and silver at the ratio of 15 to 1; i. e. the value of 15 ounces of fine silver was declared to be equal in value to an ounce of fine gold. It very soon became apparent that this ratio was not proper, as it undervalued gold; therefore, in 1834, the ratio was changed to 16.002 to 1, and in 1837 it was changed to 15.988 to 1, which is the present ratio; usually referred to as 16 to 1. From 1792 to 1834 values in this country were measured by silver, but since the latter date gold has been the only standard of value in actual practice. Troy weights are used to determine weights of both gold and silver. All the principal nations have the gold standard. Over three fourths of international commerce is fixed upon this standard, even though many countries have not adopted it.1 Standard of Weight and Fineness. The proportion by weight of pure metal in coins to the alloy is the "fineness." In the United States it is 900 parts by weight to 100 parts of alloy in both gold and silver. The weight of a gold dollar is 25.8 grains and a silver dollar 412.5 grains. The "present standard of weight and fineness" in this country, therefore, provides for gold and silver dollars as above. Our unit of weight was obtained from England, is of bronze, and weighs 5,760 grains, or one pound troy. It is in safe keeping at the Philadelphia Mint. Each year an assay commission appointed by the President compares the working copies of the weight with the original. The weight and fineness of the United Kingdom of Great Britain and Ireland (Act fifty-six George the Third, chapter sixty-eight) provides that there should be nine hundred and thirty-four sovereigns and one ten shilling piece contained in twenty pounds weight troy of standard gold, of the fineness at the trial of the same of twenty-two carats fine gold and two carats of alloy in the pound weight troy; and, further, as regards silver coins, that there should be sixty-six shillings in every pound troy of standard silver of the fineness of eleven ounces two pennyweights of fine silver and eighteen pennyweights of alloy in every pound weight troy.2 the commodities produce in men. And "that the standard unit of value is some entirely arbitrary weight of the standard metal, the exact amount of which, being a matter of indifference on general ground, should be fixed as seems most convenient in reference to the habits of the nations or other accidental circumstances." 1 The Act of Congress, March 14, 1900, commonly known as the "Financial Bill," declares "that the dollar consisting of twenty-five and eighttenths grains of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard, and it shall be the duty of the Secretary of the Treasury to maintain such a parity." 2 The Coinage Act, 1870. Standard Silver Dollars. In the United States these "are legal tender at their nominal or face value in payment of all debts, public and private, without regard to the amount, except where otherwise expressly stipulated in the contract. Issued by the Treasurer and assistant treasurers of the United States in redemption of silver certificates and Treasury notes of 1890; sent, express paid, by the Government, in sums of $500 or any multiple thereof, for silver certificates or treasury notes of 1890 deposited with the Treasurer or any assistant treasurer.1 A dollar such as the above contains 412 grains of standard silver, .900 fine, which is equivalent to 371 fine grains of silver, balance being copper alloy to the amount of 41 grains. Standard Stocks (or Standard Investments). Well known securities, of established reputation, in which confidence is felt as to the future payment of interest or dividends, and of the principal, if redeemable; stocks which are sought as conservative investments. State Banks. Formerly "State banks" issued bank notes, but in 1865 Congress passed a law taxing these notes 10%, which speedily resulted in their retirement. Since that time, in other respects, they have performed about the same functions as national banks. As a class they have very largely disappeared in the East, but are more frequent in other sections of the country. Fiske writing in 1903 said that these institutions outnumbered the national banks in the country. State banks are under the regulation of the State in which they are located. State Bonds. An obligation in the form of a bond issued by a State, the payment of which must be accomplished through the collection of taxes assessed upon the taxable property embraced within its corporate limits. Some State issues have valuable assets in the shape of income-producing property, which contribute towards the payment of the principal and interest of its cbligations; such, for instance, are the large income-producing State-owned wharves and docks in San Francisco. Again, an indebtedness of this nature may be incurred for some improvement more or less local in its nature, the particular section benefited being primarily responsible for the 'The difficulty experienced in keeping silver dollars in circulation is shown by the following excerpt from the Report of the Secretary of the Treasury for 1905: "The silver dollars in circulation June 30, 1898, were $58,482,966. The amount of this coin distributed at Government expense for transportation, from July 1, 1898, to June 30, 1905, was $275,536,512, but the amount in circulation on the latter date was only $73,584,336." liquidation of the debt, for which, nevertheless, the State has obligated itself for payment. An example being bonds issued by the Commonwealth of Massachusetts for the benefit of the Metropolitan Water District. The interest return from most of our State securities is not large, and, consequently, their purchase is more or less limited to institutions such as insurance companies and savings banks, or to trustees of estates, or to those seeking a particularly conservative form of investment, and who can afford the low rate of interest. The past record of "State bonds" has not been a very happy one. Many of the issues have entailed great losses upon the holders. These debts, however, were incurred under different conditions than at present existing, and there is not to-day any reason to believe that any of our State issues of recent date are anything but safe holdings. The fact that States cannot be sued by an individual is a point which has always deterred some investors from placing money in securities