terested inquirer and not the
curious. Whenever some particular item of interest finds its way to an
agency that would affect one's credit seriously, such as the giving of
chattel mortgage or the confession of a judgment or the sale and
transfer of property, it is customary to send unsolicited a special
report of these facts to all subscribers on the agency's books who
have ever at any time made inquiry concerning the firm. One might
expect that these agencies expose themselves to risk of prosecution
for libel, but since no malice is ever intended in any report
circulated, and since it rarely occurs that damaging reports are sent
out by these institutions unless abundantly confirmed, there is little
opportunity for litigation of this sort.
Another field of usefulness of the mercantile agency is in the
exposure of the absconding debtor and his whereabouts, and also the
dishonest trader who in arranging a fraudulent failure may be striving
to open many new accounts. The unusual demands for reports respecting
such a one lead to careful investigation. Instead of a restrictive
tendency a mercantile agency promotes the expansion of credit and yet
permits of proper conservatism. It opens to the trader as a market for
his merchandise every new and trustworthy account. It curbs
speculation, stimulates diligence in business, habituates punctuality,
and develops character. When we remember that the present annual
internal commerce of our country is estimated at about 800,000,000
tons of merchandise carried an average distance of 120 miles, and that
this volume of trade is worth over $10,000,000,000, we are forced to
admit that the unique system of these credit agencies has done much to
further and make possible this commercial prosperity.
IX. BONDS
UNITED STATES, STATE, AND MUNICIPAL BONDS
When a country borrows money it gives a guaranty that the money will
be returned at a particular time and that interest will be paid at
regular intervals at a fixed rate. This guaranty is called a bond. In
actual practice, instead of borrowing the money required and then
giving bonds for its return, countries usually issue the bonds first,
and sell them to the highest bidder. For instance, if our government
needed to borrow $1,000,000 it would issue bonds for this amount,
stating definitely the rate of interest to be paid, and call for bids.
If the rate of interest were four per cent. and a buyer paid more than
$1000 for a $1000 bond
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