or to whose order the note is
+made payable. NEGOTIABLE in a commercial sense means _transferable_,
+and a negotiable note is a note which can be transferred from one
+person to another. A note to be made negotiable must contain the word
+_bearer_ or the word _order_--that is, it must be payable either _to
+bearer_, or _to the order_ of the payee. A NON-NEGOTIABLE note is
+payable to a particular person _only_. A note may be written on any
+kind of paper, in ink or pencil. It is wise, however, to use ink to
+prevent changes. All stationers sell blank forms for notes which are
+easily filled in.
+
+The samples of notes which appear in this lesson are selected simply
+to illustrate to students the fact that there are a great many special
+forms of notes in common use. The wording differs slightly in
+different States.
+
+The DATE of a note is a matter of the first importance. Some bankers
+and business men consider it better to draw notes payable at a certain
+fixed time, as, "_I promise to pay on the 10th of March, 1897_." The
+common custom is to make notes payable a certain number of days or
+months after date. A note made or issued on Sunday is void. The DAY OF
+MATURITY is the day upon which a note becomes legally due. In several
+of the States a note is not legally due until three days, called DAYS
+OF GRACE, after the expiration of the time specified in the note.
+
+[Illustration: A promissory note filled out on an engraved blank.]
+
+The words VALUE RECEIVED, which usually appear upon notes, are not
+necessary legally. Thousands of good notes made without any value
+consideration are handled daily.
+
+The PROMISE TO PAY of a negotiable note must be unconditional. It
+cannot be made to depend upon any contingency whatever.
+
+Notes that are made in settlement of genuine business transactions
+come under the head of regular, legitimate business paper. An
+ACCOMMODATION note is one which is signed, or indorsed, simply as an
+accommodation, and not in settlement of an account or in payment of an
+indebtedness. With banks accommodation paper has a deservedly hard
+reputation. However, there are all grades and shades of accommodation
+paper, though it represents no actual business transaction between the
+parties to it, and rests upon no other foundation than that of mutual
+agreement. No contract is good without a consideration, but this is
+only true between the original parties to a note. The third party or
+innocent receiver or holder of a note has a good title, and can
+recover its value, even though it was originally given without a
+valuable consideration. An innocent holder of a note which had been
+originally lost or stolen has a good title to it if he received it for
+value.
+
+[Illustration: A special form for a promissory note.]
+
+A note does not draw interest until after maturity, unless the words
+WITH INTEREST appear on the face. Notes draw interest after maturity
+and until paid, at the legal rate.
+
+A note should be presented for payment upon the exact day of maturity.
+Notes made payable at a bank, or at any other place, must be presented
+for payment at the place named. When no place is specified the note is
+payable at the maker's place of business or at his residence.
+
+In finding the date of maturity it is important to remember that when
+a note is drawn _days after date_ the actual days must be counted, and
+when drawn _months after date_ the time is reckoned by months.
+
+To DISCOUNT a note is to sell it at a discount. The rates of discount
+vary according to the security offered, or the character of the loan,
+or the state of the money market. For ordinary commercial paper the
+rates run from four to eight per cent. Notes received and given by
+commercial houses and discounted by banks are not usually for a longer
+period than four months.
+
+
+VIII. THE CLEARING-HOUSE SYSTEM
+
+In large cities cheques representing millions of dollars are deposited
+in the banks every day. The separate collection of these would be
+almost impossible were it not for the clearing-house system. Each
+large city has its clearing-house. It is an establishment formed by
+the banks themselves, and for their own convenience. The leading banks
+of a city connect themselves with the clearing-house of that city, and
+through other banks with the clearing-houses of other cities,
+particularly New York. Country banks connect themselves with one or
+more clearing-houses through city banks, which do their business for
+them. The New York banks, largely through private bankers, branches of
+foreign banking houses, connect themselves with London, so that each
+bank in the world is connected indirectly with every other bank in the
+world, and in London is the final clearing-house of the world.
+
+[Illustration: The advantages of the clearing-house system.]
+
+Suppose that the above diagram represents the banks and clearing-house
+of a city, and also the two business houses of Brown and Smith. Brown
+keeps his money on deposit in Bank E, and Smith in Bank B. Brown sends
+(by mail) a cheque to Smith in payment of a bill. Now, Smith can come
+all the way to Bank E, and, if he is properly identified, can collect
+the cheque. He does not do this, however, but deposits Brown's cheque
+in Bank B, the bank where he does his banking business. Now, B cannot
+send to E to get the money. It could do this, perhaps, if it had only
+one cheque, but it has taken in hundreds of cheques, some, perhaps, on
+every bank in town, and on many banks out of town. It would take a
+hundred messengers to collect them. So, instead of B's going to E,
+they meet half-way, or at a central point called a clearing-house, and
+there collect their cheques. B may have $5000 in cheques on E, and E
+may have $4000 in cheques on B, so that the exchange can be made--that
+is, the cheques can be paid by E paying the difference of $1000, which
+is done, not direct, but through the officers of the clearing-house.
+Now Bank E's messenger carries Brown's cheque back with him and enters
+it up against Brown's account. This in simple language is the primary
+idea of the clearing-house.
+
+The clearings in New York in one day amount to from one to two hundred
+millions of dollars. By clearings we mean the value of the cheques
+which are _cleared_--that is, which change hands through the
+clearing-house. Usually once a week (in some cities oftener) the banks
+of a city make to their clearing-house a report, based on daily
+balances, of their condition.
+
+[Illustration: The route of a cheque.]
+
+To illustrate the connection between banks at distant points let us
+suppose that B of Media, Pennsylvania, who keeps his money on deposit
+in the First National Bank of Media, sends a cheque in payment of a
+bill to K of South Evanston, Illinois. K deposits the cheque in the
+Citizens Bank of his town and receives immediate credit for it upon
+his bank-book, just the same as though the cheque were drawn upon the
+same or a near-by bank. The Citizens Bank simply sends the cheque,
+with other distant cheques, to its correspondent, the National Bank of
+the Republic, Chicago, on deposit, in many instances in about the
+same sense that K deposited the cheque in the Citizens Bank. The
+National Bank of the Republic sends the cheque, with other cheques, to
+its New York correspondent, the National Park Bank. It may possibly
+send to Philadelphia direct, or even to Media; but this is very
+unlikely. The National Park Bank sends the cheque to its Philadelphia
+correspondent, say the Penn National Bank. Now the clearing-house
+clerk of the Penn National carries the cheque to the Philadelphia
+clearing-house and enters it, with other cheques, on the First
+National of Media. Custom, however, differs very greatly in this
+particular. Many near-by country banks clear through city banks;
+others clear less directly. If the First National Bank of Philadelphia
+is known at the clearing-house as the representative of the First
+National Bank of Media it likely has money belonging to this Media
+bank on deposit. In that case the cheque is charged up against the
+account of the First National of Philadelphia. This bank then sends
+the cheque to the First National of Media, by which it is charged up
+against B. This system of collection of cheques is about as perfect as
+is the post-office system of carrying registered mail.
+
+[Illustration: Backs of two paid cheques.]
+
+Now, the banks and clearing-houses through which the cheque passes on
+its way _home_ stamp their indorsements and other information upon the
+back. Our illustration shows the backs of two cheques which have
+"travelled." Millions of dollars are collected by banks daily in this
+way, and all without expense to their customers. It is estimated that
+these collections cost the New York City banks more than two million
+dollars a year in loss of interest while the cheques are _en route_.
+Ten thousand collection letters are sent out daily by the banks of New
+York City alone.
+
+
+IX. COMMERCIAL DRAFTS
+
+A COMMERCIAL DRAFT bears a close resemblance to a letter from one
+person to another requesting that a certain sum of money be paid to
+the person who calls, or to the bank or firm for whom he is acting.
+For instance, the draft shown in the first illustration might be
+worded something like this:
+
+                                 _St. Louis, Mo., Feb. 22, 1899._
+
+    _Mr. Robert Elsmere,_
+        _Jefferson City, Mo._
+
+    _My dear Sir:_
+
+   _Will you kindly pay to the messenger from the ---- Bank who will
+   call to-morrow the sum of three hundred and ninety-seven dollars
+   and charge to my account?_
+
+    _Yours, very truly,_
+        _David Grieve._
+
+[Illustration: A sight draft developed from the above letter.]
+
+Commercial usage, however, recognises a particular form in which this
+letter is to be written, and the address of the person for whom it is
+intended is usually written at the lower left-hand corner instead of
+on an envelope. Commercial drafts usually reach the persons upon whom
+they are drawn through the medium of the banks rather than directly by
+mail. Let us illustrate. Suppose that A of Chicago owes B of Buffalo
+$200, and B desires to collect the amount by means of a draft. He
+fills in a blank draft, signs it, and addresses it on the lower
+left-hand corner to A. Instead of sending it by mail he takes it to
+his bank--that is, deposits it for collection. It will reach a Chicago
+bank in about the same way that cheques for collection go from one
+place to another. A messenger from the Chicago bank will carry the
+draft to A's office and present it for payment or for acceptance. If
+it is a _sight_ draft--that is, a draft payable when A sees it--he may
+give cash for it at once and take the draft as his receipt. If he has
+not the money convenient he may write across the face "Accepted,
+payable at (his) Bank," as in the illustration. It will then reach his
+bank and be paid as his personal cheque would be, and should be
+entered in his cheque-book. Banks usually give one day upon sight
+drafts. The draft will not be presented a second time, but will be
+held at the bank until the close of the banking hours the next day,
+where A can call to pay if he chooses. Leniency in the matter of time
+will depend largely upon B's instructions and the bank's attitude
+toward A. If the draft is a time draft--that is, if B gives A time, a
+certain number of days, in which to pay it--A, if he wishes to pay the
+draft, _accepts_ it. He does this by writing the word _accepted_ with
+the date and his signature across the face of the draft. He may make
+it payable at his bank as he would a note, if he so desires. He then
+returns the draft to the messenger, and if the time is long the draft
+is returned to B; if only a few days, the bank holds it for
+collection.
+
+[Illustration: No. 1. A sight draft.]
+
+[Illustration: No. 2. An accepted ten-day sight draft.]
+
+[Illustration: No. 3. An accepted sight draft.]
+
+[Illustration: No. 4. A time draft.]
+
+An accepted draft is really a promissory note, though it is more often
+called an _acceptance_. When a man pays or accepts a draft he is said
+to _honour_ it. In the foregoing illustration A is not obliged either
+to pay or to accept the draft. It is not binding upon him any more
+than a letter would be. He can refuse payment just as easily and as
+readily as he could decline to pay a collector who calls for payment
+of a bill. Of course, if a man habitually refuses to honour legitimate
+drafts it may injure his credit with banks and business houses.
+
+It is a very common thing to collect distant accounts by means of
+commercial drafts. A debtor is more likely to meet--that is, _to
+pay_--a draft than he is to reply to a letter and inclose his cheque.
+It is really more convenient, and safer, too, for there is some risk
+in sending personal cheques through the mail. There are some houses
+that make all their payments by cheques, while there are others which
+prefer to have their creditors at a distance draw on them for the
+amounts due.
+
+If a business man who has been accustomed to honour drafts continues
+for a period to dishonour them, the banks through which the drafts
+pass naturally conclude that he is unable to meet his liabilities.
+
+Some houses deposit their drafts for collection in their home banks,
+while others have a custom of sending them direct to some bank in or
+near the place where the debtor resides. If the place is a very small
+one the collection is sometimes made through one of the express
+companies.
+
+When goods are sold for distinct periods of credit, and it is
+generally understood that maturing accounts are subject to sight
+drafts, there should be no need of notifying the debtor in advance.
+Some houses, however, make a general custom of sending notices ten
+days in advance, stating that a draft will be drawn if cheque is not
+received in the meantime.
+
+Notice the illustrations. The protest notice at the left of Nos. 1, 2,
+and 4 is intended for the bank presenting the draft for payment. The
+reason for this will be fully explained in our lesson on protested
+paper. (See LESSON XIII.) No. 2 shows an accepted draft payable to the
+order of a bank in the city upon which it is drawn. No. 1 is payable
+to the order of a bank in the city of the drawer. No. 3 is a sight
+draft payable to the order of a bank and accepted payable at a bank.
+No. 4 is a time draft payable to "_ourselves_"--that is, the
+Pennsylvania Steel Company.
+
+Drafts are often discounted at banks before acceptance where the
+credit of the drawer is good. In such cases the drafts which are
+dishonoured are charged up against the drawer's account.
+
+
+X. FOREIGN EXCHANGE
+
+It is quite in order that we should follow lessons on the
+clearing-house and commercial drafts with a lesson on foreign
+exchange.
+
+We learned in the last lesson that commercial drafts are made use of
+to facilitate the collection of accounts. They are simply formal
+demands for the payment of legitimate debts. When these formal demands
+are made upon foreign debtors they are called bills of exchange; and
+the process of buying and selling these drafts, the drafts themselves,
+and the fluctuations in price, all are included in the general name
+_exchange_.
+
+[Illustration: Foreign exchange.]
+
+To illustrate the principles of exchange let us suppose that the
+following transactions have occurred:
+
+1. C of Boston has sold goods, L2000, to H of Hamburg.
+
+2. D of Chicago has sold goods, L5000, to F of Glasgow.
+
+3. M of Chicago has sold goods, L3000, to K of London.
+
+4. E of Philadelphia has sold goods, L6000, to R of Paris.
+
+5. P of New York has sold goods, L1000, to G of Paris.
+
+C draws on H for L2000, sells the draft to a banking-house in Boston;
+they send to Bank A of New York, and the New York bank to their
+London correspondent, say Bank B, with instructions to collect from
+Hamburg.
+
+D draws in a similar way on F. E draws on R, and P on G. Suppose that
+M instead of drawing on K receives a draft drawn by Bank B of London
+on Bank A of New York, payable to M's order.
+
+AMERICA has sold goods worth L17,000 to EUROPE.
+
+    EUROPE . . . . . . owes L17,000 to . . . . . . AMERICA
+                    But B has paid A L3000.
+                       ---------------
+    B . . . . . .  therefore owes L14,000 to . . . . . . A
+
+Now it will cost B a considerable sum of money to ship L14,000 in gold
+to A, for all exchanges between Europe and America are payable in
+gold. Suppose that S of New York owes T of London L14,000, and T draws
+on S and takes the draft to Bank B in London and offers it for sale.
+Will B offer more or less than L14,000 for the bill of exchange or
+draft? He will offer more. It will be cheaper for him to pay a premium
+for the draft than to ship gold, for he can send this draft to Bank A
+to pay his indebtedness, and A can collect from S.
+
+In the money market in New York there is a constant supply of
+exchanges (drafts) on London, and in London a constant supply of
+exchanges on New York.
+
+Experience has shown that at all times the number of persons in Europe
+indebted to American business houses is about (though of course not
+actually) the same as the number of persons in America indebted to
+European houses. Hence when A of New York wishes to make a payment
+to B of London he does not send the actual money, but goes into the
+market--that is, to a banker doing a foreign business--and buys a
+draft, called a bill of exchange, which is in reality the banker's
+order on his London correspondent, asking the latter to pay the money
+to the person named. It may be that about the same time some London
+merchant who owes money in New York goes to the very same London
+banker and buys a draft on the New York bank. In this way the one
+draft cancels the other, and when there is a difference at the end
+of the week or month the actual gold is sent across to balance the
+account.
+
+These exchanges have a sort of commodity value, and like all
+commodities, depend upon the law of supply and demand. When gold is
+being shipped abroad we say that the balance of trade is against
+us--that is, we are buying more from Europe than Europe is buying from
+us, and the gold is shipped to pay the balance or difference.
+
+The _par_ of the currency of any two countries means, among merchants,
+the equivalency of a certain amount of the (coin) currency of the one
+in the (coin) currency of the other, supposing the currencies of both
+to be of the precise weight and purity fixed by the respective mints.
+The par of exchange between Great Britain and the United States is
+4.86-2/3; that is, L1 sterling is worth $4.86-2/3. Exchange is quoted
+daily in New York and other city papers at 4.87, 4.88, 4.88-1/2, etc.,
+for sight bills and at a higher rate for sixty-day bills. Business men
+who are accustomed to watching fluctuations in exchange rates use the
+quotations as a sort of barometer to foretell trade conditions. The
+imports and exports of bullion (uncoined gold) are the real test of
+exchange. If bullion is stationary, flowing neither into nor out of a
+country, its exchanges may be truly said to be at par; and on the
+other hand, if bullion is being exported from a country, it is a proof
+that the exchange is against it; and conversely if there be large
+importations.
+
+The cost of conveying bullion from one country to another forms the
+limit within which the rise and fall of the _real_ exchange between
+them must be confined. If, for illustration, a New York merchant owes
+a debt in London and exchange costs him, say, two per cent., and the
+cost of shipping the gold is only one per cent., it will be to his
+advantage to pay the debt by sending the actual coin across. A
+favourable _real_ exchange operates as a duty on exportation and as a
+bounty on importation.
+
+[Illustration: A bill of exchange (private).]
+
+It is to the interest of merchants or bankers who deal in foreign
+bills to buy them where they are the cheapest and to sell them where
+they are the dearest. For this reason it might often be an advantage
+for a New York merchant to buy a bill on London to pay a debt in
+Paris.
+
+[Illustration: A bill of exchange (banker's).]
+
+Two illustrations of bills of exchange are given in this lesson. Each
+is drawn in duplicate. The original is sold or sent abroad, while the
+duplicate is preserved as a safeguard against the loss of the
+original. When one is paid the other is of no value. Notice the
+similarity between bills of exchange as shown here and commercial
+drafts as shown in our last lesson.
+
+The first form shows a draft made by a coal company upon a steamship
+company to pay for coal supplied to a particular steamer. Suppose that
+the steamship company has a contract with Robert Hare Powel & Co. of
+Philadelphia to supply coal to their steamers. The steamer _Cardiff_,
+when in port at Philadelphia, is supplied; the bill is certified to by
+the engineer; the master (captain) of the vessel signs Powel & Co.'s
+draft (and in doing this really makes it the captain's draft); the
+bill is receipted. Now Powel & Co. sell this exchange (draft) on
+London to a broker or banker doing a foreign business. It is forwarded
+to London and presented in due time at the office of the Wales
+Navigation Company for payment.
+
+The second form shows a bill of exchange drawn by a Philadelphia
+banking house upon a London banking house and payable to the order of
+the firm buying the draft. C. H. Bannerman & Co. will send this bill
+(the original) to pay an account in Europe. The first form bears the
+same relation to a commercial draft that the second does to a
+cashier's cheque.
+
+[Illustration: First page of a letter of credit.]
+
+
+XI. LETTERS OF CREDIT
+
+The usual instruments of credit by means of which travellers abroad
+draw upon their deposits at home are known as CIRCULAR LETTERS OF
+CREDIT. These forms of credit are of such common use that every one
+should be familiar with their form. We reproduce here a facsimile of
+the first and second pages of a circular letter for L1000, copied with
+slight change of names from an actual instrument. The first page shows
+the credit proper authorising the various correspondents of the bank
+issuing it to pay the holder, whose signature is given on its face,
+money to the extent of L1000. The names of the banks who are
+authorised to advance money upon the letter are usually printed upon
+the third and fourth pages, though letters issued by well-known
+banking houses are usually recognised by any banking house to which
+they are presented.
+
+The second illustration shows how the holder of a particular letter
+availed himself of its advantages. It gives the names of the banks to
+which he presented his letter, and the amounts paid by each.
+
+With such a letter a traveller could make a trip around the world and
+not have in his pocket at any one time more gold or silver or bills
+than would be necessary to meet immediate expenses.
+
+Suppose that A. B. is about to make a European trip. He goes to a bank
+doing a foreign business, say Brown Bros. & Co. of New York City, and
+asks for a circular letter for L1000, for which he is obliged to pay
+about $4880. Copies of A. B.'s signature are left with Brown Bros. &
+Co., and may perhaps be forwarded to their foreign banking houses.
+When A. B. presents himself at a Glasgow or Paris bank with his letter
+of credit, and asks for a payment upon it, the banker asks him to sign
+a draft on Brown Bros. & Co., New York, or more likely on their London
+bank, for the amount required, which amount is immediately indorsed on
+the second page of the letter of credit, so that when the indorsements
+equal the face the letter is fully paid. A. B. is simply drawing upon
+his own account--that is, upon the money he deposited to secure the
+letter of credit.
+
+Payment is usually made upon the simple identification or comparison
+of signatures. If a traveller should lose his letter of credit he
+should notify at once the bank issuing it and, if possible, the banks
+upon which drawn.
+
+[Illustration: Second page of a letter of credit (used).]
+
+There are several other forms of travellers' credits in use. The
+_Cheque Bank_, an English institution with a branch in New York City,
+issues to travellers a book of cheques, each of which can be filled up
+only to a limited amount, as shown by printed and perforated notices
+appearing on the face. For instance, for L100 one can buy a
+cheque-book containing fifty blank cheques, each good, when properly
+filled up, for L2. Each of these cheques is really a certified cheque,
+only it is certified in advance of issue. Any of the thousand or more
+foreign banks which are agents for the _Cheque Bank_ sell these
+cheque-books, and cash the cheques when presented. The amounts that
+may be short drawn go toward the cost of a new cheque-book, or may be
+returned in cash. The American and other express companies have forms
+of travellers' cheque-books very similar to those issued by the
+_Cheque Bank_.
+
+
+XII. JOINT-STOCK COMPANIES
+
+To organise a stock company it is necessary for a number of persons to
+come together and make a certificate to the effect that they propose
+to form a company to bear a certain name, for the purpose of
+transacting a certain kind of business at a certain place. The
+certificate states that they propose to issue a certain number of
+shares of stock at a certain price per share, that the capital stock
+is to be a certain amount, and that the company is to continue to
+exist for a definite period of time. Blank forms for such certificate
+are supplied by the Secretary of the State where the company is being
+organised, and when such certificate is properly filled out, signed,
+and delivered to him, he issues a license, or charter, to the persons
+making such certificate, giving them permission to open books, sell
+stock, and carry on the enterprise outlined.
+
+State laws regarding stock companies differ very largely. Students of
+this course who desire to know the law in any particular State can
+easily secure the information by writing to the secretary of that
+State.
+
+The usual par value of a share of stock is $100. That is, if a company
+organises with a capital of $200,000, there will be 2000 shares to
+sell. Each person who buys or subscribes for the stock--that is, who
+joins the company--receives a CERTIFICATE OF STOCK. Our illustrations
+show two examples; one of a national bank, and the other of a
+manufacturing company. These certificates are transferable at the
+pleasure of the owners. The transfer is made usually by a form of
+indorsement on the back of the certificate, but to be legal the
+transfer must be recorded on the books of the company.
+
+[Illustration: A certificate of stock in a national bank.]
+
+The men subscribing in this way become responsible for the good
+management of the business and are obliged to act according to the
+laws of the State in which the company is organised. Usually they are
+not responsible individually for the liabilities of the concern beyond
+the amounts of their individual subscriptions.
+
+[Illustration: A certificate of stock in a manufacturing company.]
+
+Every person who subscribes for stock owns a part of the business and
+is called a SHAREHOLDER. All the shareholders meet together, and out
+of their number they choose a certain number of DIRECTORS. The
+directors choose a president and other necessary officers, and in a
+general way direct the policy of the company. As a rule directors have
+no salaries attached to their positions. General meetings of
+shareholders are held once a year to elect the directors and to hear
+the reports of the officers.
+
+The student should be familiar in a general way with the different
+classes of stock and with the technical terms familiar to stock
+companies. The more important of these matters are as follows:
+
+DIRECTORS. All the shareholders meet together and out of their number
+choose a certain number of directors. The directors choose a president
+and other necessary officers and fix the amount of salary which shall
+be paid such officers for their work.
+
+CAPITAL STOCK. This name is given to the gross capital for which the
+company is organised, without any reference to its value or to whether
+it has been fully paid in or not. The _paid-in capital_ is the amount
+received from the stockholders on the shares for which they have
+subscribed.
+
+DIVIDENDS. The directors of the company, after paying the expenses and
+laying by a certain amount for contingencies, divide the profits among
+the shareholders. These profits are called dividends, and in
+successful concerns such dividends as are declared quarterly,
+semiannually, or annually usually amount to good interest on the
+shareholders' investments.
+
+TREASURY STOCK. It often occurs that a new company finds it necessary
+to set aside a certain number of shares to be sold from time to time
+to secure working capital. Such stock is held in the treasury until it
+is needed, and is called treasury stock.
+
+PREFERRED STOCK. Preferred stock is stock which is guaranteed certain
+advantages over ordinary stock. It is usually given to secure some
+obligation of the company, and upon it dividends are declared in
+preference to common stock. That is to say, if a man holds a share of
+preferred stock he will receive interest thereon out of the profits
+of the business before such profits are given in the form of dividends
+to shareholders generally. Preferred stock can be issued only when
+authorised by the charter of the company. The interest on the
+investment in the case of preferred stock is more sure, but the
+security itself is not any more secure than in the case of common
+stock.
+
+GUARANTEED STOCK. Guaranteed stock differs from preferred stock in
+this--that it is entitled to the guaranteed dividend (interest) before
+all other classes of stock, whether the company earns the necessary
+amount in any one year or not. This right is carried over from year to
+year, thus rendering the shares absolutely secured as to interest.
+
+WATERED STOCK. When stock is issued to the shareholders without
+increase of actual capital the stock is said to have been _watered_. A
+company may organise for, say, $10,000, and may want to increase to
+$50,000 without adding to the number of its shareholders. Each holder
+of _one_ share will, in this instance, receive _four_ new shares, and
+in future instead of receiving a dividend on one share will receive a
+dividend on five shares. The object of this is, quite commonly, to
+avoid State laws requiring certain corporations to pay excess of
+profit over a stated rate per cent. into the State treasury.
+
+FORFEITED STOCK. Stock is usually sold on certain explicit conditions,
+such as the paying of ten per cent. down and the balance in
+installments at stated intervals. If the conditions which are agreed
+to by the shareholder are not met his stock is declared _forfeited_,
+or he can be sued in the same manner as upon any other contract.
+
+ASSESSMENTS. Some companies organise with the understanding that a
+certain percentage of the nominal value of the shares is to be paid at
+the time of subscribing, and that future payments are to be made at
+such times and in such amounts as the company may require. Under
+these conditions the stockholders are assessed whenever money is
+needed. Such assessments are uniform on all stockholders.
+
+SURPLUS FUND. It is not customary to pay a larger dividend than good
+interest. The profits remaining after the expenses and dividends are
+paid are credited to what is called a surplus fund. This fund is the
+property of the shareholders and is usually invested in good
+securities.
+
+FRANCHISE. A franchise is a right granted by the State to individuals
+or to corporations. The franchise of a railroad company is the right
+to operate its road. Such franchise has a value entirely distinct from
+the value of the plant or of the ordinary property of the corporation.
+
+SINKING FUND. A sinking fund is a fund set aside yearly for the
+purpose at some future time of sinking--that is, paying a debt.
+
+
+XIII. PROTESTED PAPER
+
+When a note is presented for payment at maturity and is not paid it is
+usually PROTESTED; that is, a notary public makes a formal statement
+that the note was presented for payment and payment was refused.
+Notice of such protest is sent to the maker of the note and to each
+indorser.
+
+The bank should never hand to its notary any paper for protest until
+it has made sure that its non-payment has not been brought about by
+some error or misunderstanding. Quite often, even though the paper has
+been made payable at a bank, the notary sends a messenger with the
+note to the maker to make a formal demand for payment.
+
+In taking in collection paper, banks should obtain clear instructions
+from its owners as to whether or not it should be protested in case
+of non-payment. It by no means follows that a formal protest is not
+desired because the paper bears no indorsements. Many banks make it a
+rule to protest all unpaid paper unless otherwise ordered.
+
+We often see attached to the end of a draft a little slip with the
+words: "_No protest; tear this off before protesting._" This is simply
+private advice to the banker informing him that the drawer does not
+wish to have the draft protested. It may be that he does not wish to
+wrong or injure the credit of or add to the expense of his debtor; or
+it may be that he considers the account doubtful and does not wish to
+add to his own loss the cost of protest fees.
+
+To hold an indorser, he must be properly notified of the non-payment
+of the note; and whether this has been done is a question of fact. If
+he was not properly notified this defence will avail whenever it is
+clearly proved. A great variety of defences may be successfully made
+by an indorser. A few of these defences are here briefly noticed: One
+is usury; another is the maker's discharge by the holder; nor can he
+be held when he has paid the note; nor when its issue was unlawful,
+nor when the note was non-negotiable, nor when his indorsement was
+procured by fraud. Finally, an indorser may avail himself of any
+defence existing between the holder and the maker or principal debtor.
+This is evidently a just principle, for the holder should have no more
+rights against an indorser than he has against the maker. If,
+therefore, the maker can interpose some just claim as a partial or
+complete defence the indorser should be permitted to avail himself of
+this claim.
+
+In order to recover from an indorser it must be proven that a formal
+and proper demand for payment was made upon the maker. The formal
+protest is usually undisputed evidence of this. The maker is liable in
+any event.
+
+[Illustration: A protest.]
+
+To make the indorser's liability absolute it is necessary to demand
+payment at the specified place on the last day of the period for which
+the note was given, and to give due notice of non-payment to the
+indorser. For, as the contract requires the maker to pay at maturity,
+the indorser may presume, unless he has received a notice to the
+contrary, that the maker has paid the obligation.
+
+Ordinarily a notice of an indorsement by a partnership need not be
+sent to each member. Even after the partnership has been dissolved a
+notice to one partner is sufficient to bind the other members. If the
+note is owned jointly (that is, by parties who are not business
+partners) the indorsers are not liable as partners but as individuals.
+In such a case the notice of non-payment should be sent to each.
+
+Our illustration shows a facsimile of a protest notice.
+
+
+XIV. PAPER OFFERED FOR DISCOUNT
+
+One of the most valuable parts of a banker's education is to learn
+whom to trust. Every bank should have a well-organised and thoroughly
+equipped credit department, in charge of some one who can be relied
+upon to investigate carefully all names referred to him by the
+officers. A banker has the right to expect the fullest confidence on
+the part of the borrower, and the borrower should furnish him with a
+complete and detailed statement of the condition of his affairs. It is
+safe to conclude that when a borrower refuses absolutely to give any
+information as to his financial condition his credit is not in the
+most favourable shape.
+
+Many of the banks have blank forms which they, from time to time, ask
+borrowers to fill out. These statements show in detail the assets and
+liabilities of the firm in question; they show the notes which are
+outstanding, the mortgages on real estate, and many other particulars,
+including the personal or individual credit of members of the firm, if
+a partnership.
+
+In estimating the value of paper offered for discount the following
+points should be considered:
+
+1. The total net worth of the borrower.
+
+2. The character of his business; whether it is speculative or staple.
+
+3. The borrower's record and standing in the community and his
+   business habits.
+
+4. Whether he is in enterprise abreast with modern ideas and methods.
+
+5. The character of the merchandise owned by the borrower. What would
+   it bring under the hammer? Groceries and raw material can usually be
+   turned into cash at a forced sale at very small discount from current
+   prices. Not so with hardware, glass, dry goods, boots and shoes,
+   books, etc. Machinery and fixtures are not a bankable asset upon
+   which to base credit.
+
+The banker should note his borrower's bills payable. Why did he give
+notes? Are they met promptly? Many houses prefer to sell their own
+paper in the open market, and keep their banks open for accommodations
+when they are unable to secure outside credit. The insurance carried
+should be considered; also the volume of business done. A large
+business on moderate capital, with long credits, will naturally have
+large liabilities, while a small business with a liberal capital and
+short credits should have small liabilities.
+
+Paper offered for discount is of a variety of kinds. The larger
+proportion of it is from customers of the borrower who have extended
+their credit by paying their accounts in notes instead of in cash.
+Such paper is really, though having two names, very little better
+than single-name paper, for it is not the maker's credit, but the
+payee's, which the bank usually considers. Many very small notes
+offered for discount usually indicate a very needy condition.
+
+There are many firms which carry two or more bank accounts, and others
+who sell their paper to out-of-town banks. In buying paper it is
+important to ascertain whether the firm is in the habit of taking up
+paper at one bank by floating a loan at another.
+
+Paper may be classified for purposes of discount as follows:
+
+1. Bills drawn by shippers on the houses to which the goods are
+   shipped.
+
+2. Bills drawn by importers against commodities placed in brokers'
+   hands for sale.
+
+3. Bills arising out of our manifold trades and industries.
+
+4. Drafts with bills of lading attached.
+
+5. Paper having personal indorsements.
+
+6. Paper secured by collateral.
+
+7. One-name paper.
+
+
+XV. CORPORATIONS
+
+Stock companies are in a sense corporations, but the name CORPORATION
+has in its common application a broader meaning. PUBLIC CORPORATIONS
+are those which are created exclusively for the public interest, as
+cities, towns, counties, colleges, etc. PRIVATE CORPORATIONS are
+created wholly or in part for the pecuniary benefit of the members, as
+railroad companies, banks, etc. Corporate bodies whose members at
+discretion fill by appointment all vacancies occurring in their
+membership are sometimes called _close corporations_. In this country
+the power to be a corporation is a franchise which can only exist
+through the legislature.
+
+In municipal corporations the members are the citizens; the number is
+indefinite; one ceases to be a member when he moves from the town or
+city, while every new resident becomes a member when by law he becomes
+entitled to the privileges of local citizenship.
+
+The laws which corporations may make for their own government are made
+under the several heads of by-laws, ordinances, rules, and
+regulations. These laws may be made by the governing body for any
+object not foreign to the corporate purposes. A municipal corporation,
+for example, makes ordinances for the cleaning and lighting of its
+streets, for the government of its police force, for the supply of
+water to its citizens, and for the punishment of all breaches of its
+regulations. A railway corporation establishes regulations for
+signals, for the running of trains, for freight connections, for the
+conduct of its passengers, and for hundreds of other things. But such
+by-laws and regulations must be in harmony with the charter of the
+corporation and with the general law of the land. For instance, a
+municipal corporation could not enforce a by-law forbidding the use of
+its streets by others than its own citizens, because by general law
+all highways are open to the common use of all the people. Again, a
+railway corporation could not make a rule that it would carry goods
+for one class of persons only, because as a common carrier the law
+requires that it carry impartially for all.
+
+As a general rule private corporations organised under the laws of one
+State are permitted to do business in other States. It is quite often
+to the advantage of a company to organise under the laws of one State
+for the purpose of doing business in another. For instance, there are
+many companies chartered under the laws of Maine with headquarters in
+Boston. The Massachusetts laws require that a large proportion of the
+capital be actually paid in at the time of organising, while the Maine
+law has no such provision. For similar reasons many large companies
+doing business in New York or Philadelphia are organised under the
+laws of New Jersey.
+
+A corporation may make an assignment just as may an individual. If all
+the members die the property interests pass to the rightful heirs, and
+under ordinary conditions the corporation still exists.
+
+A FRANCHISE is a right granted by the State or by a municipal
+corporation to individuals or to a private corporation. The franchise
+of a railroad company is the right to operate its road. Such franchise
+has a value entirely distinct from the value of the plant or the
+ordinary property of the corporation.
+
+An UNLIMITED LIABILITY corporation is one in which the stockholders
+are liable as partners, each for the full indebtedness.
+
+A LIMITED LIABILITY corporation is one in which the stockholders, in
+case of the failure of the corporation, are liable for the amount of
+their subscriptions. The name _limited_ is required by law to appear
+after the name of the company. If a subscription is entirely paid up
+there is no further liability--that is to say, the property of a
+shareholder cannot be attached for any debts of the company.
+Understand clearly that the name _limited_ printed after the name of a
+company does not indicate in any way that the capital or credit of the
+company is limited, only that the liability of the shareholders of the
+company is limited to the amounts of their shares.
+
+A DOUBLE LIABILITY corporation is one in which, in case of failure,
+the stockholders are further liable for amounts equal to their
+subscriptions. All national banks are double liability companies. If A
+owns $5000 stock in a national bank, and the bank fails, he loses his
+stock; and if the liabilities of the bank are large he may be obliged
+to pay a part or the whole of an additional $5000.
+
+
+XVI. BONDS
+
+When a railroad company, or a city or any other corporation desires to
+borrow money it is a common practice to issue instruments of credit
+called BONDS. A bond means something that binds. Bonds bear the same
+relation to the resources of a corporation that mortgages do to real
+estate.
+
+Corporation bonds are issued for a period of years. They usually have
+coupons attached which are cut off and presented at regular intervals
+for the payment of interest. A bondholder of a corporation runs less
+risk than a stockholder, first, as to interest: the corporation is
+obliged to pay interest on its bonds, but may at its own pleasure
+_pass_ its dividends; secondly, the bondholder is a creditor, while
+the stockholder of the corporation is the debtor. On the other hand,
+if a concern is very successful, a shareholder may receive large
+dividends, while the bondholder receives only the stipulated interest.
+A _bond_ is evidence of debt, specifying the interest, and stating
+when the principal shall be paid; a _certificate of stock_ is evidence
+that the owner is a part-owner in the corporation or company, not a
+creditor, and he has no right to regain his money except by the sale
+of his stock, or through the winding up of the company's business.
+
+The name DEBENTURES is given to a form of municipal bond in common
+use. Nearly all the large sums of money used by States and cities for
+the building of State or municipal buildings, bridges, canals,
+water-works, etc., are raised through the issue of bonds
+(_debentures_), which are sold, usually at a price a little below par,
+to large financial institutions, banks, and insurance companies.
+Generally speaking, such bonds are good _securities_, and are
+marketable anywhere.
+
+[Illustration: A private bond.]
+
+At different times the United States government has issued bonds to
+relieve the treasury. These bonds are absolutely safe and are always
+marketable. _Registered bonds_ have the name of the buyer
+_registered_; _unregistered bonds_ are payable to _bearer_. _Municipal
+bonds_ are issued by cities and other municipalities to raise money
+for local improvements. If proper precautions are taken by buyers,
+municipal securities may be considered among the safest and most
+remunerative investments.
+
+When a new railroad enterprise is undertaken its promoters often
+expect to make the road not only supply the money for its construction
+but also give working capital in addition. This is done by the issue
+of mortgage bonds. Default in the payment of interest throws the road
+into the hands of a receiver. The securities immediately fall in value
+and are perhaps bought up by a syndicate of crafty speculators who are
+permitted to reorganise the road and its management. This is the
+history of many of our roads. There are exceptional cases, of course,
+but the investor should be familiar with the facts before buying
+railroad mortgages.
+
+A BOTTOMRY BOND is a kind of mortgage peculiar to shipping. It is a
+conveyance of the ship as security for advances made to the owner. If
+the ship is lost the creditor loses his money and has no claim against
+the owner personally. It is allowable for a loan made upon such a bond
+to bear any rate of interest in excess of the legal rate. A vessel
+arriving in a foreign port may require repairs and supplies before she
+can proceed farther on her voyage, and in occasions of this kind a
+bottomry bond is given. The owner or master pledges the keel or
+_bottom_ of the ship--a part, in fact, for the whole--as security.
+
+We have now upon the market stocks and bonds representing all
+conceivable kinds of property. Not only are properties of many kinds
+used to issue bonds upon, but many kinds of bonds are often issued
+upon the same property. Thus we find among our railroads not only
+first, second, and third mortgage bonds, but income bonds, dividend
+bonds, convertible bonds, consolidated bonds, redemption bonds,
+renewal bonds, sinking-fund bonds, collateral trust bonds, equipment
+bonds, etc., until they lap and overlap in seemingly endless
+confusion.
+
+RECEIVER'S CERTIFICATES are issued by receivers of corporations,
+companies, etc., in financial difficulties, to secure operating
+capital; they are granted first rights upon the property and are
+placed above prior lien and first mortgage bonds.
+
+
+XVII. TRANSPORTATION
+
+The most common effect of cheapened transportation is to increase the
+distance at which it is possible for producer and consumer to deal
+with each other. To the producer it offers a wider market and to the
+consumer a more varied source of supply. On the whole, cheapened
+transportation is more uniformly beneficial to the consumer; its
+temporary advantage to the producer very often leads to
+overproduction. It has the effect also of bringing about nearly
+uniform prices the world over.
+
+The time was when nearness to market was of the greatest possible
+advantage. At the present time a farmer can raise his celery in
+Michigan or his beets in Dakota and market them in New York City about
+as easily as though he lived on Long Island. It is no longer location
+which determines the business to be carried on in a particular place,
+but natural advantages more or less independent of location. But the
+railroad or the steamboat very often determines where a new business
+shall be developed. It is this quickening and cheapening of
+transportation that has given such stimulus in the present day to the
+growth of large cities. It enables them to draw cheap food from a far
+larger territory, and it causes business to locate where the widest
+selling connection is to be had, rather than where the goods or raw
+materials are most easily procured. It is the quick and comfortable
+transportation facilities which our large cities possess that have
+given strength to the great shopping centres. Shoppers for thirty or
+forty miles around can easily reach these centres, and the result is
+that trade gathers in centres rather than at local points. A city of a
+million population in the most productive agricultural section of
+country could not be fed if the food had to reach the city by teaming.
+With this growth of trade centres comes the increased gain of large
+dealers at the expense of the small; with it comes organised
+speculation and its attendant results, good and evil.
+
+Prior to the completion of the organisation of trunk or through lines,
+freight was compelled to break bulk and suffer trans-shipment at the
+end of each line, where a new corporation took up the traffic and
+carried it beyond. To prevent this breaking of bulk and to expedite
+the carriage of freight, fast freight lines on separate capitalisation
+were organised. The purpose of the interstate-commerce law is largely
+to prevent discrimination and corruption in freight charges, to secure
+for every person and place just and equal treatment at the hands of
+the transportation companies. The freight rates are arranged and
+regulated by the traffic associations, and the various conditions and
+compromises necessary have made both classifications and rates about
+as complicated as anything possibly could be.
+
+The name DIFFERENTIAL as applied to freight rates refers to the
+differences which are made by railroad companies. Certain roads are by
+agreement allowed to charge a lower rate than others running to the
+same points. To and from each of the eastern cities there are two
+classes of roads--the _standard_ lines and the _differential_ lines.
+The standard lines have the advantage of more direct connections; the
+differential lines reach the freight destinations by circuitous
+routes, in some instances by almost double the mileage. With a view to
+equalising these conditions the general traffic associations allow the
+differential lines to carry freight at a lower rate per mile than the
+rate charged by the standard lines.
+
+The transportation business of the United States is so varied and
+complicated that a proper study of its freight tariffs and
+classifications would require much more space than can be given the
+subject in these lessons.
+
+
+XVIII. TRANSPORTATION PAPERS
+
+The common transportation papers, familiar to all shippers, are the
+(1) _shipping receipt_, (2) _bill of lading_, (3) _waybill_.
+
+ORIGINAL RECEIPTS, stating marks and quantities of goods, go with each
+separate lot of merchandise to the freight sheds or vessels, and these
+are summed up in a formal bill of lading, for which they are exchanged
+when all the cases or bundles belonging to the particular shipment
+have been delivered. The duplicate receipt, or the part commonly
+marked _invoice_, is kept by the receiver of the freight, and the
+other end, commonly marked _original_, is given to the drayman. In
+making ordinary shipments it is not usual or necessary to make out a
+formal bill of lading. Of course, when no bill of lading is made out,
+the receipt should be preserved by the shipper. The full contract is
+usually printed on the receipt, but it must be remembered that a
+receipt is not a negotiable instrument and cannot be used as security
+for money.
+
+[Illustration: A shipping receipt (original).]
+
+A BILL OF LADING is an acknowledgment by a transportation company of
+the receipt of goods specified, and contracts for their delivery at a
+certain place, under conditions stated thereon, upon payment of
+freight and expenses. Bills of lading are negotiable and maybe
+transferred by indorsement, but are of no value apart from the goods
+to which they give title. A bill of lading goes with certain _named_
+goods and cannot be transferred to other goods, even though of
+precisely the same kind and price. Marine bills of lading are usually
+made in triplicate; one is kept by the shipper, another by the
+vessel, and the third is sent by mail to the person to receive the
+goods.
+
+[Illustration: A steamship bill of lading.]
+
+The parties to a bill of lading are three--the shipper, the consignee,
+and the transportation company. The declaration of having received the
+goods in good order and condition, and the consequent obligation,
+subsequently expressed, of delivering them in like good order and
+condition, is sensibly lessened in its importance by the additional
+clause now adopted by almost all transportation companies--namely:
+"Contents and condition of contents of packages unknown." Should the
+goods or part of them be shipped in a damaged condition, or in a bad
+condition of packing, a note to that effect should be made by the
+transportation company on the bill of lading, which ceases then to be
+a _clean bill of lading_.
+
+[Illustration: A local waybill.]
+
+Like any other instrument of credit, a bill of lading may be deposited
+with a creditor as security for money advanced (or it may be
+transferred to a buyer) by means of indorsement, and the property or
+goods will be thereby either mortgaged or assigned. Acting upon this
+principle, the shipper declares in the bill of lading that the goods
+shall be delivered unto the consignee or his assigns. When a shipper
+is unable to insert the name of the consignee at the time the bill of
+lading is made out, a _bill to order_ is drawn up wherein the
+consignee's name is superseded by the words _shipper's order_, or
+simply _order_; it being thus understood that the goods shall be
+delivered to whomsoever presents, at point of destination, the bill of
+lading duly indorsed by the shipper. By such a simple arrangement as a
+_bill to order_ the merchant is enabled to sell the goods while they
+are at sea, or in transit, and a consignment of merchandise may change
+hands several times before arriving at its destination.
+
+When a case of merchandise to be shipped has been properly entered and
+weighed it is then ready to be _manifested_ or _waybilled_, as no
+shipment is allowed to go forward without a waybill. The WAYBILL is
+simply a memorandum of the consignment, together with full and
+complete shipping directions, giving also the number of the car into
+which the case has been loaded, and the point to which the car is
+"carded." The freight conductor has waybills for all goods which he
+carries. They are turned over with the merchandise to the agent of the
+railroad at the point of destination.
+
+Our illustrations show (1) _a shipping receipt_--the half marked
+"_original_"; (2) _a steamship bill of lading_; (3) _a local
+waybill_.
+
+
+EXAMINATION PAPER
+
+NOTE.--_The following questions are set as an indication of the sort
+of knowledge a student should possess who has carefully read the
+several papers of this course. The paper covers only about the first
+half of the course. The student is recommended to write out the
+answers carefully. Only such answers need be attempted as can be made
+from a study of the lessons._
+
+ 1. What in a general sense is meant when we speak of the currency of a
+    country?
+
+ 2. Enumerate some of the advantages afforded to the community and to
+    commerce in general by banking institutions.
+
+ 3. A bank cheque is a demand order for money, drawn by one who has
+    funds in the bank. How does a cheque differ from an order on John
+    Smith to pay bearer a certain sum of money?
+
+ 4. Why is it important that cheques should be very carefully drawn?
+
+ 5. (_a_) A cheque has no date. Does this make it void? (_b_) How about
+    a cheque dated months ago? (_c_) Is a cheque dated on Sunday good?
+    (_d_) Why are cheques sometimes dated ahead? (_e_) Are you at liberty
+    to print your own form of cheque? (_f_) Is it necessary that your
+    cheque be written on the prescribed blank form? (_g_) How would you
+    write a cheque for 75 cents?
+
+ 6. How would you word a cheque to give to a person who is unknown at
+    your bank, but who wishes to draw the money over the counter?
+
+ 7. You are sending a cheque through the mails to John Brown,
+    Philadelphia. How will you prevent the cheque from falling into
+    the hands of the wrong John Brown?
+
+ 8. You identify A. B. at your bank. The cheque A. B. presented turns
+    out to be a forgery. Are you responsible?
+
+ 9. A. B. transfers a cheque to you by a blank indorsement. It is then
+    payable to bearer. How can you legally make it payable to your own
+    order?
+
+10. What is meant by power-of-attorney? How should an attorney indorse
+    cheques for any person for whom he is acting?
+
+11. If a note were about to be transferred to you by indorsement and
+    delivery in payment of a debt, would it make any difference to you
+    whether or not it was overdue? Explain in full.
+
+12. Tell how you would receipt for a payment of a note. Why is not an
+    ordinary separate receipt sufficient?
+
+13. Why are notes protested? Why is a formal protest sometimes desired
+    even though the paper bears no indorsements?
+
+14. If an indorser is compelled to pay a note, against whom has he a
+    good claim?
+
+    NOTE TO THE FOREGOING EXAMINATION PAPER
+
+    It is a mistake to answer questions for a student if he is able
+    of himself to find the answers. A question which sets a student
+    thinking, even though he cannot immediately find a satisfactory
+    answer, affords educational training of considerable value. A
+    few of the answers to the foregoing questions are as follows:
+
+    5. (_a_) Not necessarily so. (_b_) Such a cheque would under
+    ordinary conditions be all right. Cheques should be presented as
+    soon after date as convenient. (_c_) Cheques dated on Sunday
+    are very commonly paid. Cheques or notes delivered on Sunday are
+    void. The delivery makes the contract, not the dating. (_d_)
+    That the maker may have a few days in which to deposit
+    sufficient money to meet them. (_e_) You are at liberty to print
+    your own form of cheque or to write it out in full if you wish.
+    (_g_) Write the words "_Seventy-five cents_" plainly along the
+    money line.
+
+    8. Yes.
+
+
+
+
+BUSINESS GEOGRAPHY
+
+THE TRADE FEATURES OF THE GREAT COMMERCIAL NATIONS
+
+
+I. THE TRADE FEATURES OF THE BRITISH ISLES
+
+LONDON AS A FOOD CONSUMER
+
+London is the greatest seat of trade and commerce in the world. Its
+commercial greatness is evidenced by its greatness of population. Its
+inhabitants number over 6,000,000. The houses in which this vast
+population lives, would, if placed end to end, make a continuous
+street that would stretch across all Europe and Asia. The mere effort
+of providing food for this vast population necessitates an enormous
+commerce. Half a million of beeves are required every year to supply
+its meat market; also 2,000,000 sheep and 8,000,000 fowls. To supply
+its fish market 400,000,000 pounds of fish are required, and
+500,000,000 oysters. Grain, flour, fruit, butter, eggs, cheese, sugar,
+tea, and coffee, are brought to London daily in such quantities that
+the prices of these commodities all the world over are based upon what
+they will fetch in London. Whole nations and provinces and districts
+get their subsistence from industries that have for their end the
+supplying of some of this enormous food demand. Denmark, for example,
+owes its entire prosperity of recent years to its profitable
+manufacture of butter for the London market. Brittany and Normandy, in
+France, are almost wholly occupied in supplying that market with
+poultry and eggs. The islands of Jersey and Guernsey derive their
+principal wealth, not, as might be supposed, from the sale of milk and
+butter, but from the supplying of London with potatoes. Canada during
+the last six or eight years has built up with London an immense trade
+in cheese, a trade that exceeds in importance any other that Canada
+has, while even our own home States--Illinois, Iowa, and Wisconsin,
+for example--have found new sources of wealth in catering to the
+London dairy trade. "Elgin" and "Ames" creamery butters are products
+well known to the London consumer.
+
+LONDON THE COMMERCIAL CENTRE OF THE WORLD
+
+What is the reason of London's wonderful prosperity? Already its
+population is one fifth the entire population of England and Wales,
+and it is increasing at the rate of about 20 per cent. per decade.
+Three hundred people are added to the number every day in the year, a
+rate of 110,000 inhabitants in the course of the year. It is now one
+half greater than the total population of all Ireland. London's Scotch
+population is almost as numerous as that of Edinburgh, while its Irish
+population is quite as numerous as that of Dublin. Every civilised
+country is represented among its people, and every civilised tongue is
+spoken among them. A sea of brick and mortar, even now fifteen miles
+long and ten miles broad, it is growing at the rate of a new house
+every hour of its existence. Its streets are already 28,000 miles in
+length, and these are spreading out so rapidly that every year many
+whole villages and townships are enmeshed by them. Every day 1,000,000
+people enter London by railway, and at least 500,000 people have
+occupations in it in the daytime who reside beyond its limits at
+night. Fifty thousand people have occupations in it in the night-time
+who reside beyond its limits during the day. It is the largest
+importing centre in Great Britain, and the largest in the world, and
+its exports are exceeded only by Liverpool, and not always by
+Liverpool. It is also the centre of the world's financial business.
+For example, traders in the East Indies who ship cargoes of spices and
+other Eastern produce to America, draw in settlement on London rather
+than on New York, while traders in America who ship cargoes of cotton
+to Marseilles or Riga, draw in settlement on London rather than on
+Paris or St. Petersburg. What is it that thus makes London the chief
+seat of population in the world, the commercial metropolis of the
+world, the great financial clearing-house of the world?
+
+LONDON THE CENTRE OF THE LAND SURFACE OF THE GLOBE
+
+[Illustration: London the natural centre of the world's trade.]
+
+London stands as nearly as possible in the centre of the land surface
+of the globe. Its situation, therefore, eminently adapts it to be the
+great centre of the world's trade--the great distributing centre of
+the world's products. Its ships can go to the farthest parts of the
+earth, and, loading themselves with the natural products of these
+parts, can bring them to its docks without breaking bulk, deposit them
+there for assortment, and then take them away again to other parts of
+the earth, and do this more economically than the ships of almost any
+other port in the world. But a greater reason is to be found in the
+fact that for centuries the British people have pursued a definite
+policy of manufacture, trade, and commerce, and have had the good
+fortune to have had that policy interfered with in a less degree than
+any other nation in the world by commerce-destroying war, whether
+internal or external. And whenever Britain has been in external wars
+her navy has been able to protect her commercial interests. London,
+being the capital of the kingdom and its chief seat of trade, has
+naturally derived the principal benefit from these many years of
+peaceful industry and commerce. Then, again, London is favourably
+adapted to trade in respect to its own country. It is a seaport, sixty
+miles inland, and is connected by navigable canals with all the other
+chief manufacturing and commercial centres of the country. Its railway
+facilities, too, are so complete that there is not a manufacturing
+town in the whole island that is not within fifteen hours of
+freightage from it. Then, too, the peculiar configuration of the
+coast-line of Great Britain makes every point on the island within an
+hour or two of carriage from a seaport. Finally, all British seaports
+are in trade connection with London by a coasting service unequalled
+in the world for cheapness, completeness, and efficiency. In a word,
+London stands not only in the centre of the land surface of the globe,
+but also at the commercial centre of its own home territory--that is
+to say, within easy reach both by water and by land of all the trading
+and producing interests of a people that for centuries have been
+leaders in commercial and manufacturing industry and enterprise.
+
+GREAT BRITAIN'S COMMERCIAL POLICY
+
+But that which more than anything else has made London the great trade
+centre of the world has been the policy, now for many years adopted by
+the British people, of allowing the goods and products of all other
+nations to enter their ports untaxed. Every port in Britain is a free
+port of entry for all imported merchandise except spirits, tobacco,
+wine, tea, coffee, cocoa, and chicory; and ships of all nations are
+allowed to trade at British ports upon terms exactly the same as those
+laid down for British ships. The result is that Britain has become the
+entrepot or distributing mart for the produce of the world. Ships of
+all nations are found at her wharves, and commodities from all parts
+of the world brought in those ships are found in her warehouses. Her
+mercantile navy numbers 21,000 vessels, and 8000 of these are
+steamships. The tonnage of these vessels amounts to over 8,750,000
+tons, and of this nearly 8,000,000 is engaged in the foreign trade
+alone. Her mercantile sailors number over 250,000 men, and over
+150,000 of these are engaged in the foreign trade. London is, of
+course, the chief gainer from this perfect unrestriction of trade.
