everybody's guide to money matters

Everybody'sGuidetoMoneyMatters ProjectGutenbergEtextofEverybody'sGuidetoMoney,byCotton Copyrightlawsarechangingallovertheworld,besuretocheck thecopyrightlawsforyourcountrybeforepostingtheseiles!! Pleasetakealookattheimportantinformationinthisheader. Weencourageyoutokeepthisileonyourowndisk,keepingan electronicpathopenforthenextreaders.Donotremovethis. **WelcomeToTheWorldofFreePlainVanillaElectronicTexts** **EtextsReadableByBothHumansandByComputers,Since1971** *TheseEtextsPreparedByHundredsofVolunteersandDonations* InformationoncontactingProjectGutenbergtogetEtexts,and furtherinformationisincludedbelow.Weneedyourdonations. Everybody'sGuidetoMoneyMatters byWilliamCotton,F.S.A. September,1999[Etext#1903] [Datelastupdated:August22,2003] ProjectGutenbergEtextofEverybody'sGuidetoMoney,byCotton ******Thisileshouldbenamedegtmm10.txtoregtmm10.zip****** Page1 Everybody'sGuidetoMoneyMatters CorrectedEDITIONSofouretextsgetanewNUMBER,egtmm11.txt VERSIONSbasedonseparatesourcesgetnewLETTER,egtmm10a.txt ThisetextwaspreparedbyNigelLacey,Leicestershire,UK. ProjectGutenbergEtextsareusuallycreatedfrommultipleeditions, allofwhichareinthePublicDomainintheUnitedStates,unlessa copyrightnoticeisincluded.Therefore,wedousuallydoNOT!keep thesebooksincompliancewithanyparticularpaperedition. Wearenowtryingtoreleaseallourbooksonemonthinadvance oftheoficialreleasedates,leavingtimeforbetterediting. Pleasenote:neitherthislistnoritscontentsareinaltill midnightofthelastdayofthemonthofanysuchannouncement. 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Togodirectlytotheetextcollections,useFTPorany WebbrowsertovisitaProjectGutenbergmirror(mirror sitesareavailableon7continents;mirrorsarelisted athttp://promo.net/pg). Macusers,doNOTpointandclick,typingworksbetter. ExampleFTPsession: ftpsunsite.unc.edu login:anonymous Page4 Everybody'sGuidetoMoneyMatters password:your@login cdpub/docs/books/gutenberg cdetext90throughetext99 dir[toseeiles] getormget[togetiles...setbinforzipiles] GETGUTINDEX.??[togetayear'slistingofbooks,e.g.,GUTINDEX.99] GETGUTINDEX.ALL[togetalistingofALLbooks] *** **InformationpreparedbytheProjectGutenberglegaladvisor** (ThreePages) ***START**THESMALLPRINT!**FORPUBLICDOMAIN ETEXTS**START*** Whyisthis"SmallPrint!"statementhere?Youknow:lawyers. Theytellusyoumightsueusifthereissomethingwrongwith yourcopyofthisetext,evenifyougotitforfreefrom someoneotherthanus,andevenifwhat'swrongisnotour fault.So,amongotherthings,this"SmallPrint!"statement disclaimsmostofourliabilitytoyou.Italsotellsyouhow youcandistributecopiesofthisetextifyouwantto. *BEFORE!*YOUUSEORREADTHISETEXT ByusingorreadinganypartofthisPROJECTGUTENBERG-tm etext,youindicatethatyouunderstand,agreetoandaccept this"SmallPrint!"statement.Ifyoudonot,youcanreceive arefundofthemoney(ifany)youpaidforthisetextby sendingarequestwithin30daysofreceivingittotheperson yougotitfrom.Ifyoureceivedthisetextonaphysical Page5 Everybody'sGuidetoMoneyMatters medium(suchasadisk),youmustreturnitwithyourrequest. ABOUTPROJECTGUTENBERG-TMETEXTS ThisPROJECTGUTENBERG-tmetext,likemostPROJECTGUTENBERG- tmetexts,isa"publicdomain"workdistributedbyProfessor MichaelS.HartthroughtheProjectGutenbergAssociationat Carnegie-MellonUniversity(the"Project").Amongother things,thismeansthatnooneownsaUnitedStatescopyright onorforthiswork,sotheProject(andyou!)cancopyand distributeitintheUnitedStateswithoutpermissionand withoutpayingcopyrightroyalties.Specialrules,setforth below,applyifyouwishtocopyanddistributethisetext undertheProject's"PROJECTGUTENBERG"trademark. Tocreatetheseetexts,theProjectexpendsconsiderable effortstoidentify,transcribeandproofreadpublicdomain works.Despitetheseefforts,theProject'setextsandany mediumtheymaybeonmaycontain"Defects".Amongother things,Defectsmaytaketheformofincomplete,inaccurateor corruptdata,transcriptionerrors,acopyrightorother intellectualpropertyinfringement,adefectiveordamaged diskorotheretextmedium,acomputervirus,orcomputer codesthatdamageorcannotbereadbyyourequipment. LIMITEDWARRANTY;DISCLAIMEROFDAMAGES Butforthe"RightofReplacementorRefund"describedbelow, [1]theProject(andanyotherpartyyoumayreceivethis etextfromasaPROJECTGUTENBERG-tmetext)disclaimsall liabilitytoyoufordamages,costsandexpenses,including legalfees,and[2]YOUHAVENOREMEDIESFORNEGLIGENCEOR UNDERSTRICTLIABILITY,ORFORBREACHOFWARRANTYOR CONTRACT, Page6 Everybody'sGuidetoMoneyMatters INCLUDINGBUTNOTLIMITEDTOINDIRECT,CONSEQUENTIAL, PUNITIVE ORINCIDENTALDAMAGES,EVENIFYOUGIVENOTICEOFTHE POSSIBILITYOFSUCHDAMAGES. 