will usually be furnished by the bank, with printed blanks upon the outside to be filled in by the depositor, and the amount as shown by the envelopes entered upon the deposit ticket.

A word in regard to indorsing checks for deposit. The simplest form to follow is: "Pay to the order of the Ninth National Bank of Portland" (for example) and then the depositor signing his name immediately below. (For further information upon this subject see "Indorse " " and How to Open a Savings Bank Account.")

This subject needs no further treatment, except to remind those carrying a deposit "subject to check" that they are prone to consider all checks and other items which they may deposit in their bank as cash, and proceed at once to check against them. As a matter of fact, although banks make a habit of crediting checks at once to the depositor, they may not themselves get the benefit of the money for some days, and, to that extent, the depositor obtains previous use of the money. Suppose, however, some of these checks or other items which may have been immediately credited to his account are uncollectable by the bank. They will be returned and charged against the depositor's account; and so it is a thing to bear in mind on the part of those who may be checking their accounts down to the low point, that occasionally some check, etc., may be returned unpaid, and an "overdraft " possibly result.

Deposit Book. See " Bank-Book."

Deposit Certificate of. See "Certificate of Deposit."

Depositor. One who places money in a bank; that is, makes a deposit, is the usual meaning in banking affairs; but a depositor may be one who commits securities, valuable papers, or anything, to the care of another.

Depository of Public Moneys. See "United States Depository."

Deposits ("Bank Statement "). Deposits as referred to under "Bank Statement "" are somewhat difficult to define from the fact that money itself to the full amount of the deposits is not necessarily understood, for the reason that a man with a deposit of $50,000 may borrow from the same bank $25,000, which, instead of being paid to him in cash, will be credited to his account, swelling it to $75,000. One-third of this amount, therefore, certainly is not cash, and the increase in the deposit does not increase the bank's money holdings. This explains why an increase in deposits follows an expansion of loans. Such matters are all based on credit and a due appreciation of its importance in connection with

financial and business affairs should be kept constantly in mind.

The deposits of the associated banks of New York are divided so as to show separately the amount to the credit of the Government, and is itemized as " United States Deposits" (for an understanding of which turn to " United States Depository"), and enables one to estimate the reserve requirements, as explained under the subject "Reserve."

When not divided as above "deposits" would include everything to the credit (less debits) of individuals, firms, corporations, other banks, and the Government; in fact everything to the credit of others, and which may be withdrawn.

Deposit Ticket or Slip. Blanks provided by banks and filled out by those wishing to make deposits subject to check. The depositor writes in his name, date, amount of deposit; giving a list of the kind of money, checks, etc., deposited. This is handed, or sent, to the bank with the deposit and bank-book.

Depreciated Currency. When it takes more than a like amount, face value, of any kind of money to have the same purchasing power as gold coin, the former is a "depreciated currency.' The paper money of the Confederate States had greatly depreciated towards the end of the Civil War.

Depreciation. In making up a statement of earnings of a business or corporation it is very easy to deceive oneself by not taking into proper consideration the falling off in value of the property on account of the wear and tear; machinery becoming antiquated; reduction of the life of the property, as in the case of a mine, etc. In examining the statement of earnings furnished by a company in which a person is considering investing money this matter of "depreciation" should be seriously considered. It differs, of course, in different industries, but it is safe to say that the depreciation in what is called an industrial property is considerable. Some manufacturing concerns make a point to set aside each year from their profits a sum equal to 10% of the cost value of all the machinery and 6% of the cost value of the buildings. The question of charging off real estate depends upon the location, etc. In street railways the depreciation is very large. This does not appear at first, and in new roads the net earnings are given as much larger than they will appear later on unless there is an increase in business. The wear and tear to electric plants is considerable. In many classes of business which have been running years, so that the depreciation is constantly apparent, calling for repairs to the machinery, etc., it may be a sufficient safeguard to charge all such repairs, replacements and the like to operating expenses and create

no special fund to cover it, but it must be certain that such repairs and replacements are equal to the actual depreciation. If some method is not adopted to set aside from earnings each year a sum to offset the depreciation of the property, the share and bondholders of such a corporation will eventually find that they have had their investment gradually returned to them in the shape of dividends and interest, representing a piecemeal payment of their principal sum rather than actual profits of the corporation. Bear in mind that it is always easy for any corporation, by a method of bookkeeping, to show fictitious earnings, and it is to safeguard this very thing that a competent "expert accountant" should, in the majority of cases, verify the earnings of a corporation before the investor may safely purchase its securities.

A distinction is made between "depreciation" and loss resulting from "wear and tear," on the ground that no matter if a plant is continually kept in the most thorough repair, the time is bound to come when, on account of newer mechanical devices and inventions, it will have to sooner or later be entirely replaced. A piece of machinery, even in the best of repair, may be suddenly thrown out and replaced by a different one. The former is but little more than old junk; the cost of the new is what must be provided for by a "depreciation

account."

