We are going now to speak about money: not, however, about how to get
it, but about what to do with it after it is got. About the occupations
by which money is made, we shall not at present say anything. Many of
them have already been treated of in THE GIRL’S OWN PAPER.
When people have money there are three things they can do with it; they
can spend it, or place it out at interest, or tie it up in a parcel and
hide it away. Perhaps they do not need at the moment to spend it; in
that case of the two ways that are left the only wise one is to place
it out at interest.
And what is _interest_? Interest is the sum paid by anyone who gets the
loan of money, for the use of it. Selina, say, gets the loan of £50 for
a year—not for nothing—oh, no, she pays £2 for the twelve months. This
£2 is the interest. At the end of the year the lender receives back her
£50 and £2 added to it, so, you see, it is for a good reason that we
recommend lending in preference to unfruitful hoarding. Money—and this
is a wise rule—should never be allowed to lie idle.
The sum lent is known as the _principal_, and on the principal the
interest is calculated at so much _per cent._ (by the hundred); that is
to say, at so much for every £100. For instance, 5 per cent. means £5
for the use of every £100; 2½ per cent., £2 10s. for the use of every
£100; and 3¾ per cent., £3 15s. for the use of every £100. Selina’s
loan, in the preceding paragraph, is at 4 per cent., in other words, £4
for £100; so, of course, for £50 she just pays £2.
When you see a rate of interest quoted you may safely conclude that it
is for a year—_per annum_ (by the year), is the correct phrase—unless
something is said to the contrary.
The rate paid in the shape of interest depends on a number of things,
but the main question is, will the principal be perfectly safe? If the
answer be yes, then the interest in these days will certainly be low.
But on this subject we shall have more to say in a succeeding article.
To calculate interest on any sum _for a year_, the rule is to multiply
by the rate per cent. and divide by 100. For example, find the interest
on £460 at 4½ per cent. Here you multiply 460 by 4½, which gives
2,070, and dividing by 100, arrive at the answer, £20 14s.
When the interest is wanted _for a certain number of days_, you must
multiply by the number of days and by double the rate per cent., and
divide by 73,000. By way of example, find the interest on £320 for 30
days at 3 per cent. Multiply 320, first by 30 and afterwards by 6,
which gives 57,600. Now divide by 73,000, and you have the total amount
of interest, 15s. 9d.
People who have much calculating of interest to do should invest in
a book of Commercial Tables. The use of these saves a great deal of
trouble. There are some short cuts, however, which every business woman
should carry in her head. At 5 per cent. per annum the interest upon
a pound for every month is one penny. Having seen what this comes to,
other rates may be reckoned by adding to or deducting from the 5 per
cent. product.
For example, 2½ per cent. is one-half; 3 per cent. is six-tenths; 3½
per cent. is seven-tenths; 4 per cent. is four-fifths; 6 per cent. is
six-fifths; 7½ per cent. is one-half more. Thus, 5 per cent. on £30 for
ten months will be £1 5s.; 2½ per cent., 12s. 6d.; 3 per cent., 15s.;
3½ per cent., 17s. 6d.; 4 per cent., £1; 6 per cent., £1 10s.; and 7½
per cent., £1 17s. 6d.
Sometimes, on interest becoming due, it is regularly added to the
principal, and interest is paid on the new principal thus formed. Money
invested on this accumulating system is said to be placed at _compound
interest_.
There is something startling about the growth of money invested in
this way. “A penny,” says Dr. Price, “so improved from our Saviour’s
birth as to double itself every fourteen years—or, what is nearly the
same, put out at five per cent. compound interest at our Saviour’s
birth—would by this time have increased to more money than could
be contained in 150 millions of globes, each equal to the earth in
magnitude, and all solid gold.
“A shilling put out at six per cent. compound interest would, in the
same time, have increased to a greater sum in gold than the whole solar
system could contain, supposing it a sphere equal in diameter to the
diameter of Saturn’s orbit; and the earth is to such a sphere as half a
square foot or a quarto page is to the whole surface of the earth.”
To show the difference between “simple interest,” in which the interest
does not bear interest, and “compound interest,” in which it does,
we give the following table, showing the time it takes for a sum to
double itself at different rates:—
---------+------------------------------------------
| Time in which a sum will double itself.
Rate per +--------------------+---------------------
cent. | Simple Interest. | Compound Interest.
