In business, a callover is a meeting of commodity brokers and dealers at fixed times during the day in order to form a market in that commodity. The callover is usually used for trading in futures, in fixed quantities on a standard contract, payments usually being settled by differences through a clearing house. Because traders usually form a ring around the person calling out the prices, this form of market is often called ring trading. This method of trading is also called open outcry, as bids and offers are shouted out during the course of the callover. Research Callover
In business, a capital allowance is an income tax relief given against business and some other profits to reflect the depreciation of certain types of asset owned by the business. Because the Inland Revenue cannot control the amount of depreciation of fixed assets that traders charge in their accounts against profits, it is customary for the trader's own depreciation charge to be disallowed for tax purposes and the Revenue's own charges (the capital allowances) substituted. These may be targeted to some types of asset (e.g. plant and machinery) and not others (office buildings); where the authorities want to create incentives for traders to invest, the allowances may be accelerated (i.e. allowed at a higher rate than would be expected if normal depreciation rates were applied), even to the extent of allowing 100% capital allowances in the year of purchase. Research Capital Allowance
A capital asset (fixed asset) is an asset that is expected to be used for a considerable time in a trade or business. Examples of capital assets in most businesses are land and buildings, plant and machinery, investments in subsidiary companies, goodwill, and motor vehicles, although in the hands of dealers these assets would become current assets. The costs of these assets are normally written off against profits over their expected useful life spans by deducting an item for depreciation from their book value each year. Research Capital Asset
In economics, a capital budget is the sums allocated by an organization for future capital expenditure. The capital budget may well encompass a longer period than the next accounting period. Research Capital Budget
In business, capital commitments are firm plans, usually approved by the board of directors in the case of companies, to spend sums of money on capital assets. Capital commitments must by law be shown by way of a note, or otherwise, on company balance sheets. Research Capital Commitments
Capital consumption is the total depreciation in the value of the capital goods in an economy during a specified period. It is difficult to calculate this figure, but it is needed as it has to be deducted from the gross national product (GNP) and the gross domestic product (GDP) to obtain the net figures. Research Capital Consumption
Capital expenditure is expenditure on capital assets. Capital expenditure is not deducted from profits, as an asset is acquired rather than a loss being made. However, as a capital asset loses value by depreciation, the amount of the depreciation is charged against profit. Research Capital Expenditure
A capital gain is a gain on an asset not bought and sold in the normal course of trade by the person making the gain. These gains are taxed in Britain and in many other countries by means of a capital- gains tax. Research Capital Gain
Capital gearing is the ratio of the amount of fixed interest loan stock and preference shares in a company to its ordinary share capital. A company with a preponderance of ordinary share capital is low-geared while one in which fixed-interest capital dominates is high-geared. With high gearing, when profits are rising, the amounts available to ordinary shareholders rise, in percentage terms, faster than the percentage rise in profits. However, when profits are falling shareholders in high- geared companies suffer a larger percentage drop in their dividends than the percentage fall in profits. In the USA capital gearing is known as leverage. Research Capital Gearing
Capital reserves are undistributed profits of a company that for various reasons are not regarded as distributable to shareholders as dividends. These include certain profits on the revaluation of capital assets and any sums received from share issues in excess of the nominal value of the shares, which are shown in a share premium account. Capital reserves are now known as undistributable reserves under the Companies Act (1985). Research Capital Reserves
In accounting, capital structure are the elements, such as shares, loan stock, etc., from which the capital of a company or other organization is composed. Research Capital Structure
In accounting, capital turnover is the ratio of sales of a company or other organization to its capital employed (i.e. its assets less liabilities). It is presumed that the higher this ratio, the better the use that is being made of the assets in generating sales. Research Capital Turnover
A capital-conversion plan is an annuity that converts capital into income. Capital-conversion policies are often used to provide an income later in life for a person who might be liable to capital-gains tax if his capital is not reinvested in some way. Research Capital-Conversion Plan
Capital-gains tax (CGT) is a tax on capital gains. Most countries have a form of income tax under which they tax the profits from trading and a different tax to tax substantial disposals of assets either by traders for whom the assets are not trading stock (e.g. a trader' s factory) or by individuals who do not trade (e.g. sales of shares by an investor). The latter type of tax is a capital-gains tax. Short-term gains taxes are taxes sometimes applied to an asset that has only been held for a limited time. In these cases the rates tend to be higher than for the normal capital- gains tax. In Britain, capital-gains tax applies to the net gains (after deducting losses) accruing to an individual in any tax year, with an exemption to liability if the individual's gains do not exceed a specified figure. Other exemptions include gains on private cars, government securities and savings certificates, loan stocks, options, gambling, life- assurance and deferred- annuity contracts, main dwelling house, and works of art.
The rate of tax is the taxpayer's marginal tax rate. An indexation allowance is available when calculating a chargeable gain or allowable loss based on the Retail Price Index between a date fixed by the Chancellor, or, if later, the month of purchase and the date of sale. Research Capital-Gains Tax
The capital-redemption reserve is a reserve fund required to be created by the UK Companies Act (1985) when shares are redeemed out of retained profits and not out of a new issue of share capital. The reserve is created by making a transfer out of the profit and loss account to a specially designated account, the capital- redemption reserve account. Amounts held in this account cannot be distributed to shareholders by way of dividend, although they may be used to make bonus issues of share capital. The purpose of the reserve is to ensure that the company's capital is not diluted by the redemption of some of the shares. Research Capital-Redemption Reserve
Capital-transfer tax is a tax levied when capital is transferred from one person's estate usually into that of another, as by lifetime gifts or inheritances. There was such a tax in Britain from 1974 to 1986. It continued in a truncated form from 1986, when it became known as inheritance tax. Research Capital-Transfer Tax
Captive audience is a term applied to an audience that is unlikely to be able to escape being exposed to an advertising message in toto. Examples include cinema audiences and conference audiences. Research Captive Audience
In business a captive insurance company is an insurance company that is totally owned by another organization and insures only, or mostly, the parent company's risks. In this way the parent organization is able to obtain insurance cover (particularly those classes that are compulsory by law) without having to pay premiums to an organization outside its trading group. Research Captive Insurance Company
In economics, a captive market is a group of purchasers who are obliged to buy a particular product as a result of some special circumstance, such as the absence of an alternative supplier or product. Research Captive Market
Cargo is the goods or merchandise carried by a trading vessel from one place to another. When part of the cargo is on deck it is called the deck cargo, as distinguished from the inboard cargo. Research Cargo
Cargo insurance is an insurance covering cargoes carried by ships, aircraft, or other forms of transport. On an FOB contract the responsibility for insuring the goods for the voyage rests with the buyer. The seller's responsibility ends once the goods have been loaded onto the ship or aircraft (or train in the case of FOR contracts). On a c.i.f. contract, insurance is the responsibility of the seller up to the port of destination. On a c & f contract, the seller arranges the shipment and pays the freight but the buyer is responsible for the insurance during the voyage (as in an FOB contract). Research Cargo Insurance
The carolus was a gold coin first struck in the reign of Charles I and originally equal to one pound. It was later valued at 23 shillings. The name was also given to other coins of the period bearing 'Carolus' as the name of the monarch, e.g. a Carolus dollar. Research Carolus
In economics, a carry-over is the quantity of a commodity that is carried over from one crop to the following one. The price of some commodities, such as grain, coffee, cocoa, and jute, which grow in annual or biannual crops, is determined by the supply and the demand. The supply consists of the quantity produced by the current crop added to the quantity in the hands of producers and traders that is carried over from the previous crop. Thus, in some circumstances the carry-over can strongly influence the market price. Research Carry-Over
Cash against documents (CAD) is a payment term for exported goods in which the shipping documents are sent to a bank, agent, etc., in the country to which the goods are being shipped, and the buyer then obtains the documents by paying the invoice amount in cash to the bank, agent, etc. Having the shipping documents enables the buyer to take possession of the goods when they arrive at their port of destination; this is known as documents against presentation. Research Cash against Documents
A cash and carry is a wholesaler, especially of groceries, who sells to retailers and others with businesses at discounted prices on condition that they pay in cash, collect the goods themselves, and buy in bulk. Research Cash and Carry
In accounting the cash book is the book of prime entry in which are recorded receipts into and payments out of the organization's bank account. The
cash book, unlike most other books of prime entry, is also an account, as its balance shows the amount due to or from the bank. Research Cash Book
A cash dispenser is a machine for supplying cash to cardholders, often installed outside banks and building societies to provide a 24-hour service. The customer is supplied with an embossed plastic card (cash card or cash- point card) bearing account details. When it is inserted into the dispenser with the appropriate personal identification number, it will allow cash to be withdrawn direct from the customer's account. Other services may also be requested, such as the provision of a statement of account, a cheque book, or account balance. Cheques and cash may also be paid in through a
cash dispenser. Research Cash Dispenser
Cash flow is the input of cash required to cover all expenses of a business, whether revenue or capital. Alternatively, the actual or prospective balance between the various outgoing and incoming movements which are designated in total. Cash flow is positive if receipts are greater than payments; negative if payments are greater than receipts. A 'cash flow forecast' is one of the most important forms of financial planning for any business. The business needs to know if monthly outgoings are going to be greater than receipts. If it does not have finance, such as bank deposits or an overdraft facility, to cover a period of negative cash flow, the company will go bankrupt even if the business is fundamentally profitable in the long term. Research Cash Flow
The cash register is a machine invented in 1879 by James Ritty for retail traders. Simply they consist of keys which pressed record the value of sales, a display which indicates to the customer the values, and a cash draw which cannot be opened except by registering the fact to the machine. Research Cash Register
Caveat emptor (Latin for 'let the buyer beware') is a maxim implying that the purchaser of goods must take care to ensure that they are free from defects of quality, fitness, or title, i.e. that the risk is borne by the purchaser and not by the seller. If the goods turn out to be defective, the purchaser has no remedy against the seller. The rule does not apply if the purchaser is unable to examine the goods, if the defects are not evident from a reasonable examination, or if the seller has behaved fraudulently. Some measure of protection for the unwary purchaser is afforded by a number of statutes, including the Unfair Contract Terms Act (1977), the Sale of Goods Act (1979), and the Consumer Protection Act (1987). Research Caveat Emptor
A cent is typically a small coin denoting one hundredth of a larger denomination, such as one hundredth of a dollar or Euro.
