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[Illustration: A private bond.]

At different times the United States government has issued bonds to
relieve the treasury. These bonds are absolutely safe and are always
marketable. _Registered bonds_ have the name of the buyer
_registered_; _unregistered bonds_ are payable to _bearer_. _Municipal
bonds_ are issued by cities and other municipalities to raise money
for local improvements. If proper precautions are taken by buyers,
municipal securities may be considered among the safest and most
remunerative investments.

When a new railroad enterprise is undertaken its promoters often
expect to make the road not only supply the money for its construction
but also give working capital in addition. This is done by the issue
of mortgage bonds. Default in the payment of interest throws the road
into the hands of a receiver. The securities immediately fall in value
and are perhaps bought up by a syndicate of crafty speculators who are
permitted to reorganise the road and its management. This is the
history of many of our roads. There are exceptional cases, of course,
but the investor should be familiar with the facts before buying
railroad mortgages.

A BOTTOMRY BOND is a kind of mortgage peculiar to shipping. It is a
conveyance of the ship as security for advances made to the owner. If
the ship is lost the creditor loses his money and has no claim against
the owner personally. It is allowable for a loan made upon such a bond
to bear any rate of interest in excess of the legal rate. A vessel
arriving in a foreign port may require repairs and supplies before she
can proceed farther on her voyage, and in occasions of this kind a
bottomry bond is given. The owner or master pledges the keel or
_bottom_ of the ship--a part, in fact, for the whole--as security.

We have now upon the market stocks and bonds representing all
conceivable kinds of property. Not only are properties of many kinds
used to issue bonds upon, but many kinds of bonds are often issued
upon the same property. Thus we find among our railroads not only
first, second, and third mortgage bonds, but income bonds, dividend
bonds, convertible bonds, consolidated bonds, redemption bonds,
renewal bonds, sinking-fund bonds, collateral trust bonds, equipment
bonds, etc., until they lap and overlap in seemingly endless
confusion.

RECEIVER'S CERTIFICATES are issued by receivers of corporations,
companies, etc., in financial difficulties, to secure operating
capital; they are granted first rights upon the property and are
placed above prior lien and first mortgage bonds.

XVII. TRANSPORTATION

The most common effect of cheapened transportation is to increase the
distance at which it is possible for producer and consumer to deal
with each other. To the producer it offers a wider market and to the
consumer a more varied source of supply. On the whole, cheapened
transportation is more uniformly beneficial to the consumer; its
temporary advantage to the producer very often leads to
overproduction. It has the effect also of bringing about nearly
uniform prices the world over.

The time was when nearness to market was of the greatest possible
advantage. At the present time a farmer can raise his celery in
Michigan or his beets in Dakota and market them in New York City about
as easily as though he lived on Long Island. It is no longer location
which determines the business to be carried on in a particular place,
but natural advantages more or less independent of location. But the
railroad or the steamboat very often determines where a new business
shall be developed. It is this quickening and cheapening of
transportation that has given such stimulus in the present day to the
growth of large cities. It enables them to draw cheap food from a far
larger territory, and it causes business to locate where the widest
selling connection is to be had, rather than where the goods or raw
materials are most easily procured. It is the quick and comfortable
transportation facilities which our large cities possess that have
given strength to the great shopping centres. Shoppers for thirty or
forty miles around can easily reach these centres, and the result is
that trade gathers in centres rather than at local points. A city of a
million population in the most productive agricultural section of
country could not be fed if the food had to reach the city by teaming.
With this growth of trade centres comes the increased gain of large
dealers at the expense of the small; with it comes organised
speculation and its attendant results, good and evil.

Prior to the completion of the organisation of trunk or through lines,
freight was compelled to break bulk and suffer trans-shipment at the
end of each line, where a new corporation took up the traffic and
carried it beyond. To prevent this breaking of bulk and to expedite
the carriage of freight, fast freight lines on separate capitalisation
were organised. The purpose of the interstate-commerce law is largely
to prevent discrimination and corruption in freight charges, to secure
for every person and place just and equal treatment at the hands of
the transportation companies. The freight rates are arranged and
regulated by the traffic associations, and the various conditions and
compromises necessary have made both classifications and rates about
as complicated as anything possibly could be.