---------+--------------------+---------------------
2 | 50 years | 35 years 1 day
2½ | 40 years | 28 years 26 days
3 | 33 years 4 months | 23 years 164 days
3½ | 28 years 208 days | 20 years 54 days
4 | 25 years | 17 years 246 days
4½ | 22 years 81 days | 15 years 273 days
5 | 20 years | 14 years 75 days
6 | 16 years 8 months | 11 years 327 days
7 | 14 years 104 days | 10 years 89 days
8 | 12½ years | 9 years 2 days
9 | 11 years 40 days | 8 years 16 days
10 | 10 years | 7 years 100 days
---------+--------------------+---------------------
The really surprising difference between simple and compound interest
is, however, only seen after the first few years are over. A loan of
£100 for ten years at 4 per cent. simple interest would give £40, and
at 4 per cent. compound interest about £47. But if the loan were for
a hundred years the simple interest would be only £400, whilst the
compound interest would be no less than £4,950.
Having now said all that is necessary at present about interest, we
must speak for a little on the subject of banking, for it is by means
of banks that most money transactions are satisfactorily managed.
What, then, is a bank? There seems, at first sight, something
mysterious about it, but it is really a simple institution. It is
partly a shop and partly a left-luggage office. It is a shop for
dealing in cheques, bills, notes, gold, and silver, and a left-luggage
office to which we consign our spare cash to lie till called for.
This, however, is only a rough and ready way of putting it, and we may
as well add the following extract from a writer who has taken pains to
give an exact definition:—“A banker is the custodier of the money of
other people. Such is his business, viewed in its simplest aspect. A
banker, however, if he hoarded the money deposited with him, would be
simply a cash-keeper to the public; his bank would be literally a bank
of _deposit_.... But the business of receiving money on deposit has
always been, and is now, universally combined with that of lending it
out. A banker does not hoard all the money deposited with him—he gives
the greater portion out in loan. The lending of money is as much a part
of his business as the receiving of deposits.”
You cannot go into a banker’s and say, “I have come to open an
account,” just as you would enter a grocer’s with, “Be so good as send
me half a dozen tins of the best sardines.” You must be introduced by
someone who can vouch for your respectability, or, if not introduced,
you must be able yourself to satisfy the banker that you are likely to
be a desirable customer.
This first step being taken, you open what is called a _current or
drawing account_; that is to say, an account into which you can pay
money whenever it suits you, and from which you can draw money at any
time by means of orders, or _cheques_, as they are called. In a current
account in a good bank money is kept safely—which is a great matter—and
at the same time you can make use of it as readily as if it were lying
in your pocket.
For convenience, and partly, too, as a protection against fraud,
bankers are in the habit of supplying their customers with books
containing forms of cheques. When a book of cheques is exhausted, a new
one is supplied on the presentation of a form which, when filled up,
may resemble the following:—
THE CASHIER,
THE COSMOPOLITAN BANK.
LONDON, _29th November, 1886._
_Please deliver to Bearer Cheque Book containing 25 cheques
payable to_
JEMIMA BOUNCER.
Each cheque bears a penny impressed stamp, and a book of cheques is
supplied at the price of the stamps—a book, say, of twenty-five costing
two shillings and a penny.
Cheques may be in one or other of two forms. The first form is—
No. 478953. LONDON............188...
THE COSMOPOLITAN BANK,
14, Marketjew-street, E.C.
Pay..................or Bearer..................
£...............
The other form is precisely the same, except that instead of the word
“Bearer” it has the word “Order.”
As an example of a cheque with the particulars filled in, take the
following:—
No. 536212.
LONDON, 19th November, 1886.
THE COSMOPOLITAN BANK,
14, Marketjew-street, E.C.
_Pay Miss Georgina Makepeace or Bearer Nine pounds Thirteen
shillings and Four pence._
£9: 13: 4. ALICE M. LITTLEPROUD.
The difference between cheques made out to “Bearer” and those made out
to “Order” is this. Cheques payable to bearer can be cashed by anyone.
Those payable to order, however, must be endorsed by the person in
whose favour they are drawn before the money can be received. But what
is to _endorse_ a cheque? It is simply to write your name on the back
of it.
Cheques payable to order are certainly safer than those payable to
bearer. And they have another advantage. In the event of receipts being
lost or mislaid, they supply evidence that the money was received by
the person to whom it was owing.
A cheque payable to bearer can be made payable to order by drawing the
pen through “Bearer,” and writing “Order” above it. A cheque payable to
order can also be made payable to bearer by scratching out “Order” and
putting “Bearer” above it; but in this case you must put your initials
to the alteration.
