Rocky Balboa

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This article is about the fictional boxer. For the sixth film in the Rocky series, see Rocky Balboa (film).
Robert 'Rocky' Balboa.
Rocky character
Rocky balboa.jpeg
Sylvester Stallone as Rocky Balboa
First appearance Rocky
Last appearance Rocky Balboa
Portrayed by Sylvester Stallone
Information
Nickname(s) The Italian Stallion, The Iron Horse
Gender Male
Occupation professional boxer (retired)
Children Robert (Rocky) Balboa Jr.
Religion Roman Catholic
Nationality Italian American

Robert "Rocky" Balboa, Sr. is a fictional southpaw boxer portrayed by Sylvester Stallone who has appeared in the Rocky series from 1976 to 2006. During the series, he wins the Heavyweight Championship of the World twice. He remains one of cinema's most beloved movie characters.

Fictional character biography
[edit] Rocky

Robert Balboa was born in 1946 as the only child to a Roman Catholic Italian-American family. Up to 1975, Balboa was living in the slums of the Kensington section of Philadelphia, working as an enforcer for a local loan shark while at the same time fighting the local club circuit, including the Cambria Fight Club, nicknamed "The Bucket of Blood". By this time, Balboa had fought in 64 fights, winning 44 (38 knockouts) and losing 20 (as directly mentioned in Rocky). His previous fight was a second round knockout over local fighter Spider Rico.

Balboa got his big break when the undisputed World Heavyweight Champion Apollo Creed (Carl Weathers) decided that he wanted to give an unknown fighter a chance to fight for the title after his intended challenger, Mac Lee Green, broke his hand while training. After getting picked by Apollo, Balboa reunites with his estranged trainer, grizzled former boxer Mickey Goldmill, who convinces Balboa that he can help get him prepared for this fight. At the same time, Balboa begins dating shy pet-shop worker Adrian Pennino (Talia Shire), younger sister of his friend Paulie (Burt Young).

On January 1, 1976 at the Philadelphia Spectrum, Balboa fought with Creed. Creed, who didn't take the fight seriously during training, soon realized that while Balboa didn't have his skill, he had a punch like a concrete block and was determined not to quit even when Mickey told him to. Although Creed won the fight by a split decision, it was the first time an opponent had lasted the full 15 rounds against Creed, and both men, battered beyond belief, agreed that there would be no rematch.
[edit] Rocky II

After the second match, Creed changed his mind and wanted a re-match under the stress of being humiliated by the press for failing to beat Balboa convincingly, as well as his own knowledge that he didn't give his best in the fight. Creed demanded a rematch with Balboa, stating that he would fight him any place, anywhere, to prove to the world that Balboa's feat was purely a fluke. At first, Rocky refused. He and Adrian got married, and at his wife's urging, Rocky tried living outside boxing. However, Rocky, a grade-school drop-out, soon realized he had no skills beyond fighting, and in fact could barely read. The money he made in the first fight was soon frittered away, and despite Adrian's objections, when Apollo called him out on national television, Rocky agreed to the rematch. Without Adrian's support, however, Rocky's heart wasn't in the training and he was close to quitting until the pregnant Adrian went into premature labor and slipped into a coma after giving birth to Robert. When Adrian came out of the coma, she gave her full support to Rocky. Together, Mickey and Rocky trained hard, focusing on Rocky's speed and improving his right-handed punching (Rocky being a southpaw). At the same time, the angry Apollo also focused fully on his training, taking this match seriously. The re-match was set for Thanksgiving '76. The grueling battle was another 15-round war with both Balboa and Creed falling to the canvas after Balboa landed a succession of left hands. Referee Lou Fillipo exercised his 10-count and as both Creed and Balboa struggled to make it to their feet, Creed crumbled back down in exhaustion. Only Rocky was able to get up, getting the better of Creed this time and beating the 10-count, winning the rematch by knockout, thus becoming heavyweight champion of the world.
[edit] Rocky III

Over the next few years, Balboa successfully defended his title in 10 consecutive defenses against various contenders. In addition, Balboa also fought an exhibition bout against the World Heavyweight Wrestling Champion Thunderlips (Hulk Hogan) to a draw. However, in 1981, Balboa was challenged by intense and hungry newcomer James "Clubber" Lang (Mr. T). Balboa had some issues with his trainer Mickey Goldmill due to his revelation of having faced "hand-picked" challengers that were "good fighters, but not 'killers'" which Lang was; Mickey insisted that he would quit as Balboa's manager if he chose to fight Lang, but Balboa convinced him to train him for one last match. However, like Creed in the first movie, Rocky didn't put his heart into the training. Lang shoved Goldmill out of the way before the match, sending the elderly trainer into cardiac arrest, which threw Balboa, already undertrained, completely off his game. He was then knocked out in the second round, losing his title; adding to his defeat, Goldmill died of a heart attack after the match, devastating Balboa. Despairing, Balboa was met by Apollo Creed, who told Rocky that when they fought Rocky won because Rocky was hungry, he had the 'fire' Apollo no longer had, and convinced Rocky that he needed to get his fire ("the eye of the tiger") back. Along with his old trainer Tony "Duke" Evers (Tony Burton), Apollo offered to train Rocky for a rematch against Lang, taking Rocky home to his old gym where he first trained. After a while Rocky managed to purge his doubts and get his fire back. Fighting a style very reminiscent of Creed's own boxing technique mixed with his own style, Rocky won the second match with Lang by KO, taking Lang's best blows and still standing, regaining his world heavyweight title. After the fight Rocky and Apollo were last seen alone in Mickey's Gym, Apollo taking his 'payment' for his training services: one last rematch, just the two of them, no spectators. But this fight was only a sparring session between two new friends.
[edit] Rocky IV

A couple of years after the events from Rocky III, Apollo Creed came out of retirement and agreed to fight a Soviet World Amateur Champion and Olympic Gold Medalist-turned-professional fighter Ivan Drago (Dolph Lundgren) in Las Vegas with Rocky Balboa and Tony "Duke" Evers in his corner. Creed, past his prime and again not taking his opponent seriously, was brutally beaten by massive Drago in the first round but begged Rocky not to stop the fight. In the second round, Creed continued to be beaten by Drago, falling limp in the ring and dying from the injuries. Feeling responsible for not stopping the fight, Balboa set up a match with Drago, which was held on Christmas Day in Moscow. Rocky had to surrender his World Heavyweight Championship crown to accept the bout. With "Duke" assuming the role as his new trainer, Balboa trained hard using all-natural methods within the mountainous terrain of Krasnoyarsk Siberia, while Drago was shown being trained with state-of-the-art equipment and steroid enhancement.

During the fight, Drago dominated the early moments of the match, but in the second round Balboa caught Drago with a haymaker to the eye and cut him. The fight continued in a bloody back-and-forth battle, with the Soviet crowd who had originally rooted for Drago began cheering for Balboa while Drago's handler became increasingly upset over his inability to finish the American. In the end Rocky's superior stamina and will to win persevered and he defeated the Russian in the fifteenth round. After the fight Rocky gave an impassioned thank you speech to the crowd which received a standing ovation both from the crowd and the politicians in attendance.
[edit] Rocky V

After the fight with Drago, Balboa’s doctor discovered that he had suffered significant brain damage, caused by repeated blows to the head, which forced him to retire. He then lost his fortune after his brother-in-law Paulie granted power of attorney to their accountant, who subsequently embezzled Rocky's money. His only remaining asset was the now closed Mickey's Gym, which had been willed by Mickey to Robert. Rocky was forced to return to the Philadelphia slums in which he had been raised.

Though retired from boxing himself, Balboa starts training an up-and-coming fighter, Tommy Gunn (Tommy Morrison). Gunn slowly becomes an excellent fighter, but suffers some from being constantly put in Rocky's shadow; he is nicknamed "Rocky's Robot" by the media. Gunn is wooed by seedy promoter George Washington Duke and leaves Rocky after an argument about whether Balboa is holding him back. At the same time Robert also has problems adjusting to the new, less-than-lavish lifestyle his family was now leading, and by his father's distance. After a while Rocky realizes the damage he is doing to his relationship with his son and makes amends.

Gunn wins the World Heavyweight title from Union Cane. However, he is ridiculed in the press—since he had never fought a "real contender", he is not regarded as a real champion or heir to the belt. This motivates Gunn, with prodding from Duke, to publicly challenge Rocky to a fight. Balboa initially declines, but when the hot-tempered Gunn punches Paulie, Rocky accepts, telling Gunn his ring is in the alley right outside. The two engage in a street brawl which quickly gets the attention of the locals, the police (who allow the fight to continue) and the media. In the end Rocky defeats his protege then punches Duke (who had obnoxiously threatened to sue if Rocky touches him), telling him "Sue me for what?".
[edit] Rocky Balboa

After the events of Rocky V, Rocky and Adrian eventually open up a restaurant called 'Adrian's' in 1995. In 2002, Adrian dies of ovarian cancer. Rocky has drifted apart from his son.

ESPN’s program Then And Now featured a computer animation about a simulated fight between Rocky (in his prime), and the current champion, Mason "The Line" Dixon (Antonio Tarver). The fight simulated Rocky winning by knockout in the 13th round, which stirred up a great deal of discussion about the result if such a fight ever occurred.

Inspired by the simulation and feeling he still has some issues to deal with ("stuff in the basement"), Rocky decides to return to the ring. Rocky applies for a boxing license and though passing the physical with flying colors the Licensing Committee denies his license, however they change their minds and give him his license after Rocky makes an impassioned speech to them (the brain damage suffered in Rocky V was ignored, though Stallone has stated that the plot intended for the damage to have actually been a bad concussion which was misdiagnosed as brain damage and never got a second opinion due to Rocky's financial troubles and the fact that he never planned to fight again anyway) . Rocky's intentions were originally just to compete in small, local fights for fun. However with the publicity of Rocky's return Mason Dixon's promoters convince Rocky to face The Champ in an exhibition bout in Las Vegas. Despite being champion, Dixon is haunted by criticism, claiming that he has never had a truly great opponent or memorable match. Originally against fighting an aged-Balboa, Dixon recognized the opportunity to fight a legend and hoping to end all prognosticating about who would win and agreed to the fight.

In the press, commentators dismiss Rocky's chances, assuming that the fight will be one-sided due to his age. Robert is also against the fight, believing himself held down due to his father's shadow, though after a confrontation with Rocky he realizes that the only one holding him back is himself. Rocky, reunited with his old trainer Duke, works hard on his one major remaining weapon: power. The fight initially seems lop-sided with Dixon's speed allowing him to dish out all of the damage. However Dixon soon realizes Rocky isn't going down and that the old man "has bricks in his gloves." The tide turns when Mason injures his hand while punching Rocky. This evens the playing field and allows Rocky to mount an offense. In the end, the two fighters go the distance with Dixon winning by split decision (although in the alternate ending, Rocky defeats Dixon). Dixon is finally recognized as being a warrior for fighting through and Rocky proves to the world that he is no joke, mirroring the ending of the first Rocky film.
[edit] Personal life

Balboa married Adriana "Adrian" Pennino in 1976 (played by Talia Shire) during Rocky II. Adrian suffered from ovarian cancer. They were married for 26 years. The two have a son, Rocky Balboa Jr who was born in 1976 (played by Surge Stallone in Rocky II, Sage Stallone in Rocky V, and Milo Ventimiglia in Rocky Balboa). As evidenced by conversations with his priest, Father Carmine, Rocky understands Italian very well; however, it is unknown whether or not he speaks the language because his responses are in English. He also likes eating Cheez Whiz on Ritz crackers.
[edit] Rocky's onscreen fight record

* Before fighting Mason Dixon, Rocky's record was 80 fights, 57 wins (54 KO), 22 losses, 1 draw.

Total record: 81 fights, 57 wins (54 KO), 23 Losses, 1 Draw.
Res. Opponent Type Rd Venue & location Date Notes
Loss Mason Dixon Split decision 10 Mandalay Bay Resort and Casino -- Las Vegas, Nevada Feb 26 2005 Charity Exhibition Rocky makes a comeback after not fighting for nearly 20 years
Win Tommy Gun KO N/A Philadelphia, PA ??? ?? 1986 A street brawl in Philadelphia between Rocky and his former protege.
Win Ivan Drago KO 15 Moscow, Russia Dec 25 1985 Rocky wins, then retires after fight for medical reasons
Win James "Clubber" Lang KO 3 Madison Square Garden -- New York City, New York Jan 12 1982 Rocky wins the World Heavyweight Championship
Loss James "Clubber" Lang KO 2 Spectrum—Philadelphia, Pennsylvania Aug 15 1981 Title defense, Rocky loses title
Draw Thunderlips Draw N/A Spectrum—Philadelphia, Pennsylvania May 10 1981 hybrid wrestling-boxing charity match
Win Philip Hammerman KO 3 Palazzetto dello sport -- Rome, Italy Apr 29 1981 Title defense
Win Matt Delarue KO 5 MGM Grand Hotel and Casino -- Las Vegas, Nevada Nov 07 1980 Title defense
Win Joe Green KO 2 Korakuen Hall -- Bunkyo, Tokyo, Japan Jun 17 1980 Title defense
Win Flip Folsom KO 2 Milwaukee Arena -- Milwaukee, Wisconsin Oct 24 1979 Title defense
Win Dave Fossan KO 2 Nassau Coliseum -- Long Island, New York Feb 9 1979 Title defense
Win Bobby Jalali KO 3 Royal Albert Hall -- London, England Oct 3 1978 Title defense
Win Vito Soto KO 10 Monte Carlo Casino -- Monte Carlo, Monaco Feb 16 1978 Title defense
Win Big Yank Ball KO 6 Caesars Palace -- Las Vegas, Nevada Nov 13 1977 Title defense
Win Joe Czak KO 2 Radio City Music Hall -- New York City, New York Aug 1 1977 Title defense
Win Trevor Faus KO 1 Spectrum -- Philadelphia, Pennsylvania Apr 6 1977 Title defense
Win Apollo Creed KO 15 Spectrum -- Philadelphia, Pennsylvania Nov 25 1976 Rocky wins the World Heavyweight Championship
Loss Apollo Creed Split Decision 15 Spectrum -- Philadelphia, Pennsylvania Jan 1 1976 For the World Heavyweight Championship
Win Spider Rico KO 2 Blue Door Fight Club -- Philadelphia, Pennsylvania Nov 25 1975 local boxing match
Sporting positions
Preceded by
Apollo Creed Heavyweight Boxing World Champion
November 25, 1976 – August 15, 1981 Succeeded by
Clubber Lang
[edit] Character origin
“ Early in my acting career I realized the only way I would ever prove myself was to create my own role in my own script. On my 29th birthday, I had $106 in the bank. My best birthday present was a sudden revelation that I had to write the kind of screenplay that I personally enjoyed seeing. I relished stories of heroism, great love, dignity, and courage, dramas of people rising above their stations, taking life by the throat and not letting go until they succeeded. But I had so many ideas in my head, I couldn't focus on any one. To cheer myself up, I took the last of my entertainment money and went to see the Ali-Wepner fight on closed circuit TV. Chuck Wepner, a battling, bruising club fighter who had never made the big time, was having his shot. It wasn't at all regarded as a serious battle. But as the fight progressed, this miracle unfolded. He hung in there. People went absolutely crazy. Wepner was knocked out in the 15th and final round, almost lasting the distance. We had witnessed an incredible triumph of the human spirit and we loved it.