In America, the cent is a copper coin stamped with various designs and issued first by the States, later by the Federal Government. Vermont was the first State to issue copper cents, having permitted in June, 1785, Reuben Harmon Jr., to make money for the State for two years. He started a mint at Rupert, Bennington County, coining the Vermont cent of 1785. This coin had on the obverse, wooded mountains and a rising sun with a plough, and the inscription Vermontis. Res. Publica. Exergue 1785. On the reverse was a ring surrounded by thirteen stars with rays springing from the circle; and the legend, Stella. Quarta. Decima.
Connecticut, in October, 1785, granted to Bishop, Hopkins, Hillhouse and Goodrich the right to coin 10,000 pounds of copper cents, known as the Connecticut cent of 1785. These had on the obverse, a mailed bust, head laureated; and the legend, Auctori. Connec. On the reverse they were marked with the goddess of Liberty grasping an olive branch in her right hand and liberty staff in her left, which was surmounted by a liberty cap; and the legend, Inde Et Lib Exergue 1785.
Massachusetts established a mint in 1786, and coined $60,000 in cents and half cents. These were marked on the obverse of the cent with a clothed Indian, in his right hand a bow, in his left an arrow; and the legend, Common + Wealth. On the reverse was marked a spread eagle, a shield on his breast bearing the word cent, his talons grasping an olive branch and a bundle of arrows; And the legend, Massachusetts, Exergue 1787, beneath a horizontal bar.
New Jersey granted to Goadsby and Cox, in 1786, the right to coin 10,000 pounds at fifteen coppers to the shilling, known as the New Jerseycopper coin of 1786. These were marked on the obverse with a horse's head, heraldic wreath and a plough; and the legend, Nova. Csesarea. Exergue 1786. On the reverse was a shield; and the legend, E Pluribus Unum.
In 1781 the Continental Congress directed Robert Morris to look into the matter of Governmental Coinage. Robert Morris proposed a money unit equal to one-fourth of a grain of fine silver, an equivalent of one-fourteen-hundred-and-fortieth of a Spanish dollar. The coin equal to one hundred of these units was to be called a cent from the Latin centum, meaning one hundred, 500 units a quint, 10,000 units a mark. These were not accepted, but in 1784 Jefferson proposed in his coinage report to Congress that 'the smallest coin be of copper, of which two hundred shall pass for one dollar'. In 1786 the hundredth was substituted. Copper cents began to be coined in the USA in 1793. In 1796 their weight was reduced and in 1857 the small nickel cent was substituted, and in 1864 the small bronze. Research Cent
The Central Arbitration Committee is a committee set up by the Employment Protection Act (1975) to arbitrate on matters voluntarily submitted to it through ACAS by the parties to a trade dispute. It has powers to enforce the disclosure of certain bargaining information in these disputes and to arbitrate when a statutory joint industrial council is deadlocked. It does not charge for its services and cannot award costs. Research Central Arbitration Committee
A central bank is a bank that provides financial and banking services for the government of a country and its commercial banking system as well as implementing the government's monetary policy. The main functions of a
central bank are: to manage the government's accounts; to accept deposits and grant loans to the commercial banks; to control the issue of banknotes; to manage the public debt; to help manage the exchange rate when necessary; to influence the interest rate structure and control the money supply; to hold the country's reserves of gold and foreign currency; to manage dealings with other central banks; and to act as lender of last resort to the banking system. Examples of major central banks include the Bank of England in Britain, the Federal Reserve Bank of the USA, the Deutsche Bundesbank in Germany, and France's Banque de France. Research Central Bank
The Central Government Borrowing Requirement (CGBR) is in Britain, the Public Sector Borrowing Requirement (PSBR) less any borrowings by local authorities and public corporations from the private sector. Since local authorities and public corporations both have a measure of freedom in deciding how much they borrow, the government does not have the complete control over the PSBR as it does over the CGBR. Research Central Government Borrowing Requirement
A certificate of incorporation is the certificate that brings a company into existence; it is issued to the shareholders of a company by the Registrar of Companies. It is issued when the memorandum and articles of association have been submitted to the Registrar of Companies, together with other documents that disclose the proposed registered address of the company, details of the proposed directors and company secretary, the nominal and issued share capital, and the capital duty. The statutory registration fee must also be submitted. Until the certificate is issued, the company has no legal existence. Research Certificate of Incorporation
A certificate of insurance is a certificate giving abbreviated details of the cover provided by an insurance policy. In a motor-insurance policy or an employers'-liability policy, the information that must be shown on the
certificate of insurance is laid down by law and in both cases the policy cover does not come into force until the certificate has been delivered to the policyholder. Research Certificate of Insurance
A certificate of origin is a document that states the country from which a particular parcel of goods originated. In international trade it is one of the shipping documents and will often determine whether or not an import duty has to be paid on the goods and, if it has, on what tariff. Such certificates are usually issued by a chamber of commerce in the country of origin. Research Certificate of Origin
A certified accountant is a member of the Chartered Association of
Certified Accountants. Its members are trained in industry, in the public service, and in the offices of practising accountants. They often attend sandwich courses in technical colleges while still working and take the Association's exams. Members are recognized by the UK Department of Trade and Industry as qualified to audit the accounts of companies. They may be associates (ACCA) or fellows (FCCA) of the Association and although they are not chartered accountants, they fulfil much the same role. In the USA the equivalent is a certified public accountant (CPA), who is a member of the Institute of Certified Public Accountants. Research Certified Accountant
The cesser clause is a clause in a charterparty, inserted when the charterer intends to transfer to a shipper his right to have goods carried. It provides that the ship owner is to have a lien over the shipper's goods for the freight payable under the charterparty and that the charterer's liability for freight ceases on shipment of a full cargo. Research Cesser Clause
Ceteris paribus (Latin: all other things being equal) is the widely used assumption in economics that the variables under consideration have no other effects on the economy than those specified and are not themselves affected by any other variables. Usually hopelessly unrealistic, the ceteris paribus assumption is the basis of partial equilibriumanalysis from which most economic theories are derived. On the other hand, general- equilibriumanalysis excludes the ceteris paribus assumption but has difficulty in reaching any worthwhile conclusions. Research Ceteris Paribus
The chairman is the most senior officer in a company, who presides at the annual general meeting of the company and usually also at meetings of the board of directors. He may combine the roles of chairman and managing director, especially in a small company of which he is the majority shareholder, or he may be a figurehead, without executive participation in the day-to-day running of the company. He is often a retired managing director. In the USA the person who performs this function is often called the president. If this office is filled by a woman, she is known as a chairwoman or chairperson. To avoid this complication the officer is now sometimes referred to as the chair. Research Chairman
The chairman's report is a report, often included in the annual report of a company, giving a summary of the year's activities and a brief survey of what can be expected in the coming year. It is signed by the chairman, who usually reads it at the annual general meeting. Research Chairman's Report
In Britain, a chamber of commerce is a voluntary organization, existing in most towns, of commercial, industrial, and trading businessmen who represent their joint interests to local and central government. The London Chamber of Commerce is the largest such organization in the UK; it also fulfils an educational role, running several commercial courses, for which it also sets examinations. Most UKchambers of commerce are affiliated to the Association of British Chambers of Commerce.