To give extra security to a cheque, draw two parallel lines across the
face of it with the words “—— & Co.” inserted between them. This makes
it what is called a “crossed cheque,” which will only be paid through
some banker to a known customer. Instead of “—— & Co.” you may write
the name of the banker of the person to whom the cheque is payable.
When this is done, the cheque is only payable through him.
If in crossing the cheque you add the words “Not negociable,” that is
another safeguard. These words “warn all whom it may concern that they
accept the cheque subject to the liability of being compelled to refund
its value should it prove to have come improperly into the possession
of any person from whom their own title is derived.” This makes a
cheque as secure against the wiles of the dishonest as anything in this
world can be.
The filling up of a cheque should be done very carefully, and the style
of signature should be always the same. The figures in the body of a
cheque must be in words, and should be written close together, so that
there is no room left for the fraudulent to improve on the amount.
Cases have frequently occurred of “ty” being added to six, seven, and
nine, to make them read sixty, seventy, and ninety, and a “y” being
given as a tail to eight, to multiply eight by ten, is quite a common
trick. As a protection, the words “Under ten pounds” are sometimes
written upon a cheque that lends itself to this sort of roguery.
Suppose a cheque is given by a person who has not money enough in the
bank to meet it, the banker will most likely return it, with the words
written on it, “No effects,” or “Refer to Drawer.” The cheque is then
said to be _dishonoured_.
Cheques should always be _cashed_—that is to say, payment of them
should be got—as soon as possible after they have come to hand. It is
never safe to delay, for the most unlikely things happen; the bank may
fail, or the drawer may become bankrupt, or his account may become
locked up through his death.
A memorandum should be preserved of every cheque you give away. This is
provided for by the cheque-books furnished by the banks having a margin
which is left when the cheque is torn out. This margin, separated
from the cheque by a perforated line, is known as the _counterfoil_.
The counterfoil bears the same number as the cheque to which it is
attached. Here is an example of one filled up:
No. 213,551
_17th November, 1886._
DR. SIMON BURRE.
_Medical Attendance._
£7.7.0
On the back of each counterfoil some people are in the habit of
writing the balance they have at the moment in the bank. This has some
advantages, and is certainly a check to extravagance.
Though cheques are usually made out on engraved forms, you may write a
cheque on a sheet of note-paper should a cheque-book not be at hand. In
that case, remember to put a penny stamp on it, and to cancel the stamp
by writing on it the date and your initials.
Keep your cheque-book always under lock and key. If you leave it about,
it only puts temptation in the way of people to abstract a blank form
and make free with your signature. Should your book ever be lost or
stolen, give notice at once to the bank.
Lodging money is one of the easiest of business operations. You go to
the bank, and fill up a slip, headed, say—
THE COSMOPOLITAN BANK,
14, Marketjew-street.
............18...
CREDIT...........................
_Paid in by_.....................
Below this heading you enter the particulars of the sum you are going
to lodge:—Bank-notes, so much; coin, so much; cheques and bills
(mentioned separately), so much; total, so much. You hand this slip
over to the teller with the money, and the whole thing is done. No
receipt is given, and it says a great deal for the perfect machinery by
which banking is conducted that one never hears of a mistake, or that
any customer ever thought his confidence taken advantage of. We speak
here of the method in the best London banks. In the provinces and in
some London establishments the form of procedure varies a little.
When you send money to your banker by post, you should write with it
somewhat as follows:—
_Brackenhurst, 24th November, 1886._
_Dear Sir_,
_I enclose cheque for £34 12/—Messrs. Bagwell and Sackit on the
Welsh Counties Bank—which kindly place to my credit._
_I remain, Dear Sir,
Yours truly,
SILVANINHA HAMILTON._
_The Manager_,
THE COSMOPOLITAN BANK.
Receipt of this will be acknowledged by the manager, thus:—
_Dear Madam_,
_I beg to acknowledge receipt of your favour of 24th inst.,
with enclosure, value £34 12/, for your credit._
_Yours, etc.,
JACOB BIRCHENOUGH,
Manager._
To every person keeping an account the bank supplies a book, generally
known as a _pass-book_. On the Dr. or left-hand side of this book, will
appear the sums received on behalf of the owner of the book; whilst all
the cheques paid on her account by the bank will appear on the Cr. or
right-hand side. Here is an example in which, for convenience, we have
printed the Cr. side under the Dr., instead of side by side:
THE COSMOPOLITAN BANK.
_in Account with_
MISS ESMERALDA BEATRICE BONES.
Dr.