The name DIFFERENTIAL as applied to freight rates refers to the
differences which are made by railroad companies. Certain roads are by
agreement allowed to charge a lower rate than others running to the
same points. To and from each of the eastern cities there are two
classes of roads--the _standard_ lines and the _differential_ lines.
The standard lines have the advantage of more direct connections; the
differential lines reach the freight destinations by circuitous
routes, in some instances by almost double the mileage. With a view to
equalising these conditions the general traffic associations allow the
differential lines to carry freight at a lower rate per mile than the
rate charged by the standard lines.

The transportation business of the United States is so varied and
complicated that a proper study of its freight tariffs and
classifications would require much more space than can be given the
subject in these lessons.

XVIII. TRANSPORTATION PAPERS

The common transportation papers, familiar to all shippers, are the
(1) _shipping receipt_, (2) _bill of lading_, (3) _waybill_.

ORIGINAL RECEIPTS, stating marks and quantities of goods, go with each
separate lot of merchandise to the freight sheds or vessels, and these
are summed up in a formal bill of lading, for which they are exchanged
when all the cases or bundles belonging to the particular shipment
have been delivered. The duplicate receipt, or the part commonly
marked _invoice_, is kept by the receiver of the freight, and the
other end, commonly marked _original_, is given to the drayman. In
making ordinary shipments it is not usual or necessary to make out a
formal bill of lading. Of course, when no bill of lading is made out,
the receipt should be preserved by the shipper. The full contract is
usually printed on the receipt, but it must be remembered that a
receipt is not a negotiable instrument and cannot be used as security
for money.

[Illustration: A shipping receipt (original).]

A BILL OF LADING is an acknowledgment by a transportation company of
the receipt of goods specified, and contracts for their delivery at a
certain place, under conditions stated thereon, upon payment of
freight and expenses. Bills of lading are negotiable and maybe
transferred by indorsement, but are of no value apart from the goods
to which they give title. A bill of lading goes with certain _named_
goods and cannot be transferred to other goods, even though of
precisely the same kind and price. Marine bills of lading are usually
made in triplicate; one is kept by the shipper, another by the
vessel, and the third is sent by mail to the person to receive the
goods.

[Illustration: A steamship bill of lading.]

The parties to a bill of lading are three--the shipper, the consignee,
and the transportation company. The declaration of having received the
goods in good order and condition, and the consequent obligation,
subsequently expressed, of delivering them in like good order and
condition, is sensibly lessened in its importance by the additional
clause now adopted by almost all transportation companies--namely:
"Contents and condition of contents of packages unknown." Should the
goods or part of them be shipped in a damaged condition, or in a bad
condition of packing, a note to that effect should be made by the
transportation company on the bill of lading, which ceases then to be
a _clean bill of lading_.

[Illustration: A local waybill.]

Like any other instrument of credit, a bill of lading may be deposited
with a creditor as security for money advanced (or it may be
transferred to a buyer) by means of indorsement, and the property or
goods will be thereby either mortgaged or assigned. Acting upon this
principle, the shipper declares in the bill of lading that the goods
shall be delivered unto the consignee or his assigns. When a shipper
is unable to insert the name of the consignee at the time the bill of
lading is made out, a _bill to order_ is drawn up wherein the
consignee's name is superseded by the words _shipper's order_, or
simply _order_; it being thus understood that the goods shall be
delivered to whomsoever presents, at point of destination, the bill of
lading duly indorsed by the shipper. By such a simple arrangement as a
_bill to order_ the merchant is enabled to sell the goods while they
are at sea, or in transit, and a consignment of merchandise may change
hands several times before arriving at its destination.

When a case of merchandise to be shipped has been properly entered and
weighed it is then ready to be _manifested_ or _waybilled_, as no
shipment is allowed to go forward without a waybill. The WAYBILL is
simply a memorandum of the consignment, together with full and
complete shipping directions, giving also the number of the car into
which the case has been loaded, and the point to which the car is
"carded." The freight conductor has waybills for all goods which he
carries. They are turned over with the merchandise to the agent of the
railroad at the point of destination.