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INDEMNITY YouwillindemnifyandholdtheProject,itsdirectors, oficers,membersandagentsharmlessfromallliability,cost andexpense,includinglegalfees,thatarisedirectlyor indirectlyfromanyofthefollowingthatyoudoorcause: Page7 Everybody'sGuidetoMoneyMatters [1]distributionofthisetext,[2]alteration,modiication, oradditiontotheetext,or[3]anyDefect. DISTRIBUTIONUNDER"PROJECTGUTENBERG-tm" Youmaydistributecopiesofthisetextelectronically,orby disk,bookoranyothermediumifyoueitherdeletethis "SmallPrint!"andallotherreferencestoProjectGutenberg, or: [1]Onlygiveexactcopiesofit.Amongotherthings,this requiresthatyoudonotremove,alterormodifythe etextorthis"smallprint!"statement.Youmayhowever, ifyouwish,distributethisetextinmachinereadable binary,compressed,mark-up,orproprietaryform, includinganyformresultingfromconversionbywordpro- cessingorhypertextsoftware,butonlysolongas *EITHER*: [*]Theetext,whendisplayed,isclearlyreadable,and does*not*containcharactersotherthanthose intendedbytheauthorofthework,althoughtilde (~),asterisk(*)andunderline(_)charactersmay beusedtoconveypunctuationintendedbythe author,andadditionalcharactersmaybeusedto indicatehypertextlinks;OR [*]Theetextmaybereadilyconvertedbythereaderat noexpenseintoplainASCII,EBCDICorequivalent formbytheprogramthatdisplaystheetext(asis thecase,forinstance,withmostwordprocessors); OR Page8 Everybody'sGuidetoMoneyMatters [*]Youprovide,oragreetoalsoprovideonrequestat noadditionalcost,feeorexpense,acopyofthe etextinitsoriginalplainASCIIform(orinEBCDIC orotherequivalentproprietaryform). 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TheProjectgratefullyacceptscontributionsinmoney,time, scanningmachines,OCRsoftware,publicdomainetexts,royalty freecopyrightlicenses,andeveryothersortofcontribution youcanthinkof.Moneyshouldbepaidto"ProjectGutenberg Association/Carnegie-MellonUniversity". *END*THESMALLPRINT!FORPUBLICDOMAIN ETEXTS*Ver.04.29.93*END* ThisetextwaspreparedbyNigelLacey,Leicestershire,UK. Page9 Everybody'sGuidetoMoneyMatters Transcriber'sNotes: IhaveusedtheUKpoundsymbol(£)inthis e-textasitappearsintheoriginal.[It lookslikeanLwithacrossbar.]Iam uncertainwhetherthissymbolwillbe supportedonallsystemsandfontsthatthis textileendsbeingviewedwith.Myapologies ifthisappliestoyou. Ihaveendeavouredtoretaintheoriginaltable formatting,ratherthantoreformatthetables inalignmentwiththetext.However,asseveral ofthetableswereinlandscapeorientationin theoriginal,thishasnecessarilyresultedin someverylonglinesinthetables(upto130 charactersinsomecases). Finally,asIcheckedthetranscriptionprocess certainerrorsinthetablescametolight. Ratherthancorrecttheseerrors,astheyare anintegralpartoftheoriginal,theonesthat Inotedaremarkedwithunderscores(_).[Note thatunderscoresarealsousedtomark_italicised_ passagesintheoriginaltext.] Page10 [...].. .Everybody's Guide to Money Matters Everybody's Guide to Money Matters _With a description of the various investments chie ly dealt in on the stock exchange, and the mode of dealing therein_ also Some account of the pitfalls prepared for the unwary, and suggestions to the cautious investor by William Cotton, F.S.A Late treasurer of the county of Devon,... always the risk of their being lost or stolen To avoid this risk, and to provide facilities for buying and selling, with the complications incident thereto, and the passing of money from one hand to another, an intermediary agency is required, and that agency is to be found in the banking companies In nearly every town, Page 19 Everybody's Guide to Money Matters having a pretence to the name, in the United Kingdom, will be found a branch bank of some... passing between the bank and herself, now become a customer - in which she will ind it Page 21 Everybody's Guide to Money Matters stated in the briefest business manner, that the Blankshire Bank is Dr (debtor) to, or owes, Miss Jane Smith £500 She will be told that portions of this money may be drawn out from time to time as she may need it, but this can only be done by cheques, or forms of request to the bank to pay out the amount desired.*... Bank is convenient to herself and pro itable to the Blankshire Bank, for they have the use of it free, paying nothing for that use in the way of interest She will have other money coming to her in the shape of rents, and the interest on money invested, as represented in those documents in the tin box - all which money can be handed Page 26 Everybody's Guide to Money Matters over to the Bank in the same way that the £500... _189 | To the Blankshire Banking Company, | | | Blanktown | | | | | _ | Pay to or bearer | | | | | | the sum of | | | | | £ | £ _ | | | | Page 22 Everybody's Guide to Money Matters She then recollects that she has no money to go on with, and asks to have £10 of the £500... at the dotted line, and is retained by the cashier, who hands over £10 to the lady together with the book containing the remaining cheques "Oh! I had quite forgotten - I owe Miss Page 23 Everybody's Guide to Money Matters Tucker, the milliner, £23 10s Will the cashier please to let me have £23 10s to pay her with." Miss Smith is told that there is no need of incurring the risk of carrying the money through the streets, as a cheque in favour of Miss Tucker... Arranging Cheques to be Honored by Another Bank 145 Request for Passport and Circular Notes 145 Ordering Letter of Credit 146 Remitting in this Country 146 Lodging Securities at Bank 147 Order to Receive Dividends 147 Ordering Investments 148 EVERYBODY'S GUIDE TO MONEY MATTERS CHAPTER I EASY STEPS TO MONEY MATTERS MONEY is the medium by which we may acquire... premising that in the meantime she has received and paid into the bank some moneys, and also Page 28 Everybody's Guide to Money Matters signed and sent cheques to some of her tradesmen: -| || | | THE BLANKSHIRE BANK || BLANKTOWN, | | || | | Dr to Miss Jane Smith || of Blanktown Cr | | || | | ... the interest usually charged is fair and reasonable Page 31 Everybody's Guide to Money Matters CHAPTER III LONDON BANKS AND BANKING