That night, Rocky Balboa was born. People looked on him as the all-American tragedy, a man without much mentality and few social graces. But he has deep emotion and spirituality and good patriotism. And he has a good nature, although nature has not been particularly good to him. I have always seen him as a 20th Century gladiator in a pair of sneakers. Like so many of us, he is out of sync with the times. To all this, I injected doses of my own personal life, of my frustration at not getting anywhere.
”

—Sylvester Stallone[1]
[edit] Boxing style

Balboa fights as a southpaw (left-handed). He is a hybrid fighter, possessing the qualities of an inside fighter, brawler, and swarmer. With the exception of his rematch against Clubber Lang (where he fights as an outside fighter), he often advances quickly upon his opponents, driving them into the ropes in order to attack the body. Balboa's best attribute is without question his near-superhuman ability to absorb a multitude of the hardest hits without falling — an attribute he often employs on purpose to wear down his opponents, sacrificing defensive strategy to land his own punches. Because of this rare talent, Balboa can afford to keep his hands in position to strike rather than up high to block. Because he takes more punches than he throws, it is easy to overlook his incredible punching power. He is also acknowledged as having the most devastating body attack in the sport, breaking Drago's ribs and causing internal bleeding in Creed. Boxer Mason Dixon once remarked about Balboa, "...that guy's got bricks in his gloves." These qualities, in concert, helped land him a high percentage of KO victories over the course of his career.

Height 5'9

Reach 74 inches

191 pounds for first Apollo Creed fight

202 pounds for Apollo Creed rematch

201 pounds for Clubber Lang fight

191 pounds for Clubber Lang rematch

204 pounds for Ivan Drago fight

217 pounds for Mason Dixon fight
[edit] Honors

Rocky Balboa was anointed the 7th greatest movie hero by the American Film Institute on their 100 Years... 100 Heroes and Villains list.[2] Additionally, he was ranked #34 on Empire Magazine's compilation of The 100 Greatest Movie Characters.[3] Premiere magazine ranked Rocky Balboa #64 on their list of The 100 Greatest Movie Characters of All Time.[4]
[edit] Notes

Rocky Balboa's birth date is, at present, unclear. In Rocky, he tells Paulie he is 30. This is in November, 1975, so his year of birth would be in 1945. In Rocky III, he is revealed to be 34. This is in August, 1981, which suggests his year of birth as 1947. In Rocky Balboa, a reporter during the press conference states that Balboa is still in his 50s.

Marvel Comics' G.I. Joe Order of Battle, a listing of all of the then-members of the G.I. Joe and Cobra teams, originally listed Rocky as a member of the G.I. Joe team in issue 2, specializing in hand-to-hand combat training and an example of what it means to persevere under seemingly impossible odds. Marvel was forced to run a retraction in the third issue of the limited-run series indicating that the character was never a part of G.I. Joe.

--

The RMS Titanic was an Olympic-class passenger liner owned by the White Star Line and was built at the Harland and Wolff shipyard in Belfast, in what is now Northern Ireland. At the time of her construction, she was the largest passenger steamship in the world.

Four days into the Titanic's maiden voyage, on 14 April 1912 shortly before midnight, the ship struck an iceberg, sinking early on 15 April 1912, two hours and forty minutes later. The sinking resulted in the deaths of 1,517 of the 2,223 people on board, making it one of the deadliest peacetime maritime disasters in history. The high casualty rate was due in part to the fact that, although complying with the regulations of the time, the ship did not carry enough lifeboats for everyone aboard. The ship had a total lifeboat capacity of 1,178 people, although her maximum capacity was 3,547. A disproportionate number of men died due to the women and children first protocol that was followed.

The Titanic was designed by some of the most experienced engineers, and used some of the most advanced technologies available at the time. It was popularly believed to have been unsinkable.[7] It was a great shock to many that, despite the extensive safety features, the Titanic sank. The frenzy on the part of the media about the Titanic's famous victims, the legends about the sinking, the resulting changes to maritime law, and the discovery of the wreck have contributed to the continuing interest in, and notoriety of, the Titanic.

Construction

The Titanic was built at the Harland and Wolff shipyard in Belfast, and designed to compete with the rival Cunard Line's Lusitania and Mauretania. The Titanic, along with her Olympic-class sisters, the Olympic and the soon-to-be-built Britannic (which was to be called Gigantic at first), were intended to be the largest, most luxurious ships ever to operate. The designers were Lord Pirrie,[8] a director of both Harland and Wolff and White Star, naval architect Thomas Andrews, Harland and Wolff's construction manager and head of their design department,[9] and Alexander Carlisle, the shipyard's chief draughtsman and general manager.[10] Carlisle's responsibilities included the decorations, the equipment and all general arrangements, including the implementation of an efficient lifeboat davit design. Carlisle would leave the project in 1910, before the ships were launched, when he became a shareholder in Welin Davit & Engineering Company Ltd, the firm making the davits.[11]

Construction of the RMS Titanic, funded by the American J.P. Morgan and his International Mercantile Marine Co., began on 31 March 1909. The Titanic's hull was launched on 31 May 1911, and her outfitting was completed by 31 March the following year. Her length overall was 882 feet 9 inches (269.1 m), the moulded breadth 92 feet 0 inches (28.0 m),[12] the tonnage 46,328 GRT, and the height from the water line to the boat deck of 59 feet (18 m). She was equipped with two reciprocating four-cylinder, triple-expansion steam engines and one low-pressure Parsons turbine, which combined drove three propellers. There were 29 boilers fired by 159 coal burning furnaces that made possible a top speed of 23 knots (43 km/h; 26 mph). Only three of the four 62 feet (19 m) funnels were functional: the fourth, which served only for ventilation purposes, was added to make the ship look more impressive. The ship could carry a total of 3,547 passengers and crew.
Features
Gymnasium aboard the Titanic
The first-class Grand Staircase aboard the Titanic


Size comparison with the Airbus A380, a car, a bus and an average size human

The Titanic surpassed all her rivals in luxury and opulence. The First-class section had an on-board swimming pool, a gymnasium, a squash court, Turkish bath, Electric bath and a Verandah Cafe. First-class common rooms were adorned with ornate wood panelling, expensive furniture and other decorations. In addition, the Café Parisien offered cuisine for the first-class passengers, with a sunlit veranda fitted with trellis decorations.[13] There were libraries and barber shops in both the first and second-class.[14] The third class general room had pine panelling and sturdy teak furniture.[15] The ship incorporated technologically advanced features for the period. She had three electric elevators in first class and one in second class. She had also an extensive electrical subsystem with steam-powered generators and ship-wide wiring feeding electric lights and two Marconi radios, including a powerful 1,500-watt set manned by two operators working in shifts, allowing constant contact and the transmission of many passenger messages.[16] First-class passengers paid a hefty fee for such amenities. The most expensive one-way trans-Atlantic passage was US$4,350 (which is more than US$95,860 in 2008 dollars).[17][18]
Lifeboats

For her maiden voyage, Titanic carried a total of 20 lifeboats of three different varieties:[19]

* Lifeboats 1 and 2: emergency wooden cutters: 25'2" long by 7'2" wide by 3'2" deep; capacity 326.6 cubic feet or 40 persons
* Lifeboats 3 to 16: wooden lifeboats: 30' long by 9'1" wide by 4' deep; capacity 655.2 cubic feet or 65 persons
* Lifeboats A, B, C and D: Englehardt "collapsible" lifeboats: 27'5" long by 8' wide by 3' deep; capacity 376.6 cubic feet or 47 persons

The lifeboats were predominantly stowed in chocks on the boat deck, not connected to the falls of the davits. All of the lifeboats, including the collapsibles, were placed on the ship by the giant gantry crane at Belfast. Those on the starboard side were numbered 1, 3, 5, 7, 9, 11, 13 and 15 from bow-to-stern, while those on the port side were numbered 2, 4, 6, 8, 10, 12, 14 and 16 from bow-to-stern. The emergency cutters (lifeboats 1 and 2) were kept swung out, hanging from the davits, ready for immediate use while collapsible lifeboats C and D were stowed on the boat deck immediately in-board of boats 1 and 2 respectively. Collapsible lifeboats A and B were stored on the roof of the officer's quarters, on either side of number 1 funnel. However there were no davits mounted on the officer's quarters to lower collapsibles A and B and the both of them weighed a considerable amount empty. During the sinking, lowering collapsibles A and B proved difficult as it was first necessary to slide the boats on timbers and/or oars down to the boat deck. During this procedure, collapsible B capsized and subsequently floated off the ship upside down.

At the design stage Carlisle suggested that the Titanic use a new, larger type of davit, manufactured by the Welin Davit & Engineering Co Ltd, each of which could handle four lifeboats. Sixteen sets of these davits were installed, giving the Titanic the ability to carry 64[20] wooden lifeboats—a total capacity of over 4,000 people, compared with the Titanic's total carrying capacity of about 3,600 passengers and crew. However, the White Star Line, while agreeing to the new davits, decided that only 16 wooden lifeboats (16 being the minimum required by the Board of Trade, based on the the Titanic's projected tonnage) would be carried (there were also four folding lifeboats, called collapsibles), which could accommodate only 1,178 people (33% of the Titanic's total capacity). At the time, the Board of Trade's regulations stated that British vessels over 10,000 tons must carry 16 lifeboats with a capacity of 5,500 cubic feet (160 m3), plus enough capacity in rafts and floats for 75% (or 50% in case of a vessel with watertight bulkheads) of that in the lifeboats. Therefore, the White Star Line actually provided more lifeboat accommodation than was legally required.[21]

The regulations had made no extra provision for larger ships since 1894, when the largest passenger ship under consideration was the Cunard Line's Lucania, only 13,000 tons. Sir Alfred Chalmers, nautical adviser to the Board of Trade from 1896 to 1911, had considered the matter "from time to time", but because he thought that experienced sailors would have to be carried "uselessly" aboard ship for no other purpose than lowering and manning lifeboats, and the difficulty he anticipated in getting away a greater number than 16 in any emergency, he "did not consider it necessary to increase [our scale]".[22]

Carlisle told the official inquiry that he had discussed the matter with J. Bruce Ismay, White Star's Managing Director, but in his evidence Ismay denied that he had ever heard of this, nor did he recollect noticing such provision in the plans of the ship he had inspected.[11][23] Ten days before the maiden voyage Axel Welin, the maker of the Titanic's lifeboat davits, had announced that his machinery had been installed because the vessel's owners were aware of forthcoming changes in official regulations, but Harold Sanderson, vice-president of the International Mercantile Marine and former general manager of the White Star Line, denied that this had been the intention.[24]
Pumps

The Titanic was fitted with five ballast and bilge pumps, used for trimming the vessel, and three bilge pumps.[25] Two 10-inch main ballast pipes ran the length of the ship and valves controlling the distribution of water were operated from the bulkhead deck, above.[26] The total discharge capacity from all eight pumps operating together was 1,700 tons or 425,000 gallons per hour.[25]
Comparisons with the Olympic

The Titanic closely resembled her older sister Olympic. Although she enclosed more space and therefore had a larger gross register tonnage, the hull was almost the same length as the Olympic's. Two of the most noticeable differences were that half of the Titanic's forward promenade A-Deck (below the boat deck) was enclosed against outside weather, and her B-Deck configuration was different from the Olympic's. As built the Olympic did not have an equivalent of the Titanic's Café Parisien: the feature was not added until 1913. Some of the flaws found on the Olympic, such as the creaking of the aft expansion joint, were corrected on the Titanic. The skid lights that provided natural illumination on A-deck were round, while on Olympic they were oval. The Titanic's wheelhouse was made narrower and longer than the Olympic's.[27] These, and other modifications, made the Titanic 1,004 gross register tons larger than the Olympic and thus the largest active ship in the world during her maiden voyage in April 1912.
Ship history
Sea trials

The Titanic's sea trials took place shortly after she was fitted out at Harland & Wolff shipyard. The trials were originally scheduled for 10.00am on Monday, 1 April, just nine days before she was due to leave Southampton on her maiden voyage, but poor weather conditions forced the trials to be postponed until the following day.

Aboard the Titanic were 78 stokers, greasers and firemen, and 41 members of crew. No domestic staff appear to have been aboard. Representatives of various companies travelled on the Titanic's sea trials, including Harold A. Sanderson of I.M.M and Thomas Andrews and Edward Wilding of Harland and Wolff. Bruce Ismay and Lord Pirrie were too ill to attend. Jack Phillips and Harold Bride served as radio operators, and performed fine-tuning of the Marconi equipment. Mr Carruthers, a surveyor from the Board of Trade, was also present to see that everything worked, and that the ship was fit to carry passengers. After the trial, he signed an 'Agreement and Account of Voyages and Crew', valid for twelve months, which deemed the ship sea-worthy.[28]
Maiden voyage
Titanic on her way after the near-collision with the SS New York. On the left can be seen the Oceanic and the New York.

The vessel began her maiden voyage from Southampton, England, bound for New York City, New York on 10 April 1912, with Captain Edward J. Smith in command. As the Titanic left her berth, her wake caused the liner SS New York, which was docked nearby, to break away from her moorings, whereupon she was drawn dangerously close (about four feet) to the Titanic before a tugboat towed the New York away.[29] The incident delayed departure for about half-an-hour.[30] After crossing the English Channel, the Titanic stopped at Cherbourg, France, to board additional passengers and stopped again the next day at Queenstown (known today as Cobh), Ireland. As harbour facilities at Queenstown were inadequate for a ship of her size, the Titanic had to anchor off-shore, with small boats, known as tenders, ferrying the embarking passengers out to her. When she finally set out for New York, there were 2,240 people aboard.[31]
Captain Edward J. Smith, master of the Titanic

John Coffey, a 23-year-old crewmember, jumped ship by stowing away on a tender and hid amongst mailbags headed for Queenstown. Coffey stated that the reason for smuggling himself off the liner was that he held a superstition about sailing and specifically about travelling on the Titanic. He later signed on to join the crew of the Mauretania.[32]
Depiction of Titanic at sea

On the maiden voyage of the Titanic some of the most prominent people of the day were travelling in first-class. Among them were millionaire John Jacob Astor IV and his wife Madeleine Force Astor, industrialist Benjamin Guggenheim, Macy's owner Isidor Straus and his wife Ida, Denver millionairess Margaret "Molly" Brown (known afterwards as the 'Unsinkable Molly Brown' due to her efforts in helping other passengers while the ship sank), Sir Cosmo Duff Gordon and his wife, couturière Lucy (Lady Duff-Gordon), George Dunton Widener, his wife Eleanor, and son Harry, cricketer and businessman John Borland Thayer with his wife Marian and their seventeen-year-old son Jack, journalist William Thomas Stead, the Countess of Rothes, United States presidential aide Archibald Butt, author and socialite Helen Churchill Candee, author Jacques Futrelle his wife May and their friends, Broadway producers Henry and Rene Harris and silent film actress Dorothy Gibson among others.[33] J.P. Morgan was scheduled to travel on the maiden voyage, but cancelled at the last minute.[34] Travelling in first–class aboard the ship were White Star Line's managing director J. Bruce Ismay and the ship's builder Thomas Andrews, who was on board to observe any problems and assess the general performance of the new ship.[33]
Sinking
Main article: Timeline of the sinking of the RMS Titanic
Further information: Ship floodability
Route and location of the RMS Titanic.

On the night of Sunday, 14 April 1912, the temperature had dropped to near freezing and the ocean was calm. The moon was not visible (being two days before new moon),[35] and the sky was clear. Captain Smith, in response to iceberg warnings received via wireless over the preceding few days, had drawn up a new course which took the ship slightly further southward. That Sunday at 13:45,[a] a message from the steamer Amerika warned that large icebergs lay in the Titanic's path, but as Jack Phillips and Harold Bride, the Marconi wireless radio operators, were employed by Marconi[36] and paid to relay messages to and from the passengers,[37] they were not focused on relaying such "non-essential" ice messages to the bridge.[38] Later that evening, another report of numerous large icebergs, this time from the Mesaba, also failed to reach the bridge.