+Twenty-seven per cent. of the whole trade of the country is in its
+hands. Its merchants do business in every seaport on the globe, and
+the trade of Great Britain with ports in Europe, the Levant, Egypt,
+India, the East Indies, China, Japan, and Australasia, is almost
+wholly controlled by them. Its shipping embraces the finest trading
+fleets known to commerce. Its docks and wharves extend on either side
+of the Thames for twenty-four miles from London Bridge down to
+Gravesend, and are the largest and finest in the world.
+
+[Illustration: British mercantile marine. Compared with that of other
+countries.]
+
+LONDON THE CLEARING-HOUSE OF THE WORLD
+
+A similar explanation is to be given of the fact that London is the
+great financial centre of the world. The same policy which has made
+Britain a great trading country has also made her a great
+manufacturing country. The food products of all the world pour in upon
+her shores, and Britain has become a cheap place to live in. Her
+artisans are supplied with the best food that the world can produce,
+and this at prices that are practically what the British demand makes
+them to be. The British artisan is therefore both well fed and cheaply
+fed. As a consequence of this, British manufactures are produced more
+efficiently and more cheaply than those of most other nations, and
+they are therefore exported enormously to every quarter of the globe.
+London, from its accessibility with respect to the great manufacturing
+centres at home, and from its trade connections and facilities for
+trade abroad, is the great distributing centre of this enormous
+manufacture. London exporters have accounts for goods sold by them all
+the world over. There is, therefore, no quarter of the world where
+money is not constantly owing to London; or, if not to London, then to
+Manchester, Birmingham, Sheffield, Leeds, Glasgow, or some other
+manufacturing centre in close financial touch with London. In this,
+then, lies the explanation of the financial supremacy of London. No
+matter in what quarter of the world money is owed by any place, the
+final destination of that money is London; for in almost all cases it
+will be found that the locality to which the money is owed, if it be
+not London, will itself be a debtor to London. London, therefore, from
+necessity, and as a matter of custom and convenience, has become the
+great clearing-house of the world. The final adjustments of the
+indebtedness of all the commercial centres of the world are made
+there.
+
+[Illustration: London bridge.]
+
+GREAT BRITAIN THE CREDITOR NATION OF THE WORLD
+
+One other reason for the financial supremacy of London lies in the
+enormous wealth of Britain. For now almost half a century Britain has
+been importing far more than she has been exporting, and the total
+volume of her import and export trade is more than quadruple what it
+was in 1850. The consequence is that not only has Britain been
+accumulating wealth, but she has been accumulating it enormously. Her
+accumulated savings, therefore, have been at the world's disposal, and
+she has had so much money to invest that she has become the creditor
+nation of the world. The total investments of British capital in
+foreign countries (in loans, railways, manufacturing syndicates, etc.)
+is estimated to be the enormous sum of over $10,500,000,000. London,
+of course, is the investing, controlling, and supervising
+counting-house for all this capital. And as so much British capital
+finds in London its place of investment, it naturally follows that
+nearly all the remaining unemployed capital of the world, that seeks
+investment, either is sent to London as a market, or else assumes a
+price for investment elsewhere which the current price of capital in
+London warrants it to assume. The London market rate of capital,
+therefore, determines its market rate in every other commercial centre
+of the world.
+
+GREAT BRITAIN A BEEHIVE OF MERCANTILE AND MANUFACTURING INDUSTRY
+
+Britain like all other civilised countries, was originally an
+agricultural country. Although for some centuries she has been one of
+the chief manufacturing and mercantile countries of the world, it has
+been only during the past one hundred years, and especially during
+the past fifty years, that her development in manufactures and in
+commerce has been remarkable. Britain is still, in respect of quality,
+the foremost agricultural country on the globe. Her breeds of horses,
+cattle, sheep, and swine are the standard breeds from which almost all
+other breeds derive their origin, and by which from time to time they
+are improved. And nowhere is the raising of grains and roots for food
+of man and beast pursued with more skill and success than in Britain.
+But agriculture is fast ceasing to be an important industry of
+Britain. Two million acres less are under cultivation now than were
+cultivated fifty years ago. The total amount of wheat raised is
+sufficient only for three months' consumption of the people; the
+remaining quantity needed must be supplied by importation. Three
+fifths of the total population of the island live in towns, and only a
+small proportion of the population that live in the country is
+actually supported by agriculture. Agriculture, in fact, supports only
+fifteen per cent. of the population in all Britain, and in England
+only ten per cent. Three and a half times as many people are
+personally engaged in manufactures as in rural pursuits. For three
+quarters of a century the population in towns and cities has been
+growing four times faster than the population of the rural parts. At
+the same time the working power of the urban population has been
+constantly growing more effective. In fifty years, by the general
+adoption of machinery, the effective working power of the British
+workman has been increased sixfold. In England eighty-six per cent. of
+the total work of the country is done by steam, and in Scotland ninety
+per cent. Great Britain, therefore, has become practically one great
+beehive of mercantile and manufacturing industry. Agriculture as a
+general occupation of the people, except in the production of the
+finer food products, such as choice beef and mutton and high-grade
+dairy products, is no longer profitable. Indeed, during the last
+fifteen years the plant (including land) employed in agricultural
+industries has been depreciating in value at the rate of $150,000,000
+yearly; that is, in these fifteen years the enormous sum of
+$2,250,000,000 of capital employed in agriculture has been
+obliterated. But the gain to capital employed in profitable mercantile
+and manufacturing pursuits has much more than compensated for this
+enormous loss in agriculture.
+
+GREAT BRITAIN'S COAL-FIELDS AND IRON DEPOSITS
+
+One reason for the great development which Britain has made as a
+manufacturing and trading nation lies in the fact that Britain was the
+first nation to utilise on a large scale the power of steam as a help
+to manufacture and trade. The steam-engine was a British invention.
+The first railways were built in Britain. The first steamship to cross
+the Atlantic was a British enterprise. A second reason lies in the
+fact that when Britain began to use steam as a motive power she found
+her supplies of coal so near her iron mines, and so near her clays and
+earths needed for her potteries, that from the very first she was able
+to manufacture cheaply and undersell most of her competitors. Her
+coal-fields have an area of over 12,000 square miles, and wherever her
+coal-beds are other natural products have been found near by, so that
+her manufacturing areas and her coal areas are almost identical.
+Taking Liverpool, Manchester, Birmingham, Wolverhampton, Sheffield,
+Leeds, Newcastle, Durham, Bristol, Stoke, Carlisle, Cardiff, Swansea,
+Glasgow, Paisley, and Dundee as centres, around each of these lies a
+coal area of such richness as amply sustains it in its commercial and
+manufacturing pre-eminence. London is almost the only great
+commercial centre of Britain that does not lie in the midst of or
+quite adjacent to a rich coal and other mineral region. But London is
+within easy distance, not only by rail, but also by canal and by
+coastwise sailing, of every coal-field and mineral deposit of Britain.
+London, however, is an importing and exporting centre rather than a
+manufacturing centre.
+
+[Illustration: The coal-fields of England.]
+
+LONDON'S SPECIAL TRADE FEATURES
+
+The commercial supremacy attained by many of the large cities of
+Britain is not wholly due to natural causes, or even to ordinary
+causes. Much of it is due to extraordinary enterprise and forethought
+on the part of their citizens. London, for example, is the centre of
+the wool trade of Britain. The woollen manufacturers of Britain use
+about 250,000 tons of wool annually, and three fourths of this is
+imported. Other cities that lie near the seats of the great woollen
+manufactures--Liverpool, for example--have tried to secure a share of
+this vast importation of wool, but London, because of the special
+attention it gives to this trade, manages to keep almost the whole of
+the trade in its own hands. Similarly, London almost wholly
+monopolises the trade of England with Arabia, India, the East Indies,
+China, and Japan. It is therefore the great emporium for tea, coffee,
+sugar, spices, indigo, and raw silk. It also enjoys the bulk of
+Britain's trade in fruits (oranges, lemons, currants, raisins, figs,
+dates, etc.) and in wines, olive oil, and madder, with the countries
+that lie about the Mediterranean. By virtue partly of its situation,
+but largely because of the enterprise of its merchants, it absorbs
+nearly the whole of Britain's French trade, and of England's trade
+with Germany, Belgium, Holland, and Denmark. This includes principally
+wines (from France), and butter, eggs, and vegetables. Another great
+branch of its trade is that with the ports of the Baltic, including
+those of Russia, the imports comprising, besides wheat and wool,
+tallow, timber, hemp, and linseed. The tobacco imported from Virginia
+into England goes almost wholly to London; so does almost the whole of
+the Central American and South American trade in fine woods,
+dye-stuffs, drugs, sugar, hides, india-rubber, coffee, and diamonds.
+Quite a large share of the trade of Britain with Canada is
+concentrated in London; also, more than one half of the trade of
+England with the West Indies, the imports from the latter country
+comprising principally sugar, molasses, fruit, rum, coffee, cocoa,
+fine woods, and ginger.
+
+THE SPECIAL TRADE FEATURES OF GLASGOW, LIVERPOOL, AND MANCHESTER
+
+The great commercial centres of Britain after London are GLASGOW
+(800,000), LIVERPOOL (700,000) and MANCHESTER (640,000, including
+SALFORD). All these cities have derived the greater portion of their
+size from the progress they have made during the present century. All,
+of course, owe their progress and their prosperity largely to their
+natural advantages of situation, etc. LIVERPOOL stands on the margin
+of the Atlantic, "the Mediterranean of the modern world," and thus
+enjoys the principal share of the trade with America, especially that
+with the United States. Great Britain's imports from the United States
+amount to over $500,000,000 per annum, and her exports to the United
+States (exclusive of bullion, etc.) to over $100,000,000. (Formerly
+the exports to the United States were twice this amount.) Of this vast
+trade, amounting to one fifth of Britain's total trade with the world,
+Liverpool enjoys the lion's share. Nearly all the cotton, not merely
+of the United States but of the world, that is used in Europe is sent
+to Liverpool for distribution. Similarly, GLASGOW, situated with its
+aspect directed toward the same maritime routes, enjoys also an
+immense transatlantic trade both north and south. And MANCHESTER,
+situated in the very heart of the richest coal districts of the
+kingdom, and within easy reach of the great cotton port, Liverpool,
+has built up a cotton-manufacturing industry surpassing that of all
+the rest of the world.
+
+THE BUSINESS ENTERPRISE OF GLASGOW, LIVERPOOL, AND MANCHESTER
+
+But the natural advantages of situation possessed by these great
+cities have been grandly supplemented by the enterprise of their
+inhabitants. GLASGOW is only a river port. For twenty miles below its
+site the Clyde is naturally narrow, shallow, and shoal-encumbered. In
+places it is naturally not more than fifteen inches deep. By the
+expenditure of no less a sum than $60,000,000 this shallow stream has
+been converted into a continuous harbour, lined on either side for
+miles with wharves and docks, and easily capable of accommodating the
+largest and finest merchant ships afloat. As a consequence of this
+enterprise Glasgow has become the greatest ship-building port in the
+world. No less than twenty shipyards--in efficiency and magnitude of
+the very highest class--are to be found along the banks of the once
+shallow, impassable Clyde, between Glasgow proper and the river's
+mouth.
+
+Similarly, the enterprise of the ship merchants of LIVERPOOL has
+converted a port, that high tides and impassable bars would naturally
+render unfit for modern ships, into the greatest shipping port in the
+world. One hundred million dollars were spent in making the
+improvement, but $5,000,000 is the annual revenue derived therefrom
+in dock dues alone. And because of this enterprise Liverpool can now
+boast of controlling one fourth of all the imports of the kingdom, and
+two fifths of all the exports, and of handling three fourths of all
+the grain and provision trade of the kingdom, and of having the
+largest grain warehouses in the world.
+
+[Illustration: The Manchester ship canal.]
+
+But MANCHESTER, a wholly inland city, forty miles distant from
+Liverpool, its nearest port, has outdone even Glasgow and Liverpool in
+its endeavour to bring the sea to its own doors. It also has spent
+$100,000,000--not, however, in amounts spread over a number of years,
+and as occasion seemed to demand, but all at once, in one lump sum, in
+one huge enterprise. It has built a canal to the Mersey where it is
+navigable, thirty-five and one half miles in length, and sufficiently
+deep and wide, so that the whole of its vast importation of cotton,
+and the whole of its vast manufacture of cotton and other textile
+fabrics, and as much else as may be desired, may be brought in from
+the sea or taken to the sea in merchant vessels of the very largest
+size now afloat. And it has done this in the face of engineering
+difficulties, and of obstacles raised against it by jealous competing
+interests that were almost insurmountable.
+
+GREAT BRITAIN'S SPECIALISATION OF HER INDUSTRIES IN DEFINITE CENTRES
+
+In no part of the world are manufacture and trade carried on with such
+strict regard to the conditions of economic production and the
+economic handling of goods as in the British Isles. The free-trade
+policy of the empire permits everywhere within its borders not merely
+national but world-wide competition; and yet it is but truth to say
+that wherever Great Britain attempts to sell her goods abroad every
+nation and every community in the world rises against her. Even her
+colonies are against her. Her markets are open to every one's trade,
+and yet in almost every market in the world which she does not
+absolutely control barriers are raised against her trade. She is able
+to sell goods in foreign markets only because, despite these barriers,
+she is able to undersell all competitors in them, or to give better
+value for the same money than they. Even when she obtains the control
+of new markets, as she has in India, China, Egypt, West Africa, etc.,
+she allows every nation to trade in these markets on precisely the
+same terms as she herself trades in them. In the face of this
+world-wide competition, therefore, the industries of Britain would
+cease to exist if every condition conducive to economy of
+production--climatic suitability, availability of cheap motive power,
+accessibility to cheap raw material, and accessibility to natural and
+cheap means of transportation--were not taken advantage of to the
+utmost. But this is just what Britain does. She does take advantage to
+the utmost of conditions conducive to economy of production; and this
+is why, to a degree nowhere else attempted in the world, she has
+specialised her industries in definite favouring localities.
+
+THE NATURAL APTITUDES OF COMMUNITIES IN GREAT BRITAIN FOR SPECIAL
+INDUSTRIES
+
+A result of this specialisation of industries in definite centres is
+that a natural aptitude for the industry specialised in a locality is
+developed among the inhabitants of the locality, and this, being
+stimulated by association, is transmitted from generation to
+generation with ever-increasing efficiency. Again, this inherited
+aptitude of the community for the industry historically associated
+with it is a prime element in the economic prosecution of the
+industry. Also, in turn, it acts as an important influence in
+continuing the industry in the locality where once it has been
+successfully specialised. In no country in the world, outside of Asia,
+have great industries had such long-continued successful existence in
+definite localities as in Britain. And therefore in no country in the
+world do the natural aptitudes of communities for special industries
+constitute such an important element of economic industrial
+production. A community of efficient "smiths," for example, has
+existed in and about Birmingham since the fifteenth century. As a
+consequence of this the Birmingham country has for several centuries
+been the greatest seat of the metal or hardware industries in the
+world. Again, the manufacture of woollen cloths has been an industry
+successfully specialised in West Yorkshire from the fourteenth
+century. It results that nowhere in the world is the woollen
+manufacture carried on more prosperously than in West Yorkshire
+to-day. The potteries of Staffordshire have been in existence time out
+of mind, and in the eighteenth century they took a pre-eminent place
+among the industries of the world. They hold that place of
+pre-eminence now, even though since then the methods of manufacture
+have been several times revolutionised.
+
+THE COTTON MANUFACTURES OF GREAT BRITAIN
+
+But the influence which more than anything else has determined the
+specialisation of industries in certain places in Britain rather than
+in others has been the presence of coal-fields. In only a very few
+instances have great industries been maintained in districts that are
+not coal-producing. The busiest industrial centre in all Britain is,
+perhaps, South Lancashire, the great seat of the COTTON MANUFACTURE.
+South Lancashire is one great coal-field. LIVERPOOL, the great cotton
+port of the world, is at one edge of this field. MANCHESTER, the
+cotton metropolis of the world, is at the other edge. Between and near
+these two chief towns is a whole nest of large towns and
+cities--PRESTON, BURNLEY, BLACKBURN, ROCHDALE, BOLTON, BURY, ASHTON,
+STOCKPORT, OLDHAM, etc.--every one of which is wholly devoted to the
+cotton interest. From their position all these towns obtain both their
+motive power and their raw material at the lowest possible cost. But,
+in addition to its advantages of cheap coal and cheap raw material,
+South Lancashire has one other great advantage in favour of its
+special industry--its climate is eminently suited to the industry. Its
+atmosphere is moist, and not too moist, and its temperature is not too
+cold. Cotton thread can be spun and woven in Lancashire which
+elsewhere would break. In scarcely any other place in England has
+cotton-weaving or cotton-spinning ever proved a success. The cotton
+industry of Scotland is not so localised as it is in England, but
+PAISLEY (65,000) is famous all the world over for its identification
+with the manufacture of cotton thread. Ireland has no important cotton
+manufactures except in BELFAST. One third of the cotton manufactured
+in the world is manufactured in the United Kingdom. The total product
+is about 14,000 miles of cloth daily. The number of separate mills is
+over 2500. The annual product is $500,000,000, which is one hundred
+times what it was one hundred years ago. The quantity of raw cotton
+imported annually to sustain this immense production is 1,750,000
+pounds.
+
+[Illustration: The great manufacturing districts of England.]
+
+THE WOOLLEN MANUFACTURES OF GREAT BRITAIN
+
+A second great industry of Great Britain is its WOOLLEN MANUFACTURE.
+This industry is specialised in England, principally in West
+Yorkshire, a district which is as well supplied with coal as is South
+Lancashire. LEEDS (410,000) and BRADFORD (232,000) are the two
+principal seats of the industry, but HUDDERSFIELD and HALIFAX are also
+important "cloth towns," and many other communities are identified
+with the manufacture of woollens. The noted "West of England" cloths
+are made principally in Gloucestershire, where their manufacture in
+the town of STROUD is a survival of an ancient industry once general
+throughout the whole county. In Scotland there are two centres of the
+woollen industry. The first and most important is in southeast
+Scotland, where, in the valley of the Tweed (in GALASHIELS, HAWICK,
+JEDBURGH, etc.), the celebrated "Scotch tweeds" are manufactured. The
+second is in the valley of the Teith (STIRLING, BANNOCKBURN, etc.). At
+one time the sheep that were pastured on the wolds of Yorkshire were
+the chief supply of the raw material for this industry in the whole of
+Britain, but that time is now long past. The total annual import of
+wool into the United Kingdom is about 750,000 pounds, of which about
+one half is retained for home manufacture. Two thirds of this import
+comes from Australia. The number of wool and worsted factories in the
+kingdom aggregates over 2750. The value of the woollen goods produced
+annually is about $250,000,000, which is about one fourth of the total
+product of the world.
+
+THE LINEN MANUFACTURES OF GREAT BRITAIN
+
+The third great textile manufacture of the United Kingdom is that of
+LINENS. This is the one manufacture in which Ireland surpasses her
+sister kingdoms, England and Scotland. The cultivation of flax and the
+spinning of linen yarn have been domestic industries throughout all
+Ireland from time immemorial. But at the present time the
+linen-manufacturing industry of Ireland is almost wholly concentrated
+in BELFAST. In Scotland, which now almost rivals Ireland in the extent
+and perfection of her linen manufactures, the industry is principally
+located in Fifeshire and Forfarshire, especially in the towns of
+DUNDEE and DUNFERMLINE, the latter town being greatly famed for its
+napery and table linens. Linen, like cotton, requires a peculiar
+atmospheric condition of temperature and moisture for its manufacture,
+and only in few localities has the linen industry been successfully
+established. The total value of the annual linen manufacture of the
+United Kingdom is $100,000,000.
+
+OTHER TEXTILE MANUFACTURES OF GREAT BRITAIN
+
+The annual value of the total manufacture of textile fabrics in the
+British Isles is about $1,000,000,000--not far short, indeed, of one
+fourth of the total manufacture of textile fabrics in all the world.
+Great Britain has over $1,000,000,000 invested in her textile
+industry, and one half of her total exports consists of textile
+manufactures. Cotton, woollen, and linen cloths are the chief staples
+of this industry, but there are many other branches of it and many
+other localities in which it is specialised besides the ones already
+mentioned. LEICESTER (204,000), which, like so many other
+manufacturing cities of England, lies at the centre of a coal-field,
+is the chief seat of the WOOLLEN HOSIERY manufacture. DUMFRIES is the
+chief seat of the woollen hosiery manufacture in Scotland.
+KIDDERMINSTER, in Worcestershire, is the chief seat of the "Brussels"
+carpet industry; WILTON, in Wiltshire, of the Wilton carpet industry.
+KILMARNOCK, in Ayrshire, is the chief seat of the carpet manufacture
+in Scotland. NOTTINGHAM (233,000) is the metropolis of the cotton
+hosiery and lace manufacture of England. NORWICH (110,000), in eastern
+England, has a noted manufacture of muslins and fine dress-goods. The
+Norwich textile manufacture is an instance of the continuance of an
+industry in a community historically associated with it, although its
+seat is far removed from a coal-field. The SILK manufacture of Great
+Britain is almost entirely confined to the county of Derby and
+adjacent districts in England. MACCLESFIELD, in Cheshire, is the chief
+centre. COVENTRY is noted for its silk ribbons and gauzes. But the
+manufacture of silk in Britain is not prospering like that of her
+other textile fabrics. In fact, in forty years it has depreciated
+three fourths. British silk manufacturers are not as adept in
+weighting their products with dyes as their French competitors are,
+and in consequence English silks, though intrinsically better than
+French silks, look inferior and therefore cannot be sold at profitable
+prices. But, on the other hand, the JUTE manufacture of Great Britain
+is increasing by leaps and bounds. Established only sixty years ago,
+the value of its annual output is now twice that of the whole
+manufacture of silk, and in twenty-five years has tripled. The chief
+seat of this industry is DUNDEE (160,000), in Scotland.
+
+THE HARDWARE MANUFACTURES OF GREAT BRITAIN
+
+The textile manufactures of Great Britain are in the aggregate
+first in importance, but the HARDWARE manufactures come a close
+second. The total amount of Great Britain's hardware products is
+about $750,000,000, or one fourth of the total product of the
+world, and of this about one third is exported. Even more than her
+textile fabrics, the hardware manufactures of Great Britain are
+associated with her coal-fields. The most distinctive "hardware
+centre" is that one which is identified with the great coal-field
+in the middle of England known as the "Black Country." BIRMINGHAM
+(506,000), the chief place in this centre, is unrivalled in
+the world for the multifariousness and extent of its metal
+manufactures. It is literally true that everything from a "needle
+to an anchor" is made within its limits. But though its industries
+comprise principally those of iron and steel, its manufactures in
+gold, silver, copper, zinc, lead, and aluminium are also very
+important. Birmingham, too, is unrivalled in the world in the
+application of art to metal work. Its manufacture of jewellery, and
+gold and silver ornaments, is enormous. Its manufacture of small
+wares is also enormous. For example, it turns out 15,000,000 pens
+weekly. Its manufacture of buttons runs into the hundreds of
+thousands of millions. WOLVERHAMPTON (88,000), also in the Black
+Country, is noted for its manufacture of heavy hardware and
+machinery. So also in OLDHAM, in the Lancashire district. So also
+in LEEDS, in the West Yorkshire district. SHEFFIELD (352,000), also
+in Yorkshire, is historically identified with its celebrated
+cutlery manufacture, an industry that first began there because of
+the quality and abundance of the grindstones found near by. With
+the coal-beds of Durham and Cumberland are identified the great
+ship-building and locomotive-building industries of NEWCASTLE
+(218,000), SUNDERLAND (142,000), and DARLINGTON, on the northeast
+side of England, and the great steel manufactures (the largest in
+the kingdom) and ship-building industries of BARROW-ON-FURNESS,
+on the northwest side. With the coal-fields of South Wales (noted
+for its smokeless coal) are identified the smelting industries of
+SWANSEA (70,000). Ores of copper especially, but also of silver,
+zinc, and lead, are brought from all over the world to Swansea to
+be smelted. These South Wales coal-fields also account for the fact
+that in respect to amount of tonnage CARDIFF (160,000) is one of
+the chief ports for exports in the world, ranking in this respect
+next after New York. The exports of coal from Cardiff are now
+12,000,000 tons annually.
+
+
+II. THE TRADE FEATURES OF FRANCE
+
+FRANCE A RICHLY FAVOURED COUNTRY
+
+France by nature is one of the most highly favoured countries in the
+world. Its climate is genial. Its temperature is so varied that almost
+every vegetable, grain or fruit needed for the sustenance of man may
+be raised within its borders. Its soil, though not surprisingly
+fertile, yet yields abundantly such products as are suited to it. Its
+mineral resources, especially in coal, iron, lead, marble, and salt,
+are very considerable. Its area is compact. Its facilities for foreign
+commerce are unsurpassed. It lies between the two bodies of water--the
+Atlantic and the Mediterranean--of greatest commercial importance in
+the world. And its people, especially those in rural parts, are
+exceptionally frugal and industrious. But France as a nation has not
+made the progress in the world that its natural advantages call for.
+It has been cursed with expensive and unstable governments and
+sanguinary wars. Its upper classes, the natural leaders of its
+peoples, are excessively fond of pleasure and military glory, and the
+energies of the nation have been much misdirected. As a consequence,
+despite its natural advantages, France is losing ground among the
+nations of the world. Its national debt amounts to nearly
+$7,000,000,000, the largest national debt known in history, being per
+head of population seventeen and one half times as great as that of
+Germany, six times as great as that of the United States, and much
+more than one and one half times as great as that of Great Britain.
+But, what is of more serious consequence, the vitality of its people
+seems debilitated. For years the annual number of births in France has
+been steadily decreasing, while the annual number of deaths has been
+more or less increasing. Over a great part of the country the number
+of deaths annually exceeds the number of births. In numerous years
+this is so for the whole country. The birth rate is the lowest in
+Europe. The death rate, while not the highest, is yet higher than in
+many other countries. As a consequence of all this the population of
+France is almost stationary. During the last seventy years it has
+increased only 18 per cent., while that of Great Britain has increased
+63 per cent., Germany 75 per cent., Russia 92 per cent., and Europe as
+a whole 62 per cent. And even this increase, small as it is, is
+largely due to immigration from other countries. Nor is the emigration
+of Frenchmen to their colonies or to other countries to be set down as
+a sufficient explanation. The French are averse to emigration. At the
+present time the number of Frenchmen residing abroad is only a little
+more than half a million, while of foreigners residing in France the
+number is not far short of a million and a quarter.
+
+[Illustration: France, compared in size with the States of Illinois
+and Texas.]
+
+THE FRENCH A THRIFTY, FRUGAL PEOPLE
+
+When France is compared with other countries in respect of commercial
+development and progress, the results will in almost every particular
+turn out unfavourable to France. For example, since the close of the
+Napoleonic wars eighty-three years ago the national trade of Great
+Britain has quadrupled, while that of France has only trebled. At the
+close of the Franco-German war France was eighteen per cent. ahead of
+Germany in the carrying power of her shipping. Now Germany is seventy
+per cent. ahead of France in that respect. But it must be remembered
+that the Franco-German war cost France in army expenses and in
+indemnity no less a sum than $3,250,000,000. The effect of that
+tremendous expenditure upon the prosperity of the nation can be
+estimated by one comparison. Since that war the annual average savings
+per inhabitant in France have been $17. For the same period the annual
+average savings per inhabitant in Great Britain have been $19.50. Had
+that war not occurred the average annual savings per inhabitant in
+France would have been $21.50. In short, no people in Europe are
+comparable with the working classes of the French people in frugality
+and thrift, and because of this characteristic, if France were well
+governed, its prosperity would be equal to that of any country in the
+world, and this would be so in spite of the fact that France's
+interest bill imposes a tax of $6.50 a year on every inhabitant of the
+country.
+
+[Illustration: Street scene in Paris, showing the Bourse.]
+
+THE IMPORTANCE OF AGRICULTURE IN FRANCE
+
+France has one element of stability, one characteristic inducive of
+thriftiness, that most other countries of Europe lack. In most
+other European countries the land is held by few proprietors. In
+France it is held by many. In Great Britain and Ireland, for
+example, the land that is devoted to agriculture is held by only
+19,000 proprietors. In France it is held by 3,500,000 proprietors.
+There are also 3,500,000 district farms in France, though only
+sixty per cent. of the farm land of the country is cultivated by
+the owners. It follows from this that agriculture has in France a
+hold upon the affections and self-interest of the people that it
+has in no other country in the world. About forty-two per cent. of
+the total population of the country able to work are employed in
+agricultural pursuits. Agriculture, therefore, is one of the most
+important industries of France. One fifth of the total earnings of
+her people are made in agriculture. It cannot be said, however,
+that agriculture in France is pursued as successfully as it is in
+some other countries--in Great Britain, for example. France, with
+sometimes the exception of Russia, is the largest wheat-grower of
+all the nations of Europe, but its production of grain per acre is
+not more than four sevenths that of Great Britain, while its
+production of grain per farming hand is only two thirds that of
+Great Britain. But so much of the agricultural effort of France is
+devoted to such industries as can be carried on in small farms or
+holdings--potato-raising, for example, and fruit-raising and
+poultry-raising--that the total money product per acre in France
+is not far short of what it is in Great Britain. That is to say,
+while agriculture is more profitably carried on in Great Britain
+than in France, it proportionately supports a larger number of
+people in France than in Great Britain.
+
+FRANCE'S WATERWAYS AND RAILWAYS
+
+France, like Germany, is well supplied with navigable rivers, and
+these, with its canals, constitute a complete network of navigable
+waterways that cover all the country and greatly promote the internal
+commerce of the nation. These navigable rivers aggregate 5500 miles,
+and the navigable canals over 3100 miles. The tonnage of goods carried
+on these waterways compares quite favourably with that carried by the
+railways. The railways aggregate 25,000 miles.
+
+THE DISTINCTIVE AND IMPORTANT MANUFACTURES OF FRANCE
+
+The most distinctive manufacture of France, the one in which she
+surpasses all other countries of the world, is the SILK MANUFACTURE.
+France's total production of silk is not far short of one third of the
+total production of the world. LYONS (466,000), on the Rhone, is the
+chief seat of the industry, having had this pre-eminence ever since
+the Jacquard loom was invented there at the beginning of this century.
+Its production is not far short of three fourths of the total
+production of the country. The most important manufacture of France,
+however, is her manufacture of WOOLLENS. In this manufacture she comes
+next after Great Britain, her total production being a little ahead of
+that of both Germany and the United States. Her woollen mills number
+over 2000. Her consumption of wool for this industry is about three
+fourths that of Great Britain, but the value of her production is only
+two thirds that of Britain. LILLE (216,000) and RHEIMS (108,000) are
+the chief seats of the woollen industry. Of about equal value with the
+woollen manufacture of France is its HARDWARE manufacture, but the
+importance of France's hardware manufacture is national rather than
+international. Of next importance is the manufacture of COTTONS and
+LINENS. The chief seats of these industries are, for cottons, ROUEN
+(113,000), the "Manchester of France," and for linens, LILLE. Near
+Lille is CAMBRAI, the chief place of manufacture for that finer class
+of linens known as cambrics. A second distinctive manufacture of
+France is that of GLASS and PORCELAIN. In this manufacture France
+quite equals Great Britain in respect of value, and surpasses her in
+respect of the artistic character of the wares. LIMOGES (77,000) and
+ST. CLOUD (near Paris) are the chief seats of the French porcelain
+manufacture. It is at St. Cloud that the celebrated "Sevres" porcelain
+is made.
+
+PARIS AND THE GREAT SEAPORTS OF FRANCE
+
+Paris (2,536,834) is, of course, the chief trade centre of all France,
+but the trade interests of Paris are general rather than special. The
+manufactures that are most localised in Paris are those of articles of
+luxury, such as jewellery, perfumery, gloves, fancy wares, novelties,
+and fashionable boots and shoes. Paris is also a great financial
+centre. MARSEILLES (442,000), one of the oldest cities in Europe, is
+the great seaport of France. Its trade amounts to over $350,000,000
+annually, and it ranks next after Hamburg among the great seaports of
+central Europe. Its specialty is its great trade with the
+Mediterranean and the East. The opening of the Suez Canal has been of
+incalculable advantage to Marseilles. Next as shipping port comes
+HAVRE (119,000), at the mouth of the Seine, with a total trade not far
+short of that of Marseilles. Havre is in reality the port or "haven"
+of Paris. It is the great depot for French imports from North and
+South America. These comprise principally cotton, tobacco, wheat,
+animal produce, and wool. Its import of South American wool is
+enormous, for three fourths of the wool used in France now comes from
+the region of the La Plata. Recently the Seine has been deepened and
+now both Rouen and Paris may be considered seaports. By this means
+Paris has direct water communication with London, and is, indeed, the
+third seaport in the country. Next comes BORDEAUX (257,000), the chief
+place of export for French wines and brandies. About twenty years ago
+the wine industry of France suffered tremendous loss from the ravages
+of the insect phylloxera. Over 4,000,000 acres of vineyard,
+representing a value of $1,000,000,000, were wholly or partially
+ruined by this terrible pest. The plague, however, has now been
+stamped out, but nearly 2,000,000 acres of vineyards have been
+permanently destroyed and have been devoted to potatoes and the
+sugar-beet root. The result is that the production of wine in France
+is now less than what is needed for home consumption, and over fifty
+per cent. more wine is imported than is exported. The remaining great
+shipping ports are DUNKERQUE (40,000) and BOULOGNE (37,500). CALAIS
+(57,000) has a great passenger trade with England.
+
+
+III. THE TRADE FEATURES OF GERMANY
+
+GERMANY THE MOST PROSPEROUS NATION IN CONTINENTAL EUROPE
+
+The greatest and most prosperous commercial nation in the old world
+after Great Britain is Germany. Its population is 52,000,000, as
+against France's 38,500,000; and while France's population is scarcely
+increasing at all, Germany's population is increasing the most rapidly
+of any in Europe. Since the Franco-Prussian war France has gained in
+population only a little over 2,000,000, while Germany in the same
+time has gained 12,000,000. In the middle of the present century the
+populations of Germany and France were equal, being each about
+35,000,000. Since that date Germany's population has increased by
+about fifty per cent. and France's by only about ten per cent.
+Similarly, the commerce of Germany not only greatly exceeds that of
+France, but is growing much faster than that of France. The total
+exports and imports of Germany, exclusive of bullion, now foot up to
+nearly $2,000,000,000 a year. The total exports and imports of France,
+exclusive of bullion, foot up to only $1,500,000,000 a year. The total
+commerce of Germany is therefore about one third more than that of
+France. At the close of the Franco-Prussian war the total commerce of
+France considerably exceeded that of Germany.
+
+THE CHARACTER OF GERMANY'S INDUSTRIES CHANGING
+
+Germany, like England, is rapidly changing the character of her
+industries and becoming a manufacturing and commercial nation instead
+of an agricultural nation. This is the cause of her well-known anxiety
+to secure control of territories in Africa, Asia, etc., as exclusive
+markets for her manufactures, for, unlike England, Germany is at
+present a believer in exclusion in trade, both at home and in her
+colonies. Fifty years ago about four sevenths of the people of Germany
+were engaged in agriculture; now only about one third of the people
+are so employed. The growth of the great cities of Germany is eight
+times faster than that of the rural districts, and in fifty years the
+aggregate population of the six largest cities of the empire--Berlin,
+Hamburg, Leipzig, Munich, Breslau, and Dresden--has grown sixfold,
+namely, from 600,000 to 3,600,000. In fifty years, too, the
+manufactures of Germany have nearly doubled, the commerce nearly
+trebled, the shipping increased more than fivefold, and the mining
+output more than sixfold. While all this is true, it nevertheless is
+also true that the area of cultivated soil in Germany is double what
+it was fifty years ago. But this is because much land, formerly waste
+or in pasture, has been brought under cultivation. Yet even now only
+one half of the land of Germany is cultivated, and thirty-three per
+cent. of the total food consumption of the people has to be imported.
+Fifty years ago only five per cent. of the total food consumption was
+imported, and this small fraction consisted almost wholly of
+luxuries.
+
+GERMANY'S SUCCESS IN TECHNICAL EDUCATION
+
+[Illustration: Approximate size of the German Empire.
+
+NOTE.--The population of that part of the United States included
+within the circle is about 10,000,000. The population of the German
+Empire is about 52,000,000.]
+
+Germany's prosperity and progress cannot wholly be measured by
+statistics. No one can predict what it will be, for it is partly
+based upon elements that unfortunately other countries have not
+taken much account of. Germany pays greater attention to the
+PRACTICAL EDUCATION of her people than any other nation in the
+world. Her system of technical education extends over the whole
+empire, and provides technical instruction for every class of the
+people and for every occupation of the people--night schools for
+those already engaged in life's work, agricultural schools, forestry
+schools, commercial schools, mining schools, naval schools, and
+schools in every branch of manufacturing industry, besides, of
+course, schools for the education of those intending to follow the
+learned professions. As a consequence of this very general provision
+of technical education, there is engaged in German manufacturing
+pursuits a class of workmen not found in the workshops of any other
+country--men of industrial skill and experience, and at the same
+time of the highest scientific technical attainments in the branches
+of science that bear particularly upon their work. These men work at
+salaries that in other countries would be considered absurdly low.
+In almost all other countries the possession of a sound scientific
+education is a passport to social distinction, and every profession
+is open to him who is deserving to enter it. In Germany, however,
+the learned professions, and especially the official positions of
+the army and navy, are almost the exclusive preserves of those who
+are born to social rank. The educated commoner, therefore, has to
+betake himself to manufacture, trade, or commerce. It follows that
+scientific skill and intelligence are more generally diffused in
+German commercial industries than in those of all other nations. So
+far, however, the German artisan has not been the equal in special
+technical skill of his more rigidly specialised English competitor,
+and as a consequence of this more than one sixth of Germany's total
+imports consist of goods brought from England--principally the finer
+sort of textile fabrics and articles of iron and steel. This
+inferiority in specialisation in the German workmen cannot continue
+long, and the successful rivalry of Germany with the manufacturing
+pre-eminence of Great Britain may soon be a startling fact.
+
+GERMANY'S MINES AND HARDWARE MANUFACTURES
+
+It is in the development of her mines and of manufactures in which
+MINERALS are employed that Germany has made most noticeable progress.
+She produces four times as much coal as France, and she has over 1000
+separate iron-mines. Her production of iron has increased tenfold in
+fifty years. She employs over 400,000 men in her mines, and by the
+use of labour-saving machinery one man can now produce as much as
+three men could produce fifty years ago. Her HARDWARE manufactures
+are one sixth of her total manufactures, and in the past half century
+they have increased sixfold. They are now double those of France, and
+are only one fourth less than those of Great Britain. She has 750
+factories devoted to the making of machinery alone. Two of
+these--Krupp's at Essen, and Borsig's at Berlin--are among the
+largest in the world. Krupp's employs 20,000 men, has 310
+steam-engines, and covers an area of 1000 acres. Borsig's employs
+10,000 men, and in fifty years, starting from nothing, has turned out
+nearly 4000 locomotives. One of Krupp's hammers (a fifty-ton hammer)
+cost $500,000.
+
+GERMANY'S INTERNAL TRADE
+
+Germany's commercial energies up to the present have been mainly
+concentrated on her INTERNAL TRADE. The total amount of this trade
+foots up to $7,000,000,000, against France's $6,000,000,000, and in
+fifty years it has trebled, while that of France has scarcely
+doubled. Germany has more miles of railway than any other country in
+the world except the United States, her mileage being nearly 30,000,
+against France's 25,000 and Great Britain's 21,000. Her natural and
+artificial waterways are also the best in Europe, and her vast
+production of mineral wealth is transported from mine to foundry and
+factory, and her vast production of lumber and grain is transported
+from forest and field to seaport, largely by means of water carriage.
+The Rhine, the Elbe, the Oder, and the Vistula are all navigable
+throughout their whole courses through German territory, while the
+Weser and the Danube are also navigable throughout great parts of
+their courses. All these navigable rivers are interconnected by
+canals. The total length of possible river navigation is nearly 6000
+miles, while the total length of canals and canalised rivers is 2700
+miles. Besides, in 1895 there was completed the Kaiser Wilhelm Canal,
+a lockless sea-going vessel canal, twenty-nine feet six inches deep
+and sixty-one miles long, connecting the North Sea and the Baltic,
+and constructed at a cost of nearly $40,000,000. This canal effects
+a saving of almost one whole day for commercial steamers, and of
+three days for all sailing-vessels, engaged in the Baltic and North
+Sea trade.
+
+GERMANY'S FOREIGN TRADE
+
+But while it is true that Germany's internal trade is her most
+important trade, it is also true that her FOREIGN TRADE has during the
+last half century made more progress than that of any other European
+country, and during the last three or four decades more progress than
+even that of the United States. Since 1840 it has increased six and
+two third times, while that of Great Britain has increased six times,
+and France only four and one fifth times. It is now second in the
+world, being more than half of that of Great Britain, ahead of that of
+the United States,[1] and very considerably ahead of that of France,
+while in 1860 it was much less than half of that of Great Britain,
+less than that of the United States, and considerably less than that
+of France. Germany, however, is not well favoured with respect to
+seaports, for in its transmarine trade it is largely dependent on
+foreign seaports--namely, ports in Belgium, Holland, France, Italy,
+and Austria. Rotterdam in Holland and Antwerp in Belgium are much more
+favourably situated with respect to the commerce of its chief mining
+and manufacturing regions than any of its own ports. There are only
+two German seaports with water of depth sufficient to accommodate the
+deep-drawing vessels in which foreign commerce is now mainly carried
+on--namely, CUXHAVEN, the outport of Hamburg, sixty-five miles from
+Hamburg, and BREMERHAVEN, the outport of Bremen, thirty-five miles
+from Bremen, though recent improvements in the navigation of the Elbe
+allow vessels of even twenty-six feet draught to ascend the Elbe
+wholly to Hamburg. But HAMBURG (625,000), for the reason that for
+centuries it was a free port of entry, has built up a very large
+foreign trade, being the fifth in the world in this respect, London,
+New York, Liverpool, and Rotterdam, alone being ahead of it. Hamburg's
+foreign trade is almost one half greater than the whole foreign trade
+of all other German ports put together, while the foreign trade of
+Bremen is about one fourth that of Hamburg. BREMEN, like Hamburg, was
+for centuries a free port of entry, but in 1888 both Hamburg and
+Bremen gave up in great part their free port privileges and entered
+the general customs union of the empire. Both cities were extremely
+loath to give up their ancient unique commercial privileges, for they
+feared an immense loss of trade in doing so, but it was hoped that
+what they lost in foreign commerce would be made up to them in
+increased commerce with other parts of the empire. One reason for the
+great development of Germany's foreign trade in late years is found in
+the facilities that it possesses for rapid transit to and from Italy
+by means of tunnels through the Alps.
+
+[Illustration: North central Germany, showing the ship canal and the
+leading commercial arteries.]
+
+FOOTNOTE:
+
+[1] During the last two or three years the foreign trade of the United
+States has greatly expanded and has exceeded that of Germany, and is
+making a close push upon that of Great Britain. The above statement
+was intended to represent the situation as existing during a period of
+some years.
+
+THE SPECIAL TRADE CENTRES OF GERMANY
+
+BERLIN (1,700,000), the capital of the empire, is a chief seat of
+machinery manufacture. For many years FRANKFORT-ON-THE-MAIN enjoyed
+the pre-eminence of being next to London the greatest money market in
+the world; but since the establishment of the German Empire
+Frankfort's financial business has been absorbed by Berlin. LEIPZIG
+(400,000) has the distinction of being the seat of a book-publishing
+trade that turns out over 60,000,000 volumes in a year, amounting in
+value to $30,000,000. Leipzig has also the honour of being the
+greatest fur market in the world. DANTZIG (120,000) is Germany's chief
+port on the Baltic, and the chief seat of its great export trade in
+timber, grain, flax, hemp, and potatoes. Its harbour, however, is
+closed in winter because of ice. DRESDEN (330,000) is noted for its
+porcelain manufacture, but the porcelain is not manufactured chiefly
+in Dresden, but in MEISSEN, fifteen miles from Dresden. MUNICH
+(407,000) manufactures largely the national beverage, beer. Finally,
+NUREMBERG (162,000), in southern Germany, is remarkable for its
+continuance into modern days of manufactures for centuries carried on
+domestically. Of these the most noted are watches, clocks, pencils,
+and toys.
+
+
+IV. TRADE FEATURES OF SPAIN AND ITALY
+
+ITALY, TURKEY, AND SPAIN, THE THREE DECADENT NATIONS OF EUROPE
+
+The Mediterranean from the very earliest epochs of civilisation has
+been a chief highway of trade, and along its shores every sort of
+commercial activity has been prosecuted. For centuries and centuries
+the nations upon the borders, especially those upon its northern
+borders, were the leading nations of the world, and their empire,
+indeed, comprised the empire of the world. But during the last two or
+three centuries, and especially during the nineteenth century,
+commercial pre-eminence and pre-eminence in empire have departed from
+the Mediterranean. Italy, the ruler of the whole ancient world, and
+even in modern times a ruler of almost equal potency; Turkey, during
+the middle ages a chief power both in Europe and in Asia; Spain, for
+two centuries at the beginning of our modern epoch a chief power in
+Europe and the mistress of almost the whole Western world as
+well,--these countries have all sunk to positions of comparative
+insignificance, and Italy alone shows signs of effectual regeneration.
+And yet on the whole earth's surface there are no lands more richly
+endowed by nature as abodes for man than Italy, Turkey, and Spain.
+
+SPAIN: ITS TRADE AND ITS SPECIAL TRADE CENTRES
+
+Spain, because of the varied climate of her several parts, is capable
+of producing almost all the edible fruits and grains known to both
+temperate and tropical regions. Though there are some desert areas, a
+great portion of the soil is abundantly productive, and were
+agriculture pursued with the same skill as it is in other
+countries--in England and Scotland, for example--Spain would be one of
+the richest agricultural regions on the globe. But not only is
+agriculture very inefficiently pursued, but the country is also
+sparsely inhabited (only 90 to the square mile, as compared with 270
+to the square mile in Italy) and only one fourth of it is cultivated.
+As a consequence only those products are raised in Spain in which,
+because of her advantages of climate, etc., she has least competition.
+The principal commercial agricultural product is WINE, the vine being
+cultivated in every province in the kingdom. Six hundred million
+gallons of wine are raised annually, which is more in value than the
+total quantity of grain raised. Only one fifth of this, however, is
+exported (principally to France), and even of this the greater portion
+is wine of inferior grade, used for mixing. The remaining agricultural
+products of Spain exported are chiefly oranges, lemons, grapes,
+raisins, nuts, olives, and onions. Of these over $15,000,000 worth go
+to England annually. England and France, indeed, enjoy the great bulk
+of Spain's foreign trade, but of late years Germany and the United
+States are taking a small share of it. The MINERAL WEALTH of Spain is
+enormous, and as the mines are often controlled by foreign capital
+they are worked with energy. The iron ore of the Basque provinces of
+the north and the copper ore of the district about Cadiz have been
+renowned for ages. Thirty-five million dollars' worth of copper, iron,
+lead, silver, and quicksilver are exported to Great Britain annually.
+There are manufactures of cottons, woollens, linens, and silks, but
+none of these can be said to be very prosperous, although during the
+last twenty-five years, owing to a high protective tariff, the
+quantity of raw material used in textile manufacture in Spain has
+doubled. Spain produces excellent wool, but her woollen manufacture is
+unable to use it all and one fourth is exported. Similarly, although
+Spain is especially rich in iron-fields, she gets about one third of
+the hardware she needs for her own consumption from England. The total
+area of Spain's COAL-FIELDS is estimated at 5500 miles, but hitherto
+little coal has been mined, partly because it is somewhat
+inaccessible. Four million dollars' worth of coal is annually imported
+from England. Whole mountains of ROCK SALT exist, but little is mined
+and none is exported, although bay salt obtained in the south is
+exported to the fishermen of Cornwall. Another important export is
+ESPARTO GRASS, which is sent to England to be used in paper-making.
+And still another is CORK, although Portugal, which adjoins Spain, is
+the chief seat of the cork-producing industry. MADRID (470,000) is the
+capital and largest city. BARCELONA (250,000) is the chief seaport of
+Spain and the chief manufacturing centre. VALENCIA (145,000), in the
+southeast, and SEVILLE (135,000) and MALAGA (115,000), in the south,
+are the principal seats of the fruit export trade of the country.
+CADIZ (65,000), Spain's principal naval seaport, has a famous export
+trade in sherry wines. The total population of Spain is 17,500,000.
+
+[Illustration: Spain compared in size with California.]
+
+ITALY'S LAMENTABLE CONDITION
+
+Italy's condition is in some respects better than that of Spain, but
+in others worse. Its population is 30,500,000, being three times more
+to the square mile than that of Spain, and fifty per cent. more to the
+square mile than that of France. Since 1830 the population has
+increased forty-five per cent., and this notwithstanding the fact that
+the loss by emigration is equal to one half of the natural increase
+from the surplus of births over deaths. Two million people of Italian
+birth are to-day residing in foreign countries. Again, the Italians,
+except those in the southern parts (the Italians of Naples and
+vicinity, for example), are the MOST INDUSTRIOUS PEOPLE in Europe,
+with a special aptitude for gardening and tillage. In fifty years they
+have reclaimed 20,000,000 acres from forest, and increased the area of
+land under cultivation by one hundred per cent. In fifty years, too,
+they have trebled the amount of capital invested in agriculture. Since
+1860 they have increased the amount of material which they use in
+their textile manufactures (cotton, wool, silk, and linen) nearly
+fivefold. Since 1850 they have increased their external commerce two
+and one half times. Finally, since 1830, they have increased their
+internal trade two and one quarter times. But all these signs of
+prosperity in Italy are negatived by the constantly increasing
+magnitude of her NATIONAL DEBT. This now amounts to more than
+$2,500,000,000, or more than two and one half times the total net
+national debt of the United States, and about one fourth more than the
+total national, state, county, municipal, and school-district debts of
+the United States. And this vast debt for a people of 30,500,000 is
+exclusive of the provincial and communal debts, which amount to
+$275,000,000 additional. Italy since her reorganisation as a kingdom
+in 1870 has set out to be a first-class military and naval power, and
+the cost is more than she can stand. She has a permanent army of
+nearly 800,000 men, 250,000 of whom she keeps under arms constantly.
+She has a fleet of seventeen battleships, two coast-defence ships,
+eighteen cruisers, and 272 torpedo craft, most of these being of
+modern type and first-class rating. She spends on her army nearly
+$50,000,000 annually, and on her navy nearly $20,000,000 annually.
+This, with an annual interest payment of $115,000,000, all
+unproductive expenditure, makes a demand upon her revenue that is
+draining her people of their life's blood. EVERY SORT OF TAXATION is
+resorted to--direct and indirect; land, house, and income; succession
+duties, registration charges, and stamps for commercial papers;
+customs, excise and octroi; besides government monopolies; and all
+this exclusive of communal taxation. And yet since 1891 there has been
+an annual deficit of national revenue under national expenditure
+averaging $2,250,000. As a consequence of these taxes, and of the
+repressive effect they have upon industrial enterprise, the net
+earnings of the country per inhabitant are lower in Italy than in any
+other European state except Turkey, Russia, and Greece--lower, even,
+than in the Danubian states and Portugal and Spain.
+
+ITALY'S TRADE AND SPECIAL TRADE CENTRES
+
+The most distinctive natural product of Italy is SILK, and the amount
+of raw and thrown silk exported is about $57,500,000 annually. Silk
+culture is carried on all over the kingdom, though the industry
+flourishes most extensively in Piedmont and Lombardy, in the north.
+Over 550,000 people are engaged in rearing silkworms, and the annual
+cocoon harvest approximates 100,000,000 pounds. Silk-"throwing,"
+or-spinning, is the principal manufacturing industry, and the amount
+of silk spun and exported is about 45,000 tons, most of which goes to
+France. After silk the products of the country that constitute the
+principal exports are OLIVE OIL, FRUIT (oranges, lemons, grapes,
+almonds, figs, dates, and pistachio nuts), and WINE (in casks). The
+olive-oil export and the fruit export are each about a fifth of the
+export of silk, and the wine export about a sixth. Other important and
+characteristic exports are raw hemp and flax, sulphur, eggs,
+manufactured coral, woods and roots used for dyeing and tanning, rice,
+marble, and straw-plaiting. The principal import is WHEAT, for
+agriculture, though generally pursued, is still in a backward state
+of efficiency, and the average grain crop is only one third what it is
+in Great Britain. One eighth the total amount of wheat needed to
+support the people has to be imported. In fact, the total amount of
+food-stuffs raised in the kingdom is much less than the amount
+required, being, for example, per inhabitant, not more than one half
+of what is raised in France. In particular, there is a deficiency of
+meat, and the amount of meat raised per inhabitant is the lowest in
+Europe. As a consequence the Italians are poorly fed, and it is
+estimated that four per cent. of the annual death loss is occasioned
+by impoverishment of blood due to insufficiency of wholesome food.
+After wheat and raw cotton, the next principal import is COAL, for
+Italy has no workable coal-fields. As far as possible water power is
+used as a motive power instead of coal, especially in the iron
+industries. An important import also is FISH, for, owing to the great
+number of fast days which the Italian people observe, and to the
+dearness and scarcity of meat, fish is a very general article of
+consumption. Six million dollars' worth is imported annually, and
+perhaps an equal amount is obtained from local fisheries, for there
+are over 22,000 vessels and boats and over 70,000 men engaged in this
+industry. After silk-throwing, the most characteristic Italian
+manufacturing industries are those which are of an artistic or
+semi-artistic nature, such as the making of fine earthenware,
+porcelain, glassware, mosaics, and lace. VENICE (154,000) and GENOA
+(225,000) are still the principal seaports and trade centres of Italy,
+but in commercial importance these famous cities are only the mere
+shadows of what they once were. NAPLES (529,000), the largest city, is
+a place of little enterprise, for its imports, principally cereals,
+are three or four times the value of its exports, which are mainly
+cheap country produce. MILAN (457,000) and TURIN (348,000) are the
+great trade centres of the north interior, and the most prosperous
+places in the kingdom, being the chief seats of the silk-throwing
+industry. Milan is also the chief seat of the Italian cutlery
+manufacture. PALERMO (284,000) and MESSINA (150,000), in Sicily, are
+the chief ports for the export of Italian fruits, and also of Italian
+fish (anchovies, tunnies, etc.). ROME (474,000) and FLORENCE (207,000)
+owe their chief importance to their art interest and to their historic
+associations, but Florence has an important manufacture of fine
+earthenware and mosaics. Rome is the chief seat of government. CATANIA
+(127,000), in Sicily, is the chief seat of the Italian sulphur export
+trade. LEGHORN (104,000), the port of Florence, is the chief seat of
+the export straw-plaiting trade. It should be noted that
+notwithstanding Italy's extent of coast-line a large part of her
+foreign commerce is transacted northward by means of the railways that
+tunnel the Alps.