These associations originated in France early in the 18th century. The first in Britain was that of Glasgow founded in 1783, by 1900 all the great towns have their chamber of commerce. Research Chamber of Commerce
A chamber of trade is an organization of local retailers set up to protect their interests in local matters. They are a much narrower organization than a chamber of commerce and most in Britain are affiliated to the National Chamber of Trade (NTC). Research Chamber of Trade
The channel captain is the most powerful member in the distribution channel of goods. The channel consists of the manufacturer, wholesaler, and retailer, the channel captain usually being the manufacturer. There are, however, exceptions, most notably when the retailer is a major department store or chain, whose buying power enables it to become the channel captain. The channel captain controls the distribution channel and can insist that products should be made to their own specifications. Research Channel Captain
A channel conflict is a disagreement between members of a distribution channel. Horizontal channel conflict can occur among retailers, if one retailer feels another is competing too vigorously through pricing or is invading his sales territory by means of advertising. Vertical conflict occurs between retailers and their suppliers when either side feels dominated by the other. Research Channel Conflict
In Britain, a charity is defined in law as a business which provides 'a public good' until 2006 there was a presumption that all charities based around education, health or religion were providing a public good, and as such they had no need to prove their public benefit. This allowed private schools to charge enormous fees to the elite children of society to attend them, and at the same time claim charitable status. The public perception of a charity is of an organisation operated to relieve need or suffering in other people. However, a charity can pay its staff and directors (known as 'trustees' any salary it wishes, providing an ideal opportunity for a business to generate a large income for itself from public donations, while passing on very little if any tangible benefit to those it claims to assist. Zoos are recognised in law as being charitable, while some people might view them as simply businesses which provide entertainment, the legal status of a charity affords the business a greatly reduced tax burden and other benefits. Research Charity
In the British Isles, a chartered accountant is defined as a qualified member of the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, or the Institute of Chartered Accountants in Ireland. These were the original bodies to be granted royal charters. Other bodies of accountants now have charters (the Chartered Association of Certified Accountants, the Chartered Institute of Management Accountants, and the Chartered Institute of Public Finance and Accountancy) but their members are not known as chartered accountants. Most firms of chartered accountants are engaged in public practice concerned with auditing, taxation, and other financial advice; however, many trained
chartered accountants fulfil management roles in industry. Research Chartered Accountant
Chartered Companies are trading companies which receive from the government of the country to which they belong a charter granting them certain rights and privileges in a certain region or sphere of action, and also imposing upon them certain obligations or restrictions.
One of the oldest, and the greatest and most celebrated of all these companies, was the East India Company, which received its first charter in 1600, and was the means of founding the British empire in India. A Russia company was of earlier date, and maintained its existence down to 1825. The Hudson Bay Company, though later in origin, still existed at the start of the 20th century in a highly flourishing condition. Several chartered companies of later origin came prominently before the public, and did much to enlarge the British empire, though not granted by their charters such exclusive privileges as the chartered companies of early times. One of these - the Imperial British East Africa Company - had a comparatively short career, receiving a charter in 1888, and being finally wound up in 1897, after having resigned its charter to the government. Its founder was Sir W Mackinnon and it was mainly through him and the company that Uganda and the region extending between it and the Indian Ocean were secured to the British empire. The government paid the company 250,000 pounds on the surrender of its charter and all rights and property in the region, a sum far smaller than had been disbursed.
A more fortunate company, established in West Africa, in the Niger region, and for a time known as the National African Company, received a charter in 1886, and became well known as the Royal Niger Company. At the head of it was Sir George Taubman Goldie, to whom may be ascribed the acquisition for Britain of Northern Nigeria, and parts of the territory between it and the sea. Latterly it was decided that the administrative rights and powers of the company should be transferred to the crown, and the transfer took place in 1900. The company then became simply a trading company the Niger Company Limited.
In South Africa a huge tract of territory, the main portion of which is now comprised of Zimbabwe, was acquired for Britain by the British South Africa Company. The moving spirit in this company was the late Cecil Rhodes, and the charter was obtained in 1889. An immense amount was spent in opening up the country, in constructing railways, telegraphs, and roads, in providing a settled government, and otherwise, and the expenditure greatly exceeded the revenue. Another chartered company was the British North Borneo Company, which acquired its charter in 1882, and under it administered a region as large as Ireland, and rich in various tropical products. Research Chartered Companies
The Chartered Insurance Institute (CII) is a British association of insurers and brokers in the insurance industry. Its origins date back to 1873; its first Royal Charter was granted in 1912. It provides training by post and at its own college, examinations leading to its associateship diploma (ACII) and fellowship diploma (FCII), and sets high standards of ethical behaviour in the industry. Research Chartered Insurance Institute
In finance, a chartist is an investment analyst who uses charts and graphs to record past movements of the share prices, P/E ratios, turnover, etc., of individual companies to anticipate the future share movements of these companies. Claiming that history repeats itself and that the movements of share prices conform to a small number of repetitive patterns, chartists have been popular, especially in the USA, in the past. It is now more usual for analysts to use broader techniques in addition to those used by chartists. Research Chartist
chattels is a term describing all property of whatever kind, excluding freehold land and anything permanently affixed to freehold land. Interests in land (e.g. leaseholds) are chattels real. Chattels personal are all movable and tangible articles of property. Chattels include timber growing on land (whether freehold or leasehold) and articles of personal use. Research Chattels
A cheque, (formerly also known as a check) is a draft or bill on a bank payable on presentation. A cheque may be drawn payable to the bearer, or to the order of someone named: the first form is transferable without endorsation, and payable to any one who presents it; the second must be endorsed, that is the person in whose favour it is drawn must write his name on the back of it. Cheques are a very important species of mercantile currency wherever there is a well-organized system of banking. The regular use of them for all payments, except of small amounts, make the transfer of funds a mere matter of cross-entries and transferring of balances among bankers, and tends greatly to economize the use of the precious metals as a currency. What is called a 'crossed cheque' has two lines drawn across it transversely, with or without the words '& Co.' between. A cheque thus marked can only be paid by the banker on whom it is drawn when presented by some other banker, and the person to whom it is sent can consequently only obtain payment of it through his own bankers. Research Cheque
A cheque card is a card issued by a British bank or building society to an approved customer, guaranteeing any cheque drawn by that customer up to an amount stated on the cheque card (usually either 50 or 100 pounds). This enables the customer to use cheques for purchases (up to the value of the cheque card) from establishments in which they are unknown. The cheque card can also be used by a bank customer to draw cash from any branch of his bank. Research Cheque Card
The chief executive is the person with responsibility for ensuring that an organization functions efficiently if it is non-profit making and makes a profit acceptable to the shareholders if it is profit making. Although the term was formerly more common in North America than Britain, it is now sometimes used in place of managing director in Britain. Research Chief Executive
The China Association was a society of merchants and others founded in Britain in 1889 with the object of the representation of the interests of British merchants in their relations with China and Japan, and the extent of trade with these countries. Research China Association