At 23:40, while sailing about 400 miles south of the Grand Banks of Newfoundland, lookouts Fredrick Fleet and Reginald Lee spotted a large iceberg directly ahead of the ship. Fleet sounded the ship's bell three times and telephoned the bridge exclaiming, "Iceberg, right ahead!". First Officer Murdoch gave the order "hard-a-starboard", using the traditional tiller order for an abrupt turn to port (left), and adjusted the engines (he either ordered through the telegraph for "full reverse" or "stop" on the engines; survivor testimony on this conflicts).[39][40][41] The iceberg brushed the ship's starboard side (right side), buckling the hull in several places and popping out rivets below the waterline over a length of 299 feet (90 m). As seawater filled the forward compartments, the watertight doors shut. However, while the ship could stay afloat with four flooded compartments, five were filling with water. The five water-filled compartments weighed down the ship so that the tops of the forward watertight bulkheads fell below the ship's waterline, allowing water to pour into additional compartments. Captain Smith, alerted by the jolt of the impact, arrived on the bridge and ordered a full stop. Shortly after midnight on 15 April, following an inspection by the ship's officers and Thomas Andrews, the lifeboats were ordered to be readied and a distress call was sent out.
Photograph of an iceberg in the vicinity of the RMS Titanic's sinking taken on 15 April 1912 by the chief steward of the liner Prinz Adelbert who stated the berg had red anti-fouling paint of the kind found on the hull from below Titanic's waterline.

Wireless operators Jack Phillips and Harold Bride were busy sending out CQD, the international distress signal. Several ships responded, including Mount Temple, Frankfurt and Titanic's sister ship, Olympic, but none was close enough to make it in time.[42] The closest ship to respond was Cunard Line's Carpathia 58 miles (93 km) away, which could arrive in an estimated four hours—too late to rescue all of the Titanic's passengers. The only land–based location that received the distress call from Titanic was a wireless station at Cape Race, Newfoundland.[42][43]

From the bridge, the lights of a nearby ship could be seen off the port side. The identity of this ship remains a mystery but there have been theories suggesting that it was probably either the SS Californian or a sealer called the Sampson.[44] As it was not responding to wireless, Fourth Officer Boxhall and Quartermaster Rowe attempted signalling the ship with a Morse lamp and later with distress rockets, but the ship never appeared to respond.[45] The Californian, which was nearby and stopped for the night because of ice, also saw lights in the distance. The Californian's wireless was turned off, and the wireless operator had gone to bed for the night. Just before he went to bed at around 23:00 the Californian's radio operator attempted to warn the Titanic that there was ice ahead, but he was cut off by an exhausted Jack Phillips, who had fired back an angry response, "Shut up, shut up, I am busy; I am working Cape Race", referring to the Newfoundland wireless station.[46] When the Californian's officers first saw the ship, they tried signalling her with their Morse lamp, but also never appeared to receive a response. Later, they noticed the Titanic's distress signals over the lights and informed Captain Stanley Lord. Even though there was much discussion about the mysterious ship, which to the officers on duty appeared to be moving away, the master of the Californian did not wake her wireless operator until morning.[45]
Lifeboats launched
Sinking of the Titanic by Henry Reuterdahl, drawn based on radio descriptions.

The first lifeboat launched was Lifeboat 7 on the starboard side with 28 people on board out of a capacity of 65. It was lowered at around 00:40 as believed by the British Inquiry.[47][48] Lifeboat 6 and Lifeboat 5 were launched ten minutes later. Lifeboat 1 was the fifth lifeboat to be launched with 12 people. Lifeboat 11 was overloaded with 70 people. Collapsible D was the last lifeboat to be launched. The Titanic carried 20 lifeboats with a total capacity of 1,178 people. While not enough to hold all of the passengers and crew, the Titanic carried more boats than was required by the British Board of Trade Regulations. At the time, the number of lifeboats required was determined by a ship's gross register tonnage, rather than her human capacity.

The Titanic was given ample stability and sank with only a few degrees list, the design being such that there was very little risk of unequal flooding and possible capsize.[12] Furthermore the electric power plant was operated by the ship's engineers until the end. Hence Titanic showed no outward signs of being in imminent danger, and passengers were reluctant to leave the apparent safety of the ship to board small lifeboats. Large numbers of Third Class passengers were unable to reach the lifeboat deck through unfamiliar parts of the ship and past barriers, although some stewards such as William Denton Cox successfully led some groups from Third Class to the lifeboats.[49] As a result, most of the boats were launched partially empty; one boat meant to hold 40 people left the Titanic with only 12 people on board. With "Women and children first" the imperative for loading lifeboats, Second Officer Lightoller, who was loading boats on the port side, allowed men to board only if oarsmen were needed, even if there was room. First Officer Murdoch, who was loading boats on the starboard side, let men on board if women were absent. As the ship's list increased people started to become nervous, and some lifeboats began leaving fully loaded. By 02:05, the entire bow was under water, and all the lifeboats, except for two, had been launched.
Final minutes

Around 02:10, the stern rose out of the water exposing the propellers, and by 02:17 the waterline had reached the boat deck. The last two lifeboats floated off the deck, collapsible B upside down, collapsible A half-filled with water after the supports for its canvas sides were broken in the fall from the roof of the officers quarters. Shortly afterwards, the forward funnel collapsed, crushing part of the bridge and people in the water. On deck, people were scrambling towards the stern or jumping overboard in hopes of reaching a lifeboat. The ship's stern slowly rose into the air, and everything unsecured crashed towards the water. While the stern rose, the electrical system finally failed and the lights went out. Shortly afterwards, the stress on the hull caused the Titanic to break apart between the last two funnels, and the bow went completely under. The stern righted itself slightly and then rose vertically. After a few moments, at 02:20, this too sank into the ocean.

Only two of the 18 launched lifeboats rescued people after the ship sank. Lifeboat 4 was close by and picked up five people, two of whom later died. Close to an hour later, lifeboat 14 went back and rescued four people, one of whom died afterwards. Other people managed to climb onto the lifeboats that floated off the deck. There were some arguments in some of the other lifeboats about going back, but many survivors were afraid of being swamped by people trying to climb into the lifeboat or being pulled down by the suction from the sinking the Titanic, though it turned out that there had been very little suction.

As the ship fell into the depths, the two sections behaved very differently. The streamlined bow planed off approximately 2,000 feet (609 m) below the surface and slowed somewhat, landing relatively gently. The stern plunged violently to the ocean floor, the hull being torn apart along the way from massive implosions caused by compression of the air still trapped inside. The stern smashed into the bottom at considerable speed, grinding the hull deep into the silt.

After steaming at 17.5 knots for just under four hours, the RMS Carpathia arrived in the area and at 04:10 began rescuing survivors. By 08:30 she picked up the last lifeboat with survivors and left the area at 08:50 bound for New York.[50]
Aftermath
Arrival of Carpathia in New York
Carpathia docked at Pier 54 in New York following the rescue.

On 18 April, the Carpathia docked at Pier 54 at Little West 12th Street in New York with the survivors. It arrived at night and was greeted by thousands of people. The Titanic had been headed for 20th Street. The Carpathia dropped off the empty Titanic lifeboats at Pier 59, as property of the White Star Line, before unloading the survivors at Pier 54. Both piers were part of the Chelsea Piers built to handle luxury liners of the day. As news of the disaster spread, many people were shocked that the Titanic could sink with such great loss of life despite all of her technological advances. Newspapers were filled with stories and descriptions of the disaster and were eager to get the latest information. Many charities were set up to help the victims and their families, many of whom lost their sole breadwinner, or, in the case of third class survivors, lost everything they owned.[51] The people of Southampton were deeply affected by the sinking. According to the Hampshire Chronicle on 20 April 1912, almost 1,000 local families were directly affected. Almost every street in the Chapel district of the town lost more than one resident and over 500 households lost a member.[52]
Survivors, victims and statistics
See also: Maritime disasters, List of passengers on board RMS Titanic, and List of crew members on board RMS Titanic
Category Number aboard Number of survivors Percentage survived Number lost Percentage lost
First class 329 199 60.5 % 130 39.5 %
Second class 285 119 41.7 % 166 58.3 %
Third class 710 174 24.5 % 536 75.5 %
Crew 991 214 23.8 % 685 76.2 %
Total 2,223 706 31.8 % 1,517 68.2 %
Los Angeles Times front page about the Titanic disaster.

Of a total of 2,223 people aboard the Titanic only 706 survived the disaster and 1,517 perished.[53] The majority of deaths were caused by hypothermia in the 28 °F (−2 °C) water.[54] At this water temperature, death could be expected in less than 15 minutes.[55]

Men and members of the 2nd and 3rd class were less likely to survive. Of the male passengers in second class, 92 percent perished. Less than half of third-class passengers survived.

Six of the seven children in first class survived, all of the children in second class survived, whereas less than half were saved in third class. 96 percent of the women in first class survived, 86 percent of the women survived in second class and less than half survived in third class. Overall, only 20 percent of the men survived, compared to nearly 75 percent of the women. Men in first class were four times as likely to survive as men in second class, and twice as likely to survive as those in third.[56]

Four of the eight officers survived. About 21 of the 29 able seamen survived and all of the 7 quartermasters and 8 lookouts survived. 3 of the 13 leading firemen survived, around 45 other firemen survived and around 20 of the 73 coal trimmers survived. 4 of the 33 greasers survived and 1 of the 6 mess hall stewards survived. Around 60 of the 322 stewards and 18 of the 23 stewardesses survived. 3 of the 68 restaurant staffs survived. All of the postal clerks, guarantee group and eight-member orchestra perished.

Another disparity is that a greater percentage of British passengers died than American passengers; some sources claim this could be because many Britons of the time were polite and queued, rather than forcing their way onto the lifeboats. The captain, Edward John Smith, shouted out: "Be British, boys, be British!" as the ocean liner went down, according to witnesses.[57][58]

* In one case in the third class, a Swedish man lost his wife, Alma Pålsson, and his four children, all aged under 10. The father was waiting for them to arrive at the destination. "Paulson's grief was the most acute of any who visited the offices of the White Star, but his loss was the greatest. His whole family had been wiped out."[59]
* The sailors aboard the ship CS Mackay-Bennett which recovered bodies from the Titanic, who were very upset by the discovery of an unknown boy's body, paid for a monument and he was buried on 4 May 1912 with a copper pendant placed in his coffin by the sailors that read "Our Babe". The unknown child was later positively identified as Sidney Leslie Goodwin.
* One survivor, stewardess Violet Jessop, who had been on board the RMS Olympic when she collided with HMS Hawke in 1911, went on to survive the sinking of HMHS Britannic in 1916.
* There are no living survivors of the Titanic disaster. The last living survivor was Millvina Dean, who was only nine weeks old at the time of the sinking. She died on 31 May 2009, the 98th anniversary of the launching of the ship's hull. She lived in Southampton, England.[60]
* There are many stories relating to dogs on the Titanic. Apparently, a passenger released the dogs just before the ship went down; they were seen running up and down the decks. At least two dogs survived.[61]

Retrieval and burial of the dead
Marker of the unknown child who was later positively identified as Sidney Leslie Goodwin.

Once the massive loss of life became clear, White Star Line chartered the cable ship CS Mackay-Bennett from Halifax, Nova Scotia to retrieve bodies. Three other ships followed in the search, the cable ship Minia, the lighthouse supply ship Montmagny and the sealing vessel Algerine. Each ship left with embalming supplies, undertakers, and clergy. Of the 333 victims that were eventually recovered, 328 were retrieved by the Canadian ships and five more by passing North Atlantic steamships. Most of the bodies were numbered. The six passengers buried at sea by the Carpathia went unnumbered.[62] In mid-May 1912, over 200 miles (320 km) from the site of the sinking, the Oceanic recovered three bodies, numbers 331, 332 and 333, who were occupants of Collapsible A, which was swamped in the last moments of the sinking. Several people managed to reach this lifeboat, although some died during the night. When Fifth Officer Harold Lowe rescued the survivors of Collapsible A, he left the three dead bodies in the boat: Thomas Beattie, a first-class passenger, and two crew members, a fireman and a seaman. The bodies were buried at sea from Oceanic.[63]

The first body recovery ship to reach the site of the sinking, the cable ship CS Mackay-Bennett found so many bodies that the embalming supplies aboard were quickly exhausted. Health regulations permitted that only embalmed bodies could be returned to port.[64] Captain Larnder of the Mackay-Bennett and undertakers aboard decided to preserve all bodies of First Class passengers, justifying their decision by the need to visually identify wealthy men to resolve any disputes over large estates. As a result the burials at sea were third class passengers and crew. Larnder himself claimed that as a mariner, he would expect to be buried at sea.[65] However complaints about the burials at sea were made by families and undertakers. Later ships such as Minia found fewer bodies, requiring fewer embalming supplies, and were able to limit burials at sea to bodies which were too damaged to preserve.

Bodies recovered were preserved to be taken to Halifax, the closest city to the sinking with direct rail and steamship connections. The Halifax coroner, John Henry Barnstead, developed a detailed system to identify bodies and safeguard personal possessions. His identification system would later be used to identify victims of the Halifax Explosion in 1917. Relatives from across North America came to identify and claim bodies. A large temporary morgue was set up in a curling rink and undertakers were called in from all across Eastern Canada to assist.[63] Some bodies were shipped to be buried in their hometowns across North America and Europe. About two-thirds of the bodies were identified. Unidentified victims were buried with simple numbers based on the order in which their bodies were discovered. The majority of recovered victims, 150 bodies, were buried in three Halifax cemeteries, the largest being Fairview Lawn Cemetery followed by the nearby Mount Olivet and Baron de Hirsch cemeteries.[66] Much floating wreckage was also recovered with the bodies, many pieces of which can be seen today in the Maritime Museum of the Atlantic in Halifax.
Memorials
The Anna Bliss Titanic Victims Memorial in Woodlawn Cemetery
The memorial to the Titanic's engineers in Southampton

In many locations there are memorials to the dead of the Titanic. In Southampton, England a memorial to the engineers of the Titanic may be found in Andrews Park on Above Bar Street. Opposite the main memorial is a memorial to Wallace Hartley and the other musicians who played on the Titanic. A memorial to the ship's five postal workers, which says "Steadfast in Peril" is held by Southampton Heritage Services.[67]

A memorial to the liner is also located on the grounds of City Hall in Belfast, Northern Ireland.

In the United States there are memorials to the Titanic disaster as well. The Titanic Memorial in Washington, D.C. and a memorial to Ida Straus at Straus Park in Manhattan, New York are two examples.

On 15 April 2012, the 100th anniversary of the sinking of the Titanic is planned to be commemorated around the world. By that date, the Titanic Quarter in Belfast is planned to have been completed. The area will be regenerated and a signature memorial project unveiled to celebrate the Titanic and her links with Belfast, the city that had built the ship.[68]

The Balmoral, operated by Fred Olsen Cruise Lines has been chartered by Miles Morgan Travel to follow the original route of the Titanic, intending to stop over the point on the sea bed where she rests on 15 April 2012.[69]
Investigations into the RMS Titanic disaster
See also: Changes in safety practices following the RMS Titanic disaster and International Maritime Organization
Political cartoon from 1912 which shows the public demanding answers from the shipping companies about the Titanic disaster

Before the survivors even arrived in New York, investigations were being planned to discover what had happened, and what could be done to prevent a recurrence. The United States Senate initiated an inquiry into the disaster on 19 April, a day after the Carpathia arrived in New York.