+
+[Illustration: Italy and its chief commercial centres.]
+
+
+V. THE TRADE FEATURES OF RUSSIA
+
+RUSSIA, A COUNTRY WHOSE FUTURE IS A PROBLEM
+
+The position of Russia in the world is a sort of problem. Its area is
+immense. More than one seventh of the land surface of the globe is
+included within its compact borders. Of this vast territory the area
+of European Russia alone is only a fourth; but even so it is larger
+than the area of all other European states put together. The
+population of Russia is over 129,000,000, of which over 106,000,000
+belong to European Russia. But taking even European Russia this is a
+population of only fifty-four to the square mile, the lowest
+proportion in Europe, except in Sweden and Norway. And the population
+is increasing. The birth rate is the highest in the world. And though
+the death rate is very heavy, being fifty per cent. more than it is in
+England, the increase from births is so great that the population
+doubles in forty-six years. There is thus apparently a prospect that
+Russia will, in the near future, play an important part in the drama
+of nations, her capacities and capabilities for growth seem so
+prodigious. And yet there is a reverse side to the picture. Of the
+106,000,000 inhabitants of European Russia 10,000,000 belong to a
+cultured, progressive class, quite the equal of any people in Europe.
+But the remainder are principally a low grade of peasantry, not long
+removed from slavery. The principal occupation of these peasantry is
+farming. But their farms are small, not more than ten acres apiece,
+and the total revenue they get from them does not average more than
+$65 a year per farm. The food of these peasantry is the poorest in
+Europe. In the main it consists of rye bread and mushroom soup, worth
+about four cents a day. The houses are often mere huts, not more than
+five feet square. Women as well as men work in the fields, and yet the
+total amount of food raised is not more per head of population than
+one tenth of what is raised by the peasantry of France. The value of
+food raised per acre, too, is but little more than one third of the
+average per acre for all Europe.
+
+[Illustration: Russia, the British Empire, the United States
+compared.]
+
+RUSSIA A COUNTRY OF SOCIAL EXTREMES
+
+The degradation of the peasantry of Russia is not simply material. It
+is also moral. In the language of a recent traveller, "they are the
+drunkenest people in Europe." The principal intoxicant is a sort of
+whisky called "vodka." With drunkenness exist also dirtiness,
+idleness, dishonesty, and untruthfulness. And as yet little has been
+done to ameliorate this degradation. Ignorance prevails everywhere.
+Even of the young people of the peasant class more than eighty per
+cent. can neither read nor write. There is no middle class. The gulf
+between the upper class and the lower is so wide as to be absolutely
+impassable. And for the most part the upper class is quite content to
+have this state of affairs continue.
+
+THE "ARTELS" OF THE RUSSIAN PEASANTS
+
+There is, however, some hope for the lower classes of Russia. This is
+because of the prevalence among them, especially in villages, towns,
+and cities, of a communal custom in which self-restraint and
+self-government are necessary conditions of existence. In every branch
+of common industry "artels" are found; that is, communistic
+organisations, where all labour for a common purse in accordance with
+rules and regulations determined by the members of the organisations.
+These "artels" have done much toward increasing the industry, the
+honesty, the truthfulness, the thrift, and also the sobriety of their
+members. They exist throughout all Russia, but in some parts more
+prevalently than in others. As yet, however, they scarcely affect the
+character and condition of the rural peasantry, and it is these who
+are most in need of elevation. It should be said, too, that the
+government is doing something to lessen the evil of drunkenness.
+
+RUSSIA PRINCIPALLY AN AGRICULTURAL COUNTRY
+
+Russia's principal business is AGRICULTURE. More than one half her
+whole internal trade is agricultural. Her agricultural products are
+one and one half times greater than the products of her manufactures
+and ten times greater than her mining products or her imports. And
+though her production of grain per acre is the lowest in all Europe
+except Italy, Spain, and Portugal, and her total production of all
+food products per acre by far the lowest in Europe (not more than one
+third that of Spain, which is next lowest), yet she manages to export
+a larger quantity of GRAIN than any other country in Europe, France
+only sometimes excepted. Russia's export of grain for some years past
+has averaged 266,000,000 bushels a year. Her export of WHEAT alone has
+averaged 94,000,000 bushels a year, or considerably more than a fifth
+of the total wheat export of the world. The explanation of this
+enormous export of wheat from so poor a country is that three fourths
+of the people live on rye. Among the peasants wheat bread is
+practically unknown, and nothing could be more pathetic than the hard
+rye lumps which passed as bread during the last famine. Other
+agricultural exports (besides grain) are flax, hemp, oil-seed cake,
+linseed and grass seed, butter, eggs, wool, hides, and hogs' bristles.
+Wood, lumber, and timber are also extensively exported. England is
+Russia's best customer. The amount of England's annual importation of
+the above products (including grain) exceeds $112,000,000.
+
+RUSSIA'S MINERAL WEALTH
+
+In MINERALS Russia is enormously wealthy, but the mining lands are not
+diffused throughout the empire but confined to definite areas. Nor can
+they be said to be energetically worked. The great gold-fields of the
+Ural mountains would not pay expenses as worked at present were they
+not supplied with convict labour. Owing to the heavy import duty which
+is imposed on pig-iron nearly all the iron now needed for the IRON
+manufactures of the empire is obtained at home, but this amounts to
+only 46 pounds per inhabitant, as against 810 pounds per inhabitant
+used in Britain. COAL is very abundant, especially in the valley of
+the Donetz, but fire-wood is so plentiful for domestic purposes, and
+water power so plentiful for heavy manufactures, that the amount of
+coal mined in all Russia is only one twelfth that mined in Germany,
+and only one twenty-fourth that mined in Britain. Over 2,250,000 tons
+of coal are imported despite very heavy protective duties. There is
+one mineral product, however, in which Russia excels all other
+European countries. This is PETROLEUM. The oil-springs on the Caspian
+Sea produce an annual yield of crude petroleum of an average value of
+$15,000,000. The value of the petroleum and petroleum products
+exported in 1896 was over $22,000,000.
+
+RUSSIA'S TRADE AND MANUFACTURES
+
+Despite Russia's resources in farm products and in minerals, yet,
+owing to the ignorance and degradation of her people, she is a poor
+country, and her exports are always more than her imports. Her total
+wealth per inhabitant is only $305, as against $780 per inhabitant
+for Germany, $1260 for France, and $1510 for Great Britain and
+Ireland. Her total foreign trade is only $5 per inhabitant, whereas
+the foreign trade of her neighbour, Germany, is $35 per inhabitant.
+Her total internal trade is only $50 per inhabitant, whereas even in
+Greece the internal trade is $65 per inhabitant, while in Germany it
+is $130 per inhabitant, and in the United States $215 per inhabitant.
+The reason of all this is the lack of energy and industry in the
+people. Their earnings per inhabitant average only 12 cents a day.
+Another reason is the lack of modern labour-saving devices. Comparing
+inhabitant with inhabitant, Russia has only one sixth of the steam
+power which Germany has. One half of all the manufactures of the
+country are produced domestically--that is, without motive power or
+machinery. No industry in Russia is fully up to the needs of the
+people when judged by the standards of other countries. For example,
+notwithstanding the severity of the climate, only two pounds of raw
+wool per inhabitant are consumed in Russia's woollen manufactures, as
+against seven pounds consumed in Germany, and the total annual value
+of all manufactures is only $20 per inhabitant, as against $56 in
+Germany, and $88 in Britain. Notwithstanding these unfavourable
+comparisons, the factory industries of Russia are making progress. In
+seventy years the textile factories have increased fivefold and in
+thirty years twofold. In sixty years the cotton-manufacturing industry
+has increased sevenfold, and in fifteen years twofold. Until recently
+Russia exported wool. Now she imports more wool than she exports.
+Ninety years ago in Russia iron was dearer than bread, and the
+peasants used wooden plough-shares and left their horses unshod. Now
+the consumption of hardware, though still per inhabitant the smallest
+in Europe, is yet in the aggregate the fourth in Europe, although even
+so it is only two ninths what it is in Britain. Beet-root
+sugar-making is also a new industry, and 500,000 tons are made
+annually, the number of sugar works being 235. The beet-root crop of
+the country amounts to nearly 6,000,000 tons annually. But the
+consumption of sugar per inhabitant is only seven pounds annually, as
+against eighteen pounds per inhabitant in Germany. A universal
+industry throughout Russia is TANNING, and Russia leather, with its
+fragrant birch-oil odour, is a highly prized commodity the world over.
+But the amount manufactured is only 114,000 tons yearly, and the
+quantity exported is inconsiderable.
+
+RUSSIA'S RAILWAYS AND NAVIGABLE RIVERS
+
+The most characteristic physical feature of European Russia is its
+_flatness_. In consequence its rivers are almost all navigable, and,
+as the most important of them are interconnected by canals, the
+facilities for transportation which they afford are very considerable.
+Altogether the length of inland navigation thus afforded amounts to
+nearly 47,000 miles. This abundance of navigation facilities has
+retarded the growth of railways, but there are already 25,756 miles of
+finished railway in European Russia alone. The total length of railway
+in all Russia built and in building is 34,849 miles. The most
+important railway enterprise in the empire is the Trans-Siberian
+Railway, which will afford through communication from the Baltic to
+the Pacific. The shortest possible distance between these two bodies
+of water is 4500 miles. The length of the railway will be 4950 miles,
+and its cost, it is supposed, will be $120,000,000. It is to be
+completed by 1905.
+
+RUSSIA'S CITIES AND TOWNS
+
+[Illustration: Moscow.]
+
+ST. PETERSBURG (with suburbs 1,267,000), the capital of Russia, is,
+like most European capitals, an important trade centre as well as the
+seat of government. Its manufactures are general and numerous, but the
+chief ones are those concerned in making munitions of war. Until 1885
+St. Petersburg was not a seaport, but in that year a canal was built
+which now permits vessels drawing twenty-two feet of water to enter
+its docks. Its harbour, however, is closed with ice from November to
+May. Near St. Petersburg is REVAL, the chief cotton port of Russia.
+The raw cotton importation of Russia averages about $60,000,000
+annually, most of which comes direct from the United States. MOSCOW
+(988,000), the ancient capital of Russia, is also a great
+manufacturing city, but its principal importance is derived from the
+fact that it is the great centre of the internal trade of Russia.
+WARSAW (615,000), the capital of Polish Russia, is a great railway
+centre, and the principal entrepot of railway traffic between Russia
+and the rest of Europe. LODZ (315,000), also in Polish Russia, is the
+great cotton-manufacturing centre of the empire. ODESSA (405,000) is
+the chief seaport of Russia. It has an immense export trade in grain,
+tallow, iron, linseed, wood, hides, cordage, sailcloth, tar, and
+beef. RIGA (283,000), the chief port of Russia on the Baltic, has a
+large export trade with England in characteristic Russian produce.
+KIEFF (249,000) is the centre of the Russian sugar-refining industry.
+ASTRAKHAN (113,000), on the Volga delta, is noted for its sturgeon
+fisheries, and its export of caviare, amounting, it is said, to
+$1,500,000 yearly. TULA (111,000) is the Sheffield of Russia. Even in
+1828 there were 600 cutlery establishments in Tula, but the
+manufacture was then principally domestic. It is now a city of
+factories, for it stands on a large coal and iron field.
+NIJNI-NOVGOROD (99,000) is noted for its fair, an Asiatic institution
+which modern civilisation will no doubt soon disestablish. Once a year
+merchants to the number of 200,000 come to Nijni-Novgorod from all
+over Russia, and even from India and China, to exchange their wares.
+The value of the exchange sometimes amounts to $100,000,000. ORENBURG
+(73,000), on the Ural, is the terminal depot of the caravan trade of
+Asiatic Russia. ARCHANGEL (25,000), on the White Sea, is the chief
+emporium of trade in the north, with exports of characteristic
+northern produce. BAKU, on the Caspian Sea, is the chief seat of the
+petroleum industry of Russia. All the towns and cities above named
+have grown enormously during the last twenty years.
+
+
+VI. THE TRADE FEATURES OF INDIA
+
+INDIA'S PAST AND PRESENT COMPARED
+
+To the student of civilisation India is one of the most interesting
+countries in the world. It has always been one of the most fertile and
+populous regions of the globe. For centuries it was thought to be one
+of the richest. In consequence it has, time and time again, been the
+scene of invasion, conquest, and spoliation. But its riches never
+consisted so much in natural treasure as in the savings of an
+industrious and frugal people. Since the year 1600 European nations
+have had much to do with India, especially England, France, Portugal,
+and Holland. During the last 140 years, however, England has been the
+dominant power there. Whatever may be said as to the motive of
+England's interference in India's affairs in the first place, it can
+only be said that the present influence of England in India is
+immensely beneficial to the country. India's prosperity on the whole
+is now comparable with that of any civilised nation on the globe. And
+a people that once, because of repeated conquest and spoliation, had
+lost all sense of honour and self-respect, are now, under the benign
+influence of peace, law, order, and security, rapidly becoming
+honourable, self-reliant, and enterprising, and ambitious to possess
+all the rights and privileges of modern civilisation.
+
+INDIA'S SIZE AND POPULATION
+
+India is a much larger and more populous country than most people
+think it to be. In shape it is somewhat like a huge kite, each of
+whose diameters is over 2000 miles long, or more than the distance
+across the Atlantic from Ireland to Newfoundland. Its TERRITORY is
+about 1,700,000 square miles. Of this area, over 1,000,000 square
+miles, a territory considerably greater than the territory of all the
+states of Europe (including the British Isles) except Russia, is
+directly under British control. The remainder is indirectly under
+British control. The POPULATION is 308,000,000, of which 236,000,000
+are directly under British control and 72,000,000 indirectly so. This
+population is made up of people who speak seventy-eight different
+languages, of which twenty languages are spoken by not less than
+1,000,000 persons each.
+
+INDIA'S GREAT FERTILITY
+
+India owes much of its fertility to the fact that its soil is
+constantly being replenished by alluvium brought down from its high
+mountains by its immense rivers. The valleys of the Indus (1800 miles
+long), the Ganges (1600 miles long), and the Brahmapootra (1500 miles
+long) include an area of 1,125,000 square miles, a part of which, the
+Indus-Ganges plain, consists of a great stretch of alluvial soil whose
+fertility is as rich as that of any portion of the globe. One hundred
+and eighty millions of people live in this plain. So finely pulverised
+is its soil that for a distance of almost 2000 miles not even a pebble
+can be found in it. And so fertile is it that there are some
+agricultural districts in the plain where the population exceeds 900
+to the square mile. In that part of the plain which the Ganges waters,
+60,000,000 of people find support on the soil by agriculture, at a
+density of over 700 persons to the square mile, which is 140 persons
+more to the square mile than the density of Belgium, the most thickly
+populated country in Europe.
+
+INDIA'S IRRIGATION CANALS AND RIVER EMBANKMENTS
+
+But, fertile as is the soil of India, and propitious to agricultural
+industry as is its climate generally, its climate is not always
+favourable. It suffers periodically from excess of drought. As a
+consequence artificial irrigation has to be resorted to, or much of
+this fertile country would oftentimes be a desert. In British India
+alone 28,000 miles of irrigation canals are under the control of the
+government, 14,000 of which have been constructed by the present
+(British) government--works of vast dimensions and the highest
+engineering skill. Altogether 28,000,000 acres in British India are
+dependent for their necessary supply of moisture upon general
+irrigation, and 8,000,000 upon irrigation canals. Were it not for
+these irrigation canals, 2,000,000 acres in Scinde (northwestern
+India) would be a perpetual desert, for Scinde is almost wholly
+rainless. On the other hand, in a great part of India the rainfall is
+excessive. Some districts indeed are the wettest on the globe. In
+Assam, for example (which is also one of the hottest places in India),
+the rainfall is 600 inches yearly, and it has been 650. As a
+consequence rivers in India often overflow their banks. Therefore to
+protect the country on the lower river reaches from floods the British
+government has built over 1500 miles of embankments.
+
+INDIA'S MINERAL RESOURCES
+
+At one time India was famed for its wealth in precious minerals and
+precious stones. Poets often celebrated its golden resources. But its
+wealth in this respect was always fabulous rather than real. India is
+in reality poor in minerals. It has a good deal of iron--iron of the
+choicest quality. It has also a good deal of coal, but its coal is
+poor, owing to its superabundance of ash. It has also a little copper
+and tin. It has gold-mines that are worked. Diamonds, too, are found
+in southern India, and numerously so. The celebrated Koh-i-nur (280
+carats) was an Indian product. But neither diamond-hunting nor
+gold-mining is any longer a profitable industry in India. The
+principal mineral industry of India is salt-mining, pursued in the
+Punjaub, where there are solid cliffs of pure salt. Owing to the fact
+that the people of India are mostly vegetarians (250,000,000 of
+Hindoos would rather die than eat flesh), salt is a necessary article
+of diet and a universal commodity. Its production, therefore, is
+controlled by the government as a means of raising revenue.
+
+INDIA'S WONDERFUL AGRICULTURAL RESOURCES
+
+[Illustration: Comparative sizes of India and the United States.]
+
+The real wealth of India lies in the luxuriance and economic value of
+its VEGETATION. As a consequence the principal industry is
+AGRICULTURE. Only one tenth of the people live in towns. Two thirds of
+the adult males in the country are engaged wholly in tilling the soil.
+Every sort of agricultural product known to commerce is raised in
+India; for from the high levels on the mountain sides to the low
+levels on the coasts the vegetation of the whole world is produced
+within its borders. Even in WHEAT India competes in the world's
+markets with countries like Russia and Argentina. In 1896 British
+India had 19,000,000 acres of wheat under cultivation, and (though a
+dearth year) an exportation of $4,000,000. In 1892 the exportation was
+$25,000,000. The district known as the Central Provinces of India has
+become one of the most important wheat areas in the world. But the
+principal agricultural product of India is RICE. British India alone
+has 70,000,000 acres of rice under cultivation, and an annual
+exportation of $60,000,000. In all the coast regions rice is grown
+universally, and also in the lower parts of the river plains,
+especially in the Ganges valley. It is the staple food of the people
+everywhere except on the higher levels. On the higher levels millet
+and maize (corn) are the staple foods. The next important agricultural
+product of India is COTTON, of which $47,000,000 worth in the raw
+state is exported annually, besides what is used at home. The American
+civil war was the great cause of the starting of the cotton-growing
+industry in India. The next important agricultural product is JUTE, of
+which the export in the raw state is about $35,000,000. No country in
+the world can compete with India in the production of this fibre, for
+jute is very exhaustive of the soil, and in the Ganges valley, where
+it is principally raised, the soil is annually replenished by
+alluvium. A fifth great agricultural product is TEA, in which India
+now leads the world. England uses twice as much India tea as China
+tea, the reason being that India teas are produced with all the
+economic care of a high-class English or American manufactured
+product. The value of the tea export of India is about $27,000,000.
+Other chief agricultural products are OPIUM (which is a government
+monopoly), oil seeds, hides, and skins, INDIGO (in which India excels
+the world, the value of the export being $14,000,000), COFFEE (the
+best grown anywhere--except perhaps that of Arabia and Java--though
+the bean is sometimes injured in transit), raw wool, lac (for dyeing),
+cinchona or Peruvian bark (which since it has been raised in India,
+has greatly reduced the price of quinine), raw silk, raw sugar,
+tobacco, and spices. Spices are produced abundantly in India, but
+their quality is not equal to East Indian spices. Also the cotton,
+rice, sugar, and tobacco of India, though produced plentifully, are
+inferior in quality to those of the United States. Nor are the wheat
+and corn of India so good as the wheat and corn of the United States
+and Canada. Improved cultivation will, however, in time improve the
+quality of all these products. Of exports of natural products not
+agricultural the principal are WOOD (chiefly TEAK, the most valuable
+timber known for ship-building, and sal, a most valuable wood for
+carpentry) and saltpetre.
+
+INDIA'S GROWING MANUFACTURES
+
+Though India is now chiefly an agricultural country her people from
+time immemorial have been adepts in manufacturing. The domestic
+textile manufactures and the domestic metal manufactures of India were
+for ages among the most beautiful and ingenious in the world. These
+DOMESTIC MANUFACTURES are principally pursued in small villages, of
+which there are over half a million in India. But under the influences
+of modern civilisation introduced by British rule, the domestic
+industries of the country are now giving way to FACTORY INDUSTRIES.
+These have already become well established, and are rapidly increasing
+in number and importance. The stability of India as a nation is now so
+well assured that capital can be had there as cheaply as in England or
+the United States. Besides, co-operative or joint-stock enterprises
+are becoming common. The Indian people, with their natural aptitude
+for weaving, make the best of textile operatives, and India bids fair
+soon to become a formidable rival of Western nations in TEXTILE
+MANUFACTURES. In twenty years the cotton spindles have increased
+sixfold. In ten years the COTTON OUTPUT has increased twofold. Bombay
+has become one of the greatest cotton centres in the world, a sort of
+Liverpool and Manchester combined. It has practically shut the doors
+of India to English manufactured cottons of the cheaper grades. Bombay
+manufactured cotton is even sent to England in immense quantities, but
+the principal export is to China. The total export of Indian
+manufactured cotton is $23,000,000. Another important modern
+manufacture is that of JUTE. The jute factories of Bengal are now
+competing with those of Scotland, and the total export is $17,500,000.
+A similar development is expected in iron manufactures, for already
+iron-smelting has begun. But, notwithstanding these developments,
+India still remains a tremendous market for the manufactured goods of
+England, especially in cottons and hardware and machinery. The value
+of the annual cotton importation from England is $100,000,000, equal
+to the total of England's exportation of goods of every sort to the
+United States. The value of the annual hardware and machinery
+importation from England is $35,000,000.
+
+INDIA'S EXTERNAL AND INTERNAL TRADE
+
+The total yearly value of the EXPORTS of India amounts to the enormous
+sum of $350,000,000, more than a third of the total exportation of the
+United States for the banner year 1897.[2] Of this England receives
+about one half. The total yearly value of the IMPORTS of India
+(exclusive of bullion) amounts to $255,000,000, which is considerably
+more than a third of the total importation of the United States. Of
+this England sends out about two thirds. (India is therefore England's
+best customer, although from the United States England purchases
+vastly more.) Of the internal trade of India no statistics are
+available, but with the rapid advances in modern conveniences for
+doing business which the country is adopting, the internal trade is
+also enormously increasing. Already 20,290 miles of railway are built
+and opened, and 13,000 miles of canals and canalised river
+navigation. Railways are rapidly being constructed in every part of
+the country. Over 31,000 miles of metalled roads for highways and
+106,000 of unmetalled roads are now maintained by the government as
+public works. There are 38,000 miles of telegraph routes. The
+government highways and canals as well as the railways are all
+splendidly engineered and solidly built works. The greatness of India
+is only just beginning.
+
+FOOTNOTE:
+
+[2] The total exports of the United States for the years 1898 and 1899
+have exceeded $1,200,000,000, each year. In the year 1897 they were
+about $1,050,000,000.
+
+INDIA'S CITIES AND TOWNS
+
+CALCUTTA (862,000) is the capital of the empire of India and the
+second city in the British Empire. Although situated on an arm of the
+delta of the Ganges, eighty miles inland, Calcutta is an immense
+seaport, but its sea-going privileges can be maintained only by great
+engineering works, because of the silt which the Ganges is constantly
+bringing down and depositing in its seaward channels. Calcutta enjoys
+almost a monopoly of the whole trade of the Ganges and Brahmapootra
+valleys, and until the building of the Suez Canal it had almost a
+monopoly of the outward trade of the whole Hindustan peninsula. Its
+total trade is even yet very large, aggregating for outward and inward
+business together about $700,000,000 per annum, a sum which can be
+appreciated from the fact that it is about equal to the total import
+trade of the whole of the United States. BOMBAY (822,000), the second
+city of the Indian Empire, owes its eminence to three things: (1) the
+opening of the Suez Canal, which has made it the port of India nearest
+England; (2) the starting of the cotton-growing industry in India,
+owing to the American civil war (the cotton-growing district of India
+is adjacent to Bombay); and (3) the development of the railway system
+of India, which is making Bombay rather than Calcutta the natural
+ocean outlet for the trade of the country. MADRAS (453,000), the
+third city of India, is also the third seaport. But it has no natural
+harbour, and its shore is surf-beaten and for months together exposed
+to the full fury of the northeast monsoons. An artificial harbour,
+however, has recently been built. Besides the cities above mentioned
+there is one (HYDERABAD) with a population of over 400,000; there are
+two (LUCKNOW and BENARES) with a population of over 150,000 each, and
+eleven more with a population of over 100,000 each. There are besides
+forty-seven towns with a population more than 50,000 each, and over a
+thousand towns with a population of about 10,000 each.
+
+
+VII. THE TRADE FEATURES OF CHINA
+
+THE VASTNESS OF CHINA'S AREA AND POPULATION
+
+China, to the student of commerce, is the most interesting country on
+the globe. The reason for this is that its area is so large, its
+population so vast, and its chances for development so magnificent.
+The total area of the empire, according to late estimates, is
+4,218,401 square miles. Other estimates make it 4,468,470 square
+miles. The greatness of this area may be understood from a few
+comparisons. It is about one twelfth of the total land surface of the
+globe. It is two and one fourth times the size of European Russia. It
+is almost one and one half times the total area of the United States,
+exclusive of Alaska. But all of this territory is not of equal
+commercial interest. The Chinese Empire consists of six parts: China
+Proper, Manchuria, Mongolia, Tibet, Jungaria, and Eastern Turkestan.
+Because of recent treaties, which give to Russia the right to build
+and "control" railways in Manchuria--ostensibly for the purpose of
+securing for the great Russian Trans-Siberian Railway a shorter route
+to Vladivostok, its Pacific terminus--MANCHURIA becomes practically a
+RUSSIAN POSSESSION. Turkestan, Jungaria, Tibet, and Mongolia are
+thinly inhabited countries, scarcely semi-civilised. But the part
+which remains when these "dependencies" are left out of
+consideration--CHINA PROPER--is at once one of the largest, most
+thickly populated, and most fertile countries on the face of the
+globe, and one also of the most richly endowed in mineral products.
+Its area is 1,336,841 square miles. Its population is 386,000,000. Its
+population per square mile is not far short of 300. That is to say,
+its area is more than eleven times that of Great Britain and Ireland,
+and almost one half that of the United States, exclusive of Alaska;
+its population is ten times that of Great Britain and Ireland, and
+more than six times that of the United States; while its population
+per square mile is greater than that of any European or American
+country except Great Britain (which, however, it nearly equals),
+Holland, and Belgium. In fact, more than one fourth of the total
+population of the globe is concentrated within the boundaries of
+China Proper.
+
+CHINA A COUNTRY OF GREAT TRADE POSSIBILITIES
+
+The great commercial nations of the world are now all trying to get
+shares of the trade of this VAST AND POPULOUS COUNTRY. For not only is
+China (Proper) large and populous, but it is also wealthy, for its
+inhabitants are both industrious and frugal, and, besides, as compared
+with the people of European countries they have been greatly spared
+the disastrous commerce-destroying effects of war, both foreign and
+internecine. Centuries ago the Chinese had made great progress toward
+civilisation. Their skill in the manufacturing arts, and in
+agriculture and horticulture, was for ages superior to that of Western
+nations. But, unfortunately for their advancement, they are
+conservative, self-conceited, and averse to improvement, especially if
+they have to learn improvement of others. As yet they have almost
+wholly ignored the ideas and methods of modern Western civilisation.
+They have scarcely any railways, but few steamships, almost no
+steam-power manufactories, and no telephones. The only modern
+improvement which they have made much use of is the telegraph. Some
+years ago (in 1876) a European company secured the privilege of
+building a short railway from Shanghai, but it was scarcely built
+before the government got fearful of its influence and bought it up
+and stopped its running. But the Chinese people are not averse to
+foreign trade; on the contrary, they are rather fond of it. If only
+the thing could happen in China that happened in Japan--that is to
+say, if only the government could fall into the hands of rulers who
+were open-minded to improvement and inclined to be progressive--the
+rush that China would make toward civilisation and the adoption of
+modern trade methods and modern processes of manufacture would be
+startling.
+
+CHINA'S FOREIGN TRADE
+
+At present the foreign trade of China is largely in the hands of the
+English. In the year 1896 the foreign export trade of China amounted
+to $167,000,000. Of this amount $132,500,000 was with Great Britain
+and her dependencies; $10,000,000 with the United States; something
+over $8,000,000 with the continent of Europe exclusive of Russia, and
+less than $2,000,000 with Russia. In the same year the foreign import
+trade of China was $102,500,000, of which $56,000,000 was with Great
+Britain and her dependencies; a little over $9,000,000 with the United
+States; $15,000,000 with the continent of Europe exclusive of Russia,
+and $12,500,000 with Russia. (The rest of her trade was principally
+with Japan.) The policy of the government of China has always been to
+prevent or restrict foreign trade; and even to-day foreign trade can
+be carried on in only twenty-six Chinese ports--the so-called "TREATY
+PORTS." The policy of Great Britain has been to secure by treaty as
+large a privilege of trading with China as possible; then to throw
+open the privilege to the world, but to follow it up with such
+commercial activity on her own part as would secure to her the lion's
+share of the resulting trade. Of the twenty-six ports now by treaty
+open to the world for trade, twenty-three have been secured by Great
+Britain and three by Japan.
+
+CHINA'S EXPORTS, IMPORTS, AND RESOURCES
+
+China's principal exports are TEA and SILK, tea constituting about one
+third and silk (principally raw silk) fully one half of her total
+export trade. Other principal exports are sugar, STRAW BRAID (one
+twentieth of her total exportation), hides, paper, chinaware, and
+pottery. Her principal imports are OPIUM and COTTON GOODS, opium
+constituting a fifth, and cotton goods considerably more than a half,
+of her total import trade. Other principal imports are woollen goods,
+metal goods and machinery, coal, and kerosene oil. A considerable
+importation is also made of raw cotton. But if China only had the
+blessing of an enlightened and progressive government this disposition
+of exports and imports would not long continue. China's resources of
+COAL are among the finest and certainly among the largest in the whole
+world. Her coal-fields, indeed, are estimated to be twenty times as
+great as those of all Europe combined. Much of this coal, too, is of
+the purest quality, and much of it very accessible to the miner. And
+near her coal-fields are vast deposits of some of the richest IRON
+ORES in the world. Again, a great portion of the soil of China is
+extremely fertile. There are indeed two regions, one of "RED SOIL" and
+another, much vaster, of "YELLOW SOIL," that are among the most
+fertile in the world. It is because of the extent and fertility of the
+yellow soil of China that "yellow" is the imperial colour, and the
+emperor called the "yellow lord." The climate, too, of China permits
+almost the whole range of useful vegetable products to be raised. The
+growth of COTTON is already very great, because for seven centuries
+cotton has been the staple cloth for the clothing of the people. And
+already it is being manufactured by modern machinery. But both the
+growth of cotton and its manufacture by modern methods would be
+enormously increased if only facilities for internal transportation
+existed, and freedom from unjust taxation could be secured. If, in
+short, China only had railways and a good and enlightened system of
+government her progress and prosperity would soon make the Western
+world envious. But her government is not only stupidly unprogressive,
+it is also disastrously wasteful. About seventy per cent. of the whole
+revenue of the country is lost to the public use through the
+malfeasance of officials. And only about 85 miles of railway have as
+yet been opened, although it must be said that 200 or 250 miles more
+are under construction.
+
+POSSIBILITIES OF INCREASED FOREIGN TRADE WITH CHINA
+
+There are, however, even now several ways in which foreign trade with
+China may be increased. Two of these are the supplying her people with
+WOOLLEN GOODS, and the supplying them with WHEAT and FLOUR. The
+winters of a great part of China are so cool that warm garments are
+necessary. At present these are made principally of padded cotton.
+Owing to the density of the population pasturage is scarce, and sheep
+are almost unknown. For an indefinite time, therefore, there will be
+a demand for woollen goods in China, a demand that will constantly
+increase as the superior convenience of woollen garments over garments
+of padded cotton becomes more and more known to the people. And though
+rice is now the staple food of the people even of all classes, the
+wealthy classes are fond of wheat bread and obtain it when possible.
+But the agriculture of the country does not permit of the profitable
+growth of wheat and flour, and wheat if used must be imported.
+
+THE PRINCIPAL TRADING CITIES OF CHINA
+
+The cities of China are large and numerous. PEKING (1,500,000?), the
+capital, is not open to foreign trade. In fact, it has no trade of any
+sort, and derives its whole importance from being the seat of
+government. But TIENTSIN (750,000), the port of Peking, and an
+important "treaty port," has a large trade, both foreign and local.
+Tientsin and Peking are connected by rail, and since the Russian
+government has obtained the right of connecting Peking with the
+Trans-Siberian Railway, it is more than likely that in time Tientsin
+will become a terminus of that railway. Of "treaty ports" other than
+Tientsin the principal are Shanghai, Hankow, Foochow, Hangchow, Amoy,
+and Canton. SHANGHAI (405,000) exceeds all other ports of China put
+together in the amount of its foreign trade. Its foreign trade is,
+indeed, almost three fifths of that of the whole empire. And of the
+total number of foreigners residing in China (in 1896 said to be
+10,855, of whom 4362 were British subjects and 1439 Americans) about
+one half reside in Shanghai. Shanghai is, indeed, the New York of
+China, and if railways were only built from it (as has been proposed)
+to the capital, Peking, and up the Yang-tse-kiang to Hankow, and by
+way of the coast cities to Canton, China would begin a new era in
+her career. HANKOW (800,000), on the Yang-tse-kiang, about 700 miles
+from its mouth, is the chief emporium of the tea-producing area of
+China. Ocean-going steamships ascend the river to Hankow for their
+cargoes. FOOCHOW (650,900) also has a great tea export trade. HANGCHOW
+(700,000), one of the most beautiful cities in China, is also the
+chief city for the manufacture of silks, and of gold and silver ware,
+lacquered ware, and fans. AMOY (100,000) has the best harbour in China
+and an immense import trade, ranking in that respect next after
+Shanghai. CANTON (2,000,000?) is the largest city in the Chinese
+Empire. A considerable portion of its inhabitants live in boats. Of
+these "house-boats" there are said to be 40,000. The foreign trade of
+Canton is next to that of Shanghai. Once it was superior, now it is
+much inferior. Its manufactures, however, are still important and
+include silk, cotton, glass, porcelain, paper, sugar, lacquered ware,
+and ivory goods and metal goods. NANKING (150,000), once the capital
+of China and once the largest city in the world, is now comparatively
+a small city. Although a treaty port, its commerce is not important.
+It was once famous for its beautiful tower of porcelain, 200 feet
+high, but that is now destroyed. There are many other large cities
+in China.
+
+[Illustration: China and its chief trade centres.]
+
+HONGKONG
+
+HONGKONG (245,000) is a small island belonging to Great Britain
+situated in the mouth of the Canton River, seventy-five miles from the
+city of Canton. Its population is made up principally of Chinese, who
+have been attracted there by its trade privileges. The British
+population is only 13,000, even including the garrison of 2800. Almost
+the whole population reside in the capital, VICTORIA, for the island
+itself is a barren rock. Forty-four per cent. of the total foreign
+trade of China passes through Hongkong. Its harbour is one of the
+finest in the world. It has magnificent docks. Its port is entirely
+free, and there is even no custom-house. It is calculated that the
+foreign trade transacted by its merchants amounts to $100,000,000 a
+year, exclusive of what passes through its port without breaking bulk.
+The whole of the vast export trade of China in silk and tea is largely
+handled by Hongkong firms. Other commodities of which Hongkong is the
+chief trade centre for China are opium, flour, salt, earthenware, oil,
+cotton, and cotton goods and woollen goods, which it imports from
+other countries and exports to China; and sugar, rice, amber,
+sandal-wood, ivory, and betel, which it imports from China and exports
+to other countries. Its trade is not confined to Great Britain, but
+includes France, Germany, the United States, and all other trading
+nations. But of course Great Britain has the greatest share.
+
+
+VIII. THE TRADE FEATURES OF JAPAN
+
+JAPAN THE GREAT BRITAIN OF ASIA
+
+Japan consists of a group of islands situated to the east of the
+continent of Asia, somewhat as the British Isles are situated to the
+west of the continent of Europe. But the Japan islands are of volcanic
+origin and are very numerous. There are said to be 4223 of them.
+However, there are only four that are of important size, and it is
+these that are usually thought of when Japan is spoken of. The area of
+these four islands is 147,655 miles, which is almost a fourth more
+than that of Great Britain and Ireland. The population (census of
+1895) is 42,270,620, which is 4,000,000 more than that of Great
+Britain and Ireland. The population per square mile is 286, which,
+though large, is not quite so large as that of Great Britain. If,
+however, we do not take into consideration the northern island (Yezo),
+which is still partly inhabited by uncivilised aborigines, the
+population per square mile is 375, which is considerably in excess of
+that of both China and Great Britain and Ireland, though still
+considerably less than that of England alone. The above statistics do
+not include the island of Formosa (area 13,500 miles, population
+almost 2,000,000), which was transferred from China to Japan in 1895,
+at the close of the late Chino-Japanese war.
+
+JAPAN'S WONDERFUL TRANSFORMATION
+
+The significant thing about Japan is the rapidity with which it has
+become transformed from a semi-civilised nation into one of the great
+nations of the modern world. Until the year 1868 Japan was an
+unprogressive, unenlightened country of the usual Asiatic type,
+scarcely differing in any way from an inland province of China of
+to-day. In that year a revolution took place which put the whole power
+of the empire into the hands of the present Mikado, or Emperor.
+Immediately Japan began to assimilate Western ideas of civilisation
+and to adopt Western methods of trade, commerce, manufacture,
+government, and education. Until 1889 the government remained an
+absolute monarchy. In that year the Mikado voluntarily promulgated a
+constitution by which a legislative Parliament, or "Imperial Diet,"
+and an executive Cabinet of State Ministers were instituted, so that
+the government of Japan is now as "constitutional" as that of Germany
+or Great Britain. The government is in other ways thoroughly modern.
+Education, for example, is almost as well looked after as in Germany
+or New England. There are 220 kindergartens established, 97 technical
+schools, and 49 normal schools for the training of teachers (one being
+for the training of high-school teachers), besides elementary schools,
+middle schools, high schools, special schools (1263 of these), and
+universities. The University of Tokio is an imperial institution,
+supported entirely by the government, with colleges in law, science,
+medicine, literature, engineering, and agriculture. Education, between
+the ages of six and fourteen, is compulsory. The army, too, is wholly
+a modern affair. It consists of 285,000 men, and an idea of its
+modernness may be gathered from the fact that an important part of its
+organisation is its training schools and colleges. Even the
+non-commissioned officers are specially trained and educated.
+Altogether the students in the military schools and colleges of Japan
+number 2400. The navy, too, as is well known, is both modern and
+efficient. It consists of 5 battleships and 15 high-class cruisers,
+besides 46 other vessels,--torpedo craft, gunboats, convoy ships,
+etc.,--and it is intended to build an immense fleet of 19 battleships
+and cruisers, and 100 torpedo craft in addition.
+
+JAPAN'S AGRICULTURE
+
+Japan being of volcanic origin, much of its soil is unfit for
+cultivation. The total productive area amounts to less than thirty per
+cent., and even of this only a small portion is capable of being
+tilled by modern methods. At present only twelve per cent. of the
+whole surface of the country is devoted to agriculture, even including
+pasturing. There is, however, but little pasturing, and the principal
+implement of cultivation is the spade. The modern plough is unknown.
+But manure (principally domestic manure and fish refuse) is very
+generously used, and by this means the returns are abundant. The
+principal food crop is RICE. Other food crops are wheat, barley, and
+the soya bean, but these not numerously so. The principal cultivated
+products for purposes of commerce are the mulberry tree (for
+supporting the silkworm), the tea plant, the lacquer tree, and the
+camphor tree. Rice also is grown for export as well as for home
+consumption, and COTTON is very largely grown for home manufacture. No
+milk, butter, or cheese is produced, scarcely any meat, no wood, and
+scarcely any leather. (For boots and shoes paper is used instead of
+leather.) Of cattle there are only 1,000,000, as compared with
+10,000,000 in the British Isles, although the population of Japan is
+considerably the greater. Of horses there are 1,500,000, and the
+raising of horses is much encouraged by the government, but
+principally for military purposes. Horses, indeed, are but little
+employed. In cities, for purposes of carriage and cartage, men are
+used instead of horses. Even in rural districts horses are unknown for
+farming purposes, and not even the hand-cart or wheelbarrow is used.
+Everything is carried. Fruit is much raised,--oranges, apples,
+walnuts, plums, peaches, and grapes,--but Japanese fruits are of very
+inferior quality. FLOWERS are raised everywhere in great variety and
+in great abundance, and the chrysanthemum is the emblem of the country
+and is used on postage stamps.
+
+JAPAN'S MANUFACTURES: THEIR FUTURE POSSIBILITIES
+
+The future of Japan depends upon its MANUFACTURES, but these also are
+not without their difficulties. The mineral wealth of the country is
+very great, principally in COAL and IRON. On the northern island alone
+(Yezo) the coal deposits are two thirds those of all Great Britain.
+Unfortunately, however, owing to the mountainous character of the
+country, railways in Japan are difficult to construct, and the
+transportation of coal or of ore is difficult and expensive. As the
+coal deposits and iron deposits are not near together charcoal has
+been used for smelting purposes. Iron, therefore, so far, has not been
+produced profitably, and its production has decreased. But silver is
+mined abundantly, and also KAOLIN, or the raw material used in the
+manufacture of the beautiful porcelain of the country. Copper and
+antimony are also large articles of export. The principal manufactures
+of Japan as yet are the TEXTILES, especially SILK and COTTON. In
+these modern methods are used, although so far the productions of the
+native domestic looms are superior to those of the factory looms. The
+production of textiles by machinery has increased fourfold in ten
+years, and now amounts to about $40,000,000 annually. This, however,
+is not a large amount, being less than the textile production of any
+important state in Europe, even Switzerland, or Sweden and Norway, and
+is only one twentieth that of the United States. Until recently the
+factory owner in Japan has had the advantage of cheap labour. But the
+Japanese artisan is also becoming "modernised," and is now demanding
+higher wages, and enforcing his demand by "strikes." And for all their
+deftness in domestic manufacture Japanese workmen are not yet as
+skilful in machine labour as British or American workmen. It follows,
+therefore, that textile manufacturing in Japan, especially the
+manufacture of cotton and wool, is not yet out of its tentative or
+probationary stage. But Japan, having the advantage of an extensive
+home market for cotton goods (like the Chinese, the Japanese common
+people wear cotton garments all the year round, in winter padding them
+for warmth), and having the raw material at her own door (she already
+grows a large proportion of all the raw cotton she needs), and having,
+too, an abundance of coal at hand, must needs become a great
+cotton-manufacturing country. The same conditions hold with regard to
+the possibilities of Japan's silk manufactures.
+
+POSSIBILITIES OF INCREASED FOREIGN TRADE WITH JAPAN
+
+As in the case of China, the possibilities of increased trade with
+Japan lie principally in WOOLLEN MANUFACTURES and in BREADSTUFFS. In
+addition there is a fair chance of increased trade in metal
+manufactures. The use of woollen garments in Japan in winter is
+extending even to the middle and working classes. And inasmuch as the
+country does not raise sheep, and is, indeed, not well able to raise
+sheep, such woollen clothing, woollen cloth, or raw wool as is used
+must be imported. Hitherto the woollen manufactures which have been
+established in the country have not been very successful, and the
+probability is that Japan's import trade in woollen clothing and
+woollen cloths will increase year by year. Similarly, from the fact
+that the agriculture of the country is not adapted to the growth of
+wheat, nor seems ever likely to be so adapted, and also from the fact
+that both the higher and the middle classes of Japan are rapidly
+adopting European and American habits of living, it is very probable
+that the importation of wheat and wheat flour into Japan will also
+continue to increase year by year. And from the difficulty there is of
+smelting iron cheaply it is probable that the importation of iron and
+iron goods (which in raw iron, iron and steel rails, iron small wares
+and nails, spinning and other machinery, and steel ships, already
+amounts to $8,000,000 a year) is likewise likely to increase greatly
+year by year also.
+
+JAPAN'S MODERN TRADE FACILITIES
+
+Owing to the irregular conformation of the surface of the country,
+good roads in Japan can scarcely be said to exist. But 20,000 miles of
+roads have been built, of which the state maintains about one fourth.
+There are also 2505 miles of railway, of which the state owns and
+maintains about one fourth also. There are 11,720 miles of telegraph
+routes, with 37,000 miles of wire; 520 miles of telephone routes, with
+6347 miles of wire; and 387 miles of submarine cable routes, with 1481
+miles of wire. The country also has a merchant navy of 827 steam
+vessels of modern type and 702 sailing-vessels of modern type, besides
+668 native craft. Owing to the irregular and rocky nature of the
+coast-line and the great number of small islands which exist, numerous
+lighthouses are needed; but Japan's lighthouse system is one of the
+best in the world.
+
+JAPAN'S FOREIGN TRADE
+
+Japan has a foreign trade of $60,000,000 annually in exports and
+$86,000,000 annually in imports. Of the export trade the principal
+part, running from a fourth to a third, is with the United States. The
+next largest part is with France, the next with Hongkong, the next
+with China, and the next with Great Britain. But Great Britain's
+direct share is not more than a twelfth. Of the import trade the
+principal part, almost one third, is with Great Britain. The United
+States' share is about a twelfth, and that of France about one
+twenty-fifth. The principal exports are RAW SILK (about one third of
+the whole), SILK GOODS (about one tenth of the whole), TEA, coal,
+copper, rice, and matches. The export of matches amounts to $2,500,000
+annually. Characteristic exports, though they do not figure largely in
+the total amount, are floor rugs, lacquered ware, porcelain ware,
+fans, umbrellas, bronze ware, repousse work, paper ware and
+papier-mache, fibre carpets, and camphor. There is also a large export
+of fish, shellfish, cuttlefish, edible seaweed, and mushrooms to China
+and other Asiatic countries. The chief import is RAW COTTON (almost
+one fifth of the whole). Other important imports are sugar (although
+she raises almost 100,000,000 pounds of sugar herself annually),
+cotton yarn, cotton goods, woollen cloths, flannels and blankets,
+kerosene oil, watches, and articles of iron and steel as above
+enumerated. The fishing industry is a very important one and over
+2,500,000 people are engaged in it. The number of fishing-boats is
+about 400,000. The fish trade, which includes seaweed, is (when not
+for home consumption) principally with China.
+
+[Illustration: Japan's relation to eastern Asia.]
+
+JAPAN'S SPECIAL TRADE CENTRES
+
+The foreign commerce of Japan, like that of China, is allowed to be
+carried on only at certain ports, called "treaty ports," of which
+there are nineteen, the principal being Yokohama, Osaka, Nagasaki,
+Hakodate, Niigata, and Kobe. The two principal cities, not treaty
+ports, are Tokio and Kioto. TOKIO (1,300,000) is the capital and chief
+centre of the political, commercial, and literary activity of the
+empire. In many respects Tokio is a "modern" city. Its educational
+features are excellent. Its sanitation also is good. KIOTO (340,000)
+was formerly the capital, but after the revolution of 1868 it was
+superseded in this respect by Tokio. YOKOHAMA (170,000), distant from
+Tokio eighteen miles, is the chief place of the empire for foreign
+trade. Its foreign trade, indeed, is more than half that of the whole
+empire, being about $75,000,000 annually. OSAKA (487,000) is in
+respect to population the second city of the empire, but its foreign
+trade is not large and is carried on principally at HIOGO, a port near
+it. NIIGATA (50,000) is the only treaty port on the west side of
+Japan, the surf caused by the winter monsoon making the flat west
+coast of the country very dangerous for shipping for half the year.
+Other important ports are KOBE (161,000) and NAGASAKI (72,000). NAGOYA
+(215,000) is an important inland town.
+
+
+IX. THE TRADE FEATURES OF AFRICA
+
+AFRICA FIFTEEN YEARS AGO
+
+Within a period of about fifteen years the continent of Africa has
+been the scene of a vast partition. At the beginning of that period
+the amount of African territory that was subject to European control
+was comparatively small. The British were firmly established in South
+Africa, and had possessions along the coasts elsewhere principally in
+the west. The French were firmly established in Algeria and in
+Senegal. The Portuguese had their ancient settlements in Mozambique
+and Lower Guinea. Morocco on the northwest and Abyssinia in the
+northeast were more or less well-established governments that were
+independent. Egypt in the extreme northeast, with tributary
+possessions extending along the Nile into the far interior of the
+continent, was also a more or less well-established government that
+possessed a quasi-independence, though it was nominally dependent upon
+Turkey. But elsewhere, except in a few other places controlled by
+European authority, the whole continent may be described as having
+been in its original state of savagery or semi-savagery. No government
+existed anywhere that was either beneficent or stable. The
+slave-traffic abounded everywhere.
+
+EUROPEAN SPHERES OF INFLUENCE IN AFRICA
+
+The European governments that had possessions in Africa were all doing
+their best to suppress the slave-traffic. But they could not take very
+salutary steps in this direction without exercising authority beyond
+the territorial limits they were supposed to occupy. Gradually, for
+these reasons, and also for the reason that they were all anxious to
+extend their commercial dealings in Africa, they began to exercise
+authority beyond their old-time territorial limits. In this way began
+the establishment on the part of European nations of what are known as
+"spheres of influence" in Africa. At first England and France were the
+only nations that were at all active in establishing these spheres of
+influence. Later on Germany and Italy and other nations began to
+establish them also. Beginning, therefore, with the years 1883 and
+1884 there has been a general establishment and gradual extension of
+these spheres until now the whole continent has been practically
+parcelled out among a few European powers.
+
+THE GREAT PARTITION OF AFRICA
+
+[Illustration: The partition of Africa.]
+
+The ancient empire of Morocco still exists in an independent state.
+Abyssinia, though Italy attempted to subjugate it, is again also
+independent. The little republic of Liberia is nominally independent.
+Some territory in the very heart of the Sahara or Great Desert is yet
+in its aboriginal independence. But elsewhere, throughout the whole
+continent, Africa is either British, or French, or German, or Belgian,
+or Portuguese, or Italian. Spain's holding is not worth mentioning.
+Italy's holding also is scarcely worth mentioning. Portugal's holding
+has not been increased in the recent "scramble"--only made more
+definite. France's holding, however, has been enormously increased,
+and is now the largest (3,300,000 square miles), although much of the
+French area is barren desert, and much of the rest of it
+uninhabitable by white people. Great Britain's holding also has been
+greatly increased, but not nearly so much so as it would have been if
+in the earlier years of the scramble the British government had not
+been singularly blind to the actions of other governments in the
+matter. Germany, too, has got a substantial holding (925,000 square
+miles). The Kongo Free State, which, though nominally independent, is
+practically under the suzerainty of Belgium, and must look to Belgium
+for the funds with which to promote its development, is also a
+substantial possession, being a little less than Germany's
+holding--900,000 square miles.
+
+GREAT BRITAIN IN AFRICA
+
+Great Britain's holding, however, in the partitioned continent
+comprises its best portions. Much of Africa is uninhabitable by white
+men. Wherever, however, white men can live--except in northern
+Africa--there Great Britain has managed to get control. Excluding the
+shore of the Mediterranean, the best part of Africa, considered from
+the view points of colonisation and commerce, is what is now known as
+"British South Africa." This is an immense area--an area of almost
+1,000,000 square miles. It comprises (1) that whole southern portion
+of the continent known as Cape Colony, and (2) that portion of the
+great central plateau of the continent which extends from Cape Colony
+northward to Lakes Nyassa and Tanganyika--all except the two Boer
+republics, the Orange Free State and the South African Republic.
+British East Africa (800,000 square miles) includes the territory of
+Uganda, north of Lake Victoria, a territory which from the character
+of its native population and its possibilities of trade has been
+called the "pearl of Africa." British West Africa (500,000 square
+miles) includes the basin of the lower Niger, the most densely peopled
+area in all Africa, the seat of the great Fula-Hausa empire of
+Sokoto-Gandu, the wealthiest and greatest trading nation in the
+continent. Furthermore, in the northeast, Great Britain exercises
+"protectorate control" over Egypt--a control that is likely to be
+instrumental in reclaiming for Egypt, and thus for civilisation and
+commerce under British authority, the whole of Egypt's ancient
+possessions along the Nile as far at least as Uganda. The total area
+of the British possessions in Africa, exclusive of the two Boer
+republics and Egypt, is over 2,300,000 square miles.
+
+THE "DOMINION OF SOUTH AFRICA"
+
+"South Africa" is practically "British South Africa." The German
+portion is either largely barren or else inaccessible. The Portuguese
+portion is only a narrow strip along the east coast, much of which is
+too unhealthy for habitation other than by natives. The two Boer
+republics are rapidly filling up with British people, are being
+developed by British capital, and must in time become confederated
+with the states that environ them. One of them, too, is already under
+British suzerainty. British South Africa, however, is as yet only a
+name. It has no real existence except in hope. The aspiration of
+statesmen in southern Africa is that all the territories of southern
+Africa under British control shall form one confederation, and that in
+this confederation the Orange Free State and the South African
+Republic shall join. The territories entering into this confederation
+would therefore be as follows: The self-governing colonies of Cape
+Colony and Natal, the crown colony of Basutoland, the protectorates of
+Bechuanaland and Zululand, the territory now administered by the
+British South Africa Company, popularly known as "Rhodesia," and the
+British Central Africa protectorate, with in addition the two Boer
+republics previously mentioned. The length of this proposed South
+African dominion would be 1800 miles. Its width would be from 600
+to 800 miles. And, as said above, its area would be about 1,000,000
+square miles. Mr. Stanley predicts that in a hundred years the
+"Dominion of South Africa" will have a white population of 8,000,000,
+and a coloured population of 16,000,000.
+
+SOUTH AFRICA'S AGRICULTURAL POSSIBILITIES
+
+Of South Africa as above defined Cape Colony and Natal are at present
+the most important portions. Their climate is in some respects the
+finest in the world. Their soil is of remarkable richness. The number
+of distinct species of indigenous plants found upon it is greater than
+for any other equal area on the globe. The same remark was once true
+of the animals found in South Africa, which again is testimony to the
+great fertility of the soil. But a serious drawback is the
+insufficiency and uncertainty of the rain supply. Irrigation, however,
+is practised, and wherever irrigation is possible the land may be made
+to blossom like the rose. Agriculture, however, is only indifferently
+pursued. The VINE in Cape Colony produces more abundantly, very much
+more abundantly than anywhere else in the world, and yet neither
+grape-raising nor wine-making can be said to be successful. PASTURING
+is the principal occupation of the people in rural districts. There
+are 17,000,000 sheep in Cape Colony, and 6,000,000 goats. Natal, which
+is warmer, has 500,000 sheep. Another principal occupation is
+OSTRICH-FARMING. The ostrich, once wild in South Africa, is now bred
+domestically. Cape Colony has 230,000 ostriches. Ostrich feathers
+fetch from $150 to $300 a pound. The RAISING OF CATTLE is another
+principal occupation, and draught cattle are much used for transport
+purposes. Cape Colony has 2,000,000 cattle; Natal, 1,000,000. The
+principal food crops are wheat and maize, but little is raised for
+export. In Natal, sugar is an important product, and also tea. Many
+magnificent timber woods are found, but the trees are stunted and
+little timber is exported. Much has been wasted by fires. The great
+agricultural possibilities of South Africa are WOOL, MOHAIR (the hair
+of the Angora goat), fruit, wine, and skins. The breadstuffs of South
+Africa will probably all be needed for home consumption.
