issue notes while any English country bank doing business within the 65 mile limit loses that right. Irish Banks.-Irish banks have practically the same privileges as the Scotch banks, the main difference being that their notes are repayable in gold wherever they are issued, and not at the head office only. VI. MAIN CAUSES OF MARKET FLUCTUATIONS We have already referred, under various heads, to the main influences which affect the rates of discount and the loan rates on the money market; but it may be convenient to recapitulate here a few of the most important points already dealt with, and to mention one or two others to which we have not yet called attention. Supply and Demand.-We have shown that, as in other markets, the law of supply and demand is the main regulator of the price of money. Generally speaking, when loanable money is plentiful the banks and other lenders are eager to lend it on almost any terms to prevent its lying idle, since they have to pay deposit rate on at least a portion of it to their customers. When, however, the fund of money in the market is small, or bankers become uneasy for any reason, the rate quickly rises. The official bank rate is usually raised to protect the banking reserve, and reduced when that reserve is large and requires no such protection. Gold Movements.-The ordinary internal movements of gold are regular and well known, and their effects can be foreseen. The amount in circulation is constantly fluctuating, and depends to a large extent on the condition of trade. When trade is good more money is required, and the tendency is to diminish the reserve, while bad trade has the opposite effect. The external movements are also fairly regular. As a rule gold leaves the country during the autumn in payment of imports (chiefly from the United States), and continental countries often draw upon our reserve, partly on account of dearer money abroad and partly in respect of payments on account of foreign loans subscribed for here in the earlier part of the year. The imports and exports of gold nearly balance one another, but we usually import more than we export. The effect of an export of gold is to reduce the reserve, and the movements are closely watched. Whenever it is necessary to check this export the bank rate is raised. Government Operations, etc.-The floating of a large loan by our own or a foreign government, or the raising of additional capital by a railway or other large concern, always affects the market in proportion to the magnitude of the demand for money, and may quickly raise the price. India Council Remittances.-The India Council collects the Indian revenue in rupees, but has to make many payments in gold in this country in respect of interest, pensions, etc. On the other hand, merchants who have imported tea and other produce desire to make payments in India in rupees. The India Council accordingly offers to supply bills on the Presidency Treasuries, to be transmitted by post in the usual way, or, in case greater dispatch is wished, a remittance may be effected by telegraphic transfer. The money is offered in lakhs of rupees and the merchants tender for the remittances they require at certain rates per rupee. A lakh of rupees is R100,000, and is usually written R1,00,000. The Foreign Exchanges.-The Foreign Exchanges have already been dealt with in vol. iii. p. 97, and we need only here point out that the fluctuations of the market cannot be thoroughly understood without carefully studying this somewhat intricate subject. VII. CONCLUSION There are many other circumstances which may affect the value of money from time to time, but which we have not the space to examine in detail. We have perhaps said enough to clear up the mysteries of the ordinary money article, and we conclude with a small Table, which shows at a glance the movements of the money market during the last ten years. Average market ratebest three months bills Market below bank 1/15/10 1/7/7 15/11 19/3 3/7/8 2/19/3 3/3/3 3/13/3 3/5/0 2/11/10 REFERENCES.-GOSCHEN's Theory of Foreign Exchanges; BAGEHOT's Lombard Street; CLARE'S Money Market Primer and A. B. Č. of the Foreign Exchanges; PALGRAVE'S, Dictionary of Political Economy; and Professor J. SHIELD NICHOLSON'S Bankers' Money. W. GORDON CAMPBELL. Month. The lunar month consists of 28 days, or four weeks. The calendar month consists of 28, 29, 30, or 31 days. A month in law was formerly a lunar month, unless otherwise stated, as it is always one uniform period, and because it falls naturally into a quarterly division of weeks. lease for "twelve months" is only for forty-eight weeks, while if it be for a "twelvemonth" in the singular number, it is good for the whole year. A The term "month" in statutes prior to 1850 was understood to mean a lunar month, but after that date where the word month is used it means calendar month, unless there is an expression to the contrary. In commercial and mercantile transactions the term month means calendar month, but in contracts other than mercantile or commercial, the meaning of month depends upon the words used in the contract, showing the intention of the parties. In the computation of a calendar month the general rule is that the day from or after which the time runs is excluded, and the day on which the act is to be done, or the protection afforded terminates, is to be included. Thus, a month's notice given on the 28th January expires on the 28th February, and it has been held that no action can be brought where goods are sold on, say, the 5th of March payable in two months, until after the 5th of May. A mortality table has been defined as the instrument by means of which are measured the probabilities of life and the probabilities of death. In its final form it sets forth the history of the mortality experience by means of the number living and the number dying columns (denoted respectively by l and d). Taking the Carlisle table, for illustration, we find the following figures :— These statistics tell us that, according to the Carlisle experience, out of every 10,000 persons born 8461 on the average survive to age 1, 7779 attain age 2, and so on. Or again, they indicate that out of every 10,000 births, 1539 on the average will die before attaining age 1, 682 will attain that age, but die before attaining age 2, and so on. A mortality table does not represent absolute numbers living or dying, but only the relative numbers. An arbitrary figure, called the radix, is selected to represent the number of entrants at the initial age, and the history of these entrants is traced from that age onwards until they all emerge by death. As every one must die, it follows that the sum total of the deaths will be