35. I bought mining stock at 31% discount, and remitted in payment a bank draft at 12% premium, that cost $1380. How many shares did I buy, the time of the draft being 69 days and interest at 7% ?

FOREIGN EXCHANGE

411. Foreign Drafts or Bills of Exchange are usually expressed in the money of the country on which they are drawn.

Drafts drawn on persons and banks located in England, Ireland and Scotland, are expressed in pounds, shillings and pence; on France, Belgium or Switzerland in francs; on Germany, in marks, etc.

412. The Par of Exchange is the value of the money of one country expressed in the denominations of another.

1. The intrinsic par of exchange is the value of the coin of one country in the coin of another, based upon the relative weight and fineness of the two coins.

2. The commercial par of exchange is the market value of the currency of one country as compared to that of another.

413. Foreign bills of exchange are usually drawn at sight or sixty days after sight. The former are known as short exchange, and the latter as long exchange.

Days of grace are usually allowed on all foreign exchange.

The course of exchange on time bills is as much less than that on sight bills as the per cent. of interest for the time given plus the days of grace.

414. A Documentary Bill of Exchange is one accompanied with a Bill of Lading and Insurance Certificate, giving the title of the property represented by the Bill of Lading to the holder of the Bill of Exchange.

415. The following quotations of Foreign Exchange were taken from a newspaper.

paid on that day was $1.8234 for one £, and the highest $4.83.

2. French Exchange at 5.1834 means that the price was 5.1834 francs for $1. Quotations are sometimes given, showing the cost of a franc, as, $.19%.

3. German Exchange at 94@944 means that the lowest price was $.94 for four marks; and the highest $.944. Quotations are sometimes given, showing the cost of a mark; as $.237.

1. What sum must I pay for a draft of £890 on London, exchange at $4.863 ?

2. James Smith remits to a customer a draft on Paris for 4056 francs, when exchange is 5.20. Find the cost.

3. Geo. Graham bought a draft of 2740 marks, to pay for a bill of goods. What did it cost at 96% ?

4. A merchant sold to a bank a draft of £320.8s. 6d. at $4.821. How much did he receive for it?

5. A commission merchant remitted to his principal a draft of 1935 francs at 5.16. Find the net proceeds of the sale.

6. I received from my agent a draft of 1975 marks at 94. What was the amount of sale, commission being 5% ?

7. An agent received a draft of £1245.2s. 3d. to invest in grain at 2% commission. How much can he invest, exchange at $4.847?

8. William Brown bought a bill of goods at a discount of 20%, and remitted for same a draft for 32093 francs at 5.12. Find the invoice price of the goods.

9. C. H. Fuller received a draft for 8400 marks to invest in wheat at 85 cents per bu., at 5% commission. How many bushels did he buy, exchange being 931?

10. My broker drew on me for £27644 for stock bought at 110. What was the purchase price of the stock, if the brokerage was 2%, and exchange $4.86?

11. I remitted a draft on a Paris bank for 3072 francs at 5.221, in payment of a lot of silk bought at a discount of 20 and 121%. Find the invoice price.

12. D. W. Graham remitted to his principal a draft for 8000 marks, bought at 96, for a lot of goods sold at 4% commission. Find the amount of his commission.

13. What is the face of a draft on a Liverpool bank, that cost $2848.09, exchange at $4.88?

14. What is the face of a draft on a Lyons bank, that cost $812, exchange at 5.16 francs to $1?

15. The cost of a draft on Berlin was $156.75, when exchange was $.95 for 4 marks. Find face of the draft.

16. James Nolan paid $3439.95 for a draft on a bank of Dublin, exchange at $4.84. What was the face of the draft?

17. An agent sold goods for a merchant of Berlin at 6% commission. What is the face of the draft he must send in payment, exchange at $.933; if the amount of the sale was $2000?

18. What is the face of a draft on London, that will pay for an invoice of $4000, bought at a discount of 25 and 143%; when exchange is $4.861⁄2 ?

19. I paid $368 for a draft on Paris, exchange at 5.17, to remit in payment for cloth sold at 8% commission. Find my commission and the face of the draft.

20. A merchant paid $720 for a draft on Frankfort, when exchange was 94, to remit in payment for cloth that was bought at 3 marks per yard. How many yards did he buy?

BANKS AND BANKING

416. A Bank is an institution which deals in money or its representative. Banks are usually incorporated concerns, and are either National or State banks.

The chief business of a bank consists in:

1. Receiving deposits of money for safe keeping and convenience of customers.

2. Loaning money by discounting and collecting commercial

paper.

3. Issuing bills or notes as a circulating medium.

4. Making collections.

5. Selling drafts on its correspondents.

Banks make no charge for keeping deposits and pay no interest on them except in rare cases, and then at a low rate. The privilege of loaning out a large proportion of the deposits is a source of profit to the bank, sufficient to compensate it for keeping the account.

NATIONAL BANKS

417. A National Bank is one which is organized under the National Banking Act of the United States.

According to the National Banking Act, Banking Associations may be formed of any number of persons not less than five.

No association can be organized with a capital less than $100,000, except in cities whose population does not exceed 6,000, where they may be formed, with the approval of the Secretary of the Treasury, with a capital of $50,000; also except that the Secretary may permit the organization of a bank with a capital of not less than $25,000 where the population does not exceed 3,000. In cities the population of which exceeds 50,000, the capital must not be less than $200,000, the stock being divided into shares of $100.

All national banks are subject to periodical visitation and examination by the National Bank Examiner, as the representative of the Secretary of the Treasury.

The stockholders of national banks are liable individually beyond their investment for the debts of the bank, to an amount equal to the stock which they hold.

National banks are not allowed to loan money on real estate security, and real estate purchased or mortgaged to secure a previous debt must be disposed of within five years.

418. Circulation. National banks issue circulating notes by depositing as security with the United States Treasurer an amount of Registered Bonds not less than one-fourth of the capital paid in. These bonds are held as security for the circulating notes, and in case the bank should fail the Government will redeem the notes. Banks are allowed to issue circulating notes to the full amount of the par value of the bonds deposited, but no bank can have a circulation greater than the amount of the capital stock paid in.

A bank desiring to reduce its circulating notes may deposit with the Treasurer legal tenders or specie in amounts not less than $9,000, and withdraw a proportionate amount of the bonds previously deposited. However, the amount of bonds on deposit shall not be reduced below $50,000.

419. National Bank Notes are redeemable by the banks issuing them or by the Treasurer of the United States.

Every national bank is required to keep on deposit in the Treasury of the United States, a sum equal to 5 per cent. of its circulation for the purpose of redeeming its bills, which is counted in as part of the Reserve.

420. A Reserve Fund equal to 25 per cent. of their deposits is required to be kept by national banks in the cities of New York, Boston, Philadelphia, Albany, Baltimore, Pittsburg, Washington, New Orleans, Louisville, St. Louis, Cleveland, Detroit, Chicago, Milwaukee and San Francisco, and 15 per cent. by all other national banks.

These are called Reserve Cities, and the excess above the requirements is called the Surplus Reserve.

421. A Surplus Fund, of the net earnings of the bank, is also required by law to be set aside, before the usual semiannual dividends are declared, consisting of one-tenth of the net