such a title frequently are secured by stocks only, as was the case recently with a large Western railway company (Holding Company) which authorized an issue of $75,000,000 "collateral mortgage gold bonds" secured by a pledge of nothing but the stock of another railway company.

Collateral Note. A promissory note secured by stocks, bonds, mortgages, or other securities. A " collateral note," of course, may be given by an individual, firm, or corporation. (See "Collateral.") It is quite a common form of borrowing among many of the railway companies, as evidenced by the Cincinnati, Hamilton & Dayton Railway Co. issuing, in 1905, $15,000,000 44% "collateral notes." To secure these notes there was deposited with the Central Trust Company of New York, as trustee, the following securities, which had an estimated market value, at the time, of $24,000,000.

$15,000,000 Cincinnati, Hamilton & Dayton 41% Consolidated Mortgage Gold Bonds.

$6,700,000 Cincinnati, Hamilton & Dayton 5% Preferred Stock.

$1,073,000 Cincinnati, Hamilton & Dayton 4% Preferred Stock.

$375,000 bonds of constituent companies.

7,501 shares Southwestern Construction Company stock.

Ascertain the value of securities held by the trust company as collateral security for notes of this description, and what their nature is and how important to the company issuing the "collateral notes."

Collateral Trust Bonds. Issued by a corporation, not secured by a mortgage upon its own property, unless upon certain real estate and subject to previous liens thereon, but secured by depositing in trust securities of other companies. Such a bond may, however, be indirectly a first mortgage through mortgages which have been deposited as above indicated; for instance, under the heading "Joint Bonds" is described a bond issued against stock of the Chicago, Burlington & Quincy Railroad Co. In this case, these "joint bonds" are really" collateral trust bonds," and are in no sense a mortgage. Suppose, however, some of the first mortgage bonds of the Chicago, Burlington & Quincy Railroad Co. had been deposited; this "collateral trust," or "joint bond," would, in that case, have been indirectly a first mortgage upon the Chicago, Burlington & Quincy Railroad.1

The value, as an investment, of such a bond as described

The Armstrong Committee, in its recommendations after investigating the New York life insurance companies, expressed disapproval of collateral trust bonds secured by stock collateral. "Collateral trust bonds at their best have many objectionable points, and cannot be classed as conservative.

"

above, depends upon two things: first, the value of the securities pledged for its payment, and their desirability if, through default, they become the property of the bondholders; second, the strength and ability to pay of the corporation actually issuing the bond and what obligation, if any, such corporation is under to pay in case of insecurity of the collateral pledged. (See "Convertible Collateral Trust Bonds.") Collection Charges. Banks belonging to the New York Clearing-House Association have adopted certain rules and regulations covering the collection of checks, etc. Such banks are allowed to use their discretion as regards charges for collection on the largest Eastern cities, and in transactions with the City and State of New York and the government, but the remainder of the United States is divided into two sections, in which charges of 1-10 and of 1% are, respectively, made. Collections on points east of the Mississippi River and north of Tennessee (also including the State of Missouri) are charged for at the rate of 1-10 of 1%. On all other points of the United States (including Canada and the Provinces) a charge of 1-4 of 1% is made.

Other large cities, of course, have their own customs. The Chicago banks recently adopted a plan of charges for the collection of out of town checks. This is modelled somewhat after the St. Louis plan, and there is great similarity between these and the New York method. The essential point is, that the custom is becoming very general for banks to charge for the collection of out of town checks.

Collection-Clerk. This employee of a bank is responsible for such items as notes, time drafts, etc., that is, papers which are payable "on time." Items which are payable "on demand" do not as a rule come under his jurisdiction.

Collection of Coupons. See "Coupons - Collection of." Collections. The "clearing-house" term indicating the checks, drafts, etc., which a bank presents at the "clearinghouse," or which it has for collection. Also referred to as "collection items."

Colon. Monetary unit of Costa Rica, equal to $0.465 United States money.

Columbian Half Dollar. By an act of Congress, August 5, 1892, $2,501,052.50 of silver half dollars, of special design, were minted in recognition of the Chicago World's Fair. Weight, 192.9 grains; fineness, .900. Legal tender to the extent of $10.

Columbian Quarter Dollar. By an act of Congress, March 3, 1893, $10,005.75 of silver twenty-five cent pieces, of special

design, were minted in recognition of the Chicago World's Fair. Weight, 96.45; fineness, .900. Legal tender in amounts not exceeding $10.

Combine. Practically the same thing as a "trust," or more particularly a " pool." Also, a stock market term for a combination of brokers or others for the accomplishment of a certain object.

Commercial Agencies. In New York the head offices of the two principal "commercial agencies" of this country; namely, Bradstreet's and Dun's, are located. These agencies furnish subscribers periodically with books in which may be found the credit standing or rating of practically all the business men, firms, etc., who would probably need credit, not only throughout the United States, but in many other parts of the world as well. These publications are of great value to the banks, manufacturers, wholesalers, and others.