THE private banks now doing business in London are few in number The tendency of late years has been to transform these banks into "Limited Liability" Companies, or to amalgamate with companies of this character It looks as though, in course of time, private banks will altogether cease to exist, the joint-stock banks being better adapted to modern requirements... Florin, or two-shilling piece, equal to onetenth of a sovereign Shilling piece, equal to one-twentieth of a sovereign Sixpenny piece, one-half of a shilling Page 16 Everybody's Guide to Money Matters Threepenny piece, one-half of a sixpence BRONZE A penny, equal to one-twelfth of a shilling Halfpenny, equal to one-half of a penny Farthing, one-fourth of a penny In writing or speaking of sums of money the expression takes the form of "pounds, shillings, . Everybody's Guide to Money Matters ProjectGutenbergEtextofEverybody's Guide to Money, byCotton Copyrightlawsarechangingallovertheworld,besure to check thecopyrightlawsforyourcountrybeforepostingtheseiles!! Pleasetakealookattheimportantinformationinthisheader. 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Theytellusyoumightsueusifthereissomethingwrongwith yourcopyofthisetext,evenifyougotitforfreefrom someoneotherthanus,andevenifwhat'swrongisnotour fault.So,amongotherthings,this"SmallPrint!"statement disclaimsmostofourliability to you.Italsotellsyouhow youcandistributecopiesofthisetextifyouwant to. *BEFORE!*YOUUSEORREADTHISETEXT ByusingorreadinganypartofthisPROJECTGUTENBERG-tm etext,youindicatethatyouunderstand,agree to andaccept this"SmallPrint!"statement.Ifyoudonot,youcanreceive arefundofthe money (ifany)youpaidforthisetextby sendingarequestwithin30daysofreceivingit to theperson yougotitfrom.Ifyoureceivedthisetextonaphysical Page5 Everybody's Guide to Money Matters medium(suchasadisk),youmustreturnitwithyourrequest. ABOUTPROJECTGUTENBERG-TMETEXTS ThisPROJECTGUTENBERG-tmetext,likemostPROJECTGUTENBERG- tmetexts,isa"publicdomain"workdistributedbyProfessor MichaelS.HartthroughtheProjectGutenbergAssociationat Carnegie-MellonUniversity(the"Project").Amongother things,thismeansthatnooneownsaUnitedStatescopyright onorforthiswork,sotheProject(andyou!)cancopyand distributeitintheUnitedStateswithoutpermissionand withoutpayingcopyrightroyalties.Specialrules,setforth below,applyifyouwish to copyanddistributethisetext undertheProject's"PROJECTGUTENBERG"trademark. To createtheseetexts,theProjectexpendsconsiderable efforts to identify,transcribeandproofreadpublicdomain works.Despitetheseefforts,theProject'setextsandany mediumtheymaybeonmaycontain"Defects".Amongother things,Defectsmaytaketheformofincomplete,inaccurateor corruptdata,transcriptionerrors,acopyrightorother intellectualpropertyinfringement,adefectiveordamaged diskorotheretextmedium,acomputervirus,orcomputer codesthatdamageorcannotbereadbyyourequipment. LIMITEDWARRANTY;DISCLAIMEROFDAMAGES Butforthe"RightofReplacementorRefund"describedbelow, [1]theProject(andanyotherpartyyoumayreceivethis etextfromasaPROJECTGUTENBERG-tmetext)disclaimsall liability to youfordamages,costsandexpenses,including legalfees,and[2]YOUHAVENOREMEDIESFORNEGLIGENCEOR UNDERSTRICTLIABILITY,ORFORBREACHOFWARRANTYOR CONTRACT, Page6 Everybody's Guide to Money Matters INCLUDINGBUTNOTLIMITED TO INDIRECT,CONSEQUENTIAL, PUNITIVE ORINCIDENTALDAMAGES,EVENIFYOUGIVENOTICEOFTHE POSSIBILITYOFSUCHDAMAGES. 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INDEMNITY YouwillindemnifyandholdtheProject,itsdirectors, oficers,membersandagentsharmlessfromallliability,cost andexpense,includinglegalfees,thatarisedirectlyor indirectlyfromanyofthefollowingthatyoudoorcause: Page7 Everybody's Guide to Money Matters [1]distributionofthisetext,[2]alteration,modiication, oraddition to theetext,or[3]anyDefect. DISTRIBUTIONUNDER"PROJECTGUTENBERG-tm" Youmaydistributecopiesofthisetextelectronically,orby disk,bookoranyothermediumifyoueitherdeletethis "SmallPrint!"andallotherreferences to ProjectGutenberg, or: [1]Onlygiveexactcopiesofit.Amongotherthings,this requiresthatyoudonotremove,alterormodifythe etextorthis"smallprint!"statement.Youmayhowever, ifyouwish,distributethisetextinmachinereadable binary,compressed,mark-up,orproprietaryform, includinganyformresultingfromconversionbywordpro- cessingorhypertextsoftware,butonlysolongas *EITHER*: [*]Theetext,whendisplayed,isclearlyreadable,and does*not*containcharactersotherthanthose intendedbytheauthorofthework,althoughtilde (~),asterisk(*)andunderline(_)charactersmay beused to conveypunctuationintendedbythe author,andadditionalcharactersmaybeused to indicatehypertextlinks;OR [*]Theetextmaybereadilyconvertedbythereaderat noexpenseintoplainASCII,EBCDICorequivalent formbytheprogramthatdisplaystheetext(asis thecase,forinstance,withmostwordprocessors); OR Page8 Everybody's Guide to Money Matters [*]Youprovide,oragree to alsoprovideonrequestat noadditionalcost,feeorexpense,acopyofthe etextinitsoriginalplainASCIIform(orinEBCDIC orotherequivalentproprietaryform). [2]Honortheetextrefundandreplacementprovisionsofthis "SmallPrint!"statement. [3]Payatrademarklicensefee to theProjectof20%ofthe netproitsyouderivecalculatedusingthemethodyou alreadyuse to calculateyourapplicabletaxes.Ifyou don'tderiveproits,noroyaltyisdue.Royaltiesare payable to "ProjectGutenbergAssociation/Carnegie-Mellon University"withinthe60daysfollowingeach dateyouprepare(orwerelegallyrequired to prepare) yourannual(orequivalentperiodic)taxreturn. WHATIFYOU*WANT* TO SEND MONEY EVENIFYOUDON'THAVE TO? TheProjectgratefullyacceptscontributionsin money, time, scanningmachines,OCRsoftware,publicdomainetexts,royalty freecopyrightlicenses,andeveryothersortofcontribution youcanthinkof. Money shouldbepaid to "ProjectGutenberg Association/Carnegie-MellonUniversity". *END*THESMALLPRINT!FORPUBLICDOMAIN ETEXTS*Ver.04.29.93*END* ThisetextwaspreparedbyNigelLacey,Leicestershire,UK. Page9 Everybody's Guide to Money Matters Transcriber'sNotes: IhaveusedtheUKpoundsymbol(£)inthis e-textasitappearsintheoriginal.