EVERY GIRL A BUSINESS WOMAN.

A PRACTICAL GUIDE TO THE WORLD OF INDUSTRY AND THRIFT.

ByJAMES MASON.

eare going now to speak about money: not, however, about how to get it, but about what to do with it after it is got. About the occupations by which money is made, we shall not at present say anything. Many of them have already been treated of inThe Girl’s Own Paper.

When people have money there are three things they can do with it; they can spend it, or place it out at interest, or tie it up in a parcel and hide it away. Perhaps they do not need at the moment to spend it; in that case of the two ways that are left the only wise one is to place it out at interest.

And what isinterest? Interest is the sum paid by anyone who gets the loan of money, for the use of it. Selina, say, gets the loan of £50 for a year—not for nothing—oh, no, she pays £2 for the twelve months. This £2 is the interest. At the end of the year the lender receives back her £50 and £2 added to it, so, you see, it is for a good reason that we recommend lending in preference to unfruitful hoarding. Money—and this is a wise rule—should never be allowed to lie idle.

The sum lent is known as theprincipal, and on the principal the interest is calculated at so muchper cent.(by the hundred); that is to say, at so much for every £100. For instance, 5 per cent. means £5 for the use of every £100; 2½ per cent., £2 10s. for the use of every £100; and 3¾ per cent., £3 15s. for the use of every £100. Selina’s loan, in the preceding paragraph, is at 4 per cent., in other words, £4 for £100; so, of course, for £50 she just pays £2.

When you see a rate of interest quoted you may safely conclude that it is for a year—per annum(by the year), is the correct phrase—unless something is said to the contrary.

The rate paid in the shape of interest depends on a number of things, but the main question is, will the principal be perfectly safe? If the answer be yes, then the interest in these days will certainly be low. But on this subject we shall have more to say in a succeeding article.

To calculate interest on any sumfor a year, the rule is to multiply by the rate per cent. and divide by 100. For example, find the interest on £460 at 4½ per cent. Here you multiply 460 by 4½, which gives 2,070, and dividing by 100, arrive at the answer, £20 14s.

When the interest is wantedfor a certain number of days, you must multiply by the number of days and by double the rate per cent., and divide by 73,000. By way of example, find the interest on £320 for 30 days at 3 per cent. Multiply 320, first by 30 and afterwards by 6, which gives 57,600. Now divide by 73,000, and you have the total amount of interest, 15s. 9d.

People who have much calculating of interest to do should invest in a book of Commercial Tables. The use of these saves a great deal of trouble. There are some short cuts, however, which every business woman should carry in her head. At 5 per cent. per annum the interest upon a pound for every month is one penny. Having seen what this comes to, other rates may be reckoned by adding to or deducting from the 5 per cent. product.

For example, 2½ per cent. is one-half; 3 per cent. is six-tenths; 3½ per cent. is seven-tenths; 4 per cent. is four-fifths; 6 per cent. is six-fifths; 7½ per cent. is one-half more. Thus, 5 per cent. on £30 for ten months will be £1 5s.; 2½ per cent., 12s. 6d.; 3 per cent., 15s.; 3½ per cent., 17s. 6d.; 4 per cent., £1; 6 per cent., £1 10s.; and 7½ per cent., £1 17s. 6d.

Sometimes, on interest becoming due, it is regularly added to the principal, and interest is paid on the new principal thus formed. Money invested on this accumulating system is said to be placed atcompound interest.

There is something startling about the growth of money invested in this way. “A penny,” says Dr. Price, “so improved from our Saviour’s birth as to double itself every fourteen years—or, what is nearly the same, put out at five per cent. compound interest at our Saviour’s birth—would by this time have increased to more money than could be contained in 150 millions of globes, each equal to the earth in magnitude, and all solid gold.

“A shilling put out at six per cent. compound interest would, in the same time, have increased to a greater sum in gold than the whole solar system could contain, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit; and the earth is to such a sphere as half a square foot or a quarto page is to the whole surface of the earth.”

