3. The stock is sold on the 31st of December, 1907, but there is no time to register the buyer's title in the company's books prior to their closing: the seller's name accordingly remains on the register as the owner, and the cheque for the interest due on the 15th of January is sent to him. But on its receipt he must transfer it to the buyer as the latter's due. The seller is not damaged, since in the price he obtained he secured all he was entitled to in this respect, namely, the interest which had accrued from the corresponding periodical payment (or from his own date of purchase) to the present day of sale - that increment of interest being contained in the price. The aspect of the case in relation to the buyer is the same as in the preceding section.

4. The stock is sold between the 1st and the 15th of January (both inclusive), and prior to the marking x d., the seller's name being still on the books as owner (as explained): the cheque is received by him for the January interest, which, however, he must transmit to the buyer for the reason already assigned. The buyer's relative position has been above expressed.

5. Then the day of marking the quotation x d. arrives - the 16th of January - on which day we will assume that the sale was effected; the seller having received the cheque for the January interest retains it; and the reason is that the price being fixed x d., is thereby quoted at a lower amount, that is to say, the quotation is reduced by the amount of the interest; hence the seller obtains a reduced price, but properly keeps the interest for the half-year on his investment, and the buyer is uninjured, for he has thus paid an equivalently diminished price for the stock. The purchaser will then be entitled to the next half-year's interest due on the 15th of July.

6. And if the stock be sold after the 16th of January and prior to the next half-yearly period, when it is again marked x d.t the buyer secures the interest due on the 15th of July, the seller being indemnified by receiving in the price the accrued interest from the 15th of January to the date of sale.

With this explanation the justice of procedure in the two cases cited on an earlier page is readily recognised.

The General Principle

It will be noticed as the general principle that, if a sale occur prior to the date of the quotation x d., the dividend or interest just declared or due, or about to be declared or to become due, is the property of the buyer - he having paid its full proportion to the seller in the price he gave, and would thus be paying it twice over if he himself did not receive the compensation of the current dividend or interest itself. The case, accordingly, may actually occur that the holder of a stock may attend the meeting of the company at which the dividend is declared; may exult in its favourable character; and yet, should he sell before the date of the x d. marking, the amount he has thus received must be disconsolately handed to the purchaser. The fairness of the practice and the equity of the rule must now be admitted; and a cause of unwarranted expectation is thus removed.

Dates For Closing A Company's Books, Etc

The date of the closing of a company's books depends upon convenience and other circumstances at the time, and accordingly varies; the date is intimated in the published report; but in the case of government and municipal securities no public announcement is requisite, since the "shutting" of the books for the dividend occurs on fixed dates, and the quotation x in. is practically simultaneous with such closing. Thus in respect (for example) of Manchester Corporation stock - looking to the interest due on the 1st of February, 1908 - the balance for that interest was "struck" at the close of business on the 1st of January, and all persons then registered at the Bank of England (the agents for the loan) as holders of the stock were entitled, so far as the Bank was concerned, to the February interest. Transfers effected after the 1st of January were made x in., and the transferror (or seller) would receive the payment. This, it will be perceived, accords with the preceding statements.

An Illustration Drawn From Consols

An illustration may also be furnished for Consols. The balances are struck for payment of the interest about four weeks before that amount becomes due, and the stock is subsequently transferred x in. up to the date when the interest is paid. For example: the balance was struck on the 2nd of March, 1908, in respect of the quarterly interest due on the 5th of April; the stock was marked x in. on the 3rd of March, and a sale on or after the 3rd of March would be without the interest payable on the 5th of April, or the seller would receive that interest - the buyer paying the lower price as reduced by its amount. The Rule of the Stock Exchange, accordingly, brings the market procedure into harmony with the regulations of the bank where the transfer books are kept.

Stocks Quoted X D. Or X In. Appear So Marked In Successive Lists

It may be added that when a stock is quoted x d. or x in. the symbol is retained for a time in successive lists in order that the fact may not escape the notice of those who may take in the list only once a week. Thus Consols were marked x in. on the 3rd of March, 1908, and on each succeeding list until the 11th of March, inclusive.

An Interesting Point

An interesting point may now be noticed which applies generally. I take the case of Consols. A buyer of that stock on the 4th of March - the day after it was marked x in. - would receive no interest until the 5th of July (the second quarterly date of payment), and would apparently lose one month's interest on the capital he had invested, that is to say, from the time of purchase to the 5th of April (when the seller secures the interest then due). But (1) the purchaser would not pay the price until the Account day, which at this period in 1908 was the 1st of April, and hence would retain his money at interest for this interval, and (2) as to the term of four days (the 1st to the 5th of April), if he sell what he had bought at the corresponding period in any subsequent quarter of any year (corresponding to the date, that is, on which he purchased), he obtains a quarter's interest, which affords the compensation. Thus, the ensuing Account day in Consols is the-1st of July, 1908; the stock is quoted x d. on the 2nd of June, and if he sell on (say) the 3rd of June he receives the price on the 1st of July and secures the interest due on the 5th of July; in other words, he then obtains three months' interest, while the period from the date of completion of the original purchase (the 1st of April) to the 1st of July is exactly the same term, so that no loss is incurred.

In the case of a company the Committee of the Stock Exchange fix the date of x d. on receiving an official intimation of the rate of dividend just declared, or about to be recommended to the shareholders for adoption.