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FELLOWSHIP OR PARTNERSHIP. 204. FELLOWSHIP—or, as it is sometimes termed, PARTNERSHIP-deals with the individual gains or losses of the partners in a mercantile company, when the total gain or loss of the company is known.
205. Fellowship is said to be SIMPLE or COMPOUND—according as the partners' respective portions of the capital have been in the business for the same length of time, or for unequal periods.
From the examples which follow, it will be seen that Simple Fellowship is nothing more than Division into Proportional Parts; and that the conversion of " Compound” into “ Simple” Fellowship is merely a matter of Multiplication.
SIMPLE FELLOWSHIP. EXAMPLE I.-A and B enter into partnership, and gain £96; A's share of the capital is £350, and B’s share £250; how much of the gain ought each partner to receive ?
Itisevident that, if A's portion of the capital were equal to B's portion, the partners would each be entitled to one-half of the profit; that, if A's portion of the capital were twice as large as B’s portion, A should receive twice as much of the profit as B; and so on.
We have therefore to divide £96 into two parts proportional to the numbers 350 and 250:
; EXAMPLE II.— Three persons, A, B, and C, enter into partnership, and lose £365; A's share of the capital is £820, B's share £750, and C's share £640; how much of the loss ought each person to sustain ?
Here we have to divide £365 into three parts proportional to the numbers 820, 750, and 640:
EXAMPLE III.-A bankrupt, whose assets amount to £500, has four creditors—A, B, C, and D-to whom he owes £ 340, £230, £200, and £150, respectively; what portion of the assets ought each creditor to receive?
Dividing £ 500 into four sums proportional to the numbers 340, 230, 200, and 150, we have
£ s. d.
=108 13 II,
C's 920 : 150 :: 500 : d; d= 81 10 51, D's NotE.— The last example, although worked in the same way as the preceding ones, can hardly be said to belong to Fellowship.
COMPOUND FELLOWSHIP. ExamPLE I.-Two persons, A and B, were in partnership, and gained £900; A's capital, £2,500, was only 7 months in the business, whilst B's capital, Ē 1,800, was in the business for 11 months; how ought the gain to be divided ?
The use of £2,500 for 7 months is equivalent to the use of 7 times £2,500, or of £17,500, for one month ; and the use of £1,800 for 11 months is equivalent to the use of 11 times £1,800, or of £19,800, for one month. So that the question can be put in this way, and made one in Simple Fellowship: A and B were a month in partnership, and gained £900; A's capital was £17,500, and B's £19,800; how ought the gain to be divided ? Here, therefore, is the solution :
2,500 X 7=17,500
£ s. d. 37, 300 : 17,500 :: 900 : a; a=422 5 0,
A's gain. 37,300 : 19,800 : : 900 : 0; b=477 14 113, B's EXAMPLE II. - A, B, and C were in partnership, and lost £1,500; A had £5,000 in the business for 6 weeks, B £4,000 for 7 weeks, and C £3,000 for 9 weeks; how much of the loss ought each partner to sustain ?
Here we have£5,000 for 6 weeks=(£5,000 x 6=)£30,000 for one week, 2.4,000 , 7 (£4,000 x 7=)£28,000 £3,000 » 9 =(£3,000 X 9=)£27,000
We therefore divide £1,500 into three parts proportional to the numbers 30,000, 28,000, and 27,000~or to the numbers 30, 28, and 27:
EXCHANGE. 206. A knowledge of ExcHANGE enables us to find how much of the money of a country is equivalent to a given amount of the money of another country.
207. The intrinsic value of the money of a country compared to the money of another country-the comparison being based upon the weight and fineness of the two sets of coins—is called the “PAR of Exchange” between those countries.