[It lookslikeanLwithacrossbar.]Iam uncertainwhetherthissymbolwillbe supportedonallsystemsandfontsthatthis textileendsbeingviewedwith.Myapologies ifthisapplies to you. Ihaveendeavoured to retaintheoriginaltable formatting,ratherthan to reformatthetables inalignmentwiththetext.However,asseveral ofthetableswereinlandscapeorientationin theoriginal,thishasnecessarilyresultedin someverylonglinesinthetables(up to 130 charactersinsomecases). Finally,asIcheckedthetranscriptionprocess certainerrorsinthetablescame to light. Ratherthancorrecttheseerrors,astheyare anintegralpartoftheoriginal,theonesthat Inotedaremarkedwithunderscores(_).[Note thatunderscoresarealsoused to mark_italicised_ passagesintheoriginaltext.] Page10 Everybody's Guide to Money Matters Everybody's Guide to Money Matters _Withadescriptionofthevariousinvestmentschielydealtinonthestock exchange,andthemodeof dealingtherein_ also Someaccountofthepitfallspreparedfortheunwary, andsuggestions to thecautiousinvestor. by WilliamCotton,F.S.A. LatetreasurerofthecountyofDevon, authorof"AnElizabethanGuild,""GleaningsfromRecords," "TheBankManager,"etc. Originatorofthepostalordersystem. London1898. PREFACE. Page11 Everybody's Guide to Money Matters THEAuthor,emboldenedbyaBankingexpe- rienceofoverfortyyears,offersthislittlework to thepublicinthehopethat,elementarythough itbe,itmayproveacceptable to manypersons ofbothsexes. Theworkhasbeenpreparedchielyforthe useofwomen,avastproportionofwhomare broughtupinutterignoranceof money matters inthesimplestform,thoughotherwisetheymay behighlyaccomplished. Thesubject,itmustbeallowed,isnotafasci- natingone,butthereareperiodsinthelivesof mostpersonswhensomeknowledgeof money matters maybeusefulandevennecessary. W.C. CONTENTS. PAGE CHAP.I.-Whatis Money? -What to dowithit-How to openaBankAccount-How to drawCheques...1 CHAP.II.-How to Deposit Money atInterest-TheBank PassBook-TheAdvantagesofaBankAccount.13 Page12 Everybody's Guide to Money Matters CHAP.III.-LondonBanksandBanking-BillofExchange- Deposits-ScotchandIrishBanks.......20 CHAP.IV.-Investments-WhatareSecurities-Mortgages -TheFunds-TheNationalDebt-StocksandShares- Dividends,howPayable............26 CHAP.V.-BritishGovernmentFunds-TheDifferentDebts -TerminableAnnuities-LoansGuaranteedbyGovern- ment-Dividends,how to Receivethem-AutomaticRe- investmentofDividends............35 CHAP.VI.-GovernmentAnnuities,how to Purchase-When Payable-Tables-InsuranceOficeAnnuities-Tables- IndianGovernmentStocks...........41 CHAP.VII.-Loans to Corporations,&c.-ColonialGovern- mentSecurities-InscribedStocksandBonds-Listof InscribedStocks-BondsandCoupons-ForeignGovern- mentStocks-CautioninInvesting-Railways-The DifferentStocksandtheirRelativeValues-TheWar- rantsforInterestandDividends-IndianRailwayStocks -AmericanRailways-ForeignRailways-Banks-As anInvestment-ColonialandForeignCorporationStocks -CanalsandDocks-Gas-ElectricLighting,Telegraph andTelephone-WaterWorks-Breweries-Industrial Companies-Financial,LandandInvestmentCompanies -FinancialTrusts-InsuranceCompanies-Steamship Companies-Mines...............55 CHAP.VIII.-TheStockExchange-BrokersandJobbers- HowBusinessisDone-"Contango"and"Backwarda- Page13 Everybody's Guide to Money Matters tion"-"Bulls"and"Bears"-"Boom"and"Slump" -Settlement-RiskinKeepingConvertibleBonds- Brokers-TrapsandSnares-GoodCompaniesandBad- AdvertisingSwindles-GoldMines-ATypicalCase- ExplorationCompanies.............79 CHAP.IX.-LifeInsurance-ItsAdvantages-Mutualand JointStockCompanies-ChoiceofOfice-FormofPro- posal-Examination-Premiums,howPayable-Examples ofAdvantage-VariousModesofInsuring-Bonuses- HowApplied-EndowmentInsurance-Non-proitable Policies-SettlementPolicies-EndowmentofChildren- InsuranceofJointLives-InsuranceonLongestofTwo Lives-Surrenders-FireInsurance-FarmStock-Other Insurances..................101 CHAP.X.-ABuildingSociety,ModeofDoingBusiness- How to ObtainaShare,andTableofPayments-How to Withdraw,andTable-Borrowers-How to Builda House-TableofPayments-HowProitsaremade-The WeakPointsofSocietiesBadlyConducted-WhatLeads  to Collapse-NecessityforChoosingDirectorsofStanding andCharacter-NecessityforEficientAuditofAc- counts....................122 CHAP.XI.-ThePostOficeSavingsBank-ModeofDepo- siting-OpeninganAccount-ConvenienceandPrecau- tions-LimitinAmounts-Withdrawal-Payment to Representatives-GovernmentAnnuities,&c.