The chairman of the inquiry, Senator William Alden Smith, wanted to gather accounts from passengers and crew while the events were still fresh in their minds. Smith also needed to subpoena the British citizens while they were still on American soil. This prevented all surviving passengers and crew from returning to the UK before the American inquiry, which lasted until 25 May, was completed.

Lord Mersey was appointed to head the British Board of Trade's inquiry into the disaster. The British inquiry took place between 2 May and 3 July. Each inquiry took testimony from both passengers and crew of the Titanic, crew members of Leyland Line's Californian, Captain Arthur Rostron of the Carpathia and other experts.

The investigations found that many safety rules were simply out of date, and new laws were recommended. Numerous safety improvements for ocean-going vessels were implemented, including improved hull and bulkhead design, access throughout the ship for egress of passengers, lifeboat requirements, improved life-vest design, the holding of safety drills, better passenger notification, radio communications laws, etc. The investigators also learned that the Titanic had sufficient lifeboat space for all first-class passengers, but not for the lower classes. In fact, most third class passengers had no idea where the lifeboats were, much less any way of getting up to the higher decks where the lifeboats were stowed.
SS Californian inquiry
The SS Californian.

Both inquiries into the disaster found that the SS Californian and her captain, Stanley Lord, failed to give proper assistance to the Titanic. Testimony before the inquiry revealed that at 22:10, the Californian observed the lights of a ship to the south; it was later agreed between Captain Lord and Third Officer C.V. Groves (who had relieved Lord of duty at 22:10) that this was a passenger liner. The Californian had warned the ship by radio of the pack ice because of which the Californian had stopped for the night, but was violently rebuked by the Titanic's senior wireless operator, Jack Phillips. At 23:50, the officer had watched this ship's lights flash out, as if the ship had shut down or turned sharply, and that the port light was now observed. Morse light signals to the ship, upon Lord's order, occurred five times between 23:30 and 01:00, but were not acknowledged. (In testimony, it was stated that the Californian's Morse lamp had a range of about four miles (6 km), so could not have been seen from the Titanic.)[45]

Captain Lord had retired at 23:30; however, Second Officer Herbert Stone, now on duty, notified Lord at 01:15 that the ship had fired a rocket, followed by four more. Lord wanted to know if they were company signals, that is, coloured flares used for identification. Stone said that he did not know and that the rockets were all white. Captain Lord instructed the crew to continue to signal the other vessel with the Morse lamp, and went back to sleep. Three more rockets were observed at 01:50 and Stone noted that the ship looked strange in the water, as if she were listing. At 02:15, Lord was notified that the ship could no longer be seen. Lord asked again if the lights had had any colours in them, and he was informed that they were all white.

The Californian eventually responded. At 05:30, Chief Officer George Stewart awakened wireless operator Cyril Evans, informed him that rockets had been seen during the night, and asked that he try to communicate with any ships. The Frankfurt notified the operator of the Titanic's loss, Captain Lord was notified, and the ship set out for assistance.

The inquiries found that the Californian was much closer to the Titanic than the 19.5 miles (31.4 km) that Captain Lord had believed and that Lord should have awakened the wireless operator after the rockets were first reported to him, and thus could have acted to prevent loss of life.[45]

In 1990, following the discovery of the wreck, the Marine Accident Investigation Branch of the British Department of Transport re-opened the inquiry to review the evidence relating to the Californian. Its report of 1992 concluded that the Californian was farther from the Titanic than the earlier British inquiry had found, and that the distress rockets, but not the Titanic herself, would have been visible from the Californian.[70]
Rediscovery of the Titanic
See also: List of shipwrecks
Titanic's bow, with the forestay shackle fallen forwards, as seen from the Russian MIR I submersible.

The idea of finding the wreck of the Titanic, and even raising the ship from the ocean floor, had been around since shortly after the ship sank. No attempts were successful until 1 September 1985, when a joint American-French expedition, led by Jean-Louis Michel (Ifremer) and Dr. Robert Ballard (WHOI), located the wreck using the side-scan sonar from the research vessels Knorr and Le Suroit. In June 1985, the French ship Le Suroit began systematically crossing the 150-square-mile target zone with her deep-search sonar. Le Suroit covered 80 percent of the zone, leaving only 20 percent for the American ship Knorr.[71] It was found at a depth of 2.5 miles (4 km), slightly more than 370 miles (600 km) south-east of Mistaken Point, Newfoundland at 41°43′55″N 49°56′45″W / 41.73194°N 49.94583°W / 41.73194; -49.94583Coordinates: 41°43′55″N 49°56′45″W / 41.73194°N 49.94583°W / 41.73194; -49.94583, 13 miles (21 km) from fourth officer Joseph Boxhall's last position reading where the Titanic was originally thought to rest. Ballard noted that his crew had paid out 12,500 feet (3,810 m) of the sonar's tow cable at the time of the discovery of the wreck,[72] giving an approximate depth of the seabed of 12,450 feet (3,795 m).[73] Ifremer, the French partner in the search, records a depth of 3,800 m (12,467 ft), an almost exact equivalent.[74] These are approximately 2.33 miles, and they are often rounded upwards to 2.5 miles or 4 km. Video cameras aboard the unmanned submersible Argo were the first to document the Titanic's visual state on the bottom of the ocean. The submersible was based on the Knorr and the images retrieved were featured in National Geographic by December 1985.[75] In 1986, Ballard returned to the wreck site aboard the Atlantis II to conduct the first manned dives to the wreck in the submersible Alvin.

Ballard had in 1982 requested funding for the project from the US Navy, but this was provided only on the then secret condition that the first priority was to examine the wreckage of the sunken US nuclear submarines USS Thresher and USS Scorpion. Only when these had been photographed did the search for Titanic begin.[76]

The most notable discovery the team made was that the ship had split apart, the stern section lying 1,970 feet (600 m) from the bow section and facing opposite directions. There had been conflicting witness accounts of whether the ship broke apart or not, and both the American and British inquiries found that the ship sank intact. Up until the discovery of the wreck, it was generally assumed that the ship did not break apart.

The bow section had struck the ocean floor at a position just under the forepeak, and embedded itself 60 feet (18 m) into the silt on the ocean floor. Although parts of the hull had buckled, the bow was mostly intact. The collision with the ocean floor forced water out of the Titanic through the hull below the well deck. One of the steel covers (reportedly weighing approximately ten tonnes) was blown off the side of the hull. The bow is still under tension, in particular the heavily damaged and partially collapsed decks.[77]

The stern section was in much worse condition, and appeared to have been torn apart during its descent. Unlike the bow section, which was flooded with water before it sank, it is likely that the stern section sank with a significant volume of air trapped inside it. As it sank, the external water pressure increased but the pressure of the trapped air could not follow suit due to the many air pockets in relatively sealed sections. Therefore, some areas of the stern section's hull experienced a large pressure differential between outside and inside which possibly caused an implosion. Further damage was caused by the sudden impact of hitting the seabed; with little structural integrity left, the decks collapsed as the stern hit.[78]

Surrounding the wreck is a large debris field with pieces of the ship, furniture, dinnerware and personal items scattered over one square mile (2.6 km²). Softer materials, like wood, carpet and human remains were devoured by undersea organisms.

Dr. Ballard and his team did not bring up any artefacts from the site, considering this to be tantamount to grave robbing.[79] Under international maritime law, however, the recovery of artefacts is necessary to establish salvage rights to a shipwreck. In the years after the find, Titanic has been the object of a number of court cases concerning ownership of artefacts and the wreck site itself. In 1994, RMS Titanic Inc. was awarded ownership and salvaging rights of the wreck, even though RMS Titanic Inc. and other salvaging expeditions have been criticised for taking items from the wreck. Among the items recovered by RMS Titanic Inc. was the ship's whistle, which was brought to the surface in 1992 and placed in the company's travelling exhibition. It has been operated only twice since, using compressed air rather than steam, because of its fragility.[80]

Approximately 6,000 artefacts have been removed from the wreck. Many of these were put on display at the National Maritime Museum in Greenwich, England, and later as part of a travelling museum exhibit.
Current condition of the wreck

Many scientists, including Robert Ballard, are concerned that visits by tourists in submersibles and the recovery of artefacts are hastening the decay of the wreck. Underwater microbes have been eating away at the Titanic's steel since the ship sank, but because of the extra damage visitors have caused the National Oceanic and Atmospheric Administration estimates that "the hull and structure of the ship may collapse to the ocean floor within the next 50 years."[81][82]

Ballard's book Return to Titanic, published by the National Geographic Society, includes photographs depicting the deterioration of the promenade deck and damage caused by submersibles landing on the ship. The mast has almost completely deteriorated and has been stripped of its bell and brass light. Other damage includes a gash on the bow section where block letters once spelled Titanic, part of the brass telemotor which once held the ship's wooden wheel is now twisted and the crow's nest is completely deteriorated.[83]
Ownership and litigation

The Titanic's rediscovery in 1985 launched a debate over ownership of the wreck and the valuable items inside. On 7 June 1994 RMS Titanic Inc., a subsidiary of Premier Exhibitions Inc., was awarded ownership and salvaging rights by the United States District Court for the Eastern District of Virginia.[84] (See Admiralty law)[85] Since 1987, RMS Titanic Inc. and her successors have conducted seven expeditions and salvaged over 5,500 historic objects. The biggest single recovered object was a 17-ton section of the hull, recovered in 1998.[86] Many of these items are part of travelling museum exhibitions.

In 1993, a French administrator in the Office of Maritime Affairs of the Ministry of Equipment, Transportation, and Tourism awarded RMS Titanic Inc.'s predecessor title to the relics recovered in 1987.

In a motion filed on 12 February 2004, RMS Titanic Inc. requested that the district court enter an order awarding it "title to all the artifacts (including portions of the hull) which are the subject of this action pursuant to the Law of Finds" or, in the alternative, a salvage award in the amount of $225 million. RMS Titanic Inc. excluded from its motion any claim for an award of title to the objects recovered in 1987, but it did request that the district court declare that, based on the French administrative action, "the artifacts raised during the 1987 expedition are independently owned by RMST." Following a hearing, the district court entered an order dated 2 July 2004, in which it refused to grant comity and recognise the 1993 decision of the French administrator, and rejected RMS Titanic Inc.'s claim that it should be awarded title to the items recovered since 1993 under the Maritime Law of Finds.

RMS Titanic Inc. appealed to the United States Court of Appeals for the Fourth Circuit. In its decision of 31 January 2006[87] the court recognised "explicitly the appropriateness of applying maritime salvage law to historic wrecks such as that of Titanic" and denied the application of the Maritime Law of Finds. The court also ruled that the district court lacked jurisdiction over the "1987 artifacts", and therefore vacated that part of the court's 2 July 2004 order. In other words, according to this decision, RMS Titanic Inc. has ownership title to the objects awarded in the French decision (valued $16.5 million earlier) and continues to be salver-in-possession of the Titanic wreck. The Court of Appeals remanded the case to the District Court to determine the salvage award ($225 million requested by RMS Titanic Inc.).[88]

On 24 March 2009, it was revealed that the fate of 5,900 artefacts retrieved from the wreck will rest with a US District Judge's decision.[89] The ruling will decide whether the artefacts should be placed in a public exhibit or in the hands of private collectors. The judge will also rule on the RMS Titanic Inc.'s degree of ownership of the wreck as well as establishing a monitoring system to check future activity upon the wreck site.[90]
Possible factors in the sinking
The iceberg buckled the Titanic's hull, allowing water to flow into the ship

It is well established that the sinking of the Titanic was the result of an iceberg collision which fatally punctured the ship's front five watertight compartments. Less obvious however are the reasons for the collision itself (which occurred on a clear night, and after the ship had received numerous ice warnings), the factors underlying the sheer extent of the damage sustained by the ship, and the reasons for the extreme loss of life.
Construction and metallurgy

Originally, historians thought the iceberg had cut a gash into the Titanic's hull. Since the part of the ship that the iceberg damaged is now buried, scientists used sonar to examine the area and discovered the iceberg had caused the hull to buckle, allowing water to enter Titanic between her steel plates.

The steel plate used for the Titanic hull was of 1 to 1½ inch (2.5 to 3.8 cm) thickness.[91] A detailed analysis of small pieces of the steel plating from the Titanic's wreck hull found that it was of a metallurgy that loses its ductility and becomes brittle in cold or icy water, leaving it vulnerable to dent-induced ruptures. The pieces of steel were found to have very high content of phosphorus and sulphur (4× and 2× respectively, compared with modern steel), with manganese-sulphur ratio of 6.8:1 (compared with over 200:1 ratio for modern steels). High content of phosphorus initiates fractures, sulphur forms grains of iron sulphide that facilitate propagation of cracks, and lack of manganese makes the steel less ductile. The recovered samples were found to be undergoing ductile-brittle transition in temperatures of 90 °F (32 °C) for longitudinal samples and 133 °F (56 °C) for transversal samples, compared with transition temperature of −17 °F (−27 °C) common for modern steels: modern steel would only become so brittle in between −76 °F and −94 °F (−60 °C and −70 °C). The Titanic's steel, although "probably the best plain carbon ship plate available at the time", was thus unsuitable for use at low temperatures.[92] The anisotropy was probably caused by hot rolling influencing the orientation of the sulphide stringer (defect) inclusions. The steel was probably produced in the acid-lined, open-hearth furnaces in Glasgow, which would explain the high content of phosphorus and sulphur, even for the time.[92][93]

Another factor was the rivets holding the hull together, which were much more fragile than once thought.[93][94] From 48 rivets recovered from the hull of the Titanic, scientists found many to be riddled with high concentrations of slag. A glassy residue of smelting, slag can make rivets brittle and prone to fracture. Records from the archive of the builder show that the ship's builder ordered No. 3 iron bar, known as "best"—not No. 4, known as "best-best", for its rivets, although shipbuilders at that time typically used No. 4 iron for rivets. The company also had shortages of skilled riveters, particularly important for hand riveting, which took great skill: the iron had to be heated to a precise colour and shaped by the right combination of hammer blows. The company used steel rivets, which were stronger and could be installed by machine, on the central hull, where stresses were expected to be greatest, using iron rivets for the stern and bow.[93] Rivets of "best best" iron had a tensile strength approximately 80% of that of steel, "best" iron some 73%.[95] Despite this, the most extensive and finally fatal damage the Titanic sustained, at boiler rooms No. 5 and 6, was done in an area where steel rivets were used.
Rudder construction and turning ability
View of the stern and rudder of RMS Olympic in dry-dock. The man in the shot gives scale.[96]

Although the Titanic's rudder met the mandated dimensional requirements for a ship her size, the rudder's design was hardly state-of-the-art. According to research by BBC History: "Her stern, with its high graceful counter and long thin rudder, was an exact copy of an 18th-century sailing ship...a perfect example of the lack of technical development. Compared with the rudder design of the Cunarders, the Titanic's was a fraction of the size. No account was made for advances in scale and little thought was given to how a ship, 852 feet in length, [sic] might turn in an emergency or avoid collision with an iceberg. This was the Titanic's Achilles heel."[97] A more objective assessment of the rudder provision compares it with the legal requirement of the time: the area had to be within a range of 1.5% and 5% of the hull's underwater profile and, at 1.9%, the Titanic was at the low end of the range. However, the tall rudder design was more effective at the vessel's designed cruising speed; short, square rudders were more suitable for low-speed manoeuvring.[98]

Perhaps more fatal to the design of the Titanic was her triple screw engine configuration, which had reciprocating steam engines driving her wing propellers, and a steam turbine driving her centre propeller. The reciprocating engines were reversible, while the turbine was not. According to subsequent evidence from Fourth Officer Joseph Boxhall, who entered the bridge just after the collision, First Officer Murdoch had set the engine room telegraph to reverse the engines to avoid the iceberg,[40] thus handicapping the turning ability of the ship. Because the centre turbine could not reverse during the "full speed astern" manoeuvre, it was simply stopped. Since the centre propeller was positioned forward of the ship's rudder, the effectiveness of that rudder would have been greatly reduced: had Murdoch simply turned the ship while maintaining her forward speed, the Titanic might have missed the iceberg with metres to spare.[99] Another survivor, Frederick Scott, an engine room worker, gave contrary evidence: he recalled that at his station in the engine room all four sets of telegraphs had changed to "Stop", but not until after the collision.[41]
Orientation of impact

It has been speculated that the ship could have been saved if she had rammed the iceberg head on.[100][101] It is hypothesised that if Titanic had not altered her course at all and instead collided head first with the iceberg, the impact would have been taken by the naturally stronger bow and damage would have affected only one or two forward compartments. This would have disabled her, and possibly caused casualties among the passengers near the bow, but probably would not have resulted in sinking since Titanic was designed to float with the first four compartments flooded. Instead, the glancing blow to the starboard side caused buckling in the hull plates along the first five compartments, more than the ship's designers had anticipated.
Adverse weather conditions

The weather conditions for the Atlantic at the time of the collision were unusual because there was a flat calm sea, without wind or swell. In addition, it was a moonless night. Under normal sea conditions in the area of the collision, waves would have broken over the base of an iceberg, assisting in the location of icebergs even on a moonless night.
Excessive speed

The conclusion of the British Inquiry into the sinking was “that the loss of the said ship was due to collision with an iceberg, brought about by the excessive speed at which the ship was being navigated”. At the time of the collision it is thought that the Titanic was at her normal cruising speed of about 22 knots, which was less than her top speed of around 24 knots. At the time it was common (but not universal) practice to maintain normal speed in areas where icebergs were expected. It was thought that any iceberg large enough to damage the ship would be seen in sufficient time to be avoided.