A distinction is sometimes drawn between the intrinsic and the commercial par of Exchange. The “intrinsic” par is calculated on the supposition that the market value of pure gold is everywhere the same, and bears a constant ratio to the market value of pure silver. Owing, however, to certain causes which cannot be entered into here, the market values of the precious metals are occasionally a little higher in one country than in another; and this circumstance enters into the calculation of the “commercial” par. When the word
commercial" is not mentioned, the par of Exchange between two countries is always understood to mean the intrinsic par, which, it is hardly necessary to observe, remains the same so long as no alteration is made in the currency of either country.
208. The amount of the money of one country (sometimes more, and sometimes less, according to the circumstances of trade) that is actually givenat any particular time--for a certain amount of the
money of another country, is termed the “ COURSE of Exchange”—at that time—between those countries.
Thus, whilst the intrinsic value, in French money, of £i is 25 francs 22 centimes, £i may be convertible into so much as 25 francs 50 centimes at one time, and into only 25 francs 10 centimes at another. When the amount of French money that can be obtained for £,i is exactly 25 francs 22 centimes, the course of Exchange with France is said to be “at” PAR; and the course of Exchange is spoken of as “ above” or “below" PAR-according as more or less than 25 francs 22 centimes can be got for £1.
209. In mercantile transactions between different countries, payments are usually made by means of bills of exchange--i.e., “foreign” bills (see p. 203).
Let us suppose that Mr. Smyth of London owes Mr. Browne of New York £500, and that
Jones equal amount.
At first sight, these two transactions would appear to involve the transmission of £ 500 from London to New York, and of £500 more from New York to London. A
Smyth Robinson little reflection, however, makes it evident that both accounts
London. can be settled without the transmission of any money: all that is necessary being-an arrange
New York. ment by means of which Browne is paid by Jones instead of by Browne + Jones Smyth, and Robinson is paid by Smyth instead of by Jones. Smyth
London. Such an arrangement, however, does not necess
essarily suppose any acquaintanceship either between Smyth and Jones or between Browne and Robinson. In places like London and New York, foreign bills are bought and sold like any other description of property ; buyers and sellers being, in most cases, brought together through the agency of a class of persons called Billbrokers. In the case under consideration, what occurs is this: (a) Jones gives Browne £500 (or thereabouts)
for a £500 bill on Smyth, in favour of the person named by Jones—that is, Robinson; this bill Jones then sends to Robinson, who presents it to Smyth for payment. Or (6) Smyth gives Robinson £ 500 (or thereabouts) for a £500 bill on Jones, in favour of the person named by Smyth—that is, Browne; this bill Smyth then sends to Browne, who presents it to Jones for payment.
So that if the debts due by London to New York and those due by New York to London happened to be equal in amount, the accounts between the two places could all be settled by means of bills of exchange: the demand, in each place, for bills “on”—i.e., payable in-the other place would be exactly equal to the supply, and the course of exchange would be at par.
But if London owed New York £80,000, whilst New York owed London only £70,000, (in other words, if the value of the imports from New York exceeded that of the exports to it by £10,000,) London would be obliged to send New York £10,000 in money: bills on New York would then fetch a higher price than usual in London, because of the increased demand for them-compared to the supply; and the course of exchange would be against London, and in favour of New York. On the other hand, if New York owed London £130,000, whilst London owed New York only £100,000, New York would be obliged to send London £30,000 in money: bills on London would then fetch a higher price than usual in New York; and the course of exchange would be against New York, and in favour of London.*
In no case, however, can the price paid for a foreign bill exceed the amount of the bill by a larger sum than would be charged for the transmission and insurance of the amourt, in gold or silver.
It is obvious that when specie or bullion to the amount of £500, for instance, can be sent from London to New York, and insured against risk, for i per cent.,—that is, for £5,-a £,500 bill on New York cannot fetch a higher price in London than £ 505.
210. Foreign bills are sometimes transmitted from one country to another—not directly, but (so to speak) circuitously; that is, through one or more other countries.
* In order to appreciate the expressions “against” and “in favour of,” we must remember that a certain amount of loss is sustained by a body of merchants who, for goods received, are obliged to give money instead of merchandise ; and that the withdrawal of money from a country is regarded as more or less detrimental to the country at large.