Balance of payments

“ If, however, his [76] business be in a healthy condition the corner will soon be turned; and as his payments in begin to exceed the cheques he draws, his indebtedness to the bank speedily sinks below the average. Each payment to his credit reduces his debit balance, and every cheque debited, of course, increases it, but as the banker charges him a rate upon the sum owing at the end of each day, it follows that the customer only pays interest upon the actual money he has borrowed—not upon the amount of the “limit” as does the London client upon the amount of his “loan.” ”

“ V) , and mandates adjustments " [w] ith respect to payment to a person of more than the correct amount," § 404 (a) (1) (A) , and " [w] ith respect to payment to a person of less than the correct amount," § 404 (a) (1) (B) . If Congress had in mind only shortfalls or excesses in individual monthly payments, rather than in the overall payment balance, it would have been more natural to refer to "the correct amount of any payment," and to require adjustment "with respect to any payment . . . of less [or more] than the correct amount." ”

“ A business firm would hardly pay car fares with checks and liquidate its large liabilities with cash. Each person strikes an equilibrium between his use of the two methods of payment, and does not greatly disturb it except for short periods of time. He keeps his stock of money or his bank balance in constant adjustment to the payments he makes in money or by check. Whenever his stock of money becomes relatively small and his bank balance relatively large, he cashes a check. In the opposite event, he deposits cash. ”

“ When we speak here of balances to be paid from one country to another, we understand, that the general amount of the whole payments to be made to the world, exceeds the sum of all that is reciprocally due from it. So far as a balance due to one country is compensated with a balance due by another, they may be mutually discharged by bills of exchange, according to the principles already laid down. All compensations being made by bills drawn for reciprocal debts, we must here suppose a balance due by the country whose interest we are considering. ”

“ Prudence designed to stabilize the balance of payments position will be followed to eliminate waste in government, to generate savings for productive and development activities, to strengthen comprehensive debt management, and to improve our tax administra­tion and collection effort. ”

“ The custom of keeping the spare cash reserved for immediate use or against contingent demands, in the hands of a banker, and making all payments, except small ones, by orders on bankers, is in this country spreading to a continually larger portion of the public. If the person making the payment, and the person receiving it, keep their money with the same banker, the payment takes place without any intervention of money, by the mere transfer of its amount in the banker's books from the credit of the payer to that of the receiver. ”

“ B does the like with respect to A. At the end of the year, the sum of A's debts to B is set against the sum of B's debts to A, and it is ascertained to which side a balance is due. This balance, which may be less than the amount of many of the transactions singly, and is necessarily less than the sum of the transactions, is all that is paid in money; and perhaps even this is not paid, but carried over in an account current to the next year. A single payment of a hundred pounds may in this manner suffice to liquidate a long series of transactions, some of them to the value of thousands. ”

“ I simply said that if you look at the economic principles of a lump-sum payment in the form of a $300 check, as been given before, or a $500 check for a worker in this plan, or a $1000 check for a family that has two workers, that economic studies show that lump-sum payments tend not to be spent out as quickly or as fully because people and consumers recognize that it's a one-time payment that they're not going to see during their next paycheck. ”

“ When in a given period, say a day or a week, the receipts of the customers of a bank from outsiders, as a result of current or past sales and gifts, exceed the payments made by them as a result of purchases and gifts, its credit balances with its correspondents will increase, and under opposite conditions they will decrease. ”

“ The customer, therefore, when checking his banker’s charges and allowances, will take care that he is receiving the maximum rate of interest, and paying the minimum or lowest commission rate, which varies from 1⁄8 to 1/16 per cent., while it is sometimes possible to arrange for a reduced and merely nominal charge. A person, when he sees a “little interest” credited in his pass-book, is disposed to increase his balance, on the assumption that he is being allowed a rate ”

“ Then the metaphor of the balance suggests what to do. If one scalepan is lighter than the other, put a weight into it. If the debit side is lighter, that is, if it is less than the credit side, add on the amount which will make it even with the credit side, and write beside that amount, "Balance." In that case, there is a little money yet unspent, and when the next two pages of the accounts are begun this money yet unspent is put down at the head of the credit page like this:
If, on the contrary, the credit side is less than the debit side, add the balance there. ”

“ The true rule, therefore, for ascertaining the rights of the parties in the case, is to calculate the interest on the principal of the note up to the time of the payment, and, having then deducted the payment, to treat the balance as the debt then due; the amount in money to be determined by the value in Georgia of Confederate notes in coin or the legal currency of the United States at the time the note was made. ”

“ A balance sheet should therefore be so arranged that the condition of [Pg 25] the business, viewed from the standpoint of its ability to pay its debts, will be clearly and easily determinable. Cash is usually the only medium used for the payment of debts. In the regular course of business, debts are incurred which come due at different dates. Hence it is not necessary to have on hand at a given time cash sufficient to pay all of the debts of the business. Certain classes of debts will not wait. The sums owed employees for services must usually be paid when due. ”

“ In the accounts kept by the landowners with the merchants who sold them goods, and the artizans who worked for them, there usually appear credit accounts in which the amounts due on account of produce of various kinds are deducted from the debt, leaving a balance to be settled by cash and by orders. ”

“ Officers being entitled to halfpay, such as choose to emigrate, should have provisions &c allowed them as above & quarterly notes with interest for three years full pay to commence & be computed from the time they begin their march, in full discharge of all such half pay. As I have already observed that it may be objected depreciations & other payments have been made good; but can a just debt be equitably discharged by certificates of very small comparative value, or depreciated paper money? Certainly no, consequently the States are still bound to make good the deficiency. ”

