WRITTEN EXERCISES

426. 1. Write a negotiable note for $122.50, yourself the maker and Reuben Hamilton the payee. Make it payable ninety days after date in the place where you live, with interest at the legal rate in your state.

2. Write a non-negotiable demand note for $200 payable by yourself to John H. Fassett, without interest.

3. Write a note with three indorsements, the first and second in full, the last in blank.

4. Write a note with two indorsements in full, the second without recourse.

5. Write two forms of negotiable notes for $795.36 payable in three months to John C. Fenton, with interest.

6. Indorse them properly to transfer one to the bearer and the other to Richard Gray or order.

7. Write a demand note with interest. Write indorsements to show that it has been transferred four times, each time by a different kind of an indorsement, the last being restrictive.

8. Suppose that you have sold to Sanford & Williams merchandise for $1000, terms half cash and half payable in sixty days. Draw the note, with their signature. Make the note negotiable.

9. Indorse the note for selling it to J. K. Avery in such a way that he can sell it. Do this in two ways.

10. Suppose that Mr. Avery sells the note to Henry Baldwin, and indorses it in such a way as to avoid responsibility for its payment. Write the indorsement.

11. Suppose that Mr. Baldwin is the final holder of the note. If Sanford & Williams do not pay the note at maturity, who must pay it? Explain each indorser's liability.

12. Who are responsible to Mr. Baldwin for the payment of the note? Who is responsible to you?

PARTIAL PAYMENTS

427. It frequently happens that the maker of a note cannot pay the whole amount at one time, but instead he makes partial payments.

A record of the partial payments is written, or indorsed, on the back of the note with the dates when they were made.

United States Rule

WRITTEN EXERCISES

428. 1. A note for $1000, dated Jan. 1, 1904, interest 6%, was indorsed as follows: Mar. 22, 1904, $125; June 1, 1905, $50; Aug. 4, 1905, $75; Nov. 1, 1905, $150. Find the amount due Jan. 1, 1906.

Second payment (which is less than int. due).

Int. from June 1 to Aug. 4-2 mo. 3 da. on $ 888.50

$1000.00

13.50

1013.50

125.00

$888.50

63.53

$50.00

9.33

961.36

$75.00 125.00

$836.36

12.13

848.49

150.00

$698.49

6.98

$705.47

United States Rule. Find the amount of the principal to a time when a payment, or the sum of two or more payments, equals or exceeds the interest due, and from the amount subtract such payment or payments.

With the remainder as a new principal proceed as before.

In other words, partial payments are applied first to pay the interest due, and then, if anything is left, to reduce the principal.

Most of the states have adopted the United States Rule for computing the indebtedness when partial payments have been made. In states where other methods are prescribed the rules of those states should be followed.

2. A note for $1000, bearing 5% interest, and dated Jan. 2, 1906, had these payments indorsed on it: Apr. 2, 1906, $ 200 ; July 2, 1906, $ 300. How much was due Oct. 12, 1906 ?

indorsed on it

3. A note for $ 400, dated Apr. 1, 1905, had the following payments: July 1, 1905, $25; Sept. 1, 1905, $30; Dec. 11, 1905, $100. How much was due Apr. 5, 1906, with interest at 4%?

4. A note for $1600, bearing 6% interest, dated Nov. 1, 1904, had indorsed on it the following partial payments: Feb. 1, 1905, $60; Oct. 20, 1905, $20; Nov. 1, 1905, $400. How much was due Apr. 10, 1906?

5. A note for $4000, bearing 5% interest, dated Aug. 15, 1904, had the following partial payments indorsed on it: Jan. · 2, 1905, $40; May 11, 1905, $500. How much was due June 1, 1906 ?

6. A note for $1250, given Feb. 28, 1903, had indorsed on it the following payments: July 1, 1903, $ 100; Dec. 16, 1904, $200; Oct. 11, 1905, $600. Find the amount due Apr. 4, 1906, with interest at 6%.

7. A note for $80, dated Oct. 22, 1904, had written across the back of it, "Received on the within note, Feb. 1, 1905, $47." How much was due July 1, 1905, with interest at 4%?

Mercantile Rule

429. Business men often settle notes and accounts on which partial payments have been made, and which do not run longer than one year, by the following rule:

Mercantile Rule. - Find the amount of the principal at the time of settlement.

Find the amount of each payment from the time it was made until the time of settlement.

From the amount of the principal subtract the sum of the amounts of the payments.

The following exercises are to be solved by this rule.

WRITTEN EXERCISES

430. 1. A note for $1200 given May 18, 1904, had the following partial payments indorsed on it: Oct. 15, 1904, $300; Mar. 10, 1905, $50. How much was due May 18, 1905, with interest at 5% ?

2. A note for $500, dated May 15, 1906, had these payments indorsed on it: July 10, 1906, $145; Oct. 16, 1906, $175. How much was due Jan. 1, 1906, interest at 6% ?

3. A note for $850, dated June 1, 1905, had the following payments indorsed on it: Oct. 1, 1905, $100; Feb. 1, 1906, $150; May 1, 1906, $75. How much was due May 16,

1906, with interest at 6% ?

4. A note for $175, dated June 20, 1906, had these indorsements: July 20, 1906, $75; Aug. 15, 1906, $25. How much was due Dec. 20, 1906, at 4% interest?

5. A note for $1600, dated Jan. 1, 1905, had the following payments indorsed on it: Mar. 2, 1905, $300; July 1, 1905, $25; Oct. 17, 1905, $80. With interest at 6%, how much was due Jan. 2, 1906?

Find also the amount due by the United States Rule.

THIRD PROG. AR.-17

BANKING

431. People do not usually carry much money about in their pockets or leave it in their houses or in their stores; they deposit it in banks for safe keeping.

If they intend to use the money soon, they place it in a bank of deposit, but if they do not expect to withdraw it for some time, it will be wiser to leave it in a savings bank, because the savings bank will pay interest upon small sums of money that are left for the interest term, which is commonly six months.

Banks of deposit do not usually pay interest on deposits unless the sums left with them are large.

432. The chief business of banks of deposit and discount, variously styled commercial banks, national banks, state banks, private banks, etc., is the receiving of deposits for safe keeping and the lending of money in various ways, as by buying notes at a discount. They also perform various financial services for business men and corporations.

433. National banks do business under the authority of national law. Besides the ordinary banking business, they issue demand notes, payable to bearer, called bank notes, or bank bills, which circulate as money.

434. A trust company is authorized under state law and is usually similar to a bank so far as loans and deposits are concerned, but it does other business peculiar to itself.

Trust companies, being restricted less than banks in regard to the kind of investments they may make, are usually able to pay interest on deposits. They do not issue bank notes.