+
+SOUTH AFRICA'S GREAT MINERAL WEALTH
+
+All the world over South Africa is famous for its DIAMOND-MINES and
+its GOLD-MINES. The diamonds are found principally in Griqualand,
+north of the Orange River, now a part of Cape Colony, but they are
+also found in the Orange Free State. The diamond areas are very
+circumscribed, the diamond-bearing "pipes" being supposed to be
+craters of extinct volcanoes. The principal "pipes" are at KIMBERLEY
+(28,718), in Griqualand. These constitute the richest diamond-fields
+in the world. It is estimated that over $350,000,000 worth of diamonds
+have been taken out of Kimberley since their first discovery there in
+1867. The largest South African diamond yet found was worth $300,000,
+but many other large ones have been found. The annual diamond export
+now is about $20,000,000. For 1896 the export was $23,200,000; for
+1897 a little less. The production and export are strictly limited, so
+that prices may not depreciate. Next in interest to the diamond-fields
+are the gold-mines. These so far have been found principally in the
+South African Republic, or "Transvaal" as it is popularly called, in
+the "rand," or "reef," near the far-famed town of JOHANNESBURG
+(102,078). Since gold was first discovered in the rand (1871)
+$250,000,000 worth has been taken out. The annual output now is nearly
+$50,000,000, but it is estimated that before the rand can be exhausted
+$2,250,000,000 worth of gold must be taken out--an amount much greater
+than the total public debt of the United States, national, state, and
+municipal. But north of the Transvaal, in Rhodesia, especially in
+Mashonaland, is a territory popularly called the "Land of Ophir,"
+where mining operations are only just begun, but where gold is
+supposed to be even more richly stored than in the Transvaal. Of this
+district the newly built town of SALISBURY is the centre. Other
+mineral products of South Africa are coal in Natal, mined at
+NEWCASTLE, and copper in the northwest of Cape Colony, shipped at PORT
+NOLLOTH.
+
+SOUTH AFRICA'S FOREIGN TRADE
+
+The import trade of South Africa so far consists of almost everything
+needed by the inhabitants except meat, flour, vegetables, and fruit,
+for there are as yet almost no manufactures. The principal exports
+are: (1) gold, $60,000,000 per annum, including that from the
+Transvaal; (2) diamonds, $22,500,000; (3) wool, $12,500,000; (4)
+mohair, the hair of the Angora goat, $3,000,000; (5) ostrich feathers,
+over $2,500,000; (6) hides and skins, $2,200,000; and (7) copper ore,
+$1,250,000. The export of wine and fruit, for the production of which
+the country is so well suited, and also of grain, is inconsiderable.
+
+SHIPPING PORTS AND RAILWAYS OF SOUTH AFRICA
+
+British South Africa, like all of Africa, is wanting in seaports. In
+fact, it has but few. However, it has one, WALFISH BAY, which
+territorially does not belong to it, inasmuch as it is in the middle
+of the coast of German Southwest Africa--the only port in that coast.
+The principal port in British South Africa is CAPE TOWN (83,718),
+which is also the capital and principal place. The next principal
+ports are, for Cape Colony, PORT ELIZABETH (23,266) and EAST LONDON,
+and for Natal, DURBAN. LORENZO MARQUEZ, on Delagoa Bay, and BEIRA, at
+the mouth of the Pungwe, both in Portuguese East Africa, are natural
+ports for northern British South Africa, and are used as such,
+railways being constructed from them into the interior.
+Railroad-making, indeed, is now the all-important matter in South
+Africa. Lines are already built from Cape Town, Port Elizabeth, East
+London, Durban, and Lorenzo Marquez to the diamond-fields of Kimberley
+and the gold-mines of Johannesburg. These also give to the pastoral
+and agricultural parts of the interior facilities of access to the
+sea. But the line from Cape Town to Kimberley is being rapidly
+extended northward to Salisbury, the central point of the gold-fields
+of Rhodesia, and already has reached BULAWAYO, 1600 miles from Cape
+Town. The line from Beira is also to end at Salisbury. Already a
+telegraph line extending from Salisbury northward has reached the west
+shore of Lake Nyassa, and by the close of this year (1898) it will
+reach the south end of Lake Tanganyika. It is proposed that the
+railroad from Bulawayo shall follow this same route, and it is the
+dream (or shall we say the hope?) of the empire-builders of South
+Africa that this railway shall before many years be so far advanced
+northward that it will meet the railway that is now being built from
+Cairo southward through the continent along the Nile. Mr. Stanley
+predicts that the "Cape to Cairo" railway will be an accomplished fact
+before 1925. The white population of South Africa, even including the
+Boer republics, is still less than 750,000.
+
+
+X. THE TRADE FEATURES OF AUSTRALIA
+
+AUSTRALIA AND AUSTRALASIA
+
+The term AUSTRALASIA, as now generally used, comprises Australia
+(including Tasmania) and New Zealand, and a number of small
+neighbouring islands. So used it practically denotes a British
+possession; for such islands as are comprised by the term and yet do
+not belong to Great Britain are comparatively unimportant. But when we
+speak of Australasia, we are generally thinking of AUSTRALIA, for
+Australia is so large and important that it seems to overshadow the
+other parts of Australasia. But in respect to politics or commerce
+Australia is not one country; it is divided into several
+self-governing colonies. These are, in order of importance, Victoria,
+New South Wales, South Australia, Queensland, and West Australia. But
+a movement is now being made to unite all these colonies, and Tasmania
+as well, into one "Australian Confederation," just as the several
+provinces of Canada, which were once independent colonies, have been
+united into one "Dominion of Canada." This confederation scheme,
+however, has not yet been accomplished.[3] New Zealand, because of
+its distance (1200 miles) from Australia, has so far shown no desire
+to enter into this confederation.
+
+FOOTNOTE:
+
+[3] Since the above was written the scheme has been developed a very
+considerable way toward completion. The name of the confederation is
+to be "The Commonwealth of Australia."
+
+THE AREA AND CLIMATE OF AUSTRALIA
+
+Australia is a continent not only in name but in fact. Its area,
+including Tasmania, is almost 3,000,000 square miles, which is about
+the area of the United States exclusive of Alaska, and only about one
+fourth less than the area of the continent of Europe. Fully two fifths
+of this area lie within the torrid zone, and of the rest, even in
+Victoria, the part farthest from the equator, the climate is so warm
+that it corresponds with that of Spain, southern France, and Italy.
+But over so vast a territory great differences of climate must occur,
+and consequently of products also. A general description of the
+climate and products of Australia is therefore impossible. Yet there
+are several characteristics which appertain to the whole continent.
+The chief of these are (1) the great DRYNESS of the ATMOSPHERE--not
+merely its lack of rain, but its absolute freedom from moisture; (2)
+the remarkable INEQUALITY, or want of regularity, in the RAINFALL.
+Occasionally the rainfall is excessive, but a more frequent and
+serious cause of trouble is excessive drought. The continent on every
+side has a low coast region, where the rainfall is heavier and the
+temperature generally hotter than in the corresponding table-land
+interior to it. But the vast table-land of the interior has
+comparatively little rain, and indeed in some parts of it, especially
+in the centre and west, the rainfall is so slight that the country is
+practically a desert.
+
+But even when all the desert areas of Australia are excluded from
+calculation there still remains in the interior plateau, toward the
+east and south, an immense area of country of great fertility and
+productiveness. The Murray River alone drains an area of 500,000
+square miles, one sixth of the whole continent, a great part of which
+is of exceeding richness. In these fertile parts irrigation by
+artesian wells has been tried, and always with great success. And it
+is thought that almost the whole continent can be regained for
+agriculture, or at least for sheep-pasturing, by similar means; for
+even in the arid and so-called desert parts of the interior, there is
+very little soil that is not really fertile, for all of it is covered
+with thick brushwood. Moisture alone is needed to make it bear crops
+abundantly. And this dryness of the atmosphere which prevails
+throughout the whole continent is not without its compensations. It
+renders the climate exceedingly healthful.
+
+AUSTRALIA A CONTINENT OF PECULIARITIES
+
+Australia has MANY PECULIARITIES. It has only one large river, and
+even that in summer becomes a series of isolated pools. It has no high
+mountain range, its principal mountains being only a series of
+ramparts marking off the lower coast lands from the interior plateau.
+Again, its native quadrupeds are entirely different from those of
+other continents, being almost all, whether little or big,
+"marsupials," or "pouch-bearers," like the kangaroo. Its birds are
+mostly songless. Its flowers, for the most part, have no scent. Its
+trees are leaved vertically and cast no shade. Its indigenous
+inhabitants have made no progress toward civilisation. When Europeans
+first came to the country they found no native animal that could be
+put to any use, nor any native fruit, vegetable, or grain that could
+be utilised for food. Still, all European domestic animals thrive
+abundantly in the country, and so do all European fruits, grasses,
+grains, and vegetables. The English rabbits, indeed, have become a
+terrible pest. As many as 25,000,000 of them have been killed in a
+year without any apparent diminution in their numbers. Over $1,000,000
+a year has at times been spent to exterminate them, all to no effect.
+
+VICTORIA
+
+Victoria, the smallest of the Australian colonies, had until recently
+the largest population (June, 1897, 1,177,304) and also the largest
+trade. In both respects, however, it is at present surpassed by New
+South Wales. Victoria has owed its past pre-eminence to its GOLD
+PRODUCTION. Gold was discovered in the colony in 1851, and for years
+the output of the precious mineral was not less than $50,000,000 per
+annum. The present output of gold in Victoria, however, is only
+$10,000,000 per annum. Richer, however, than the gold-mines of
+Victoria is the fertility of its soil. A large part of the soil is
+exceedingly fertile--with irrigation one of the finest fruit-bearing
+soils in the world. The arboreal vegetation of the country is
+magnificent. Trees thirty feet in diameter rise to the height of 200
+feet without a single lateral branch, and then 100 feet to 200 feet
+higher still. Pear-trees grow to the height of eighty feet, with
+trunks three feet in diameter. But as yet wool-growing, wheat-raising,
+and vine-growing are the principal agricultural occupations of the
+people. The principal agricultural export is WOOL--$25,000,000 worth
+per annum. But a considerable portion of this comes from New South
+Wales. The SHEEP kept number 15,000,000, the cattle 2,000,000. But the
+colony still remains principally a mining community. Five ninths of
+the population live in towns. Yet there are few towns, and two fifths
+of the whole population live in Melbourne--a city almost exactly as
+large as Boston.
+
+MELBOURNE
+
+MELBOURNE (451,110; with suburbs, 500,000), the capital city of Victoria
+and the chief city in Australia, is also one of the most beautiful
+cities in the world. Its parliament buildings, town hall, post-office,
+treasury, mint, law courts, public libraries, picture galleries,
+theatres, churches, and clubs are all edifices of architectural
+magnificence and beauty, while its boulevards, parks and gardens are
+equally splendid. At one time money flowed freely and great commercial
+recklessness prevailed. But though Melbourne has sustained several
+severe depressions its present condition is prosperous and its future is
+assured. It is, however, a pleasure-loving city, and it is as much on
+this account as on account of its great beauty that it is called "the
+Paris of the southern hemisphere." Nowhere else in the world, perhaps,
+are indoor amusements--the theatre, concerts, etc.--or outdoor
+amusements--cricket, football, horse-racing, etc.--more devotedly
+patronised than in Melbourne. Other important places in Victoria are
+BALLARAT (40,000) and SANDHURST (37,000), both mining towns, and
+GEELONG (25,000) locally noted for its manufacture of "tweeds."
+
+NEW SOUTH WALES
+
+[Illustration: Australia. Shaded portions show where the rainfall is
+sufficiently abundant.]
+
+New South Wales (population 1,311,440) is the oldest colony of
+Australia and the parent of both Victoria and Queensland. Of all the
+colonies, it has, perhaps, the greatest range of productions. On the
+low coast lands its soil is of extraordinary fertility, and even in
+the dry interior, when irrigation is employed, the fertility is still
+extraordinary. As yet, however, but one acre out of every two hundred
+is under cultivation, the chief agricultural occupation being
+pasturing. Over 50,000,000 SHEEP are kept, principally the MERINO.
+Grass grows everywhere, and even the summits of the mountains are
+covered. Drought, however, is a terrible drawback, and sometimes
+tremendous losses occur. In 1877 over 8,000,000 sheep perished, and in
+1884 over 12,000,000. The total WOOL PRODUCTION is very large,
+averaging $50,000,000 a year. The export of hides, skins, leather, and
+chilled meat, principally mutton, amounts to $10,000,000 annually.
+Chilled mutton and beef are sent direct to London, though the passage
+takes five or six weeks by steamer and twelve to sixteen weeks by
+sailing-vessel. Scarcely less important than its agricultural products
+are the mineral products of New South Wales. Its COAL-MINES are the
+finest on the continent, and $4,500,000 worth of coal is exported
+annually, besides what is consumed locally. Its gold production,
+though not very large, is general throughout the whole colony. Its
+SILVER-MINES in SILVERTON and BROKEN HILL are among the most famous in
+the world, and its tin-bearing lands comprise over 5,500,000 acres.
+The foregoing comprise the staple products--the production of
+industries already well established. But fruit-growing, including all
+fruits, from apples, pears, and peaches, to olives and oranges, is a
+rapidly developing industry, no country in the world being better
+suited to it. Wine-making, too, is quickly coming forward, the New
+South Wales wines equalling in flavour those of France and Spain.
+Wheat-growing, cotton-growing, and even rice-growing are also in their
+several districts rapidly extending and prosperous pursuits. The
+development of New South Wales has only just begun. SYDNEY (including
+suburbs 410,000) is the capital and by far the largest city. Sydney,
+like Melbourne, is a beautiful city, but its beauty is natural rather
+than artificial, and it is well entitled to its name, "Queen of the
+South." It is situated on Port Jackson, one of the finest and most
+beautiful harbours on the globe. Sydney is the headquarters of all the
+various lines of steamships--British, American, French, Italian,
+etc.--that trade with Australia, and is indeed one of the great
+seaports of the world.
+
+SOUTH AUSTRALIA
+
+South Australia (358,224 in 1897) occupies the whole central part of
+the continent from north to south. But as only a very small portion
+of this vast area is settled--the southeast corner--it may be
+described as in characteristics resembling Victoria. Its principal
+industry is WHEAT-GROWING. South Australia is indeed the great granary
+of the continent, and is destined to be one of the great granaries of
+the world. Like the other divisions of Australia, South Australia,
+when once drought has been overcome by irrigation, is destined to
+become a great fruit country, its warm, moistureless climate being
+peculiarly well suited to the ripening of fruits of exquisite
+flavours. Already its olives are pronounced the finest in the world.
+The principal city and chief port is ADELAIDE (with suburbs 144,352).
+Like other Australian ports, Adelaide possesses excellent steamboat
+shipping facilities. In the north, on the Timor Sea, is PORT DARWIN,
+likely to be an important trade centre.
+
+QUEENSLAND
+
+The most interesting of all the Australian colonies is Queensland
+(population 472,179), for it is a tropical country with a climate so
+salubrious that white people can live in it and be comfortable and
+healthy. The heat, instead of being enervating, is stimulating and
+bracing. A great portion of its soil is of unsurpassed fertility. The
+only drawback is the unequal distribution throughout the year of the
+rainfall. But wherever irrigation wells are sunk the climate becomes
+highly suitable for SHEEP-RAISING, and also for the growing of many
+kinds of FRUIT. There are already 15,000,000 sheep and 5,000,000
+cattle in the colony, and wool is exported to the amount of
+$15,000,000 annually. Other agricultural exports are frozen beef and
+mutton, and hides and skins. WOOL is the chief export. The second
+export in importance is GOLD, which reaches $10,000,000 per annum. Tin
+is also exported, and coal, though little worked, is abundant.
+Developing exports are sugar ($2,500,000 per annum), arrowroot,
+cotton, tobacco, rice, and coffee. A difficulty, however, in the
+development of these products is the labour question. White men cannot
+work in the plantations. Chinese prefer to work in the mines. The
+natives won't work anywhere. No negroes are obtainable. As a
+consequence Polynesians have to be imported. BRISBANE (100,913) is the
+capital and chief city and port.
+
+WEST AUSTRALIA
+
+West Australia (population 162,394), the largest of all the Australian
+colonies, has only been recently settled, and its constitution as a
+self-governing colony dates only from 1890. A large part of its area
+has never been explored, and a large part is known to be scrub desert.
+But there is scarcely any part of it, even of its "scrub" areas, but
+that will support sheep when once artesian wells have been sunk, and
+large portions of the colony, especially along the coasts, are as
+fertile as need be. And the climate, though very dry, is exceedingly
+healthful. PERTH (43,000) is the capital. ALBANY is the principal
+port.
+
+THE IMMENSE RESOURCES OF AUSTRALIA. ITS PROBABLE FUTURE
+
+Australia is undoubtedly on the eve of a period of great development.
+Its resources are known to be immense. Its climate has been found most
+favourable to human health, and the objectionable feature of the
+climate, the smallness and irregularity of the rainfall, has been
+studied and become understood and found remediable. Once the
+confederation that is now in process of formation takes place, there
+is no doubt that Australia will enter upon a new and prosperous
+commercial era. Owing to the fact that its chief opportunities for
+wealth lie in the development of its natural resources, it is probable
+that for some time to come almost all the manufactured goods Australia
+needs will have to be imported. Already its importation amounts to
+$275,000,000, of which, of course, Great Britain supplies the
+principal share. This importation is principally clothing and
+materials for clothing, but it also comprises hardware and machinery,
+and in fact everything required by a highly civilised and
+money-spending people, except breadstuffs and provisions. The
+magnitude of this importation may be comprehended from the fact that
+it is more than one third of the total exportation of the United
+States for any year save one up to 1896, including our immense export
+of breadstuffs, provisions, and cotton. And besides the articles of
+export already mentioned--WOOL, MEATS, HIDES, SKINS, MINERALS, FRUITS,
+etc.--there is one other Australian resource that is capable of almost
+indefinite development. This is its TIMBER. The eucalyptus or gum-tree
+prevails almost universally in Australia, and some of its commonest
+varieties, being both strong and indestructible by insects, are of
+almost unequalled value for ship-building, railway ties, and dock and
+harbour construction. That the Australians are fully alive to the
+importance of developing their foreign trade is seen in the efforts
+they have made to provide facilities for bringing their products to
+ocean ports. There are 11,980 miles of railway, almost every mile of
+which has been built by the governments. This is one mile of railway
+for every 300 inhabitants, as against one mile for every 400
+inhabitants in the United States. These railways run wholly to and
+from the seaboard. There are no manufacturing towns to be catered to.
+Australian trade consists wholly in exchanging home-raised natural
+products for imported manufactures. Equally remarkable with the
+railroad enterprise of the Australians is their enterprise in
+telegraphic construction and the establishment of cable
+communications. For example, a telegraph line 2000 miles long, running
+across the continent from Adelaide to Port Darwin, has been built by
+the province of South Australia so as to connect with a cable from
+Port Darwin to Java, Singapore, etc., and thus with Europe and
+America. For at least 1500 miles this telegraph line runs through one
+of the most desolate and inaccessible regions in the world.
+
+
+XI. THE TRADE FEATURES OF SOUTH AMERICA
+
+SOUTH AMERICA, A FERTILE CONTINENT WITH DRAWBACKS
+
+South America is an immense but very fertile continent, whose natural
+resources are as yet scarcely begun to be utilised. Though not so
+large as North America, it has a far greater area of productive
+soil--and, indeed, much of its soil is quite unsurpassed in fertility.
+It suffers, however, from two great drawbacks. 1. A great portion of
+its area (four fifths) lies within the torrid zone. In the low coast
+regions of this torrid area, and also in the low forest regions
+watered by the great flat rivers of the interior, the climate is for
+the most part unendurable to white men. 2. South America has been
+unfortunate in its settlement and colonisation. Until in recent years
+colonisation as understood in Anglo-Saxon communities has scarcely
+been attempted in South America at all. All the earlier immigrations
+from the Old World were prompted by the thought of getting gold and
+silver and precious stones--if need were by the spoliation and
+enslavery of the natives. Only a small proportion of the
+population--not more than a quarter of the whole--consists of whites,
+and these are principally from Spain and Portugal. These conquerors
+of the continent have not in the main succeeded in establishing either
+stable forms of government or high types of civilisation. Furthermore,
+the mixed races--the MESTIZOS or METIS, as they are called, the
+descendants of the earlier Europeans and the natives--instead of
+advancing in civilisation have for some time past been retrograding.
+Then, again, there is a large negro element, the descendants of
+Africans once imported as slaves, to still further complicate the race
+question; and there is a considerable element partly negro and partly
+Indian. In only one state, Argentina, can affairs be said to be really
+prosperous, and even in Argentina the civilisation developed by its
+prosperity is gross and material rather than refined and intellectual.
+The next most prosperous and important states are Brazil and Chile.
+Perhaps Uruguay, though the smallest of all the states, should be
+placed after Argentina. The remaining independent states of the
+continent--Venezuela, Colombia, Ecuador, Peru, Bolivia, and
+Paraguay--are all states of the prevailing South American type. Their
+governments are more or less unstable. They are terribly burdened with
+debt, and their credit is such that they must pay high rates of
+interest. The civilisation once introduced among their native races by
+the zeal of Spanish missionaries is deteriorating if not vanishing.
+And even among their leading classes there is much to be desired in
+the observance of the ordinary principles of right and wrong.
+
+EUROPEAN IMMIGRATION IN SOUTH AMERICA
+
+All the South American states enumerated above, with the exception of
+Brazil, were first taken possession of and "settled" by the Spanish,
+and the Spanish language still remains in them the language of
+government, education, and society. Brazil was first taken possession
+of and "settled" by the Portuguese, and in Brazil the Portuguese
+language prevails, just as elsewhere in the continent the Spanish
+language prevails. Among the natives many different languages are
+found, but in Brazil a "common language" is used, one introduced by
+the original Portuguese missionaries, and understood by nearly all the
+tribes. Between Brazil and Venezuela is a triangular piece of country
+called Guiana, which, unlike the rest of South America, is still under
+the control of European powers. It consists of three parts--French
+Guiana, Dutch Guiana, and British Guiana--colonies of France, Holland,
+and Great Britain, respectively. Leaving out Guiana, South America has
+received its entire civilisation from Spain and Portugal, and, with
+the exception of Argentina, Uruguay, and Brazil, there has been little
+or no emigration to any South American country except from these two
+European countries. To Argentina, however, there has been a large
+emigration from Italy especially, but also from France, Great Britain
+(mainly from Ireland and Wales), Germany, and Sweden. A similar
+emigration has taken place to Uruguay, though the foreigners in
+Uruguay are principally Basques, a people that live on the border-land
+between Spain and France, but are neither Spanish nor French. In
+Brazil the immigration, where it has not been Portuguese, has been
+chiefly Italian and German, and in the temperate region of the extreme
+south of Brazil a large German population exists. Everywhere in South
+America the parts most prosperous are the parts that have come most
+directly under the influence of recent European emigration.
+
+THE ARGENTINE REPUBLIC
+
+The Argentine Republic, or "Argentina," as it is popularly called, is
+the most prosperous and most important of all the South American
+states. Its area (1,319,247 square miles) is equal to the total area
+of the States of the United States east of the Mississippi and
+Missouri, including the Dakotas, Missouri, Arkansas, and Louisiana.
+Although a portion of this vast area is not of much value for
+agricultural purposes, especially in Patagonia, a very large portion
+of it does consist of soil of great fertility, while the climate,
+which for the most part is a temperate one, is such as is well suited
+to Europeans and white people generally. The population May 10, 1895,
+was 4,094,911. Of this population it is estimated that over 850,000
+are Italians, 183,000 French, 161,000 recently emigrated Spaniards,
+60,000 English, and 54,000 Germans and Swedes. The language of the
+government and of the schools is Spanish. At one time in Argentina
+there was a disposition to take the United States as a model in
+everything, but of late years there has been a tendency toward taking
+France as a model in manners and customs. This disposition to imitate
+European peoples is particularly true of the wealthy classes.
+
+ARGENTINA'S RAPID PROGRESS
+
+The pride and boast of Argentina has been its rapid progress. In the
+thirty years ending 1886 the immigration was over a million. From 1886
+to 1889 it was from 100,000 a year to 200,000 a year. In 1890, owing
+to the financial crisis of that year, it fell away almost to nothing.
+Since 1890 it has gradually increased until now it is about 100,000 a
+year again. In 1869 the population was only 1,837,000. Now it is over
+4,000,000. Similarly the capital city, Buenos Ayres, has made an
+increase not easily paralleled. In 1869 its population was only
+187,126. In 1887 it was 423,996. By the census of 1895 it was 663,854.
+To-day it is said to be 750,000. Of this number about one half are
+foreigners. The high protective tariff established by Argentina in
+1878 had the effect of instituting many small industries in Buenos
+Ayres, and to this cause the exceedingly rapid growth of its
+population is partly attributable.
+
+ARGENTINA'S AGRICULTURE AND MANUFACTURES
+
+The great prosperity of Argentina has been due to the extent and
+immediate availability of its agricultural resources, for its forest
+wealth remains undeveloped, and its mineral resources are
+comparatively scanty. Its vast treeless and stoneless plains have
+needed no "improvements" to make them fit for settlement, and the soil
+which covers them being of virgin richness bears crop after crop
+without fertilising and with very little cultivation. Immigrants
+arrive in the country without a dollar and in twenty years are owners
+of estates of 5000 acres each. In no country in the world has
+agricultural extension been more rapid. In twenty years the acreage
+under cultivation increased 1400 per cent. The amount under
+cultivation in wheat alone increased 2600 per cent. The WHEAT
+PRODUCTION averages 40,000,000 bushels, which is not far short of one
+fourth of the total wheat export of the United States. The production
+for 1897 was 60,000,000 bushels, although the amount exported was much
+less than that. The wheat product is indeed very variable, owing to
+droughts and locusts, for, like Australia, Argentina is uncertain in
+its rainfall. The CORN CROP is steadier, and in 1896 amounted (for
+export alone) to 60,000,000 bushels. More important in the aggregate
+than the direct products of the soil are the indirect products. There
+are 22,000,000 CATTLE kept in Argentina, 75,000,000 SHEEP, and
+4,500,000 HORSES. The total exportation of animals and animal products
+amounts to $70,-000,000. Of this exportation the principal item is
+WOOL, the wool-clip of Argentina being, in weight, one seventh of the
+total wool-clip of the world. Unfortunately, however, Argentina wool
+is very dirty, and when washed reduces to one third, while Australian
+wool reduces only to two thirds or three fifths and is free from
+seeds. The profit accruing to the Argentina wool-grower is thereby
+lessened. But, nevertheless, wool-growing in Argentina is a very
+profitable industry, and many farmers (principally Irish settlers)
+have from 50,000 to 100,000 sheep each. Cattle-farming is carried on
+mostly by native Argentines, and many cattle farms are stocked with as
+many as 10,000 cattle and 2000 horses each. The great exports of
+Argentina, therefore, after wheat and corn and wool, are HIDES and
+SKINS, TALLOW, CHILLED BEEF, and MUTTON and bones. There are five
+factories in Buenos Ayres engaged wholly in chilling mutton, and the
+export of chilled mutton to Great Britain alone is $5,000,000 a year.
+Another growing agricultural product is WINE, the yearly production
+being 1,500,000 gallons. Notwithstanding Argentina's magnificent
+forest areas, but little timber is exported or even manufactured for
+home consumption. The other principal manufacturing industries are
+carriage-, cart-, and harness-making, cigarette- and match-making,
+preserving and tinning meat, brewing, flour- and corn-milling, and the
+making of macaroni.
+
+BUENOS AYRES
+
+[Illustration: The most prosperous part of South America.]
+
+BUENOS AYRES, the capital of Argentina, is the largest city not only
+in South America but in the whole southern hemisphere. The La Plata,
+at whose mouth it stands, affords navigation into all the northern
+parts of the republic, as well as into the neighbouring states of
+Uruguay, Paraguay, Brazil, and Bolivia. The riverside at Buenos Ayres
+is at all times of the year a perfect forest of masts and smoke-stacks
+belonging to the shipping that supplies this navigation. Recently, at
+a cost of $25,000,000, the river, which here is shallow, has been
+deepened and new wharves and docks have been built, and ocean-going
+vessels of the deepest draught (which formerly used to be lightened
+fourteen miles away) can now unload or be loaded right in the very
+heart of the city. The total commerce of the republic amounts to
+$200,000,000 or $225,000,000 a year, and of this trade Buenos Ayres
+transacts seven eighths in imports and three fifths in exports. The
+amount of this trade secured by the United States is about a tenth,
+running from $12,000,000 to $24,000,000. In 1896 it was only
+$12,500,000. The principal export trade is with France ($24,000,000),
+Great Britain ($14,000,000), Germany ($13,000,000), and Belgium. Great
+Britain does not buy Argentina wool. The principal import trade is
+with Great Britain ($45,000,000), Germany ($14,000,000), France
+($12,000,000), and Italy. The Buenos Ayreans are fond of display and
+of dress and of ornamentation, and the importations from France and
+Italy are principally of goods to gratify this fondness. There is a
+considerable exportation of wheat, flour, tobacco, and mate (Paraguay
+tea) to Brazil and other South American states. Buenos Ayres is the
+centre of the Argentina railway system, which consists of about 9000
+miles of road. There are 25,500 miles of telegraph routes. The
+national debt amounts to $430,000,000. The provincial debts amount to
+about $140,000,000. The taxation amounts to nearly ten per cent. of
+the earnings of the people, as against four and one half per cent. in
+Canada and five per cent. in Australia.
+
+BRAZIL
+
+Brazil is a much larger and more populous country than Argentina. Its
+area (3,209,878 square miles) is as large as that of all the United
+States, less half of Alaska. A great portion of this area is of
+superlatively tropical richness of production. But, unfortunately, the
+most fertile parts of Brazil are the parts least fit for settlement by
+white men. The population by the last census is approximately
+14,500,000, but less than 4,000,000 of this population are pure
+whites. The negroes that were lately slaves number over 2,000,000, and
+there are supposed to be about 1,000,000 Indians. Intermediate between
+the Indians and negroes and the white population are the numerous
+mixed races or half-breeds. Agriculture is the chief industry, but is
+of two kinds: the tropical agriculture of the central and south
+central seaboard, which is carried on principally by negro and mulatto
+labour, and the agriculture of the temperate region of the extreme
+south, which is carried on mainly by colonists from Europe, the recent
+European emigration being almost wholly directed toward that region.
+Almost the whole of the interior of Brazil still remains unsettled and
+untilled. The COFFEE yield of Brazil is enormous and is its principal
+product. The production amounts to 8,000,000 bags or over
+1,000,000,000 pounds annually, which is more than two thirds of the
+total amount of coffee used in the world. Labour for coffee
+cultivation is scarce and dear, and in the earlier stages of the
+production of the berry the Brazilian coffee gets badly treated. But
+machinery is used wherever possible, and in the later stages of the
+production the Brazilian coffee gets the best attention that skill can
+devise. As a consequence the coffee product of Brazil is rising in the
+estimation of coffee-users. The shrubs are cultivated under palm-trees
+so as to keep them from the intense heat of the sun. Three or four
+harvests of berries are obtained in a year. Rio Janeiro and SANTOS are
+the two chief centres of the coffee industry. Next to coffee the chief
+tropical product is SUGAR, the export of which is about 250,000 tons
+annually, principally from Pernambuco. Other products of the tropical
+area of Brazil are COCOA and COTTON, from the cultivated coast
+regions, and RUBBER and Brazil-nuts, from the dense forests of the
+lower Amazon; also DYEWOODS and CABINET WOODS, drugs, and diamonds.
+For many years Brazil was celebrated for its diamonds--obtained
+chiefly from a town in the interior named Diamantina. The present
+diamond production is not large. From the temperate agricultural
+region of the south, dried beef, hides, and tallow are the chief
+exports. The greatest customer of Brazilian produce is the United
+States, which takes $70,000,000 worth. Great Britain is next, with
+$35,000,000 worth (in rubber alone in 1896 $15,000,000). Brazil gets
+her goods principally from Great Britain, the United States, France,
+and Germany--from Great Britain $20,000,000, from the United States
+$13,000,000. The imports include almost all articles needed for
+domestic and manufacturing purposes--particularly cottons and
+woollens, ironware, machinery, lumber, flour, rice, dried meats,
+kerosene, butter, and fish. There are, however, 155 cotton factories
+established in Brazil, with capital to the value of $50,000,000, and
+cotton manufacturing is protected by very heavy duties. But
+agricultural machinery and such like manufactures are very lightly
+taxed. The principal food of the people is manioc flour (tapioca).
+
+RIO JANEIRO
+
+RIO JANEIRO (674,972), the capital and principal city, though a
+poor-looking place, is situated on a magnificent harbour--one of the
+very finest in the world. About 1500 vessels, with tonnage amounting
+to 2,500,000 tons, enter Rio Janeiro with foreign trade annually. Nine
+thousand miles of railway have been built in Brazil and 3500 more are
+in course of construction, and 12,000 miles of telegraph routes have
+been built. Rio Janeiro is the chief railway centre, but other centres
+are RIO GRANDE DO SUL, in the temperate regions of the south, and
+BAHIA and PERNAMBUCO, in the tropical regions. The public (national)
+debt of Brazil is not far short of $1,000,000,000, bearing interest
+(a great part of it) at from four to six per cent. per annum.
+
+
+XII. THE TRADE FEATURES OF CANADA
+
+CANADA, PRACTICALLY AN INDEPENDENT FEDERAL REPUBLIC
+
+The dominion of Canada comprises all that portion of the continent
+of North America north of the United States--except Alaska and
+Newfoundland and the coast of Labrador. (Newfoundland and the Labrador
+coast is a colony in direct relationship to Great Britain.) Canada is
+entirely self-governing and self-maintaining, and its connection with
+Great Britain is almost wholly a matter of loyalty and affection. It
+consists (1) of seven Provinces: Ontario, Quebec, Nova Scotia, New
+Brunswick, Prince Edward Island, Manitoba, and British Columbia,
+which, in their self-governing powers and their relation to the
+general government, correspond very closely to our States; (2) of
+four Territories--Assiniboia, Alberta, Saskatchewan, and Athabasca,
+which correspond somewhat to our Territories; (3) of four other
+Territories--Ungava, Franklin, Mackenzie, and Yukon, which are
+administered by the general government; and (4) the District of
+Keewatin, which is under the jurisdiction of the lieutenant-governor
+of Manitoba. The capital of the whole dominion is Ottawa. Each
+province has its own capital.
+
+SIZE, SOIL, CLIMATE, AND POPULATION OF CANADA
+
+The area of Canada is immense. It figures up to 3,456,383 square
+miles, which is almost 500,000 square miles more than the total area
+of the United States exclusive of Alaska, and not far short of being
+equal to the area of all Europe. But almost 150,000 square miles of
+this area are taken up by lakes and rivers; and a much greater portion
+than this, under present conditions of civilisation, is wholly
+uninhabitable, being either too cold or too barren. Yet when all the
+necessary allowances have been made there still remains in Canada an
+immense area with soil fertile enough and climate favourable enough
+for all the purposes of a highly civilised population. Over 900,000
+square miles are already occupied, and of the occupied area fully one
+half has been "improved." The older provinces are, acre for acre, as
+suitable for agricultural pursuits as the adjoining States of the
+Union. Manitoba, the "Prairie Province," is almost one vast wheat
+field, with a productivity for wheat unequalled anywhere except in the
+Red River valley of Minnesota and Dakota. The Manitoba grain harvest
+foots up to 50,000,000 bushels. British Columbia is a land of almost
+infinite possibilities, not only because of its mineral and timber
+resources, but also because of its capabilities for agriculture and
+fruit-growing. The Territories are so vast an area that no general
+description of them is possible, but it may be said that the great
+wheat valley of the Saskatchewan, the sheltered grazing country of
+Alberta, and the great wheat plains of the Peace River valley in
+Athabasca, are regions adapted in soil and climate to sustain a hardy
+and vigorous people. The population of Canada is comparatively small.
+It is estimated at 5,250,000. Over 1,000,000 people of Canadian birth
+reside in the United States, and the number of Americans residing in
+Canada is only 80,000. Out of the 2,425,000 persons who came to Canada
+as immigrants in a period of forty years, no fewer than 1,310,000, or
+fifty four per cent., came over into the United States. It is stated
+that this exodus has ceased, and that if any great movement of
+population now exists it is toward Canada.
+
+CANADA'S FOREST WEALTH
+
+Canada, like all new countries, depends for her prosperity upon the
+development and exportation of her natural products. These are of four
+great classes: (1), the products of her forests; (2), the products of
+her mines; (3), the products of her fisheries; (4), her agricultural
+products. Canada's forest resources, when both extent and quality are
+considered, are the finest in the world. The forest area uncut was in
+1891 nearly 1,250,000 square miles, or more than one third of the area
+of the whole country. The annual value of the timber and lumber
+produced is about $82,500,000. The annual value of the timber and
+lumber exported is about $32,000,000. Two thirds of this goes to Great
+Britain, and over $9,000,000 in lumber and logs goes to the United
+States. Quebec and Ontario have unlimited supplies of spruce for
+wood-pulp manufacture, the annual output of which reaches 200,000
+tons. The uncut lumber of British Columbia, which includes Douglas
+pine, Menzies fir, spruce, red and yellow cedar, and hemlock, is
+estimated to be 100,000,000,000 cubic feet.
+
+CANADA'S MINERAL RESOURCES
+
+Canada is just beginning to realise the largeness of her mineral
+resources. The most talked of gold-mines are those of the Klondike
+district, the extent of which is still uncertain. Much more definitely
+known and almost as productive are the gold-mines of British Columbia
+and the newly discovered gold-fields of the Rainy River district in
+northern Ontario. More important than the gold-mines of Canada are its
+coal-fields. These are principally in Nova Scotia and British
+Columbia. The latter province is destined to be the coal-supplying
+region for the whole Pacific coast of North America. The yearly output
+at present is about 1,000,000 tons; the yearly output of Nova Scotia
+is about 2,000,000 tons, principally produced by American capital. In
+Alberta there are said to be coal-fields having an area of 65,000
+square miles. Iron is found in abundance in both British Columbia and
+Ontario. Ontario has in its nickel-mines of Sudbury a mineral treasure
+not found elsewhere in equal abundance in the world. Experts have
+estimated that 650,000,000 tons of this ore are actually in sight.
+Ontario produces petroleum and salt. Silver, copper, lead, asbestos,
+plumbago, mica, etc., are found in varying quantities. Canada imports
+annually from the United States nearly $10,000,000 worth of coal and
+coke.
+
+CANADA'S FISHERIES
+
+The fisheries of the Gulf of St. Lawrence and of the shallow waters
+bordering on Nova Scotia and Newfoundland have for centuries been the
+most productive in the world. The Canadian fishing interest in these
+waters is very great. Cod, mackerel, haddock, halibut, herring,
+smelts, and salmon, are the principal fish, and the annual "take" is
+about $15,000,000. About $2,500,000 worth of whitefish, salmon-trout,
+herring, pickerel, and sturgeon are produced annually from the
+Canadian lakes. The salmon-fishing of the rivers and great sea-inlets
+of British Columbia brings about $4,500,000 annually. About one half
+of the total product is exported to Great Britain and the United
+States.
+
+CANADA'S AGRICULTURAL PRODUCE
+
+Agriculture, including stock-raising, dairying and fruit-growing, is
+Canada's greatest industry. Over 23,000,000 acres are under crop and
+about 20,000,000 under pasture. Over 3,000,000 acres are under wheat
+cultivation. Ontario exports more than twice as much cheese as the
+whole of the United States, and her cheese product is recognised as
+the finest in the world. Canada exports to Great Britain alone
+$15,000,000 worth of cheese annually. In 1896, in Ontario alone, 170
+creameries turned out over 6,000,000 pounds of butter at an average
+net receipt of 18-1/4 cents a pound. By the cold-storage facilities
+provided by the government Canadian butter can be sent even from far
+inland points to Liverpool or London without the slightest
+deterioration. England buys $6,000,000 worth of Canadian bacon and
+hams annually, and Canadian beef is already famous on the London
+market. American corn for stock-feeding is admitted to Canada free
+of duty and about $10,000,000 worth is imported annually. A great
+deal of eastern and southern Canada is well adapted to fruit-raising.
+The Niagara-St. Clair peninsula of Ontario is especially famous for
+its peaches and grapes.
+
+CANADA'S TRADE WITH THE UNITED STATES
+
+Canada has made a great effort in the direction of encouraging home
+manufactures, but her most progressive and most staple industries are
+those concerned in the conversion of the raw products of the country
+into articles of common merchandise. Her steam horse-power in
+proportion to population is the largest in the world. The capital
+invested in factories as a whole amounts to over $400,000,000, with an
+annual output of over $500,000,000. Her total annual importation is
+now over $130,000,000. More than half of this is from the United
+States. Canada's total annual exportation is about $160,000,000. Of
+this over one third goes to the United States. Canada's total trade
+with the United States is about forty one per cent. of her total trade
+with all countries, and almost equal to her total trade with Great
+Britain. Canada's total trade with the United States is exceeded only
+by that of Great Britain, Germany, and France, and her import trade
+with the United States is exceeded only by that of Great Britain and
+Germany.
+
+[Illustration: Trade centres of Canada and trunk railway lines.]
+
+CANADIAN CITIES
+
+MONTREAL (250,000) is the commercial metropolis of Canada. It is
+situated on an island in the St. Lawrence River, and, though 1000
+miles from the open ocean, the largest sea-going vessels reach its
+wharves with ease. It is the headquarters of Canada's two great
+railways--the Canadian Pacific system, with its 8000 miles of road,
+and the Grand Trunk system, with its 5000 miles of road. Through
+passenger-trains run from Montreal to Vancouver on the Pacific coast,
+a distance of nearly 3000 miles. Montreal is the centre also of the
+great inland navigation system of Canada.
+
+TORONTO (200,000), the capital of the province of Ontario, is the
+second city of Canada. While Toronto has a great local trade and many
+important manufactures, it is specially noted as an educational
+centre. QUEBEC (80,000) is the oldest city of Canada and one of the
+oldest upon the continent. HALIFAX (50,000), the eastern terminus of
+the Canadian railway system, has one of the finest harbours in the
+world. WINNIPEG (35,000) is destined to be the centre of the great
+inland trade of Canada.
+
+
+XIII. THE TRADE FEATURES OF THE UNITED STATES
+
+THE CHARACTER OF OUR EXPORT TRADE
+
+Having reviewed the industrial and trading conditions of the other
+great commercial nations of the world, it should now remain for us to
+review these conditions in the United States. But the United States is
+so large a country, and its trading and industrial interests are so
+diversified and extensive, that it would be impossible for us in the
+limits of our space even barely to touch upon all these interests. So
+that with respect to the "Trade Features of the United States" we
+shall simply confine ourselves to one part of the subject--namely, the
+character, extent, and importance of our foreign trade. And we shall,
+further, have to restrict ourselves in the main to our exports. These
+will be found to be principally not manufactures, but the products of
+our great agricultural, mining, and forest industries. The total value
+of the manufactures of the United States amounts in round numbers to
+the immense sum of $10,000,000,000 annually, a sum considerably more
+than a third (it is thirty five per cent.) of the total value of the
+annual manufactures of the world. But only a very small portion of
+this vast output is exported. The greater portion of it is used to
+sustain the still vaster internal trade of our country, a trade which
+amounts to more than $15,500,000,000 annually, an amount not far short
+of being one third of the total internal trade of the world, and not
+far short of being twice the internal trade of Great Britain and
+Ireland, the country whose internal trade comes next to ours. Our
+exports, therefore, are not in the main manufactured goods, but
+breadstuffs, provisions, and raw materials, the production of our
+farms, our plantations, our forests, and our mines. But principally
+they are the products of our farms and our plantations, for with the
+exception of cotton we do not export much raw material. Nearly all the
+raw material we produce (other than cotton) we use in our own
+manufactures. And even this is not enough, for in addition we have to
+import considerable quantities of raw material for our manufactures
+from other countries, the principal items being raw sugar, raw silk,
+raw wool, chemicals of various kinds including dye-stuffs, hides and
+skins, lumber, tin, nickel, and paper stock.
+
+OUR EXPORT TRADE IN DETAIL
+
+Our total exportation for the twelve months ended June 30, 1898,
+amounted to the unprecedented sum of nearly $1,250,000,000
+($1,231,329,950).[4] This is an amount almost a quarter of a billion
+dollars greater than ever before, the only years when the export even
+approximated this amount being 1897 and 1892, when the exportation was
+slightly over a billion dollars in each case. Of this exportation the
+sum of $855,000,000, or seventy one per cent. of the whole, was for the
+PRODUCTS OF AGRICULTURE, the principal items being (1) "breadstuffs,"
+including wheat and wheat flour, corn and cornmeal, oats and oatmeal,
+rye and rye flour, $335,000,000; (2) cotton, $231,000,000; (3)
+"provisions," including beef and tallow, bacon and hams, pork and lard,
+oleomargarine, and butter and cheese, $166,000,000; (4) animals,
+including cattle, horses, sheep, and hogs, $47,000,000; (5) raw tobacco,
+$23,000,000; (6) oil-cake, $12,500,000, and (7) fruits and nuts,
+$9,000,000. The exports of the products of our mines amounted to only
+1.6 per cent. of the total export, or scarcely $20,000,000, the
+principal items being (1) coal and coke, $12,500,000; (2) crude
+petroleum, $4,000,000, and (3) copper ore. The exports of the products
+of the forest amounted to only three per cent. of the total export, or
+$38,000,000, the principal items being (1) sawed and hewn timber, logs,
+lumber, shingles, and staves, $28,500,000, and (2) naval stores,
+including resin, tar, turpentine, and pitch, $9,000,000. The exports of
+the products of our fisheries amounted to only $4,500,000, or less than
+one half of one per cent. of the total exports. The exports of the
+products of our manufactures, according to the official returns,
+amounted to $289,000,000, or twenty four per cent. of the total export.
+But this sum included many items which represent raw natural products
+converted merely into material for subsequent manufacture, as, for
+example, pig- and bar-iron, planed boards, sole leather, ingot- and
+bar-copper, cotton-seed oil, and pig- and bar-zinc. The principal items
+in the true "manufactures" list are (1) machinery, including
+metal-working machinery, steam-engines and locomotives, electrical
+machinery, pumping machinery, sewing-machines, typewriting-machines and
+printing-presses, and railway rails, hardware, and nails, $65,000,000;
+(2) refined petroleum, $50,000,000; (3) manufactures of cotton,
+$17,000,000; (4) vegetable oils and essences, $12,000,000; (5)
+agricultural implements, $7,000,000; (6) cycles, $7,000,000; (7) paper
+and stationery, $5,500,000; (8) furniture and other manufactures of
+wood, $5,000,000; (9) tobacco and cigarettes, $5,000,000; (10)
+fertilisers, $4,500,000; (11) boots and shoes, harness, and rubber
+shoes, $3,500,000; (12) telegraph, telephone, and other instruments,
+$3,000,000; (13) bags, cordage, and twine, $2,500,000; (14) books and
+pamphlets, $2,500,000; (15) sugar, syrup, molasses, candy, and
+confectionery, $2,000,000; (16) spirits, including brandy and whisky,
+$2,000,000; and (17) clocks and watches, $2,000,000.
+
+FOOTNOTE:
+
+[4] For the year ending June 30, 1899, the total exportation amounted
+to $1,204,123,134.
+
+OUR EXPORTS AND THOSE OF GREAT BRITAIN COMPARED
+
+The significance of these figures descriptive of our export trade will
+be better understood from a few comparisons. Our total exportation for
+the year 1897-8 was, as said before, in round numbers, $1,250,000,000.
+For the year previous it was over $1,000,000,000. The exportation of
+Great Britain for the year 1896 was $1,500,000,000. For the year 1897
+it was almost the same amount. For the year 1895 it was
+$1,450,000,000. But whereas our exportation of breadstuffs,
+provisions, animals, fruit, etc., and of raw materials, such as
+cotton, lumber, ores, etc., amounts to probably 77 or 78 per cent. of
+our total exportation, while our exportation of manufactured goods
+amounts to not more than 22 or 23 per cent., the exportation of
+breadstuffs, provisions, raw material, etc., which Great Britain makes
+is not more than one sixth, or 17 per cent., of her total exportation,
+while her exportation of manufactured goods is five sixths, or 83 per
+cent., of her total exportation. For example, Great Britain's export
+of textiles alone amounts to over $500,000,000 a year (for 1896
+$526,647,525), while our total export of textiles, including cottons,
+woollens, silks, and fibres, is not more than $19,000,000 a year.
+Great Britain's total export of hardware and machinery amounts to over
+$250,000,000 a year; our total export of these articles does not
+amount to more than a third of this sum. On the other hand, Great
+Britain's total export of raw materials of all sorts is not more than
+$100,000,000 a year, while ours of cotton alone is almost two and
+one-third times that sum. And while Great Britain exports no
+breadstuffs or provisions to speak of, our exportation of these
+articles (including animals) amounts to the enormous sum of
+$855,000,000 a year.
+
+OUR IMPORTS AND THOSE OF GREAT BRITAIN COMPARED
+
+[Illustration: Export trade of the United States and Great Britain
+compared.]
+
+Similar differences with respect to our import trade and that of Great
+Britain are observable. Our imports do not amount to more than from
+$600,000,000 to $800,000,000 a year. For the year ended June 30, 1897,
+they were $765,000,000. For the year ended June 30, 1898, they were
+$616,000,000. The imports of Great Britain, on the other hand, amount
+to over $2,000,000,000 a year. For the year 1896 they were
+$2,210,000,000. For the year 1897 they were $2,225,000,000. But, while
+our imports, with the exception of coffee, sugar, tea, fruits, and
+fish, consist chiefly of manufactured articles, such as woollen goods,
+cotton goods, silk goods, and iron and steel goods, with only moderate
+amounts of raw material (for example, hides, skins, and furs,
+$41,000,000; raw silk, $32,000,000; raw wool, $17,000,000), Great
+Britain, besides importing coffee, sugar, tea, fruits, and fish, the
+same as we do, and manufactured goods to a far greater amount than we
+do (not less than $500,000,000 annually), imports likewise an enormous
+quantity of raw material for her manufactures, all duty free, and a
+still more enormous quantity of breadstuffs, provisions, etc., also
+all duty free. For example, for the year 1897 her imports of raw
+materials for her manufactures were not less than $750,-000,000,
+while her imports of duty-free food products were not less than
+$825,000,000. The difference between the two countries, therefore, so
+far as their foreign trades are concerned is simply this: The United
+States is an immense exporter of food-stuffs, and also of raw
+materials for foreign manufacture; but for the raw materials for her
+own manufacture she depends principally upon her own products. In
+comparison she is only a moderate exporter of manufactured goods.
+Great Britain, on the other hand, is an enormous importer and consumer
+of food-stuffs and also of raw materials for her manufactures. She, in
+fact, depends very largely upon other countries for her food products
+and her raw materials, and obtains them wherever she can, very largely
+from the United States. She is also an enormous exporter of
+manufactures.
+
+[Illustration: The United States manufactures and internal trade
+compared with the manufactures and internal trade of all other
+countries.]
+
+OUR COTTON PRODUCTION AND COTTON EXPORT
+
+The one article of export that is of greatest importance in our
+commerce is COTTON. The production of cotton in the United States is
+enormous. It is not far short of 5,000,000,000 pounds per annum. This
+is probably four times the amount produced upon the whole globe
+elsewhere. Our export amounts annually to about 4,000,000,000 pounds,
+with a total value of about $240,000,000. Our greatest competitors in
+the world's cotton markets are Egypt and India. The export of cotton
+from Egypt amounts to $50,000,000 annually. The export of cotton from
+India amounts to $45,000,000 annually. At least one half of our export
+of cotton goes to Great Britain. Our next greatest customers are (in
+order) Germany, France, Italy, Spain, and Russia. We send about
+$7,500,000 worth annually to Japan, and $4,000,000 worth annually to
+Canada. All our southeastern States produce cotton, but the States
+that produce it most plentifully are (in order) Texas (about one third
+of the whole), Georgia, Mississippi, and Alabama. The area under
+cultivation in the whole country is about 21,000,000 acres, which is
+about one sixth of the area devoted to corn, wheat, and oats, or one
+half the area devoted to hay. The areas of greatest cotton production
+are (1) the "Yazoo bottom," a strip on the left bank of the
+Mississippi extending from Memphis to Vicksburg, and (2) the upper
+part of the right bank of the Tombigbee. The productivity of cotton is
+much higher in the United States than it is in India, averaging not
+far short of 200 pounds per acre, as against less than 100 pounds in
+India. In India, however, the cotton crop has been grown on the same
+soil for ages, whereas in the United States the practice is to
+substitute new soils for old ones as soon as crops begin to fail. On
+the other hand, the United States cotton crop is much less per acre
+than the crop in Egypt. There the yield per acre is from 300 pounds to
+500 pounds. The remedy for this defect of productivity in our cotton
+crop as compared with that of Egypt is manuring. Where the manuring is
+properly attended to our cotton crop is comparable with Egypt's. But
+the cotton of Egypt is of better quality than the great mass of the
+cotton crop of the United States (the "upland" cotton crop). On the
+other hand in the low, flat islands off the coast of Georgia and South
+Carolina a species of cotton grows ("sea-island" cotton) which is the
+finest in the world, its fibres being the longest, finest, and
+straightest, of all cotton fibres produced anywhere, and the most
+beautiful in appearance in the mass. Of this "sea-island" cotton about
+three to four million dollars' worth is exported annually at a price
+averaging from two and one fourth to two and three fourth times the
+value per pound of the "upland" cotton. The great cotton ports of our
+country are (in order of amount of exportation) NEW ORLEANS,
+GALVESTON, SAVANNAH, NEW YORK, CHARLESTON, MOBILE, and WILMINGTON. New
+Orleans' export is about a third of the whole, and Galveston's about a
+fifth.
+
+OUR PRODUCTION AND EXPORT OF BREADSTUFFS
+
+The item in the official returns that figures largest for exports is
+that which is set down as BREADSTUFFS. This term includes wheat, corn,
+oats, rye, and other grains, and the flours or meals made from these.
+For the year ending June 30, 1898, our total export of breadstuffs was
+$334,000,000. This is an enormous increase over the year before, when
+the amount was not quite $200,000,000.[5] A large part of this
+increase was due to the high prices for breadstuffs which prevailed in
+the European markets during the past autumn and winter, but a part of
+the increase was due to an increased acreage and to good crops. The
+main products that composed this vast exportation were: wheat,
+$146,000,000; wheat flour, $70,000,000; corn, $75,000,000; cornmeal,
+$2,000,000; oats and oatmeal, $22,500,000; rye and rye flour,
+$9,000,000, and barley, $5,500,000. The magnitude of our breadstuffs
+exportation can be judged from the magnitude and importance of our
+exports of wheat and flour as compared with those of other countries.