“ But when balances come to be paid, exchange becomes intricate; and merchants are so much employed in particular branches of 315business, that they are obliged to leave the liquidation of their debts to a particular set of men, who make it turn out to the best advantage to themselves.
Whenever a balance is to be paid, that payment costs, as we have seen, an additional expence to those of the place who owe it, over and above the value of the debt. ”

“ Though a man keep a balance of £10,000 to his credit, he will not receive one penny in the shape of interest unless he ask for it, and, even after having arranged a rate, it is advisable to check the banker’s figures and ascertain that you are getting it, as, sometimes, they are apt to err in his favour, through small debits that have been deducted from the interest, and which, consequently, do not appear in your pass-book. ”

“ Subject to any special agreement to the contrary between the Governments concerned, debts shall carry interest in accordance with the following provisions:
Interest shall not be payable on sums of money due by way of dividend, interest, or other periodical payments which themselves represent interest on capital.
The rate of interest shall be 5 per cent. per annum except in cases where, by contract, law, or custom, the creditor is entitled to payment of interest at a different rate. In such cases the rate to which he is entitled shall prevail. ”

“ In the same way a statement with reference to the remaining balance retains its validity without regard to these repayments or debit entries, until in its place comes another acknowledgment of receipt in consequence of a new deposit, or a new statement with reference to the balance of the account in consequence of a new payment made without delay.
It is evident of itself that a higher sum than the balance remaining at the depositor's disposal after deduction of the last repayment and entered in the book cannot at any time be paid. ”

“ Having disposed of the paying average credit balances we can now discuss those accounts that [42] have a large turn-over. A trader, for instance, who draws a considerable number of cheques during the course of a half-year, and whose balance is small, cannot expect his banker to work his account free of charge; but it is difficult to draw up a table showing what he ought to pay, for the simple reason that some bank-managers debit him with a rate which they think he will stand. A 1/16 per cent. commission, that is to say, 1s. 3d. upon each £100 he draws out by cheque, seems a very full rate ”

“ When no rate is fixed by the laws of the state, or territory, or district, the bank may take, receive, reserve, or charge a rate not exceeding seven per centum, and such interest may be taken in advance, reckoning the days for which the note, bill, or other evidence of debt has to run. ”

“ With this background of analogy, we reach the specific problem that calls for answer here. The respondent filed a claim for taxes overpaid, a claim for money had and received to his use by the agents of the government. The identity of the cause of action may be said in one aspect to depend upon the mere fact of overpayment, the existence of a net balance owing to the taxpayer after the ascertainment of all items of debit and of credit. ”

“ As a matter of fact people who have studied such questions tell us that when payments are frequent less stuff is bought on credit and fewer bills are run. Savings banks find that, under certain conditions, men who are paid daily or weekly will put by more money than those who have a monthly pay day. ”

“ In concerns where both regular and instalment sales take place, a separation of the customers’ balances on the basis of the sales contract gives the necessary information for balance sheet purposes. The accounts of instalment trade debtors normally require a much more liberal valuation reserve than those of regular credit customers. ”

“ Extraordinary means are placed by law within the command of the Secretary of the Treasury, by the reissue of Treasury notes redeemed and by negotiating the balance of the loan authorized by the act of June 14, 1858, to the extent of $11,000,000, which, if realized during the present fiscal year, will leave a balance in the Treasury on the 1st day of July, 1859, of $7,063,298.57. ”

“ A person buys on time and sells on time and expects to pay for [Pg 18] his purchases by the proceeds of his sales. So long, therefore, as the processes of commerce and industry proceed in a normal fashion, the paper discounted by a bank will be paid at maturity and the credit balance created by means of such discounts offset by corresponding debits. Ordinarily the credits created through discounts during a given period, say a day or a week, in favor of one set of customers will be balanced during this same period by the payment of notes previously discounted for other customers. ”

“ Similarly, the basis for the valuation of each of the asset items must be investigated and determined correct before the balance sheet may be considered to represent the true financial condition of the business. It is the experience of every business that it cannot collect all of the credits extended to customers. Regardless of how carefully credit is granted, it will be found that some customers do not pay their debts. ”

“ The surplus of the loan shall be paid over by the Commissioners of the Treasury to our Minister of Finance as required.
The portion of the loan remaining after deduction of the amount of the indemnities shall, together with the funds placed at the disposal of our Minister of Finance by Article 24 of the present Law, be assigned to the following charges:—
Art. X. Any unemployed balance after provision has been made for the charges indicated above shall be applied, according to the conditions enumerated in Article 5 of the present Law, to the purchase of securities which shall be cancelled. ”

“ To revert to our purchase record sheets: there is no necessity for noting thereon the amount paid on each invoice or the discount on same, as is sometimes done. This information will be shown in the cash book, and data should not be repeated unnecessarily. The remaining two columns (Balances) are used only when closing the books. Whenever this is done, the balance on each order is brought out to the proper column, the amount we owe being entered in the credit side of this column, and the amount due us being entered on the debit side. ”

“ All other payments were made in bonds bearing interest at eight per cent. per annum till redeemed. Strenuous reductions were made in the public expenditure, the utmost care was exercised over the collections, and in twelve months' time enough cash had been accumulated to pay off the whole of the new paper debt, besides meeting the ordinary expenses of government. ”