After the sinking the British Board of Trade introduced regulations instructing vessels to moderate their speed if they were expecting to encounter icebergs.[citation needed] It is often alleged that J. Bruce Ismay instructed or encouraged Captain Smith to increase speed in order to make an early landfall, and it is a common feature in popular representations of the disaster, such as the 1997 film, Titanic.[102] There is little evidence for this having happened, and it is disputed by many.[103][104]
Insufficient lifeboats
Survivors aboard a collapsible lifeboat, viewed from the Carpathia.

No single aspect regarding the huge loss of life from the Titanic disaster has provoked more outrage than the fact that the ship did not carry enough lifeboats for all her passengers and crew. This is partially due to the fact that the law, dating from 1894, required a minimum of 16 lifeboats for ships of over 10,000 tons. This law had been established when the largest ship afloat was RMS Lucania. Since then the size of ships had increased rapidly, meaning that Titanic was legally required to carry only enough lifeboats for less than half of its capacity. Actually, the White Star Line exceeded the regulations by including four more collapsible lifeboats—this gave a total capacity of 1,178 people (still only around a third of the Titanic's total capacity of 3,547).

In the busy North Atlantic sea lanes it was expected that in the event of a serious accident to a ship, help from other vessels would be quickly obtained, and that the lifeboats would be used to ferry passengers and crew from the stricken vessel to its rescuers. Full provision of lifeboats was not considered necessary for this.

It was anticipated during the design of the ship that the British Board of Trade might require an increase in the number of lifeboats at some future date. Therefore lifeboat davits capable of handling up to four boats per pair of davits were designed and installed, to give a total potential capacity of 64 boats.[105] The additional boats were never fitted. It is often alleged that J. Bruce Ismay, the President of White Star, vetoed the installation of these additional boats to maximise the passenger promenade area on the boat deck. Harold Sanderson, Vice President of International Merchantile Marine, rejected this allegation during the British Inquiry.[106]

The lack of lifeboats was not the only cause of the tragic loss of lives. After the collision with the iceberg, one hour was taken to evaluate the damage, recognise what was going to happen, inform first class passengers, and lower the first lifeboat. Afterward, the crew worked quite efficiently, taking a total of 80 minutes to lower all 16 lifeboats. Since the crew was divided into two teams, one on each side of the ship, an average of 10 minutes of work was necessary for a team to fill a lifeboat with passengers and lower it.

Yet another factor in the high death toll that related to the lifeboats was the initial reluctance of the passengers to board them. The most notable being Lifeboat #1 with a capacity of 40, launched at 00:40 with only 12 people aboard. This was partly due to at the point of launch, Titanic did not appear to be in imminent danger and hence passengers were likely to be reluctant to leave the apparent safety of the ship. The idea that the ship was unsinkable is unlikely to be the reason of the low utilisation of early life boats.
Alternative theories
Main article: Titanic alternative theories

A number of alternative theories diverging from the standard explanation for the Titanic's demise have been brought forth since shortly after the sinking. Some of these include a coal fire aboard ship,[107] or the Titanic hitting pack ice rather than an iceberg.[108][109] In the realm of the supernatural, it has been proposed that the Titanic sank due to a mummy's curse.[110]
Legends and myths regarding the RMS Titanic
Unsinkable

Contrary to popular mythology, the Titanic was never described as "unsinkable", without qualification, until after she sank.[7][111] There are three trade publications (one of which was probably never published) that describe the Titanic as unsinkable, prior to her sinking, but there is no evidence that the notion of the Titanic's unsinkability had entered public consciousness until after the sinking.[7]
General arrangement of the 16 main compartments of the Titanic. The double bottom was 7 feet high and divided into 44 watertight compartments. There were additional 13 small compartments above the tank top, e.g. for the shaft tunnels.[112]

The trade journal The Shipbuilder and Marine Engine Builder described in their June 1911 Special Number devoted to the Olympic and Titanic that "The captain may, by simply moving an electric switch, instantly close the watertight doors throughout, making the vessel virtually unsinkable."[113] In fact the vessel was designed to comply with Grade 1 subdivision proposed by the 1891 Bulkhead Committee, meaning that it could stay afloat with any two adjoining out of its 16 main compartments in free communication with the sea. The height of the bulkhead deck above the water line in flooded condition was well above the requirements and the vessel indeed would have been able to float with three adjoining compartments flooded in 11 out of 14 possible combinations.[114]

The first unqualified assertion of the Titanic's unsinkability appears the day after the tragedy (on 16 April 1912) in The New York Times, which quotes Philip A. S. Franklin, vice president of the White Star Line as saying, when informed of the tragedy,

I thought her unsinkable and I based by [sic] opinion on the best expert advice available. I do not understand it.[115]

This comment was seized upon by the press and the idea that the White Star Line had previously declared the Titanic to be unsinkable (without qualification) gained immediate and widespread currency.
David Sarnoff, wireless reports and the use of SOS

An often-quoted story that has been blurred between fact and fiction states that the first person to receive news of the sinking was David Sarnoff, who would later lead media giant RCA. In modified versions of this legend, Sarnoff was not the first to hear the news (though Sarnoff willingly promoted this notion), but he and others did staff the Marconi wireless station (telegraph) atop the Wanamaker Department Store in New York City, and for three days, relayed news of the disaster and names of survivors to people waiting outside. However, even this version lacks support in contemporary accounts. No newspapers of the time, for example, mention Sarnoff. Given the absence of primary evidence, the story of Sarnoff should be properly regarded as a legend.[116][117][118][119][120]

Despite popular belief, the sinking of the Titanic was not the first time the internationally recognised Morse code distress signal "SOS" was used. The SOS signal was first proposed at the International Conference on Wireless Communication at Sea in Berlin in 1906. It was ratified by the international community in 1908 and had been in widespread use since then. The SOS signal was, however, rarely used by British wireless operators, who preferred the older CQD code. First Wireless Operator Jack Phillips began transmitting CQD until Second Wireless Operator Harold Bride suggested half jokingly, "Send SOS; it's the new call, and this may be your last chance to send it." Phillips, then began to intersperse SOS with the traditional CQD call.
The Titanic's band
Members of the Titanic's band.

One of the most famous stories of the Titanic is of the ship's band. On 15 April the eight-member band, led by Wallace Hartley, had assembled in the first-class lounge in an effort to keep passengers calm and upbeat. Later they moved on to the forward half of the boat deck. The band continued playing, even when it became apparent the ship was going to sink, and all members perished.

There has been much speculation about what their last song was.[121] A first-class Canadian passenger, Mrs. Vera Dick, alleged that the final song played was the hymn "Nearer, My God, to Thee". Hartley reportedly once said to a friend if he were on a sinking ship, "Nearer, My God, to Thee" would be one of the songs he would play.[122] But Walter Lord's book A Night to Remember popularised wireless operator Harold Bride's 1912 account (New York Times) that he heard the song "Autumn" before the ship sank. It is considered Bride either meant the hymn called "Autumn" or waltz "Songe d'Automne" but neither were in the White Star Line songbook for the band.[122] Bride is the only witness who was close enough to the band, as he floated off the deck before the ship went down, to be considered reliable—Mrs. Dick had left by lifeboat an hour and 20 minutes earlier and could not possibly have heard the band's final moments. The notion that the band played "Nearer, My God, to Thee" as a swan song is possibly a myth originating from the wrecking of the SS Valencia, which had received wide press coverage in Canada in 1906 and so may have influenced Mrs. Dick's recollection.[7] Also, there are two, very different, musical settings for "Nearer, My God, to Thee": one is popular in Britain, and the other is popular in the U.S., and the British melody might sound like the other hymn ("Autumn"). The film A Night to Remember (1958) uses the British setting; while the 1953 film Titanic, with Clifton Webb, uses the American setting.
The stories of W.T. Stead
Main article: William Thomas Stead

Another often cited Titanic legend concerns perished first class passenger William Thomas Stead. According to this folklore, Stead had, through precognitive insight, foreseen his own death on the Titanic. This is apparently suggested in two fictional sinking stories, which he penned decades earlier. The first,[123][124] (Pall Mall Gazette, 22 March 1886) tells of a mail steamer's collision with another ship, resulting in high loss of life due to lack of lifeboats.

In 1892, Stead published a story called From the Old World to the New,[125] in which a White Star Line vessel, the Majestic, rescues survivors of another ship that collided with an iceberg.
The Titanic curse

When the Titanic sank, claims were made that a curse existed on the ship. The press quickly linked the "Titanic curse" with the White Star Line practice of not christening their ships (notwithstanding the opening scene of the film A Night to Remember).[7]

One of the most widely spread legends linked directly into the sectarianism of the city of Belfast, where the ship was built. It was suggested that the ship was given the number 390904 which, when read backwards, was claimed to spell "no pope", a sectarian slogan attacking Roman Catholics that was (and is) widely used provocatively by extreme Protestants in Northern Ireland, where the ship was built. In the extreme sectarianism of north-east Ireland (Northern Ireland itself did not exist until 1920), the ship's sinking, though mourned, was alleged to be on account of the sectarian anti-Catholicism of her manufacturers, the Harland and Wolff company, which had an almost exclusively Protestant workforce and an alleged record of hostility towards Catholics. (Harland and Wolff did have a record of hiring few Catholics; whether that was through policy or because the company's shipyard in Belfast's bay was located in almost exclusively Protestant East Belfast—through which few Catholics would dare to travel—or a mixture of both, is a matter of dispute.)[126]

The "no pope" story is in fact an urban legend. The RMS Olympic and Titanic were assigned the yard numbers 400 and 401[127] respectively. The source of the story may have been from reports by dockworkers in Queenstown of anti-Catholic graffiti that they found on Titanic's coalbunkers when they were loading coal.

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Titanic (1997 film)
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Titanic

Theatrical release poster
Directed by James Cameron
Produced by James Cameron
Jon Landau
Written by James Cameron
Starring Leonardo DiCaprio
Kate Winslet
Billy Zane
Kathy Bates
Frances Fisher
Gloria Stuart
Bernard Hill
Victor Garber
Danny Nucci
Bill Paxton
Music by James Horner
Cinematography Russell Carpenter
Editing by James Cameron
Conrad Buff
Richard A. Harris
Studio Lightstorm Entertainment
Distributed by 20th Century Fox
United States
Paramount Pictures
Release date(s) December 19, 1997
Running time 194 minutes
Country United States
Language English
Budget $200 million[1][2][3][4][5][6]
Gross revenue $1,843,201,268[1]

Titanic is a 1997 American disaster/romantic/drama film directed, written, co-produced, and co-edited by James Cameron about the sinking of the RMS Titanic. It stars Leonardo DiCaprio as Jack Dawson and Kate Winslet as Rose DeWitt Bukater, two members of different social classes who fall in love aboard the ill-fated maiden voyage of the ship. The main characters and the central love story are fictional, but some characters (such as members of the ship's passengers and crew) are based on historical figures. Gloria Stuart portrays the elderly Rose, who narrates the film in a modern day framing device, and Billy Zane stars as Cal Hockley, the overbearing fiancé of Rose's younger self.

Production of the film began in 1995, when Cameron shot footage of the real wreck of the RMS Titanic. He envisioned the love story as a means to engage the audience with the real-life tragedy. Shooting took place on board the Akademik Mstislav Keldysh – which aided Cameron in filming the real wreck – for the modern scenes, and a reconstruction of the ship was built at Playas de Rosarito, Baja California. Cameron also used scale models and computer-generated imagery to recreate the sinking. At the time, the picture became the most expensive film ever made, costing approximately US$200 million with funding from Paramount Pictures and 20th Century Fox.[3][4][5][6]

The film was originally to be released on July 2, 1997, but post-production delays pushed back the film's release to December 19, 1997.[7] The film turned out to be an enormous critical and commercial success. Nominated for fourteen Academy Awards, it won eleven, including Best Picture.[8] It became the highest-grossing film of all time, with a worldwide total of over $1.8 billion, and remained so for twelve years until Cameron's directorial follow-up, Avatar, surpassed it in 2010.[9][10]

The film is due to be re-released in theatres in 2012 after Cameron completes its 3-D transformation.[11]

Plot

In 1996, treasure hunter Brock Lovett (Bill Paxton) and his team explore the wreck of the RMS Titanic, searching for a necklace set with a valuable blue diamond called the Heart of the Ocean. They believe the diamond is in Caledon "Cal" Hockley's safe, which they recover. They do not find the diamond, but a sketch of a nude woman wearing the diamond. The drawing is dated April 14, 1912, the night the Titanic hit the iceberg. One-hundred-year-old Rose Dawson Calvert (Gloria Stuart) learns of the drawing and contacts Lovett, informing him that she is the woman in the drawing. She and her granddaughter Elizabeth "Lizzy" Calvert (Suzy Amis) visit Lovett and his team on his salvage ship. When asked if she knew the whereabouts of the necklace, Rose recalls her memories aboard the Titanic, revealing that she is Rose DeWitt Bukater, a passenger believed to have died in the sinking.

In 1912, the upper class 17-year-old Rose DeWitt Bukater (Kate Winslet) boards the ship in Southampton, England with her 30-something fiancé Caledon "Cal" Hockley (Billy Zane), the son of a Pittsburgh steel tycoon, and her mother, Ruth DeWitt Bukater (Frances Fisher). Cal and Ruth stress the importance of Rose's engagement, since the marriage will mean the eradication of the Dewitt-Bukater debts; while they appear upper-class, Rose and her mother are experiencing severe financial troubles. Distraught and frustrated by her engagement to the controlling Cal and the pressure her mother is putting on her, Rose considers attempting suicide by jumping off the stern of the ship. Before she leaps, a drifter and artist named Jack Dawson (Leonardo DiCaprio) intervenes and persuades her not to. As he helps her up from the stern, her dress catches and she falls. Jack grabs Rose's arm and helps her to pull herself back onto the boat. Cal, his friends and the sailors, overhearing Rose's screams, believe Jack attempted to rape her. She explains that Jack saved her life, hiding her suicide attempt by claiming she slipped while trying to see the propellers. Jack supports Rose's story, though Hockley's manservant, former Pinkerton agent Spicer Lovejoy (David Warner), is unconvinced. Jack and Rose develop a tentative friendship. Their bond deepens when they leave a stuffy first-class formal dinner of the rapport-building wealthy for a much livelier gathering in third-class.