-Advan- tagesthePostOficeOffers.........134 Page14 Everybody's Guide to Money Matters APPENDIX. TableofInterestonInvestments...........142 ExamplesofBusinessCommunications-Sending Money byPost................143 Requiring Money ...............143 AcknowledgingReceipt.............144 Transfer to DepositAccount..........144 ArrangingCheques to beHonoredbyAnotherBank145 RequestforPassportandCircularNotes....145 OrderingLetterofCredit...........146 RemittinginthisCountry...........146 LodgingSecuritiesatBank..........147 Order to ReceiveDividends..........147 OrderingInvestments.............148 EVERYBODY'S GUIDE TO MONEY MATTERS. CHAPTERI. EASYSTEPS TO MONEY MATTERS. MONEY isthemediumbywhichwemayacquire fromothers,whoarewilling to partwiththem, suchthingsaswemaydesire.Thepriceofan articleisthevaluesetuponitbythepossessor, Page15 Everybody's Guide to Money Matters asrepresentedbyanexpressedsumin money. Thepriceofsomethingsarearbitrarilyixed bylaworcustom,suchasstamps,professional fees,duties,&c. Thestandardofvalueinthiscountryisgold, anditisasagainstgold,representedbycoins ofdifferentdenominations,thatthevalueofall commoditiesisestimated. TheauthorisedcoinsoftheUnitedKingdom consistofthefollowingpieces:- GOLD. Five-sovereignpiece,equal to Fivepounds. Two-sovereignpiece,equal to Twopounds. One-sovereignpiece,equal to Onepound. Half-sovereignpiece,equal to Half-a-pound. SILVER. Acrown,orive-shillingpiece,equal to one- fourthofasovereign. Double-iorin,orfour-shillingpiece,equal to one-ifthofasovereign. Half-a-crown,ortwoshillingsandsixpence, equal to one-eighthofasovereign. Florin,ortwo-shillingpiece,equal to onetenthofasovereign. Shillingpiece,equal to one-twentiethofa sovereign. Sixpennypiece,one-halfofashilling. Page16 Everybody's Guide to Money Matters Threepennypiece,one-halfofasixpence. BRONZE. Apenny,equal to one-twelfthofashilling. Halfpenny,equal to one-halfofapenny. Farthing,one-fourthofapenny. Inwritingorspeakingofsumsof money the expressiontakestheformof"pounds,shillings, andpence";forexample,Twenty-onepounds iveshillingsandninepence.Sometimesthe word"sterling"isadded,meaninggenuineor standardcoinoftherealm.Inaccountsthe iguresareplacedinthreeparallelcolumns undertheheadingof£s.d."£"forpounds, "s."forshillings,and"d."forpence,from _Libri_,_solidi_,and_denarii_,theLatinequivalents forthesevalues. ||||| ||£|s.|d.| ||21|5|9| ||||| Anotherformof money, ifitmaybeso termed,istheBanknote.Thisissimplya promise to pay,ondemand,theamountrepresentedonthenote,ingoldorsomelegaltender. Themostcommoninuseare£5notes,butthere areothersofdifferentdenominations,suchas £10,£20,£50,£100,&c.Somecountrybanks stillissuethesenotes,buttheyarebylaw Page17 Everybody's Guide to Money Matters restrictedfromissuingbeyondacertainamount ixedbytheBankActof1844.Nonewbank canissuenotes,andthosewhichhavetheprivi- legearegraduallyrelinquishingit,sothatin courseoftimetherewillbeonlyonebank entitled to issuenotes,andthatistheBankof England. Thenotesofcountrybanks,otherthanthe BankofEngland,arenotalegaltender;that is,itisnotcompulsoryonanyone to accept theminpaymentofadebt. TheBankofEnglandistheoldestjoint-stock bankinthecountry,andalthough,initsconsti- tution,itdoesnotdiffermateriallyfromother joint-stockbanks,yet,beingtheagentofthe BritishGovernmentinall money matters, and possessingotherexclusiveprivileges,itislooked uponasoneoftheenduringinstitutionsofthe country.*(*SeeJoint-StockBanks,p.68.) Amongstotherprivilegesitenjoysisthe authority to issuepromissorynotes to acertain extent,representingrespectivelysumsof£5, £10,£20,£50,£100,£200,£500,and£1,000. TheseBankofEnglandnotes,astheyare termed,areabsolutelyconvertible,thatis to say, thebankislegallybound to exchangethemfor goldatalltimeswhendemanded;andacertainamountofgoldhasalways,bylaw, to be Page18 Everybody's Guide to Money Matters keptinstockforthepurpose.Moreover,the tenderofBankofEnglandnotes,thesameas withgold,inpaymentofadebt,cannot,inthis country,legallyberefused.Noone,however, canbecompelled to givechange;thatis to say, ifyouoweaperson£415s.,youarebound instrictlaw to payhimthatexactsum.You cannotofferhimaive-poundnoteandinsist uponhisgivingyou5s.change,though,asa matterofcourtesyandconvenience,payments areconstantlyacceptedinthatform. ItmustbeobviousthattheseBankofEng- landnotesareagreatconvenience,andevena necessity to thepublic,asitwouldbequite impossible to carryontheenormousbusinessof thecountryifsuchacumbersomemediumas goldcoinswastheonlylegalwayofpaying debt.Nevertheless,goldcoinofproperweight isalegaltender to anyamount.Silverisnot alegaltenderforsumsovertwopounds,nor bronzeforsumsoveroneshilling. Butevenwithbank-notestherequirements ofbusinessarenotfullysatisied,asthereis alwaystheriskoftheirbeinglostorstolen. To avoidthisrisk,and to providefacilitiesfor buyingandselling,withthecomplicationsincidentthereto,andthepassingof money from onehand to another,anintermediaryagencyis required,andthatagencyis to befoundinthe bankingcompanies.Innearlyeverytown, Page19 Everybody's Guide to Money Matters havingapretence to thename,intheUnited Kingdom,willbefoundabranchbankofsome establishmentofmoreorlessrepute,andthose whoarefortunateenough to possess money will dowell to takeadvantageofsuchanagency fortheir money matters, having,ofcourse,irst ascertainedthatthestandingofthecompanyis suchthattheymaydosowithsafetyandconi- dence. Asairststepwegiveanexampleofwhatis occurringdailyinhundredsofcases. MissJaneSmithisaladywhohasbeen broughtupwithouttheslightestinstructionin business