To show the difference between “simple interest,” in which the interest does not bear interest, and “compound interest,” in which it does, we give the following table, showing the time it takes for a sum to double itself at different rates:—

The really surprising difference between simple and compound interest is, however, only seen after the first few years are over. A loan of £100 for ten years at 4 per cent. simple interest would give £40, and at 4 per cent. compound interest about £47. But if the loan were for a hundred years the simple interest would be only £400, whilst the compound interest would be no less than £4,950.

Having now said all that is necessary at present about interest, we must speak for a little on the subject of banking, for it is by means of banks that most money transactions are satisfactorily managed.

What, then, is a bank? There seems, at first sight, something mysterious about it, but it is really a simple institution. It is partly a shop and partly a left-luggage office. It is a shop for dealing in cheques, bills, notes, gold, and silver, and a left-luggage office to which we consign our spare cash to lie till called for.

This, however, is only a rough and ready way of putting it, and we may as well add the following extract from a writer who has taken pains to give an exact definition:—“A banker is the custodier of the money of other people. Such is his business, viewed in its simplest aspect. A banker, however, if he hoarded the money deposited with him, would be simply a cash-keeper to the public; his bank would be literally a bank ofdeposit.... But the business of receiving money on deposit has always been, and is now, universally combined with that of lending it out. A banker does not hoard all the money deposited with him—he gives the greater portion out in loan. The lending of money is as much a part of his business as the receiving of deposits.”

You cannot go into a banker’s and say, “Ihave come to open an account,” just as you would enter a grocer’s with, “Be so good as send me half a dozen tins of the best sardines.” You must be introduced by someone who can vouch for your respectability, or, if not introduced, you must be able yourself to satisfy the banker that you are likely to be a desirable customer.

This first step being taken, you open what is called acurrent or drawing account; that is to say, an account into which you can pay money whenever it suits you, and from which you can draw money at any time by means of orders, orcheques, as they are called. In a current account in a good bank money is kept safely—which is a great matter—and at the same time you can make use of it as readily as if it were lying in your pocket.

For convenience, and partly, too, as a protection against fraud, bankers are in the habit of supplying their customers with books containing forms of cheques. When a book of cheques is exhausted, a new one is supplied on the presentation of a form which, when filled up, may resemble the following:—

The Cashier,The Cosmopolitan Bank.London,29th November, 1886.Please deliver to Bearer Cheque Book containing 25 cheques payable toJemima Bouncer.

The Cashier,The Cosmopolitan Bank.London,29th November, 1886.

Please deliver to Bearer Cheque Book containing 25 cheques payable toJemima Bouncer.

Each cheque bears a penny impressed stamp, and a book of cheques is supplied at the price of the stamps—a book, say, of twenty-five costing two shillings and a penny.

Cheques may be in one or other of two forms. The first form is—

No. 478953.London............188...The Cosmopolitan Bank,14, Marketjew-street, E.C.Pay..................or Bearer..................£...............

The other form is precisely the same, except that instead of the word “Bearer” it has the word “Order.”

As an example of a cheque with the particulars filled in, take the following:—

No. 536212.London, 19th November, 1886.The Cosmopolitan Bank,14, Marketjew-street, E.C.Pay Miss Georgina Makepeace or Bearer Nine pounds Thirteen shillings and Four pence.£9: 13: 4.Alice M. Littleproud.

No. 536212.

London, 19th November, 1886.The Cosmopolitan Bank,14, Marketjew-street, E.C.

Pay Miss Georgina Makepeace or Bearer Nine pounds Thirteen shillings and Four pence.

£9: 13: 4.Alice M. Littleproud.

The difference between cheques made out to “Bearer” and those made out to “Order” is this. Cheques payable to bearer can be cashed by anyone. Those payable to order, however, must be endorsed by the person in whose favour they are drawn before the money can be received. But what is toendorsea cheque? It is simply to write your name on the back of it.

Cheques payable to order are certainly safer than those payable to bearer. And they have another advantage. In the event of receipts being lost or mislaid, they supply evidence that the money was received by the person to whom it was owing.