Our illustrations show (1) _a shipping receipt_--the half marked
"_original_"; (2) _a steamship bill of lading_; (3) _a local
waybill_.

EXAMINATION PAPER

NOTE.--_The following questions are set as an indication of the sort
of knowledge a student should possess who has carefully read the
several papers of this course. The paper covers only about the first
half of the course. The student is recommended to write out the
answers carefully. Only such answers need be attempted as can be made
from a study of the lessons._

1. What in a general sense is meant when we speak of the currency of a
country?

2. Enumerate some of the advantages afforded to the community and to
commerce in general by banking institutions.

3. A bank cheque is a demand order for money, drawn by one who has
funds in the bank. How does a cheque differ from an order on John
Smith to pay bearer a certain sum of money?

4. Why is it important that cheques should be very carefully drawn?

5. (_a_) A cheque has no date. Does this make it void? (_b_) How about
a cheque dated months ago? (_c_) Is a cheque dated on Sunday good?
(_d_) Why are cheques sometimes dated ahead? (_e_) Are you at liberty
to print your own form of cheque? (_f_) Is it necessary that your
cheque be written on the prescribed blank form? (_g_) How would you
write a cheque for 75 cents?

6. How would you word a cheque to give to a person who is unknown at
your bank, but who wishes to draw the money over the counter?

7. You are sending a cheque through the mails to John Brown,
Philadelphia. How will you prevent the cheque from falling into
the hands of the wrong John Brown?

8. You identify A. B. at your bank. The cheque A. B. presented turns
out to be a forgery. Are you responsible?

9. A. B. transfers a cheque to you by a blank indorsement. It is then
payable to bearer. How can you legally make it payable to your own
order?

10. What is meant by power-of-attorney? How should an attorney indorse
cheques for any person for whom he is acting?

11. If a note were about to be transferred to you by indorsement and
delivery in payment of a debt, would it make any difference to you
whether or not it was overdue? Explain in full.

12. Tell how you would receipt for a payment of a note. Why is not an
ordinary separate receipt sufficient?

13. Why are notes protested? Why is a formal protest sometimes desired
even though the paper bears no indorsements?

14. If an indorser is compelled to pay a note, against whom has he a
good claim?

NOTE TO THE FOREGOING EXAMINATION PAPER

It is a mistake to answer questions for a student if he is able
of himself to find the answers. A question which sets a student
thinking, even though he cannot immediately find a satisfactory
answer, affords educational training of considerable value. A
few of the answers to the foregoing questions are as follows:

5. (_a_) Not necessarily so. (_b_) Such a cheque would under
ordinary conditions be all right. Cheques should be presented as
soon after date as convenient. (_c_) Cheques dated on Sunday
are very commonly paid. Cheques or notes delivered on Sunday are
void. The delivery makes the contract, not the dating. (_d_)
That the maker may have a few days in which to deposit
sufficient money to meet them. (_e_) You are at liberty to print
your own form of cheque or to write it out in full if you wish.
(_g_) Write the words "_Seventy-five cents_" plainly along the
money line.

8. Yes.

BUSINESS GEOGRAPHY

THE TRADE FEATURES OF THE GREAT COMMERCIAL NATIONS

I. THE TRADE FEATURES OF THE BRITISH ISLES

LONDON AS A FOOD CONSUMER

London is the greatest seat of trade and commerce in the world. Its
commercial greatness is evidenced by its greatness of population. Its
inhabitants number over 6,000,000. The houses in which this vast
population lives, would, if placed end to end, make a continuous
street that would stretch across all Europe and Asia. The mere effort
of providing food for this vast population necessitates an enormous
commerce. Half a million of beeves are required every year to supply
its meat market; also 2,000,000 sheep and 8,000,000 fowls. To supply
its fish market 400,000,000 pounds of fish are required, and
500,000,000 oysters. Grain, flour, fruit, butter, eggs, cheese, sugar,
tea, and coffee, are brought to London daily in such quantities that
the prices of these commodities all the world over are based upon what
they will fetch in London. Whole nations and provinces and districts
get their subsistence from industries that have for their end the
supplying of some of this enormous food demand. Denmark, for example,
owes its entire prosperity of recent years to its profitable
manufacture of butter for the London market. Brittany and Normandy, in
France, are almost wholly occupied in supplying that market with
poultry and eggs. The islands of Jersey and Guernsey derive their
principal wealth, not, as might be supposed, from the sale of milk and
butter, but from the supplying of London with potatoes. Canada during
the last six or eight years has built up with London an immense trade
in cheese, a trade that exceeds in importance any other that Canada
has, while even our own home States--Illinois, Iowa, and Wisconsin,
for example--have found new sources of wealth in catering to the
London dairy trade. "Elgin" and "Ames" creamery butters are products
well known to the London consumer.