Church rate was formerly in England a rate raised by resolutions of a majority of the parishioners in vestry assembled, from the occupiers of land and houses within a parish, for the purpose of maintaining the church and its services. In 1868 an act was passed abolishing compulsory church rates, except such as, under the name of church rates, were applicable to secular purposes. Research Church Rate
Churning is the practice by a broker of encouraging an investor to change his investments frequently in order to make him pay excessive commissions. Also the practice by a bank, building society, insurance broker, etc., of encouraging a householder with an endowment mortgage to surrender the policy and to take out a new one when seeking to increase a mortgage or to raise extra funds, instead of topping up the existing mortgage. The purpose is to increase charges and commissions at the expense of the policyholder. Research Churning
The circular flow of income is the process by which money and goods pass between different groups in the economy. A concept first developed by the French economist Francois Quesnay in the 18th century, it is used as the basis for studying macroeconomic relationships. In its simplest forms, it postulates that households provide labour to firms in exchange for money, which the households use to buy the goods produced by firms. Household savings represent a leakage from the economy, as money saved is removed from the circular flow, but this is partially compensated for by investment, which is an injection into the circular flow. In the real world, circular flow is complicated by such factors as taxation (leakage) and government spending (injection), exports (leakage) and imports (injection). National income accounts are based on the concept of the circular flow. Research Circular Flow of Income
Circulating capital (working capital) is an economics term for the part of the capital of a company or other organization that is used in the activities of trading, as distinct from its fixed capital. The circulation of this capital occurs thus: suppliers provide stock; the stock is sold to customers who become debtors, eventually paying cash; the cash is used to pay suppliers, who provide more stock, etc. The concept was introduced by the economist Adam Smith and is popular with judges in tax cases. Research Circulating Capital
The Classical school is the school of economics founded by Adam Smith. Smith was primarily concerned with explaining the origins of wealth creation and with advocating the benefits of free trade. He achieved this by analysing the economic relationships between the classes: workers, who earn their living by wage labour; capitalists, who derive income from profits; and landlords, whose income derives from rent. Supply and demand in each class determined prices. David Ricardo extended this analysis, in particular elucidating the concept of value, which in the Classical school is seen as a product of labour. The labour theory of value was used by Karl Marx as a basis for his analysis of the capitalist economy and Marxists have remained firmly wedded to the Classical school. The Marginalists of the late 19th century overturned this thinking by defining value in relation to scarcity alone; this remains the basis of the neoclassical school. Research Classical School
The classical system of corporation tax is a system of taxing companies in which the company is treated as a taxable entity separate from its own shareholders. The profits of companies under this system are therefore taxed twice, first when made by the company and again when distributed to the shareholders as dividends. Research Classical System Of Corporation Tax
Cliometrics is the application of econometrics to the study of history, a technique developed in the 1960s and 1970s. For example, cliometrics has been used to study the impact of railways on the development of the US economy in the 19th century (and found that impact to be very small). Cliometrics has been described as a method 'born of the marriage contracted between historical problems and advanced statistical analysis, with economic theory as bridesmaid and the computer as best man.' Research Cliometrics
Closed shop is a term describing any organization in which there is an agreement between the employers and a trade union that only members of that union will be taken on as employees. Under the Employment Protection (Consolidation) Act (1978), as amended by the Employment Acts (1980, 1982, and 1988), all employees are free to join a trade union or not, as they wish. If an employer takes action, short of dismissal, against an employee to enforce membership of a union, the employee can complain to an industrial tribunal, which can order the employer to pay him compensation. Dismissal for failure to belong to a trade union is automatically unfair. In this case there are special minimum rates of compensation payable. If, as a result of trade-union pressure, an employer dismisses an employee for failing to belong to a union, the employer can join the union as a party to the dismissal proceedings and pass the liability to pay compensation on to the union. Under the Employment Act (1988), a union that attempts to enforce a closed shop by industrial action loses the immunity from legal action that it would otherwise have if the action was in furtherance of a trade dispute. The effect of these provisions is that, while closed-shop agreements are not in themselves illegal, they are unenforceable by either employers or unions. In an open-shop organization the employer is free to take on employees of any trade union or employees who belong to no trade union. Research Closed Shop
Collateral is a form of security, especially an impersonal form of security, such as life-assurance policies or shares, used to secure a bank loan. In some senses such impersonal securities are referred to as a secondary collateral, rather than a primary security, such as a guarantee. Research Collateral
Collective bargaining is a process of bargaining between employers and employees over wages, terms of employment, etc., when the employees are represented by a trade union or some other collective body. Research Collective Bargaining
A commercial bank is a privately owned bank that provides a wide range of financial services both to the general public and to firms. The principal activities are operating cheque current accounts, receiving deposits, taking in and paying out notes and coin, and making loans. Additional services include trustee and executor facilities, the supply of foreign currency, the purchase and sale of securities, insurance, a credit- card system, and personal pensions. They also compete with the finance houses and merchant banks by providing venture capital and with building societies by providing mortgages. The number of commercial banks has gradually reduced following a series of mergers. The main banks with national networks of branches are the Big Four (National Westminster, Barclays, Lloyds TSB and the HSBC), the Royal Bank of Scotland, the Bank of Scotland, and the Ulster Bank. They are also known as joint-stock banks. Research Commercial Bank
A commercial code is any of a number of codes used to reduce the cost of sending cables. Single five- letter code words can represent long phrases; however, the international use of Telex and Fax has reduced the need for cables and writing in commercial codes. Research Commercial Code
The Committee of Marketing Organizations (COMO) is abody formed to encourage the development of marketing in all sectors of British business. COMO represents all the main organizations concerned with marketing, including the Advertising Authority (AA), the Association of Market Survey Organizations (AMSO), the Incorporated Advertising Management Association (IAMA), the Incorporated Society of British Advertisers (ISBA), the Industrial Marketing Research Association (IMRA), the Institute of Marketing (IM), the Institute of Practitioners in Advertising (IPA), the Institute of Public Relations (IPR), the Institute of Sales Promotion (ISP), the Market Research Society (MRS) , and the Public Relations Consultants Society (PRCA). Research Committee of Marketing Organizations
In business a commodity is a raw material, such as grain, coffee, cocoa, wool, cotton, jute, or rubber (sometimes known as soft commodities), that is traded on a commodity market. In some contexts these raw materials are referred to as produce. In economics a commodity is a good regarded as the basis of production and exchange. A commodity in this sense is characterized by its physical attributes and where and when it is available. Research Commodity
A commodity market is a market in which commodities are traded. The main terminal markets in commodities are in London and New York, but in some commodities there are markets in the country of origin. Some commodities are dealt with at auctions (e.g. tea), each lot being sold having been examined by dealers, but most dealers deal with goods that have been classified according to established quality standards. In these commodities both actuals and futures are traded on commodity exchanges, often with daily callovers, in which dealers are represented by commodity brokers. Many commodity exchanges offer option dealing in futures, and settlement of differences on futures through a clearing house. As commodity prices fluctuate widely, commodity exchanges provide users and producers with hedging facilities with outside speculators and investors helping to make an active market, although amateurs are advised not to gamble on commodity exchanges.