A cheque payable to bearer can be made payable to order by drawing the pen through “Bearer,” and writing “Order” above it. A cheque payable to order can also be made payable to bearer by scratching out “Order” and putting “Bearer” above it; but in this case you must put your initials to the alteration.

To give extra security to a cheque, draw two parallel lines across the face of it with the words “—— & Co.” inserted between them. This makes it what is called a “crossed cheque,” which will only be paid through some banker to a known customer. Instead of “—— & Co.” you may write the name of the banker of the person to whom the cheque is payable. When this is done, the cheque is only payable through him.

If in crossing the cheque you add the words “Not negociable,” that is another safeguard. These words “warn all whom it may concern that they accept the cheque subject to the liability of being compelled to refund its value should it prove to have come improperly into the possession of any person from whom their own title is derived.” This makes a cheque as secure against the wiles of the dishonest as anything in this world can be.

The filling up of a cheque should be done very carefully, and the style of signature should be always the same. The figures in the body of a cheque must be in words, and should be written close together, so that there is no room left for the fraudulent to improve on the amount. Cases have frequently occurred of “ty” being added to six, seven, and nine, to make them read sixty, seventy, and ninety, and a “y” being given as a tail to eight, to multiply eight by ten, is quite a common trick. As a protection, the words “Under ten pounds” are sometimes written upon a cheque that lends itself to this sort of roguery.

Suppose a cheque is given by a person who has not money enough in the bank to meet it, the banker will most likely return it, with the words written on it, “No effects,” or “Refer to Drawer.” The cheque is then said to bedishonoured.

Cheques should always becashed—that is to say, payment of them should be got—as soon as possible after they have come to hand. It is never safe to delay, for the most unlikely things happen; the bank may fail, or the drawer may become bankrupt, or his account may become locked up through his death.

A memorandum should be preserved of every cheque you give away. This is provided for by the cheque-books furnished by the banks having a margin which is left when the cheque is torn out. This margin, separated from the cheque by a perforated line, is known as thecounterfoil. The counterfoil bears the same number as the cheque to which it is attached. Here is an example of one filled up:

No. 213,55117th November, 1886.Dr. Simon Burre.Medical Attendance.£7.7.0

On the back of each counterfoil some people are in the habit of writing the balance they have at the moment in the bank. This has some advantages, and is certainly a check to extravagance.

Though cheques are usually made out on engraved forms, you may write a cheque on a sheet of note-paper should a cheque-book not be at hand. In that case, remember to put a penny stamp on it, and to cancel the stamp by writing on it the date and your initials.

Keep your cheque-book always under lock and key. If you leave it about, it only puts temptation in the way of people to abstract a blank form and make free with your signature. Should your book ever be lost or stolen, give notice at once to the bank.

Lodging money is one of the easiest of business operations. You go to the bank, and fill up a slip, headed, say—

The Cosmopolitan Bank,14, Marketjew-street.............18...Credit...........................Paid in by.....................

Below this heading you enter the particulars of the sum you are going to lodge:—Bank-notes, so much; coin, so much; cheques and bills (mentioned separately), so much; total, so much. You hand this slip over to the teller with the money, and the whole thing is done. No receipt is given, and it says a great deal for the perfect machinery by which banking is conducted that one never hears of a mistake, or that any customer ever thought his confidence taken advantage of. We speak here of the method in the best London banks. In the provinces and in some London establishments the form of procedure varies a little.

When you send money to your banker by post, you should write with it somewhat as follows:—

Brackenhurst, 24th November, 1886.Dear Sir,I enclose cheque for £34 12/—Messrs. Bagwell and Sackit on the Welsh Counties Bank—which kindly place to my credit.I remain, Dear Sir,Yours truly,Silvaninha Hamilton.The Manager,The Cosmopolitan Bank.

Brackenhurst, 24th November, 1886.

Dear Sir,

I enclose cheque for £34 12/—Messrs. Bagwell and Sackit on the Welsh Counties Bank—which kindly place to my credit.