LONDON THE COMMERCIAL CENTRE OF THE WORLD

What is the reason of London's wonderful prosperity? Already its
population is one fifth the entire population of England and Wales,
and it is increasing at the rate of about 20 per cent. per decade.
Three hundred people are added to the number every day in the year, a
rate of 110,000 inhabitants in the course of the year. It is now one
half greater than the total population of all Ireland. London's Scotch
population is almost as numerous as that of Edinburgh, while its Irish
population is quite as numerous as that of Dublin. Every civilised
country is represented among its people, and every civilised tongue is
spoken among them. A sea of brick and mortar, even now fifteen miles
long and ten miles broad, it is growing at the rate of a new house
every hour of its existence. Its streets are already 28,000 miles in
length, and these are spreading out so rapidly that every year many
whole villages and townships are enmeshed by them. Every day 1,000,000
people enter London by railway, and at least 500,000 people have
occupations in it in the daytime who reside beyond its limits at
night. Fifty thousand people have occupations in it in the night-time
who reside beyond its limits during the day. It is the largest
importing centre in Great Britain, and the largest in the world, and
its exports are exceeded only by Liverpool, and not always by
Liverpool. It is also the centre of the world's financial business.
For example, traders in the East Indies who ship cargoes of spices and
other Eastern produce to America, draw in settlement on London rather
than on New York, while traders in America who ship cargoes of cotton
to Marseilles or Riga, draw in settlement on London rather than on
Paris or St. Petersburg. What is it that thus makes London the chief
seat of population in the world, the commercial metropolis of the
world, the great financial clearing-house of the world?

LONDON THE CENTRE OF THE LAND SURFACE OF THE GLOBE

[Illustration: London the natural centre of the world's trade.]

London stands as nearly as possible in the centre of the land surface
of the globe. Its situation, therefore, eminently adapts it to be the
great centre of the world's trade--the great distributing centre of
the world's products. Its ships can go to the farthest parts of the
earth, and, loading themselves with the natural products of these
parts, can bring them to its docks without breaking bulk, deposit them
there for assortment, and then take them away again to other parts of
the earth, and do this more economically than the ships of almost any
other port in the world. But a greater reason is to be found in the
fact that for centuries the British people have pursued a definite
policy of manufacture, trade, and commerce, and have had the good
fortune to have had that policy interfered with in a less degree than
any other nation in the world by commerce-destroying war, whether
internal or external. And whenever Britain has been in external wars
her navy has been able to protect her commercial interests. London,
being the capital of the kingdom and its chief seat of trade, has
naturally derived the principal benefit from these many years of
peaceful industry and commerce. Then, again, London is favourably
adapted to trade in respect to its own country. It is a seaport, sixty
miles inland, and is connected by navigable canals with all the other
chief manufacturing and commercial centres of the country. Its railway
facilities, too, are so complete that there is not a manufacturing
town in the whole island that is not within fifteen hours of
freightage from it. Then, too, the peculiar configuration of the
coast-line of Great Britain makes every point on the island within an
hour or two of carriage from a seaport. Finally, all British seaports
are in trade connection with London by a coasting service unequalled
in the world for cheapness, completeness, and efficiency. In a word,
London stands not only in the centre of the land surface of the globe,
but also at the commercial centre of its own home territory--that is
to say, within easy reach both by water and by land of all the trading
and producing interests of a people that for centuries have been
leaders in commercial and manufacturing industry and enterprise.