of that kind. State Street. Financial Boston; meaning not only that section where matters of finance are transacted (not literally State Street itself), but also the men engaged in the management of such matters. Steady. The stock market is, or prices are, said to be steady, when there are few and small variations in prices; an even tone existing. Steamship Company Bonds. The average investor has not had the opportunity to familiarize himself with this class of investments, owing to the somewhat infrequency of these issues appearing upon the market. One very notable example is that of the International Mercantile Marine Co. To safeguard an issue of bonds on vessel property, it is better that the ships should be comparatively new; otherwise a careful appraisement of their value should be obtained, and, in any event, if the mortgage is to cover the vessels only, without other property or guaranty, the bonded debt should not much exceed 50% of the valuation. Owing to the rapid depreciation of steamships, the mortgage should provide for some method of reducing the debt either by a well-protected sinking fund or direct redemption of the bonds a rate of, say, one tenth of the total issue annually, beginning one or two years from its date. The trustee of the mortgage should be required to cause the property at all times during the life of the bonds to be properly insured in good companies, against all risks on vessel property ordinarily covered by such insurance, to the full insurable value of the ships; such insurance to be made with loss payable to the trustee, and the at policies deposited with it. It should further provide that any money received by the trustee on account of destruction of the property mortgaged should either be used to replace the property destroyed, in proportion to the insured value of the same the steamship company paying the difference- or if not so used or arranged to be used, at the end of a given time say six months to be divided in some equitable way among the bondholders; perhaps added to the sinking fund, if any. It is a point in favour of "steamship company bonds" that the steamship line is not usually confined to any given territory or section. If a certain line of sailing or business proves unprofitable, the boats may be changed to another line of ports, or another class of business, or nearly always be sold at a fair valuation. You cannot economically remove railway, manufacturing, or other similar properties from one section of the country to another, if they prove unprofitable where located, whereas, of course, the sailing of a line of boats may usually be changed at will. "The liability of the owner of a vessel for loss or damage to another vessel or to the cargo of either vessel, happening through errors in navigation or management, or from perils of the sea, but without his knowledge or privity, is limited to the value of his vessel, and the freight then earned, in the condition in which it is after the happening of the loss or accident. "The owner is also not liable for loss or damage by fire to the cargo carried in his own vessel unless caused by his own neglect. If an owner exercises due diligence to make his vessel seaworthy and to see that she is properly manned and equipped, neither he nor his vessel is liable for loss or damage to the cargo carried, from errors of navigation or management, or from dangers of the sea. "The owner may relieve himself of all liability by transferring all his interest in the vessel and the freight then pending to a trustee for all claimants. "It follows that the owner is not personally liable if his vessel becomes a total wreck. "Insurance on the vessel, recovered by the owner, is no part of the owner's interest in the vessel, and is not liable to be taken to pay for the loss or damage. "The owner of a vessel is of course personally liable, without limitation, if the loss is attributal to his own fault or negligence. In case of a corporation, the knowledge and privity' which would make it liable must be the knowledge and privity of its officers or managers, and not of the masters of its vessels." Steel. United States Steel Corporation. Sterling (or Sterling Exchange). Exchange" (to which refer) on Great Britain. Sterling at Paris 25.21." This means that twenty-five francs and twenty-one centimes, French money, was the equivalent in value, at the time of quotation, in English money, to the "pound sterling," and that a purchaser in Paris of a "bill of exchange" on London would pay for it at the rate of twenty-five francs and twenty-one centimes for each "pound sterling." Similar quotations in other financial centres, as " Berlin, 20.49" would mean the value in German money of the English "pound sterling" for exchange purposes. 66 "Sterling" is very generally used in reference to English money, as, for instance, 34 million sterling, meaning 3,500,000 "pounds sterling." The English say "pounds or sterling" when referring to their money, whereas we say "dollars in speaking of our own. It is the common term for the money of Great Britain in whatever form, including its own standard bars of silver or gold. Sterling Bill. (See last subject.) Exchange" payable in English money, Sterling Bond. See next subject. Also loans Sterling Loan. Bonds, or other forms of indebtedness, payable in English money; i. e. pounds sterling. made on "sterling (which see) bills" of exchange. Bills payable, say, at sixty days' sight, are drawn by the American banker on London. These are negotiated either by the banker or the borrower, the latter, in any event, getting the proceeds. Suppose, at the time when the bill is drawn, the net rate of exchange is $4.85 for the "pound," then a "sterling loan" for £10,000 would cost $48,500. Deduct from this the banker's commission of perhaps one half of one per cent. $242.50, leaving net amount paid to the borrower $48,257.50. At the end of sixty days the loan will have to be paid on the basis of the rate of demand "sterling exchange" then ruling, which, in this suppositional case, we will figure at $4.885, making the amount due $48,850, and subtracting from this the original amount of $48,257.50 we have left $592.50, which is the interest paid for the use of the money for sixty days, or at about the rate of 41% yearly. "Sterling loans" differ from "foreign loans "in that the former are almost exclusively drawn upon London. |