1886
Sept. 6 _To Cash_ £60 0 0
13 ” _Draft_ 14 7 6
23 ” _do._ 4 1 8
29 ” _Bill_ 17 18 0
Oct. 2 ” _Notes_ 15 0 0
1886 Cr.
Sept. 9 _By Twentyman_ £ 3 5 0
15 ” _Self_ 10 0 0
25 ” _Jones_ 5 1 3
Oct. 6 ” _Williamson_ 4 9 8
12 ” _Thomson_ 27 2 5
In this book you must never make an entry yourself. It should be left
at regular intervals at the bank to be “made-up,” that is to say, for
all the sums received and paid to be entered in it. The pass-book is
really a copy of the bank ledger. When received again from the bank it
should be gone over carefully to see that all the entries are just as
they should be.
Current accounts, as a general rule in England, do not bear any
interest, in other words, the banker pays nothing for the use he enjoys
of any balance left in his hands. Unless the balance is large he
thinks he does enough in taking the trouble of keeping the account. In
Scotland interest is usually given on current accounts, but it is only
a slight advance upon nothing.
Besides receiving money on current account, however, bankers receive it
on _deposit_. _Deposit accounts_ are those in which sums of money are
lodged in a bank on the understanding that a certain rate of interest
is to be paid upon them, and that a certain number of days’ notice
is to be given before they are withdrawn. There is no such thing as
drawing cheques on a deposit account.
When money is received on deposit, a deposit receipt is given. The
amount is usually repayable to the depositor alone, but it may also be
paid to anyone to whom the depositor gives an order on the bank, either
written on the back of the deposit receipt or accompanying it.
The rate of interest paid on deposits varies with the Bank of England
rate. It is, however, usually so small that no one, except for special
reasons, will let money lie on deposit in a bank whilst there are
plenty of perfectly safe investments to be met with outside.
For business women who travel few business documents are of greater
interest than a _letter of credit_. This is a communication from a
banker to a correspondent, or correspondents, authorising credit to be
given to the bearer to a certain specified amount.
In applying for a letter of credit you must name to your banker the sum
you will require altogether, and the number of towns in which you wish
to draw portions of that sum, and if there are, say, three towns—Paris,
Berlin and Rome—you must enclose your signature on three separate
sheets of paper. The banker sends one of these slips to an agent in
each of the towns named, and forwards to you a letter of credit in this
form:—
Messrs. ANCELOT & SANTINE _Paris._
” OTTO, RUST & UMLAUF _Berlin._
” TRENTO, BERTONI, & VALENTINO _Rome._
LONDON, 27th November, 1886.
_Gentlemen_,
_We have the pleasure of establishing a credit in favour of
Miss Robina Turpin, who will present to you this letter, and we
shall thank you to supply her with cash to the amount of one
hundred and twenty-five pounds (£125) sterling, or such part
thereof as may not previously have been paid on this credit,
writing off on the back of this letter the sum advanced, and
taking her drafts on us in your favour for your reimbursement,
which we engage duly to honour._
_We remain, Gentlemen,
Your most obedient Servants,
SMITH, PATERSON & WINKLES._
Across the face of the letter of credit is written, “_This credit to be
in force for twelve months only from this date._”
_Circular Notes_, as they are called, are in one respect an improvement
on a letter of credit: they can be cashed in almost every town the
traveller is likely to visit. They are issued by most London bankers
and for sums of from £10 upwards.
A banker has a pretty responsible time of it. He is bound to keep
secret the state of his customer’s account. He must also know his
customer’s handwriting, so, should he pay a cheque or bill which turns
out to be a forgery, he must bear the loss. If he neglects to carry
out any instructions within the legitimate sphere of banking business,
such as the payment of premiums on a life insurance or the purchase
of shares, he may be called to account for any loss the customer may
suffer through his carelessness.
The simplest bank in the country, and the most important to depositors
of small means is the Post Office Savings Bank, about which we must
now speak. It is an extensive institution, having over eight thousand
branch establishments all over the country; indeed, every money order
office is a branch office of the Post Office Savings Bank. At the
present time there are more than three and a half millions of accounts
open, with an average balance of £13 10s., and the average turnover of
the bank, counting both the money deposited and the money drawn out, is
twenty-eight million pounds a year.
You cannot, in the Post Office Savings Bank, open an account from
which, by means of cheques, you can draw money at any hour. It does not
provide cheque books, and makes the withdrawal of money comparatively
a slow process, for its leading idea is not to facilitate present
business, but to provide for future need. It really starts with the
reflection that
“If youth but knew what age would crave,
Many a penny it would save.”