I remain, Dear Sir,Yours truly,Silvaninha Hamilton.The Manager,The Cosmopolitan Bank.

Receipt of this will be acknowledged by the manager, thus:—

Dear Madam,I beg to acknowledge receipt of your favour of 24th inst., with enclosure, value £34 12/, for your credit.Yours, etc.,Jacob Birchenough,Manager.

Dear Madam,

I beg to acknowledge receipt of your favour of 24th inst., with enclosure, value £34 12/, for your credit.

Yours, etc.,Jacob Birchenough,Manager.

To every person keeping an account the bank supplies a book, generally known as apass-book. On the Dr. or left-hand side of this book, will appear the sums received on behalf of the owner of the book; whilst all the cheques paid on her account by the bank will appear on the Cr. or right-hand side. Here is an example in which, for convenience, we have printed the Cr. side under the Dr., instead of side by side:

In this book you must never make an entry yourself. It should be left at regular intervals at the bank to be “made-up,” that is to say, for all the sums received and paid to be entered in it. The pass-book is really a copy of the bank ledger. When received again from the bank it should be gone over carefully to see that all the entries are just as they should be.

Current accounts, as a general rule in England, do not bear any interest, in other words, the banker pays nothing for the use he enjoys of any balance left in his hands. Unless the balance is large he thinks he does enough in taking the trouble of keeping the account. In Scotland interest is usually given on current accounts, but it is only a slight advance upon nothing.

Besides receiving money on current account, however, bankers receive it ondeposit.Deposit accountsare those in which sums of money are lodged in a bank on the understanding that a certain rate of interest is to be paid upon them, and that a certain number of days’ notice is to be given before they are withdrawn. There is no such thing as drawing cheques on a deposit account.

When money is received on deposit, a deposit receipt is given. The amount isusually repayable to the depositor alone, but it may also be paid to anyone to whom the depositor gives an order on the bank, either written on the back of the deposit receipt or accompanying it.

The rate of interest paid on deposits varies with the Bank of England rate. It is, however, usually so small that no one, except for special reasons, will let money lie on deposit in a bank whilst there are plenty of perfectly safe investments to be met with outside.

For business women who travel few business documents are of greater interest than aletter of credit. This is a communication from a banker to a correspondent, or correspondents, authorising credit to be given to the bearer to a certain specified amount.

In applying for a letter of credit you must name to your banker the sum you will require altogether, and the number of towns in which you wish to draw portions of that sum, and if there are, say, three towns—Paris, Berlin and Rome—you must enclose your signature on three separate sheets of paper. The banker sends one of these slips to an agent in each of the towns named, and forwards to you a letter of credit in this form:—

Messrs.Ancelot & SantineParis.”Otto, Rust & UmlaufBerlin.”Trento, Bertoni, & ValentinoRome.London, 27th November, 1886.Gentlemen,We have the pleasure of establishing a credit in favour of Miss Robina Turpin, who will present to you this letter, and we shall thank you to supply her with cash to the amount of one hundred and twenty-five pounds (£125) sterling, or such part thereof as may not previously have been paid on this credit, writing off on the back of this letter the sum advanced, and taking her drafts on us in your favour for your reimbursement, which we engage duly to honour.We remain, Gentlemen,Your most obedient Servants,Smith, Paterson & Winkles.

London, 27th November, 1886.

Gentlemen,

We have the pleasure of establishing a credit in favour of Miss Robina Turpin, who will present to you this letter, and we shall thank you to supply her with cash to the amount of one hundred and twenty-five pounds (£125) sterling, or such part thereof as may not previously have been paid on this credit, writing off on the back of this letter the sum advanced, and taking her drafts on us in your favour for your reimbursement, which we engage duly to honour.

We remain, Gentlemen,Your most obedient Servants,Smith, Paterson & Winkles.

Across the face of the letter of credit is written, “This credit to be in force for twelve months only from this date.”

Circular Notes, as they are called, are in one respect an improvement on a letter of credit: they can be cashed in almost every town the traveller is likely to visit. They are issued by most London bankers and for sums of from £10 upwards.

