by the establishment of a form of Clearing House, and the Account Day or Pay Day is the last day of the account.

The Market.

The prices of most securities fluctuate daily, the amount of variation depending on a variety of causes the state of the money market, the political atmosphere, the industrial position, the law of supply and demand, and the presence or absence of "Bull" or "Bear" pressure by speculators. There are many kinds of securities. A security is a document giving a right to property not in physical possession of the holder of the document. It is therefore a "chose in action." What are known as "gilt edged" securities are those which have a solid backing, which makes it highly improbable that the capital sum represented will be lost, although of course the value may fluctuate with the market, e.g., Government loans, certain railway stocks and shares, etc. These are usually authorized as trustee securities, that is to say, a trustee, unless otherwise authorized by the terms of the trust, may only invest trust money in such securities or in freehold property. Shares are in relation to certain definite equal parts or shares in an undertaking or property. Stock is not necessarily an aliquot part, but may be divided into any amount, e.g., if shares are £10 each in a company, only £10 shares can be purchased, and each share has a distinctive number; but if these shares were converted into stock, say, £10 158. worth could be purchased, and it is not numbered. Shares are not necessarily fully paid up, but it is essential that stock should be. There are various kinds of stock, viz., Inscribed, that is, written in the books at the Bank of England; Registered, where the transferee's name is entered in the Company's books; Bearer, where the holder for the time being has the title thereto. And certain securities are termed Bonds, i.e., promises to pay a stated sum, issued by various Governments and Corporations, e.g., Treasury, Exchequer, India Bonds.

Transfers.

Transfers of securities are sometimes made in blank, that is, the transferor signs a blank Form of Transfer, leaving the blanks to be filled up later by the broker. The legal effect is that, where the transfer is one that can be effected by writing only, the broker is within his authority in filling in the blanks; but where it is necessary that the transfer should be by deed, then the transferor must again deliver the instrument after the blanks have been filled in. The rules of the Stock Exchange make a broker personally liable if he obtains a transfer of securities by means of

a Forged Transfer. The transfer has, of course, no valid effect as regards the ostensible transfer. The property in securities purchased through a broker does not pass to the purchaser until the actual delivery of the completed transfer. The contract previously is only an agreement to transfer.

Underwriting.

Sometimes stockbrokers, or jobbers, or certain Financial Corporations, underwrite a new issue of shares. That is to say, they agree, usually in consideration of a commission on the whole amount issued to the public for subscription, to take up and pay for any shares that may not be applied for by the public. If all the shares should be applied for by the public, obviously the commission earned is a clear gain to the underwriter; but where very few shares are applied for, it may happen that he is badly hit by having to pay for and hold for a time a large number of shares.

Options.

66

If a person is under the impression that certain stocks or shares will shortly rise in price, but he does not wish definitely to purchase, he can deal in the securities by what is termed an option." That is, he agrees to pay a specified sum to have the right (which he need not exercise unless he wishes) to purchase a stated amount of the securities at an agreed price on or before a certain date. If the price rises he will of course exercise his option to purchase at the lower figure. If the price should remain stationary or fall he will not exercise the option. But in any event he has to pay the amount agreed to be paid for the option. This is termed a "call." Similarly, he may take an option to sell securities instead of buying. If he does this, it is termed a "put." Sometimes the two are amalgamated and he has the choice of either buying or selling, in which case it is termed a "put and call.”

Commercial Investments.

As to what consideration should be borne in mind by a company or firm in making investments is a matter which must be governed by the individual circumstances or requirements. If the Articles of a company preclude the Directors from investing the Company's funds in anything but Trustee Securities, then that provision must be complied with. Generally, there is no such restriction placed upon the Directors, in which case considerations of the element of risk and consequently the rate of dividend expected must be factors in arranging an investment.

If the company or firm is incorporated for the purpose of dealing in investments, that is, if it is an Investment Corporation, its business will be much akin to that of the Stock-jobber, but if the company or firm is a trading concern, and surplus assets are available for investment, or if money is required to be invested to satisfy the requirements of some fund, e.g., a Superannuation Fund, or a Sinking Fund, then the utmost prudence is required in selecting not only the particular classes of investments most suitable, but also the individual investments themselves.