+Our average WHEAT EXPORT is two and one half times that of Russia,
+four and one third times that of Argentina, five and one half times
+that of India, and almost twenty-five times that of Canada, while it
+is also four and one half times that of all other countries in the
+world combined. Our FLOUR EXPORT ($70,000,000) is without a rival. The
+export from Canada is now not much more than $1,500,000 a year, and
+the export from Hungary not more than $2,500,000 a year, and these
+are the only countries with which we have to compete in the western
+European markets. Still it must be remembered that Hungarian flour,
+owing to the dryness of the climate in which it is made, is the best
+in the world, while the flour of Canada made from Manitoba hard wheat
+is alike unsurpassed. As a rule much more than one half of our total
+exports of breadstuffs goes to Great Britain. Germany is our next best
+customer, but her imports of our breadstuffs are not more that a fifth
+to a tenth of those of Great Britain. France comes next, but her
+importation of our breadstuffs is still more uncertain, ranging from a
+half to a hundredth of that of Great Britain. Our other principal
+customers for our breadstuffs are (1) the other states of Europe, (2)
+Canada, (3) the countries of South America, (4) the West Indies, (5)
+Hongkong, (6) the islands of the Pacific, and (7) British Africa. Our
+exportation of breadstuffs to Japan and China (direct)[6] is still
+inconsiderable. Since the close of the War of the Rebellion our
+exportation of wheat has increased thirtyfold and our exportation of
+flour fifteenfold. Our chief wheat-growing States are Minnesota and
+California, each with about 50,000,000 bushels a year; then Kansas,
+North Dakota, Illinois, and South Dakota, each with about 30,000,000
+bushels a year; and then Ohio, Indiana, Nebraska, Pennsylvania,
+Missouri, and Michigan. The best wheat is grown in the deep black
+soil, rich in organic matter, of the Red River valley of Minnesota,
+and in the dry, sunny climate of California. The total yield for 1897
+was 530,000,000 bushels, which was about 70,000,000 bushels more than
+recent averages. The estimate for this year (1898) is over 600,000,000
+bushels, which was also the yield for 1891. The total area sown to
+wheat was for several years about 35,000,000 acres, but the average
+is now increased to about 40,000,000 acres. Large as is the gross
+production of our wheat, however, the yield per acre is somewhat
+small, being only from 12 to 13 bushels as against 18 bushels in
+Ontario, 20 in Manitoba, 26-1/2 in New Zealand, and 30 in Great
+Britain. In fact, the wheat yield per acre is lowest in the United
+States of all the great wheat-producing countries of the world, except
+Australia (7 to 11-1/2), Italy (10-1/2), Germany (10-1/4), India
+(9-1/4), and Russia (8). But far greater than our production of wheat
+is our production of CORN. Of corn we have nearly 85,000,000 acres
+under cultivation and a production of nearly 2,500,000,000 bushels.
+Our export of corn, however, is proportionately not large, and figures
+only to about 210,000,000 bushels a year, with a value (including
+cornmeal) of about $76,000,000. As is well known, CHICAGO is the great
+commercial centre of the continent for breadstuffs. NEW YORK is the
+great port of export for the Atlantic seaboard, SAN FRANCISCO for the
+Pacific seaboard. DULUTH is the great receiving point for the wheat of
+the Red River valley and the northern Mississippi. BUFFALO is the
+great point where the wheat brought down from Chicago, Duluth, etc.,
+in barges, "whale-backs," and immense propellers, is trans-shipped to
+the small boats of the Erie Canal for carriage to New York.
+MINNEAPOLIS is the great milling point of the continent, its mills
+being the largest and most capacious in the world.
+
+FOOTNOTES:
+
+[5] For the year ending June 30, 1899, the amount was $274,000,000.
+
+[6] A portion of the exportation of breadstuffs made to Hongkong is no
+    doubt intended for consumption in China and Japan.
+
+OUR EXPORT OF PROVISIONS AND ANIMALS
+
+[Illustration: Principal articles of domestic exports of the United
+States. (For the year ended June 30, 1898.)]
+
+The next most important item in our list of exports is PROVISIONS.
+But, like "breadstuffs," "provisions" also is a composite term,
+including two main divisions, "meat products" and "dairy products."
+Practically there are three main divisions, "beef products," "hog
+products," and "dairy products." We have in these great products of
+our country an export trade of $165,500,000 per annum, and if we add
+"animals," a similar item, we have $46,500,000 more, or a total of
+$212,000,000 per annum. Our export of fresh beef is nearly 300,000,000
+pounds a year. Almost the whole of this goes to Great Britain. Our
+export of canned beef runs from 40,000,000 to 60,000,000 pounds a
+year. About three fifths of this goes to Great Britain, the remainder
+going principally to Germany and other parts of Europe and to British
+Africa. We have about 50,000,000 cattle upon our farms and ranches,
+and our production of beef is estimated to be the enormous amount of
+5,400,000,000 pounds a year, which is between a third and a fourth of
+the total quantity produced throughout the world. Of course the
+greater portion of this is retained for our own home consumption, for
+we eat more meat per inhabitant than any other people in the world
+except the English. In addition to our beef we export about 400,000
+cattle annually, more than seven eighths of which are taken by Great
+Britain, our other principal customers being the West Indies and
+Canada. The principal export, however, among our "provisions" is our
+HOG PRODUCTS. We export annually of these products 100,000,000 pounds
+of pork, 850,000,000 pounds of bacon and hams, and 700,000,000 pounds
+of lard, with a value greater than $110,000,000. As with our beef
+products, so with our hog products--by far the greatest share goes to
+Great Britain. Great Britain, however, does not import largely of our
+pork or of our lard. And though she purchases from us over four fifths
+of our total export of bacon and hams, she does not pay for them so
+much as she does for the bacon and hams of Ireland, Denmark, and
+Canada. The reason for this is that as a rule our corn-fed bacon and
+hams are too fat--a fault that could be easily remedied. After Great
+Britain our next best customers for our hog products are Germany
+(principally in lard), the Netherlands, Sweden, and the West Indies
+(the latter principally in pork). We keep on our farms from 40,000,000
+to 50,000,000 hogs, and our production reaches nearly to 4,600,000,000
+pounds of pork, bacon, hams, lard, etc., per annum. A great drawback
+to our swine-raising industry is the terrible swine plague which so
+frequently devastates our swine herds. Were this plague stamped out by
+thorough preventive measures our swine industry would soon become very
+much larger and more profitable. The third principal item in our
+provisions export trade is "dairy produce." Our export of butter now
+amounts to 30,000,000 pounds a year. Our cheese export, once much
+greater, is now about 50,000,000 pounds a year. As in our beef
+products and in our hog products so again in our dairy products Great
+Britain is our chief customer. But our butter export to Great Britain
+is only one twelfth of her total importation of butter, and our cheese
+export to Great Britain is only about one eighth of her total
+importation of cheese. Our cheese has lost its hold on the English
+market because of its relative deterioration of quality, and its
+export is not more than a half or a third of what it once was. Much of
+our butter also is not suited to the English taste. But both our
+cheese and our butter are now improving in quality. Our great
+competitor in the cheese export trade is Canada. Canada's export of
+cheese to Great Britain is $15,000,000 annually, while ours is only a
+fifth of that amount. Our great competitor in butter is Denmark.
+Denmark's export of butter to Great Britain is $32,000,000 while ours
+is not more than a fourteenth of that sum. Our competitors in the
+markets of Britain for cattle are Canada and Argentina, but their
+exports together, however, are less than a third of ours. Our
+competitors in the British markets for the sale of meats are
+principally the Australasian colonies and Argentina, but their
+principal exportation so far is chilled mutton, which they send to
+Britain to the amount of many million dollars annually (Argentina
+alone $5,000,000 a year, New Zealand alone $10,000,000 a year), while
+our exportation of mutton is practically nil. We do, however, export
+$1,000,000 worth of sheep a year, but in this item we are frequently
+far exceeded by Canada. CHICAGO is, of course, the great commercial
+centre of the continent for "provisions" and "live stock," and NEW
+YORK the great shipping port. Of the entire export trade of the whole
+country New York does two fifths. BALTIMORE comes next with about one
+ninth. Then (in order) come PHILADELPHIA, BOSTON, and NEW ORLEANS. The
+chief centres of our great provision and live-stock trade, other than
+Chicago, are CINCINNATI, KANSAS CITY, INDIANAPOLIS, BUFFALO, and
+OMAHA.
+
+OUR FOREIGN CARRYING TRADE
+
+One aspect of our foreign trade is not so well understood as it ought
+to be. Our foreign commerce is carried on largely in foreign ships.
+The reason is that no vessel is allowed to be registered as belonging
+to a United States owner unless she is built in the United States, and
+it therefore seems as if our ship-builders could not compete (in
+price) in the building of steel and iron ships with those of Great
+Britain and Germany. Formerly, when wooden ships were used, our
+foreign trade was carried on in our own vessels, and our "clipper"
+sailing vessels beat the world. In 1859 seventy per cent. in value of
+our foreign trade was carried in American vessels. Since that date the
+proportion has decreased steadily until in 1896-97 it was only eleven
+per cent., and for 1897-98 it was even less than this. During the five
+years 1881-85 it averaged barely twenty per cent. Taking into
+consideration tonnage only the proportion at present varies from
+twenty five to thirty per cent., showing that the American vessels are
+used for carrying the cheaper sorts of goods. The aggregate tonnage
+burden of vessels belonging to the United States registered as engaged
+in the foreign trade 1896 was for 792,870 tons. For the same year the
+aggregate tonnage burden of vessels belonging to Great Britain
+engaged in the foreign trade was considerably more than ten times that
+amount. Of our export trade to Europe United States vessels carry only
+five and one half per cent., and of our export trade to Africa only
+four and one half per cent. But of our export trade to Asia and
+Oceanica our own vessels carry twenty six and one half per cent.,
+while of our export trade to other countries on the American continent
+our own vessels carry nearly forty per cent. But as our Atlantic trade
+is seventy six per cent. of the whole, and as our trade elsewhere than
+on the Atlantic is more than one third carried by sailing-vessels, it
+is evident how largely our steamship ocean carrying trade has been
+allowed to fall into the hands of foreigners. Seven tenths of our
+total export trade, and nearly two thirds of our total foreign trade,
+both export and import, are carried in British vessels. The next
+greatest carriers of our foreign trade are, first, the Germans, then
+ourselves, then the Norwegians, then the Dutch, then the French, then
+the Belgians.
+
+
+EXAMINATION PAPERS
+
+    NOTE.--_The following questions are given for the purpose of
+    indicating to the student the sort of knowledge he ought to be
+    possessed of after he has made a careful study of the papers of
+    the course. The student is recommended to write out carefully
+    the answers to the questions asked. Only such answers need be
+    attempted as can be made from a careful study of the papers._
+
+_PART I_
+
+ 1. GREAT BRITAIN. Give as full an account as you can of the causes
+    which have made London the great commercial centre of the world.
+
+ 2. GREAT BRITAIN. England is said to be "a beehive of mercantile and
+    manufacturing industry." Give reasons for this statement and also show
+    how England has become such.
+
+ 3. GREAT BRITAIN. (_a_) Describe the foreign trade of Great Britain.
+    (_b_) Describe the steps taken by Liverpool, Manchester, and Glasgow
+    to improve their natural facilities for external trade.
+
+ 4. FRANCE. (_a_) Describe the conditions which (1) conduce toward, and
+    (2) militate against, France's being a great commercial nation. (_b_)
+    Give an account of the distinctive manufactures of France.
+
+ 5. GERMANY. (_a_) Give an account of what Germany has accomplished in
+    technical education. (_b_) Compare Germany and France as commercial
+    nations. (_c_) Give a brief account of Germany's foreign trade.
+
+ 6. SPAIN AND ITALY. (_a_) Why are Spain, Italy, and Turkey sometimes
+    called "the three decadent nations of Europe"? (_b_) Give some account
+    of Spain's foreign trade. (_c_) Give an account of the conditions that
+    militate against Italy's prosperity as a trading nation.
+
+ 7. RUSSIA. (_a_) Describe the social condition of the Russian people.
+    (_b_) What are the "artels" of Russia? (_c_) Describe Russia's export
+    trade.
+
+ 8. INDIA. (_a_) Describe the present condition of the manufactures of
+    India. (_b_) Give a brief account of India's trade--(1) external, (2)
+    internal.
+
+ 9. CHINA. (_a_) Give an account of China's size, population, and trade
+    resources. (_b_) Give an account of China's present foreign trade.
+    (_c_) Give an account of the trade possibilities of China, and show in
+    what manner an increase of the foreign trade of China is most likely
+    first to occur.
+
+10. JAPAN. (_a_) Describe the transformation which in recent times has
+    been witnessed in the Japanese nation. (_b_) Describe Japan's
+    manufactures. (_c_) Show in what respects an increase in the foreign
+    trade of Japan is presently possible.
+
+_PART II_
+
+ 1. AFRICA. (_a_) Describe the "partition of Africa." (_b_) Describe
+    more particularly Great Britain's possessions in Africa. (_c_)
+    Describe South Africa's mineral wealth.
+
+ 2. AUSTRALIA. (_a_) Describe Australia's "peculiarities." (_b_)
+    Enumerate the political divisions of Australia, and for each describe
+    briefly (1) its climate, (2) its resources and trade.
+
+ 3. SOUTH AMERICA. (_a_) Describe the social and political condition of
+    the various peoples of South America. (_b_) Describe the agricultural
+    resources and export trade of Argentina. (_c_) Describe (1) the
+    resources, and (2) the export and import trade, of Brazil.
+
+ 4. CANADA. (_a_) Describe Canada's resources (1) in forest wealth, (2)
+    in minerals, (3) in fisheries. (_b_) Describe Canada's agricultural
+    trade. (_c_) Describe Canada's trade with the United States.
+
+ 5. THE UNITED STATES. (_a_) Describe the export trade of the United
+    States. (_b_) Compare our export trade with that of Great Britain.
+    (_c_) Compare our import trade with that of Great Britain.
+
+ 6. THE UNITED STATES. (_a_) Describe our cotton production and our
+    cotton export trade. (_b_) Describe briefly our export trade in
+    "breadstuffs." (_c_) Describe briefly our export trade in "provisions"
+    and "animals."
+
+
+
+
+FINANCE, TRADE, AND TRANSPORTATION[8]
+
+
+I. NATIONAL AND STATE BANKS
+
+ORIGIN OF BANKING INSTITUTIONS
+
+[Illustration: The Bank of England, showing the Threadneedle Street
+entrance.]
+
+The world has had its bankers and money-changers for thousands of
+years. Babylonian tablets have been found which record banking
+transactions which took place in the reign of Nebuchadnezzar. Modern
+banking institutions, however, had their origin in the twelfth
+century. The first institution of this character in Europe was the
+Bank of Venice, founded A. D. 1171. It was based upon a forced loan of
+the republic. Funds deposited in it could not be withdrawn, but were
+transferable on the books at the pleasure of the owners. The Bank of
+Genoa was founded in 1407, and for many years was one of the
+principal banks of Europe. It was the first to issue circulating
+notes; these were negotiable only by indorsement--that is to say, they
+were not made payable to bearer. This was a long step in advance of
+the earlier system of deposit transfers which was also employed by
+this bank. The Bank of Amsterdam, established in 1607, was the
+earliest considerable institution of the kind which looked to the
+promotion of commerce. The Bank of Hamburg, established in 1619, was a
+bank of deposit and circulation based upon fine silver bars. The
+deposits were confined to silver. The Bank of England is more than 200
+years old and is to-day acknowledged to be the greatest financial
+institution in the world. Nearly all the paper money of England is
+issued by this bank. This currency is based partly upon securities
+and partly upon deposits of coin. There are three or four banks in the
+United States more than one hundred years old. In 1781 Robert Morris,
+then superintendent of finance, submitted to Congress a plan for the
+establishment of the Bank of North America at Philadelphia. In 1784
+the State of Massachusetts incorporated the Massachusetts Bank. The
+Bank of New York was chartered in 1791.
+
+FOOTNOTE:
+
+[8] SUGGESTIONS AS TO METHOD OF STUDY
+
+1. Read the lessons as printed very carefully. The aim will be to give
+   fundamental knowledge as to the organisation and conduct of modern
+   business.
+
+2. Books will not be necessary. The student, however, who wishes to
+   make a more thorough study of the national banking system will find
+   excellent chapters on the subject in "Carroll's Principles and
+   Practice of Finance" (New York: Putnams) and "White's Money and
+   Banking" (Boston: Ginn & Co.).
+
+3. Take up the papers of the course paragraph by paragraph and ask
+   yourself the reason why each is introduced. Discuss with your friends
+   the advantages or disadvantages of particular requirements.
+
+OUR NATIONAL BANKING SYSTEM
+
+The national banking system of the United States was established by an
+act of Congress in 1863, revised in 1864, and amended by later
+legislation. The great advantage of the system, it is said, is the
+feature of uniformity, the fact that it brings the banking business of
+the whole United States under one authority and under the supervision
+of one set of administrative officers. The note-issuing department is
+subordinate in its public usefulness to the facilities afforded by
+banks and clearing-houses for the interchange of credits. The
+essential features of national banks are briefly set forth as follows:
+
+ 1. There is a bureau of the Treasury Department having charge of all
+    matters relating to national banks, the chief officer of which is the
+    comptroller of the currency.
+
+ 2. Any number of persons, not less than five, may form an association
+    for banking purposes, to continue not more than twenty years, but
+    renewable for twenty years with the approval of the comptroller.
+
+ 3. The powers of the bank are limited to the discounting of promissory
+    notes, drafts, bills of exchange, and other evidences of debt;
+    receiving deposits, dealing in exchange, coin, and bullion, loaning
+    money on personal security, and issuing circulating notes. It cannot
+    hold real estate except such as may be necessary for the transaction
+    of its business, or such as may have been taken as security for debts
+    previously contracted in good faith.
+
+ 4. There can be no national banks anywhere of less capital than
+    $50,000, and these small ones are restricted to places of not
+    more than 6000 inhabitants. In cities of more than 6000 and less
+    than 50,000 inhabitants there can be no bank of less than
+    $100,000 capital, and in cities of 50,000 inhabitants or more
+    none of less than $200,000. One half of the capital must be paid
+    in before the bank can begin business and the remainder must be
+    paid in monthly instalments of at least ten per cent. each.
+
+ 5. Shareholders are liable for the debts of the bank to an amount
+    equal to the par value of their shares in addition to the amount
+    invested therein.
+
+ 6. Each bank having a capital exceeding $150,000 must deposit in the
+    treasury of the United States registered interest-bearing bonds
+    to an amount not less than $50,000. Those having a capital of
+    $150,000 or less must deposit bonds equal to one fourth of their
+    capital stock. Each bank may issue circulating notes to the
+    amount of ninety per cent. of the market value of the bonds
+    deposited by it, but not exceeding ninety per cent. of the par
+    value of the same, and not exceeding ninety per cent. of the
+    paid-in capital of the bank; but no bank is compelled to issue
+    circulating notes. No bank-notes shall be issued smaller than $5.
+    The notes are receivable at par for all dues to the United States
+    except duties on imports, and are payable for all debts owing by
+    the United States within the United States except interest on the
+    public debt and in redemption of the national currency.
+
+ 7. Every bank in certain designated cities, called reserve cities,
+    must keep a reserve of lawful money equal to twenty five per
+    cent. of its deposits. All other banks must keep a like reserve
+    of fifteen per cent., but three fifths of the said fifteen per
+    cent. may consist of balances on deposit in banks approved by the
+    comptroller in the reserve cities.
+
+ 8. Each bank must keep on deposit in the treasury of the United States
+    lawful money equal to five per cent. of its circulation as a fund
+    for redeeming the same. This five per cent. may be counted as
+    part of its lawful reserve. This does not relieve banks from the
+    duty of redeeming their notes at their own counters on demand.
+
+ 9. One tenth of the net profits must be carried to the surplus fund
+    until it is equal to twenty per cent. of the capital.
+
+10. A bank must not lend more than one tenth of its capital to one
+    person, corporation or firm, directly or indirectly, nor lend
+    money on the security of its own shares, nor be the purchaser or
+    holder of its own shares unless taken as security for a debt
+    previously contracted in good faith, and if so taken they must
+    be sold within six months under penalty of being put in
+    liquidation.
+
+11. Each bank must make to the comptroller not less than five reports
+    each year, showing its condition at times to be designated by
+    him, and he may call for special reports from any particular
+    bank whenever he chooses to do so.
+
+12. Each bank must pay to the treasurer of the United States a tax
+    equal to one per cent. per annum on the average amount of its
+    notes in circulation. The shares are liable to taxation by the
+    States in which they are situated at the same rate as other
+    moneyed capital owned by the citizens of such States.
+
+13. Any gain arising from lost and destroyed notes inures to the
+    benefit of the United States.
+
+14. The comptroller has the absolute appointment of all receivers and
+    fixes their compensation. All moneys realised from the assets
+    are paid into the treasury to the credit of the comptroller, and
+    all dividends are paid out by him.
+
+15. Over-certification of cheques is strictly prohibited, rendering
+    officers or clerks liable to imprisonment.
+
+16. National bank directors are by law individually liable for the
+    full amount of losses resulting from violations of the national
+    banking laws.
+
+STATE BANKS
+
+Upon the establishment of the national banking system the greater
+number of the banks incorporated under the laws of the several States
+were organised as national banks. With others, however, the rights of
+issue did not outweigh some inconveniences of the national system, and
+as a result there is now an important class of banks, and loan and
+trust companies, organised under State legislation and carrying on a
+deposit and loan business. The regulations under which they work are
+necessarily diverse, and the amount of public supervision over them
+varies in different states. The State banks in existence when the
+national banking system was organised were obliged to retire their
+note circulation, owing to the fact that the government imposed a tax
+of ten per cent. on their circulation. The object of the tax was to
+secure the retirement of the State bank-notes to make room for the
+circulation of the national banks. The internal mechanism of State
+banks differs but slightly from that of national banks.
+
+
+II. SAVINGS BANKS AND TRUST COMPANIES
+
+SAVINGS BANKS
+
+Nearly $2,000,000,000 is deposited in the savings banks of the United
+States. This large sum represents the savings of about 5,000,000
+people. The primary idea of a savings bank and of the post-office and
+other forms of saving institutions in foreign countries is to
+encourage thrift among the masses of the people.
+
+The older savings banks, especially those in the eastern States, have
+no capital stock. That is to say, they are mutual in their form of
+organisation. Their capital is the accumulated deposits of a large
+number of people. The depositors are the owners. When taxes and other
+expenses are paid and a proper reserve set aside, the remaining
+profits go in the form of interest to the depositors. Many of the
+savings banks in the western States are capitalised as are other
+financial institutions, and on the Pacific coast they have capital
+stock or its equivalent in the form of a reserve fund in which the
+majority of the depositors are not interested otherwise than so far as
+it affords security for their deposits.
+
+As these banks are the custodians of the surplus savings of large
+numbers of people the laws of the several States have hedged them
+about with many safeguards, not only for the protection of the
+depositors but of the institutions themselves. It is eminently right
+and proper that the State, through its bank commissioners or
+otherwise, should so far supervise the operations of savings banks as
+to see that they perform their part of their contract with depositors.
+
+    Safety, at best, is relative only; there is no absolute safety
+    for the twenty-dollar piece a man has in his pocket, whether he
+    is on the street, at his office, or by his own fireside. We are
+    reminded that 'riches take to themselves wings' and that
+    'thieves break through and steal.' No savings bank can keep
+    money on hand or deposit it or loan it with absolute safety. All
+    is comparative. It is a peculiarity of money that each dollar
+    requires watching; general supervision is insufficient; hence it
+    is that the safety of moneyed institutions depends upon the
+    capacity and honesty of those in control, and not upon adherence
+    to arbitrary rules. No set of rules can be adopted that will
+    bind dishonest men nor that will compensate for want of
+    experience and ability of honest ones.
+
+There is really no conflict between commercial and savings banks. In
+fact, a large number of the commercial banks of a country allow
+interest upon average balances and standing deposits in the same
+manner as savings banks. Primarily the savings bank creates wealth,
+while the commercial bank handles it; the savings banks are creative,
+while the commercial banks are administrative. The aim of the savings
+bank is to gather money and invest it safely and thus bring profit to
+the depositor; the aim of the commercial bank is to lend money at
+fixed charges and thus bring profit to the institution. The former
+opens its doors to savers, the latter to borrowers. One serves by
+receiving and keeping and the other by lending. The savings bank aims
+at making men savers as well as producers. It offers the aid of the
+strong, who can manage well, to the weak and inexperienced. If the
+5,000,000 depositors of savings in the United States were to hide
+away their own savings nearly $2,000,000,000 would be withdrawn from
+circulation. The savings bank invests its money. Its managers are as a
+rule intelligent men, competent to make safe investments in solid
+securities. The best savings banks are conservative and do not
+encourage speculation.
+
+The rules and regulations of savings banks differ largely. In some
+institutions deposits of a dime at a time are accepted; in others a
+dollar is the limit. Deposits usually begin to draw interest on the
+first day of each quarter, but they are entitled to it only if they
+remain until the end of the half-year. Thus money deposited on the 1st
+of January is entitled to six months' interest on the 1st of July,
+though it is not entitled to any interest if withdrawn in June. Some
+few banks allow interest to begin on the 1st of each month. Most
+savings banks do not permit money to be withdrawn short of thirty
+days' notice. Students of this course who are interested in securing
+definite information upon this subject regarding any particular bank
+should apply to that bank for a set of its rules and regulations for
+the information of depositors.
+
+TRUST COMPANIES
+
+There has grown up in this country a class of financial institutions
+which take a sort of middle ground between the commercial bank and the
+savings bank, so far as their service to the public is concerned.
+These are what are known as trust companies. National banks are
+prohibited by law from making loans on real estate, and though State
+banks are not hedged in this way, as a matter of good banking they
+usually avoid loans of this character. The policy of commercial banks
+is to make a great many comparatively small loans on short-time paper,
+while that of the trust company is to make large loans on long-time
+securities. The deposits of trust companies consist largely of
+undisturbed sums such as might be set aside by administrators,
+executors, trustees, committees, societies, or from private estates.
+They are such as are not likely to fluctuate greatly in amount. From
+the very nature of their deposits trust companies find it convenient
+and profitable to make larger loans and at longer periods than do
+ordinary banks. Trust companies not only receive moneys upon deposit
+subject to cheque and for savings, and loan money on commercial paper
+and other securities, as do commercial banks; but they also act as
+agents, trustees, executors, administrators, assignees, receivers for
+individual properties, and corporations. They frequently assist as
+promoters or reorganisers of corporations and in the sale of stocks,
+bonds, and securities. They act also as agents for the payment of
+obligations maturing at future dates, such as the premiums on
+insurance, interest on mortgages and bonds, etc. Trust companies are
+organised under the laws of the State in which they exist and are
+usually subject to all the supervision required in the case of State
+banks.
+
+
+III. CORPORATIONS AND STOCK COMPANIES[9]
+
+CORPORATIONS
+
+Stock companies are usually referred to as corporations, though all
+corporations are not stock companies. A corporation is a body
+consisting usually of several persons empowered by law to act as one
+individual. There are two principal classes--(1) public corporations
+and (2) private corporations. Public corporations are not stock
+companies; private corporations usually are. Public corporations are
+created for the public interest, such as cities, towns, universities,
+hospitals, etc.; private corporations, such as railways, banks,
+manufacturing companies, etc., are created usually for the profit of
+the members. Corporate bodies whose members at discretion fill by
+appointment all vacancies occurring in their membership are sometimes
+called close corporations.
+
+POWER TO BE A CORPORATION IS A FRANCHISE
+
+In the United States the power to be a corporation is a franchise
+which can only exist through the legislature. There are two distinct
+methods in which corporations may be called into being: First, by a
+specific grant of the franchise to the members, and, second, by a
+general grant which becomes operative in favour of particular persons
+when they organise for the purpose of availing themselves of its
+provisions. When the specific grant is made it is called a charter. In
+the case of private corporations the charter must be accepted by the
+members, since corporate powers cannot be forced upon them against
+their will; but the charter is sufficiently accepted by their acting
+under it. When special charters are not granted individuals may
+voluntarily associate, and by complying with the provisions of certain
+State laws may take to themselves corporate powers. In some of the
+States private corporations are not suffered to be created otherwise
+than under general laws, and in others public corporations are created
+in the same way.
+
+FOOTNOTE:
+
+[9] For a preliminary treatment of the subject of this lesson the
+student is referred to Part I. of this book, entitled "General
+Business Information," especially Lessons XII. and XV.
+
+A CORPORATION MUST HAVE A NAME
+
+A corporation must have a name by which it shall be known in law and
+in the transaction of its business. The name is given to it in its
+charter or articles of association and must be adhered to. The
+necessity for the use of the corporate name in the transaction of
+business follows from the fact that in corporate affairs the law knows
+the corporation as an individual and takes no notice of the
+constituent members.
+
+CORPORATE INTERESTS
+
+In municipal corporations in the United States the members are the
+citizens; the number is indefinite; one ceases to be a member when he
+moves from the town or city, while every new resident becomes a member
+when by law he becomes entitled to the privileges of local
+citizenship. In corporations created for the emolument of their
+members interests are represented by shares, which may be transferred
+by their owners, and the assignee becomes entitled to the rights of
+membership when the transfer is recorded; and if the owner dies his
+personal representative becomes a member for the time being. In such
+corporations also shares may be sold in satisfaction of debts against
+their owners.
+
+ADVANTAGES OF CORPORATIONS AND JOINT-STOCK COMPANIES OVER PARTNERSHIPS
+
+The following are given as a few of the advantages which are claimed
+for corporations and joint-stock companies over partnerships:
+
+1. Union of capital without the active service of the investors.
+
+2. Better facilities for borrowing. It is a common thing for a
+   partnership to be changed to a stock company for the express purpose
+   of raising money by the issue of bonds or stock.
+
+3. Limited agency of directors. A partner may pledge and sell the
+   partnership property, may buy goods on account of the partnership,
+   may borrow money and contract debts in the name and on the account
+   of the partnership. Directors of a joint-stock company must act in
+   accordance with the provisions of the by-laws of the company.
+
+4. The continuous existence of a company.
+
+5. New shareholders are admitted more easily than new partners.
+
+6. A retiring partner is still liable for existing debts. A
+   shareholder may retire absolutely by selling his stock and
+   having it legally transferred.
+
+
+IV. BORROWING AND LOANING MONEY[10]
+
+THE MONEY MARKET
+
+Money, like other articles of commerce, has for hundreds of years had
+its fields for the production of the raw products, its manufacturing
+establishments, its markets and exchange centres, its sellers and
+buyers, its wholesale and retail dealers, and its brokers and
+commission merchants. Out of this trade in actual coin has grown a
+trade in paper notes, which are really only promises to pay coin, and
+out of this latter trade has grown up during recent years a still
+further enormous trade in securities representing all kinds of
+property. Very often these securities are based solely upon the credit
+of the names attached to them, so that our modern system of borrowing
+and loaning money is really a system of borrowing and loaning credit.
+When our government borrows $100,000,000, as it did a few years ago,
+it gives "its bond" that the money will be paid. When States, or
+cities, or railroads, or other corporations borrow money they issue
+bonds guaranteeing payment at a particular time. When an individual
+borrows money he gives his "bond" in the form of a promissory note.
+These bonds pass from hand to hand and have a fairly constant value
+in the money market. They really represent the money trade to a much
+larger extent than does actual coin, so that the borrowing or loaning
+of money really means, to a very large extent, simply the borrowing or
+loaning of credit. If we borrow a $10 gold piece we borrow money; if
+we borrow a $10 bill or an indorser's name for the back of our note we
+simply borrow credit--in the one instance the credit of the United
+States and in the other the credit of the man who indorses our paper.
+
+FOOTNOTE:
+
+[10] The student is also referred to Part I. ("General Business
+     Information"), Lesson IX.
+
+BORROWING FROM BANKS
+
+It is the business of a bank to loan money to responsible persons
+within reasonable limits. The regular customer of the bank is entitled
+to and will receive the first consideration if the demand is larger
+than the bank can safely meet. A business man should not hesitate,
+when occasion requires, to offer his bank any paper he may want
+discounted, if in his opinion it is good, nor should he be offended if
+his banker refuses to take it even without giving reasons. A portion
+of the loans of many banks consists of investments in solid bonds, but
+the bulk of the loans of banks is made on commercial paper. Time and
+demand loans are made upon collaterals of many descriptions. The
+larger banks loan on an average from $50,000 to $100,000 a day. Banks
+_discount_ paper for their depositors--and simply term the operation
+discounting; but when they go outside of their line of depositors in
+making investments in time paper they call it _buying_ paper. They
+generally buy from private bankers and note brokers. National banks
+are prohibited from loaning over ten per cent. of their capital to any
+one individual or corporation except upon paper representing actually
+existing merchandise.
+
+WHAT ARE COLLATERALS?
+
+If a business man borrow $1000 from a bank on his note and give ten
+shares of stock to the bank, to be held by it simply as security, the
+stock thus given would be termed collateral. These collaterals are not
+the bank's property and the bank is responsible for their safe
+keeping. If coupons mature while bonds are being held as collateral,
+the owners are usually allowed to collect the amount for which they
+sell. Sometimes one note is given as collateral security for another
+which is discounted.
+
+ACCOMMODATION PAPER
+
+Notes and acceptances that are made in settlement of genuine business
+transactions come under the head of regular, legitimate business
+paper. An accommodation note or acceptance is one which is signed or
+indorsed or accepted simply as an accommodation and not in settlement
+of an account or in payment of an indebtedness. With banks
+accommodation paper has a deservedly hard reputation. However, there
+are all grades and shades of accommodation paper, though it represents
+no actual business transaction between the parties to it and rests
+upon no other foundation than that of mutual agreement. No contract is
+good without a consideration, but this is only true between the
+original parties to a note. The third party, or innocent receiver or
+holder of a note, has a good title and can recover its value even
+though it was originally given without a valuable consideration. An
+innocent holder of a note which had been originally lost or stolen has
+a good title to it if he received it for value, the law justly
+protecting such a holder against the fault or carelessness of others.
+
+NOTE BROKERS
+
+Merchants sell a great many of their notes in the open market--that
+is, to note brokers. The banks buy these notes from the note brokers.
+The assistance of the broker who handles commercial paper is a
+necessary and valuable aid to the purchasing bank. Fully three fourths
+of all the paper purchased by banks in large cities is purchased upon
+the simple recommendation of the note brokers. As a rule these brokers
+simply transfer the paper without guaranteeing by indorsement its
+payment. Notes bought by banks from note brokers without their
+indorsement are held to be guaranteed by them to be all right in all
+points except that which covers the question of whether they will be
+paid or not. The bank uses its best judgment in taking the risk. If
+the note dealer in selling notes to a bank makes what he believes to
+be fair and honest representations regarding any particular
+paper--statements of such a straightforward type that upon them no
+charge of false pretenses can be made to rest--he simply guarantees
+the note genuine as to names, date, amount, etc., and that in selling
+it he conveys a good title to the paper. As business men, however,
+they are very cautious and are exceedingly anxious that the paper they
+sell shall be paid, and as a rule they make good any losses which grow
+out of apparent misrepresentations on their part.
+
+BANKERS' RATES FOR LOANS
+
+In loaning money on demand, when it is strictly understood between
+bank and borrower that the money so advanced is positively minute
+money--money returnable at any minute when the bank calls for
+it--banks usually charge low rates of interest. When interest rates
+are high bankers prefer to deal in long-time paper. This general rule
+is reversed when the situation is reversed. Bankers aim also to
+scatter and locate their maturities so that as the seasons roll around
+they will not have very large amounts maturing at one time and very
+small amounts at another. They plan also to be "in funds" at those
+seasons when there is always a large and profitable demand for money.
+For instance, in the centres of the cotton-manufacturing interest the
+banks count on a large demand for money between October and January,
+when the bulk of the purchases to supply the mills are made. Again,
+among those who operate and deal in wool there is an active demand for
+money in the wool-clip in the spring months. The wheat and corn crops
+are autumn consumers of money. Midwinter and midsummer in the north
+are usually periods of comparative stagnation in the money market. All
+these things affect rates, and the successful banker is he who from
+observation and large experience shows the most skill in timing his
+money supply.
+
+
+V. COLLATERALS AND SECURITIES
+
+TWO DISTINCT CLASSES OF SECURITIES
+
+There are two distinct classes of mortgage securities--one class based
+upon the actual value and the other upon the earning value of the
+property. When a man lends money upon a dwelling-house he bases his
+estimate of security upon (1) the cost of the property, (2) its
+location, (3) the average value of adjoining properties, and (4) the
+general character of the locality; that is to say, the value of the
+property is the basis of the security. On the other hand, the lender
+of money upon railway mortgages, for instance (that is, the buyer of
+securities known as railway mortgages), considers the general earnings
+of the road rather than the cost of building and equipping the road as
+the correct basis upon which to estimate the value of the security.
+These two classes of securities differ in other particulars. The value
+of the mortgage upon ordinary real estate is constant and the security
+itself is not so likely to change ownership, while the value of the
+railway mortgage may vary with the success or failure of the road, and
+the security itself is in the market constantly as a speculative
+property. The whole property of a railroad company, considered simply
+as real estate and equipment, is usually worth but a small fraction
+of the amount for which it is mortgaged. The creditors, as a rule,
+depend for the security of their money upon the business of the
+company.
+
+We have already learned that collaterals are mortgages, stocks, bonds,
+etc., placed temporarily in the hands of lenders as additional
+security for money borrowed. The student will note, further, that the
+borrowing value of such securities depends very largely upon the
+character of the property represented.
+
+MORTGAGES AS SECURITIES
+
+A MORTGAGE is a conveyance of property for the purpose of securing
+debt, with the condition that if the debt is paid the conveyance is to
+become void. A mortgage in form is really a deed of the land, with a
+special clause stating that the grant is not absolute but only for the
+security of the debt. It is usual for the debtor at the time of
+executing the mortgage to execute also a bond or promissory note in
+favour of the creditor for the amount of the debt. This is called a
+MORTGAGE NOTE. Mortgages are frequently given in cases where there is
+a debt existing to secure or indemnify the mortgagee against some
+liability which he may possibly incur on behalf or for the benefit of
+the mortgagor. For instance, when a man has indorsed another's note
+for the latter's accommodation or gone on his bond as surety the
+latter may execute to the former a mortgage of indemnity. The power of
+a corporation to mortgage its property is usually regulated by its
+character or by the general law under which it is organised. All
+mortgages must be recorded in the office of the register of deeds for
+the county in which the property is located. The object of recording
+is to give notice of the existence of the mortgage to any one who
+might wish to purchase the land or to take a mortgage upon it. There
+may be several mortgages upon the same property. The first mortgagee
+is entitled to be paid in full first, then the second, and so on. The
+mortgagee may use his mortgage as security for loans or he may assign
+it as he pleases. When the requirements of a mortgage are not met the
+holder has under certain conditions the right to FORECLOSE--that is,
+to advertise the property for sale and, within a time fixed by law, to
+sell it to satisfy the mortgage. It is usual for the mortgagor to
+insure the property for the benefit of the mortgagee.
+
+Although the terms of corporation mortgages are similar to those on
+real estate such as is represented by dwelling-houses, the commercial
+conditions make it inconvenient or impossible to foreclose and sell
+such properties. To stop all business of a railway or to shut down the
+work of a manufacturing concern would not only result in injury to the
+public but would reduce largely the earning value of the property. To
+overcome this difficulty where an active concern is financially
+embarrassed, the court appoints a receiver, who is responsible for the
+proper conduct of the business until a satisfactory reorganisation or
+sale is accomplished.
+
+Mortgages upon improved property, if properly graduated in amount,
+should be safe and profitable investments. The buyer, however, must
+exercise great care and good judgment. Should there be collusion
+between the loaning agent and the land-owner, the money advanced may
+be largely in excess of the actual property value. Villages with less
+than a dozen houses are often the sites of investment companies doing
+business under pretentious names and offering mortgage investments at
+interest rates which by the local conditions are impossible. One of
+the devices of these enterprising companies is to offer their own
+guarantees as to both principal and interest of all mortgages
+negotiated by them. The investor should be sure of two things: (1) The
+safety of the principal, and (2) regularity in the payment of the
+interest. There is great danger of default from causes not anticipated
+by the mortgagor and over which he has no control.
+
+STOCKS AS SECURITIES
+
+To make a profitable investment in stocks the buyer must anticipate
+the future. A mill that may be working day and night this year may be
+obliged to shut down entirely next year. A business which is open to
+public competition must take its chances on its future success. The
+greater the earnings, the more certain the competition. Many
+corporations owning monopolies by virtue of patent rights have made
+large fortunes, but there is always the possibility of new discovery.
+Electricity has succeeded gas; the telephone is competing with the
+telegraph; the trolley is cutting into the profits of railways. A good
+thing in stocks to-day does not necessarily mean a good thing next
+year. Railroad stocks are of such varied character that it is
+impossible here to make more than general statements. Many of our
+railroad stocks bring prices far above par and pay liberal interest on
+investments. Some of them are so profitable that they are really not
+on the market and cannot easily be bought. Others represent roads
+loaded down with mortgages and other obligations so heavy as to make
+the stock really a liability rather than a resource to its owner. The
+stock quotations represent in a general way the comparative value of
+these securities. Of recent stock electric-railway stock is the most
+popular and in many instances the most profitable. The introduction of
+electric power has reduced the working expense one half and in most
+instances has doubled the traffic without any reduction in fares. The
+buyer should make sure that the road is in a busy community able to
+sustain it, that its franchise will protect it from dangerous
+competition, and that the securities have been legally issued.
+
+SUBSTITUTION SECURITIES
+
+There have recently been formed several large companies whose business
+it is to issue bonds on the security of other bonds. The idea is
+similar to that of real-estate title insurance. Such companies are
+supposed to have superior facilities for investigating securities.
+They purchase those which they consider good and at the best prices
+possible. These they deposit with some trust company or banking
+institution. With these bonds which they buy as their original
+property they issue new bonds of their own, which they sell to the
+public and which they guarantee. The differences in prices and in
+interest make up their profits.
+
+LOANS AND INVESTMENTS
+
+With the growth of wealth we find increasing numbers of persons who
+want to invest their means in good securities. To do this successfully
+and safely is a very difficult question. It is even more difficult to
+keep money profitably employed than to make it. Changes and
+innovations are of continual occurrence. Not only are new securities
+constantly coming upon the market, but new subjects as a basis of
+their production are industriously sought after. Every newly
+discovered force or process in mechanics means the appearance of
+another detachment of paper securities. The War of the Rebellion
+popularised the _coupon bond_, in consequence of its adoption by the
+government, and made it the favourite form of investment paper.
+Railroads and other corporations soon availed themselves of the
+confidence which that species of paper inspired, and States, cities,
+and counties were soon flooding the country with obligations carrying
+long coupon attachments. Many persons have purchased and paid good
+prices for mortgage coupon bonds, giving them no control over their
+security, who would have rejected share certificates standing for an
+equal interest in the property pledged and giving them the right to
+participate in its management, with the possibility of a greater
+return for their money. Many of the States through careless
+legislation have permitted corporations to decide for themselves the
+amounts of obligations they might put out, and the privilege has been
+very much abused. We now have stocks and bonds upon the market
+representing nearly all conceivable kinds of property--telegraph and
+telephone companies, mining companies, cattle ranches, grain farms,
+water-works, canals, bridges, oil- and gas-wells, electric lighting,
+trolley companies, factories and mills, patent rights, steamboat
+lines, apartment-houses, etc. Not only are properties of many kinds
+used to issue bonds upon, but many kinds of bonds are often issued
+upon the same properties. One issue of bonds is sometimes made the
+basis of other issues. Some one has said that there never was a time
+in the history of the world when it was so easy to invest money--and
+to lose it. Of the securities that are offered with first-class
+recommendations it is probable that about one third are actually good,
+one third have some value, and one third are practically worthless. In
+making investments the first and main thing to be studied is safety.
+Never buy a security of any kind without having read it. Do not buy
+what are commonly known as _cheap securities_. Do not rely solely upon
+the advice of a broker; he may have personal interest to serve. By far
+the greater number of losses to investors have been in securities
+purchased exclusively on the recommendation of interested commission
+men. It is a mistake to give preference to _listed_ securities--that
+is, those reported on the stock-exchange lists. Stocks are too often
+listed simply for speculative purposes, and the price represents not
+so much the value of the property as the pitch of the speculation at
+the time. Securities in the long run must stand upon their merits. As
+a rule the best time for an experienced investor to buy is when others
+are unloading.
+
+
+VI. CHEQUES, DRAFTS, AND BILLS OF EXCHANGE[11]
+
+BANK CHEQUES
+
+[Illustration: Showing cheque raised from $7.50 to $70.50.]
+
+A CHEQUE is an order for money, drawn by one who has funds in the
+bank, payable on demand. Banks provide blank cheques for their
+customers and it is a very simple matter to fill them out properly. In
+writing in the amount begin at the extreme left of the line. The
+illustrations given here show a poorly-written cheque and a copy of
+the same cheque after it has been "raised." The original cheque was
+for $7.50 and shows very careless arrangement. It was a very easy
+matter for the fraudulent receiver to change the "seven" to "seventy"
+and to add a cipher to the amount in figures. The running line was
+written in on the raised cheque to deceive the bank. In this case Mr.
+Carter and not the bank must suffer the loss. Mr. Carter cannot hold
+the bank responsible for his carelessness. Drawers of cheques should
+exercise the greatest care in writing in the amount to prevent changes
+or additions. Draw a running line, thus: ~~~_Nine_~~~ before and after
+the amount written in words. If the words are commenced close to the
+left margin the running line will be necessary only at the right. The
+signature should be in your usual style familiar to the paying teller.
+The plain, freely written signature is the most difficult to forge.
+Usually cheques are drawn "to order." The words "Pay to the order of
+John Brown" mean that the money is to be paid to John Brown or to any
+person he "orders" it paid to. By indorsing the cheque in blank (see
+indorsements) he makes it payable to bearer. If a cheque is drawn "Pay
+to bearer" any person--that is, the bearer--can collect it. The paying
+teller may ask the person cashing the cheque to write his name on the
+back, simply to have it for reference. Safety devices to prevent the
+fraudulent alteration of cheques are of almost endless variety, but
+there has not been a preventive against forgery and alterations yet
+invented, which has not been successfully overcome by swindlers. A
+machine for punching out the figures is in common use, but the
+swindler has successfully filled in the holes with paper-pulp and
+punched other figures to suit his purposes. The safest cheques are
+those carefully written upon what is known as safety paper.
+
+FOOTNOTE:
+
+[11] A part of the matter of this lesson has already appeared in Part
+I. of this book ("General Business Information"), but it is here
+repeated to preserve the connection.
+
+IDENTIFICATION WHEN CHEQUES ARE PAID
+
+The banks of this country make it a rule not to cash a cheque that is
+drawn payable to order unless the person presenting the cheque is
+known at the bank--or unless he satisfies the paying teller that he is
+really the person to whom the money is to be paid. It must be
+remembered, however, that a cheque drawn to order and then indorsed in
+blank by the payee is really payable to bearer, and if the paying
+teller is satisfied that the payee's signature is genuine he probably
+will not hesitate to cash the cheque. In England all cheques
+apparently properly indorsed are paid without identification. In
+drawing a cheque in favour of a person not likely to be well known in
+banking circles, write his address or his business after his name on
+the face of the cheque. For instance, if you should send a cheque to
+John Smith, Boston, it may possibly fall into the hands of the wrong
+John Smith; but if you write the cheque in favour of "John Smith, 849
+Tremont Street, Boston," it is more than likely that the right person
+will collect it. If you wish to get a cheque cashed where you are
+unknown, and it is not convenient for a friend who has an account at
+the bank to go with you for the purpose of identification, ask him to
+place his signature on the back of your cheque and it is likely you
+will not have trouble in getting it cashed. By placing his signature
+on the back of the cheque he guarantees the bank against loss. A bank
+is responsible for the signatures of its depositors, but it cannot be
+supposed to know the signatures of indorsers. The reliable identifier
+is in reality the person who is responsible.
+
+CHEQUES FOR SPECIAL PURPOSES
+
+If you wish to draw money from your own account the most approved form
+of cheque is written "Pay to the order of _cash_." This differs from a
+cheque drawn to "_bearer_." The paying teller expects to see you
+yourself or some one well known to him as your representative when you
+write "_cash_." If you write "Pay to the order of (your own name)" you
+will be required to indorse your own cheque before you can get it
+cashed. If you wish to draw a cheque to pay a note write "Pay to the
+order of _bills payable_." If you wish to write a cheque to draw money
+for wages write "Pay to the order of _pay-roll_." If you wish to write
+a cheque to pay for a draft which you are buying write "Pay to the
+order of _N. Y. draft and exchange_," or whatever the circumstances
+may call for.
+
+CHEQUE INDORSEMENTS
+
+In indorsing a cheque remember that the left end of the face is the
+top when you turn it over. Write your name as you are accustomed to
+write it. If you are depositing the cheque, a blank indorsement--that
+is, an indorsement with simply your name--will answer; or you can
+write or stamp "Pay to the order of (the bank in which you deposit)"
+and follow with your signature. Either indorsement makes the cheque
+the absolute property of the bank. If you wish to transfer the cheque
+by indorsement to some particular person write "Pay to the order of
+(naming the person)" and follow with your own signature; or you may
+simply write your name on the back. The latter form would be
+considered unwise if you were sending the cheque through the mail, for
+the reason that a blank indorsement makes the cheque payable to
+bearer. An authorised stamped indorsement is as good as a written one.
+Whether such indorsements are accepted or not depends upon the
+regulations of the clearing-house in the particular city in which they
+are offered for deposit.
+
+THE NUMBERING OF CHEQUES
+
+[Illustration: A certified cheque.]
+
+Cheques should be numbered, so that each can be accounted for. The
+numbers are for your convenience and not for the convenience of the
+bank. It is important that your cheque-book be correctly kept, so that
+you can tell at any time how much money you have in the bank. At the
+end of each month your small bank-book should be left at the bank, so
+that the bookkeeper may balance it. It may happen that your bank-book
+will show a larger balance than your cheque-book. You will understand
+by this, if both have been correctly kept, that there are cheques
+outstanding which have not yet been presented at your bank for
+payment. You can find out which these are by checking over the paid
+cheques that have been returned to you with your bank-book. The unpaid
+cheques may be presented at any time, so that your actual balance is
+that shown by your cheque-book. Cheques should be presented for
+payment as soon after date as possible.
+
+CERTIFIED CHEQUES
+
+[Illustration: A bank draft.]
+
+If you wish to use your cheque to pay a note due at some other bank
+than your own, or in buying real estate or stocks or bonds you may
+find it necessary to get your cheque certified. This is done by an
+officer of the bank, who writes or stamps across the face of the
+cheque the words "Certified" or "Good when properly indorsed" and
+signs his name. (See illustration, p. 244.) The amount will
+immediately be deducted from your account, and the bank by
+guaranteeing your cheque becomes responsible for its payment. If you
+should get a cheque certified and then not use it deposit it in your
+bank, otherwise your account will be short the amount for which it is
+drawn.
+
+BANK DRAFTS
+
+[Illustration: A bill of exchange.]
+
+Nearly all banks keep money on deposit in other banks in large
+commercial centres--for instance, in New York or Chicago. They call
+these banks their New York or Chicago correspondents. A bank draft is
+simply the bank's cheque drawing upon its deposit with some other
+bank. (See illustration, p. 245.) Banks sell these cheques to their
+customers, and merchants make large use of them in making remittances
+from one part of the country to another. These drafts or cashiers'
+cheques, as they are sometimes called, pass as cash anywhere within a
+reasonable distance of the money centre upon which they are drawn.
+
+BILLS OF EXCHANGE
+
+A draft on a foreign bank is commonly called a bill of exchange. Bills
+of exchange are usually drawn in duplicate and sometimes in
+triplicate. (See illustration, p. 246.) Only one bill is collected,
+the others simply serving in the meantime as receipts. These bills are
+used to pay accounts in foreign countries, just as drafts on New York
+or Chicago are used to pay indebtedness at home.
+
+
+VII. THE CLEARING-HOUSE SYSTEM[12]
+
+THE CLEARING-HOUSE SYSTEM A MODERN INSTITUTION
+
+The clearing-house is a comparatively modern institution, the
+Edinburgh bankers claiming the credit of establishing the first one.
+The earliest clearing-house of whose transactions we have any record
+is that of London, founded about 1775. For fully seventy-five years
+the London clearing-house and that of Edinburgh were the only
+organisations of the kind known to exist. The monetary systems of most
+European countries centring around one great national bank located at
+the capital of each, found in this a means of effecting mercantile
+settlements. The New York clearing-house was established in 1853, from
+which date the American clearing-house system has grown to enormous
+proportions. No country in the world has so large a need of
+clearing-houses, for in no country is the bank cheque so generally
+used in the payment of ordinary accounts.
+
+TRANSFER OF CREDITS IN CLEARING-HOUSES
+
+The purpose of the clearing-house is largely to facilitate the
+transfer of credits. This is explained by the following illustration:
+Suppose that Brown and Smith keep their money on deposit in Bank A and
+that Brown gives Smith his cheque for $100 and Smith deposits it in
+the bank to his (Smith's) credit. The officers of the bank will
+subtract $100 from Brown's account and add the same amount to Smith's
+account. No actual money need be touched. It is simply a matter of
+arithmetic and bookkeeping. Credit has been transferred from Brown to
+Smith. If all the people of a city kept their money in one central
+bank there would be no need of a clearing-house. The bookkeepers of
+the bank would be kept busy transferring credits from one customer to
+another on the books of the bank. But if Brown keeps his money in Bank
+A and Smith keeps his money in Bank B it is necessary that Bank A and
+Bank B come together somewhere to conveniently make the credit
+transfer, and this is practically what they do in the clearing-house.
+Then, again, if Bank A should be located in San Francisco and Bank B
+in Boston, the difficulty of transfer of credit is greatly increased.
+
+Through the agency of clearing-houses located in money centres and of
+co-operation between banks at distant points, the transfer of credits
+between business men located anywhere in the United States, or for
+that matter in the world, has become a comparatively simple matter. If
+it were not for the agency of this system it would be utterly
+impossible for a great city to do the business of a single day. All
+the actual money in all the banks and stores and safes and pockets of
+New York City to-day would fall far short if used to pay to-day's
+transactions. It is estimated that the cash transactions of a single
+day are fifty times greater than the actual cash changing hands in one
+day. So that the great bulk of the business of the country, both cash
+and credit, is done on a system of credit transfers made possible
+wholly through the agency of our banking system.
+
+FOOTNOTE:
+
+[12] See also Lesson VIII. of Part I. of this book ("General Business
+     Information").
