St. Tammany farmer. [volume] (Covington, La.) 1874-current, 1888-01-28
BUSINESS TERMS.


OenaittOns a04 ExpaaAatIooo u These d
Common Gee.
Some Of the business terms used il
he published accounts of some Of thu
recent failures hare puzzled . good
many people outside Of the business
world. The words used to designate
certain commercial paper have not
carried with them sufficient evidence NJ
their meaning to make it clear to The
uninitiated. Here are . few defini-
tions that may be useful:
Business Paper" This is the ordin-
airy paper used by business men. an
ordinary note. for instance. b owes A
debt. b gives A . note for it, and A
takes the note to the bank and gets il
discounted. That is fair sample II
legitimate business paper.
Accommodation Paper''-This is
paper upon which loans from banks
aud the like are effected For instance.
A is in business and has mot enough
capital al hand wherewith to operate.
His credit is good. and he goes to a
bank and explains tina. he wants To
raise this or that amount OF money. He
gives his uotc for the amount, and the
bank takes this either with or without
endorsement. or with or without col
lateral security. A mans credit has
considerable to do with his ability to
aoat his accommodation paper.
'd;ilt-Elgc Paper"-This is term
used by bank men merely to indicate
that the paper. Of whatever nature it
may he. is first class.
kite Paper Perhaps this is best
defined by an example. Anew Haven
firm is in need Of funds and SO is Hart
ford firm. They both have good credit.
The New Haven firm sends to the HART
ford firm for its note, for say DC. 900.
aud the Hartford firm sends the note and
gets i'm return the New Haven firms
note for the same amount. There is no
actual consideration In either case. The
Hartford firm gets its note discounted.
and SO does the New Haven firm. and
then they have raised t2O. 900 lin wind"
If course providing they turn out insol-
vent. This is one form Of ''kite paper.
Another form. and worse one. is
where house with a big line OF credit
starts up concern in some distant city
az State for the mere purpose Of manu-
featuring paper which the house itself
can raise money on. For instance. A
does a hi. business n New Haven
and mas a lsr:c line Of credit he has
one Of therA paper manufacturing
houses in Milwaukee. This house sends
him note for $4,000. in payment
for goods ostensibly. The note is dis
counted in New Haven. The money
is raised ut an Opportune time. and all
is well unless the firm goes up Then
this form of "kite paper" is nothing
short Of absolute swindling.
Trust Rcccipt'-Hereis an example
Of q trust receipt transaction which
will serve as definition. A wants tO
import cargo of iron but has not the
money 70 do It with. He goes<o Il. y
banker. and says: If YOU import that
cargo Of iron for me. will have it
shipped to your order and will not part
with it without your consent. and when
I do part with it the proceeds will 10
turned over to you." The iron is
shipped to As warehouse. The COM
munications between A and b relative
To the transaction and their agreement
are the trust receipts. II A should
prove insoIvent the question is. who
does the iron belong to-" In New
York it has been decided that it is As.
In Connecticut ono of the most pr,mi-
nent lawyers in the city said this morn.
ing it is As yet an open question. -NeO
Harcn Register.