The fluctuations in commodity prices have caused considerable problems in developing countries, from which many commodities originate, as they are often important sources of foreign currency, upon which the economic welfare of the country depends. Various measures have been used to restrict price fluctuations but none have been completely successful. Research Commodity Market
The Common Agricultural Policy (CAP) is a policy set up by the European Economic Community to support free trade within the Common Market and to protect farmers in the member states. The European Commission fixes a threshold price, below which cereals may not be imported into the European Community (EC), and also buys surplus cereals at an agreed intervention price in order to help farmers achieve a reasonable average price, called the target price. Prices are also agreed for meats, poultry, eggs, fruit, and vegetables, with arrangements similar to those for cereals. The European Commission is also empowered by the CAP to subsidize the modernization of farms within the community. The common policy for exporting agricultural products to non- member countries is laid down by the CAP. In the UK, the Intervention Board for Agricultural Produce is responsible for the implementation of EC regulations regarding the CAP. Research Common Agricultural Policy
The Common Fisheries Policy is a 20-year fishing policy agreed between members of the European Community (EC) in 1983. It lays down annual catch limits for major species of fish, a 12- mile exclusive fishing zone for each state, and an equal-access zone of 200 nautical miles from its coast, within which any member state is allowed to fish. There are also some exceptions to these regulations. Research Common Fisheries Policy
The Commonwealth Development Corporation is a public corporation set up in 1948 to assist commercial and industrial development in any Commonwealth or other developing country. It is authorized to borrow up to œ750M from the Treasury and the minimum investment permitted is œ1M. Investments are in the form of low-interest loans. Research Commonwealth Development Corporation
Commutation is the right to receive an immediate cash sum in return for accepting smaller annual payments at some time in the future. This is usually associated with a pension in which certain life-assurance policyholders can, on retirement, elect to take a cash sum from the pension fund immediately and a reduced annual pension. Research Commutation
Companies House (Companies Registration Office) is the office of the Registrar of Companies, formerly in London but now in Cardiff. It contains a register of all UK private and public companies, their directors, shareholders, and balance sheets. All this information has to be provided by companies by law and is available to any member of the public for a small charge. Research Companies House
A company is a corporate enterprise that has a legal identity separate from that of its members; it operates as one single unit, in the success of which all the members participate. An incorporated company is a legal person in its own right, able to own property and to sue and be sued in its own name. A company may have limited liability (a limited company), so that the liability of the members for the company's debts is limited.
An unlimited company is one in which the liability of the members is not limited in any way. There are various different types of company: a chartered company is one formed under Royal Charter. This was the earliest type of company to exist and they were influential in the development of both foreign trade and colonization; an example is the Hudson's Bay Company. Chartered companies, however, are now rare, unless a charter is required for prestige purposes, as it might be for a new university. A joint-stock company is a company in which the members pool their stock, trading on the basis of their joint stock. This differs from the earlier merchant corporations or regulated companies of the 14th century, in which each member traded with his own stock but agreed to obey the rules of the company. A registered company, one registered under the Companies Acts, is the most common type of company.
A company may be registered either as a public limited company or a private company. A public limited company must have a name ending with the initials ' plc' and have an authorized share capital of at least œ50,000, of which at least œ12,500 must be paid up. The company's memorandum must comply with the format in Table F of the Companies Regulations (1985). It may offer shares and securities to the public. The regulation of such companies is stricter than that of private companies. Most public companies are converted from private companies, under the re-registration procedure laid down in the Companies Act. A private company is any registered company that is not a public company. The shares of a private company may not be offered to the public for sale. The legal requirements for such a company are less strict; for example, there is no minimum issued or paid-up share capital requirement and small and medium-sized private companies need not file full accounts.
A statutory company is a company formed by special Act of parliament. These are generally public utilities that were either not nationalized (for example, certain water authorities) or that have been privatized (such as British Gas and British Telecom). Their powers and privileges depend upon the Act under which they were formed. Research Company
In economics, the comparative advantage is the relative efficiency in a particular economic activity of an individual or group of individuals over another economic activity, compared to another individual or group. One of the fundamental propositions of economics is that if individuals or groups specialize in activities in which their comparative advantage lies, then there are gains from trade. This proposition, first outlined by David Ricardo, is one of the main arguments for free trade and against such restrictions as tariffs and quotas. It still holds even if one group holds an absolute advantage in all economic activities over another group. For example, even if Japan is better at producing both cars and ships than Britain, there will still be gains from trade if Britain specializes in the production of the goods in which it holds a comparative advantage. Research Comparative Advantage
Composite rate tax was a special rate of tax introduced in the UK in 1951 that building societies and banks must deduct from interest paid to investors (resident in the UK). The rate of tax is about 3% below the basic rate of income tax, but this tax cannot be claimed back under any circumstances. The result of the tax is that basic-rate taxpayers with such deposits gain some 3% and non-taxpayers (e.g. some children, married women, pensioners, etc.) lose 22%. The composite rate tax was abolished in April 1991. Research Composite Rate Tax
Comprehensive income tax is an income tax for which the tax base consists not only of income but also of capital gains as well as other accretions of wealth, such as legacies. Although this is not a tax currently levied in Britain, tax theorists find it attractive since sometimes clear distinctions between income, capital gains, etc., are difficult to sustain. Research Comprehensive Income Tax
The Compromise of 1833 was an American tariff measure passed by Congress on March the 1st, 1833, as a compromise for the high tariff act of 1828, which had caused intense dissatisfaction through the South, and had brought about nullification by South Carolina and a threat of secession in the event of its being too strictly emorced. The compromise was proposed and passed in the House while Clay himself was endeavoring to get a compromise measure through the Senate. The bill as passed was in effect practically the same as that proposed by Clay in the Senate. It was designed to scale down periodically the high duties then existing, until after ten years a free-trade basis should be reached. The Verplanck low tariff measure, then under debate in the House, was thus thrown out. Research Compromise of 1833
Conacre is a term applied to a system formerly common in Ireland, of underletting a portion of a farm for a single crop, the rent being paid to the farmer in money or in labour. Research Conacre
The Confederation of British Industry (CBI) is an independent non-party organization formed in 1965, by a merger of the National Association of British Manufacturers, the British Employers Confederation, and the Federation of British Industry, to promote prosperity in British industry and to represent industry in dealings with the government. Membership, which totals approximately 50,000 companies, is voluntary. The governing body is the Confederation of British Industry Council, which meets monthly; there are 13 Regional Councils that deal with local industrial problems. Research Confederation of British Industry
A confirming house is an organization that purchases goods from local exporters on behalf of overseas buyers. It may act as a principal or an agent, invariably pays for the goods in the exporters' own currency, and purchases on a contract that is enforceable in the exporters' own country. The overseas buyer, who usually pays the confirming house a commission or its equivalent, regards the confirming house as a local buying agent, who will negotiate the best prices on its behalf, arrange for the shipment and insurance of the goods, and provide information regarding the goods being sold and the status of the various exporters. Research Confirming House
The Congested Districts Board was established by the Irish Land Purchase Act, 1891, for the purpose of ameliorating the condition of the rural population dwelling in certain 'congested' districts, the test of such congestion being that more than 20 per cent of the population of the county were living in electoral divisions of which the total rateable value divided by the number of the population gave a sum of less than 1 pound and 10 shillings. for each individual. The board had power to amalgamate small holdings by aiding migration and emigration of occupiers from one holding to another, and generally to further agriculture, stock-rearing, fishing, weaving, spinning, or other suitable industries. The board had a considerable income, largely derived from the Irish Church Temporalities Fund. It carried out important drainage and other works, and has made large purchases of land, including the Dillonestate of over 90,000 acres, bought for 290,000 pounds. The congested districts were chiefly in Connaught and in the south-west and north-west of Ireland. A similar board for Scotland was established in 1897, and, like the Irish board, quickly spent a large amount of money on such works as piers and harbours, roads, bridges, etc. Research Congested Districts Board
A conglomerate is a group of companies merged into one entity, although they are active in totally different fields. A conglomerate is usually formed by a company wishing to diversify so that it is not totally dependent on one industry. Many tobacco firms and brewers have diversified in this way. Research Conglomerate
Consolidated accounts are the combined accounts of a group of companies. Although a parent company and its subsidiaries (the companies its owns and controls) are separate companies, it is customary to combine their results in a single set of accounts, which eliminates inter-company shareholdings and inter-company indebtedness; it also aggregates the assets and liabilities of all the companies. Parent companies of groups are required by law to prepare and file consolidated accounts in addition to individual accounts of the subsidiary companies. Research Consolidated Accounts
The Consumer Credit Act 1974 is an act of Parliament that regulates the giving of credit by companies in the UK. Under the act, any company wishing to offer credit to consumers has to obtain a licence. The annual percentage rate (APR) on a loan has to be stated on any advertisement for credit or on contracts. Consumers signing a credit contract at home have the right to change their mind within 12 days. Research Consumer Credit Act 1974
Consumer protection is the protection, especially by legal means, of consumers. It is the policy of current UK legislation to protect consumers against unfair contract terms. In particular they are protected by the Unfair Contract Terms Act (1977) and the Sale of Goods Act (1979) against terms that attempt to restrict the seller's implied undertakings that he has a right to sell the goods, that the goods conform with either description or sample, and that they are of merchantable quality and fit for their particular purpose.
