among many business men when the note runs for one year or less:

Ex. Sept. 1, 1904, a merchant takes a note for $327.50 from a customer in payment for some goods. The note is to run for 1 yr. at 6%. During the year the following payments are made: Nov. 1, 1904, $75; April 1, 1905, $100; Aug. 1, 1905, $50. Find the amount due Sept. 1,

274. By this method the amount of the note is found from the date of the note to the time of settlement. The amount of each payment is also found from its date to the time of settlement. The sum of the amounts of the payments is then subtracted from the amount of the principal.

275. Some states, e.g. New Hampshire and Vermont, have rules of their own for solving problems in partial payments. In such states it is left for the teacher to present the rule.

EXERCISE 65

1. Which of the above methods is better for the debtor? Which is better for the creditor?

2. $325

CLEVELAND, OHIO, May 15, 1897. Three years after date I promise to pay W. W. Johnson, or order, three hundred twenty-five dollars, value received, with interest at 6%.

HENRY GEORGE.

Indorsements: May 15, 1897, $22.75; May 15, 1898, $22.75; June 29, 1900, $100; June 12, 1902, $50.

the amount due June 12, 1904.

Find

3. Jan. 30, 1897, Arthur Ross borrowed $150; May 10, 1897, $125; and Dec. 10, 1902, $100, all at 7% interest. He paid Oct. 1, 1901, $100; and Dec. 10, 1902, $100. Find the amount due March 10, 1903.

4. March 1, 1897, a man buys a farm for $6000. He pays $3000 in cash and gives a note for the remainder. He makes a payment of $500 on each of the following dates: March 1, 1898; March 1, 1900; Sept. 1, 1900; and March 1, 1901. Find the amount due March 1, 1902.

5. $3500.

YPSILANTI, MICH., Aug. 15, 1899.

Five years after date I promise to pay John Robinson, or order, three thousand five hundred dollars, value received, with interest at 6%.

JAMES ROWE.

Indorsements: Nov. 5, 1902, $300; March 14, 1904, $200; May 14, 1905, $2000. Find the amount due Aug. 14, 1905.

6. A note for $5000, dated March 1, 1903, and payable two years from date, with interest at 5%, has on it the following indorsements: April 1, 1903, $500; June 1, 1903, $500; Sept. 1, 1903, $200; and May 1, 1904, $500. Find the amount due March 1, 1905.

7. Dec. 10, 1903, a merchant takes a note for $260 to run 1 yr. at 7%. During the year the following payments are made: Feb. 1, 1904, $50; June 21, 1904, $25; Oct. 10, 1904, $100. Find the amount due Dec. 10, 1904.

BANKS AND BANKING

276. A bank is an institution that deals in money and credit. Credit is a promise to pay money in the future. The chief instruments of credit are checks, drafts, and notes.

It is a mistake to say that banks deal only in money. Their most profitable business is in credit transactions. Banks, however, have a capital of their own which serves as a guarantee fund. Neither do all bank deposits represent money intrusted to banks by individuals. Most of them represent credit loaned to individuals by banks. Thus, if a bank accepts a promissory note for $5000, it may give in return a deposit credit for $5000 less the discount and will thereby add that sum to its deposits.

277. There are several kinds of banks, among which are national banks, organized under the National Banking Act of 1863 and the amendments that have been made thereto; state banks, organized under the laws of the state in which they are situated; savings banks; and private banks.

278. National banks are subject to rigorous supervision by federal authorities. All banks organized under state laws are subject to similar supervision by state authorities.

279. The chief functions of banks are to receive deposits, to lend money on promissory notes, bonds, and mortgages, to discount merchants' notes before they are due, and to buy, sell, and collect drafts or bills of exchange. National

banks also issue bank notes which circulate as a medium of exchange. Savings banks and a few others allow interest on deposits.

280. On opening an account with a bank, the customer is usually given a pass book in which the dates and amounts of all deposits are entered on the credit side. If the customer wishes to draw money from the bank, or to pay a debt, he fills out a check similar to the following, and the dates and amounts of all such checks are entered on the debit side of his pass book:

Pay to Ralph M. Brown or order $500.00...

Five hundred.___.

no

100 Dollars.

-George E. Fox.

George E. Fox is the drawee or maker of this check, and Ralph M. Brown is the payee.

281. As in the case of promissory notes, checks may be made payable to payee or order, or to payee or bearer. The same rules of indorsement apply. When the depositor wishes to draw money at the bank, the check is made payable to self.

282. Banks also issue certificates of deposit:

subject to the rules of this Bank, on the return of this Certificate, properly endorsed.

The money deposited on such a certificate is not subject to check and can be withdrawn only upon the presentation of the certificate properly indorsed.

EXERCISE 66

1. Write a check for $35.75 in each of the forms indicated above, with yourself as drawer and Robert Lyons as payee. If necessary, indorse the check as when presented for payment.

2. July 22, 1903, a man deposits $125 in a savings bank. The bank pays 3% on money left on deposit 3 mo., and 3% if left 6 mo. or longer. Money must be deposited the first of the month to draw interest for that calendar month. If the money is drawn out Nov. 1 and interest paid for full months, how much does the man receive? if drawn out Dec. 22? if drawn out March 1, 1904 ?