matters, indeedhasratherplumedherselfontheideaofbeingquiteabovesuchthings. Suddenlysheindsherselfdependentuponothers forguidanceandadvice.Shewouldlike to act forherselfifsheonlyknewhow to dososafely, beingofasomewhatsuspicioustemperamentand mistrustfulofadvicefromfriendsoracquaint- ances.Eventhehighlyrespectablelawyer, whohashandedherapacketofdocuments and£500incash(alegacyfromheruncle),with muchsagecounsel,sheisnotquitesureabout, forshehasimbibedtheideafromheryouththat lawyersarenotalways to betrusted. Thepacketofdocumentsinthetinboxas theycame to herissetasideinasafeplacefor themoment,butthebank-notesandgoldarea Page20 . Everybody's Guide to Money Matters ProjectGutenbergEtextofEverybody's Guide to Money, byCotton Copyrightlawsarechangingallovertheworld,besure to check thecopyrightlawsforyourcountrybeforepostingtheseiles!! Pleasetakealookattheimportantinformationinthisheader. 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To godirectly to theetextcollections,useFTPorany Webbrowser to visitaProjectGutenbergmirror(mirror sitesareavailableon7continents;mirrorsarelisted athttp://promo.net/pg). Macusers,doNOTpointandclick,typingworksbetter. ExampleFTPsession: ftpsunsite.unc.edu login:anonymous Page4 Everybody's Guide to Money Matters password:your@login cdpub/docs/books/gutenberg cdetext90throughetext99 dir [to seeiles] getormget [to getiles...setbinforzipiles] GETGUTINDEX.?? [to getayear'slistingofbooks,e.g.,GUTINDEX.99] GETGUTINDEX.ALL [to getalistingofALLbooks] *** **InformationpreparedbytheProjectGutenberglegaladvisor** (ThreePages) ***START**THESMALLPRINT!**FORPUBLICDOMAIN ETEXTS**START*** Whyisthis"SmallPrint!"statementhere?Youknow:lawyers. Theytellusyoumightsueusifthereissomethingwrongwith yourcopyofthisetext,evenifyougotitforfreefrom someoneotherthanus,andevenifwhat'swrongisnotour fault.So,amongotherthings,this"SmallPrint!"statement disclaimsmostofourliability to you.Italsotellsyouhow youcandistributecopiesofthisetextifyouwant to. *BEFORE!*YOUUSEORREADTHISETEXT ByusingorreadinganypartofthisPROJECTGUTENBERG-tm etext,youindicatethatyouunderstand,agree to andaccept this"SmallPrint!"statement.Ifyoudonot,youcanreceive arefundofthe money (ifany)youpaidforthisetextby sendingarequestwithin30daysofreceivingit to theperson yougotitfrom.Ifyoureceivedthisetextonaphysical Page5 Everybody's Guide to Money Matters medium(suchasadisk),youmustreturnitwithyourrequest. ABOUTPROJECTGUTENBERG-TMETEXTS ThisPROJECTGUTENBERG-tmetext,likemostPROJECTGUTENBERG- tmetexts,isa"publicdomain"workdistributedbyProfessor MichaelS.HartthroughtheProjectGutenbergAssociationat Carnegie-MellonUniversity(the"Project").Amongother things,thismeansthatnooneownsaUnitedStatescopyright onorforthiswork,sotheProject(andyou!)cancopyand distributeitintheUnitedStateswithoutpermissionand withoutpayingcopyrightroyalties.Specialrules,setforth below,applyifyouwish to copyanddistributethisetext undertheProject's"PROJECTGUTENBERG"trademark. To createtheseetexts,theProjectexpendsconsiderable efforts to identify,transcribeandproofreadpublicdomain works.Despitetheseefforts,theProject'setextsandany mediumtheymaybeonmaycontain"Defects".Amongother things,Defectsmaytaketheformofincomplete,inaccurateor corruptdata,transcriptionerrors,acopyrightorother intellectualpropertyinfringement,adefectiveordamaged diskorotheretextmedium,acomputervirus,orcomputer codesthatdamageorcannotbereadbyyourequipment. LIMITEDWARRANTY;DISCLAIMEROFDAMAGES Butforthe"RightofReplacementorRefund"describedbelow, [1]theProject(andanyotherpartyyoumayreceivethis etextfromasaPROJECTGUTENBERG-tmetext)disclaimsall liability to youfordamages,costsandexpenses,including legalfees,and[2]YOUHAVENOREMEDIESFORNEGLIGENCEOR UNDERSTRICTLIABILITY,ORFORBREACHOFWARRANTYOR CONTRACT, Page6 Everybody's Guide to Money Matters INCLUDINGBUTNOTLIMITED TO INDIRECT,CONSEQUENTIAL, PUNITIVE ORINCIDENTALDAMAGES,EVENIFYOUGIVENOTICEOFTHE POSSIBILITYOFSUCHDAMAGES. IfyoudiscoveraDefectinthisetextwithin90daysof receivingit,youcanreceivearefundofthe money (ifany) youpaidforitbysendinganexplanatorynotewithinthat time to thepersonyoureceiveditfrom.Ifyoureceivedit onaphysicalmedium,youmustreturnitwithyournote,and suchpersonmaychoose to alternativelygiveyouareplacement copy.Ifyoureceiveditelectronically,suchpersonmay choose to alternativelygiveyouasecondopportunity to receiveitelectronically. THISETEXTISOTHERWISEPROVIDED TO YOU"AS-IS".NOOTHER WARRANTIESOFANYKIND,EXPRESSORIMPLIED,AREMADE TO YOU AS TO THEETEXTORANYMEDIUMITMAYBEON,INCLUDINGBUTNOT LIMITED TO WARRANTIESOFMERCHANTABILITYORFITNESSFORA PARTICULARPURPOSE. Somestatesdonotallowdisclaimersofimpliedwarrantiesor theexclusionorlimitationofconsequentialdamages,sothe abovedisclaimersandexclusionsmaynotapply to you,andyou mayhaveotherlegalrights. INDEMNITY YouwillindemnifyandholdtheProject,itsdirectors, oficers,membersandagentsharmlessfromallliability,cost andexpense,includinglegalfees,thatarisedirectlyor indirectlyfromanyofthefollowingthatyoudoorcause: Page7 Everybody's Guide to Money Matters [1]distributionofthisetext,[2]alteration,modiication, oraddition to theetext,or[3]anyDefect. DISTRIBUTIONUNDER"PROJECTGUTENBERG-tm" Youmaydistributecopiesofthisetextelectronically,orby disk,bookoranyothermediumifyoueitherdeletethis "SmallPrint!"andallotherreferences to ProjectGutenberg, or: [1]Onlygiveexactcopiesofit.Amongotherthings,this