There is also provision for the banning of unfair consumer trade practices in the Fair Trading Act (1973). This Act provides for a Director General of Fair Trading, who is responsible for reviewing commercial activities relating to the supply of goods to consumers and discovering any practices against the economic interest of the consumer. He may refer certain practices to the Consumer Protection Advisory Committee or take legal action himself. Consumers (including individual businessmen) are also protected when obtaining credit by the Consumer Credit Act (1974). There is provision for the imposition of standards relating to the safety of goods under the Consumer Protection Act (1987), which also makes the producer of a product liable for any damage it causes. Research Consumer Protection
Consumer research is any form of market research undertaken among the final consumers of a product or service. For example, a manufacturer supplying man- made fibres to a shirt factory might undertake consumer research, interviewing purchasers of shirts, in order to establish the merits, or otherwise, of his fibres. Research Consumer Research
The Consumers' Association is a British charitable organization formed in 1957 to provide independent and technically based guidance on the goods and services available to the public. The Consumers' Association tests and investigates products and services and publishes comparative reports on performance, quality, and value in its monthly magazine Which?. It also publishes Holiday Which? and Gardening From Which? as well as various books, including The Legal Side of Buying a House, Starting Your Own Business, and The Which? Book of Saving and Investing. Research Consumers' Association
In economics, consumption is all use or expenditure of the products of industry or of things having an exchangeable value. It is usually characterized as productive or unproductive, according as it does or does not conduce to the efficiency of a producer and to further production. Thus wealth in the form of machinery is consumed productively by wear and tear in the processes of production; and, similarly, wealth expended in improving land is productively consumed; but the wealth expended in the maintenance of an operatic artiste is, from the ordinary point of view, unproductively consumed. The classification, however, is not of a very definite kind, the distinction lying for the most part in the degree of directness and obviousness with which the act of consumption is related to production.
Hence in the case of the operatic artiste it is sometimes urged that the recreative benefit conferred upon the community tends indirectly to increase efficiency in production, and that from this point of view the artiste consumes productively. So the expenditure of wealth in war, or in preparations for war, usually classed as unproductive, may be really productive consumption, as tending to the assurance of the producer in the stability of the commercial conditions. The perfect characterization of an act of consumption as productive or unproductive involves the consideration of elements of a frequently incommensurable kind, and the rough practical economic test has to be employed with some amount of reservation.
Consumption is the end of all production; and as the demand of the consumer determines the employment of the various coefficients of production, land, labour and capital, it is urged by many later economists that the scientific treatment of economics should proceed from consumption to production, instead of from production to consumption in accordance with the method of the older economists. Too much stress may be laid upon this method, but the consideration of economic problems from the stand-point of the consumer is of advantage, as giving the social need, rather than the producer's profit, the prior claim upon the attention. Research Consumption
In stock-jobbing, contango is a sum of money paid to a seller for accommodating a buyer, by carrying the engagement to pay the price of shares bought over to the next account day. In reality contango is interest paid for the loan of money for the interval between account days. Research Contango
The contestable markets theory is the theory that prices in oligopolies may be close to the perfectly competitive level due to the threat of entry by maverick firms. For example, in the airline industry although there are a relatively small number of competitors, prices tend to remain low, since as soon as the airlines try to raise their prices entrepreneurs enter the market and undercut existing fares. This leads to the suggestion that governments need not try to encourage perfect competition in markets as long as they ensure that they are contestable. Research Contestable Markets Theory
A contract of employment (contract of service) is a legally enforceable agreement entered into orally or in writing by an employer and an employee. There is no requirement in British law that a contract of employment must be in writing; however, the basic terms and conditions of employment are normally written and signed by both parties to ensure that each knows their rights and obligations. The Employment Protection (Consolidation) Act (1978) states that every employee must be given, within 13 weeks of joining, a note giving the date of joining, job title, salary, pay day, holiday entitlement, sick pay, pensions, notice requirements, and disciplinary procedures. Most employers expand this statement to provide as detailed a contract as possible in order to avoid misunderstandings. Larger organizations provide a company handbook giving a detailed account of company policies, disciplinary rules, and any other relevant matters. A contract can be varied by mutual agreement but neither an employee nor an employer can contract out of obligations covered by normal common-law rights. Research Contract of Employment
In business, control accounts are accounts in which the balances are designed to equal the aggregate of the balances on a substantial number of subsidiary accounts. Examples are the sales ledger control account (or total debtors account), in which the balance equals the aggregate of all the individual debtors' accounts, the purchase ledger control account (or total creditors account), which performs the same function for creditors, and the stock control account, whose balance should equal the aggregate of the balances on the stock accounts for each item of stock. This is achieved by entering in the control accounts the totals of all the individual entries made in the subsidiary accounts. The purpose is twofold: to obtain total figures of debtors, creditors, stock, etc., at any given time, without adding up all the balances on the individual records, and to have a crosscheck on the accuracy of the subsidiary records. Research Control Accounts
In business a controlling interest is an interest in a company that gives a person control of it. For a shareholder to have a controlling interest in a company, he would normally need to own or control more than half the voting shares. However, in practice, a shareholder might control the company with considerably less than half the shares, if the shares that he does not own or control are held by a large number of people. For legal purposes, a director is said to have a controlling interest in a company if he alone, or together with his wife, minor children, and the trustees of any settlement in which he has an interest, owns more than 20% of the voting shares in a company or in a company that controls that company. Research Controlling Interest
A convenience store is a store that trades primarily on the convenience it offers to customers. The products stocked may be influenced by local tastes or ethnic groups and the stores are often open long hours as well as being conveniently placed for customers in local shopping parades. The most successful are members of a multiple chain. Research Convenience Store
Conveyancing is the practice of drawing deeds, leases, or other writings (conveyances) for transferring the title to property from one person to another, of investigating the title of the vendors and purchasers of property, and of framing those multifarious deeds and contracts which govern and define the rights and liabilities of families and individuals. The business of conveyancing is carried on by barristers, solicitors, and members of the legal profession generally. Research Conveyancing
Coomie was a present in place of customs-duty, demanded by the kings and chiefs at parts of the West African coast for permission to trade with the natives. Coomie was still practised at the start of the 20th century prior to the Great War. Research Coomie
Cooperative Societies are associations of individuals for mutual assistance in industrial or commercial objects. One form of cooperative societies is that of an association of men belonging to some trade or industry for the purpose of carrying it on entirely by their own efforts, and thus securing all the profits of their labours to themselves; but societies of the latter kind have been established very widely in Great Britain, one of the first and most successful of them being the Rochdale Equitable Pioneers' Society, which commenced in 1844. This, like others, was conducted on the principle of dividing the surplus profits among the members alone in proportion to their purchases, after a certain fixed percentage has been deducted for interest on the capital. It provided its customers with butcher-meat, groceries, boots and shoes, drapery, etc and a part of the profits was devoted to educational purposes. Most of the stores sold goods to non-members, and by a system of tickets it was arranged that the latter received a dividend in proportion to the amount of their purchases. Research Cooperative Societies
Coopering (from the Dutch koopcr, a buyer, a dealer), was a term applied to the selling or bartering of strong drink, tobacco, etc, but especially drink, to the fishermen engaged in their business on the North Sea, by boats from Dutch or other foreign ports - a trade, which was rife during the 19th century but which was put down by the efforts of the British Government and the temperance movement by about 1905. In its place, English mission ships worked on the North Sea which were allowed to sell tobacco to fishermen at a cheap rate, but all traffic in spirits at sea was strictly forbidden. Research Coopering
In law, a corporation is a civil or political body in which are vested certain rights or privileges with a view to their preservation in perpetual succession, authorized by law to act as one person and having rights and liabilities distinct from the individuals forming the corporation. The artificial personality may be created by royal charter, statute, or common law. The most important type is the registered company formed under the Companies Act.. A corporation may consist of one person only and his successors, when it is called sole (the sovereign of Britain for example); or of a number of persons, when it is called aggregate. When a corporation is vested in a single person, that person is looked upon in regard to the rights of the corporation as holding a representative or official position, and these rights belong to and are transmitted by him in virtue of this position, and not as natural rights.