Lovejoy informs Cal of Rose's partying, and during breakfast the following morning Cal and Ruth forbid her to see Jack again. After witnessing a woman encouraging her young daughter to behave like a "proper lady" at tea, Rose defies them and meets Jack at the bow of the ship. She has decided she would rather be with him than with Cal, and the two share a passionate kiss. They go to Rose's stateroom, where she asks Jack to sketch her wearing nothing but the Heart of the Ocean, an engagement present from Cal. Afterwards, the two run from Lovejoy, going into the ship's cargo hold. They enter William Carter's Renault and make love in the backseat before moving to the ship's forward well deck. After witnessing the ship's collision with an iceberg and overhearing the ship's lookouts discussing how serious it is, Rose tells Jack they should warn her mother and Cal. Cal has discovered Rose's drawing and her taunting note in his safe, so he frames Jack for stealing the Heart of the Ocean by having Lovejoy plant it in Jack's pocket. Jack is arrested, taken down to the Master-at-arms's office and handcuffed to a pipe. Rose runs away from Cal and her mother (who has boarded a lifeboat) to rescue Jack from imprisonment. She frees him with an axe.

After much turmoil, Jack and Rose return to the boat deck. Cal and Jack want Rose safe, so they persuade her to board a lifeboat, Cal claiming that he has an arrangement that will allow him and Jack to get off safely. After Rose is out of earshot, Cal admits that there is an arrangement, but he will not use it to help Jack. Realizing that she cannot leave Jack, Rose jumps back on the ship and reunites with him at the ship's first-class staircase. Infuriated, Cal takes Lovejoy's pistol and chases Jack and Rose into the flooding first-class dining saloon. When Cal runs out of ammunition, he sarcastically wishes them well, then realizes he left the Heart of the Ocean in Rose's overcoat. Cal abandons Lovejoy and returns to the boat deck, where he boards a lifeboat by pretending to look after an abandoned child. Jack and Rose go through grueling struggles just to return to the top deck. By the time they do, people everywhere are falling to their deaths and the lifeboats have gone. The ship begins to quickly sink as the first class staircase is destroyed and the ship becomes more steep. Jack and Rose take refuge on the now-vertical stern, which washes them into the Atlantic Ocean. They grab hold of a door that only supports one person. Jack remains in the water, clinging to the door. As Rose accepts their fate, Jack assures her that she will live to have a long, happy life. He says that when she dies it will be in her own bed. As they await rescue, Jack dies from hypothermia.

When a lifeboat finally returns to the site of the sinking, Rose is thinking of staying put and dying with Jack, but is then inspired by Jack's words and determined to live. She blows a whistle taken from a nearby frozen crew member, and is taken by the RMS Carpathia to New York, where she gives her name as Rose Dawson. She sees Cal for the last time on Carpathia's deck, looking for her. It is revealed that Cal commits suicide after losing his fortune in the Crash of 1929.

Having completed her story, the elderly Rose goes alone to the stern of Lovett's ship. There, she pulls out the Heart of the Ocean, revealing that she had it all along, and drops it into the water. As she sleeps in her bed, around her are pictures of her doing everything she said she would do with Jack throughout her life. The final shot of the film is of young Rose being reunited with Jack at the Grand Staircase of the Titanic, surrounded and applauded by those who perished on the ship; it is deliberately unclear if this is a conscious dream, or if Rose has died in her sleep.[12]
[edit] Cast
[edit] Fictional characters

* Leonardo DiCaprio as Jack Dawson: Cameron said he needed the cast to feel as though they were really on the Titanic, its liveliness, and "to take that energy and give it to Jack, he's an artist who is able to have his heart soar".[13] After completing the script for Titanic, Cameron discovered that there had been a real "J. Dawson" who died aboard the Titanic. "J. Dawson" (Joseph Dawson) had been born September 1888 in Dublin, Ireland. "His body was salvaged and buried at Fairview Lawn cemetery in Nova Scotia with many other Titanic victims. Today, his grave stone (#227) is the most widely visited in the cemetery."[14] Within the film, Jack is portrayed as a penniless Wisconsin man who has toured parts of the world, primarily Paris. He wins two tickets onto the RMS Titanic in a poker game and travels as a third-class passenger with his friend Fabrizio. He is attracted to Rose at first sight and meets her when she attempts to throw herself off the stern of the ship. This enables him to mix with the first-class passengers for a night. When casting the role, various established actors, including Matthew McConaughey, Chris O'Donnell, Billy Crudup and Stephen Dorff, were considered, but Cameron ultimately felt that a few of them were too old for the part of a 20-year-old.[14][15][16][17][18] "Tom Cruise expressed an interest in [portraying] the character, though his superstar asking price was never taken seriously."[16] DiCaprio, 22 at the time, was brought to Cameron's attention by casting director Mali Finn.[15] He initially did not want to portray the character, and refused to read his first romantic scene on the set. Cameron said, "He read it once, then started goofing around, and I could never get him to focus on it again. But for one split second, a shaft of light came down from the heavens and lit up the forest." Cameron strongly believed in DiCaprio's acting ability, and told him, "Look, I'm not going to make this guy brooding and neurotic. I'm not going to give him a tic and a limp and all the things you want." Cameron rather envisioned the character as a Jimmy Stewart type.[15]
* Kate Winslet as Rose DeWitt Bukater: Cameron said Winslet "had the thing that you look for" and that there was "a quality in her face, in her eyes," that he "just knew people would be ready to go the distance with her".[13] Rose is portrayed as a 17-year-old girl, originally from Philadelphia, who is forced into an engagement to 30-something Caledon Hockley so she and her mother, Ruth, can maintain their high-class status following her father's death, whose debts left them a "reputated" empty shell. Along with Cal and Ruth, Rose boards the RMS Titanic as a first-class passenger, where she meets Jack. Winslet stated of her character, "She has got a lot to give, and she's got a very open heart. And she wants to explore and adventure the world, but she [feels] that's not going to happen."[13] Gwyneth Paltrow, Claire Danes, Gabrielle Anwar had been considered for the role.[15][19][20] When they turned it down, 22-year-old Winslet campaigned for the role heavily by sending Cameron daily notes from England, which led Cameron to invite her to Hollywood for auditions. Like DiCaprio, she was originally brought to Cameron's attention by casting director Mali Finn. Looking for a Rose, Cameron described the character as "an Audrey Hepburn type" and was initially uncertain about casting Winslet even after her screen test impressed him.[15] After she screen tested with DiCaprio, she was so thoroughly impressed with him, that she whispered to Cameron, "He's great. Even if you don't pick me, pick him." Winslet sent Cameron a single rose with a card signed "From Your Rose" and lobbied him by phone. "You don't understand!" she pleaded one day when she reached him by mobile phone in his Humvee. "I am Rose! I don't know why you're even seeing anyone else!" Her persistence, as well as talent, eventually convinced him to cast her.[15]
* Billy Zane as Caledon Nathan "Cal" Hockley: Cal is Rose's 30-something fiancé, and serves as the main antagonist of the film. Arrogant and snobbish, Cal is the heir to a steel fortune in Pittsburgh. He becomes increasingly embarrassed, jealous, and cruel over Rose's relationship with Jack. As with the role of Jack, the part was originally offered to Matthew McConaughey.[16]
* Frances Fisher as Ruth DeWitt Bukater: Rose's widowed mother, who arranges her daughter's engagement to Cal to maintain her family's high-class status. She loves her daughter but believes that social position is more important. She scorns Jack, even though he saved her daughter's life.
* Gloria Stuart as Rose Dawson Calvert: Cameron stated, "In order to see the present and the past, I decided to create a fictional survivor who is [close to] 101 years, and she connects us in a way through history."[13] The 100-year-old Rose gives Lovett information regarding the "Heart of the Ocean" after he discovers a nude drawing of her in the wreck. She tells the story of her time aboard the ship, mentioning Jack for the first time since the sinking. At 87, Stuart had to be made up to look older for the role.[16] Of casting Stuart, Cameron stated, "My casting director found her. She was sent out on a mission to find retired actresses from the Golden Age of the thirties and forties."[21] Cameron said that he did not know who Stuart was, and Fay Wray was also considered for the role. "But [Stuart] was just so into it, and so lucid, and had such a great spirit. And I saw the connection between her spirit and [Winslet's] spirit," stated Cameron. "I saw this joie de vivre in both of them, that I thought the audience would be able to make that cognitive leap that it's the same person."[21] Stuart believes her character died at the end of the film,[22] while Cameron states in his DVD commentary that he prefers to leave the viewer to interpret the shot.[12]
* David Warner as Spicer Lovejoy: An ex-Pinkerton constable, Lovejoy is Cal's English valet and bodyguard, who keeps an eye on Rose and is suspicious regarding the circumstances surrounding Jack's rescue of her.
* Danny Nucci as Fabrizio De Rossi: Jack's Italian best friend, who boards the RMS Titanic with him after Jack wins two tickets in a poker game.
* Bill Paxton as Brock Lovett: A treasure hunter looking for the "Heart of the Ocean" in the wreck of the Titanic in the present. Time and funding for his expedition are running out. He later reflects at the film's conclusion that, despite thinking about Titanic for three years, he has never understood it until he hears Rose's story.
* Lewis Abernathy as Lewis Bodine: Lovett's friend, who expresses doubt about whether the elderly Rose is telling the truth. He demonstrates to Rose, with little regard for sensitivity, how the Titanic sank with a computer simulation. When Rose finishes telling her story, he appears more sympathetic, solemnly informing her about the lack of records about Jack's existence.
* Suzy Amis as Lizzy Calvert: Rose's granddaughter, who accompanies her when she visits Lovett on the ship.
* Jason Barry as Thomas "Tommy" Ryan: An Irish third-class passenger who befriends Jack and Fabrizio.

[edit] Historical characters

* Kathy Bates as Margaret "Molly" Brown: Brown is depicted as being frowned upon by other first-class women, including Ruth, as "vulgar" and "new money" due to her sudden wealth. She is friendly to Jack and lends him a tuxedo (bought for her son) when he is invited to dinner in the first-class dining saloon. Although Brown was a real person, Cameron chose to not portray her real-life actions. Molly Brown was dubbed "The Unsinkable Molly Brown" by historians because she, with the support of other women, commandeered Lifeboat 6 from Quartermaster Hichens.[23] Aspects of this altercation are portrayed in Cameron's film.
* Victor Garber as Thomas Andrews: The ship's builder, Andrews is portrayed as a very kind and pleasant man who is modest about his grand achievement. After the collision, he tries to convince the others, particularly Ismay, that it is a "mathematical certainty" that the ship will sink. He is depicted during the sinking of the ship as standing next to the clock in the first-class smoking room, lamenting his failure to build a strong and safe ship. It is unknown how the real Andrews died.
* Bernard Hill as Captain Edward John Smith: Smith planned to make the Titanic voyage his final one before retiring. This influences his decision to increase the ship's speed to make headlines (whether this increase in speed actually happened is strongly contested; see RMS Titanic); it is later reflected in the present that this was due to his long experience causing him to conclude that anything large enough to sink Titantic would be visible early enough for them to avoid it. He retreats into the bridge as the ship sinks, dying when water bursts through the windows whilst clinging to the ship's wheel. It is often disputed whether he died this way or later froze to death, as he was reported seen near the overturned Collapsible B.[24]
* Jonathan Hyde as Joseph Bruce Ismay: Ismay is portrayed as an ignorant first-class rich man. In the film, he uses his position as White Star Line managing director to influence Captain Smith to go faster with the prospect of an earlier arrival in New York and favorable press attention. After the collision, he struggles to comprehend that his "unsinkable" ship is doomed, later sneaking on board a lifeboat to escape.
* Eric Braeden as Colonel John Jacob Astor IV: A first-class passenger whom Rose calls the richest man on the ship. The film depicts Astor and his 18-year-old wife Madeleine as being introduced to Jack by Rose in the first-class dining saloon, during which he asks if Jack is connected to the 'Boston Dawsons' (Jack neatly deflecting the query by saying that he is instead affiliated with the Chippawea Falls Dawsons). He is last seen as the Grand Staircase glass dome implodes and water surges in. In reality, Astor died after being crushed when one of the ship's funnels collapsed.[25] Madeleine Astor survived in one of the last boats to leave the Titanic, but her survival is not shown.
* Bernard Fox as Colonel Archibald Gracie IV: The film depicts Gracie making a comment to Cal that "women and machinery don't mix", and congratulating Jack for saving Rose from falling off the ship (he is unaware it was a suicide attempt). While the film depicts Gracie with a British accent, he was in fact American. Archibald Gracie survived the sinking on the overturned Collapsible B. Fox also portrayed lookout Frederick Fleet in the 1958 film A Night to Remember.
* Michael Ensign as Benjamin Guggenheim: A mining magnate traveling in first-class. He shows off his French mistress Madame Aubart to his fellow passengers while his family waits for him at home. When Jack joins the other first-class passengers for dinner after his rescue of Rose, Guggenheim refers to him as a "bohemian".
* Jonathan Evans-Jones as Wallace Hartley: The ship's bandmaster and violinist who plays uplifting music with his colleagues on the boat deck as the ship sinks. As the final plunge begins, he leads the band in a final performance of Nearer, My God, to Thee and dies in the sinking. It has been disputed for many years whether it was this or a waltz tune named "Autumn" that was played last.
* Ewan Stewart as First Officer William Murdoch: The officer who is put in charge of the bridge on the night the ship struck the iceberg. During a rush for the lifeboats, Murdoch shoots Tommy Ryan as well as another passenger in a momentary panic, then commits suicide out of guilt, in reality however it is not clear how Murdoch might have died. When Murdoch's nephew Scott saw the film, he objected to his uncle's portrayal as damaging to Murdoch's heroic reputation.[26] A few months later, Fox vice-president Scott Neeson went to Dalbeattie, Scotland, where Murdoch lived, to deliver a personal apology, and also presented a £5000 donation to Dalbeattie High School to boost the school's William Murdoch Memorial Prize.[27] Cameron apologized on the DVD commentary, but noted that there were officers who fired gunshots to follow the "women and children first" policy.[28]
* Jonathan Phillips as Second Officer Charles Lightoller: The ship's most senior surviving officer. The film depicts Lightoller telling Captain Smith that it will be difficult to see icebergs with no breaking water. He is seen brandishing a gun and threatening to use it to keep order. He can be seen on top of Collapsible B when the first funnel collapses.
* Mark Lindsay Chapman as Chief Officer Henry Wilde: The ship's chief officer, who lets Cal on board a lifeboat because he has a child in his arms. Before he dies, he tries to get the boats to return to the sinking site to rescue passengers by blowing his whistle. After he freezes to death, Rose uses his whistle to attract the attention of Fifth Officer Lowe, which leads to her rescue. It is unknown how the real Henry Wilde died.
* Ioan Gruffudd as Fifth Officer Harold Lowe: The only ship's officer who led a lifeboat to retrieve survivors of the sinking on the icy waters. The film depicts Lowe rescuing Rose.
* Edward Fletcher as Sixth Officer James Moody: The ship's only junior officer who died in the sinking. The film depicts Moody admitting Jack and Fabrizio onto the ship only moments before it departs from Southampton, follows Mr. Murdoch's orders putting the ship to full speed ahead, and informs First Officer Murdoch about the iceberg.
* James Lancaster as Father Thomas Byles: Father Byles, a Catholic priest from England, is portrayed praying and consoling passengers during the ship's final moments.
* Lew Palter and Elsa Raven as Isidor Straus and Ida Straus: Isidor is a former owner of R.H. Macy and Company, a former congressman from New York, and a member of the New York and New Jersey Bridge Commission. During the sinking, his wife Ida is offered a place in a lifeboat, but refuses, saying that she will honor her wedding pledge by staying with Isidor. They are last seen lying on their bed embracing each other as water fills their stateroom.
* Martin Jarvis as Sir Cosmo Duff-Gordon: A Scottish baronet who is rescued in Lifeboat 1. He and his wife were among only 12 people in Lifeboat #1, whose capacity was 40. He was accused of bribing the boat's crewmen not to row back and rescue those struggling in the water, but the British Board of Trade's Inquiry into the disaster cleared them of any wrongdoing and a letter written by the secretary further clears their name.[29]
* Rosalind Ayres as Lady Duff-Gordon: A world-famous fashion designer and Sir Cosmo's wife. She is rescued in Lifeboat 1 with her husband. She and her husband never lived down rumors that they had forbidden the lifeboat's crew to return to the wreck site in case they would be swamped.[30][31][32][33]
* Rochelle Rose as Noel Leslie, Countess of Rothes: The Countess is shown to be friendly with Cal and the DeWitt Bukaters. Even though she is of a higher status in society than Sir Cosmo and Lady Duff-Gordon she is kind and helps row the boats and even looks after the steerage passengers.
* Scott G. Anderson as Frederick Fleet: The lookout who saw the iceberg. Fleet escapes the sinking ship aboard Lifeboat 6.
* Martin East as Reginald Lee: The other lookout in the crow's nest. He survives the sinking.
* Simon Crane as Fourth Officer Joseph Boxhall: The officer in charge of firing flares and manning Lifeboat 2 during the sinking. He is shown on the bridge wings helping the seamen firing the flares.
* Gregory Cooke as Jack Phillips: Senior wireless operator on board the Titanic whom Captain Smith ordered to send the distress signal.
* Liam Tuohy as Chief Baker Charles Joughin: The baker appears in the film on top of the railing with Jack and Rose as the ship sinks, drinking brandy from a flask. According to the real Joughin's testimony he rode the ship down and stepped into the water without getting his hair wet. He also admitted to hardly feeling the cold, most likely thanks to alcohol.[34]
* Terry Forrestal as Chief Engineer Joseph G. Bell: Bell and his men worked until the last minute to keep the lights on and power for distress signals to get out. Bell and all of the engineers died in the bowels of the Titanic.