requiresthatyoudonotremove,alterormodifythe etextorthis"smallprint!"statement.Youmayhowever, ifyouwish,distributethisetextinmachinereadable binary,compressed,mark-up,orproprietaryform, includinganyformresultingfromconversionbywordpro- cessingorhypertextsoftware,butonlysolongas *EITHER*: [*]Theetext,whendisplayed,isclearlyreadable,and does*not*containcharactersotherthanthose intendedbytheauthorofthework,althoughtilde (~),asterisk(*)andunderline(_)charactersmay beused to conveypunctuationintendedbythe author,andadditionalcharactersmaybeused to indicatehypertextlinks;OR [*]Theetextmaybereadilyconvertedbythereaderat noexpenseintoplainASCII,EBCDICorequivalent formbytheprogramthatdisplaystheetext(asis thecase,forinstance,withmostwordprocessors); OR Page8 Everybody's Guide to Money Matters [*]Youprovide,oragree to alsoprovideonrequestat noadditionalcost,feeorexpense,acopyofthe etextinitsoriginalplainASCIIform(orinEBCDIC orotherequivalentproprietaryform). [2]Honortheetextrefundandreplacementprovisionsofthis "SmallPrint!"statement. [3]Payatrademarklicensefee to theProjectof20%ofthe netproitsyouderivecalculatedusingthemethodyou alreadyuse to calculateyourapplicabletaxes.Ifyou don'tderiveproits,noroyaltyisdue.Royaltiesare payable to "ProjectGutenbergAssociation/Carnegie-Mellon University"withinthe60daysfollowingeach dateyouprepare(orwerelegallyrequired to prepare) yourannual(orequivalentperiodic)taxreturn. WHATIFYOU*WANT* TO SEND MONEY EVENIFYOUDON'THAVE TO? TheProjectgratefullyacceptscontributionsin money, time, scanningmachines,OCRsoftware,publicdomainetexts,royalty freecopyrightlicenses,andeveryothersortofcontribution youcanthinkof. Money shouldbepaid to "ProjectGutenberg Association/Carnegie-MellonUniversity". *END*THESMALLPRINT!FORPUBLICDOMAIN ETEXTS*Ver.04.29.93*END* ThisetextwaspreparedbyNigelLacey,Leicestershire,UK. Page9 Everybody's Guide to Money Matters Transcriber'sNotes: IhaveusedtheUKpoundsymbol(£)inthis e-textasitappearsintheoriginal.[It lookslikeanLwithacrossbar.]Iam uncertainwhetherthissymbolwillbe supportedonallsystemsandfontsthatthis textileendsbeingviewedwith.Myapologies ifthisapplies to you. Ihaveendeavoured to retaintheoriginaltable formatting,ratherthan to reformatthetables inalignmentwiththetext.However,asseveral ofthetableswereinlandscapeorientationin theoriginal,thishasnecessarilyresultedin someverylonglinesinthetables(up to 130 charactersinsomecases). Finally,asIcheckedthetranscriptionprocess certainerrorsinthetablescame to light. Ratherthancorrecttheseerrors,astheyare anintegralpartoftheoriginal,theonesthat Inotedaremarkedwithunderscores(_).[Note thatunderscoresarealsoused to mark_italicised_ passagesintheoriginaltext.] Page10 Everybody's Guide to Money Matters Everybody's Guide to Money Matters _Withadescriptionofthevariousinvestmentschielydealtinonthestock exchange,andthemodeof dealingtherein_ also Someaccountofthepitfallspreparedfortheunwary, andsuggestions to thecautiousinvestor. by WilliamCotton,F.S.A. LatetreasurerofthecountyofDevon, authorof"AnElizabethanGuild,""GleaningsfromRecords," "TheBankManager,"etc. Originatorofthepostalordersystem. London1898. PREFACE. Page11 Everybody's Guide to Money Matters THEAuthor,emboldenedbyaBankingexpe- rienceofoverfortyyears,offersthislittlework to thepublicinthehopethat,elementarythough itbe,itmayproveacceptable to manypersons ofbothsexes. Theworkhasbeenpreparedchielyforthe useofwomen,avastproportionofwhomare broughtupinutterignoranceof money matters inthesimplestform,thoughotherwisetheymay behighlyaccomplished. Thesubject,itmustbeallowed,isnotafasci- natingone,butthereareperiodsinthelivesof mostpersonswhensomeknowledgeof money matters maybeusefulandevennecessary. W.C. CONTENTS. PAGE CHAP.I.-Whatis Money? -What to dowithit-How to openaBankAccount-How to drawCheques...1 CHAP.II.-How to Deposit Money atInterest-TheBank PassBook-TheAdvantagesofaBankAccount.13 Page12 Everybody's Guide to Money Matters CHAP.III.-LondonBanksandBanking-BillofExchange- Deposits-ScotchandIrishBanks.......20 CHAP.IV.-Investments-WhatareSecurities-Mortgages -TheFunds-TheNationalDebt-StocksandShares- Dividends,howPayable............26 CHAP.V.-BritishGovernmentFunds-TheDifferentDebts -TerminableAnnuities-LoansGuaranteedbyGovern- ment-Dividends,how to Receivethem-AutomaticRe- investmentofDividends............35 CHAP.VI.-GovernmentAnnuities,how to Purchase-When Payable-Tables-InsuranceOficeAnnuities-Tables- IndianGovernmentStocks...........41 CHAP.VII.-Loans to Corporations,&c.-ColonialGovern- mentSecurities-InscribedStocksandBonds-Listof InscribedStocks-BondsandCoupons-ForeignGovern- mentStocks-CautioninInvesting-Railways-The DifferentStocksandtheirRelativeValues-TheWar- rantsforInterestandDividends-IndianRailwayStocks -AmericanRailways-ForeignRailways-Banks-As anInvestment-ColonialandForeignCorporationStocks -CanalsandDocks-Gas-ElectricLighting,Telegraph andTelephone-WaterWorks-Breweries-Industrial Companies-Financial,LandandInvestmentCompanies -FinancialTrusts-InsuranceCompanies-Steamship Companies-Mines...............55 CHAP.VIII.-TheStockExchange-BrokersandJobbers- HowBusinessisDone-"Contango"and"Backwarda- Page13 Everybody's Guide to Money Matters tion"-"Bulls"and"Bears"-"Boom"and"Slump" -Settlement-RiskinKeepingConvertibleBonds- Brokers-TrapsandSnares-GoodCompaniesandBad- AdvertisingSwindles-GoldMines-ATypicalCase- ExplorationCompanies.............79 CHAP.IX.