+
+ORGANISATION OF CLEARING-HOUSES
+
+Each large city has its clearing-house system. To establish a
+clearing-house a number of banks associate themselves together, under
+certain regulations, for the purpose of exchanging daily at one time
+and place the cheques and other commercial paper which they hold
+against each other. The usual officers are a president, a secretary, a
+treasurer, and manager, and a clearing-house committee. The cheques,
+etc., which the banks take to the clearing-house are called the
+clearing-house exchanges, and the total amount of paper exchanged is
+called the day's clearings. Those banks which bring a less amount than
+they take away are obliged to make the difference good in cash or its
+equivalent within a fixed time upon the same day. Suppose, for
+illustration, that a clearing-house association consists of five
+banks--A, B, C, D, and E--and that Bank A took to the clearing-house
+cheques against B, C, D, and E amounting to $20,000, and that B, C, D,
+and E took to the clearing-house cheques against A amounting to
+$21,000. Then A is on this particular day a debtor bank, and owes the
+clearing-house, or the other banks through the clearing-house, $1000.
+The payment of the balances by the debtor banks and the receipt of the
+balances by the creditor banks complete each day's transactions. As
+the total amount brought to the clearing-house is always the same as
+the amount taken away, so the balances due from the debtor banks must
+be exactly equal to the amounts due the creditor banks. The clearings
+in New York City in one day amount to from $100,000,000 to
+$200,000,000, and the actual cash handled, if any, need only be for
+the actual debit balances. Usually once a week (in some cities
+oftener) the banks of a city make to their clearing-house a report,
+based on daily balances, of their condition. The clearing-house
+establishes a fellowship among banks that has already proved in times
+of money panics of the greatest service to themselves and the
+community.
+
+PAYMENT OF BALANCES IN CLEARING-HOUSES
+
+Clearing-house certificates are made use of in many cities for the
+payment of balances by debtor banks. These are issued against gold
+deposited with one of the associated banks. They are numbered,
+registered, and countersigned by the proper officer, and are used only
+in settlements between the banks. Various methods of making
+settlements are in use. In some of the cities the balances are paid by
+drafts on New York or other money centres. The debtor bank sells some
+creditor bank New York exchange, and receives in return a cheque or
+order on the clearing-house, which when presented makes the debits and
+credits balance. It is estimated that the actual cash employed in New
+York clearings is less than one half of one per cent. of the balances.
+
+HOW DISTANT BANKS ARE CONNECTED BY THE CLEARING-HOUSE SYSTEM
+
+[Illustration: Illustrating cheque collections.]
+
+To illustrate the connection between banks at distant points let us
+suppose that B of Haverhill, Mass., who keeps his money on deposit in
+the First National Bank of that city, sends a cheque to S of Waconia,
+Wis., in payment of a bill. S deposits the cheque in the Farmers' Bank
+of Waconia and receives immediate credit for it in his bank-book,
+just the same as though the cheque were drawn upon the same or a
+near-by bank. The Farmers' Bank deposits the cheque, with other
+cheques, in, say, the First National Bank of Minneapolis, or it may
+send the cheque to its correspondent in New York--say the Ninth
+National--asking to be credited with the amount. For sake of
+illustration, suppose that the cheque is deposited with the First
+National of Minneapolis. Now, this bank has a correspondent in
+Chicago--the Commercial National--and a correspondent in New York--the
+National Bank of the Republic. If sent to the Commercial National,
+this bank has a correspondent in Boston--the Eliot Bank, where the
+cheque would be sent. Now, the First National of Haverhill has a
+correspondent in Boston--the National Revere Bank. The Eliot Bank
+would likely take this cheque to the Boston clearing-house as a charge
+against the Revere Bank. The Revere Bank would deduct the amount from
+the First National of Haverhill's deposit and send the paid cheque to
+the Haverhill Bank, where at the close of the month it would be handed
+to B, showing on the back the indorsement of S, and stamping
+representing all the banks through whose hands it passed. If the
+Farmers' Bank of Waconia had sent direct to its New York
+correspondent, the Ninth National, this bank would have sent to its
+Boston correspondent, the North National, and the cheque would have
+been charged up through the clearing-house against the Revere Bank. If
+the First National of Minneapolis had sent direct to its New York
+correspondent, the National Bank of the Republic, this bank would have
+sent to its Boston correspondent, the Shawmut National, etc. As a
+rule, banks collect by whatever route seems most convenient or
+advantageous. It is estimated that millions of dollars are lost to the
+banks each year on account of the time consumed by cheques en route.
+
+
+VIII. COMMERCIAL CREDITS AND MERCANTILE AGENCIES
+
+HOW THE WORLD'S TRADE IS LARGELY TRANSACTED UPON CREDIT
+
+It is estimated that about ninety per cent. of the world's trade is
+transacted upon credit. And in no country of the world are commercial
+credits so freely granted as in the United States. This is a land of
+seemingly unlimited faith in humanity, and yet a land in which
+hazardous speculation, extravagance, and bankruptcy have often
+prevailed. Statistics show that about ninety-five per cent. of our
+merchants "fail to succeed," and yet no other country can boast of
+such wealth, industrial energy, and generous confidence in business
+integrity. While credit is not money, in that it cannot settle a debt,
+it must be considered a very powerful agent in the creation of
+capital. Credit is another name for trust. The business world bases
+its confidence or trust in men upon their character and resources. And
+the extent of this trust becomes the only limitation of the business
+man's purchasing power. He who can show conclusively the ability and
+disposition to fulfil obligations, has it within his power to command
+the capital or merchandise of others. Credit is one of the fruits of a
+higher civilisation and a settled condition of a country's business.
+It bespeaks a quality of government, too, that is not to be
+depreciated. The nations that are most successfully and equitably
+governed and show the most stable conditions of currency also show us
+the most extensive and efficient credit systems. It is abundantly true
+that these same nations have on many occasions passed through periods
+of great distress from failures widespread and panics severe, but it
+must also be borne in mind that these very bankruptcies are more often
+the abuse of prosperity than the product of adversity. Over-confidence
+in men and things has resulted in speculation and precipitated
+bankruptcy. And if it be urged that to the undue expansion of credit
+is traceable the greater number of our financial disasters, it may be
+said with still greater force that all our impetus to industrial
+achievement has been and still is dependent upon the generous exercise
+of credit. The construction of our railroads and canals, the operation
+of our mines, the improvement of our great farm areas, the building of
+our towns and cities, and the development of our extensive
+manufacturing interests are all the result of the trust reposed in men
+and the industrial interests they represent.
+
+THE IMPORTANCE OF A HIGH STANDARD OF CREDIT TO BUSINESS MEN
+
+Reticence on the part of business men respecting their financial
+position may seriously impair their credit. It is universally regarded
+by the intelligent business man to be good policy to make known his
+condition. A refusal to do so throws a suspicion and doubt upon his
+financial ability, and at some future time when confidence in his
+integrity may be essential to the very life of his business, he may
+find the necessary help unobtainable. An applicant for credit should
+be willing to prove himself worthy of it. But the keen competition
+among merchants eager for sales often enables the buyer to obtain
+credit without the necessity of giving very much evidence as to his
+commercial standing. Since some risks must be taken merchants
+frequently conclude to accept an account because of its possible
+acceptance by some competitor. If business is to be had risks must be
+taken, is the theory.
+
+When former customers apply for credit the merchant is guided by the
+record made in previous dealings. A business man's ledger is a very
+valuable history of credits. It is his compass in a sea of doubt. If
+upon the inspection of an old account it be discovered that in former
+years the customer paid cash and discounted his bills, and that later
+his method of payment was by promissory notes, and that on several
+occasions he asked for special favours, such as dating bills ahead or
+the privilege of renewal of notes, one is able to read a certain
+unmistakable sign of degeneracy in the customer's credit. New orders
+from such a customer will bear scrutiny; and a closer attention to the
+present condition of the account may save the firm from some bad
+debts.
+
+While it is possible to-day to determine the average losses from bad
+debts in the various lines of business, individual risks cannot be
+accepted on that basis. Each requires special study. If an applying
+customer paints his financial condition in roseate colours, let him be
+willing to reduce his statement to writing, and when his signature is
+affixed his statement is much more reliable, because he knows of the
+impending liability of fraud if he has misrepresented. Men averse to
+transforming an oral statement to writing have discredited themselves
+immediately. Men who mean to be honest may be optimistic in picturing
+prospects and be inclined to set an unreasonable value upon their
+property and extent of business. It may be easier to tell the absolute
+truth about one's liabilities, because they are such persistently real
+things; but assets have elastic qualities in many men's minds and seem
+capable of any extension in an emergency. Buyers who impress
+themselves most favourably upon the business house are frank in their
+statements. The explicit, candid man of few words will merit
+consideration. The cringing or pleading kind predisposes one
+unfavourably. Stephen Girard said of one who in tears asked for a
+loan: "The man who cries when he comes to borrow will cry when he
+comes to pay."
+
+To determine the right of a buyer to credit and the safe limit of
+credit to be extended to him is the seller's serious problem. It is
+customary to request references in order to discover how other firms
+regard the applicant's credit. But these references may be cautious of
+reply. A selfish desire to retain the customer for themselves, or the
+higher motive of a desire to be true to the interests of both the
+inquirer and the customer may produce dubious or very incomplete
+reports. If a bank be among the references one does not place too much
+stress upon a very favourable reply from it, because a merchant
+usually learns the lesson of expediency in making a friend of his
+banker. And, moreover, one endeavours to reveal only the best side of
+his business affairs to the bank. Favourable replies from several
+firms showing a uniform line of credit go a great way toward reaching
+a safe conclusion. But in these days of vast and multifarious
+interests there has developed, as a result of this desire for adequate
+knowledge respecting men's credit, an agency for the exclusive
+purpose of arriving at definite and reliable evidence upon financial
+matters; and after years of experience men have learned to depend upon
+these mercantile agencies as the most valuable and trustworthy
+assistants.
+
+MERCANTILE AGENCIES
+
+Mercantile agencies had their origin in the system adopted by several
+prominent firms of keeping on record all the information obtainable
+relating to their customers. In 1841 "The Mercantile Agency of New
+York City" began its history, and was the forerunner of the present
+great agencies whose record books of credits and ratings include the
+names of all the business houses and corporations in this country and
+Canada. The pioneer institution of this character in the United States
+was the one bearing at present the name of "R. G. Dun & Co.," an
+outgrowth of "The Mercantile Agency of New York City." Since 1860 it
+has borne the name of Mr. Dun, who was formerly a partner with Mr.
+Douglass when the agency was known as "B. Douglass & Co." Another
+popular and influential concern is the one known as "The Bradstreet
+Company," familiarly spoken of as "Bradstreet's." Besides these two
+leaders there are many others, whose reports on credits are limited to
+particular lines of trade. The larger agencies soon found it necessary
+to establish branches in all the business sections of the country. A
+particular field of investigation is allotted to each branch, and an
+interchange of information is in constant progress.
+
+[Illustration: A mercantile agency inquiry form.]
+
+To be a recipient of the valuable information afforded by these
+agencies business men, by paying an annual fee, are enrolled as
+subscribers and furnished with books of ratings, as they are called.
+Besides this book special type-written reports with elaborate details
+respecting a firm's credit are sent upon the request of the
+subscriber. The volume of information recorded in these agencies
+concerning any one's credit is obtained through the effort of
+officials of the agencies known as reporters. These men of experience,
+integrity, and discernment are seekers after truths. Usually each
+reporter has a distinct line of trade assigned him for research and
+investigation. This brings him into intimate acquaintanceship with
+every trader in his particular field. He is a constant solicitor of
+the banker and merchant for facts. His business is not merely to
+gather information respecting the resources of business men, but to
+investigate rumours that in themselves may be detrimental to one's
+credit, and to disprove them where possible and sustain and support
+the credit of a house. Too often it is supposed that the reporter is
+seeking evidences of weakness when in reality his business is most
+frequently that of discovering elements of strength. Information is
+freely given him as he interviews men whose businesses and experiences
+are the depositories for a wealth of credit information. He soon
+becomes a confidant of the merchant himself, who not only tells him
+all he knows about the customers and their accounts upon his books,
+but his own business affairs as well. Indeed, the relation becomes so
+very reciprocal that the reporter often furnishes information to the
+merchant in the interview on some matter of credit of pressing notice.
+In this way a corroboration of facts or the denial of a rumour may be
+effected. He inspects the books of the offices of public record to
+find the evidence of mortgages, judgments, and transfers of property,
+and have the same recorded on the agency's books. It is the reporter
+who finally has gathered the information that determines a firm's
+ability to have and to hold a line of credit.
+
+It is essential to the life of the agency that its reports be honest
+and free from any element of doubt. The public confidence in the
+reliability of the reports will determine the prosperity of the
+company. Perhaps at first glance it would seem as if the system of
+reporting financial information was a serious discrimination against
+the men of smaller capital and in favour of the wealthy. But mere
+capital is not the only element entering into an estimate of one's
+ability to pay. Character and reputation are powerful forces in
+assisting a merchant in determining credit. An agency discloses facts
+and not opinions. And it is within the range of possibility of any one
+to create and maintain his credit. Capital may grow gradually but
+credit is sometimes established or destroyed by a single act.
+
+The facts obtained by mercantile agencies are not public property.
+They are given in confidence and for the sole purpose of aiding the
+business with respect to the propriety of granting credit. The private
+reports are for the eyes of the interested inquirer and not the
+curious. Whenever some particular item of interest finds its way to an
+agency that would affect one's credit seriously, such as the giving of
+chattel mortgage or the confession of a judgment or the sale and
+transfer of property, it is customary to send unsolicited a special
+report of these facts to all subscribers on the agency's books who
+have ever at any time made inquiry concerning the firm. One might
+expect that these agencies expose themselves to risk of prosecution
+for libel, but since no malice is ever intended in any report
+circulated, and since it rarely occurs that damaging reports are sent
+out by these institutions unless abundantly confirmed, there is little
+opportunity for litigation of this sort.
+
+Another field of usefulness of the mercantile agency is in the
+exposure of the absconding debtor and his whereabouts, and also the
+dishonest trader who in arranging a fraudulent failure may be striving
+to open many new accounts. The unusual demands for reports respecting
+such a one lead to careful investigation. Instead of a restrictive
+tendency a mercantile agency promotes the expansion of credit and yet
+permits of proper conservatism. It opens to the trader as a market for
+his merchandise every new and trustworthy account. It curbs
+speculation, stimulates diligence in business, habituates punctuality,
+and develops character. When we remember that the present annual
+internal commerce of our country is estimated at about 800,000,000
+tons of merchandise carried an average distance of 120 miles, and that
+this volume of trade is worth over $10,000,000,000, we are forced to
+admit that the unique system of these credit agencies has done much to
+further and make possible this commercial prosperity.
+
+
+IX. BONDS
+
+UNITED STATES, STATE, AND MUNICIPAL BONDS
+
+When a country borrows money it gives a guaranty that the money will
+be returned at a particular time and that interest will be paid at
+regular intervals at a fixed rate. This guaranty is called a bond. In
+actual practice, instead of borrowing the money required and then
+giving bonds for its return, countries usually issue the bonds first,
+and sell them to the highest bidder. For instance, if our government
+needed to borrow $1,000,000 it would issue bonds for this amount,
+stating definitely the rate of interest to be paid, and call for bids.
+If the rate of interest were four per cent. and a buyer paid more than
+$1000 for a $1000 bond he would, of course, make less than four per
+cent. upon his investment. Such bonds are absolutely safe and always
+marketable on account of our strong financial standing among the
+nations of the world. Similar bonds are issued by States, cities,
+towns, school districts, etc. They are not mortgages in the ordinary
+sense, and their worth consists entirely in the ability of the issuer
+through its taxing power to meet the obligations incurred. Municipal
+bonds are issued by cities and other municipalities to raise money for
+local improvements.
+
+BONDS AND CERTIFICATES OF STOCK
+
+A bond is evidence of debt, specifying the interest and stating when
+the principal shall be paid; a certificate of stock is evidence that
+the owner is a part owner in the company, not a creditor of the
+company, and having no right to regain his money except by the sale of
+the stock or the winding up of the company's business. Bonds issued by
+stock companies and corporations are really mortgages upon their
+resources. Such a bond is usually secured by a mortgage upon the
+company's plant, franchises, and assets, or some part thereof.
+Corporate bonds can only be issued by the consent and direction of the
+shareholders of the company or corporation.
+
+    At the present time a mortgage securing the payment of corporate
+    bonds is usually placed in the hands of a trustee--generally
+    some trust company--which is supposed to act in behalf of the
+    bondholders as a unit and which is empowered by the language of
+    the bond, in the event of the failure of the corporation to
+    perform the obligations it assumes in said bond, to foreclose
+    the mortgage and divide the proceeds of sale among the
+    bondholders.--CARROLL.
+
+CLASSES OF CORPORATION BONDS
+
+Corporation bonds are of many classes, differing widely in their value
+as securities. Only a few of the more important classes can be
+mentioned here. FIRST MORTGAGE BONDS constitute, as the name implies,
+a first lien upon the property of the company issuing them. It is
+important in estimating the value of such securities to know whether
+they include only the property of the corporation at the time the
+bonds were issued or whether they are so worded as to include all
+property owned or acquired by the corporation. Second and third
+mortgage bonds are second and third liens. The interest upon second
+and third mortgage bonds is paid only after the interest upon first
+mortgage bonds is satisfied.
+
+When bonds are issued to take up and put into one fund all previously
+issued mortgage bonds, the new bonds are sometimes called CONSOLIDATED
+MORTGAGE BONDS. Holders of previously issued bonds are not obliged to
+exchange them for any new securities.
+
+INCOME BONDS are usually secured by a mortgage on the earnings of the
+corporation issuing them. Interest on such bonds must be paid before
+dividends are declared to stockholders. It is customary when such
+bonds are issued to set aside a percentage of the earnings as a
+sinking fund to meet the bonds at maturity.
+
+Bonds are issued against all conceivable kinds of securities. Not only
+are properties of many kinds used to issue bonds upon, but many kinds
+of bonds are often issued upon the same properties. This is especially
+true of railways, where mortgages of various kinds often lap and
+overlap in almost endless confusion.
+
+SINKING FUNDS
+
+Money set aside by a municipality or corporation to _sink_ a debt at a
+certain future time is called a SINKING FUND. For instance, if a city
+should issue twenty-year bonds for $100,000 to secure money for street
+improvements the entire debt would fall due in twenty years, but to
+avoid having such a large amount fall due in one year, a proportional
+sum is set aside each year as a sinking fund--that is, to _sink_, or
+reduce, or wipe out the indebtedness when the bonds mature. Bonds are
+not paid in advance of maturity.
+
+INTEREST COUPONS
+
+[Illustration: Specimens of interest coupons.]
+
+Most bonds have INTEREST COUPONS attached. These are cut off and
+presented for payment as they mature. For instance, a four per cent.
+bond for $1000 would draw $40 interest yearly. This sum would be paid
+in two instalments of $20 each. If the bond were for twenty years
+there would be at the date of issue forty interest coupons, each
+calling for $20 and collectable at intervals of six months.
+
+
+X. TRANSPORTATION BY RAIL
+
+THE GROWTH OF OUR RAILROAD SYSTEM
+
+A railway map of the United States shows that most parts of our
+country have a thickly woven net of railroads. The mileage of our
+railroad lines is now 184,000 miles, the actual length of track on
+these roads being about 245,000 miles. The significance of these large
+figures becomes more manifest when a comparison is made between the
+length of our railroads and the length of those of Europe and those of
+the world. The railroads in the United States comprise over four
+ninths of the total railway mileage of the world, and are considerably
+longer than the railroads of all the countries of Europe combined. The
+facts are shown graphically by the following diagram:
+
+    Mileage in Europe     155,000
+    Mileage in U. S.      184,000
+    Total for the World   434,000
+
+The history of the construction of American railroads covers a period
+of seventy years. The greater part of our mileage has been built
+since 1870. The following table and diagram illustrate the growth of
+our railway net during each decade:
+
+    Year  |  Miles
+    ------|--------
+    1830  |      23
+    1840  |   2,800
+    1850  |   9,000
+    1860  |  30,600
+    1870  |  53,000
+    1880  |  90,300
+    1890  | 163,600
+    1898  | 184,000
+
+It will be noted that the decades of most rapid railway development
+were the one from 1850 to 1860, following the discovery of gold in
+California, and the two between 1870 and 1890. We added 70,000 miles
+to our railway net between 1880 and 1890--a record that no other
+country has equalled. By 1892 we seem to have met the more urgent
+demands for new lines, and we are now annually building less than 2000
+miles of new roads. The face value of the capital now invested in
+American railroads is $11,000,000,000. The number of persons employed
+in the railway service is 850,000.
+
+THE RAILWAY CORPORATION
+
+The agents that do the work of transportation by rail are the railway
+corporations. These "artificial persons" are created by the several
+States and intrusted with the performance of services of a public
+nature. In all the German states and to a large degree in many other
+European states, the governments themselves provide the means of
+transportation by rail; but in the United States the ownership and
+management of the railroads is rightly regarded to be a task of
+greater magnitude than the administrative department of our government
+is as yet able to cope with.
+
+The growth of the railway corporations of the United States has been
+typical of the evolution of industrial organisation in this country.
+The early railway corporations were small. The Philadelphia,
+Wilmington and Baltimore Railroad, for instance, comprised the lines
+of four companies. In 1850 the road connecting Albany and Buffalo
+included the lines of seven companies. During the last fifty years
+most of the small companies have united to form the corporations which
+now operate our large railway systems. Though the last statistical
+report of the Interstate Commerce Commission--the one for the year
+ended June 30, 1896--contains financial reports from 1985 companies,
+there were only 782 "independent operating roads," the remainder of
+the companies being subsidiary organisations. This report shows that
+forty-four of these operating companies have an aggregate mileage that
+equals nearly six tenths of the total railway mileage of the United
+States. Indeed, the statistician to the Interstate Commerce Commission
+declared in 1894 that "over 83 per cent. of the business of the
+railways and 82 per cent. of their earnings fall under the control of
+less than forty associations of business men."
+
+The Pennsylvania system affords a good concrete illustration of
+railway consolidation. That corporation, with its 9000 miles of road,
+was built up by the union of over 200 railroad companies, and it now
+comprises within its organisation 177 corporations--most, though not
+all, of which are subsidiary railroad companies. This one railway
+system does one seventh of the entire freight business performed by
+all the railroads of the United States and handles one eighth of all
+the passenger traffic.
+
+THE FREIGHT SERVICE OF RAILROADS
+
+The freight business of the railroads of the United States is much
+larger than their passenger service, the earnings from freight being
+nearly three times that from the passenger traffic. It is only in some
+of the New England States, the most densely populated parts of the
+United States, that the passenger receipts equal the freight earnings.
+The industrial conditions of the United States necessitate the
+movement of great quantities of bulky freight long distances. Our
+principal grain-fields are from 1000 to 1500 miles from the
+manufacturing districts and seaboard cities. Our richest iron deposits
+are in the States adjacent to Lake Superior hundreds of miles from the
+coal-beds of Illinois, Ohio, and Pennsylvania. Most of the cotton crop
+is moved long distances to reach the mills of New England and Great
+Britain. In fact, most of the products of our fields, forests, mines,
+and factories are marketed over wide areas. The average distance
+travelled by each ton of freight moved during the year ended June 30,
+1896, was 124.47 miles; and, as the railroads carried 765,891,385 tons
+that year, the number of tons carried one mile was 95,328,360,278.
+
+A comparison of the revenues received from the freight and passenger
+services by the American, German, French, and British railways is
+instructive. For each dollar received from the passenger traffic the
+American railroads earn $2.95 from their freight business, the German
+roads $2.40, the French $1.31 and the British railways $1.17. The
+United Kingdom has the greatest volume of passenger traffic per
+population of any country in the world.
+
+AMERICAN PASSENGER TRAFFIC ON RAILROADS RELATIVELY UNDEVELOPED
+
+The long distances of the United States necessitate a large freight
+traffic but act as a hindrance to travel. It is a generally accepted
+but erroneous supposition that Americans travel more than any other
+people. A comparison of the passenger traffic in the United States
+with that in the United Kingdom, Germany, and France reveals some
+surprising facts. The figures are for 1896. The number of passengers
+carried one mile per mile of road upon the railroads of the United
+States was 71,705, in France the number was 273,315, in Germany
+315,399, and in the United Kingdom 440,000. The average distance which
+the Briton travels per year by rail is 244 miles; for the American the
+distance is 209 miles, for the Frenchman 176 miles, and for the German
+165 miles. The Englishman takes 24.4 trips per year on an average, the
+German 11.3, the Frenchman 9.6, and the American 8.2. Americans travel
+extensively, but it is evident from the foregoing comparisons that the
+possibility of developing the passenger service in this country has by
+no means reached its limit.
+
+RELATION OF TRANSPORTATION ON RAILROADS TO ECONOMIC ORGANISATION
+
+The economic changes which have accompanied the great development of
+transportation that has taken place during the last fifty years have
+revolutionised our industrial and social life. Among the effects of
+developed transportation upon the economic organisation may be noted:
+First, that relations of producers and consumers have been
+fundamentally changed by placing a larger market at the service of
+both. Many classes of commodities are now bought and sold in a world
+market that were formerly restricted to local trade. Second, improved
+transportation has made the prices of commodities more uniform for
+different producers and consumers. The variations due to situation
+have been lessened. In a like manner there has been a decrease in
+those time variations in prices that result from changes in the supply
+of commodities. Improved transportation also makes prices lower--not
+only because it reduces the costs of moving the raw materials of
+manufacture and the finished products of industry, but also because it
+enables the merchant to turn his stock oftener and thus do business
+with less expenses for capital.
+
+As a third effect of improved transportation may be mentioned the
+acceleration which it has given to the growth of cities. Cheap and
+efficient transportation has led manufacturers to locate their plants
+where they can command a large supply of labour and where they have
+the greatest advantages for the distribution of their products. The
+great manufacturing establishments are now located in Chicago, New
+York, Philadelphia, Pittsburg, and the other large cities. Conditions
+of transportation have become a stronger factor than even the location
+of the sources of raw materials in determining where an industry shall
+be established. The effect of the railroad upon the location of
+agriculture has been no less potent. The railroad has brought new
+agricultural regions into cultivation and destroyed the profits of
+cereal agriculture in many parts of the Eastern States.
+
+Another important consequence of improved transportation and
+communication has been that of bringing the nations of the world into
+closer economic and social relations. With the growing solidarity of
+the economic interests of the countries of the world, with the
+multiplication of the intellectual and other social ties that unite
+the nations, their political relations inevitably change, and for the
+better. Nothing is doing more to advance the attainments of the
+cherished ideal of international amity than is the development of
+transportation.
+
+
+XI. FREIGHT TRANSPORTATION BY RAIL
+
+THE ORIGIN OF RAILROAD TRAFFIC ASSOCIATIONS
+
+The performance of the transportation services necessitates the
+co-operation of carriers. When the government owns and operates the
+railroads of a country they are managed by a single authority, and the
+different parts of the railway system are fully co-ordinated; but when
+the railroads are operated by a large number of independent
+corporations, co-operation can be secured only by means of traffic
+associations composed of representatives of the railway companies, and
+intrusted with the power of making arrangements affecting joint
+traffic, and settling questions involving the interests of two or more
+companies.
+
+Two distinct causes brought about the establishment of railway traffic
+associations. The first cause was the necessity of co-operation to
+facilitate the joint business of connecting lines. Through tickets,
+joint fares and rates, through bills of lading, the interchange of
+cars between connecting roads, and the settlement of joint accounts
+led to the establishment of co-operative freight lines, car-service
+associations, claim associations, and various other general and local
+organisations for the promotion of the joint transportation business.
+
+The other cause of co-operation among the railways was the necessity
+of regulating competition. This cause first became potent after the
+process of consolidation had brought about the formation of numerous
+large railway systems, and had inaugurated the violent competition
+which led to discriminations in transportation charges, rate wars, and
+the other evils which have combined to produce "the railway question."
+The competitive struggles of rival railway systems began to be violent
+shortly after 1867, and soon led to the formation of railway traffic
+associations, with enlarged powers. The classification of freight, the
+determination of rates on competitive traffic, and the apportionment
+of that traffic, or of the earnings from it, among the competitors
+became functions of the associations.
+
+THE WORK OF ALBERT FINK
+
+The man who did more than any other person to develop traffic
+associations and to promote the co-operation of competing railroads
+was the late Albert Fink. It was his master mind that organised and
+put into successful operation in 1876 the Southern Railway and
+Steamship Association. The following year Albert Fink succeeded in
+organising the great trunk lines connecting the North Atlantic
+seaboard and the States north of the Ohio River. Though smaller
+traffic associations similar to these two organisations had been
+previously established where but few obstacles had to be overcome, it
+was Fink who first organised traffic associations including all the
+competing railroads serving large sections of the country.
+
+In discussing the work of traffic associations, which are to-day
+concerns of really enormous magnitude, railway pooling and the
+classification of freight especially demand consideration.
+
+RAILROAD POOLING
+
+Railroad pools are agreements entered into by competing carriers, by
+which the railroads provide for the division with each other of their
+competitive traffic, or of the earnings from that traffic in
+accordance with stipulated ratios. Thus there are traffic pools and
+money pools. During the decade preceding 1887, the year when the
+present interstate commerce law was enacted, most traffic associations
+had the pooling feature, and most of the competitive railway traffic
+was pooled, thus eliminating all competition in rates.
+
+Pooling agreements have never been legal in this country. Being
+illegal by the common law, they could not be enforced in the courts.
+Section 4 of the interstate commerce law made it unlawful for the
+carriers subject to the act to pool their freights or the earnings
+from their freight traffic, and made it necessary for the traffic
+associations to reorganise without the pooling agreements. Until March
+22, 1897, it was supposed that the associations, without pooling
+agreements, were legal; but, on that date, in the case of the United
+States _vs._ the Trans-Missouri Freight Association, the United States
+Supreme Court held that the law of July 2, 1890, popularly known as
+the Sherman anti-trust law, applied to railways, and made it illegal
+for railway companies to contract with each other to maintain rates.
+Thus at the present time traffic associations are permitted neither to
+contain a pooling feature nor to provide arrangements for the
+enforcement or maintenance of rates, although the charges may be
+reasonable and be sanctioned by all the carriers interested. The
+associations may now legally exercise those functions which are
+connected with the joint business of their members, and they may act
+as bureaus of information regarding the competitive traffic. They
+have no power to make or to maintain rates.
+
+TRAFFIC ASSOCIATIONS INCLUDING POOLING SHOULD BE LEGALISED
+
+The best performance of the service of transportation by rail requires
+the fullest possible co-ordination of the different parts of our
+transportation system and the largest attainable measure of
+co-operation among the agents who perform the service. Section 4 of
+the act of 1887 and the law of July, 1890, as far as the latter
+relates to railways, are based on an unsound theory. Provision having
+been made for that kind and measure of governmental regulation of
+railway rates that will insure reasonable charges, the railways should
+be permitted to co-operate in rate-making and be given power to pool
+their competitive business.
+
+CLASSIFICATION OF RAILROAD FREIGHT
+
+There are thousands of varieties of freight offered to the railroads
+for transportation. If each class of commodities were charged the same
+freight rate per ton per mile, the charges upon many articles of prime
+necessity, such as coal, lumber, and grain, would be so high as to
+prevent their being moved, while the rates on goods of high value per
+bulk would be much lower than they could readily pay. Classification
+must precede the fixing of rate schedules. The railroads are
+interested in adjusting their charges to services performed in such a
+manner as to insure the greatest possible amount of traffic at rates
+that are properly remunerative. The public is interested in having the
+necessary revenues of the railroads so levied as to make the burdens
+as light as possible. To accomplish this a careful grouping of
+commodities is necessary.
+
+The goods are usually classified in five or six large divisions. The
+official classification referred to below has six classes. The first
+class consists of articles of high value, the sixth class of bulky
+commodities of low value, such as iron ore, lumber, grain in bulk,
+etc. In practice, however, the number of classes is at least doubled.
+Goods of especially high value are made to pay once and a half,
+double, treble or quadruple the regular first-class rate. A commodity
+is also frequently placed in more than one class, the rating of
+classification being lower for car-load lots than for less than
+car-load shipments. The classification is further extended by omitting
+certain articles from the list of those classified. Live stock and
+coal are illustrations of articles to which so-called "commodity," as
+distinct from "classification," rates are given. The individual
+shippers are constantly endeavouring to have their goods given
+commodity rates, and the effort of the railroad companies is to reduce
+the number of articles excepted from classification. Commodity tariffs
+have been a fruitful source of unjust discrimination.
+
+From this description of freight classifications it will be perceived
+that the main basis upon which the grouping of commodities rests is
+the relative value of the goods. The gradations cannot, however, be
+made strictly according to value. The goods are frequently put into a
+lower class than their value would warrant in order to stimulate their
+production and shipment or to develop the industries depending upon
+those articles.
+
+At first each railroad worked out a classification of its own, and
+there were practically as many classifications as there were railway
+systems. The disadvantages of this soon became apparent with the
+development of long-distance traffic. The multiplicity of
+classifications made it difficult for shippers or purchasers to
+ascertain in advance what the charges on consignments would be; there
+was a constant tendency to increase the number of commodity tariffs,
+and unjust personal and local discriminations were in consequence made
+more numerous. It became evident that there would be great advantages
+in having one uniform classification for the whole United States. This
+ideal has not been reached yet, but the number of classifications has
+been practically reduced to three--the official, applying to the
+traffic north of the Potomac and Ohio and west of the Mississippi; the
+southern, in force among the railroads in the Southern States, and the
+western, which obtains in the territory west of the Mississippi River.
+This amalgamation of the classifications has been brought about
+chiefly by the traffic associations and as the result of the enactment
+of the interstate commerce law. In order to avoid the discriminations
+prohibited by that law it was necessary to abandon the system of a
+separate classification for each railway. It is to be hoped that the
+attainment of the ideal of uniform classification will not be long
+delayed.
+
+THE CONDUCT OF THE FREIGHT BUSINESS OF RAILROADS--TRANSPORTATION
+PAPERS
+
+The manner in which the freight business is conducted affords a good
+illustration of the high degree of development to which modern
+business methods have attained. Freight is accepted by each railroad
+for shipment not only to all points on its own system, but also
+practically to every railway station in the country, and even to many
+foreign cities.
+
+A waybill containing the initials of the number of the car used, the
+name of the consignor, the name and address of the consignee, the
+description and weight of the articles sent, the freight class and
+rate of the goods, and the total amount of freight charges,
+accompanies each shipment and is delivered to the agent at the place
+to which the goods are shipped.
+
+For the goods thus accepted for transportation, manifests, or "bills
+of lading," are issued to the consignor, which, like other
+representatives of property, may be transferred by the owner or may be
+deposited in a bank subject to draft. Bills of lading are of two
+general kinds--"straight consignment bills" and "order bills." When a
+straight consignment bill of lading is issued the goods must be
+delivered to the consignee or to the person to whom he may order them
+delivered. An order bill of lading is one that may be transferred upon
+indorsement. The following concise description of an order bill of
+lading is taken from the "Book of General Instructions to Freight
+Agents," issued by the Pennsylvania Railroad Company:
+
+    When freight is consigned to "Order" it is, as a rule, for the
+    purpose of securing the payment at destination of a draft for
+    the value of the property. The draft is usually attached to the
+    bill of lading and sent through a bank for collection from the
+    party at destination, who is to be notified of the arrival of
+    the freight. The payment of the draft secures to the payer the
+    possession of the bill of lading, which must be indorsed by the
+    party to whose order the property is consigned.
+
+
+XII. RAILROAD RATES
+
+Transportation charges have such a general and vital relation to
+industrial and social welfare that the problem of the just and
+equitable distribution of their assessment is one of paramount
+economic and political consequence. A consideration of the main
+factors which influence the railway companies in fixing charges should
+precede a discussion of the regulation of transportation by the
+government.
+
+GENERAL FACTORS WHICH DETERMINE RAILROAD RATES AND FARES
+
+The factors which have most weight in fixing schedules of rates and
+fares are what it will cost to perform the several services, what the
+services are worth to those for whom they are to be rendered, and the
+extent to which there is competition among rival carriers to secure
+the traffic concerned. Though on the face of things it would seem that
+the railways should fix the charges for their various services in
+accordance with the costs of performing those services, it is neither
+practicable for them to do so nor is it desirable from the standpoint
+of public welfare that such a criterion should be adopted. It is
+impracticable for the railroads to base their charges upon cost of
+service, because it is impossible to determine accurately the elements
+which enter into the cost of performing the particular transportation
+service. The modern railroad is a very complex mechanism, employed in
+the performance of a multitude of different services. No railroad
+official is able to say just how much of the company's total expenses
+are to be charged against any one particular freight or passenger
+service.
+
+The cost of service would be an undesirable basis of rates, because
+the railroads would derive such a small part of their total necessary
+revenues from the carriage of goods having a high value in proportion
+to bulk and weight, that they would be obliged to charge much higher
+rates than they now do upon the cruder products of the farm, forest,
+and mine. These products are the basic materials of industry, and the
+lowest possible rate for their transportation is essential to social
+and economic progress.
+
+VALUE OF SERVICE AND VALUE OF COMMODITIES
+
+Value of service is a more desirable basis for rates and fares than
+cost of service. By charging according to value of service is meant
+that the shippers of commodities and the passengers who travel shall
+contribute to the railroad's aggregate expenses in proportion to the
+value which they derive from the transportation service. The rates and
+fares may cover a part or all of the value of the service obtained. In
+either case they are fixed with reference to that value and not with
+regard to the cost involved in performing the work of transportation.
+The levy of rates and fares in accordance with this theory, which is
+usually called "charging what the traffic will bear," is considered by
+most people to distribute transportation charges properly, because it
+is claimed that the true measure of a shipper's or a passenger's
+ability to pay for a desired service is the value which he will
+thereby derive. That this theory, nevertheless, does not afford an
+altogether satisfactory basis of charges, particularly in the freight
+traffic, may be readily shown.
+
+While it is true that the amount of value added by transportation to
+goods of low value is less for each unit of weight or bulk than the
+amount of value which is acquired by an equal weight or bulk of
+high-priced commodities, yet the _percentage_ increase in value is
+greater in the case of the goods of low cost. Expensive articles can
+be carried long distances without adding very much to their cost to
+the consumers. Measured in their percentages, then, the value of the
+service of transportation is relatively much lower in the case of the
+higher-priced commodities. The freight charges on wheat range from
+twenty to forty per cent. of its farm value, while the rate on shoes
+is possibly two per cent. of their factory price. That these charges
+are levied in accordance with the real ability of the articles to pay
+would be hard to establish.
+
+A PARTIAL THEORY OF RAILROAD FREIGHT RATES
+
+Without attempting in this connection to formulate a complete theory
+of freight rates, it may be said that there are three factors to which
+weight should be given in fixing charges: First, _the cost of
+service_. The total costs of transportation, including a fair return
+on invested capital, must be covered by total receipts. Furthermore,
+the minimum rate charged any particular class of commodities ought to
+be sufficient to pay the operating expenses incurred in transporting
+the goods. Second, _the value of the service_. This fixes the maximum
+rate that may be charged. Were the railroads to charge more than the
+service is worth to the shipper the service would not be desired.
+Third, _the value of the commodities_. Between the minimum rate fixed
+by the operating expenses and the maximum charge determined by the
+value of the service actual rates may vary through a wide possible
+range. In determining what rates within this range will be
+theoretically most just and least discriminatory, consideration should
+be given both to the value of the service and--more than is the case
+at present--to the value of the articles transported. By doing this
+rates will be paid by the various articles of freight more nearly in
+proportion to their ability to pay.
+
+THE EFFECT OF COMPETITION ON RAILROAD RATES AND FARES
+
+Whatever theory of rates may be accepted as ideally best, it cannot be
+strictly adhered to under the existing conditions of active competition
+obtaining in the United States. Actual charges have to be fixed and
+revised to meet the varying circumstances under which railway traffic is
+conducted. This competition takes several distinct forms. One is that
+between railways and waterways. A large part of the domestic traffic of
+the United States has the choice of transportation by rail or by water
+on the great lakes and the tributary canals, by the navigable rivers, or
+by one of the many ocean routes followed by our coastwise commerce.
+There is also the competition of rival railways connecting common
+termini or serving the same cities. These forms of competition are the
+ones most frequently noted; but they perhaps exercise a less potent
+influence over rates than what is known as competition through the
+markets or through the channels of trade. The competition between rival
+centres of commerce and industry--between the Atlantic cities and the
+gulf ports, for instance, or between the manufactures of New York and
+Philadelphia and those of Chicago or Cincinnati for the markets of the
+Southern States, to cite another example--is a force that must be
+considered in making rates and fares. Even towns served by only one
+railway and by no waterway enjoy the benefits of this industrial
+competition. Unless the railroad can give the industries in these
+local towns rates that will enable them to market their products,
+the industries will decline and the railway will lose its traffic.
+
+An interesting result of the competition of roads connecting common
+termini or joining a common industrial region with seaboard points is
+that the road whose line is the longest and whose expenses of
+transportation are greatest is obliged to charge the lowest rate. The
+short lines can charge more because they compete for traffic under
+more favourable circumstances. The lower charge of the longer line is
+called a differential rate, and it is customary for the shorter or
+"standard" lines to agree to allow the "differential" line a
+stipulated differential rate. This is the concession which the
+standard lines are obliged to make to temper competition and to
+prevent rate wars. The Grand Trunk, running from Chicago to Boston by
+way of Montreal, is a good example of a differential line, and the New
+York Central is a good instance of a standard line.
+
+GOVERNMENTAL REGULATION OF RAILROAD TRANSPORTATION
+
+It is a maxim of common law that transportation charges must be
+reasonable, and the exaction of an unreasonable rate by a public
+carrier is a common-law misdemeanour punishable by the courts. But
+when, as the result of severe competition of railroads with waterways
+and with each other, unjust discriminations between persons, between
+places, and as regards classes of traffic--the abuses which constitute
+the railway question--became prevalent, the common-law provisions
+applying to railway charges were given statutory form and were
+supplemented and extended by such legislation as the circumstances
+peculiar to the situation seemed to demand. The comprehensive
+railway- and canal-traffic act passed by Great Britain in 1854 has
+been the model adopted for much of the railway legislation in the
+United States.
+
+The Constitution of the United States gives Congress power to regulate
+commerce "among the several States," but the jurisdiction over
+intrastate traffic lies with the State governments. The States began
+to pass general laws for the regulation of railroads fully twenty
+years before Congress acted, and two thirds of the States have
+established commissions to administer those laws.
+
+THE INTERSTATE COMMERCE LAW
+
+After fifteen years of agitation and investigation the existing
+interstate commerce law was enacted in 1887. The law prohibits
+unreasonable rates and unjust discriminations between persons, places,
+and classes of traffic, prohibits pooling agreements, provides
+penalties for the violation of the law, and establishes a commission
+of five men to administer and enforce the statute. Fortunately for the
+commission and for the country the first chairman of that body was the
+eminent jurist, Thomas M. Cooley, whose master mind did much to give
+vitality to the law.
+
+During the first five years after the law was passed it secured a
+fairly efficient regulation of interstate railway commerce, but recent
+decisions of the United States Supreme Court have so weakened the law
+that at present the commission has very little power. The commission
+can investigate complaints and make reports, it can collect
+statistical information, it can and does informally adjust many
+differences between shippers and carriers; but, to quote from the last
+report of the commission, "it has ceased to be a body for the
+regulation of interstate carriers." Legislation to amend and
+strengthen the interstate commerce law is urgently needed.
+
+[Illustration: Judge Thomas M. Cooley. (First chairman of the interstate
+commerce commission.)]
+
+
+XIII. STOCK AND PRODUCE EXCHANGES
+
+THE STOCK EXCHANGE
+
+The stock exchanges of the world must not be considered simply as
+noisy congregations of brokers speculating in securities under the
+guise of legitimate business. They really play an important and
+necessary part in the financial mechanism of the country, and are
+instruments of enormous value in subdividing and distributing capital,
+and in directing its employment in great commercial and industrial
+enterprises.
+
+The largest stock exchange of the world is that of London. It is not
+only the centre of the English market for stocks and securities but,
+like the Bank of England, it is linked internationally with nearly all
+the financial centres of the world. Almost every reputable security is
+marketable in London, either through the ordinary channels provided by
+arbitrage dealers, who buy in the cheaper and sell in the dearer
+markets, or through the agency of trusts and investment concerns. The
+magnitude and extent of the financial resources of the London Stock
+Exchange are enormous. Its advantages to the business public outweigh
+altogether the drawbacks imposed by the too-speculative spirit of
+mankind. It is a great business barometer, extremely sensitive to all
+conditions likely to disturb the world's finances. The London Stock
+Exchange has scarcely more than one hundred years of history. In the
+early part of the century the elder Rothschild was one of the giants
+"on 'change," and it was in this business that he amassed the great
+fortune which makes the name of his house a synonym for money power.
+The membership of the London exchange is not limited to a fixed
+number, as in Paris and New York. In the Paris Bourse all agents are
+strictly forbidden to trade on their own account.
+
+[Illustration: The Paris Bourse.]
+
+The New York Stock Exchange was formed in 1792. There are 1100
+members. Members are elected and must be nominated by two men who will
+say that they would accept the uncertified cheque of the nominee for
+$20,000. The initiation fee is $20,000. Memberships have sold as high
+as $32,500, and the market value of a seat on the Exchange varies only
+slightly from year to year.
+
+[Illustration: Interior view of New York Stock Exchange.]
+
+There are stock exchanges in all large cities, and scattered
+throughout the country in convenient centres are grain and produce
+exchanges, cotton exchanges, petroleum exchanges, etc. These exchanges
+are really the central markets for the commodities they represent.
+Commodity exchanges deal in actual products, even though the dealers
+handle nothing but warehouse receipts or promises to deliver. Stock
+exchanges deal in credits and securities, which may or may not have a
+tangible value back of them.
+
+There is no reason why bonds and shares should not be publicly dealt
+in--and in large quantities--as well as dry goods, corn or cotton;
+but, unfortunately, few stock exchanges confine their transactions
+wholly to legitimate business. You will look in vain in the quotations
+for the stock of dozens of corporations whose securities are among the
+choicest investments. It is upon fluctuations that stock speculations
+prosper, and it is often true that the largest profits are made on the
+poorest stocks.
+
+Transactions are quickly collected and reported to the world. In
+hundreds of offices in New York, Chicago, and other American cities
+may be seen a little instrument called a _ticker_, which automatically
+prints abbreviated names of stocks, with their prices, on a narrow
+ribbon of paper. These _tickers_ are rented to these offices by the
+telegraph companies, and as fast as the sales are made the quotations
+are ticked off in thousands of offices in all parts of the United
+States.
+
+TECHNICAL TERMS OF STOCK EXCHANGES
+
+The term _bull_ is applied to those who are purchasers of stock for
+long account, with the purpose of advancing prices, as the tendency of
+a bull is to elevate everything within his reach. The term _bear_ is
+applied to those who sell short stock, with the purpose of
+depreciating values. The _bear_ operates for a decline in prices. The
+broker's charge for his services is called a _commission_, which in
+the New York Stock Exchange is one eighth of one per cent. each way on
+a par value of the security purchased or sold. A _point_ means one per
+cent. on the par value of a stock or bond. _Stock privileges_ or
+_puts_ and _calls_ are extensively dealt in abroad and to some extent
+here. A _put_ is an agreement in the form of a written or printed
+contract filled out to suit the case, whereby the signer of it agrees
+to accept upon one day's notice, except on the day of expiration, a
+certain number of shares of a given stock at a stipulated price. A
+_call_ is the reverse of a _put_, giving its owner the right to demand
+the stock under the same conditions. A _put_ may serve as an insurance
+to an investor against a radical decline in the value of stocks he
+owns; a _call_ may be purchased by a man whose property is not
+immediately available, but who may desire to be placed in a position
+to procure the shares at the _call_ price, if they are not below that
+in the open market when he secures the necessary funds. The speculator
+usually trades on _margins_. If he has $500 to invest he buys $5000
+worth of stock, his $500 being ten per cent. of the total amount. He
+expects to sell again before the remaining amount falls due. The
+_margin_ is usually placed by the speculator in the hands of a broker
+as a guaranty against loss. Although these brokers are really agents
+for others, yet _on 'change_ they stand in the mutual relationship of
+principals. A _margin_ is merely a partial payment, but a broker
+buying stock for a client on _margin_ is compelled to wholly pay for
+it. If he has not the necessary capital his usual custom is to borrow
+from banks or money-lenders, pledging the stock as collateral
+security. In foreign exchanges the element of credit enters more
+largely into the conduct of business. Where the credit of the client
+in London is established his broker does not, ordinarily, call on him
+for any cash until the next "settlement day." A _wash sale_ is a
+fictitious transaction made by two members acting in collusion for the
+purpose of swelling the volume of apparent business in a security and
+thus giving a false impression of its value. Stocks sell _dividend-on_
+between the time the dividend is declared and the day the books of the
+company close for transfer; after that they sell _ex-dividend_, in
+which case the dividend does not go to the buyer. When a company
+decides not to declare a dividend it is said to _pass its dividend_.
+To sell stock _buyer 3_ is to give the buyer the privilege of taking
+it on the day of purchase or on any of the three following days,
+without interest; and to sell stock _seller 3_ is to give the seller
+the privilege of delivering it on the day of purchase or on any one of
+the three following days without interest. _Buyer 3_ is a little lower
+and _seller 3_ a little higher than _regular way_ when the market is
+in a normal condition. _Bucket shops_ are establishments conducted
+nominally for the transaction of a stock-exchange business but really
+for the registration of bets or wagers, usually for small amounts, on
+the rise or fall of the prices of stocks, there being no transfer or
+delivery of the commodities nominally dealt in. There are thousands of
+these counterfeit concerns throughout the country conducted without
+any regard for legitimate commercial enterprises.
+
+FUTURE DELIVERY
+
+Grain is stored in warehouses until needed for milling or shipment.
+When we speak of _December wheat_ we mean wheat that is to be
+delivered to the buyer in December. The carrying charges include
+storage, interest, and insurance, so that wheat sold for _May
+delivery_ would necessarily bring a higher price than wheat sold for
+December delivery. Carrying charges are in favour of the _short_
+seller. When sold for immediate delivery it is known as _cash grain_.
+
+
+XIV. STORAGE AND WAREHOUSING
+
+BONDED WAREHOUSES
+
+There is a government regulation that an importer who does not wish to
+pay immediately the customs duties on his goods may have them stored
+in a warehouse, provided he furnish a bond with a surety that he will
+pay the duty within three years or export the goods to some other
+country. It is also a requisite that the goods be deposited in a
+bonded warehouse in the care and custody of its proprietor, who also
+must furnish the government with a bond of indemnity. The bond of the
+proprietor is a general bond and usually covers what might be
+considered a fair amount of total values due the government at any
+time. Officers of the United States are stationed at the bonded
+warehouse during business hours. These are there in evidence of the
+government's proprietary interest in the merchandise stored. When an
+importer makes entry at the custom house for bonding his goods, he at
+that time provides the security required.
+
+By a recent decision of the Treasury Department at Washington goods in
+bond are in the joint custody of the United States government and the
+proprietor of the warehouse, and after the government has received its
+customs duties for the goods they are in the proprietor's sole
+possession. The government cannot interfere to enforce delivery of the
+goods to the importer. The claim of the warehouse proprietor for
+storage charges becomes a first lien after the government's claim is
+satisfied. When the importer has paid both customs and storage charges
+he is privileged to remove his goods.
+
+WAREHOUSE REGULATIONS
+
+It is the duty of United States storekeepers to check off the goods as
+they are received at the warehouse and to report the same to the
+custom house; and when goods are to be withdrawn to see that delivery
+is not made until a custom house permit is presented. Upon payment of
+the import duty on goods in bond at the custom house at any time after
+importation, the customs officials issue a warehouse permit to the
+importer ordering the United States storekeeper in charge of the
+bonded warehouse to deliver the goods to the importer, and upon
+presentation of the permit the goods are released unless the
+proprietor holds them subject to storage charges.
+
+Goods may be held in bond for three years with the duty unpaid, but
+after that time either the duty must be paid or the goods exported. If
+shipped to another country and afterward re-imported the goods would
+again be entitled to the three-year privilege. If goods are not
+exported and the customs charges are due and unpaid, the government
+may dispose of the goods at public sale to obtain its claim.
+
+Goods arriving by steamer and unclaimed lie at the wharf forty-eight
+hours. If the owner does not appear to make entry for them within that
+time, after the entry for the vessel has been made, the goods are sent
+to a bonded warehouse and remain there on what is known as a general
+order, and if they stand there unclaimed for a year they may, at the
+expiration of that time, be sold by the government.
+
+The capital of a warehouse is its storage space. The rates vary from
+1/4 to 3/4 of a cent per cubic foot. The charges may be based on the
+amount of space consumed and the weight of the merchandise. The latter
+often determines the floor elevation to which the goods may be
+assigned. The more convenient of access the storage location is, the
+greater the cost. Warehouse receipts are issued as evidence of
+storage. All merchandise is conveniently bulked for numbering and
+marking, and these distinguishing marks appear on the receipts.
+Negotiable and non-negotiable receipts are issued as the needs of the
+owner may require. The former permit advances to be made by bankers
+upon the merchandise as collateral security.
+
+FREE WAREHOUSES
+
+These differ from bonded warehouses only in the fact that the
+government has no control or interest in them. They are only for the
+storage of imported goods on which the customs duty has been paid or
+for goods imported free of duty or for merchandise of domestic
+production and manufacture. They are managed entirely by the
+proprietor, and the contracts for storage are, of course, between the
+proprietor of the warehouse and the owner of the goods. The storage
+rates in free warehouses are considerably lower than for goods stored
+in bonded warehouses--the latter being a much more expensive business
+to conduct. There is no time limit in free warehouses. Goods may
+remain indefinitely. When they remain from six months to a year the
+charges are collected usually at certain periods to avoid
+accumulation. Experience shows that goods in free warehouses do not
+stay so long as those in bond. The articles commonly found in these
+houses are domestic and imported wools, cotton, canned goods, peanuts,
+yarns, cotton piece goods, mattings, dry goods, etc. Perishable goods,
+of course, do not find their way into bonded or free warehouses. These
+are placed in cold storage.
+
+BANKING FEATURES OF WAREHOUSING
+
+Many of the warehouses find it advantageous to do a banking business
+in connection with the storage features. Very frequently, for the
+convenience of the importer, goods are consigned to the warehouse and
+sent subject to a sight draft for the amount of the invoice. The
+warehouse company will pay the draft with the exception of about
+twenty per cent., which the importer is expected to furnish. If the
+duty is paid then the value upon which a loan is estimated is based
+upon the market value of the goods in this country. After the draft
+has been satisfied the goods are placed in the stores of the warehouse
+company subject to the customs and storage charges. The amount
+advanced by the company bears interest at current money rates. In
+illustration let us suppose bonded goods to be shipped and invoiced at
+$10,000, customs duty $4000, and the goods consigned to a bonded
+warehouse. The draft ($10,000) is sent to the warehousing company,
+which advances $8000, and together with the $2000 received from the
+importer pays the draft. The $8000 loan made by the company is then
+charged to the importer at the usual interest rate, and when the
+borrower withdraws his merchandise from storage he will have to pay
+the government the $4000 customs duty and pay back his loan of $8000
+to the warehouse company, together with interest and storage charges.