In like manner the rights and powers of an aggregate corporation do not consist of the natural rights of the members, but of the rights held and duly exercised by the terms of the corporation. The legal divisions of corporations in England are into spiritual, intended to perpetuate the rights of the church; and lay, instituted for temporal purposes. The latter include municipal corporations, or the corporations of municipal boroughs, universities, corporations established for the administration of charitable funds, as hospitals, colleges in universities, etc. Corporations are created either by a charter from the sovereign, by act of parliament, or by prescription. Joint-stock companies are a species of corporations.
Corporations can hold property, carry on business, bring legal actions, etc, in their own name. Their actions may, however, be limited by the doctrine of ultra vires. Research Corporation
Corporation tax is a tax levied on the trading profits and other income of companies and other incorporated bodies. The rate of corporation tax is set in Britain by the Chancellor in his Budget. Corporation tax is paid in two parts: advance corporation tax and mainstream corporation tax. Of particular interest is the relationship between corporation taxes on companies and income taxes on their individual shareholders. In ' classical' corporation- tax systems, corporation tax is levied on the company and then, from what remains, dividends are paid to shareholders, who are again taxed in full by means of income tax. In imputation systems, such as that used in the UK, part of the company's corporation tax is effectively treated as a payment on account of the shareholders' income tax on their dividends. Research Corporation Tax
Coshering or coshery was an old feudal custom in Ireland by which the lord of the soil had the right to lodge and feast himself at a tenant's house. This tribute or exaction was at length commuted for a quit-rent. Research Coshering
A cost centre is a unit of a business or other organization that generates identifiable expenditure for cost- accounting purposes; for example, a department in a school or a single machine in a workshop could be regarded as cost centres. Each cost centre is frequently given its own budget, which is subsequently compared with the actual costs incurred. In some organizations central overheads, which the cost centre cannot control, are apportioned appropriately to cost centres. This may be necessary when one cost centre services other cost centres and it is required to assess the total cost of products or services for pricing purposes. Research Cost centre
Cost-benefit analysis is a method of deciding whether or not a particular project should be undertaken, by comparing the relevant economic costs and the potential benefits. It can be used for private investment projects, calculating outlays and returns, and estimating the net present value of the project: if this is positive the project would be profitable. Cost- benefit analysis is also frequently used by governments in an attempt to evaluate all the social costs and benefits of a project (e.g. road building), which is much more problematic, involving such considerations as externalities, public goods, macroeconomic consequences, etc. Research Cost-benefit Analysis
Cost-push inflation is an increase in the prices of goods caused by increases in the cost of inputs (especially wages and raw materials). As an explanation of inflation, cost-push theories became popular in the 1970s when they appeared to explain the rapid inflation of that period, which followed on from very rapid rises in wages and the increases in oil prices. However, the theory is also widely criticized as: (a) it describes only changes in relative prices (e.g. oil) rather than rises in the general price level (which is how inflation is defined); and (b) most economists would now agree that price rises can only continue if there is an accompanying increase in the money supply. Research Cost-Push Inflation
A costermonger is an itinerant dealer in fruit, vegetables, fish etc. deriving the name from costard, a favourite apple. The London costermongers were viewed as useful at relieving the markets when glutted during the 19th century. Research Costermonger
Cottier Tenure is a system of tenure according to which labourers rent small portions of land directly from the owner, or from a farmer, often giving personal service as part of the rent, and holding by annual tenancy. Research Cottier Tenure
The Court of Exchequer was an ancient English court of record, established by William the Conqueror, and intended principally for the care and collection of the royal revenues. It was one of the supreme courts of common law, and is said to derive its name from the chequered cloth, resembling a chess-board, on which the sums were marked and scored with counters. The judges of this court were the chief baron and five junior or puisne barons. This court has been merged in the High Court of Justice. Research Court of Exchequer
A covenant is a promise made in a deed under seal. Such a promise can be enforced by the parties to it as a contract, even if the promise is gratuitous: for example, if A covenants to pay B 100 per month, B can enforce this promise even though he has done nothing in return. Covenants may also be used to minimise income tax, by transferring income from higher rate taxpayers to non-taxpayers (such as children or charities). However, since the Finance Act (1988), only covenants made to charities offer much scope for tax planning.
Covenants may be entered into concerning the use of land, frequently to restrict the activities of a new owner or tenant (e.g. a covenant not to sell alcohol or run a fish-and-chip shop). Such covenants may be enforceable by persons deriving title from the original parties. This is an exception to the general rule that a contract cannot bind persons who are not parties to it. If the land is leasehold, a covenant 'touching and concerning land' may be enforced by persons other than the original parties if there is 'privity of estate' between them, i.e. if they are in the position of landlord and tenant. If the land is freehold, the benefit of any covenant (i.e. the rights under it) may be assigned together with the land. The burden of the covenant (i.e. the duties under it) will pass with the land only if it is a restrictive covenant. This means that it must be negative in nature, such as a covenant not to build on land. Research Covenant
The Cowrie-shell is a small gasteropodous shell, the Cyprcea moneta, formerly used for coinage in some parts of Africa and in many parts of Southern Asia. The beauty of the cowrie-shells has procured them a place among ornaments, and they have been in demand among civilized and uncivilized nations time out of memory. The shells used as currency occured principally in the Philippine Islands. Research Cowrie-Shell
In economics, credit is the postponement agreed on by the parties of the payment of a debt to a future day. It implies confidence of the creditor in the debtor; and a credit system is one of general confidence of people in each other's honesty, solvency, and resources. By means of a credit system a comparatively small stock of money can be made to do duty for carrying on a number of different transactions; but it is indispensable for every good system of credit that money must be instantly available when required, and this principle applies to every species of transaction where postponed payment is concerned.
Public credit is the confidence which people have in the ability and disposition of a nation to make good its engagements with its creditors; or the estimation in which individuals hold the public promises of payment, whether such promises are expressed or implied. The term is also applied to the general credit of individuals in a nation; when merchants and others are wealthy and punctual in fulfilling engagements; or when they transact business with honour and fidelity; or when transfers of property are made with ease. So we speak of the credit of a bank when general confidence is placed in its ability to redeem its notes, and the credit of a mercantile house rests on its supposed ability and probity, which induce men to trust to its engagements. When the public credit is questionable it raises the premium on loans. Research Credit
A credit card is a plastic card issued by a bank or finance organization to enable holders to obtain credit in shops, hotels, restaurants, petrol stations, etc. The retailer or trader receives monthly payments from the credit-card company equal to its total sales in the month by means of that credit card, less a service charge. The customer also receives monthly statements from the credit- card company, which he may pay in full within a certain number of days with no interest charged, or he may make a specified minimum payment and pay a high rate of interest (usually between 24% and 30% p.a.) on the outstanding balance. In Britain the main cards are Barclaycard, Mastercard, American Express, and Diners Club. Research Credit Card
Credit mobilier is a scheme which originated in France in 1852, its objects being to undertake trading enterprises of all kinds on the principle of limited liability, to buy up existing trading companies, and to carry on the business of bankers and stock-jobbers. Research Credit Mobilier
The crown was a British silver coin of the value of five shillings. Crowns were first coined by Henry VIII. None were coined from 1861 to 1887. In 1847 and 1848 some pattern crowns were struck with a gold centre, but the experiment was carried no further. Research Crown
Crown debts are monies due to the British crown, whose claim ranks before that of all other creditors, and may be enforced by a summary process called an extent. Research Crown Debts
Currency is any medium of exchange by which the processes of trade are facilitated. Originally all exchanges may be supposed .to have been made directly by barter, one commodity being exchanged against another according to the convenience of the particular holders. In barter, however, it would obviously be often difficult to find two persons whose disposable goods suited each other's needs, and there would also arise difficulties in the way of estimating the terms of exchange between unlike things, and of subdividing many kinds of goods in the barter of objects of different value. To obviate these some special commodities in general esteem and demand would be chosen as a medium of exchange and common measure of value, the selection varying with the conditions of social life.