In cases where it is not expected that the capital will be required for some years, a long term investment is convenient, say a stock maturing in 20 to 30 years. In such case, the interest or dividend will be fairly stable, and if the stock is purchased at the right price-under par-a profit will be made at maturity on the capital outlay.

If, on the other hand, a short term investment is required, and the question of interest is not important, it would be advisable to seek a stock well below par offering a small interest, and in this case a profit would be made on the capital within a short period.

Generally, the offer of a large dividend or interest entails some risk as to the capital invested, and this applies more particularly to those securities of the industrial group, e.g., oil, rubber, diamond and gold-mining shares, etc.

Frequently, the ultimate yield on the capital invested is an important factor, and in comparing one investment with another this can soon be ascertained. Consideration must be had for (a) the capital appreciation at maturity, (b) the annual dividend or interest yield, less income tax, and (c) the number of years the investment will be current, i.e., before maturity.

CHAPTER 12

PATENTS, TRADE MARKS, AND COPYRIGHT

PATENTS

The prerogative vested in the Crown of granting the monopoly of a trade or manufacture was much abused and was restricted by the Statute of Monopolies, 1623; but, by Section 6 of that Act, the right of the Crown to grant Letters Patent for the sole working or making of new manufactures to the true inventor for a period up to fourteen years, was retained. There are several later statutes dealing with Patent Law, but practically the whole of the law relating thereto has been consolidated and amended by the Patents and Designs Act, 1907, as amended by the Patents and Designs Act, 1919.

What can be Patented.

The subject of a valid patent must be

(1) A manufacture, i.e., some article which is tangible. There can be no patent in an abstract principle or a natural law, e.g., an idea cannot be patented; nor can a discovery in science or surgery.

(2) Novel, i.e., new within the United Kingdom. It must not be known to the public, otherwise a patent will not be granted.

(3) Of some utility, however small; but it need not necessarily be commercially successful.

By utility is here meant the advantage of a process by which either a better article at the same price as one previously known can be produced, or by which one as good or not so good can be produced at less cost; or it may be the virtue of an entirely new article which makes it possible to do something which was not possible before, or to do by entirely new means something which was possible before.

To whom Patent can be granted.

A patent may be granted to any person (including a body corporate) whether or not a British subject, and the person may be granted a patent either alone, or jointly with another person or persons who are not the inventor or inventors, but(1) He must be the true and first inventor, or

(2) He must be a person to whom the invention has been communicated from abroad, or

(3) He must be the legal representative of a deceased inventor. The true and first inventor was construed in the case of Plimpton v. Malcolmson (1876) to mean not only the person referred to above, but also a person who, being one of two persons who invent the same thing simultaneously, first takes out the patent; and further, it includes a person who invents and takes out a patent for a thing which somebody had invented before but had not patented nor disclosed sufficiently to make it common knowledge.

How to obtain a Patent.

In order to obtain a patent, a form of application, together with a form of statutory declaration, must be obtained from the Patent Office or from certain Post Offices. This form when duly completed by the applicant and impressed with the fee stamp is lodged at the Patent Office, together with a provisional or complete specification describing accurately the nature of the invention. The object of a "provisional" specification is to enable the inventor, who may not yet be in a position to complete his specification, to protect his invention and prevent himself from being forestalled by any other person. On this the stamp duty is £1 only, so that an inventor has a very inexpensive method of protecting himself while he is perfecting his invention or finding out whether or not it is likely to be worth his while to proceed further with it. If a provisional specification is lodged, and the inventor decides to proceed, he must lodge his complete specification, which must conform to the provisional specification, within nine months, which period may on application be extended by three months. An examiner then inquires into the invention generally to see if the specification fairly describes the invention and whether the invention has been patented or filed at any time within the last fifty years.

It is usual, and in some cases almost imperative, for an inventor to employ a Patent Agent for the purpose of taking out his patent. Very few cases are as simple as they appear owing to the technicality of the law relating to patents, and the patent agent not only keeps his client on the right lines but