An account may be opened with a very small sum. You can do it with
a shilling. With that in your hand you can go to a post office, and
assert your intention of placing your savings under the care of the
Government. And remember that the shilling, and anything else added to
it, will be safer than in any other bank whatever; for the Post Office
Savings Bank can only come to grief with the ruin of the British Empire.
Intending depositors must state their Christian name and surname,
occupation (if any), and residence, and they must sign a declaration to
the effect that they have no interest in any savings bank account, and
are willing to have any deposits they may make managed according to the
regulations of the Post Office.
When that is done a deposit book is supplied. In this book every
deposit must be entered at the time of its being made by the
postmaster, or whoever receives it, and he must affix to the entry his
signature and the stamp of the office.
“In addition to the receipt in the book, the depositor will receive an
acknowledgment by post from the Savings Bank department in London, and
this should reach him within four clear days, exclusive of Sundays and
bank holidays, if the deposit be made in England or Wales; within six
days, if it be made in Ireland or Scotland.”
The interest allowed is 2½ per cent. per annum—that is to say, at the
rate of £2 10s. every year for every £100. This is just a halfpenny
each month for every pound. Thus, a pound lodged in the bank, and lying
there for a year, becomes £1 0s. 6d.: £10 becomes £10 5s.; and £30
grows to be £30 15s. The interest is calculated to the 31st of December
in every year, and is then added to and becomes part of the principal.
The deposits made in any year ending 31st December must not exceed £30,
and when a depositor has lodged in all £150, not counting interest, she
is not allowed to lodge any more till she has reduced the sum standing
at her credit. If she chooses to let it lie, it will, of course,
by the addition of interest, increase every year. When it reaches
£200, however, no more interest is allowed till some of the money is
withdrawn.
When a depositor wishes to withdraw any money, she fills up a notice
of withdrawal, to be had at any Post Office Savings Bank, and forwards
it to the Savings Bank Department in London. She then receives by post
a warrant, which she should present with her book at the post office
where payment is to be made.
Once in every year, on the anniversary of the day on which the
first deposit was made, the deposit book should be forwarded to the
Controller of the Savings Bank Department in London, that the entries
may be checked, and that the sum due for interest may be added. When
sending the book, do not pay postage: all communications on Savings
Bank business go free.
Deposits may be made by married women, and in that case their husbands
have no control over the money. They can draw from it when they please,
and bequeath it by will to any person they choose.
The Post Office Savings Bank adapts itself to saving on the smallest
scale. If a girl can only save a penny at a time, she can with the
penny buy a stamp, and the stamp she can stick on a form with twelve
divisions, supplied by the Post Office. When she has in this way saved
twelve stamps, she must take it to the post office, and have the
shilling entered in a regular bank account.
But the Post Office undertakes more business in connection with money
than merely storing it up against a rainy day. Of that, however, we
shall speak in our next article.
(_To be continued._)
A SONG FOR THE OLD YEAR.
BY M. M. POLLARD.
A tale of the past, a tale of the past!
Of the days that have vanished, the first and the last,
Of the year, the old year that has met with its doom,
And is vanished for ever in time’s yawning tomb!
The snow of December is spread as a pall
Of white-crested trophies to mourn for its fall,
And the flow of the river is hushed in its bed,
Silent and still as the year that has fled.
Bright were the blossoms that welcomed its birth,
Springing afresh from the bosom of earth,
Smiling in valley, on mountain, and glade,
Gladdening the pathway in sunshine or shade.
But they have budded and blossomed to fall,
Summer birds answer no more to the call,
They are gone—and the wail of the chill wintry blast
Sweeps like the sound of a requiem past.
E’en as the seasons my life-tale has been,
Sunshine has lightened up many a scene;
Sometimes the hours seemed all brightness and joy,
Cloudless and calm as a sweet summer sky;
Sometimes the beauty fled swiftly away,
As rising clouds shadow the glory of day,
For life has all changes—is joyous or drear,
Like the seasons that make up thy round, hoary year!
And many more cycles will swiftly roll past,
With changes, and sunshine, and gloom like the last,
Giving new birth to the blossom and rill,
And voices will praise them when mine shall be still,
And others will welcome with gladness or tears,
The hope and the promise of many more years.
Oh, year that is vanished! I bid thee farewell,
And the chill winds of winter are sounding thy knell.
[Illustration: THE NEW YEAR’S BELLS.]
MERLE’S CRUSADE.
BY ROSA NOUCHETTE CAREY, Author of “Aunt Diana,” “For Lilias,” etc.