In the hunting state furs and skins have been employed by many nations; in the pastoral state sheep and cattle are the chief negotiable property. Articles of ornament, corn, nuts, olive-oil, and other vegetable products, cotton cloth, straw mats, salt, cubes of gum, bees'-wax, etc, have all been at various times employed to facilitate exchange. These, however, while removing some of the difficulties attendant upon barter would only partially solve others. It would be felt by degrees that any satisfactory medium must not only possess utility and value, but it must be portable, not easily destructible, homogeneous, readily divisible, stable in value, and cognizable without great difficulty. The metals would naturally commend themselves as best satisfying these requirements, and accordingly in all historic ages gold, silver, copper, tin, lead, and iron have been the most frequent materials of currency.
The primitive method of circulating metals appears to have consisted simply in buying and selling them against other commodities by a rough estimation of the weight or size of the portions of metal. Sometimes the metal was in its native state (e.g. rough copper or alluvial gold-dust), at others in the form of bars or spikes, the first approximation to a coinage being probably rudely-shaped rings.
The earliest money was stamped on one side only, and rather of the nature of stamped ingots than coins as we know them. The chief desiderata influencing the subsequent development of coinage were the prevention of counterfeiting, the prevention of any fraudulent subtraction of metal from the coin, the removal as far as possible of anything likely to occasion loss of metal in the wear and tear of usage, and the production of an artistic and historical monument of the state issuing the coin. Early coinage, which had intrinsic value, frequently had a little clipped off before being passed on, the coin then passed being of reduced intrinsic value Hence the elaboration of designs to cover the whole of a given portion of metal, and the nicer determination of quality, size, degree of relief, inscription, etc, for example the ridge pattern around the edge of a coin which was introduced to reveal if the coin had had some of the edge clipped off.
While, however, metallic money of a guaranteed standard value was at an early period found to facilitate in a high degree the mechanism of exchange, it was speedily discovered that it was possible in large part to replace the standard gold or silver or copper coins by various forms of currency of a representative character. The standard money depended solely for its value in exchange upon the value of the material of which it was composed; its metallic value and its nominal value were coincident; the representative money derived its value from a theoretic convertibility at will into the standard coin. Thus in token coins the metallic value may be much less than the nominal value, which is defined by the fact that they can either by force of law or custom be exchanged in a certain fixed ratio for standard coins. Gradually a series of devices came to be employed to further the interchange of commodities with the least friction and the least possible actual use of the coinage except as a standard and common denominator of value in terms of which exchanges were made. Even in home transactions, but especially in international transactions, the use of actual specie was found to involve a loss of interest and a risk of still more serious loss, and a paper currency based upon credit offered the readiest solution of the difficulty. In this way bank-notes, bills of exchange, and cheques - warrants or representative documents convertible, if desired, into standard coin - took their place alongside the metallic currency, partly displacing it, partly extending and supplementing it.
The requisites of circulation are that the monetary issues, whether of coin or paper, shall be from a recognized or official source, and that they admit of being freely returned when necessary to the source from which they are issued. The certification of the fineness of the masses of metal circulating in a community, and the protection from adulteration and fraud, clearly falls among the necessary acts of police. It has long been argued, as by Herbert Spencer in his Social Statics, that the coinage should be left to the ordinary competition of manufacturers and traders; but when this has occurred the currency has uniformly become debased, and it is generally held, in accordance with the maxims of civil and constitutional law, that the right of coining is a prerogative of the crown. Even in the case of state-issues base money has been circulated, as in England in the reigns of Henry VIII and Edward VI, but the attempt is little likely to be repeated, the last of such debased issues, with the refusal to redeem it at its nominal value, having been made by a petty German prince early in the 19th century. In the matter of state supervision two precautions are particularly necessary: that the standard coins shall be issued as nearly as possible of the standard weight, and that all coin worn below the least legal weight shall be withdrawn from circulation. The ground for these precautions is to be found in the broad general principle relating to the circulation of money, and known as Gresham's Law, that bad money invariably drives good money out of circulation, the heaviest coins being selected for exporting, hoarding, melting, conversion into jewellery, gold-leaf, etc. The law holds good not only with regard to coins in one kind of metal, but to all kinds of money in the same circulation, the relatively cheaper medium of exchange being retained in circulation while the other disappears. Though the increased use of token coins with no intrinsic value reduced the ce significantly.
Of the various systems of metallic currency the first adopted was that known as the single-legal-tender system, in which the state issued certified coins in one metal only. It was found, however, that in such cases the people invariably circulated for convenience coins of other metals, and there naturally arose out of this the adoption of a double or multiple legal tender system, in which coins were issued in different metals at a fixed rate of exchange. To obviate difficulties arising from the possession of two or more metals as concurrent standards of value, with the constant tendency of one or other to become more valuable as metal than as currency, a third system, the composite-legal-tender, came into existence, in which coins of one metal were adopted as the standard of value, and token coins only issued in the other metals for the payment of small amounts. The last system became prevalent in Britain and America: but the double-legal-tender system, to which the French long adhered, was revived in a more philosophic form by 19th century economists, and has found an increasing number of advocates for its universal adoption. After the Second World War currency in most industrial nations became universally representative money, the use of gold and silver relegated to ceremonial special coins and history.
The circulation of representative money formerly differed from that of standard metallic money in that it only circulated within the district or country where it was legally or habitually current. In the payment of debts to foreign merchants the only money which could formerly be exported was standard metallic money. Hence Gresham's law held with regard to paper-money, which is, like light and debased coins, capable of driving out standard money. Examples of this are to be found in the suspension of specie payments by the Bank of England between 1797 and 1819, and in the history of the French assignats at the time of the revolution. The various methods on which the issue of paper-money may be conducted are exceedingly numerous and a matter of interminable debate. The state may either constitute itself the sole issuer of representative money on the same lines as it constitutes itself sole issuer of metallic money, or it may allow corporations, companies, or private individuals to issue representative money under legislative control.
The question as to the duty of a government in this respect has been much obscured by the want of a clear apprehension of the distinction between a real and a nominal currency. The doctrine of orthodox English writers on the currency of the absolute convertibility of the bank-note, by which is intended a convertibility provided for by the action of government, is held by some writers to proceed on an altogether exaggerated and inaccurate notion of the functions of a government. Another idea, that the issue of paper-money ought to be wholly controlled by government, or ought to rest entirely upon government credit, places a high degree of faith in the trustworthiness of governments, and was held by many in time past to misconceive the nature and objects of a paper currency. The tendency in England has been to regard the issue of notes not so much as allied to the commercial operation of drawing bills, but as analogous to the royal function of coinage. In Scotland, on the other hand, a perfectly sound currency was furnished by banks acting until 1845 on their own unrestricted discretion, and the prevailing tendency was until the start of the 20th century still towards a maximum of freedom in the issue of representative paper-money. However, since the 20th century the issue of all money has been restricted to state governments.
The Currency and Bank Notes Act of 1928 passed in England had the principal purpose of the transfer of the currency note issue of the British government to the Bank of England, but still provided provision for the exchange of bank notes for their value in gold bullion. Research Currency
In economics, a current account is that part of the balance of payments concerned with current transactions, as opposed to capital movements. It includes trade (visibles) and service transactions, such as investment, insurance, shipping, and tourism (invisibles). The state of the current account is regarded as a barometer of overall economic health. Research Current account
A custom-house is an establishment where commodities are entered for importation or exportation and the duties, bounties, etc, on the same are payable. Research Custom-House
The Probert Encyclopaedia was designed, edited and programed by
Matt and Leela Probert
Abbreviations
Money
Research Callover