equal to the radix, or, in other words, that the total of the da column will equal the first value of the l, column. A Life Table always assumes a sufficient number of persons under observation to admit of average results being realised. In actual practice this condition is difficult of fulfilment, and it becomes necessary to resort to some method by which the irregularities in the data may be removed. The process is termed Graduation, and has been described as the alteration of the expression for the law of mortality from an irregular rectilinear form to a smooth curve. This smoothing down of the irregularities in the actual observations may be justified on the ground of experience derived from the inspection of other similar statistics in which like irregularities do not exist, or possibly appear in the opposite direction, and on the principle of continuity founded upon the reign of law prevailing throughout all nature. When examining mortality tables it is important to keep in view the nature of the data from which the tables have been formed. Thus, a table representing the experience of Lives Assured would be expected to yield lighter rates of mortality than another based upon Population Statistics; tables founded upon male and female mortality will differ materially in the incidence of the deaths; the rate of mortality varies in different countries; it varies with the profession or occupation-the clergy, for example, exhibiting a light, and publicans a heavy, mortality. It will thus be seen that the experience of any particular class should, so far as possible. be made the basis for the calculation of monetary values to be employed in connection with that class. No one mortality table is capable of general application. LIVES ASSURED A Select Mortality Table is formed by tracing the entrants at any one age (or group of ages) from that age (or group of ages) onwards, not admitting new entrants at subsequent ages. An Aggregate Table of Mortality, on the other hand, takes no account of the duration for which the lives have been exposed, the rate of mortality between ages (x + n) and (x + n + 1) being derived irrespective of the ages at which the lives entered. When we compare the rates of mortality of the aggregate with those of the select tables at the various ages at entry, we find that as regards the initial age of the tables, the rates of mortality of the aggregate table are all through lower than those of the select, with the exception of the first year when the two rates are equal. This is due to new entrants at subsequent ages (who have recently passed the medical examination and who are included in the aggregate table), keeping down the rate of increase in the mortality among those who entered at the initial age. At any subsequent age at entry the rates of mortality of the Aggregate Table as compared with the Select will depend upon the proportion which the new entrants at that age and future ages bear to the survivors from the entrants at previous ages. By reason of the deterioration which (on the average) takes place as time elapses since the selection of the lives, the deaths among the entrants at previous ages tend to increase the rates of mortality, and this tendency to increase may or may not be more than counterbalanced by the more favourable experience of the subsequent entrants at higher ages. If Select Mortality Tables were constructed for each age at entry, or even for central ages at entry using quinquennial groups, the extent of the tables would be considerable. It is generally recognised also that after a period the benefit of selection wears off, so that the rate of mortality thereafter may be said to vary only with the increase in the age. It is accordingly usual to assume that the effect of selection becomes unimportant after a certain period, say n years, and to join the select rates of mortality during the said n years to an ultimate aggregate table formed by ignoring the experience of the first n years after entry. Select Tables are now recognised as the standard for all life assurance calculations. The premium for an assurance at any age at entry ought obviously to be based upon the experience of those who enter at that particular age, without reference to the entrants at previous or subsequent ages, likewise the reserve that should be held by the office to provide for that portion of the risk under an existing contract which the future premiums will not suffice to cover ought to be based upon the same data. Aggregate Tables, unless perhaps as a means for approximating in practice to a select valuation, are not altogether reliable. To enable us more easily to understand the components of the aggregate table, let us assume in the first place that the table is based upon the experience of one company that has been in existence for m years. The rate of mortality then at any age d[x+n] + d(x+n-1]+1+d(x+n-2)+2+... 9x+n=E[x+n] + E[x+n-1]+1 + E[x+n-2]+2+ where dx+n] represents the deaths during one year out of m years' entrants at age (x + n). da+n-1+1 represents the deaths during one year out of the survivors from (m-1) years' entrants at age (x+n-1) one year before. da+n-21+2 represents the deaths during one year out of the survivors from (m2) years' entrants at age (x + n − 2) two years before, and so on. and Ex+n is the number of years of life lived between ages (x + n) and (x+n+1) by the m years' entrants at age (x + n) Ex+n-1]+1 is the number of years of life lived between the same two ages by the survivors from the (m-1) years' entrants at age (x + n − 1) one year ago. Ex+n-2]+? is the number of years of life lived between the same two ages by the survivors from the (m-2) years' entrants at age 2) two years ago, and so on. (x + n This function is usually termed the exposed to risk. Similarly ... d[x+n+1] + d[x+n]+1 + d[x+n−1]+2 + ... where dx+n+1 represents the deaths during one year out of m years' entrants at age (x + n + 1) da+n+1 represents the deaths during one year out of the survivors from (m-1) years' entrants at age (x + n) one year before. dx+n-11+2 represents the deaths during one year out of the survivors from (m-2) years' entrants at age (x + n − 1) two years before, and so on, and E is the corresponding exposed to risk. The above is a symbolical expression of the fact that in respect of any age at entry, under the conditions we are considering, the number of years' experience diminishes by one year at the end of each successive year of duration. It has been stated that, according to an aggregate table, a policyholder entering at any age (x+n) is charged such a premium as will, on the average, exactly meet the sum assured at the death of each of a mixed VOL. V. 7 |