[edit] Cameos

Several crew members of the Akademik Mstislav Keldysh appear in the film, including Anatoly Sagalevich, creator and pilot of the Mir submersibles.[35] Anders Falk, who filmed a documentary about the film's sets for the Titanic Historical Society, cameoed in the film as a Swedish immigrant who Jack Dawson meets when he enters his cabin. Ed and Karen Kamuda, then President and Vice President of the Society, were extras on the film.[36]
[edit] Production
[edit] Writing and inspiration
"The story could not have been written better...The juxtaposition of rich and poor, the gender roles played out unto death (women first), the stoicism and nobility of a bygone age, the magnificence of the great ship matched in scale only by the folly of the men who drove her hell-bent through the darkness. And above all the lesson: that life is uncertain, the future unknowable . . . the unthinkable possible."
— James Cameron[37]

James Cameron was fascinated by shipwrecks, especially the RMS Titanic, and wrote a treatment for the film.[38] He said he made Titanic "because [he] wanted to dive to the shipwreck, not because [he] particularly wanted to make the movie".[39][40][41] He said that the Titanic was "the Mount Everest of shipwrecks" and he, as a diver, wanted to tell the story right. "When I learned some other guys had dived to the Titanic to make an IMAX movie, I said, 'I’ll make a Hollywood movie to pay for an expedition and do the same thing.' I loved that first taste, and I wanted more," stated Cameron. "Titanic was about 'fuck you' money. It came along at a point in my life when I said, 'I can make movies until I’m 80, but I can’t do expedition stuff when I’m 80.'" Cameron's father had been an engineer. "I had studied to be an engineer and had a mental restlessness to live the life I had turned my back on when I switched from the sciences to the arts in college," said Cameron.[39]

He described the sinking of the Titanic as "like a great novel that really happened". Yet, over time he felt that the event had become a mere morality tale, and described making the film as putting the audience in an experience of living history.[37] Cameron described a love story as the most engaging part of a story. As the likable Jack and Rose had their love blossom and eventually destroyed, the audience would mourn the loss.[37] Cameron said, "All my films are love stories, but in Titanic I finally got the balance right. It's not a disaster film. It's a love story with a fastidious overlay of real history."[21] Lastly, Cameron created a modern framing of the romance with an elderly Rose, making the history palpable and poignant.[37] The treasure hunter Brock Lovett is meant to represent those who never connected with the human element of the tragedy.[35] Cameron wanted to honor the people who died during the sinking, and he spent six months fully researching what happened, creating a timeline of all the Titanic's crew and passengers.[37]

Cameron met with 20th Century Fox, and pitched the film as "Romeo and Juliet on the Titanic".[40][41] There was a tense pause and Cameron said, "Also, fellas, it's a period piece, it's going to cost $150,000,000 and there's not going to be a sequel." Peter Chernin was among the cadre of studio executives. Cameron said, "They were like, 'Oooooohkaaaaaay – a three-hour romantic epic? Sure, that's just what we want. Is there a little bit of Terminator in that? Any Harrier jets, shoot-outs, or car chases?' I said, 'No, no, no. It's not like that.'"[15] Fox was dubious about the idea's commercial prospects. Wanting a long term relationship with Cameron, however, they gave him a greenlight.[15][16][21] Cameron convinced them to make a film based on the publicity afforded by shooting the wreck itself,[38] and organized a dive to the wreck of the Titanic over two years.[37] "My pitch on that had to be a little more detailed," said Cameron. "So I said, ‘Look, we’ve got to do this whole opening where they’re exploring the Titanic and they find the diamond, so we’re going to have all these shots of the ship." Cameron stated, "Now we can either do them with elaborate models and motion control shots and CG and all that, which will cost X amount of money – or we can spend X plus 30 per cent and actually go shoot it at the real wreck."[40]

The crew shot in the Atlantic Ocean twelve times in 1995, shooting during eleven of those occasions, and actually spent more time with the ship than its passengers. At that depth, the water pressure is 6,000 pounds per square inch. "One small flaw in the vessel's superstructure would mean instant death for all on board." Not only were all the dives high-risk, but various conditions prevented Cameron from getting the high quality of footage that he wanted.[16] After getting the underwater shots, he began writing a screenplay.[38]

Cameron said that diving to the wreck made him and his crew want "to live up to that level of reality" from that point on. "But there was another level of reaction coming away from the real wreck, which was that it wasn't just a story, it wasn't just a drama," he said. "It was an event that happened to real people who really died. Working around the wreck for so much time, you get such a strong sense of the profound sadness and injustice of it, and the message of it." Cameron stated, "You think, 'There probably aren't going to be many filmmakers who go to Titanic. There may never be another one – maybe a documentarian." Because of this, he felt that it "sort of [became] a great mantle of responsibility to convey the emotional message of it – to do that part of it right, too".[21]
[edit] Filming

The modern day scenes of the expedition were shot on the Akademik Mstislav Keldysh in July 1996.[35] Principal photography for Titanic began in September 1996 at the newly-built Fox Baja Studios.[35] The scenes on the poop deck were built on a hinge which could rise from zero to ninety degrees in a few seconds as the ship's stern rose during sinking.[42] For the safety of the stuntmen, many props were made of foam rubber.[43] By November 15, they were shooting the boarding scenes.[42] Cameron chose to build his RMS Titanic on the starboard side as a study of weather data showed prevailing north-to-south wind that blew the funnel smoke aft. This posed a problem for shooting the ship's departure from Southampton, as it was docked on its port side. Writing on props and costumes had to be reversed, and if someone walked to their right in the script, they had to walk left. In post-production, the film was flipped to the correct direction.[44]
Close-up drawing of nude Rose, wearing the Heart of the Ocean. As one of the more romantic scenes within the film, Cameron drew the portrait himself.

Cameron sketched the portrait of nude Rose, the piece depicted within the film as having been drawn by Jack.[14][15] Cameron said repression is the backdrop of the scene. "You know what it means for her, the freedom she must be feeling. It's kind of exhilarating for that reason," he said.[21] The nude scene was DiCaprio and Winslet's first scene together. "It wasn't by any kind of design, although I couldn't have designed it better. There's a nervousness and an energy and a hesitance in them," Cameron stated. "They had rehearsed together, but they hadn't shot anything together. If I'd had a choice, I probably would have preferred to put it deeper into the body of the shoot." He said he and his crew "were just trying to find things to shoot" because the big set was not yet ready. "It wasn't ready for months, so we were scrambling around trying to fill in anything we could get to shoot." After seeing the scene on film, Cameron felt it worked out considerably well.[21]

Other moments on the set did not work out as smoothly. Filming Titanic was an arduous experience for all involved. The making of the film "cemented Cameron’s formidable reputation as 'the scariest man in Hollywood'. He became known as an uncompromising, hard-charging perfectionist" and "300- decibel screamer, a modern-day Captain Bligh with a megaphone and walkie-talkie, swooping down into people’s faces on a 162ft crane".[45] Winslet stated, "God damn it! He would yell at some poor crew member. That’s exactly what I didn’t want!"[45] Winslet chipped a bone in her elbow during filming, and had been worried that she would drown in the 17m-gallon water tank the ship was to be sunk in. "There were times when I was genuinely frightened of him. Jim has a temper like you wouldn’t believe," she said.[45] Co-star Bill Paxton was familiar with Cameron's work ethics; he had already acted in a number of Cameron-related films. "There were a lot of disgruntled people on the set. Jim is not one of those guys who has the time to win hearts and minds," he said.[45] Crews felt Cameron had an evil alter ego, and nicknamed him "Mij" (Jim spelt backwards).[45] In response to the criticism, Cameron stated, "Film-making is war. A great battle between business and aesthetics."[45]

During shooting on the Akademik Mstislav Keldysh, a disgruntled crew member put the hallucinogen PCP into the soup that Cameron and others ate one night, which sent more than 50 people to the hospital. "There were people just rolling around, completely out of it. Some of them said they were seeing streaks and psychedelics," said actor Lewis Abernathy.[15] Cameron managed to vomit before the drug took a full hold. Abernathy was shocked at the way he looked. "One eye was completely red, like the Terminator eye. A pupil, no iris, beet red. The other eye looked like he’d been sniffing glue since he was four."[15][45] The person behind the poisoning was never caught.[46][47]

The filming schedule was intended to last 138 days but grew to 160. Many cast members came down with colds, flu, or kidney infections after spending hours in cold water, including Winslet. After dealing with fears of drowning, chipping an elbow bone, and getting the flu, she decided she would not work with Cameron again unless she earned "a lot of money".[46] Several others left and three stuntmen broke their bones, but the Screen Actors Guild decided, following an investigation, that nothing was inherently unsafe about the set.[46] Additionally, DiCaprio said there was no point when he felt he was in danger during filming.[48] Cameron believed in passionate work ethic and never apologized for the way he ran his sets, although he acknowledged:

I'm demanding, and I'm demanding on my crew. In terms of being kind of militaresque, I think there's an element of that in dealing with thousands of extras and big logistics and keeping people safe. I think you have to have a fairly strict methodology in dealing with a large number of people.[46]

The costs of filming Titanic eventually began to amount, and finally reached US$200 million.[3][4][5][6] Fox executives panicked, and suggested an hour of specific cuts from the three-hour film. They argued the extended length would mean fewer showings, thus less money even though long epics are more likely to help directors win Oscars. Cameron refused Fox. "You want to cut my movie? You're going to have to fire me! You want to fire me? You're going to have to kill me!" he said.[15] The executives did not want to start over, because it would mean the loss of their entire investment, but they also initially rejected Cameron's offer of forfeiting his share of the profits as an empty gesture; they felt that profits would be unlikely.[15] Cameron explained forfeiting his share as complex. "...the short version is that the film cost proportionally much more than T2 and True Lies. Those films went up seven or eight percent from the initial budget. Titanic also had a large budget to begin with, but it went up a lot more," said Cameron. "As the producer and director, I take responsibility for the studio that's writing the checks, so I made it less painful for them. I did that on two different occasions. They didn't force me to do it; they were glad that I did."[21]
[edit] Design
The reconstruction of the RMS Titanic

Harland and Wolff, the RMS Titanic's builders, opened their private archives to the crew, sharing blueprints that were thought lost. For the ship's interiors, production designer Peter Lamont's team looked for artifacts from the era, though the newness of the ship meant every prop had to be made from scratch.[49] Fox acquired 40 acres (16 ha) of waterfront south of Playas de Rosarito in Mexico, and began building a new studio on May 31, 1996. A seventeen-million-gallon tank was built for the exterior of the reconstructed ship, providing 270 degrees of ocean view. The ship was built to full scale, but Lamont removed redundant sections on the superstructure and forward well deck for the ship to fit in the tank, with the remaining sections filled with digital models. The lifeboats and funnels were shrunk by ten percent. The boat deck and A-deck were working sets, but the rest of the ship was just steel plating. Within was a fifty-foot lifting platform for the ship to tilt during the sinking sequences. Towering above was a 162 feet (49 m) tall tower crane on 600 feet (180 m) of railtrack, acting as a combined construction, lighting, and camera platform.[35]

Cameron paid meticulous attention to detail. "I read everything I could. "I created an extremely detailed timeline of the ship’s few days and a very detailed timeline of the last night of its life," he said.[40] "And I worked within that to write the script, and I got some historical experts to analyze what I’d written and comment on it, and I adjusted it."[40] Cameron said when they started the production, they had "a very clear picture" of what happened on the ship that night. "I had a library that filled one whole wall of my writing office with Titanic stuff, because I wanted it to be right, especially if we were going to dive to the ship," he said. "That set the bar higher in a way – it elevated the movie in a sense. We wanted this to be a definitive visualization of this moment in history as if you’d gone back in a time machine and shot it."[40]

A full time etiquette coach was hired to instruct the cast on 1912 manners among the upper class gentility.[16] (Despite this, several critics picked up on the anachronisms in Cameron's script, not least involving the two main stars.)[50][51][52] The sets representing the interior rooms of the Titanic were reproduced exactly as originally built, using photographs and plans from the Titanic's builders. "The liner's 1st class staircase, which figures prominently in the script was constructed out of real wood and actually destroyed in the filming of the sinking." The rooms, the carpeting, design and colors, individual pieces of furniture, decorations, chairs, wall paneling, cutlery and crockery with the White Star Line crest on each piece, completed ceilings, and costumes were among the designs true to the originals. Cameron additionally hired two Titanic historians, Don Lynch and Ken Marschall, to authenticate the historical detail in the film.[16] After shooting the sinking scenes, the ship was then dismantled and sold for scrap metal to cover budgetary costs.[53]

There was one "crucial historical fact" Cameron chose to omit – the ship that was close to the Titanic, but had turned off its radio for the night and did not hear their SOS calls. "Yes, the [SS] Californian. That wasn't a compromise to mainstream filmmaking. That was really more about emphasis, creating an emotional truth to the film," stated Cameron. He said there were aspects of retelling the sinking that seemed important in pre- and post-production, but turned out to be less important as the film evolved. "The story of the Californian was in there; we even shot a scene of them switching off their Marconi radio set," said Cameron. "But I took it out. It was a clean cut, because it focuses you back onto that world. If Titanic is powerful as a metaphor, as a microcosm, for the end of the world in a sense, then that world must be self-contained."[21]
[edit] Effects

Cameron wanted to push the boundary of special effects with his film, and enlisted Digital Domain to continue the breakthroughs on digital technology the director pioneered on The Abyss and Terminator 2: Judgment Day. Previous films about the RMS Titanic shot water in slow motion, which did not look wholly convincing.[54] He encouraged them to shoot their 45-foot (14 m) long miniature of the ship as if "we're making a commercial for the White Star Line".[55] Afterward, digital water and smoke were added, as were extras captured on a motion capture stage. Visual effects supervisor Rob Legato scanned the faces of many actors, including himself and his children, for the digital extras and stuntmen. There was also a 65-foot (20 m) long model of the ship's stern that could break in two repeatedly, the only miniature to be used in water.[54] For scenes set in the ship's engines, footage of the SS Jeremiah O'Brien's engines were composited with miniature support frames and actors shot against greenscreen.[56] To save money, the First Class Lounge was a miniature set incorporated into a greenscreen backdrop.[57]
Unlike previous Titanic films, Cameron's retelling of the disaster showcased the ship breaking in half just before it sinks vertically. The scenes were an account of the moment's most likely outcome.

