The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1874-03-07
A Way to Wealth.

Whoever will solve the following arith-
metical problem will understand a method
of money making which, although not gen
orally known to the people, is extensively
practlced in this country, and which, wheth-
er strictly honest or not, il entirely IN ac-
cordance with law. Here Is the problem :
A company has obtained a charter, under
the law Of 1870, to establish national
bank, with nominal capital Of 81, 900, 900
1t wishes to obtain 81 900, 900 in United
States bonds to deposit III the United States
Treasury, and to obtain therefrom 90 per
cent Of this amount i'll national bank cur
rency, as provided by law how much mon
ey must it expend for this purpose out IF
its own resources, provided bonds are worth
premium Of 10 per cent in currency and
provided it purchases its bonds in ten lots
Of 800, 600 each, and draws its 800, 600 If
currency on the first lot before purchasing
the second, on the second before purchas-
ing the third, and 50 on to the end
Those who prefer to solve the problem
for themselves may here lay aside The
Critic and take up their slate and pencil,
but for the benefit of such as are not arith-
metically inclined, we here present the
SOLUTION
Bonds being worth premium Of 10 per
cent. each 500, 900 In bonds will st Sll5.-
600 in currency. But in making the sec
ond purchase the company may use the
$9O, 900 in currency obtained from the
Treasury on depOsiting the first lot of
bonds in making the third purchase it
may use the $50, 900 obtained Oh depositing
the second lot of bonds, and so on to the
/ tenth purchase, in making which it may
use the 800, 900 obtained on depositing the
ninth lot Of bonds. 1t follows, then, that
to purchase the first 800, 900 III bonds. the
company will have to use Sll5, 900 Of its
own money and in purchasing the nine
subsequent lots, it will have to use S25. 900
of its own money, which, added to the
500, 900 obtained from the Treasury, will
make the requisite S1l5, 600 But nine
times $25, 900 is 1925, 600, and this amount,
plus the Sl15, 900 required for the first pur-
chase, makes $340 OO0, which is therefore
the amount of its own money which the
company will have to use in purchasing
81 ,0OO, 900 in bonds and obtaining $oOO, 900
from the Treasury IN currency. Uf this
$500, 900 in currency it will have expended
all except the $50, 900 obtained on deposit
ing the last lot of bonds, and consequently
will have, at the close of it's series of oper-
ations, 81. 0OO, 900 in bonds on deposit in
the Treasury and $50, 600 cash n hand as
the result Of expending S340, 900 az its own
money. In addition to this, it will have to
keep reserve of greenbacks equ to 10
or 20 per cent of is circulation, al .ording
a. it happens to be located in a country
town or in one Of the redemption cities
In haf f..rr,.av A. II. 4
600, which added to the $40, ,O0G expended,
would make total Of S475, 900, expended
and employed as a reserve together
As interest on this sum, it will receive,
first, S6O, 600 year in gold on the bonds
deposited in the Treasury (since, excluding
accrued interest from their market price,
six per cent bonds can be purchased at the
price named y second, it will have the in
terest on the $90, 600 Of cash ON hand at the
close Of its operations, as above described,
which ii can readily lend to customers on
| good security, at seven per cent. But $50.
I 600 in gold at present rates IN equal to
about $66. 900 in currency, and seven per
cent on go, 600 amounts to 81, 800, 80 that
the annual interest obtained by the compa-
ny by an investment Of @475, coo Of their
own money, will be $73, 200, which is ri
the rate Of more than fifteen per cent pc,
aRNssps.
This, let it be observed, will be obtained
almost without ths trouble Of supervision
The e1, ,O00, 900 of bonds in the Treasury
| will not cost even safe-roc m, while the &9O,
600 in cash can be permanently loaned on
good security at the rate named, 30 an t.
involve neither trouble nor anxiety in it
management. The only trouble and ex
pense worth mentioning in connection will
carrying on o bank 20 established would b.
that connected with its deposit de partment
To this its large nominal capital wouls
probably attract heavy business, the prof