14. Smith & Co., of St. Louis, sell Jones & Co., of Grand Rapids, Mich., goods amounting to $1976.50, f. o. b. cars St. Louis. Smith & Co. draw on Jones & Co. at sight, less 2% for cash. The bank's charge for handling the draft is

%, to be paid by Jones & Co. How much will Jones & Co. have to pay in order to get the goods from the railroad company, the freight charges being $ 72.41 ?

348. The clearing house is an organization of banks in a large city for the purpose of exchanging local checks.

1. Determine the balance for or against each bank in the following clearing house statement. Check your work.

349. When money is sent from one country to another, the sending agent (post office, express company, or bank) converts the amount to be sent into terms of the money of the country to which it goes.

350. Money is thus transferred by: (a) postal money orders, (b) express money orders, (c) telegraphic or cable money orders, (d) travelers' checks, (e) letters of credit, (f) bills of exchange.

351. On money orders and travelers' checks, and on letters of credit, the cost of exchange is determined by pub

lished rates. On bills of exchange it varies according to the money market, as determined by conditions of trade. % is usually charged for issuing travelers' checks. The charge for cable transfer is the cable rate of exchange, plus % commission, plus the telegraph and cable charges.

352. Letters of credit are issued by bankers. They call for the payment of a specified amount at any one of a number of banking institutions in various parts of the world.

The usual charge for issuing a letter of credit is 1%.

353. Bills of exchange include bank and commercial drafts, checks, etc., used in the transfer of funds from one country to another. They include:

(a) Those issued by banks. These are used in foreign exchange just as bank drafts are used in domestic exchange. They are sometimes issued in duplicate or triplicate, the various copies being sent by different mails to avoid mistakes and loss.

(b) Those issued by individuals. These include all forms of commercial drafts. They may be divided into two general classes (1) Documentary bills, with shipping receipts, bills of lading, insurance policies, etc., attached as evidence that the drawer of the draft has performed his part of the transaction; (2) Clean bills, having no documents attached.

354. As in domestic exchange the cost of foreign exchange should never exceed the cost of shipping the actual money. The banks, through which most of the exchanges are made either directly or indirectly, maintain the rates by actual shipments of money, usually gold.

355. The par of exchange between any two countries is based on the value of the pure metal (gold or silver) contained in the unit coin of any country, expressed in terms of the coin of another country. For example: The United

States dollar (as a unit of money) contains 23.22 grains of fine gold; English pound sterling contains 113.0016 grains. The par of exchange between the United States and England is, therefore, 113.001623.22, or £1 $4.8665. For the values of foreign money see page 241. The most important exchange rates are quoted as follows:

=

356. Indirect exchange (called arbitrage) is used when the quotations are such that it becomes cheaper to send money to London via Paris than to send it direct. Suppose the quotations are as follows:

1. I wish to send $50 by money order to each of the following countries: Germany, England, France, and Holland. For how much will each order read, in terms of the money of the country to which it is to be sent ?

2. Exchange being at par, what will be the cost of a draft on London for £62 98. 7d.?

3. What will be the cost of a draft on Paris for F. 1000, exchange being quoted at 1% premium?

4. What will be the cost of a letter of credit for $5000 ? Of travelers' checks for $ 800?

5. What will it cost to cable $400 to London, the cable rate being $3? If London exchange is quoted at par, what amount in English money will be transferred?

6. How large a draft can be bought on Denmark for $2000? (See table in appendix.) On the Philippine Islands for $125? On Sweden for $285.67?

Quotations at the time of

7. A firm owes £283 58. 6d. in London, F. 16,723 in Paris, and M. 4933 in Germany. sending are as follows:

What will be the amount of the firm's check to purchase the exchange?

8. What will be the cost of a draft on the City of Mexico for 2550 pesos?

9. Will it be cheaper to send £1000 to London direct or to convert the money into Paris exchange and have it converted into pounds and sent to London? If so, how much cheaper? (Use quotations in § 356.)

10. What is the value of a bill of exchange on Paris for F. 7160, at 5.181?

11. If exchange on Berlin is at par, what will be the cost of a bill of exchange for M. 3750?

12. How much English money should a traveler receive for a travelers' check for $20? How much French money? 13. I hold a London acceptance for £ 112 8s. 10d., due in 45 da. If money is worth 4%, and the collecting charge is %, how much can I get for the acceptance at my banker's? 14. How much German money would a traveler receive for a letter of credit for £ 200 ?

15. What will be the cost of a letter of credit for £100 ?

PARTNERSHIP

357. A partnership is an association of two or more persons for business purposes.

358. The profits or losses are shared according to agree

ment.

359. The capital of a firm is its total investment.

360. The resources of a firm are its total investment plus all debts or obligations owing to the firm.

361. The liabilities of a firm are the total debts or obligations to others.

362. The excess of the resources of a firm over its liabilities is its present worth; the excess of its liabilities over its resources is its insolvency.

363. The net gain is the excess of gains over losses.

364. The net loss is the excess of losses over gains.

365. To find what part of the profit each partner receives. The capital employed in a business partnership is $10,000, of which A furnishes $6000, and B furnishes $4000. What part of any profit should each receive?

A has invested (5000) of the capital; hence he receives, or of the profits.

B has invested of the capital; hence he receives of the profits.

If the profits should be $2000, A would receive of $2000, or $1200; B would receive of $2000, or $800.