A banker has a pretty responsible time of it. He is bound to keep secret the state of his customer’s account. He must also know his customer’s handwriting, so, should he pay a cheque or bill which turns out to be a forgery, he must bear the loss. If he neglects to carry out any instructions within the legitimate sphere of banking business, such as the payment of premiums on a life insurance or the purchase of shares, he may be called to account for any loss the customer may suffer through his carelessness.

The simplest bank in the country, and the most important to depositors of small means is the Post Office Savings Bank, about which we must now speak. It is an extensive institution, having over eight thousand branch establishments all over the country; indeed, every money order office is a branch office of the Post Office Savings Bank. At the present time there are more than three and a half millions of accounts open, with an average balance of £13 10s., and the average turnover of the bank, counting both the money deposited and the money drawn out, is twenty-eight million pounds a year.

You cannot, in the Post Office Savings Bank, open an account from which, by means of cheques, you can draw money at any hour. It does not provide cheque books, and makes the withdrawal of money comparatively a slow process, for its leading idea is not to facilitate present business, but to provide for future need. It really starts with the reflection that

“If youth but knew what age would crave,Many a penny it would save.”

“If youth but knew what age would crave,

Many a penny it would save.”

An account may be opened with a very small sum. You can do it with a shilling. With that in your hand you can go to a post office, and assert your intention of placing your savings under the care of the Government. And remember that the shilling, and anything else added to it, will be safer than in any other bank whatever; for the Post Office Savings Bank can only come to grief with the ruin of the British Empire.

Intending depositors must state their Christian name and surname, occupation (if any), and residence, and they must sign a declaration to the effect that they have no interest in any savings bank account, and are willing to have any deposits they may make managed according to the regulations of the Post Office.

When that is done a deposit book is supplied. In this book every deposit must be entered at the time of its being made by the postmaster, or whoever receives it, and he must affix to the entry his signature and the stamp of the office.

“In addition to the receipt in the book, the depositor will receive an acknowledgment by post from the Savings Bank department in London, and this should reach him within four clear days, exclusive of Sundays and bank holidays, if the deposit be made in England or Wales; within six days, if it be made in Ireland or Scotland.”

The interest allowed is 2½ per cent. per annum—that is to say, at the rate of £2 10s. every year for every £100. This is just a halfpenny each month for every pound. Thus, a pound lodged in the bank, and lying there for a year, becomes £1 0s. 6d.: £10 becomes £10 5s.; and £30 grows to be £30 15s. The interest is calculated to the 31st of December in every year, and is then added to and becomes part of the principal.

The deposits made in any year ending 31st December must not exceed £30, and when a depositor has lodged in all £150, not counting interest, she is not allowed to lodge any more till she has reduced the sum standing at her credit. If she chooses to let it lie, it will, of course, by the addition of interest, increase every year. When it reaches £200, however, no more interest is allowed till some of the money is withdrawn.

When a depositor wishes to withdraw any money, she fills up a notice of withdrawal, to be had at any Post Office Savings Bank, and forwards it to the Savings Bank Department in London. She then receives by post a warrant, which she should present with her book at the post office where payment is to be made.

Once in every year, on the anniversary of the day on which the first deposit was made, the deposit book should be forwarded to the Controller of the Savings Bank Department in London, that the entries may be checked, and that the sum due for interest may be added. When sending the book, do not pay postage: all communications on Savings Bank business go free.

Deposits may be made by married women, and in that case their husbands have no control over the money. They can draw from it when they please, and bequeath it by will to any person they choose.

The Post Office Savings Bank adapts itself to saving on the smallest scale. If a girl can only save a penny at a time, she can with the penny buy a stamp, and the stamp she can stick on a form with twelve divisions, supplied by the Post Office. When she has in this way saved twelve stamps, she must take it to the post office, and have the shilling entered in a regular bank account.

But the Post Office undertakes more business in connection with money than merely storing it up against a rainy day. Of that, however, we shall speak in our next article.

(To be continued.)

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