+If any portion of the goods stored is withdrawn for use in the
+business of the importer, the company will rebate a proportionate
+amount of the interest. If goods decline in value as collateral in
+storage the company will demand additional margin for its protection.
+If goods appreciate in value the loan may be increased. The market
+value of the goods is ascertained by the appraisement of some expert,
+who receives a commission for his services.
+
+COLD STORAGE
+
+The cold-storage warehouse is the natural result of the necessities of
+our great agricultural interests in the preservation of perishable
+products so sensitive to the deteriorating effects of temperature. The
+solution of the problem of the preservation of dairy products, meats,
+fish, poultry, fruits, and vegetables has developed a system that has
+eliminated the seasons and made possible the equalisation of prices of
+the finer class of edibles. The cornering of products and the creation
+of unreasonable prices are avoided. No article becomes a glut on the
+market as formerly. When there is a surplus of eggs and fruit, prices
+may be maintained by putting them in cold storage for a few days and
+offering them on the market when the conditions of trade warrant.
+
+TEMPERATURE REQUIREMENTS FOR COLD STORAGE
+
+Prior to the year 1890 cold storage was dependent upon the employment
+of ice, but in the evolution of the cold-storage warehouse ice is no
+longer a requisite. In fact, the temperature obtained by the
+employment of ice precluded a thermometric register much below the
+freezing point. The accepted temperature for butter and eggs was
+formerly 40 deg. to 50 deg.; but through the introduction of mechanical
+refrigeration, which has revolutionised the business economically as
+well as physically, eggs now are held in storage at a temperature of
+31 deg. and butter from 10 deg. to 18 deg.. Under the former method of ice
+storage, goods that were offered on the market as "held goods"--that
+is, as coming from a cold storage--always brought several cents under
+the prices of fresh merchandise. But the remarkable modern methods of
+cold storage permit the carrying of dairy products for a number of
+months and their successful sale afterward in competition with fresh
+goods. Eggs stored in March are taken out in the following November
+and have commanded as high and often higher prices than the fresh
+commodity. Eggs have been kept two years and found perfectly sweet
+when used. In freezing poultry and fish the temperature now frequently
+given is zero and under. Poultry does not carry so well as other
+merchandise. Although it is possible to keep it for two years, yet it
+loses its flavour. Five or six months' storage is its usual average
+limit.
+
+Certain temperatures are maintained in the various compartments of a
+cold-storage warehouse according to the requirements of the products,
+and these temperatures are made possible by forcing through pipes
+arranged around each compartment a brine composed of about ninety-five
+per cent. of pure salt whose temperature has been reduced by the
+action of the chemicals. When a shipper stores his goods there is an
+implied contract with the storage company that the temperature
+required for the product will be furnished and maintained. Failure to
+do this renders the company liable for any damage to property. So
+vital is this feature of the business, which is really the only
+liability assumed by the company, that the custom prevails of taking
+the temperature of each room as often as five times in every
+twenty-four hours, and keeping the record in temperature books open to
+the inspection of the shippers. A room filled with merchandise may not
+vary in temperature one degree in six months.
+
+COLD-STORAGE CENTRES
+
+Chicago very naturally is the leading cold-storage centre. Its
+situation in the heart of the productive area and its advantages as a
+distributing centre have given it its prestige. But in the last two or
+three years the Eastern cities, New York, Philadelphia, and Boston,
+have developed enormous cold-storage facilities, and Chicago no longer
+is absolute in her dictation to the markets of the world. When it is
+remembered that the dairy interests of our country during the last
+three years averaged an annual value of $650,000,000, and that the
+greater portion of this found its way into cold-storage warehouses,
+the importance of this new and very necessary business is readily
+appreciated.
+
+COLD-STORAGE CHARGES
+
+The cold-storage charges for eggs in thirty-dozen cases would be about
+15 cents per case for the first month and 9 cents for every additional
+month. Butter in sixty-pound tubs would be charged at the rate of 12
+cents per tub for each month. Cheese would cost one tenth of a cent a
+pound per month. The rates of Eastern cities are usually higher than
+in the West. About ninety per cent. of the storage business of the
+East is in goods shipped from the West. The refrigerator car is a
+valuable adjunct to the business. The temperature of the cars is
+about 45 deg..
+
+Although no ice is used in the modern cold-storage plant, yet the ice
+has become a very valuable by-product. Since all the facilities for
+its manufacture are at hand it has become a matter of commercial
+expediency to employ them to the company's profit in the production
+and sale of a commodity indispensable to modern life.
+
+
+QUESTIONS FOR REVIEW
+
+ 1. Give some particulars in which the Bank of England differs from our
+    larger national banks.
+
+ 2. A bank cheque is a demand order for money drawn by one who has
+    funds in the bank. How does a cheque differ from an order on A----
+    B---- to pay bearer a certain sum of money?
+
+ 3. You are sending a cheque through the mails to John Brown, Chicago.
+    How will you prevent the cheque from falling into the hands of the
+    wrong Brown?
+
+ 4. You identify A---- B---- at your bank. The cheque A---- B----
+    presented turns out to be a forgery. Are you responsible?
+
+ 5. What is meant by power of attorney? How should an attorney indorse
+    cheques for any person for whom he is acting?
+
+ 6. What is a certified cheque? Brown gives A an ordinary cheque for
+    $1000, and B a certified cheque for $1000. He fails before either
+    cheque is presented. Why is B's security for his claim considered
+    better than A's?
+
+ 7. Show how all the banks of the United States are connected through
+    the clearing-house system.
+
+ 8. How do State and national banks differ as to their organisation?
+
+ 9. A national bank has a capital of half a million. A customer asks
+    for a loan of $62,000 on indorsed paper. Can the bank legally grant
+    the loan?
+
+10. Give some particulars of the liabilities of the officers and
+    directors of national banks.
+
+11. What is meant by borrowing money on _collaterals_? How is this
+    done?
+
+12. Tell how it is possible for a young man of good character, but
+    without friends who have financial standing, to secure bonds for his
+    faithful conduct in a responsible position.
+
+13. When rates are high bankers prefer to deal in long-time paper.
+    Why?
+
+14. Account for the fact that London is the financial centre of the
+    world.
+
+15. Explain in detail the business of a note broker, giving some
+    particulars of his responsibility in connection with the paper
+    handled.
+
+16. Enumerate the leading items of resource and liability in a
+    national-bank statement.
+
+17. A bank receives from the comptroller of the treasury $100,000 in
+    new bank-notes of its own issue. What ledger entry? A bank retires
+    $10,000 of its own bank-notes. What entry?
+
+18. Discuss fully the points which should enter into a proper estimate
+    of the value of paper offered for discount.
+
+19. Give the successive and necessary steps in the formation of a
+    joint stock company.
+
+20. Why are companies which properly exist and belong in one State
+    sometimes organised under the laws of another State?
+
+21. Explain very fully the difference as to resource and liability
+    between a bondholder and a stockholder.
+
+22. How may a stock company be dissolved?
+
+23. What is the difference between a voluntary association, such as a
+    society or club, and a stock company?
+
+24. Explain very fully the meaning of _Limited_ when it forms part of
+    the legal title of a company.
+
+25. Is it legal to sell shares of stock and issue mortgage bonds upon
+    the same property? What relationship do they bear one to the other?
+
+
+EXAMINATION PAPER
+
+    NOTE.--_The following questions are given as a means by which
+    the student may test for himself whether he has attentively
+    pursued the lessons of the course or not. It is recommended that
+    each student as he finishes the course write out the answers to
+    the questions in full. Only such answers need be attempted as
+    the student can frame from a careful study of the course._
+
+1. (_a_) Give some particulars in which the Bank of England differs
+   from our larger national banks. (_b_) Enumerate some of the
+   advantages afforded to the community and to commerce in general
+   by banking institutions. (_c_) How do private banks and trust
+   companies differ from national banks?
+
+2. (_a_) What is a stock certificate? How does it differ from a
+   mortgage bond? (_b_) At what rate must United States 4 per cents
+   be bought to net 3.2465 per cent.? (_c_) Give the successive and
+   necessary steps in the formation of a stock company. How can the
+   stock of a company or corporation be increased?
+
+3. (_a_) What provision is usually made for the redemption of
+   municipal bonds which have a long period to run? (_b_) What is
+   meant when we say that a certain railway is in the hands of a
+   receiver? (_c_) Give some of the advantages which stock companies
+   have over partnerships.
+
+4. (_a_) Tell how you would receipt for a payment on a note. Why is
+   not an ordinary separate receipt sufficient? (_b_) Discuss fully
+   the points which should enter into a proper estimate of the value
+   of paper offered for discount. (_c_) Explain in detail the
+   business of a note broker, giving some particulars of his
+   responsibility in connection with the paper handled.
+
+5. (_a_) What are the advantages to the banks of a city of their
+   central clearing-house? (_b_) Show by a diagram how collections
+   are made between distant points. (_c_) What is a certified check?
+
+6. (_a_) Enumerate some of the abuses of rate discrimination in the
+   United States and tell how they are met. (_b_) What are the
+   advantages to the public of freight organisations which arrange
+   for through service? (_c_) Explain in detail the methods adopted
+   by leading and competing railway lines to regulate and adjust
+   freight rates. (_d_) What are _differentials_? How are (1)
+   through and (2) local passenger rates regulated?
+
+7. (_a_) Give the particulars in which a warehouse receipt resembles
+   and differs from (1) a promissory note, (2) a bill of lading.
+   (_b_) What are the advantages to the importer of bonded
+   warehouses? (_c_) What are the duties of our foreign consuls with
+   reference to the importation of goods?
+
+
+
+
+COMMERCIAL LAW
+
+
+I. THE DIFFERENT KINDS OF CONTRACTS
+
+Commercial law relates to CONTRACTS. These are made by almost every
+one. A person cannot ride in a street-car without making a contract
+with the company for carrying him. If he goes into a store and buys a
+cigar, a stick of candy, or a tin whistle, he has made a contract with
+the man behind the counter, who owns the store or is his salesman.
+Tramps and thieves are about the only persons who live without making
+contracts. In that respect they are like the birds of the air, getting
+whatever they desire whenever the chance is seen.
+
+A contract has been defined as an agreement to do or not to do some
+particular thing. These are the words used by one of the greatest of
+American judges. The reader may turn to his dictionary and find other
+definitions that contain more, if he pleases, but this will answer our
+purpose.
+
+All contracts may be put into three classes, and each of these will be
+briefly explained. First, SEALED AND UNSEALED CONTRACTS. What do we
+mean by a contract that is sealed? It is one to which the person who
+signs it adds, after his name, a seal. But what is a seal? It may
+consist of sealing-wax, stamped in a peculiar manner, or a wafer made
+of sealing-wax, or a paper wafer. In the olden times when people could
+hunt and fight but were not able to write their names, they put a
+seal at the end of a contract made by them; in other words, the seal
+supplied the place of a name. Each person's seal differed from the
+seal of every other. It had its origin really in the ignorance of the
+people. As they were unable to write their names these distinct signs
+or marks, called seals, were put on instead of their signatures.
+
+With the changes brought by time the form of this device or seal,
+required by law, is much simpler than it was centuries ago. Indeed, in
+every State persons use the letters "L. S.," with brackets around
+them, instead of a seal. They mean "the place of a seal," and are just
+as good in every way as any kind of seal that might be used. Here are
+two of the forms of seals in most common use:
+
+[Illustration]
+
+Any contract that has a seal after the name of the signer is a sealed
+contract, and every other is called an UNSEALED, ORAL, or VERBAL
+contract. If a contract was written and a seal was added after the
+signer's name, and there was another exactly like it in form, but
+without a seal, this would be called an unsealed or verbal contract,
+and in law would differ in some important respects from the other.
+This is true in every State except California, where the difference
+between sealed and unsealed contracts is no longer known.
+
+The second class of contracts are called EXPRESS AND IMPLIED
+CONTRACTS. By an EXPRESS CONTRACT is meant one that is made either in
+writing or in words. But the reader may ask, Are not all contracts of
+this kind? By no means. Many contracts exist between people which have
+not been put into words. Suppose A should ask B for employment and it
+should be given to him, but no word should pass between them about the
+price to be paid. The law would _imply_ that B must pay him whatever
+his work was reasonably worth. If A should come at the end of the week
+for his pay and B should say to him: "I never made any bargain with
+you concerning the price, and I am unwilling to pay you anything," A
+could, if he understood the law, say to B: "You told me to work, and
+the law _implies_ that you must pay me whatever my work is worth." How
+much would the law give him for his work? Just what the employer was
+paying other men for the same kind of work.
+
+Another class of contracts are called EXECUTED and EXECUTORY. An
+EXECUTED CONTRACT is one that is finished, done, completed. If I
+should go into a store and ask the price of a book and say to the
+salesman, "I will take it," and give him the money, and take the book
+with me, this would be an executed contract. An EXECUTORY CONTRACT is
+one that is to be completed. Suppose the salesman did not have the
+book and I should say to him, "Please get it for me and I will come in
+next week and pay you for it," this would be an executory contract;
+and it would remain so until I came in and got the book, as I had
+promised to do, and paid the price.
+
+These are the three most general classes of contracts made by persons
+in daily life. Almost all persons make contracts of each kind during
+their lives. Sealed contracts are not as common as unsealed ones, yet
+they are frequently made. Every deed for the sale of land or lease for
+the use of it is a sealed contract.
+
+
+II. THE PARTIES TO A CONTRACT
+
+To every contract there must be two or more persons or PARTIES. When
+Robinson Crusoe was on his island all alone, eating breadfruit and
+entertaining himself by throwing stones at the monkeys, he perhaps had
+a good time, but he could not make any contracts. But as soon as
+Friday came along they could make contracts, trade, and cheat each
+other as much as they pleased. A contract, therefore, is one of the
+incidents of society. A person sailing in a balloon alone could not
+make a contract, but if two were in the basket they might amuse
+themselves by swapping jack-knives or neckties, and these exchanges
+would be completed or executed contracts and would possess, as we
+shall soon see, every element of a contract.
+
+Again, persons must be able, or COMPETENT, to make contracts. What
+kind of ability or competency must a person have? Not every person can
+make a contract, even though he may wish to do so. A MINOR, or person
+less than twenty-one years of age, though he may be very wise and
+weigh perhaps two hundred and fifty pounds, can make very few
+contracts which the law regards as binding. In fact, the only
+contracts that a minor can make for which he is bound are for
+necessaries--clothing, food, and shelter. Nor can he make contracts
+even for these things in unlimited quantities. A minor could not go
+into a store and buy six overcoats and bind himself to pay for them.
+The storekeeper must have common sense in selling to him and keep
+within a reasonable limit. In one of the well-known cases a minor
+bought a dozen pairs of trousers, half a dozen hats, as many canes,
+besides a large supply of other things, and, refusing afterward to pay
+the bill, the merchant sued him, and the jury decided that he must
+pay. The case, however, was appealed to a higher court, which took a
+different view of his liability. The judge who wrote the opinion for
+the court said that the merchant must have known that the minor could
+not make any personal use of so many trousers, canes, and hats, and
+ought not to have sold him so many. In short, the court thought that
+the merchant himself was a young minor in intelligence and ought to
+have known better than to sell such a bill to a person under age.
+
+Of course it is not always easy to answer this question, WHAT ARE
+NECESSARIES? Much depends on the condition of the person who buys. A
+merchant would be safe in selling more to a minor living in an
+affluent condition of life than to another living in a much humbler
+way. Quite recently the question has been considered whether a
+dentist's bill is a necessity, and the court decided that it was a
+proper thing for a minor to preserve his teeth and to this end use the
+arts of the dentist. Again, is a bicycle a necessity? If one is using
+it daily in going to and from his work, surely it is a necessity. But
+if one is using it merely for pleasure a different rule would apply,
+and a minor could not be compelled to pay for it. Cigars, liquors,
+theatre tickets are luxuries; so the courts have said on many
+occasions.
+
+The courts, in fact, regard a minor as hardly able to contract even
+for necessaries, and he is required to pay for them for the reason
+that as he needs them for his comfort and health he ought to pay for
+them. In other words, his duty or obligation to pay rests rather on
+the ground of an implied contract (which has been already explained)
+than of an express one. The force of this reasoning we shall
+immediately see.
+
+Suppose a minor should say to a merchant who was unwilling to sell to
+minors,--having had, perhaps, sad experience in the way of not
+collecting bills of them,--"I am not a minor and so you can safely
+trust me. I wish to go into business and wish you would sell me some
+goods." Suppose that, relying on his statement, the merchant should
+sell him hats or other merchandise for which he would afterward
+decline to pay, on the ground that he was a minor. Suppose he proved
+that he really was one--could the merchant compel him to pay the bill?
+He could not compel him to fulfil his contract, because, as we have
+already said, the law does not permit a minor to make a contract
+except for necessaries. The court, then, would say to the merchant:
+"It is true that you sold the goods to this minor; he has indeed lied
+to you; still the court cannot regard a contract as existing between
+you and him." On the other hand, a court will not permit a person to
+defraud another, and the merchant could make the minor pay for the
+_deceit_ or _wrong_ that he had practised on him; and the measure of
+this wrong would be the value of the goods he had bought. Thus the
+court would render justice to the merchant without admitting that the
+minor could make a legal contract for the goods that he had actually
+bought and taken away.
+
+
+III. THE PARTIES TO A CONTRACT (_Continued_)
+
+In the former article we told our readers that there were some persons
+who could not make contracts, and among these were INFANTS or MINORS.
+In most of the States a person, male or female, is a minor until he or
+she is twenty-one years old. In some of the States, among them
+Illinois, a female ceases to be a minor at eighteen years of age.
+
+By the Roman law a minor did not reach his majority until the end of
+his twenty-fourth year, and this rule has been adopted in France,
+Spain, Holland, and some parts of Germany. The French law, though, has
+been changed, with one noteworthy exception. A woman cannot make a
+contract relating to her marriage without the consent of her parents
+until she is twenty-five. Among the Greeks and early Romans women
+never passed beyond the period of minority, but were always subject to
+the guardianship of their parents until they were married.
+
+MARRIED WOMEN are another class of persons who cannot make every kind
+of a contract like a man. Once a married woman had but very little
+power to make contracts. However great might have been her wealth
+before marriage, as soon as she entered into this blissful state the
+law kindly relieved her of all except her real estate, giving it to
+her husband. On the other hand, he was obliged to pay her bills,
+which was one of his great pleasures, especially if she was a constant
+traveller to the silk and diamond stores. She could still keep her
+real estate in her own name, but that was about all. Her husband took
+everything else; he could claim her pocket-book, if he pleased, and
+was obliged to support her in sickness or health, in sweetness or in
+any other "ness."
+
+The law has been greatly changed in all civilised countries in this
+regard, and to-day in most States she can make almost any kind of a
+contract. In some States, however, it is even now said that she cannot
+agree to pay the debt of another, but this is, perhaps, the only limit
+on her power to contract. She can engage in business, buy and sell,
+transfer notes, make contracts relating to the sale and leasing of her
+real estate, insure it, build houses, and do a thousand other things
+quite as freely as if there were no husband around. The most of these
+changes widening her authority to make contracts have come within the
+last fifty years. Of course, unmarried women can make contracts like
+men, and many of them know it.
+
+Another class who cannot make contracts are DRUNKEN PERSONS. Once the
+law regarded a drunken man as fully responsible for his acts, and if
+he made a contract he was obliged to execute or fulfil it. He could
+not shield himself by saying he did not know what he was doing at the
+time. The court sternly frowned on him and said: "No matter what was
+your condition at the time of making it, you must carry it out." This
+was the penalty for his misdeed. It may be the courts thought that by
+requiring him to fulfil his contracts he would be more careful and
+restrain his appetite. Whatever the courts may have thought, they have
+changed their opinions regarding his liability for his contracts made
+under such conditions. Now they hold that he need not carry them out
+if he desires to escape from them. There is, however, one exception
+to this rule. If he has given a note in the ordinary form, and this
+has been taken by a third person in good faith who did not know of the
+maker's condition at the time of making it, he must pay. But, we
+repeat, the third person must act in good faith in taking it, for if
+he knew that the maker was drunk at that time he cannot require him to
+pay any more than the person to whom it was first given.
+
+One other class may be briefly mentioned--the INSANE. They are
+regarded in the law quite the same as minors. For their own protection
+the law does not hold them liable on any contracts except those for
+necessaries. These are binding for the same reasons as the contracts
+of minors, in order that they may be able to get such things as they
+need for their health and comfort. For if the law were otherwise,
+then, of course, merchants would be afraid to sell to them. But as
+merchants can now safely sell to them whatever they truly need in the
+way of clothing, food, etc., to make themselves comfortable, so, on
+the other hand, the insane, like minors, must pay for these things,
+and it is right that they should.
+
+
+IV. THE CONSIDERATION IN CONTRACTS
+
+Having explained who can make contracts, we are now ready to take
+another step. Besides having parties, there must be a CONSIDERATION
+for every contract. This is rather a long word, but no shorter can be
+found to put in its place. What do we mean by this term? We mean that
+there must be some actual gain or loss to one or both parties to a
+contract, otherwise it is not valid. If, for example, A should say to
+B, "I will give you $100 to-morrow," B, perhaps, might go away very
+happy, thinking that with this money he could buy a bicycle or some
+other fine thing; indeed, it was just the sum for which he was
+longing; so on the morrow he goes to A for his money. He promptly
+appears, but A says to him: "I have changed my mind, and will not give
+you the $100." B asks: "Did you not promise to give me this money?"
+"Certainly." "Well, why will you not fulfil your promise?" A replies:
+"I was a fool when I made that promise; you are not going to give me
+anything for it, so I am unwilling to give the money to you." Suppose
+B in his sorrow should go to a lawyer, thinking, perhaps, that he
+could compel A by some legal proceeding to pay over the money. What
+would the lawyer tell him? Why, he would say: "Did you promise to give
+A anything for the $100?" "No, sir." "Then the law will not help you
+out. You cannot get the money from him by any legal method. Perhaps
+you can get $100 worth of fun in licking him for not giving you the
+money, but you cannot get the cash. But, mind, perhaps you had better
+not try to get your fun in that way, for this is contrary to law, and
+he might get much more than $100 out of you in the way of damages for
+licking him."
+
+In every case, therefore, there must be _something for something_. Now
+this something may be a thousand things. It may be money or
+merchandise or work. In short, there is no end of the things that may
+serve as a consideration of a contract. An example may be given to
+explain what is meant by this. A man had been speculating in stocks,
+and one of the rules of the stock board is that a margin or sum of
+money that is to be paid for stock must be paid in every case. It may
+be that an additional margin or sum must be paid under some
+circumstances. The speculator in this particular case was unwilling to
+pay this margin, and he said to the broker: "If you will do as I wish,
+and not put up this margin, I will save you from any loss that may
+result from such conduct." It was contrary to the rules of that stock
+exchange for the broker not to put up the margin, and the consequence
+was that he was put off the floor; in other words, the board would not
+permit him to act as a member. Of course, as he could not buy and sell
+any more stock, he lost money; and he went to his customer, the
+speculator, and told him that he was losing money in consequence of
+carrying out his order about the margin. The speculator said he was
+sorry, but he could not help it. The broker then insisted that the
+speculator must make good his daily loss in consequence of doing as he
+had promised. This the speculator would not do. The broker then sued
+him for the amount of his loss. The speculator defended on the ground
+that there was no consideration for the agreement he had made with
+the broker about the margin. The court said that the loss which the
+broker had suffered in consequence of carrying out his contract with
+the speculator was a good consideration for the contract and must be
+made good.
+
+_When a contract is sealed the law implies that there is
+consideration_, and there need not be an actual one consisting of
+money, labour, or any other thing. This seems like an exception to the
+rule requiring a consideration in all cases, but the reason is this:
+When a sealed contract is made, the law supposes or assumes that each
+party made it, clearly knowing its nature--made it carefully, slowly,
+and, consequently, that either a consideration had been or would be
+given. If, therefore, one of the parties should refuse to fulfil it
+the other could sue him in a court of law. The person who sought to
+have it carried out would not be obliged to show that he had given any
+consideration on his part for the undertaking, because the seal
+appended to his name would imply that a consideration had been given.
+A deed for a piece of land is a good illustration of a sealed
+instrument. The law assumes whenever such a deed is given that the
+seller received a consideration for his land. The money paid was a
+consideration received by the seller, and the land was the
+consideration received by the buyer. Each gives a consideration of
+some kind for the consideration received from the other; and this is
+true in all cases.
+
+
+V. THE ESSENTIALS OF A CONTRACT
+
+In our last paper we told our readers that there must be a
+_consideration in every contract_. Sometimes this is _illegal_, and
+when it is the effect is the same as would be the giving of _no
+consideration_.
+
+Suppose a robber having stolen money from a bank should afterward
+offer to return a certain portion if he is assured that he will not be
+arrested and compelled to change the style of his clothing and his
+place of residence for a season. He cannot endure the thought of
+missing a game of football; and as for striped clothes, though very
+comfortable, perhaps, he is sure they would not be becoming. Suppose
+this agreement to return a part should be put in writing, and after
+fulfilling it he should be sued by the bank for the remainder, and
+also prosecuted by the State for committing the theft. Very naturally
+he would present the writing in court to show that he had been
+discharged from the crime and also from the payment of any more money.
+But this writing would not clear him either from prosecution for the
+criminal offence or from liability to return the rest of the money.
+The bank would say that although he had returned a part, this was not
+a proper consideration for its agreement not to sue him; it had no
+right to make such an agreement, and consequently it could sue the
+robber for the remainder of the money just as though no agreement had
+ever been made.
+
+Another illustration may be given. Suppose a person having made a bet
+and lost is unable to pay the money and gives his note for the amount.
+When the note becomes due the holder or owner sues him for the money.
+He defends, as he is unwilling to pay, by saying there was no legal
+consideration for the note. The money he promised to pay was only a
+wager, which the law regards as illegal. And this would be a good
+defence.
+
+If the consideration is partly legal and partly illegal and can be
+divided then there can be a _recovery of the legal part_. Suppose a
+man owed another $1000 for borrowed money and also a wager for the
+same amount, and had given his note for $2000. When it became due if
+the owner sued him he could recover only the $1000 of borrowed money;
+this much and no more, for the reason that the consideration could be
+divided, the legal part from the illegal part. If no separation was
+possible then the note would be void and the owner could get nothing.
+
+A person cannot recover for a _voluntary service_ that he has rendered
+to another. A man would be very mean indeed who refused to pay another
+for any service rendered to him that was truly valuable; yet if he
+would not do so the man rendering the service could get nothing
+through the law. Suppose that a person when walking along a road
+should see some cattle astray in a corn-field having a good time with
+a farmer's corn. He knows they are in the field for business and in a
+short time, unless driven out, will get the best of nature and down
+her efforts in corn-raising. In the kindness of his heart he jumps
+over the fence and succeeds in driving them away. Suppose there
+happens to be among the number an unruly animal which is unwilling to
+leave such a tempting field of plunder and turns on him and gores
+him, and he is taken to a hospital. The farmer finds out who drove out
+the animals, and of his injury, but declines to give him any reward
+whatever. Can the man recover anything? The law says not, because the
+service is purely voluntary.
+
+The question has often been asked whether a person who has made a
+contract to work for another and has broken it can recover for the
+worth of his service during the period he was employed. Some courts
+have said that a person thus breaking his contract cannot afterward
+recover anything, because he does not come into court with clean
+hands. Other courts have said that though he can recover nothing on
+the contract he has broken, he can nevertheless recover on a contract
+which the law implies in such a case for the worth of his service
+during the period of his employment. On the other hand, the employer
+can set off against his claim any injury that he may have sustained.
+Suppose he could show that the service was of no worth to him; that he
+was injured rather than benefited by what he did; then the employe
+could get nothing. The courts have been inclined of late years to
+uphold an employe in recovering whatever his service was worth--not,
+however, as done by virtue of an express or actual contract with the
+employer. He cannot sue on that; in other words, he cannot take
+advantage of his own wrong to recover anything from his employer, but
+he may recover on the contract which the law implies, as we have
+explained, as much as his service was worth to his employer, and no
+more.
+
+Another element in a contract is the meeting of minds of both parties.
+_Both must understand the matter in the same sense._ For example, a
+person offered to sell another "good barley" for a stated price, and
+the other offered to buy "fine barley" at the price mentioned. There
+was no contract between these persons, because it was shown that "good
+barley" and "fine barley" were different things in the trade. This,
+therefore, is one of the essential elements of a contract--the meeting
+of the minds of the contracting parties. Whether they have assented or
+not is a question of fact, to be found out like any other question of
+fact.
+
+Sometimes offers are made on time, and when they are several
+interesting questions may arise. Suppose A and B are negotiating for
+the sale and purchase of a piece of land. A says to B: "I will give
+you a week to think the matter over." Soon after parting A meets C, to
+whom he mentions his offer to B. C says: "I will give you a great deal
+more for the land and pay you now." "Very well," says A; "the land is
+yours." And he at once writes a letter to B saying that he has
+withdrawn his offer, as another person has offered him more for the
+land and that he has sold it to him. Now B might be very much
+surprised by this letter. Very likely he would think A was a hard man
+and perhaps a dishonest one. Perhaps he would go to a lawyer and ask
+him if he could compel A to sell the land to him if he accepted his
+offer within the time mentioned and paid to him the money. The lawyer
+would tell him--if he understood his business--that A had a perfect
+right to withdraw his offer, even though it was made on time. This
+would probably be brand-new knowledge to B, but he would know what to
+do on the next occasion.
+
+Is this true in all cases? It certainly is of all offers made in that
+manner. How, then, can a person who makes an offer to another on time
+be compelled to regard it? The way is simple enough. The person to
+whom the offer is made should give something--a consideration--to A,
+who makes the offer, for the delay. Then he would be bound by it. But
+the courts would say to B, if nothing were given: "Why should A's
+offer bind him so long as he is to get no compensation or
+consideration for it?" And we shall see again and again in these
+papers _this element of consideration is ever present, and must be to
+make transactions legal_. So with respect to an offer on time--if the
+person to whom it is made is really desirous of having it continue, in
+order to find out whether he can raise the money to pay, or for some
+reason, he can make the offer binding by giving to the offerer a
+consideration for the specified time, whatever that may be.
+
+
+VI. CONTRACTS BY CORRESPONDENCE
+
+_A great many contracts are made by correspondence._ A person writes a
+letter to another offering to sell him merchandise at a stated price.
+The other replies saying that he will accept the offer. Is a contract
+made at the time of writing his letter and putting it into the
+post-office, or not until it is received by the person who made the
+offer? The law in this country is that a contract is made between two
+persons in that way as soon as the answer is written and put into the
+post-office beyond the reach of the acceptor.
+
+The post-office usually is the agent of the person who uses it, but
+when a person sends an offer to another by mail the post-office is
+regarded a little differently. It is the agent of the person who sends
+the offer and also his agent in bringing back the reply. Consequently,
+when this is put into the hands of the agent the law regards the
+offerer as bound by his offer. In like manner, if a creditor should
+send a letter to his debtor asking him to send a cheque for his debt
+and he should comply, the post-office would be the agent of the
+creditor in carrying that cheque, because he requested his debtor to
+use this means in sending his cheque to him. But when a request is not
+made and a debtor sends a cheque on his own account, the post-office
+is his agent for carrying it to his creditor.
+
+A person making an offer by letter can of course withdraw it through
+the telephone or telegraph if he likes at any time before the letter
+has been received by the other party. Suppose the price of things is
+rising and A, finding that his goods are also advancing, should, after
+making an offer of some of them by letter, send a telegram stating
+what he had written and withdrawing his offer. This would be a proper
+thing for him to do. If, on the other hand, A's offer had been
+received by B before his withdrawal and accepted, then A would be
+bound by it.
+
+Can B, after mailing his letter of acceptance and before it has been
+received by A, withdraw his acceptance? No, he cannot--for the reason
+above given, that the post-office is the agent of A, in carrying both
+his offer and B's reply. If this were not so, if the post-office were
+the agent of B in sending his reply, then of course it could be
+revoked or withdrawn at any time before it reached A.
+
+Suppose A should send an offer and afterward a withdrawal and the
+withdrawal should be received first. Notwithstanding this, however, if
+the person to whom the offer was sent should accept the offer, could
+he not bind A? One can readily see that all the proof would be in the
+possession of B, the acceptor. If he were a man without regard for his
+honour and insisted that he received the offer first, A might be
+unable to offer any proof to the contrary and fail to win his case
+should B sue him. But the principle of law is plain enough; the only
+difficulty is in its application. Doubtless cases of this kind
+constantly happen in which the acceptor has taken advantage of the
+other to assent to an offer actually received after its withdrawal.
+
+Suppose B should in fact receive A's offer first in consequence of the
+neglect of the telegraph company to deliver A's message of withdrawal
+promptly, which if delivered as it should have been would have reached
+B before the letter containing the offer, what then? A doubtless
+would be bound by his offer, but perhaps he could look to the
+telegraph company for any loss growing out of the affair. If he could
+show that he had been injured by fulfilling the contract the telegraph
+company might be obliged to pay this.
+
+Let us carry the inquiry a little further. Suppose the messenger on
+receiving the telegram took it to B's office and it was closed and he
+made diligent inquiry concerning B's whereabouts and was unable to
+find him. Suppose he had gone off to a horse race or to a football
+game, would it be the duty of the messenger boy to hunt him up at one
+of these places? By no means. If B was not at his place of business
+when he ought to have been, the company would not be bound to deliver
+the message to him elsewhere, except at his house, unless he had left
+a special direction with the company concerning its delivery.
+Generally a telegraph company states very clearly its mode of
+delivering messages and the time when it will do so, the place, etc.,
+to which it will take them, and it is not obliged to hunt all over
+creation to find the person to whom a message is addressed. That would
+be a very unreasonable rule to apply. Therefore, if the company did
+its duty A could not recover anything from it. Would A, then, it may
+be asked, be obliged to fulfil his contract with B? He has sent his
+withdrawal, which if delivered in time would have been received by B
+before the letter containing the offer. B, however, is away from his
+place of business, and perhaps is where he ought not to be--perhaps he
+is playing poker or doing something worse--ought A under such
+circumstances to be held by his offer? This is a closer question and
+one that we will leave our readers to think over. Surely A would have
+a strong reason for claiming that he ought not to be held under such
+conditions.
+
+A person who makes an offer cannot turn it into an acceptance. An old
+uncle offered by letter to buy his nephew's horse for $100, adding:
+"If I hear no more about the matter I consider the horse as mine." The
+uncle, not hearing from the nephew, proceeded to take the horse. At
+this stage of the proceedings, however, the nephew was not inclined to
+suffer his good old uncle to make the contract entirely himself, and
+refused to give up the horse. The court said that one person could not
+do all the contracting himself, and this is what he virtually
+undertook to do. If a person could, by correspondence or otherwise,
+make a contract in this manner, one can readily see the dangers that
+might follow. Some positive act must be put forth by the other party
+showing or indicating his assent before it will be regarded as given.
+A person, in truth, is not obliged to pay any attention to an offer of
+this kind.
+
+Rewards are often made. They are found almost every day among the
+newspaper advertisements. These are binding under various conditions.
+An interesting question has been raised in the case of a runaway horse
+whose owner has made an offer to any finder who returns him. Suppose a
+person at the time of catching the animal did not know of the reward
+but does know of it when returning the beast to his owner; can he
+claim the reward? This question has somewhat puzzled the judges, but
+the more recent opinion is that the catcher can claim the reward like
+a person who knew at the time of stopping the pleasure of the runaway.
+Of course, there is no question concerning these rewards when they are
+known at the time of acting on them.
+
+In one of the cases tried not long since, an old farmer offered a
+reward of $15 to any one who would find the person who had stolen his
+harness and also $100 to the man who would prosecute the thief. The
+harness, in truth, was worth not even this small sum and the thief
+still less. Yet he was caught and prosecuted, and then the prosecutor
+and finder claimed the rewards. The farmer's excitement had cooled off
+by this time and he was not so loud and liberal as he was at the time
+of finding out his loss. He refused to pay, saying that he did not
+really mean to offer these sums as rewards, and the court decided in
+his favour, declaring that his offer of reward could not be regarded
+strictly as one, but rather "as an explosion of wrath." In another
+case a man's house was burning up and his wife was inside, and he
+offered any one $5000 who would go in and bring her out--"dead or
+alive." A brave fellow went in and rescued her. Then he claimed the
+reward. Was the man who made the offer obliged to pay, and could he
+not have escaped by insisting that this was simply "an explosion of
+affection" and not strictly an offer or promise of reward? He tried to
+hold on to his money, but the court held that this was an offer he
+must pay. Possibly after the recovery of his wife his valuation of her
+had changed somewhat from what it was while his house was burning up.
+
+One or two more cases may be given. Some persons who prepared
+"carbolic-smoke balls" offered to pay L100 to any person who
+contracted influenza after having used one of the balls in the manner
+clearly set forth and for a stated period. This offer was in the form
+of a newspaper advertisement. A person bought one of them and followed
+carefully all the directions about its use. The influenza, though, did
+not disappear as advertised, so he sued to recover the offer; and,
+having proved clearly that he had complied faithfully with the
+directions and had not been cured, the court said that the owners must
+pay up and compelled them to give him the L100 offered.
+
+Another case may be briefly mentioned. A offered to sell B his farm
+for $1000. B offered $950, which offer was declined. Then B offered
+to pay $1000. By that time A had changed his mind and declined to
+accept B's offer. Then B sued to get the farm, offering to pay the
+money; but the court held that B had declined A's offer and
+consequently that, as A had not made any other offer, there was no
+contract.
+
+Finally, it may be added that the phrase "by return mail" does not
+always mean by the next mail, although the person to whom the offer is
+made cannot delay his answer long. On the other hand, the person to
+whom such a letter may be addressed can bind the other by an
+acceptance very quickly after the receipt of the offer, although not
+literally by the first mail going out.
+
+
+VII. WHAT CONTRACTS MUST BE IN WRITING
+
+_Some contracts must be in writing to be valid_; for instance,
+contracts relating to the sale and leasing of lands. This writing must
+be signed by the person who is charged with having made it. Suppose
+that A has sold his farm to B for an agreed sum and refuses to give
+him a deed on his payment of the amount or offer to pay, and B wishes
+to compel A to carry out or execute his agreement. B must show a
+writing signed by A to that effect, otherwise the court will not pay
+any attention to the matter. On the other hand, if A claims that such
+an agreement has been made with B, who is unwilling to pay the money
+and receive the deed, he must show in court a writing signed by B that
+he has agreed to purchase the farm at a stated price and to receive a
+deed of the same. If such a writing is not forthcoming when required,
+he cannot recover anything from him. This is the meaning of the
+phrase, therefore, that a writing must be signed by the party charged
+with having made the agreement.
+
+_The writing need not be very formal._ It need not specify the amount
+that is to be paid; in other words, it need not specify the
+consideration. Some courts say, however, that it must contain this
+fact or statement. It may be in pencil. I presume it would be
+sufficient if written on a blackboard with chalk. But it must be a
+writing of some kind signed by the party to be charged; that is the
+essential thing. The courts have also said that this writing need not
+be on a single piece of paper. If the two parties have made an
+agreement by a series of letters, an offer on the one side and an
+acceptance on the other, and the agreement can be fully shown from the
+series of letters, this is sufficient writing.
+
+If a man buys a farm and pays a part of the price and goes away saying
+that he will pay the remainder within a week, expecting then to do so
+and receive a deed, the seller, if he chooses, can escape giving that
+deed and parting with his farm. The payment of a part of the money
+does not bind the bargain, nor will the courts, though knowing this,
+compel the seller to give such a deed. The reader may ask, if this is
+the law, cannot the farmer practise a fraud on the buyer by receiving
+his money and keeping it and the farm too? He cannot do both things.
+If he refuses to give the deed he must, on the other hand, return the
+money; if he refuses to do this the buyer can compel him by a proper
+legal proceeding to refund the amount. In this way the buyer gets his
+money back again, but not the farm that he bought.
+
+It is said that this statute is as often used as a shield to protect
+men in doing wrong as in preventing frauds. In numberless cases
+persons, just like the farmer imagined, have used this statute as a
+means to protect them in not carrying out their agreements. This
+happens every day.
+
+This statute also relates to other matters. One clause says that an
+executor or administrator cannot be required to pay anything at all
+out of his own pocket on any promise that he has made unless it be in
+writing. Every one knows about the duties of an executor or
+administrator. An executor is one who settles the estate of a person
+who has died leaving a will directing what shall be done with his
+wealth. An administrator is a person who settles the estate of a
+deceased person leaving no will. He is appointed by the law, which
+fully states his duties. Let us suppose that an executor is employed
+to settle an estate, and that he employs a carpenter to make some
+repairs on a house belonging to the estate. The contract is fairly
+enough made between the carpenter and the executor. Let us also
+suppose that he has no lien on the house for the work that he has
+done, or that he has lost his lien by reason of not having filed it in
+time, as the law requires. Afterward he goes to the executor and
+demands payment for the repairs that he has made. Let us suppose that
+the estate is insolvent and cannot pay all of its debts in full. At
+the time of making this contract neither party supposed this would
+happen. But, unhappily, debts have come to light so large and numerous
+that there is not property enough to pay all the creditors everything
+that is due them. The executor says to the carpenter: "There is not
+property enough to pay all of the creditors and you, unfortunately,
+must fare like all of the rest, and you cannot be paid a larger
+percentage on your share than the others." To the carpenter this would
+be unwelcome news, and he would doubtless say to the executor: "I made
+this contract with you expecting that you would pay me, and if the
+property of the estate is not sufficient you ought to pay me this. I
+am a poor man and cannot afford to lose any of my hard-earned money."
+The executor might say to him: "I am as poor as you and I cannot
+afford to pay you out of my own pocket, and in law you cannot compel
+me to do this." And, in truth, the carpenter could not do this unless
+the executor had made a contract in writing, agreeing in any event to
+pay whether there was money enough belonging to the estate or not.
+
+Another clause says that _a person cannot be required to pay the debt
+of another unless the agreement is in writing_. If A went into a store
+to buy goods and B should be a little afraid to trust him, and C, a
+friend of A's, should happen to be present and say to the merchant,
+"Let A have these goods and if he does not pay you I will," this would
+be the promise to pay the debt of another; and if A should not pay it
+C could shield himself behind this statute and escape without paying
+anything.
+
+There is another clause relating to the sale of ordinary merchandise.
+The law says that _contracts for ordinary merchandise must be in
+writing if the amount is over_ $50. In some States the amount is $35.
+Long ago it was decided that this statute did not relate to contracts
+for work, and they therefore must be carried out or fulfilled in the
+same manner as though no statute existed, _for work is not
+merchandise_.
+
+
+VIII. CONTRACTS FOR THE SALE OF MERCHANDISE
+
+To make a contract of sale there must be, as we have seen, two or more
+parties, and a consideration must also be given. The sale is complete
+when the _property_, or _title_, or _ownership_ in the thing bought
+passes from the seller to the buyer. It is not necessary in order to
+make a valid sale to deliver the thing bought. If the _title_ or
+_ownership_ in the thing is not transferred, the sale still remains
+incomplete.
+
+The law supposes or assumes that a person will always pay for a thing
+purchased. If I should go into a store, inquire the price of a book,
+and, after learning the price, should say to the salesman, "I will
+take the book," and he should wrap it up and give it to me and I
+should then walk out with the book under my arm, he doubtless would
+come to me and say in his politest manner: "Why, sir, you have
+forgotten to pay me for it." Suppose I should say: "Oh, yes; but I
+will come in to-morrow and pay." But if I happened to be a stranger,
+and especially if there was a suspicious look about me, and he should
+say they did not give credit in that store, and I was still inclined
+to walk out with my book, he could insist that there had been no sale
+and that I must give the book to him. The law would protect him in
+taking it from me if he did not use undue force. The law assumes,
+unless some different rule exists, that the buyer will always pay for
+the thing purchased, yet in law there is no sale unless the purchase
+money is actually paid.
+
+Of course, credit may be given in a store--that may be the practice;
+and if it is understood between buyer and seller that credit is to be
+given, then a sale is complete as soon as the bargain is struck.
+Indeed, so complete is the sale that if the buyer should say to the
+salesman, "I will leave this here and return and take it in a short
+time," and during his absence the store should be burned up and
+everything perish, the buyer would be obliged to pay for the book. In
+other words, after it had been sold, if still kept there the seller
+would be merely the keeper, or bailee, which is the legal term, and he
+would be obliged to use only ordinary care in keeping it. Suppose a
+thief should come in and take it away--would the seller be responsible
+for the loss? Not if he had used the same care in protecting it as in
+protecting his own property.
+
+Another illustration may be used to bring out the nature of a sale
+more clearly. Suppose I have bought a particular work in a store,
+either paying cash or buying it on credit, if that be the practice of
+the store, and I should say to the salesman: "I am going down street
+and on my return will call and take the book." During my absence I
+meet a friend and tell him of my purchase, and he should say to me: "I
+am very desirous to get that work; I am sure there is no other copy in
+town. Will you not sell it to me?" Suppose I gave him an order,
+directed to the seller, requesting him to deliver the work to the
+person to whom I have sold it. If he should take the order to the
+store he could claim the book as his own and the original seller would
+be obliged to give it to him.
+
+_It is very important_, however, in many cases _to make a delivery of
+the thing sold_. As we have already stated, the title as between the
+buyer and seller is actually changed or transferred at the time of
+making the sale and it is therefore complete. But if a delivery of the
+thing sold is not actually made and another person should come along
+and wish to buy it, and the seller should prove to be, as he sometimes
+is, deceitfully wicked, and should sell and deliver it to him, the
+second buyer would get a good title and could hold it just as securely
+as though it had not been previously sold to another. Of course, the
+second buyer must be an innocent person, knowing nothing about the
+first or prior sale. If he did not know and pays the money for the
+thing he has bought and takes it away, he gets a perfectly good title
+as against the first buyer. If he was not innocent the first buyer
+could claim it and the second one would lose his money unless he was
+able to get it back again from the seller. Of course, such a
+transaction is a fraud on the part of the seller. Therefore it is
+safer in all ordinary transactions for the buyer to take the thing he
+has purchased unless he is sure that the seller is a perfectly honest
+man, who will not practise any such fraud upon him.
+
+Suppose the seller had things in his keeping that had been sold but
+not taken away, and should fail in business, or that persons to whom
+he owed money should sue him and try to hold not only all of the goods
+still owned by him but even those which he had sold. Could they
+succeed as against a person who had bought them in perfectly good
+faith? It is said that the buyer in such cases can get his goods after
+clearly showing that he had bought them and paid for them; but the
+evidence of his purchase must be perfectly clear, otherwise the court
+will not permit him to take them away and he will lose them.
+
+If a merchant is to deliver a thing as a part of the contract of sale,
+then, of course, he must do this; otherwise he is liable for his
+failure to carry out his contract. This rule applies to most purchases
+that are made in stores. The merchant intends to deliver the thing
+sold, the buyer purchases expecting this will be done, and the price
+paid for them is enough to cover the cost of taking them to the
+buyer's house; in other words, the price of the goods, whatever it may
+be, is intended to be enough to pay the merchant for his cost in
+delivering them, and in such cases the contract is not complete until
+a delivery has actually taken place.
+
+Again, if the thing purchased is a part of a mass of goods, a
+separation must be made to complete the contract. If a man should buy
+100 barrels of oil which were a part of 1000 barrels, a separation of
+some kind must be made of the particular ones sold. If one should buy
+trees in a nursery, to make the contract complete the particular trees
+must in some way be known, either by rows or every other tree--in
+short, in some way the trees must be clearly set apart. If part of a
+mass of timber is bought, the particular logs must be marked or in
+some way pointed out from the other part of the mass. This rule
+applies to all things bought that form a part of a large mass. The
+mode of pointing them out depends on the nature of the thing; a
+different kind of separation must be made in some cases from what is
+necessary in others.
+
+
+IX. THE WARRANTIES OF MERCHANDISE
+
+The rule of law in buying is, _the buyer must look out for himself_;
+and if things are not what he supposed they were he has no rightful
+claim against the seller. The maxim of the law is, "_Let the purchaser
+beware_"--let him take care of himself. The rule of the Roman law was
+different. It was the duty of the seller to tell the buyer of all the
+defects known by him in the thing sold, and if he did not he was
+responsible for any loss caused by any defect or imperfection found
+after purchasing that was known by the seller before.
+
+The modern principle may be looked at from two points of view. First,
+_the seller need not make known any defects which the buyer can find
+out himself_. Suppose a man is thinking of buying a horse that is
+(though he does not know it) blind in one eye. The law says that the
+buyer ought to be able to see such a defect quite as readily as the
+seller, and if he does not the fault is his own. Blindness in one eye
+is quite as easily seen as would be the lack of an ear or tail. And
+this principle applies very generally in all purchases. It covers all
+visible defects. Nor can any one find much fault with this rule,
+because the buyer generally has as good eyesight as the seller, and if
+he takes pains, as he should, he is able to discover all ordinary
+defects. Furthermore, the buyer doubtless often knows quite as much
+about the things he purchases as the seller.
+
+But the courts also say that it applies to other defects. Suppose a
+horse has the heaves or the rheumatism, which is known to the seller
+but of which the buyer has no knowledge whatever. The seller is not
+obliged to make known this defect to the buyer, and if he is silly
+enough to purchase on his own wisdom he must abide by the
+consequences. If he does inquire and is deceived, that is another
+thing. But if he asks no questions, or the seller does not deceive him
+in any way, the seller is not responsible for defects known by him at
+the time of the sale. This also is a well-understood rule.
+
+_The seller_, we repeat, _must not deceive the buyer_. In one of the
+well-known cases a man owned a ship that he was desirous of selling.
+She was unsound in several places and the seller put her in such a
+position that her defects could not be readily found out. He did this
+for the purpose of deceiving the buyer and succeeded. When the buyer
+learned how he had been tricked he began a legal proceeding to get
+back a part of the money that he had paid, and won his case. And
+rightfully, too, for the reason that the seller had deceived him,
+which he had no right to do.
+
+Another case may be stated of a man who was desirous of purchasing a
+picture, supposing that it was once in the collection of an eminent
+man. The seller knew perfectly well that the picture did not come from
+that collection and that the buyer was acting under a delusion. He did
+not say that the picture had belonged to the collection or had not; he
+was silent, although he knew that the buyer would not purchase it if
+he knew the truth about its former ownership. For some reason or other
+the buyer did not make any inquiry of the seller, or if he did was not
+told. But after purchasing the picture the buyer learned that he was
+mistaken and that the seller knew this at the time of making the sale.
+He sought to recover the money he had paid and succeeded, the court
+saying that a fraud had been practised upon him; that it was the duty
+of the seller, knowing what was passing in the mind of the buyer, to
+have told him the truth about the former ownership of the picture.
+
+It will be seen, therefore, that _the seller must not deceive the
+buyer in any way or practise any fraud on him_; if he does he will be
+responsible for the loss or injury befalling the other.
+
+What, then, ought a buyer to do in purchasing a horse, for example, in
+order to guard himself against the unwelcome discovery of disease or
+other defect? Clearly, _he ought to require the seller to give him a
+warranty_. A proper way is, if the transaction be an important one, to
+have the warranty in writing and signed by the seller. It need not be
+very long; a few words usually are enough.
+
+There is a very important difference that every one ought to
+understand between words that are spoken at a sale, which are mere
+representations, and words that form a warranty of the thing sold. If
+I should go into a store to buy a piece of flannel, and ask the
+salesman if it was all wool, and he should assure me that it was, and
+I, ignorant of the quality of the material, and desirous of buying a
+piece of all-wool flannel, should say to him: "I know nothing about
+it; I rely entirely on your statement," and he should say: "It is all
+right; all wool, and no cotton," his words would be a warranty, and if
+the flannel proved to be made partly of straw or cotton, or something
+besides wool, I could sue the seller on his warranty, and recover for
+the loss I had suffered, whatever that might be. But suppose I were a
+flannel manufacturer myself, and knew at the time he was saying this
+to me that the flannel was partly cotton; in short, knew a great deal
+more about it than he did, and was not deceived in any way by what he
+said, his words would not be a warranty, because my action in buying
+the flannel would not be influenced by them.
+
+What test, then, is to be applied? Evidently whether or not the buyer
+acts on the words spoken and is deceived by them. If, relying on them,
+he buys and is deceived or misled to his loss or injury, then the
+words will be taken as a warranty and protect the buyer. If, on the
+other hand, he is not deceived by what is told him, and he buys on his
+own knowledge and judgment, then the words are not a warranty.
+
+One or two other points may be briefly noticed. The law says that _the
+seller always warrants the title to the thing sold_--in other words,
+that he is the owner. He may not say one word about the matter, but
+the law implies that he is the owner and would not sell a thing that
+did not belong to him. If he should prove not to be the owner, the
+buyer could recover for his loss.
+
+_Another point about adulterations._ The common law does not regard an
+article as adulterated, giving the buyer the right to claim something
+back, unless it has been materially changed by the foreign substance.
+All, or nearly all, of the States have made statutes within recent
+years, or re-enacted old ones, holding sellers strictly responsible
+for the quality, especially of provisions, sold. These statutes
+generally require the seller to sell absolutely pure articles, and he
+cannot shield himself by saying that he was ignorant and innocent of
+their nature if they proved to be other than pure articles. If a
+grocer should sell cotton-seed oil for olive oil, even though doing so
+ignorantly, without any intention to deceive, he would nevertheless be
+held liable under the statutes that now exist in most of the States;
+and public opinion strongly favours the strict execution of these
+statutes.
+
+
+X. COMMON CARRIERS
+
+_What is meant by a common carrier?_ A person or company that is
+obliged to carry merchandise or passengers for a price or compensation
+from place to place. A common carrier cannot select his business, like
+a private carrier, but _must_ carry all merchandise that is offered;
+or, if he is a carrier of persons, all persons who desire to go and
+are willing to respect all reasonable regulations that relate to
+carrying them. _The principal common carriers are railroads,
+steamboats, and canal companies._
+
+The liability of common carriers is very important to all who travel
+or send merchandise. A common carrier is liable for all losses not
+happening by the act of God or by the public enemy. By "act of God" is
+meant unavoidable calamity, such as lightning and tempests, and by
+"public enemy" is meant a nation at war with another. Once these were
+the only exceptions. Carriers were therefore insurers of the goods
+left with them to be carried to some other place.
+
+This early rule of law fixing their liability has been greatly
+changed. Carriers can now make a contract relieving themselves of all
+liability for losses in carrying goods except those arising from their
+own negligence. The courts in a few cases have said that they can
+relieve themselves even from this, but this is not generally the law.
+They can, though, by special contract relieve themselves from all
+other liability. A railroad company, therefore, can make a contract
+for carrying wheat from Chicago to New York, relieving itself from all
+liability for loss by fire unless this shall be caused by its
+negligence. If a fire should occur without any negligence on the part
+of the company and goods on the way should be destroyed, it could not
+be held responsible for the loss if there was such a contract between
+the shipper and carrier. _A carrier is no longer an insurer for the
+safe carrying of goods._
+
+The courts have permitted carriers to thus lessen their liability
+because they are willing to take goods at lower prices than they would
+if they were to be responsible for all losses. They now virtually say
+to the shippers: "If you are willing to be your own insurers, or
+insure in insurance companies, and hold us for no losses except those
+arising from our own negligence, we are willing to carry your goods at
+a much lower rate." And, as shippers are willing to take the risks
+themselves for the sake of getting lower rates, the practice has
+become universal for lessening the liability of carriers in the manner
+described.
