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CHAPTER X

BANKS AND BANKING

75. Promissory notes. When money is borrowed the borrower gives a promissory note. The following is a

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for value received, with interest at the rate of.......six_-per cent per annum from date.

John R. Fremont

In this note John R. Fremont is the maker, Arthur S. Porter, the payee, and $2000, the face of the note. The day this note is due, August 16, 1923, is called the date of maturity.

76. To find the date of maturity of a note. To find the date of maturity of a note due in a certain number of days, count that number of days from the day the note is given.

EXAMPLE. Find the date of maturity of a note dated January 12, 1918, due in 90 days.

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If a note is due in a certain number of months, it is due on the same day of the month as that on which it was given, unless the month in which it is due has no corresponding day. For example, a note dated March 20, due in three months, falls due June 20; but a note dated March 31, due As a rule a note falling due on

in 3 months, is due June 30.
a holiday becomes due on the following day.

If a note or check

77. Indorsement of notes and checks. reads "Pay to John Doe or order," "Pay to John Doe or bearer," or "Pay to the order of John Doe," it is said to be negotiable, that is, John Doe may transfer it to another person. What is said in the following discussion concerning notes is true also of checks.

If a note is payable to John Doe or bearer, it is payable to the person who holds it.

If a note is payable to John Doe or order, John Doe must, when transferring this note, indorse it, that is, he must write his name on the back of the note.

The usual forms of indorsement are in blank and in full. If the note given above is indorsed in blank, Arthur S. Porter writes his name on the back. If it is indorsed in full to James Smith, the indorsement is written: Pay to the order of James Smith, Arthur S. Porter.

A note indorsed in blank is payable to bearer. A note indorsed in full is payable only to the person to whom it is indorsed, unless this person also indorses it,

The indorser of a note becomes liable for its payment unless he writes the words Without recourse above his name. Thus in the indorsement given above Arthur S. Porter is liable for the payment of the note if John R. Fremont does not pay it. But if Arthur S. Porter writes the words "Without recourse" above his name in either the indorsement in blank or the indorsement in full, he is no longer liable for the payment of the note.

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1. Write a note for $350, dated May 6 of the present year, due in six months, E. H. Cofer maker, and C. J. Crampton payee. Indorse this note in full to the Cary Clothing Company.

2. On March 25 Oliver Jones of Three Lakes, Wis., buys a team of horses from U. S. Walter for $365, and pays for them by a note due in one year with interest at six per cent. Write the note.

3. The note in the previous exercise is indorsed in blank and sold to James Maxwell, who indorses it in full to J. K. Crowley. Write these indorsements. Who now holds the note? When this note becomes due who should pay it? To whom? Name all the persons who are liable for the payment of this note.

4. Arthur S. Mills gives a note for $1500 to John Walsh, dated Aug. 10, due in 3 years, with interest at 7%. This note is sold to R. C. Mann to whom it is indorsed in full. Write the note and the indorsement. Who now holds this note? Who must pay it when due? gets the note when it is paid?

To whom? Who

5. What is the date of maturity of a note dated Dec. 31 and due in 2 months? Of one dated Jan. 4 and due in 6 months?

78. Interest. The pupil has already learned how to compute interest. The following are two convenient forms of computation.

EXAMPLE 1. Find the interest on $900 at 7% from March 22, 1917, to May 11, 1919. Find time by subtracting dates. SOLUTION. Six per cent method.

1919 5 11 Int. on $1 for 2 yr. 1 mo. 19 da. at 6% = $.128. 1917 3 22 Int. on $900 for 2 yr. 1 mo. 19 da. at 6% =900X$.128 2 1 19

= $115.35. EXAMPLE 2. Find the interest on $1200 at 5% from June 17 to November 8. Use as the time the exact number of days. SOLUTION. Day method. Number of days in June

24

13

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12
$1200×3×144
100 X360

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In the first five exercises find the time by subtracting dates. Find interest on

1. $3000 at 6% from Jan. 12, 1919, to March 15, 1921. 2. $654 at 5% from Sept. 15, 1918, to May 27, 1920. 3. $35.60 at 7% from July 3 to Dec. 31.

4. $700 at 5% from Feb. 27, 1920, to June 11, 1921.

5. $25,000 at 4% from July 1, 1919, to Jan. 1, 1923.

In the next four exercises find the exact number of days. Find the interest on

6. $800 from April 10 to Sept. 9 at 6%.

7. $1500 at 5% from Feb. 7, 1920, to Dec. 22, 1920.

8. $2460 at 4% from May 24 to Feb. 16.

9. $48.15 at 7% from Oct. 14, 1920, to May 5, 1921.

79. Depositing money. Most people leave their money at a bank for safe keeping. When money is deposited at a bank either the depositor or an officer of the bank fills out a deposit slip.

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This deposit slip contains the name of the bank, the name of the depositor, the date of the deposit, the amount of the deposit, and the kind of funds deposited, whether currency, silver, gold, or checks.

When his first deposit is made the depositor receives a pass book in which is kept a record of the amounts of money deposited and withdrawn.

80. Checking account. Money that is deposited to be withdrawn in such amounts

and at such times as the depositor wishes is kept in a checking account.

The depositor with a checking account may either withdraw the money himself, or order it paid to another person. In either case he fills out a check. The check contains (a) the name and the location of the bank on which it is drawn; (b) the date when the check is made; (c) the name of the person to whom the check is to be paid, who is called the payee; (d) the amount to be paid, which is called the face of the check and is written both in figures and in words; (e) the signature of the maker, or drawer, of the check.

The name of the maker must be written by himself. The other parts of the check may be written by any one.

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