-LifeInsurance-ItsAdvantages-Mutualand JointStockCompanies-ChoiceofOfice-FormofPro- posal-Examination-Premiums,howPayable-Examples ofAdvantage-VariousModesofInsuring-Bonuses- HowApplied-EndowmentInsurance-Non-proitable Policies-SettlementPolicies-EndowmentofChildren- InsuranceofJointLives-InsuranceonLongestofTwo Lives-Surrenders-FireInsurance-FarmStock-Other Insurances..................101 CHAP.X.-ABuildingSociety,ModeofDoingBusiness- How to ObtainaShare,andTableofPayments-How to Withdraw,andTable-Borrowers-How to Builda House-TableofPayments-HowProitsaremade-The WeakPointsofSocietiesBadlyConducted-WhatLeads  to Collapse-NecessityforChoosingDirectorsofStanding andCharacter-NecessityforEficientAuditofAc- counts....................122 CHAP.XI.-ThePostOficeSavingsBank-ModeofDepo- siting-OpeninganAccount-ConvenienceandPrecau- tions-LimitinAmounts-Withdrawal-Payment to Representatives-GovernmentAnnuities,&c.-Advan- tagesthePostOficeOffers.........134 Page14 Everybody's Guide to Money Matters APPENDIX. TableofInterestonInvestments...........142 ExamplesofBusinessCommunications-Sending Money byPost................143 Requiring Money ...............143 AcknowledgingReceipt.............144 Transfer to DepositAccount..........144 ArrangingCheques to beHonoredbyAnotherBank145 RequestforPassportandCircularNotes....145 OrderingLetterofCredit...........146 RemittinginthisCountry...........146 LodgingSecuritiesatBank..........147 Order to ReceiveDividends..........147 OrderingInvestments.............148 EVERYBODY'S GUIDE TO MONEY MATTERS. CHAPTERI. EASYSTEPS TO MONEY MATTERS. MONEY isthemediumbywhichwemayacquire fromothers,whoarewilling to partwiththem, suchthingsaswemaydesire.Thepriceofan articleisthevaluesetuponitbythepossessor, Page15 Everybody's Guide to Money Matters asrepresentedbyanexpressedsumin money. Thepriceofsomethingsarearbitrarilyixed bylaworcustom,suchasstamps,professional fees,duties,&c. Thestandardofvalueinthiscountryisgold, anditisasagainstgold,representedbycoins ofdifferentdenominations,thatthevalueofall commoditiesisestimated. TheauthorisedcoinsoftheUnitedKingdom consistofthefollowingpieces:- GOLD. Five-sovereignpiece,equal to Fivepounds. Two-sovereignpiece,equal to Twopounds. One-sovereignpiece,equal to Onepound. Half-sovereignpiece,equal to Half-a-pound. SILVER. Acrown,orive-shillingpiece,equal to one- fourthofasovereign. Double-iorin,orfour-shillingpiece,equal to one-ifthofasovereign. Half-a-crown,ortwoshillingsandsixpence, equal to one-eighthofasovereign. Florin,ortwo-shillingpiece,equal to onetenthofasovereign. Shillingpiece,equal to one-twentiethofa sovereign. Sixpennypiece,one-halfofashilling. Page16 Everybody's Guide to Money Matters Threepennypiece,one-halfofasixpence. BRONZE. Apenny,equal to one-twelfthofashilling. Halfpenny,equal to one-halfofapenny. Farthing,one-fourthofapenny. Inwritingorspeakingofsumsof money the expressiontakestheformof"pounds,shillings, andpence";forexample,Twenty-onepounds iveshillingsandninepence.Sometimesthe word"sterling"isadded,meaninggenuineor standardcoinoftherealm.Inaccountsthe iguresareplacedinthreeparallelcolumns undertheheadingof£s.d."£"forpounds, "s."forshillings,and"d."forpence,from _Libri_,_solidi_,and_denarii_,theLatinequivalents forthesevalues. ||||| ||£|s.|d.| ||21|5|9| ||||| Anotherformof money, ifitmaybeso termed,istheBanknote.Thisissimplya promise to pay,ondemand,theamountrepresentedonthenote,ingoldorsomelegaltender. Themostcommoninuseare£5notes,butthere areothersofdifferentdenominations,suchas £10,£20,£50,£100,&c.Somecountrybanks stillissuethesenotes,buttheyarebylaw Page17 Everybody's Guide to Money Matters restrictedfromissuingbeyondacertainamount ixedbytheBankActof1844.Nonewbank canissuenotes,andthosewhichhavetheprivi- legearegraduallyrelinquishingit,sothatin courseoftimetherewillbeonlyonebank entitled to issuenotes,andthatistheBankof England. Thenotesofcountrybanks,otherthanthe BankofEngland,arenotalegaltender;that is,itisnotcompulsoryonanyone to accept theminpaymentofadebt. TheBankofEnglandistheoldestjoint-stock bankinthecountry,andalthough,initsconsti- tution,itdoesnotdiffermateriallyfromother joint-stockbanks,yet,beingtheagentofthe BritishGovernmentinall money matters, and possessingotherexclusiveprivileges,itislooked uponasoneoftheenduringinstitutionsofthe country.*(*SeeJoint-StockBanks,p.68.) Amongstotherprivilegesitenjoysisthe authority to issuepromissorynotes to acertain extent,representingrespectivelysumsof£5, £10,£20,£50,£100,£200,£500,and£1,000. TheseBankofEnglandnotes,astheyare termed,areabsolutelyconvertible,thatis to say, thebankislegallybound to exchangethemfor goldatalltimeswhendemanded;andacertainamountofgoldhasalways,bylaw, to be Page18 Everybody's Guide to Money Matters keptinstockforthepurpose.Moreover,the tenderofBankofEnglandnotes,thesameas withgold,inpaymentofadebt,cannot,inthis country,legallyberefused.Noone,however, canbecompelled to givechange;thatis to say, ifyouoweaperson£415s.,youarebound instrictlaw to payhimthatexactsum.You cannotofferhimaive-poundnoteandinsist uponhisgivingyou5s.change,though,asa matterofcourtesyandconvenience,payments

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