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Indorsements : Sept. 30, 1850, received one hundred dollars.
Providence, April 30, 1852. On demand, after three months, I promise to pay to the order of John Gorham seven hundred and eighty-three dollars, with interest, value received.
Indorsements : Jan. 24, 1853, received one hundred dollars. March 20, 1854, received one hundred and forty-five dollars and seventy-five cents.
Oct. 12, 1855, received two hundred dollars.
116. Merchants' Method when Debts are paid within &
Year. (a.) When notes or debts of any kind, on which partial payments have been made, are paid in full within one year from the time interest commences, merchants often determine the sum. to be paid on settlement, as they would if nothing is due on a note till it is paid in full.
(b.) In such cases, they find the amount of the note to the time of settlement, and the amount of each payment from the time it was made to the time of settlement; then the excess of the amount of the note over the sum of the amounts of the several payments will be the sum due on settlement.
Providence, Aug. 1, 1856. For value received, I promise to pay Wm. H. Ayer, or order, four hundred and fifty dollars, on demand, with interest.
F. C. Rider.
Indorsements: Nov. 13, 1856, received fifty dollars.
This note was settled July 3, 1857. What was the amount due op it ?
24.90 = Int. 11 mo. 2 da. to July 3, 1857.
$50.00 = lst payment, Nov. 13, 1856.
1.917 = Int. 7 mo. 20 da. to July 3, 1857. 33.500 = 2d payment, Jan. 7, 1857.
.983 = Int. 5 mo. 26 da. to July 3, 1857. 150.000 = 3d payment, March 24, 1857.
2.475 = Int. 3 mo. 9 da. to July 3, 1857.
.930 = Int. 2 mo. 2 da. to July 3, 1857.
Hartford, Feb. 19, 1857. For value received, I promise to pay James B. Atwood, or order, seven hundred and twenty-five dollars and fifty cents, on demand, with interest.
Henry E. Harris.
Indorsements : April 6, 1857, received seventy-five dollars.
Sept. 23, 1857, received three hundred and fifteen dollars.
Providence, Sept. 30, 1856. For value received, I promise to pay H. C. Bradford, or order, twelve hundred and seventy-five dollars, on demand, with interest.
J. L. Burroughs.
Indorsements: Dec. 5, 1856, received fifty-five dollars.
Aug. 5, 1857, received the balance due on the above note. How much did I receive ?
Worcester, May 7, 1856. For value received, I promise to pay E. S. Winsor, or order, five hundred and forty-seven dollars and seventy-five cents, on demand, with interest.
S. S. Rider.
Indorsements: Aug. 19, 1856, received one hundred dollars.
April 15, 1857, received the balance due on the above note. How much did I receive ?
117. Banks and Banking.
(a.) A Bank is an institution established for the purpose of trafficking in money.
(b.) Banks usually receive money on deposit, loan money on interest, and issue bank notes, or bank bills, i. e. notes payable in specie to the bearer on demand at the bank, and intended to circulate as money.
(c.) When money is loaned by a bank, it is commonly made payable at the end of a given time, and the interest for that time and the three days of grace is deducted at the time it is loaned.
ILLUSTRATION. - On a note of $800, payable in 60 days, I shall receive at a bank $800 minus the interest of $800 for 63 days, i. e. $800 - $8.40 = $791.60.
(d.) By this arrangement the banks receive interest on a larger sum of money than they lend.
ILLUSTRATION.-In the above example, the bank receives interest on $800, while the sum actually lent is only $791.60.
(e.) Bank interest is called DISCOUNT, because it is thus deducted from the face of the note.
(f.) The note on which the money is received is said to be DISCOUNTED..
1. How much would be received at a bank on a note for $1000 due in 60 days ?
SOLUTION.—The interest of $1000 for 63 days is $10.50, which, subtracted from $1000, leaves $989.50, the sum received.
(g.) How much would be received at a bank on a note for
2. $800 payable in 30 days ?
8. A note for $1327.58, dated July 1, 1857, and payable in 3 months, was discounted July 27, 1857. When was it due and how much was received on it?
SUGGESTION.- The note was due in 3 mo. 3 da. after July 1, 1857, i. e. on Oct. 4, 1857. Hence, it had 2 mo. 7 da. to run from the day of discount, and interest for that time would be deducted. Ans. $1312.756.
9. A note for $1327.58, dated July 1, 1857, and payable in 90 days, was discounted at a bank July 27, 1857. When was it due and what was received on it?
Suggestion. — The note was due in 93 days after July 1, 1857, i. e. (by actually counting the days in the months included) on Oct. 2d. As 26 days had elapsed from the date of the note to the date of the discount, it had 67 days to run, and interest for that time would be deducted. Ans. $1312.756.
Note.-The last two examples illustrate the inequalities which may arise in reckoning time by the methods adopted in this country, one note becoming due 2 days before the other, yet giving the same interest. The only strictly accurate method is to compute the interest by days, reckoning 365 days to the year, as is done in England.
10. A note for $978.43, dated Aug. 7, 1856, and payable in 5 months, was discounted at a bank Sept. 17, 1856. When was it due and how much was received on it?
11. A note for $978.43, dated Sept. 1, 1857, and payable in 6 months, was discounted at a bank Jan. 1, 1858. When was it due and how much was received on it ?
12. A note for $197.64, dated Jan. 19, 1856, and payable in 60 days, was discounted at a bank Jan. 21, 1856. When was it due and how much was received on it ?
13. My note for $1200, payable in 3 months, was discounted at a bank, and I immediately put the proceeds at interest. When the note at the bank became due, I renewed it for the same time as before. When the second note became dae, I collected the amount of the money I had lent, and paid my note at the bank. How much did I lose by the transaction?
SUGGESTION. — To understand the process of renewal, it is only necessary to consider that, when the first note became due, I owed the bank $1200. To renew it, I got a new note for $1200 discounted at the bank, which would pay $1181.40 of the debt, leaving the balance, which is the bank discount, to be paid in cash. When the new note became due, I paid $1200 in cash. The total expense to me, then, was the amount of the bank discount for 3 mo. 3 da. plus the face of the note, $1200, and my total receipts were the amount of the sum received at the bank for 6 mo. 6 da. My loss is the difference between the total expenses and total receipts.