GREAT BRITAIN'S COMMERCIAL POLICY

But that which more than anything else has made London the great trade
centre of the world has been the policy, now for many years adopted by
the British people, of allowing the goods and products of all other
nations to enter their ports untaxed. Every port in Britain is a free
port of entry for all imported merchandise except spirits, tobacco,
wine, tea, coffee, cocoa, and chicory; and ships of all nations are
allowed to trade at British ports upon terms exactly the same as those
laid down for British ships. The result is that Britain has become the
entrepot or distributing mart for the produce of the world. Ships of
all nations are found at her wharves, and commodities from all parts
of the world brought in those ships are found in her warehouses. Her
mercantile navy numbers 21,000 vessels, and 8000 of these are
steamships. The tonnage of these vessels amounts to over 8,750,000
tons, and of this nearly 8,000,000 is engaged in the foreign trade
alone. Her mercantile sailors number over 250,000 men, and over
150,000 of these are engaged in the foreign trade. London is, of
course, the chief gainer from this perfect unrestriction of trade.
Twenty-seven per cent. of the whole trade of the country is in its
hands. Its merchants do business in every seaport on the globe, and
the trade of Great Britain with ports in Europe, the Levant, Egypt,
India, the East Indies, China, Japan, and Australasia, is almost
wholly controlled by them. Its shipping embraces the finest trading
fleets known to commerce. Its docks and wharves extend on either side
of the Thames for twenty-four miles from London Bridge down to
Gravesend, and are the largest and finest in the world.

[Illustration: British mercantile marine. Compared with that of other
countries.]

LONDON THE CLEARING-HOUSE OF THE WORLD

A similar explanation is to be given of the fact that London is the
great financial centre of the world. The same policy which has made
Britain a great trading country has also made her a great
manufacturing country. The food products of all the world pour in upon
her shores, and Britain has become a cheap place to live in. Her
artisans are supplied with the best food that the world can produce,
and this at prices that are practically what the British demand makes
them to be. The British artisan is therefore both well fed and cheaply
fed. As a consequence of this, British manufactures are produced more
efficiently and more cheaply than those of most other nations, and
they are therefore exported enormously to every quarter of the globe.
London, from its accessibility with respect to the great manufacturing
centres at home, and from its trade connections and facilities for
trade abroad, is the great distributing centre of this enormous
manufacture. London exporters have accounts for goods sold by them all
the world over. There is, therefore, no quarter of the world where
money is not constantly owing to London; or, if not to London, then to
Manchester, Birmingham, Sheffield, Leeds, Glasgow, or some other
manufacturing centre in close financial touch with London. In this,
then, lies the explanation of the financial supremacy of London. No
matter in what quarter of the world money is owed by any place, the
final destination of that money is London; for in almost all cases it
will be found that the locality to which the money is owed, if it be
not London, will itself be a debtor to London. London, therefore, from
necessity, and as a matter of custom and convenience, has become the
great clearing-house of the world. The final adjustments of the
indebtedness of all the commercial centres of the world are made
there.

[Illustration: London bridge.]

GREAT BRITAIN THE CREDITOR NATION OF THE WORLD

One other reason for the financial supremacy of London lies in the
enormous wealth of Britain. For now almost half a century Britain has
been importing far more than she has been exporting, and the total
volume of her import and export trade is more than quadruple what it
was in 1850. The consequence is that not only has Britain been
accumulating wealth, but she has been accumulating it enormously. Her
accumulated savings, therefore, have been at the world's disposal, and
she has had so much money to invest that she has become the creditor
nation of the world. The total investments of British capital in
foreign countries (in loans, railways, manufacturing syndicates, etc.)
is estimated to be the enormous sum of over $10,500,000,000. London,
of course, is the investing, controlling, and supervising
counting-house for all this capital. And as so much British capital
finds in London its place of investment, it naturally follows that
nearly all the remaining unemployed capital of the world, that seeks
investment, either is sent to London as a market, or else assumes a
price for investment elsewhere which the current price of capital in
London warrants it to assume. The London market rate of capital,
therefore, determines its market rate in every other commercial centre
of the world.

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