The amount of money loaned, or goods advanced, is generally dependent upon the rating of the borrower or purchaser in one of the "commercial agencies." The agencies will also furnish special reports to subscribers upon any person in any part of the territory covered. Besides all this, they furnish general information to the public regarding the number of failures during a certain period, crop and business conditions, etc. In fact, these agencies are to-day a great factor in banking and mercantile life.

There are many other smaller agencies each of which makes a specialty of some one industry.

The first mercantile agency was created in New York in 1841.

Commercial Banks. In several States, such as Kentucky and Michigan, there are banks bearing the above title. They are much the same as an ordinary "bank of deposit." The intent is not so much for the deposit of savings, but more the accepting of deposits subject to check to facilitate an exchange of commodities; to be of benefit to the merchants and business men in general. They carry on the usual business of banking by discounting and negotiating notes, drafts, bills of exchange, and other evidences of debt; lending money on real and personal security, etc. Their functions are very similar to those of national banks, with the exception, among others, of course, that they do not issue bank notes.

In a broad sense, national banks, and, in fact, all" banks of deposit" are "commercial banks," but, as stated above, in certain communities there are those specially designated by that name.

Commercial Bar. Explained under "Assay Office Bar." Commercial Bill. A draft, accompanied by a "bill of

lading" and a certificate of marine insurance, drawn by a seller in one country against a buyer in another, on account of goods sold the latter. These drafts are usually sold by the "drawer" to some banking house dealing in foreign exchange, as by so doing immediate use of the money can be obtained. It is customary for the "drawer" of a commercial bill " to make it payable to himself, and then indorse it as need may arise; unless he wishes to use the amount due him directly to offset a foreign debt of his own, in which event he may draw the bill in favour of the party abroad to whom the sum is due. For the different kinds of "commercial bills" refer to "Demand Bills" and "Time Bills."

Commercial Borrowers. Borrowers of money, as set forth under "Commercial Paper."

upon

Commercial Discounts. Notes given by those engaged in commercial enterprises dry goods, hardware, etc., which the interest is paid in advance" discounted " (see matter under "Discount "). Sometimes the rate of discount" is meant by the term "commercial discount."

Also, the discount allowed by the seller of merchandise to the purchaser on account of earlier payment than called for in the bill. For instance, unless otherwise stipulated, the wool dealer bills a sale of wool as "net sixty days, 1% ten days," meaning that the bill is absolutely due and payable at the end of sixty days, but that if the purchaser chooses to pay it before the expiration of ten days he may deduct 1% from the face of the bill. In the same way, in cotton yarn transactions, the bills call for "net sixty days, 2% ten days," and so on.

Commercial Letter of Credit. See last part of "Letter of Credit."

Commercial Paper. This is a very general term and is made in usage to cover many kinds of notes, acceptances, bills of exchange, etc. It is the general term used by note brokers, but they further distinguish between the various kinds of "commercial paper" by referring to the same as "corporation paper," ""business paper," "mercantile paper," etc., as explained under the several subjects.

Commission. The charge made by any banker or broker for buying or selling securities for some one else; the banker's, broker's, or promoter's charge for services. When an agent or broker sells or buys a security for another, acting as a "middleman," he receives a commission for his services. In other words, he is "commissioned" to accomplish a certain act. In the case of a merchant who owns goods and sells the same to his customers, he makes a profit," not a commission; the distinction between a and a profit commission

RUNIVERS.

OF

CALIFORNIA

MONEY AND INVESTMENTS

95

being, that in the case of the former there is no "middleman; that is, the owner sells directly to the purchaser; the difference between the buying and selling price being the "profit." In the case of a "commission" when securities or commodities are passed, for instance, from the possession of the owner, through an agent or broker, to a third party, who is the buyer, the agent or broker receives a compensation for his services, called a commission."

66

New York Stock Exchange Rules for Commission Charges: "All commissions shall be calculated upon the par value of securities and the rates shall be as follows:

"On business for parties not members of the Exchange, including joint account transactions in which a non-member is interested, transactions for partners not members of the Exchange, and for firms of which the Exchange member or members are special partners only, the commission shall be not less than one-eighth of one per cent.

"On business for members of the Exchange, the commission shall be not less than one-thirty-second of one per cent., except when a principal is given up, in which case the commission shall be not less than one-fiftieth of one per cent.

"On mining shares and subscription rights, such rates, to members and non-members as may be determined, from time to time, by the Committee on Commissions, with the approval of the Governing Committee.

"Government and municipal securities are exempted from the provisions of this article."

Transactions in bonds on the New York Stock Exchange are made without regard to the "accrued interest" (see that subject). On the Boston Stock Exchange, interest is added to the price of the bond unless otherwise agreed upon or bonds in default and income bonds. This results in the quotations upon the two Exchanges varying, to a greater or lesser degree, for the same bond, as it is natural that the equivalent to the interest accrued should be added, approximately, to the New York quotation, so as to offset the Boston price.

Commission Broker. An agent who buys and sells for others for a commission.

Commission Buying. Buying of securities on the part of investors and speculators through their brokers, to whom commissions are paid; in contradistinction to buying by bankers, brokers, and members of the stock exchange for their own accounts.

Commission House. A firm dealing in securities only on a commission basis, and which neither speculates on its own account nor buys issues outright with the idea of selling in