Greene in reference to the depreciation of street railway property declares that "In the cases of companies freshly established and operating in large cities, it may be assumed, for the purpose of a rough calculation, that the roadbed will require a complete renewal in ten or twelve years, the overhead construction (if the trolley is used) within fifteen years, the electric station and buildings in from twenty-five to fifty years, the car bodies in twelve or fifteen years, and the motor trucks ten or twelve years, with the steam machinery in fifteen years. These averages of life should, of course, be extended in cases where circumstances would make such a test too severe, as for instance, in interurban lines using the turnpikes."

Derogation. As used in relation to securities, it means a subtraction from or alteration of a contract for the sale of the

same.

Destroyed Securities. See "Care of Securities " and "Bond of Indemnity.'

Detroit United. Detroit United Railway Co. (Street Railway.)

Differential. A rate less than the regular or tariff rate allowed to a road disadvantageously situated, by a competitor in order to equalize conditions and avoid rate wars.

1 1 Corporation Finance.

Digested Securities. See "Undigested Securities."

Dime. A small silver coin of the United States of the value of one-tenth of a dollar, or ten cents, containing 34.722 grains of fine silver, and 3.858 of alloy. Legal tender in amounts. not exceeding $10.

Dinar. The monetary unit of Servia, the same as that of the "Latin Union," and equivalent to $0.193 United States money.

Direct Exchange. "Exchange" between points in two different countries (or two points in the same country) without the intervention of a third, as in the case of "triangular operation."

Direct Obligation. The obligation to pay on the part of the person, corporation, etc., named. As an example, take the Baltimore & Ohio R. R. Co., Southwestern Division bonds. These are really a first mortgage upon certain portions of the railroad property, but, in case of financial disaster to the road, if there were not sufficient value in such property as the mortgage covers, the Baltimore & Ohio R. R. Co. itself would be responsible for the payment of the difference. Again, if the earnings of the property covered by the mortgage are not sufficient to protect the interest and principal of the bonds, as due, the Baltimore & Ohio R. R. Co. is liable for any deficiency. Dis. Short for "discount.'

Disagio. See "Agio."

Discharge of Mortgage. See "Release of Mortgage." Discount. The percentage or price of a security below its par or face value. Taking the face value as $100, a share of stock selling at 95 would be selling at 5%, or $5 per share, "discount." The par value of various securities differs, however (see "Par "), therefore, it does not argue that because a share of stock is quoted at 95 it is selling at a discount," for, if by chance the face value of that share happens to be $50, it would really be selling not at a "discount," but at a premium of 90%. There are exceptions to this, however, for which see reference to stock exchange rules under "Par."

For another meaning of "discount," see "Disagio," as described under "Agio."

Paper money is at a "discount" when, in order to obtain one dollar in gold, it is necessary to give more than one dollar in paper money. During war times, in the early '60's, it took $1.25 in paper money to obtain $1.00 in gold.

A note is "discounted" when the interest upon the same is deducted by the lender from the amount loaned; that is, the borrower pays the interest in advance. This amount of

interest retained by the lender is called the "discount," or "bank discount." The amount of money which the lender obtains, that is, the face of the note less the "discount," is called the "proceeds," or "net avails."

By this method, he does not receive a sum of money equal to the face of the note, because the lender has deducted the interest. There is another plan which may be best explained by an example: Carlton wishes to borrow $10,000 for six months at his bank; he wishes the full amount. The bank proceeds in this way: Interest is figured on the $10,000 for six months at the agreed rate, say 5% per annum. This would amount to $300. Then the interest for the same length of time is figured again at the same rate on $300, amounting to $9. These two interest amounts are added to the $10,000, equalling $10,309. The borrower signs a note for that amount and in return receives $10,000. When the note becomes due, he pays $10,309. Therefore, the amount of "discount," or interest deducted by the bank, amounts to $309.

There is another method of figuring this, which is more favourable to the borrower than the above. It is to find the interest, i. e. the "discount," on $1 for the time and rate, which, in this case would be 2 cents. Deducting this from $1 you get $.975 as the "proceeds" of $1 after deducting the "discount." As $10,000 is the amount of money which Carlton desires, you divide $10,000 by $.975, the "proceeds of $1, and get a result of $10,256.41, which is the amount discounted at 5% for six months, which will produce $10,000, the required amount. It will be seen that this method favours the borrower to the extent of $52.59 in this particular

case.

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Another question which often arises having a bearing upon this subject is best explained by an example: Wilson holds a ninety-day note for $1,000, dated June 5th, " with interest at 5%; namely, interest payable at maturity, not deducted, as in the case of "discount." On August 5th he has sudden call for the money and goes to his bank and "discounts " the note for the balance of the time which it has to run. The proceeds" is figured after this fashion: Wilson is entitled to the interest on the note for the time he has held it, which fact must not be lost sight of. The face of this note then is really $1,000, plus the amount of interest from date of issue to date of maturity; that is, ninety days, which at 5% would be $12.33 (New York method - see "Interest"), making a total face, for the purpose of figuring the discount, of $1,012.33. It is now necessary to ascertain when the note matures. If it had read due in "three months after date," September 5th would have been the date of maturity, but as it is due "ninety days after date " you proceed in this way: