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the following conventional signs :

WOODEN VESSELS.



M f First A T
Grade, '



\ A

, j A



First ^
Grade.

- >!
Second
Grade. J

IRON VESSELS.



I Second (



Grade. A r .
( 90 A *



or

So A



The annual edition of Lloyd's Register of British
and Foreign Shipping is regularly published on the
first day of July, supplementary lists being, moreover,
published monthly with the variations which may
have occurred during the time. Another register of
less importance is published in Liverpool for the sole
classification of iron vessels.

Origin of Lloyd's. We are told by ancient chro-
niclers that when, about the end of the seventeenth
century, coffee was first introduced into England,
public houses were started in different points of



INSURANCE. 141



London for the sale of the new beverage, which had
speedily become a favourite with the people. They
were called coffee-houses, and some of them, being
situated in the principal thoroughfares of the metro-
polis, soon became places of resort for merchants,
brokers, shippers, and other commercial people, busi-
ness being transacted therein to such an extent that
the journals of the period report advertisements for
the public sale of ships or goods to take place at such
or at such other coffee-house.

One among them, kept by one Mr. Lloyd, appears
to have been in great favour with the business men of
the neighbourhood, owing, very likely, to the enter-
prising character of the proprietor, who, in August,
1696, started one of the earliest commercial news-
papers in London, under the name of Lloyd's News>
containing miscellaneous, commercial, and shipping
information, both from home and foreign places. The
paper could not fail to turn out greatly acceptable to
the public, especially to those connected with the
shipping trade, and Lloyd's Coffee-house soon became
the headquarters of maritime insurance business,
which was then carried on solely by private under-
writers after the ancient system in use with the Italian
merchants, who had introduced it into England.

In 1720 the two most ancient British insurance
companies, viz., the London Assurance Corporation
and the Royal Exchange Assurance Corporation, both
still existing and flourishing, were incorporated with
particular privileges by Act of Parliament ; an event
which it was thought at the time would prove fatal to
private insurers ; while, on the contrary, it protected
them against the competition of the large number
of insurance companies which would undoubtedly
have sprung up but for the monopoly conferred upon
the two privileged corporations. In February, 1697,
owing to having fallen into disgrace with the House
of Lords, Mr. Lloyd stopped at once the publication



142 LESSONS IN COMMERCE.

of his journal, when seventy-six numbers only had
been issued. It remained dormant for thirty years,
and in 1726 started anew in an altered and improved
form, under the name of Lloyd's List. Under Mr.
Lloyd's active management the intelligence depart-
ment of the new journal soon possessed the most
powerful means, as is evinced by the fact that in
March, 1740, Mr. Baker, then the master of Lloyd's
Coffee-house and a successor to Mr. Lloyd, was able to
announce to the Prime Minister of England the
capture of Portobello by Admiral Vernon, whereof
the Government had had no news as yet.

Insurance business continued prosperous at Lloyd's
Coffee-house, but a great deal of illicit gambling was
also done under the pretence of insurance, most of
the underwriting transactions being mere bets on any
matter or fact which might in any way interest the
public. To prevent the discredit of the trade, it was
proposed that the underwriters and brokers at Lloyd's
should form an association governed by fixed rules,
into which none but persons enjoying a good repute
in the profession could be admitted. The plan was
carried into execution in 1770, when the new institu-
tion was formed under the name of Lloyd 's, and,
removing from the coffee-house in Lombard Street,
set up on a permanent footing at the Royal
Exchange.

Present Constitution of Lloyd's. With a constant
progress towards the improvement of its organisation
and the development of its means, Lloyd's has con-
tinued its brilliant career down to our times, and was
lately incorporated by Act of Parliament in 1871.

According to the provisions of the Act of Incor-
poration, the objects of the Corporation of Lloyd's are
as follows :

(i) The carrying on of the business of marine
insurance by members of the society.



INSURANCE. 143

(2) The protection of the interest of members of the
society in respect of shipping and cargoes and freight,

(3) The collection, publication, and diffusion of in-
telligence and information with respect to shipping.

The Corporation is composed of underwriting and
non-underwriting members ; the former carrying on
insurance business in their own private interest and
with their own capital, strictly abiding, however, by
the rules and forms issued by the Committee of Lloyd's,
the ruling body of the Corporation, duly appointed on
election by members in general assembly, the latter
consisting of brokers and merchants who effect insur-
ances with the indemnity members, either on their
own account or for third parties.

Such forms and rules are frequently adopted by the
mass of the ship-trading community wherever British
commercial influence has a hold. Thus the Lloyd's
policy now in use, officially adopted by the Corpora-
tion in 1779, is still the standard form of the contract
of private underwriting, and Lloyd's clauses are often
accepted and included in other descriptions of
policies, either framed by insurance companies or by
other parties, as well as in any kind of transactions
relating to shipping. The clause usually inserted in
such cases is : practice of Lloyd's.

Other contributories to the Corporation are also a
large number of subscribers for information (among
whom are many British and foreign insurance com-
panies), to whom the Lloyd's Intelligence Department
forwards, directly on receipt, all news regarding the
arrival and departure of ships, the wrecks, casualties,
and other occurrences any intelligence, in fact, reach-
ing the office in the Royal Exchange, by steam,
telegraph, or other expeditious means, from any of the
numerous agents which, for this purpose and for the
protection of the interest of its members, the Cor-
poration keeps in almost every sea town or port of
the globe.



144 LESSONS IN COMMERCE.

Lloyd's Publications. All shipping news received
is published daily in Lloyd's List, the official paper of
the corporation, and the most reliable source of mari-
time intelligence in the world.

An immense deal of information is supplied by the
Corporation to its members and subscribers with the
Index, the Captains' Register, and the world-wide
known Register of Shipping. The two former are kept
for inspection at Lloyd's offices ; the latter is pub-
lished yearly and sent to all countries.

The Index is a list of all ships in the British mer-
cantile navy, and of a vast number of foreign ships
besides, showing the whereabouts for the time being,
and the conditions of any of them, according to the
latest news received. The Index is kept in order day by
day, and is open for inspection at Lloyd's office, while
any of the members or subscribers, both at home and
abroad, may obtain telegraphic communication of
the latest intelligence received concerning any ship.

The Captains' Register is a biographical dictionary
of all the certificated commanders of the British navy
(about 25,000), showing the character, capacity, and
active service of each individual, and affording, there-
fore, valuable information to shipowners and mer-
chants especially, who have to intrust such officers
with the care of their property and the management
of important business abroad. The necessary data
for keeping the index correctly posted are supplied by
the Registrar General of Shipping and Seamen, under
the authority of the Board of Trade.

Lloyd's Register of British and Foreign Ship-
ping points out in clear and distinct language, as
already explained above, the age, materials, state of
repair, and general condition of all vessels, either
British or foreign, of a burden of 100 tons and
upwards, classed according to the report of surveyors
appointed by Lloyd's, the number of whom is now so



INSURANCE. 145



large that a ship may be surveyed for the account of
Lloyd's in almost any port of the world.

The classification of vessels being one of the most
important features of the shipping and insurance
trade, the importance of such an Index may be
easily imagined. The practice has found its way into
all maritime nations which have instituted their own
Registers.

The following are the principal foreign registers of
shipping now being published, viz. : The Bureau
Veritas for France ; the Germanischer Lloyd and the
Stetliner Register for Germany ; the Regtstro Italiano
for Italy; the Austro-Ungarian Veritas for Austria;
the Nederlandische Wereeniging for Holland ; the
Norske Veritas for Scandinavia; the Veritas Hel-
linque for Greece ; the Register of American Shipping
and the American Lloyd for the United States.

The Committee of Lloyd's Register has been pub-
lishing for some years past another large volume,
called The Universal Register of Shipping, for the
purpose of giving statistical intelligence of all men-
of-war, merchant vessels, shipowners, shipbuilders,
marine-engine-builders, and dry and wet docks, in
the world, besides other valuable information. By a
recent resolution of the Committee, the issue of the
Universal Register has been, however, discontinued
since 1889, and all information similar to that
formerly given in that work is amalgamated with
the information given in the Lloyd's Register of
British and Foreign Shipping.

Finances. The income of this powerful Corporation
consists of the entrance fees and yearly contributions
of members and subscribers. The capital stock of
the company amounts at present to about fifty thou-
sand pounds sterling.



146



LESSONS IN COMMERCE.



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CHAPTER X.

BILLS AND NOTES.

Commercial Instruments of Credit Bills of Exchange Parties Thereto
Acceptance Indorsement Presentation and Payment Case of
Need Dishonour Noting and Protest Accommodation Bills
Promissory Notes Cheques Crossed Cheques I.O.U.s Letters
of Credit Stamp Duty on Bills and Notes.

Instruments of Credit. The forms of commercial
instruments used for credit transactions are : bills of
exchange, promissory notes, cheques, I.O.U.s, and letters
of credit.

Bills of Exchange derive their peculiar properties
from the law merchant. A bill of exchange is defined
by the Bills of Exchange Act as being " an uncondi-
tional order in writing, addressed by one person to
another, signed by the person giving it, requiring the
person to whom addressed to pay on demand, or at
a fixed or determinable future time, a certain sum in
money to, or to the order of, a specified person, or to
bearer. No particular form of words is necessary, and
it may be in any language ; but there must be an
unconditional order to pay a sum of money, signed
by the person giving it."

A bill of exchange is sometimes called a draft. Such
a name should, according to lawyers, be employed
only when the order is addressed to a person who
holds money in deposit, or to an agent j while a bill



BILLS AND NOTES. 551

of exchange is properly such, as drawn on a debtor.
This distinction is not, however, strictly adhered to
by commercial men, and the two words are now in-
distinctly used in the same sense.

Parties to a Bill. The parties to a bill of exchange
are :

The drawer the person who draws the bill, giving
thereby the order of payment.

The drawee the person on whom the bill is drawn,
and who is thereby ordered to pay.

The payee the person to whom the money is to
be paid ; also called, remittee.

Requisites of a Bill. A bill of exchange, when issued,
must show on its face

(a] The date and place of issue.
(d) The time of payment.

(c) The sum to be paid, usually expressed both in
letters and figures.

(d) The name and address of the drawee.

(e) The payee's name or description.
(/) The drawer's signature.

(g) Occasionally, the special place at which the bill
should be made payable by the drawer.

The following is the usual form of an English bill of
exchange ;

LIVERPOOL, 2oth March, 1891.
500.



Two months after | J^ ' fay to the order of Mr. JAMES RODGER
the sum ofm Hundred Pounds {j^^value eceM.

T. COOK & Co.
MESSRS, WHITE BROS. & Co,

Birmingham.



152 LESSONS IN COMMERCE.

The words : value received, although not legally re-
quired, are generally used to point out that the drawee
has received from the drawer either money or goods,
in consideration of which the bill is drawn.

The cause of drawing is also expressed by the
words : value in account, which means that the posi-
tion of the drawer's and drawee's accounts, as relating
to each other's engagements, is such as to give the
former the right of claiming payment of a certain sum
from the latter.

Both the preceding clauses are often followed by
the words : as per advice, or, as advised ; whereby the
drawer states on the bill that notice of its drawing
has been given to the drawee.

Such a notice, when necessary, is sent in good
time before the issue of the document ; and it is not
safe for the drawee to pay the bill unless the advice
has been duly received.

None of these forms is strictly essential to the
validity of the bill.

Distinction in Bills, Some of the above particulars,
viz., the place of issue and that of payment, the payee,
the time of payment give rise to several different
descriptions of bills, as hereafter described.

As regards the place of issue and that of payment,
bills may be either inland or foreign.

An inland bill is one which on its face is drawn
and made payable within the British Isles, including
the Channel Islands.

All other kinds are foreign bills.

The main difference in the form of such descriptions
of bills is, that the foreign bills are usually drawn in
a set of three parts, called mas ; the one referring to
the other two, and expressing that each of them is
payable only on condition of the others being unpaid.



BILLS AND NOTES. 153

Such parts are regularly distinguished as : first, second,
and third of exchange.

Foreign bills are usually drawn up in the following
form :

First of Exchange. London, i8th June, 1891.

Li-vres 6,000.

Three months after | S jf fe 'pay this our first of exchange (second and
third of same tenor and date unpaid) to the order 0/Mr. CHARLES MARSH
Five Thousand livres, which place to account as ad-vised.

JAMES MILLER & Co.
MESSRS. CANEPA BROS.
Genoa.

As regards the payee, a bill of exchange may be either
special, or to order, or to bearer.

A bill is said to be special when it directs that the
amount be paid to the person or firm mentioned in it
and to nobody else. With this object the words : and
to him, or them, only, must follow the payee's name.

A bill to order is a bill wherein the payee's name is
usually followed by the words : or order ; whereby it is
directed that the amount of the bill be paid either
to the payee, or to any other person to whom it may
be transferred by the payee, after endorsing it.

Such words are not, however, strictly required by
law, and a bill would still be transferable if they
were omitted, provided no such restrictive words be
appended to the payee's name as to render the bill a
special one.

It is often the case that a bill is issued in the
drawer's own behalf, when it usually runs : Pay to
me only, if special. Pay to me or my order, if to order.

A bill to bearer directs that the sum be paid to
bearer, that is, to whomsoever presents it.

As regards the time of payment, bills may be of
two different descriptions :



154 LESSONS 2N COMMERCE.

(a) At sight or on demand, when the drawer orders
the money to be paid at sight or on demand ; both
of which clauses have the same meaning, viz., that
the drawee is to pay the bill directly on its being
presented to him by the holder. Should no time
of payment be mentioned, a bill is still considered,
both by law and practice, as payable on presentation.

(b} For a term, when made payable either on a
certain day or at a certain time after date or after
sight, viz., after the date of drawing, or after being
presented to the drawee.

Bills for a term are called either long or short accord-
ing to the length of time which is to run before their
falling due.

(See the specimen of a BILL OF EXCHANGE, page 151.)

Acceptance. The order of payment represented by
a bill of exchange cannot, of course, be enforced
upon the drawee unless his assent to pay the obliga-
tion, when due, be regularly given, which is done by
acceptance. A bill should be presented for acceptance
within a reasonable time from the date of issue, and
in any case before it is overdue.

The usual form of acceptance consists of the word :
accepted, written or stamped across the face of the bill,
and followed by the drawee's own signature. Legally
the sole signature of the drawee is, however, a sufficient
mark of acceptance.

After the bill is accepted the drawee is called the
acceptor.

In the case of a bill payable after sight, the
acceptor's signature should be preceded by the date
of acceptance, from which time the date of payment
counts. A bill duly accepted is commonly called
an acceptance.

Acceptance is strictly required for bills payable after
sight, and whenever a bill has been made payable at a



BILLS AND NOTES. 155

different place than the drawee's residence or place
of business, in order that the holder may know upon
whom he is to call for payment at maturity.

Neither of such bills ought to be, nor is, in
fact, negotiated before acceptance. An exception is
usually made in the case of foreign bills, as the loss
of time necessarily occasioned by keeping the bill
travelling to and fro would be prejudicial to the
drawer. The course followed in such cases is that
the drawer sends one of the mas (usually the first)
to a correspondent of his, at the drawee's residence,
to get it accepted ; and negotiates the others on his
own responsibility, stating the fact on the face of
the bill.

Bills for a term, payable either on a certain day or
after date, do, of course, admit of being presented
for acceptance before their falling due, but such a
formality may be dispensed with, provided the drawee
has received a timely advice of the draft. Such a
course, which saves considerable time, is frequently
followed in trade when bills are drawn on parties
abroad.

As to bills on demand, they require no acceptance,
since they must be paid directly on presentation.

Qualified Acceptance. According to English law
the acceptance of a bill may be either general or
qualified.

A general acceptance is represented, as already said,
by the simple word : accepted, or even by the sole
signature of the drawee; and conveys an uncondi-
tional assent to the drawer's order ; while a qualified
acceptance is one which in express terms varies the
effect of the bill as drawn, by making the payment
dependent on a stated condition, which may refer
either to the sum to be paid or to the time, place or
mode of payment.



156 LESSONS IN COMMERCE.



The following are specimens of qualified acceptances :

(a) Accepted f or only.

b) ,, payable in three months.

c) t , on condition of six months' renewal.

d) payable by monthly instalments of lO.

e ) payable at the National J3ank, and there only.

The restrictive words : and there only, in clause e,
or others to the same effect, are strictly required to
render an acceptance qualified ; as the mere indica-
tion of a particular place of payment would not alter
the general form of the bill.

The holder of a bill may refuse to take a qualified
acceptance ; and the drawer and indorser are not
bound by it, without assent.

Other forms of acceptance may be resorted to in
the case of dishonour, which cases shall be hereafter
explained.



Negotiation. To negotiate a bill means to transfer
it to another person, giving over to him the property
thereof, and all the rights and privileges to which the
holder of a bill of exchange is entitled by law.

The transfer may be effected by delivery, or by
indorsement and delivery.

All bills are transferable, except such as are special,
e.g., payable to a certain person only.

Any bill which is made out as payable to hearer
may pass from hand to hand, and be transferred by
simple delivery ; as it directs that it should be paid
to whomsoever presents it for payment, when due.
Bills to order instead must be indorsed before delivery.

Bills not originally transferable by simple delivery
may become so through blank indorsement, and be
thereupon transferable likewise by simple delivery.

Indorsement. The indorsement of a bill is effected
by the payee, or any other lawful holder, by writing



BILLS AND NOTES. 157

his name on the back of it, together with such direc-
tions concerning its payment as may best fit each
case. The person in whose favour the bill is in-
dorsed is called the indorsee. The usual form of
indorsement is the following : Pay to Mr.

Each indorsee in his turn may become the last
indorser of a bill, no limit being fixed by law to the
number of times that such an instrument may be
transferred. Should the back of a bill be already
covered with indorsements, a slip of paper, called an
allonge, may be pasted on to the end of the bill, to
make room for new indorsements.

Indorsement may either precede or follow accept-
ance.

Forms of Indorsement. Indorsement is either
Special, restrictive, or blank.

A special indorsement is such as directs the sum to
be paid to a certain person or firm, with or without
leave to transfer.

The power of transferring the bill again is given
by the words : or order, usually following the indorsee's
name. It is, however, an accepted principle that
the omission of such words cannot prevent a new
transfer of the bill. Thus, for instance

Pay to Messrs. N. N. 6* Co. ;

Pay to Messrs* N. N. dr* Co. or order;

are equivalent forms of indorsement. Should the
indorser wish to prevent another transfer of the bill,
the word : only should be added, as follows :

Pay to Messrs. N. N. dr* Co. only.

A restrictive clause attached to the indorsee's
name will make, of course, a restrictive indorsement.
The clauses commonly used are : per procuration ;
for my account ; for my use whereby notice is given,
to whomsoever may see the bill, that the indorsee is



158 LESSONS IN COMMERCE.

merely a trustee of the indorsees claims, and cannot,
therefore, transfer such claims to any one else.

A blank endorsement takes place when the indorser
simply writes his name on the back of the bill, thus
making it payable to the bearer, that is, to whoso-
ever presents it for payment at maturity.

Liability of an Indorser. Each indorser of a bill is
liable towards the succeeding holders for the whole
amount of the bill, both in the case of refused accept-
ance or refused payment ; while he has a claim on
the acceptor, the drawer and the preceding indorsers.

Should the indorser intend to decline such a re-
sponsibility, he must add to the form of indorsement
the words : sans recours, or without recourse, whereby


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