+
+Suppose that goods are burned up by fire. The shipper must be the
+loser unless he can show that it was caused by the negligence of the
+carrier. As he often can show this, he imagines that the carrier is
+still living under the old law and is liable as he was in the early
+days of railroad and steamboat companies. In truth, this is not so.
+His liability is measured by his contract, and there can be no
+recovery for any loss unless negligence on the carrier's part is
+clearly shown, and in many cases this is not easily done.
+
+Though common or public carriers are obliged to take and transport
+almost everything, _they may make reasonable regulations about the
+packing, etc., of merchandise_. Suppose a shipper were to come to a
+railroad company's clerk with a quantity of glass not in boxes, and
+should say to him, "I wish this glass to be carried to New York"; and
+the clerk should say to him that the rules of the company required all
+glass to be packed in boxes lined with straw, and that the rule could
+not be set aside, however short might be the distance. Very likely the
+shipper would say to the agent: "This is expensive; I wish you to take
+it as it is." And if he should say to the agent that he was willing to
+run the risk of breakage, then, perhaps, the clerk might take it in;
+yet, even on those terms, some carriers would not. At all events, if
+the clerk should insist on following the rules, the shipper could not
+justly complain, for this rule is a very reasonable one, as the courts
+have many times declared.
+
+Suppose a shipper should ask a carrier to take a load of potatoes or
+apples to Montreal in very cold weather. The carrier says to him:
+"There is danger of the apples being frozen. I am unwilling to carry
+them unless you will take the risk of their freezing." He could insist
+on these terms, because it would be unreasonable to require carriers
+to transport such merchandise and keep their cars heated. They are not
+made in that way and every shipper knows it, nor are carriers required
+to heat them.
+
+The courts have said that any reasonable regulations respecting the
+merchandise to be carried, the packing, etc., must be respected. A
+carrier could refuse positively to carry dynamite or powder unless it
+was packed in a very careful manner. Doubtless many things are carried
+in ways quite contrary to the regulations, without the knowledge of
+the carrying companies. Packages are rarely examined and things may be
+put within, out of sight, of which carriers know nothing.
+
+A carrier is not required to have cars enough to carry all goods on
+unusual occasions. But it must have enough to carry without delay all
+that come from day to day.
+
+
+XI. THE CARRYING OF PASSENGERS
+
+Millions ride on steamboats, in the street-cars, and by
+steam-railways, and the question is an important one with them. _What
+are the rights and duties of company and passenger? First, it is the
+duty of a company carrying passengers to provide every one with a
+seat._ This rule does not apply to street-cars but it does to
+steam-railways. In some cases it is said of the street-car passengers
+that those who use the straps pay the money from which dividends are
+paid. But the rule is otherwise that applies to railway companies.
+They must furnish seats for their passengers and cannot demand fares
+until seats are secured.
+
+Having taken him on board and seated him, what degree of care must the
+company use in carrying the passenger? It may seem strange to say that
+the company is not obliged to use as much care as in carrying a barrel
+of apples or an animal. Goods must be moved, kept dry, perhaps, and
+cared for in other ways. An animal must be fed. In carrying cattle
+stops must be made for rest. But the passenger takes care of himself.
+He gets in and out and provides his own rations. Therefore the law
+puts on the carrier the duty of using only a reasonable degree of care
+in taking him from place to place. In other words, the railway is not
+an insurer of life, as it is of goods or other merchandise. As
+passengers are of themselves able to get around and use some care
+with respect to their own movements, the law lessens the
+responsibility.
+
+Perhaps the reader would like to know _what the company must do in
+carrying a passenger's baggage_. This is a very practical question. If
+he takes his grip in the seat with him, he alone is responsible for
+its safety. If some one should get in the seat beside him and in going
+out should take the grip along with him, the owner could not ask the
+company to make good his loss. On the other hand, if he delivers his
+grip to the company, then the company is bound by the same rule as
+when carrying other goods and merchandise. The price paid for his
+ticket is also enough to pay the cost of carrying his trunk or other
+baggage, therefore the carrier cannot escape paying for its loss when
+having possession of it on the ground that the service is purely
+voluntary and without compensation. As the company gets compensation
+it must pay for any loss while taking baggage from one place to
+another unless the loss or damage should be due to no fault or
+negligence of the company.
+
+Every now and then we receive a cheque for a trunk or other piece of
+baggage stating that in the event of loss the company will not be
+responsible beyond a certain amount--$50, or $100, or other sum. Is
+that statement on the cheque worth anything? The courts have held that
+if one of these cheques is taken by a passenger and he reads it he is
+bound thereby. This is a contract between carrier and passenger,
+consequently he is bound by the figures mentioned under ordinary
+circumstances. This rule is just and is based on a good reason. As
+every one knows, whenever a trunk is lost it is very difficult for the
+carrier to get any proof of the real value of its contents. All the
+evidence is in the hands of the passenger. If he is without a
+conscience and apparently proves that the things in it were worth
+$200 or $300, he may succeed in getting this much, although it might
+have been full of shavings. It is because of much experience of this
+kind that carriers have tried to limit the amount for which they will
+be responsible, and so long as they do this in a fair, open way the
+law regards their conduct with favour. If, however, a passenger
+receives such a cheque and at once puts it in his pocket and does not
+know its true nature, then the courts have held that he was not bound
+by any limit of this kind.
+
+Again, a person has no business to put diamonds and rubies and
+jewellery and the like in his trunk. If he does and they are lost, he
+cannot compel the carrier to pay for them. The courts have said that
+passengers have no right to put such things in their trunks expecting
+to make carriers pay for them when they are lost. If there are things
+of unusual value in a trunk, the carrier should be informed or else
+the owner should assume the risk.
+
+One word more. An express company is a common carrier and is bound by
+the same rules as other carriers except so far as such rules may be
+changed by definite contract. When a definite contract is made, then
+the rules of ordinary carriers do not apply.
+
+
+XII. ON THE KEEPING OF THINGS
+
+There are some principles of every-day importance relating to the
+keeping of things.
+
+In our last lecture was mentioned the carriage of merchandise by
+common carriers. They not only carry merchandise--they also keep it.
+When merchandise reaches its destination and shippers have had a
+reasonable time to take it away, but neglect to do so, a common
+carrier is no longer liable for its safe keeping as a common carrier
+but only as a warehouseman. What do we mean by this? As we have seen,
+a common carrier, unless he makes a special contract for carrying the
+merchandise, is liable for everything lost or injured except "by the
+act of God or the public enemy"; or, as we have already said, he is an
+insurer for safely taking and keeping the merchandise while it is in
+his charge. When the merchandise has reached the final station, and
+the person to whom it is shipped or sent has had ample time to take it
+away and does not do so, the carrier still keeps the merchandise in
+his warehouse or depot, but he is no longer liable as a carrier for
+keeping it but simply as a warehouseman. In other words, if goods are
+kept by him for this longer period, he is liable for their loss only
+in the event of gross negligence on his part. If a fire should break
+out and the goods be burned, unless it happened by his own gross
+negligence, he would not be liable for the loss. So, too, if a thief
+should break into his warehouse and steal the goods, he would not be
+liable for the theft unless it was shown that he was grossly negligent
+in not providing a safer building. If the rats and mice should destroy
+the goods while they were in the common carrier's building, the same
+rule would apply; or if they were injured or destroyed in any other
+manner, he would not be responsible for the loss unless gross
+negligence was shown.
+
+Different rules apply, depending on whether the keeper, or bailee,
+gets any compensation for storage. In our lecture relating to sales we
+stated that the seller would not be liable for the loss of anything
+intrusted to his keeping after it had been bought of him unless he was
+grossly negligent, for the reason that no reward or compensation is
+paid to him for storage. There are, therefore, two rules which govern
+many cases. If a person keeps a thing for a reward or compensation,
+then he is bound by a stricter rule of diligence than in those cases
+in which he receives nothing for his service. This accords with the
+common reason of mankind. Evidently if a person keeps a thing simply
+as an act of kindness, he ought not to be responsible in the same
+sense that one is held responsible who is paid a fixed price for such
+service.
+
+Another good illustration is that of a bank which keeps the bonds of a
+depositor in its safe for his accommodation. The bank does not pretend
+to be a safe-deposit company or anything of the kind, but it has a
+large vault and wishes to accommodate its customers by keeping their
+stocks and bonds and other articles for them while they are off on
+vacations or for other reasons. It is a common thing for a customer to
+go to his bank, especially in the country, and ask the cashier to keep
+his valuables during his absence. The cashier is willing to comply,
+and the things are intrusted to him; but as the bank receives no
+compensation for this service it is not responsible for their loss
+unless it is grossly negligent in the matter. Suppose they are put in
+the safe among other valuables belonging to the bank and a robber
+breaks in and takes them away--is the bank responsible? Certainly not.
+On the other hand, if the customer should leave his valuables at a
+safe-deposit company, a different rule would apply, because that
+company charges him for keeping the articles. It is therefore bound by
+a stricter rule than the bank. It must use the greatest care, and if
+neglectful in any respect it is responsible for the consequences.
+
+Suppose a person should say to me: "Will you be good enough to leave
+this package with a jeweller on your way down street?" I say to my
+friend: "Certainly, with the greatest pleasure." What degree of care
+must I use in carrying that package? Only ordinary care. Suppose in
+going along the street a thief, without my knowledge, should walk
+beside me and slip his hand into my pocket and take the package, and
+on my arrival at the jewellery store I should find that it was gone.
+Should I be responsible for the loss? Certainly not, because I had
+neither received nor expected to receive any reward for taking the
+package to the store. Of course, if it could be shown that I was
+unnecessarily negligent in carrying the parcel, the owner might be
+justified in claiming damages.
+
+One thing more may be added. If a bailee should be a scoundrel and
+sell the thing left with him for safe-keeping and receive the money,
+the true owner could, nevertheless, claim the thing wherever he could
+find it. The owner would not get a good title. This rule of law
+applies to everything except negotiable paper. A person who buys that
+in good faith, honestly, not knowing that it was stolen, and pays
+money, gets a good title. _This is the only exception to the above
+rule in the law._
+
+
+XIII. CONCERNING AGENTS
+
+Very many persons act as agents for others. Much of the business of
+modern times is carried on by persons of this class. All the managers
+of corporations are agents of the railways, banks, manufacturing
+companies, and the like. They are to be seen everywhere. Every
+salesman is an agent. In short, _the larger part of the modern
+commerce of the world is done by agents_.
+
+AGENTS ARE OF TWO KINDS, SPECIAL AND GENERAL; and there are important
+differences between the two. A GENERAL AGENT is a person who transacts
+all the business of the person hiring or appointing him, called a
+principal, or all his business of a particular kind. A principal might
+have several general agents for the different kinds of business in
+which he was engaged. Suppose he has a cotton-factory and a store and
+a farm; he might have three general agents, each managing one of these
+enterprises.
+
+A general agent may be appointed in different ways. This may be done
+by a written contract. Very often, however, no such contract is made,
+and the person comes to act in a different way. A cashier of a bank,
+for example, is a general agent to transact its business, but the mode
+of appointing him rarely consists of anything more than a resolution
+of the board of directors. More often than otherwise his appointment
+is purely verbal, by word of mouth. And, again, the authority of an
+agent thus to act is often found out by his acts, known and approved
+by his principal, or in other ways. Suppose that A should manage B's
+store for him, buying and selling merchandise with A's knowledge; by
+thus putting him before the world as B's agent the law would say that
+he really was so, and B would be bound by his acts within a limit soon
+to be explained. This, perhaps, is the more common way in which the
+world learns of the authority of an agent's act. He does a great
+variety of things which it is well known must be within the knowledge
+of his principal or employer and, as they are known by the employer
+and the employer says nothing in the way of disowning or repudiating
+these acts, he is bound by them.
+
+Sometimes, indeed, persons pretend to be agents for others when really
+they have no authority to act. When this is done, and the person for
+whom they are pretending to act finds out what they are doing, then it
+is his immediate duty to take such action as the circumstances require
+to disown the acts of such pretenders. If this is not done he may be
+bound by them. His action in adopting or approving is called the
+RATIFYING of an agent's act; and when this is done the agent's action
+is just as valid as though authority had been given to him to act in
+the beginning. The principal's conduct in thus ratifying an agent's
+acts relates back to the time when the agent first began to act.
+
+A SPECIAL AGENT is appointed to do a particular thing and this is more
+often done in writing. Perhaps the most common illustration is the
+appointment of some one to act for another at the annual meeting of a
+corporation to vote on stock. Such a person is called a PROXY, and
+persons often act as through another in this manner. Sometimes one
+person serves as a proxy or agent for a very large number of
+shareholders.
+
+The liability of a principal for the acts of a general agent are very
+different from his liability for the acts of a special agent. In the
+former case the principal is said to be responsible for all the acts
+of his agent that are within the general scope of his business. In
+other words, if it is generally known that A is acting as the general
+agent of B in conducting his business,--we will say managing his
+cotton-factory,--A will bind his principal B for everything done by
+him as general agent in conducting that business.
+
+Suppose A was acting as a general agent of an insurance company and,
+among other things, was told by the president or board of directors of
+the company not to insure property in a given place below a stated
+rate. Suppose a person should go to this agent, desiring to have his
+property insured, but at a lower rate, and suppose that the agent
+should finally yield and make a lower rate as requested. Could his
+company repudiate the contract? Clearly not, for it was A's duty to
+make contracts for insuring properties. If the insured knew that the
+agent had been expressly limited in the rates for insuring and that he
+was going contrary to his instructions in making the lower rate, then,
+indeed, the company would not be bound by the contract. Otherwise it
+could not repudiate the act, for it would fall within the general
+principle that a principal is bound by the acts of his agent done
+within the general scope of his business or employment; and such a
+contract clearly would be within the limit. For, indeed, this is the
+very business of the agent--to effect insurance.
+
+The only thing necessary, therefore, for a person doing business with
+a general agent is to find out whether he is such an agent; and when
+this is learned then a person can safely transact business with him,
+doing anything within the general scope of his powers, unless the
+person actually knows that some limit or restriction has been put upon
+the agent. It is not his duty to find out what the powers of a general
+agent are, but simply whether he is a general agent or not.
+
+But the rule is very different that applies to the liability of a
+principal who employs a special agent. In such cases it is the duty of
+the person doing business with him to inquire what his powers are, for
+the principal will not be bound beyond these. Such an inquiry,
+therefore, must be made. He must ask the agent to show the authority
+under which he is appointed, or in some way clearly convince the other
+what his powers are before any business can be safely done.
+
+The authority of a special agent is often stated in writing, and the
+paper is called A POWER OF ATTORNEY. _In selling land an agent should
+always have such a power_, because a good title to land can only be
+given in writing, and this power of attorney should be copied in the
+records kept for this purpose with the deed itself to show by what
+authority the agent acted in selling the land. Every now and then when
+a person buys a piece of land and examines the title to find out
+whether it is perfect or not, he discovers that somewhere in the chain
+of title a deed was made by the agent of the seller instead of the
+seller himself, and the buyer had forgotten to put the power of
+attorney on record with his deed. The omission to do this is often
+serious. It is in truth just as important for an agent to have a
+proper power of attorney in such a case as to give a proper deed for
+his principal, and the one paper should be recorded quite as much as
+the other, as both are parts of the same story.
+
+_Sometimes an agent appoints a subagent._ This may be orally or in
+writing. A good illustration is that of the collection of a cheque
+deposited with a bank. Suppose a cheque is deposited in a bank in
+Chicago drawn on a bank in Newark, N. J. The Chicago bank is, in the
+first instance, the agent for collecting it. The bank would send the
+cheque to another in New York, which would be its subagent, and that
+bank in turn would send it to a third bank in Newark, which would be a
+subagent of the New York bank. Thus there would be two subagents,
+besides the agent, employed in collecting the cheque.
+
+There is an important question relating to the liability of one of
+these agents or subagents in the event of the negligent performance of
+the duty; which is responsible? Generally, it is said, if the general
+agent appoints a subagent he is nevertheless responsible for his act.
+Suppose a street contractor employs a subagent to repair a street and
+he digs a hole and improperly guards it and some one falls into the
+place and is injured, can the person thus injured look to the
+contractor or to the subcontractor for compensation for his injury?
+The contractor is liable in such cases. It may be added, however, that
+although he is liable to the person injured, he may be able to recover
+of the subcontractor or subagent. But this rule does not apply to the
+banks in every State. In some of them the first bank in which the
+cheque was deposited is liable for the negligence of others that may
+be afterward employed in collecting it, and this rule prevails in the
+federal courts. In a larger number of States the first bank fully
+performs its duty in selecting a proper or reputable agent, and in
+sending the cheque to it for collection. Should the second or subagent
+be neglectful, the depositor of the cheque could compel that agent,
+and not the first, to make its loss good.
+
+
+XIV. THE LAW RELATING TO BANK CHEQUES
+
+A CHEQUE has come to be one of the most common of all writings. Almost
+everybody receives more or less of them. There are some principles
+that ought to be understood by every holder or receiver of a cheque
+which, we fear, are not as well known as they should be.
+
+_First of all, a person ought to present his cheque for payment soon
+after receiving it._ Some people are quite negligent in this matter
+and carry cheques around in their pocket-books for several days before
+presenting them for payment. It may not be convenient to take them to
+a bank, and so they are carried around; perhaps their owners forget
+they have them. They ought not to do so, for the reason that the maker
+of a cheque really says to the holder: "This is an order that I give
+to you on my bank for the money mentioned. If you go at once you can
+get payment, but I do not promise to keep it there always for
+you--only for a short time." Now if a person is willing to accept a
+cheque at all, he ought to present it within the time the holder
+intended, and if he does not and the bank fails, the loss falls on the
+holder and not on the maker.
+
+_What time does the law fix for presenting cheques for payment?_ The
+rule everywhere is that the holder must present a cheque received by
+him, if drawn on a bank in the place where he lives, on the day of
+receiving it or on the next day. If the cheque is drawn on a bank at
+a distance, out of town, then he should send it to that bank, either
+directly or by leaving it with another bank for that purpose, on the
+same day as he received it or the next day. In other words, _he must
+take steps to collect the cheque either on the day of receiving it or
+the following one_.
+
+A friend of mine gave a cheque to a merchant in payment of a small
+bill. Both lived in the same town, where the bank on which the cheque
+was drawn was also located. About a week afterward the bank failed and
+the merchant wrote to him, stating the unwelcome fact and that the
+cheque had not been collected and desired him to send another. I asked
+my friend if he complied with the request, and he said: "Certainly." I
+told him that he ought not to have done so, for he was under no
+obligation either in law or morals to do such a thing. Had he known
+the above rule he would not have sent the second cheque, for it was
+pure negligence on the part of the merchant in not presenting it--in
+fact, on the same day it was received.
+
+A person may, of course, hold a cheque for a much longer period than
+the time above mentioned and present it and receive payment, but the
+point that we are trying to make clear is that _the risk of holding
+it_ during this period _is the holder's and not the risk of the maker
+of the cheque_. I suppose the merchant in the above case had, perhaps,
+lost the cheque. Every now and then one is mislaid and, consequently,
+is not presented for payment when it should be, but the maker ought
+not to suffer for the negligence of the receiver of his cheque. The
+rule of law that we have given is founded on justice, and if the
+receiver is negligent in not presenting it as he should, the holder
+ought not to suffer.
+
+_It is the duty of a bank to pay a cheque just as it is drawn, and if
+it makes any mistakes it must suffer._ The reason for this rule is
+that the maker does not expect to see his cheque again after it leaves
+his hand, and when he puts his money in a bank for safe-keeping the
+bank virtually says to him that it will pay only on his order just as
+he has written. It will guard his interests carefully and pay no
+forged cheques or cheques that have been altered in dates or amounts,
+to his injury. Now, it is quite a common thing for cheques to be
+forged, and still more common for them to be raised. A scoundrel gets
+a cheque that is genuine, ordering a bank to pay $18, and changes it
+to $1800. He presents it for payment and it is paid. By and by the
+depositor finds out that he has not as much money in the bank as he
+supposed he had there. What has happened? Some one has altered one of
+his cheques and drawn out too much. He goes to the bank and makes
+inquiry, learns that this is so, and then demands that it shall make
+the amount good to him. Usually a bank is obliged to pay.
+
+There is one limit to this rule. _A man making a cheque must be
+careful to write it in such a way that changes or alterations cannot
+easily be made._ If he is careless, leaving ample space so that
+changes can be made in the amount, then he will be considered
+negligent, and a bank would not be obliged to make good his loss. If,
+on the other hand, he is careful in drawing his cheques then a bank's
+duty to protect him is plain, and it is liable in the event of
+neglecting to do so.
+
+A few years ago a man drew a cheque for $250, dated it three days
+ahead, and left it with his clerk, directing him to draw the money on
+the day written in the cheque and pay the men who worked for him, and
+went away. The clerk thought that he would like to keep that money
+himself and take a little journey also, so he changed the date to one
+day earlier, went into the bank on that day and drew the money, and
+started for the Klondike or some other place. The maker of the cheque
+soon found out what had happened and demanded of the bank to make the
+amount good. The bank said to him: "Suppose the clerk had waited one
+day longer and then drawn the money, you would have been the loser
+just the same." The man admitted all this, but replied, nevertheless,
+that he had not changed the date; that the bank ought to have seen the
+alteration before paying, and as it did not it was negligent in that
+regard, and the bank was obliged to lose.
+
+When a person takes a cheque he naturally supposes that the bank on
+which it is drawn owes the money to him because he can truly demand
+it. _Suppose a bank refuses to pay, can the holder then sue the bank
+for money?_ In six States--Illinois, South Carolina, Missouri,
+Kentucky, Colorado, and Texas--the holder of such a cheque can sue the
+bank and get his money. The courts in those States say that a cheque
+is an assignment or transfer of the amount of money stated to the
+holder of the cheque from the time that the cheque was given him. The
+law in all of the other States is otherwise, and a bank for a good
+reason can decline to pay a cheque, and, in any event, the holder
+cannot sue the bank for the amount. If it will not pay he must look to
+the maker and not the bank for payment. Of course, _a cheque must
+always be drawn against a deposit, and it is a fraud on the part of a
+person to draw a cheque on a bank when he has no money there_.
+Sometimes mistakes are made by banks in their bookkeeping, and they
+think they have not the money to pay when in truth they have. In such
+cases they sometimes decline to pay, but even if they had the money
+the law says that there is no contract between the holder of a cheque
+and the bank on which it is drawn, and therefore the holder cannot
+sue it should it refuse to pay. This rule, however, is rather losing
+ground and the other is coming into more general favour--that a cheque
+does operate to transfer the money of the maker to the holder and,
+consequently, that he has a right to sue the bank for the money.
+
+Cheques are made payable either to bearer or order. If a cheque is
+made payable to bearer it can be transferred from one person to
+another simply by handing it to him--by delivery; but if a cheque is
+made payable to order, then the person who receives it, if wishing to
+transfer it to some one else, must write his name on the back. If he
+writes his name on the back it is called a blank indorsement, and this
+form is often used in transferring cheques. If, however, a person
+intends to send a cheque through the mail he should never write it
+payable to bearer, but always payable to the order of a particular
+person, so as to require his name to be written thereon in order to
+make a good transfer. This is a much safer way of sending cheques than
+simply by making them payable to bearer.
+
+
+XV. THE LAW RELATING TO LEASES
+
+A LEASE IS AN AGREEMENT, and, as every one knows, usually relates to
+the hiring of lands and houses. _If the agreement is to be for a
+longer period than one year it should be in writing_, for if it be not
+either party can avoid it, not morally but in law. The statute of
+frauds, which has been explained, would shield either party in not
+carrying out such an agreement if it were not in writing if by its
+terms it was to last for a longer period than one year.
+
+There is another very important reason for putting such an agreement
+in writing. Much of the law relating to the two parties, landlord and
+tenant, is one-sided and in favour of the landlord. Our law on that
+subject is based on the English law. It was imported in the early
+colonial days, and, though it has been greatly changed by statute and
+by decisions of the courts, it is still very one-sided, as we shall
+see before finishing this paper. For this reason, especially, all
+leases relating to houses and stores or other buildings, even for a
+short period, should be in writing, with the rights and duties of both
+parties fully stated, so that both may clearly know what to do and to
+expect.
+
+Unless something is said in the lease concerning repairs the landlord
+is not obliged to make any. This statement shows at once the need of
+having a written lease. If the house is out of order--the locks,
+blinds, doors, and windows are not in good order--the tenant cannot
+claim anything of the landlord or require him to put them in good
+condition. Even if a house should become unfit for habitation in
+consequence of fire, or is blown down, or is flooded with water, the
+landlord is not bound to do anything unless he has stated that he will
+in his lease.
+
+A fire broke out not long since in a large warehouse and burned it so
+completely as to render it wholly unfit for use; indeed, all the
+merchandise in it was wholly consumed. Nevertheless, when the lease
+expired and the tenants refused to pay as they had agreed to do, the
+landlord brought a legal proceeding against them to compel them to pay
+during the entire period, as though they had been staying there and
+selling goods and making money, and they were compelled to pay. _This
+is the common law on the subject_, and every tenant is bound to pay in
+such cases unless he has clearly stated in his lease that he is not to
+be holden in the event of the destruction of the building by fire,
+flood, lightning, or other cause.
+
+Furthermore, it may be added that leases nowadays are often furnished
+with blank spaces to be filled up with names, the amounts to be paid,
+times of payment, etc., and persons often sign them without even
+reading them. They should not do this. They should be careful to read
+them over two or three times or more, until they fully understand them
+and are sure of their nature before signing or executing them. People
+are still more negligent in taking out insurance policies without
+reading them. They are very long and parts of them are printed in fine
+type and, perhaps, are quite difficult, especially for old eyes, to
+read. In truth some of the most important parts are put in the finest
+print--some of the exceptions against loss and other matters, which,
+we are quite sure, if a person when taking out a policy should read
+over and understand he would insist on having changed.
+
+If a house becomes unfit for living therein by its own fault--for
+example, if it is overrun with rats, or becomes so decayed that the
+weather invades and is thereby rendered unfit--the tenant, so the law
+says, has indeed the privilege of quitting, if he did not know these
+things at the time of entering; but if he did, he would be required to
+live there, however much he might dislike the company of rats or the
+presence of the snow or rain, and also to pay his rent; or, if
+quitting for that reason, he would still be responsible for the rent
+as he would if living in the house. An eminent legal writer has stated
+the principle in this way: The tenant can leave if the defect was not
+known or anticipated by him, or known or anticipated if he had made a
+reasonable investigation or inquiry before he took the lease.
+
+A tenant is not required to make general repairs without an agreement,
+but he must make those that are necessary to preserve the house from
+injury by rain and wind. If the shingles are blown off or panes of
+glass are broken others must be put in their places; and it is said
+that he would be bound even for ornamental repairs, like paper and
+painting, if he made an agreement to return the house in good order.
+
+A tenant of a farm must manage and cultivate it by the same rules of
+husbandry as are practised in his vicinity, and if his lease ends by
+any event that is uncertain and could neither have been foreseen nor
+foretold, he is entitled to the annual crop sowed or planted by him
+while he was in possession.
+
+As we have stated, if the house is wholly destroyed the tenant must
+still pay the rent, for the reason, which to many may seem absurd,
+that the law regards the land as the principal thing and the house as
+secondary. It is true that a man, in the event of his house burning
+down, might pitch a tent on the ground and live there, but it would be
+a decidedly chilly way of living, especially in the winter-time, in
+the northern part of our country. If a tenant should agree to return
+and deliver the house at the end of the term in good order and
+condition, reasonable wear and tear only excepted, he would be obliged
+to rebuild the house if it burned down. Once more, we ask, in view of
+these things, ought he not to make a written lease and well understand
+its terms before signing it?
+
+The times for paying rent are usually specified in the lease, if one
+is made. When they are not the tenant is governed by the usage of the
+country or place where he lives.
+
+When nothing is said about underletting the whole or a part to some
+one else the tenant has a right to do this, but remains bound to the
+landlord for his rent. Generally when written leases are made there is
+a clause stating that the tenant cannot underlet any portion or all
+without the landlord's consent.
+
+_A tenant is not responsible for taxes unless it is expressly agreed
+that he shall pay them._
+
+If a lease be for a fixed time the tenant loses all right or interest
+in the land as soon as the lease comes to an end, and he must leave
+then or the landlord may turn him out at once, or, in other language,
+eject him. If, however, he stays there longer with the consent of the
+landlord he is then called a tenant at will and cannot be turned out
+by the landlord without giving a notice to him to quit. The statutes
+of the several States have fixed the length of time that a notice
+must be given by the landlord to his tenant before he can turn him
+out. In many States a notice of thirty days must be given; sometimes
+sixty days' notice is required, or even longer.
+
+It is an important question _what things a tenant may take away with
+him at the expiration of his lease_. Of course, there is no question
+whatever with respect to many things. Besides his wife and children he
+may take all his furniture and other movable property. But there are
+many things fixed to the house by the tenant that he desires to remove
+if he has the right to do so, and many questions have been asked and
+decided by the courts relating to this subject. The method of
+fastening them to the house is the test usually applied to determine
+whether they can be taken away or not. If they are fastened by screws
+in such a way as to show that the tenant intended to take them away,
+he can do so, otherwise he cannot.
+
+In modern times the rule has been changed in favour of the tenant, and
+whatever he can remove without injuring the house, leaving it in as
+good condition as it would otherwise be, he can take away; for
+example, ornamental chimney-pieces, coffee-mills, cornices that are
+furnished with screws, furnaces, stoves, looking-glasses, pumps,
+gates, fence rails, barns or stables on blocks, etc. On the other
+hand, a barn placed on the ground cannot be removed, nor benches
+fastened to the house, nor trees, plants, and hedges not belonging to
+a gardener by trade, nor locks and keys. Of course, all these things
+may be changed by the written lease, and it should be clearly stated
+what things may be removed concerning which any doubt may arise. We
+have heard of a case in which a tenant put a pier-glass into a house,
+fastening it by means of cement. He asked and was given the
+landlord's permission to do this at the time of putting it in, but
+when the lease ended the landlord would not allow him to take it out,
+and an appeal was made to a court, which decided in favour of the
+landlord. Doubtless this decision is correct. If the glass could have
+been taken away without injuring the wall then it belonged to the
+tenant. This shows the need of putting such matters in writing;
+otherwise the tenant will suffer unless the landlord be a man of the
+highest integrity.
+
+
+XVI. LIABILITY OF EMPLOYER TO EMPLOYES
+
+Persons who are employed in mills, in erecting buildings, by railroad
+companies, and others, are frequently injured while pursuing their
+employment, and the question has often arisen whether the employer was
+liable for the injury thus suffered by them. The more important of
+these questions we propose to answer in this and the following
+lecture, as they are matters of every-day importance to many people.
+
+First of all, an employe to recover anything for the loss that may
+have happened must show that in some way _his employer was negligent_.
+He cannot get something simply because he has been injured. The law in
+no country has ever said that he could. In all cases he must show that
+his employer failed in his duty in some way toward him to lay the
+foundation of an action against him. This is the first principle to
+keep clearly in mind.
+
+Again, it is said that an employe cannot recover if the injury has
+happened to him in consequence of the negligence of a fellow-servant.
+By this is meant a person engaged in the same common employment. It is
+not always easy to determine whether two persons employed by the same
+company are fellow-servants, as we shall soon see, but the principle
+of law is plain enough that in all cases where they are thus acting
+as fellow-servants they cannot recover for any injury. The law says
+this is one of the risks that a person takes when he enters the
+service of another. Suppose a person is at work mining coal and is
+injured by another person working by his side through his negligence.
+However severely injured he may be he cannot get anything, because the
+person through whose negligence he has been injured is a
+fellow-workman.
+
+But many employes may have the same common employer and yet not be
+fellow-servants. For example, a brakeman would be a fellow-servant
+with the conductor and engineer and other persons running on the same
+train or on other trains belonging to the same company, but he would
+not be a fellow-servant working in the same line of employment with
+those who are engaged in the repair-shop of the company.
+
+This statement is quite sufficient to show the difficulty there is
+sometimes in deciding whether a person is a fellow-servant or not. If
+a person is injured through the negligence of another employed by the
+same company who is not a fellow-servant, then he can recover if there
+are no other difficulties in the way, otherwise he cannot. It does not
+follow that fellow-servants are of the same grade or rank; the test is
+whether they are acting in the same line of employment. The brakeman's
+position is not so high as that of the engineer or conductor, yet all
+three are acting in the same line of employment, and if any one of
+them was injured by another in that part of the service the employer
+would not be liable.
+
+In a very large number of cases, therefore, employers are not liable
+for accidents happening to their employes, because they are injured
+through the negligence of other employes engaged in the same line or
+subdivision of the common service. Perhaps employers escape more
+frequently on this ground than on any other from paying anything for
+losses.
+
+Yet there is another ground on which they often escape paying
+anything. An employe is supposed when making his contract with his
+employer to take on himself all the ordinary risks arising from his
+employment. These in many cases are very numerous. He does not assume
+extraordinary risks, but he does assume all ordinary risks that are
+likely to happen to him. Employes are injured every day and yet can
+recover nothing, because their injury is simply a common one, the risk
+of which they have assumed.
+
+Would it not be possible to make an employer liable for them all?
+Undoubtedly an employe could make a contract of this kind if he wished
+and his employer was willing to do so, but if they did the employer
+would be unwilling to pay as high wages. The greater the risk assumed
+by the employe the larger is the compensation paid; the one thing is
+graded by the other. It was stated when considering the rights and
+duties of common carriers that they have been lessening their
+liabilities; on the other hand, they are carrying for smaller prices
+than they once did. Doubtless a carrier would be willing to assume
+more risks--every kind of risk, in short--if he were paid enough for
+it, but shippers ordinarily are willing to assume many risks for the
+sake of the lower rates and insure their risks in insurance companies.
+Just so the working-men prefer higher wages and assume many risks of
+their employment. There is nothing unfair in this. For example, the
+persons who are engaged in making white lead run an unusual risk in
+pursuing their employment. It is said nowadays that if they use the
+utmost care in protecting themselves from inhaling the fumes that
+arise in some stages of this process, they can live quite as long as
+other people. But unless they do exercise every precaution their
+system finally becomes charged with the poison that arises from this
+process and their lives are shortened. They well understand this
+before beginning the work; they are told of the risks and are paid
+high wages. If, therefore, they undertake such employment, well
+knowing the risks, they have no right to complain if their health
+after a time suffers. No fraud has been practised on them, and we do
+not know that they do complain if they suffer any ill effects from
+their work.
+
+
+XVII. LIABILITY OF EMPLOYERS TO EMPLOYES (_Continued_)
+
+In our last lecture we stated some of the principles relating to the
+liabilities of employers to their employes; in this lesson the subject
+will be continued. _An employer is bound to use some care or
+precaution, and if he does not will be responsible for his neglect._
+One of these is he must employ persons who are fit for the work they
+are set to do. If an employer in mining should put a man to work by
+the side of another to mine coal who he knew was not a skilful
+workman, and, in consequence of this unskilful workman's
+unskilfulness, other miners were injured, he would be responsible for
+hiring such a man. Every one will see the justice of this rule.
+
+_The employer must also give proper instructions to the person
+employed whenever he does not understand his duties._ If a person is
+employed to run a laundry machine who does not understand how to work
+it, and other employes are injured through his ignorance, the employer
+would be liable. He must, therefore, tell such a person what to do; he
+has no right to hazard the lives of others by putting any one who has
+no knowledge of a machine to work without instructing him properly.
+Again, if a person pretends to be capable, and the employer,
+believing him, engages him, and it is soon found out that he is not,
+then it is the duty of the employer either to dismiss him or to give
+him proper instructions. The rule, however, on this subject is not the
+same everywhere. It is sometimes said that if an employe continues to
+work by the side of another after knowing that this other is
+incompetent, it is his duty to give notice to the employer, and if the
+employer continues to employ him, to quit. If he does not he assumes
+the greater risk arising from his knowledge of the incompetency of the
+other.
+
+_It is the duty of the employer to furnish proper appliances for his
+workmen._ He must furnish proper tools and machinery and safe
+scaffolding, and in every respect must show a reasonable degree of
+care in all these particulars. But the courts say that he is not
+obliged to exercise the _utmost_ care, because the employe takes on
+himself some risk with respect to the tools and machinery he uses. For
+example, it is said that employers are not obliged to use the latest
+appliances that are known or appear in the market for the use of their
+workmen. If an employer has an older one that has been in use for
+years, and the employes have found out all the dangers attending its
+use, and a new one appears that is less dangerous to use, the law does
+not require the employer to throw the older one away and get the
+other. It is true that in many States within the last few years
+statutes have been passed by the legislatures requiring employers to
+be much more careful than they were formerly in protecting their
+machinery. Many injuries have happened from the use of belting, and
+the statutes in many cases have stated what must be done in the way of
+enclosing belts, and of putting screens around machinery, and in
+various ways of so protecting it that persons will be less liable to
+suffer. Furthermore, inventors have been very busy in inventing
+machinery with this end in view. The old-fashioned car-coupler was a
+very dangerous device, and many a poor fellow has been crushed between
+cars when trying to couple them. A coupler has been made in which this
+danger no longer exists; in truth, there has been a great advance in
+this direction.
+
+_An employer must also select suitable materials on which to work._
+This is a well-known principle. If he does not, then he is responsible
+for the consequences. In one of the cases a person was injured while
+erecting a scaffolding from the breaking of a knotty timber. The
+testimony was that the knot was visible on the surface and if the
+stick had been examined the defect would have been seen. That seemed a
+slight defect, surely, but the consequence of using the timber was
+very serious, and the court rightly held that as this defect could
+have been seen, had the timber been properly examined, the employer
+was responsible for the injury to a workman who was injured by the
+breaking of it.
+
+_An employer must also select suitable places for his employes._ In
+one of the cases a court said a master does not warrant his servant's
+safety. He does, however, agree to adopt and keep proper means with
+which to carry on the business in which they are employed. Among these
+is the providing of a suitable place for doing his work without
+exposure to dangers that do not come within the reasonable scope of
+his employment. In one of the cases a company stored a quantity of
+dynamite so near a place where an employe was working that he was
+killed by its explosion. The court held that it was negligence on the
+part of the company in requiring its employe to work so near the place
+where this explosive material was kept.
+
+It is said that if an employe knows that a machine which he is to
+operate is defective when accepting employment he can recover nothing
+for the consequences. He assumes the risk whenever he thus engages to
+work. If the service be especially perilous and yet he clearly
+understands the nature of it and is injured when performing it, he can
+get nothing. Doubtless in many of these cases he is paid a larger sum
+for working under such conditions. Whatever may be the truth in this
+regard, the principle of law is well understood that, if he has a full
+knowledge of the risk of his situation and makes no complaint about
+the nature of the machinery that he is to operate, he accepts the
+risks, however great they may be. In one of the cases an employe was
+injured by the kick of a horse belonging to his employer, but he
+recovered nothing, because he understood the vicious nature of the
+animal. The horse had kicked others; in fact, its reputation for
+kicking was well known, and the employe began work with his eyes wide
+open.
+
+This rule also applies if tools, machinery, etc., become defective and
+the employe continues to work after the defects are found out. Of
+course, every one knows that tools wear out and machinery becomes
+weaker, and that is one of the natural consequences of using them. And
+so it is regarded as one of the risks ordinarily taken by an employe,
+and therefore he can get nothing whenever he is injured through the
+operation of a defective machine caused by the natural wear and tear
+of time.
+
+
+EXAMINATION PAPER
+
+    NOTE.--_The following questions are given as an indication of
+    the sort of knowledge a student ought to possess after a careful
+    study of the course. The student is advised to write out the
+    answers. Only such answers need be attempted as can be framed
+    from the lessons._
+
+1. (_a_) What is a contract? (_b_) What is the difference between a
+   simple and a special contract? (_c_) What contracts can be made
+   by a minor? When and how can he ratify them? (_d_) If a person
+   makes a contract to work for one year and breaks it after working
+   six months can he collect six months' wages? (_e_) Give
+   illustrations of six different kinds of contracts.
+
+2. (_a_) When is it necessary that contracts be in writing? (_b_) In
+   what case is a failure of consideration a good defence to a
+   contract? (_c_) Is a consideration required to make an offer
+   binding? (_d_) Is the delivery of goods essential to make a sale
+   complete?
+
+3. (_a_) What are the different kinds of warranties? (_b_) Suppose A
+   should buy goods and pay for them, but not take them away, and
+   afterward B should buy them and take them away--could A recover
+   the goods from B?
+
+4. (_a_) What is the difference between a public and a private
+   carrier? (_b_) Must a public carrier take everything offered?
+   (_c_) What rules of liability apply to common carriers, and how
+   can they be modified?
+
+
+
+
+PREPARING COPY FOR THE PRESS AND PROOF-READING
+
+
+I. PREPARING COPY
+
+Our purpose in these few lessons is to give some explicit directions
+as to the general make-up of manuscripts intended for printing. Every
+person who has even a business card or a circular to print should have
+a knowledge of the common phraseology of a printing house.
+
+As to paper, the size in most common use for manuscripts is what is
+known as _letter_. The sheets in any case should be of uniform size.
+Avoid all eccentricity and affectation in the preparation of your
+manuscript, or "copy," as printers call it. The more matter-of-fact
+and businesslike it is the better.
+
+If at all possible have your manuscript type-written, and under no
+circumstances should you roll the sheets when preparing them for the
+mails. There are a number of large publishing houses which positively
+refuse to touch rolled manuscripts. The very first impression created
+by such a manuscript is one of extreme irritation. A rolled proof is
+pretty nearly as discouraging, yet many printers still follow the
+annoying practice of rolling their proofs.
+
+Every printing establishment of any note has its methods and customs
+as regards orthography, the use of capitals and of punctuation. As a
+rule it is best to leave doubtful points to the printer. Any little
+deviation desired may be easily remedied in the proofs.
+
+Paragraphs should be boldly indicated by setting the line well back in
+the "copy." Extract matter included in the text should be clearly
+shown, either by marking it down the side with a vertical line from
+beginning to end or by setting the whole well back within the compass
+of the text. Such matter is commonly set in slightly smaller type.
+
+With regard to the corrections in the proofs it must be remembered
+that the more carefully an article is written the smaller the expense
+for author's corrections. This charge is often a great source of
+contention between the author and the printer, and, altogether, is an
+unsatisfactory item. A printer is bound, with certain reservations, to
+follow the "copy" supplied. If he does that and the author does not make
+any alterations there is no extra charge and nothing to wrangle about.
+A small correction, trivial as it may seem to the inexperienced, may
+involve much trouble to the printer. A word inserted or deleted may
+cause a page to be altered throughout, line by line, and a few words
+may possibly affect several pages. The charges made for corrections
+are based on the time consumed in making the necessary alterations.
+
+
+II. ON THE NAMES AND SIZES OF TYPE
+
+The beauty of printed matter depends very largely upon the selection
+of a suitable style of type. For books and newspaper work there are in
+use two general classes known as (_a_) _old style_, (_b_) _modern_.
+These names refer to the shape of the letter and not to its size. The
+several sizes of type commonly used in all plain work are as follows:
+
+     1. PEARL.
+     2. AGATE.
+     3. NONPAREIL.
+     4. MINION.
+     5. BREVIER.
+     6. BOURGEOIS.
+     7. LONG PRIMER.
+     8. SMALL PICA.
+     9. PICA.
+    10. ENGLISH.
+    11. GREAT PRIMER.
+
+PICA is universally considered as the standard type, just as the _foot_
+is the standard of measurement. The twelfth part of a pica is the unit,
+called a _point_, by which type bodies are measured. In many printing
+offices the type is known as _6-point_, _8-point_, _10-point_, _etc._,
+instead of as _nonpareil_, _brevier_, _long primer_, _etc._ The
+following specimens show the sizes of the type in common use:
+
+[Illustration: Sample type faces pearl, agate, nonpareil, minion,
+brevier, bourgeois, primer, small pica, pica, English, primer.]
+
+The student must bear in mind the fact that these names refer to the
+_size_ of the type. For instance, there may be a dozen different
+styles of brevier or of pica; a particular specimen of printing may be
+entirely in long primer, yet some words may be capitals, others
+italic, others boldface, and so on.
+
+AGATE is the size of type used in measuring advertisements. There are
+fourteen agate lines in an inch.
+
+A complete series of type of a particular size is called a _font_; as
+a font of brevier, or of pica. Such a font would include:
+
+    CAPITALS
+    SMALL CAPITALS
+    lower-case
+    _ITALIC CAPITALS_
+    _italic lower-case_.
+
+Also _figures_, _fractions_, _points_, _references_, _braces_,
+_signs_, _etc._ Printers divide a font of letters into two classes:
+
+    1. _The upper-case_ } _sorts._
+    2. _The lower-case_ }
+
+The _upper-case sorts_ are _capitals_, _small capitals_, _references_,
+_dashes_, _braces_, _signs_, etc.
+
+The _lower-case sorts_ consist of _small letters_, _figures_,
+_points_, _spaces_, etc.
+
+Type lines are often bulked out by the insertion of thin strips of
+lead, this being called _leading_. Where no leads are employed the
+matter is said to be _solid_.
+
+
+III. THE TERMS USED IN PRINTING
+
+COMPOSITION. This is the name given by printers to the work of setting
+the type. The compositor holds in his hand a _composing-stick_, into
+which he places the type letter by letter, adding the spaces where
+necessary. A great deal of the newspaper work of the present day is
+set by type machines.
+
+DISTRIBUTING. The type of a particular page or article after it has
+been used on the press or for electrotyping is distributed letter by
+letter in the _cases_. This work is much more rapid than composition.
+Type to be used a second time is said to be _standing_ or is called
+_standing matter_.
+
+SPACES. Spaces are short blank types and are used to separate one word
+from another. To enable a compositor to space evenly and to "justify"
+properly, these spaces are cast to various thicknesses. An _em
+quadrat_ is a short blank type, in thickness equal to the letter _m_
+of the font to which it belongs. Quadrats are of various sizes.
+
+CALENDERED PAPER. This name is given to very highly rolled or glazed
+paper such as is used in illustrated work. _Laid_ paper has a slightly
+ribbed surface. _Antique_ paper is rough and usually untrimmed at the
+edges. It is made in imitation of old styles.
+
+CAPS. and LOWER-CASE. These names are used to designate capitals and
+small letters.
+
+CLARENDON. This name is commonly given to a _bold_ and _black-faced
+type_, such as used in text-books to bring out prominently particular
+words.
+
+DUMMY. An imitation in style and size of a book or pamphlet that is
+wanted, usually made up with blank paper.
+
+ELECTROTYPE. Electrotype or stereotype plates are made from type.
+Books are usually printed from such plates.
+
+GALLEY PROOF. As the type is set up it is removed from the
+composing-stick to long forms called _galleys_. A proof taken of the
+whole galley at once is called a _galley proof_. Book work should be
+revised in galleys before it is made up into pages.
+
+IMPRESSION. A _flat-pull_ or first impression is a simple proof usually
+pulled in job offices by laying a sheet of damp paper on the inked type
+and pounding with a flat-surfaced weight to get the impression.
+
+INDENT. To set a line some distance forward, as in the case of a new
+paragraph.
+
+LETTERPRESS. Printed matter from type as distinguished from plate
+printing.
+
+MAKE-UP. To measure off type matter into pages.
+
+OFF-SET. It frequently occurs that as the result of insufficient drying
+or from other causes the impression of one sheet appears on the back of
+another; such work is said to _off-set_.
+
+OVERLAYS. In making ready for the press the pressman finds it necessary
+to add here and there, by pasting, thicknesses of paper to his roller to
+bring out properly the light and shade of an illustration or to get an
+even ink impression from the type or plates. This work is called _making
+overlays_. In expensive illustrated work specialists are engaged solely
+for the purpose of making overlays.
+
+PRESS PROOF. The final proof passed by the author or publisher.
+
+PROCESS-BLOCKS. Blocks produced by the photoengraving and other
+mechanical processes.
+
+QUERY. A mark made on a proof by the printer to call attention to a
+possible error, sometimes expressed by a note of interrogation (?).
+
+REGISTER. The exact adjustment of pages back to back in printing the
+second side of a sheet.
+
+SIGNATURE. The letter or figure at the foot of a sheet to guide the
+binder in folding; also used by printers to identify any particular
+sheet.
+
+The various marks and signs used by printers will be explained in the
+lesson on proof-reading.
+
+
+IV. MARKS USED IN PROOF-READING
+
+The most important of the signs used in making corrections for the
+printer are as follows:
+
+ 1. [Illustration] Delete or expunge.
+
+ 2. [Illustration] A turned letter.
+
+ 3. [Illustration] Wrong-font letter.
+
+ 4. [Illustration] Change capital to small letter, ("lower-case").
+
+ 5. [Illustration] Insert period.
+
+ 6. [Illustration] Transpose words or letters as indicated.
+
+ 7. [Illustration] Change roman to _italic_.
+
+ 8. [Illustration] Change _italic_ to roman.
+
+ 9. [Illustration] Space to be inserted.
+
+10. [Illustration] Matter wrongly altered to remain as it was
+    originally. Dots are placed under the matter.
+
+11. [Illustration] A bad or battered letter.
+
+12. [Illustration] Space to be reduced.
+
+13. [Illustration] Close up.
+
+14. [Illustration] Push down space or lead.
+
+15. [Illustration] New paragraph.
+
+16. [Illustration] Something foreign between the lines, or a wrong-font
+    space making the type crooked.
+
+17. [Illustration] Line to be indented one _em_ of its own body.
+
+When letters or words are set double or are required to be taken out a
+line is drawn through the superfluous word or letter and the mark No.
+1, called _dele_, placed opposite on the margin. (_Dele_ is Latin for
+_take out_.)
+
+A turned letter is noted by drawing a line through it and writing the
+mark No. 2 on the margin.
+
+If letters or words require to be altered to make them more
+conspicuous a parallel line or lines must be made underneath the word
+or letter--namely, for capitals, _three lines_; for small capitals,
+_two lines_; and for italic, _one line_; and on the margin opposite
+the line where the alteration occurs the sign _caps._, _small caps._,
+or _ital._ must be written.
+
+Where a letter of a different font is improperly introduced into the
+page it is noted by drawing a line through it and writing _w. f._
+(_wrong font_) on the margin.
+
+Where a word has been left out or is to be added a _caret_ must be
+made in the place where it should come in and the word written on the
+margin. A caret is made thus: ^
+
+Where letters stand crooked they are noted by a line, but where a page
+hangs lines are drawn across the entire part affected.
+
+Where a faulty letter appears it is denoted by making a cross under it
+and placing a similar mark on the margin.
+
+Where several words are left out or where new matter is to be added
+the added matter is written wherever convenient, and a line is drawn
+from the place of omission to the written words.
+
+In making a correction in a proof always mark the wrong letter or word
+through and insert the alteration in the margin, not in the middle of
+the printed matter, because it is liable to be overlooked if there is
+no marginal reference to the correction. To keep the different
+corrections distinct finish each off with a stroke, thus /; and to
+make the alterations more clear or less crowded mark those relating
+to the left-hand portion on the left margin and those relating to the
+right-hand portion on the right margin.
+
+       *       *       *       *       *
+
+The hints given here are intended for the general public and not for
+the printer, and to the student of these lessons let us say that the
+first essential of good proof-reading is clearness. Be very sure that
+the printer will understand the changes which you desire him to make.
+Quite often it is an advantage if you wish a particular style of type
+used to cut out a sample of that style and paste it on your copy or on
+your proof, indicating that you want it to be used. Instructions to
+the printer written either on the copy or on the proof should be
+surrounded by a line to separate them from the text, or to prevent
+any confusion with other written matter intended as copy or as
+corrections.
+
+When the corrections have been duly made and approved by the author or
+editor it is customary to write the word "press" on the top of the
+first page. If intermediate proofs are wanted, mark on the proofs
+returned to the printer "Send revise." The final or "press" proof is
+always retained by the printer in case of any dispute. It is his
+voucher, and he retains it for future reference.
+
+It is a good plan to make corrections in a different coloured ink from
+that used by the printer's proof-reader. If you are having a pamphlet
+or book printed the different proofs will reach you in the following
+order:
+
+    1. _Galley proofs._
+    2. _Revised proofs_ (if any).
+    3. _Page proofs._
+    4. _Foundry proofs._
+
+[Illustration: A printer's proof.]
+
+So far as possible, make all the necessary changes while the type is in
+galleys. Once made up into pages, a very slight change, particularly
+such a change as the crossing out or addition of a sentence, may make a
+great deal of trouble. When the pages are passed upon they are sent to
+the foundry for casting. The foundry proofs are the last proofs pulled.
+Corrections made on these make it necessary to alter the electrotype
+plates, which is rather an expensive process. To change a word, a piece
+of the metal plate has to be cut out and another with the new word
+soldered in.
+
+[Illustration: A printer's corrected proof.]
+
+A page is said to _overrun_ if it is too long. If the space to be
+occupied is limited it is a good plan to adapt your copy to it by
+counting the words and by comparing the count with that of some
+printed page in the same size of type.
+
+Return proofs to your printer or publisher as promptly as possible. As
+a rule printing houses cannot afford to keep type locked up and unused
+waiting for the return of proofs. There are many imperfections in
+typography, such as wrong-font and inverted letters, awkward and
+irregular spacing, uneven pages or columns, crooked words and lines,
+etc., which it is the business of the printing house to correct. No
+book or pamphlet, therefore, ought to go to press until it has been
+read and revised by an experienced reader.
+
+Strict uniformity should always be preserved in the use of capitals,
+in spelling, and in punctuation.
+
+Where authors have their manuscripts type-written and make two or
+three revises upon the type-written sheets before their copy is turned
+over to the publishing house, the labour of proof-reading and the
+expenses of corrections are reduced to a minimum.
+
+The errors shown in our illustration are more numerous than are likely
+to appear in any proof sent out from a publishing house.
+
+
++------------------------------------------------+
+|            Transcriber's Notes                 |
++________________________________________________+
+|                                                |
+| Page  35 favorable changed to favourable       |
+|       49 favor changed to favour               |
+|       65 (5) changed to 5.                     |
+|      115 contantly changed to constantly       |
+|      130 Ierland change to Ireland             |
+|      150 battle-ships changed to battleships   |
+|      152 BREAD-STUFFS changed to BREADSTUFFS   |
+|      162 duplicated "from" deleted             |
+|      163 bread-stuffs change to breadstuffs    |
+|      205 June, 1898 changed to June 30, 1898   |
+|      208 proportiona t changed to proportion at|
+|      223 duplicated "in" deleted               |
+|      258 typewritten changed to type-written   |
+|      350 everyday changed to every-day         |
+|      384 comma added after figures             |
+|      389 colored changed to coloured           |
+|      390 nessary changed to necessary          |
++------------------------------------------------+
+
+
+
+
+
+End of the Project Gutenberg EBook of Up To Date Business, by Various
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