An enclosed 5,000,000 US gallons (19,000,000 l) tank was used for sinking interiors, in which the entire set could be tilted into the water. To sink the Grand Staircase, 90,000 US gallons (340,000 l) of water was dumped into the set as it was lowered into the tank. Unexpectedly, the waterfall ripped the staircase from its steel-reinforced foundations, though no one was hurt. The 744-foot (227 m) long exterior of the RMS Titanic had its first half lowered into the tank, but being the heaviest part of the ship meant it acted as a shock absorber against the water. To get the set into the water, Cameron had much of the set emptied and even smashed some of the promenade windows himself. After submerging the Dining Saloon, three days were spent shooting Lovett's ROV traversing the wreck in the present.[35] The post-sinking scenes in the freezing Atlantic were shot in a 350,000 US gallons (1,300,000 l) tank,[58] where the frozen corpses were created by applying a powder on actors that crystallized when exposed to water, and wax was coated on hair and clothes.[49]

The climactic scene involving the breakup of the ship just before it sinks and its final plunge to the bottom of the Atlantic, involves a tilting full-sized set, 150 extras and 100 stunt performers. Cameron criticized previous Titanic films for depicting the final plunge of the liner as sliding gracefully underwater. He "wanted to depict it as the terrifyingly chaotic event that it really was".[16] To carry out the sequence, people needed to fall off the increasingly tilting deck, plunging hundreds of feet and bouncing off railings and propellers on the way down. "A few attempts to film this sequence with stunt people resulted in some minor injuries and Cameron halted the more dangerous stunts." The risks were eventually minimized "by using computer generated people for the dangerous falls".[16]
[edit] Editing

During the first assembly cut, Cameron altered the planned ending, which had given resolution to Brock Lovett's story. In the original version of the ending, Brock and Lizzy see Old Rose at the stern of the boat, and fear she is going to jump. Rose then reveals that she had the Heart of the Ocean diamond all along, but never sold it, as it reminded her of Cal too much. She tells Brock that life is priceless and throws the diamond into the ocean, after allowing him to hold it. Accepting that treasure is worthless, Brock laughs at his stupidity. Rose goes back to sleep, whereupon the film ends in the same way as the final version. In the editing room, Cameron decided that by this point, the audience would no longer be interested in Brock Lovett and cut the resolution to his story, so that Rose is alone when she drops the diamond. He also did not want to disrupt the audience's melancholy after the Titanic's sinking.[59]

The version used for the first test screening featured a fight between Jack and Lovejoy which takes place after Jack and Rose escape into the flooded dining saloon, but the test audiences disliked it.[60] The scene was written to give the film more suspense, and featured Cal (falsely) offering to give Lovejoy, his valet, the "Heart of the Ocean" if he can get it from Jack and Rose. Lovejoy goes after the pair in the sinking First Class dining room. Just as they are about to escape him, Lovejoy notices Rose's hand slap the water as it slips off the table behind which she is hiding. In revenge for framing him for the "theft" of the necklace, Jack attacks him and smashes his head against a glass window (this explains the gash on Lovejoy's head that can be seen when he dies in the completed version of the film). Of the scene, test audiences said it would be unrealistic to risk one's life for wealth, and Cameron cut it for this reason, as well as for timing and pacing reasons. Many other scenes were cut for similar reasons.[60]
[edit] Music and soundtrack
Main articles: Titanic (soundtrack) and Back to Titanic

"My Heart Will Go On" (performed by Céline Dion)
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Written by James Horner and Will Jennings, this ballad won four Grammy Awards and reached number-one in more than twenty-five countries.
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The soundtrack album for Titanic was composed by James Horner. For the vocals heard throughout the film, subsequently described by Earle Hitchner of The Wall Street Journal as "evocative", Horner chose Norwegian singer Sissel Kyrkjebø (better known as "Sissel"). Horner knew Sissel from her album Innerst I Sjelen, and he particularly liked how she sang Eg Veit I Himmerik Ei Borg (I Know in Heaven There Is a Castle). He had tried 25 or 30 singers before he finally chose Sissel as the voice to create specific moods within the film.[61]

Horner additionally wrote the song "My Heart Will Go On" in secret with Will Jennings because Cameron did not want any songs with singing in the film.[62] Celine Dion agreed to record a demo with the persuasion of her husband René Angélil. Horner waited until Cameron was in an appropriate mood before presenting him with the song. After playing it several times, Cameron declared its approval, although worried that he would have been criticized for "going commercial at the end of the movie".[62] Cameron also wanted to appease anxious studio executives and "saw that a hit song from his movie could only be a positive factor in guaranteeing its completion".[16]
[edit] Release

Paramount Pictures and 20th Century Fox financed Titanic, and expected Cameron to complete the film for a release on July 2, 1997. The film was to be released on this date "in order to exploit the lucrative summer season ticket sales when blockbuster films usually do better".[16] In April, Cameron said the film's special effects were too complicated and that releasing the film for summer would not be possible.[16] With production delays, Paramount pushed back the release date to December 19, 1997.[63] "This fueled speculation that the film itself was a disaster." Though a preview screening in Minneapolis on July 14 "generated positive reviews" and "[c]hatter on the Internet was responsible for more favorable word of mouth about the [film]". This led to more positive media coverage.[16]

The film premiered on November 1, 1997, at the Tokyo International Film Festival,[64] where reaction was described as "tepid" by The New York Times.[65] However, positive reviews started to appear back in the United States; the official Hollywood premiere occurred on December 14, 1997, where "the big movie stars who attended the opening were enthusiastically gushing about the film to the world media".[16]
[edit] Box office

The film received steady attendance after opening in North America on Friday, December 19, 1997. By the end of that same weekend, theaters were beginning to sell out. The film debuted with $8,658,814 on its opening day and $28,638,131 over the opening weekend from 2,674 theaters, averaging to about $10,710 per venue, and ranking #1 at the box office, ahead of the 18th James Bond film, Tomorrow Never Dies. By New Year's Day, Titanic had made over $120 million, had increased in popularity and theaters continued selling out. Its biggest single day took place on Saturday February 14 (Valentine's Day) 1998, making $13,048,711, more than six weeks after it debuted in North America. After it was released, it stayed at #1 for 15 consecutive weeks in the United States and Canada box office, which remains the record for any film.[66] By March 1998, it was the first film to earn more than $1 billion worldwide.[67] The film stayed in theaters in North America for almost ten months before finally closing on Thursday October 1, 1998 with a final domestic gross of $600,788,188. Box Office Mojo estimates that after adjusting for ticket price inflation, Titanic would be the sixth highest-grossing film of all time in the United States and Canada.[68] The film made double that amount overseas with an international gross of $1,248,025,607 and accumulated a grand total of $1,843,201,268 worldwide to become the highest-grossing film in history, and remained so for twelve years, until Avatar (also written and directed by Cameron) surpassed it in 2010.[9]
[edit] Performance analysis

Before its release, various film critics predicted the film would be a significant disappointment at the box office, especially due to being the most expensive film ever made at the time.[45][69][70][71] When it was shown to the press in autumn 1997, "it was with massive forebodings" since the "people in charge of the screenings believed they were on the verge of losing their jobs – because of this great albatross of a picture on which, finally, two studios had had to combine to share the great load of its making".[70] Cameron also thought he was "headed for disaster" at one point during filming. "We labored the last six months on Titanic in the absolute knowledge that the studio would lose $100m. It was a certainty," he stated.[45] As the film neared release, "particular venom was spat at Cameron for what was seen as his hubris and monumental extravagance". A film critic for the Los Angeles Times wrote that "Cameron’s overweening pride has come close to capsizing this project" and that the film was "a hackneyed, completely derivative copy of old Hollywood romances".[45]
"It’s hard to forget the director on the stage of the Shrine Auditorium in LA, exultant, pumping a golden Oscar statuette into the air and shouting: 'I’m the king of the world!' As everyone knew, that was the most famous line in Titanic, exclaimed by Leonardo DiCaprio’s character as he leaned into the wind on the prow of the doomed vessel. Cameron’s incantation of the line was a giant 'eff off', in front of a television audience approaching a billion, to all the naysayers, especially those sitting right in front of him."
— Christopher Goodwin of The Times on Cameron's response to Titanic's criticism[45]

When the film became a success, with an unprecedented box office performance, it was credited as "the love story [that] stole the world's hearts".[69] "The first batch of people to see it [were] gob smacked by the sheer scale and intimacy of the production. They emerged from the cinema, tear stained and emotionally flabbergasted."[71] The film was playing on 3,200 screens a full 10 weeks after it opened,[70] and out of its 15 straight weeks on top of the charts, jumped 43 percent in total sales in its ninth week of release. It earned over $20 million a week for 10 weeks,[72] and after 14 weeks into its run, it was still bringing in more than $1m in a week.[70] Though teenage girls and young women in general, who would see the film several times and subsequently caused "Leo-Mania", were often credited with having primarily propelled the film to its all-time box office record,[73] other reports have simply attributed the film's success to "[p]ositive word of mouth and repeat viewership" due to the love story combined with the ground-breaking special effects.[72][74] Its impact on men has also been especially credited.[71][75][76] Considered one of the films that "make men cry", MSNBC's Ian Hodder stated that men admire Jack's sense of adventure, stowing away on a steamship bound for America. "We cheer as he courts a girl who was out of his league. We admire how he suggests nude modeling as an excuse to get naked. So when Jack plunges to his death, an uncontrollable flood of tears sinks our composure," he said.[75] Benjamin Willcock of DVDActive.com said that, as a fourteen-year-old male, he had wanted to see Starship Troopers instead, but was overruled by an uncle and friends. "Little did I know that I would be seeing a film that would become the biggest, most successful motion picture event of all time," he stated. "I was also blissfully unaware that it would turn out to be so much more than 'some epic love story'".[71] Website filmjunk.com concluded, "Sure, most guys will tell you that the only people who enjoy Titanic are menopausal house wives, Celine Dion fans and the mentally ill. The truth, however, is that even the most red-blooded NASCAR-loving beer-guzzling alpha male secretly loves this movie."[76]

The film's catch phrase "I'm the king of the world!" became one of the film industry's more popular quotes.[77][78] According to Richard Harris, a psychology professor at Kansas State University, who studied why people like to cite films in social situations, using film quotes in everyday conversation is similar to telling a joke and a way to form solidarity with others. "People are doing it to feel good about themselves, to make others laugh, to make themselves laugh, he said. He found that all of the participants in his study had used film quotes in conversation at one point or another. "They overwhelmingly cited comedies, followed distantly by dramas and action adventure flicks." As for horror films, musicals and children's movies, they were hardly ever cited.[78]

Cameron explained the film's success as having significantly benefited from the experience of sharing. "When people have an experience that's very powerful in the movie theatre, they want to go share it. They want to grab their friend and bring them, so that they can enjoy it," he said. "They want to be the person to bring them the news that this is something worth having in their life. That's how Titanic worked.[79] Media Awareness Network stated, "The normal repeat viewing rate for a blockbuster theatrical film is about 5%. The repeat rate for Titanic was over 20%."[16] The box office receipts "were even more impressive" when factoring in "the film's 3 hour and 14 minute length meant that it could only be shown three times a day compared to a normal movie's four showings". In response to this, "[m]any theatres started midnight showings and were rewarded with full houses until almost 3:30 am".[16]

For twelve years after its release, various films were cited as contenders for surpassing Titanic's box office gross, but all failed to do so.[80] Cameron's latest film, Avatar, was considered the first film with a genuine chance at surpassing its worldwide gross,[81][82] and did so in 2010.[10] Various explanations for why the film was able to successfully challenge Titanic were given. For one, "Two-thirds of Titanic's haul was earned overseas, and Avatar [tracked] similarly... Avatar opened in 106 markets globally and was No. 1 in all of them" and the markets "such as Russia, where Titanic saw modest receipts in 1997 and 1998, are white-hot today" with "more screens and moviegoers" than before.[83] Brandon Gray, president of Box Office Mojo, said that while Avatar may beat Titanic's revenue record, the film is unlikely to surpass Titanic in attendance. "Ticket prices were about $3 cheaper in the late 1990s."[81] In December 2009, Cameron had stated, "I don't think it's realistic to try to topple Titanic off its perch. Some pretty good movies have come out in the last few years. Titanic just struck some kind of chord."[72] In a January 2010 interview, he gave a different take on the matter once Avatar's performance was easier to predict. "It's gonna happen. It's just a matter of time," he said.[82]
[edit] Critical reception

The film garnered mostly positive reviews from film critics. Review aggregator Rotten Tomatoes reports the film as holding an overall 82% approval rating based on 98 reviews, with a rating average of 7.4 out of 10. The site's general consensus is that the film is "[a] mostly unqualified triumph for Cameron, who offers a dizzying blend of spectacular visuals and old-fashioned melodrama".[74] At Metacritic, which assigns a weighted mean rating out of 0–100 reviews from film critics, the film has a rating score of 74 based on 34 reviews, classified as a generally favorable reviewed film.[84]

Regarding the film's overall design, Roger Ebert stated, "It is flawlessly crafted, intelligently constructed, strongly acted, and spellbinding...Movies like this are not merely difficult to make at all, but almost impossible to make well." He credited the "technical difficulties" with being "so daunting that it's a wonder when the filmmakers are also able to bring the drama and history into proportion" and "found [himself] convinced by both the story and the sad saga".[85] It was his ninth best film of 1997.[86] On the television program Siskel & Ebert, the film received "two thumbs up" and was praised for its accuracy in recreating the ship's sinking; Ebert described the film as "a glorious Hollywood epic, well-crafted and well worth the wait" and Gene Siskel found Leonardo DiCaprio "captivating".[87] James Berardinelli stated, "Meticulous in detail, yet vast in scope and intent, Titanic is the kind of epic motion picture event that has become a rarity. You don't just watch Titanic, you experience it."[88] It was his second best film of 1997.[89] Almar Haflidason of the BBC wrote that "[t]he sinking of the great ship is no secret, yet for many exceeded expectations in sheer scale and tragedy" and that "when you consider that it tops a bum-numbing three-hour running time, then you have a truly impressive feat of entertainment achieved by Cameron".[90] Joseph McBride of Boxoffice Magazine concluded, "To describe Titanic as the greatest disaster movie ever made is to sell it short. James Cameron's recreation of the 1912 sinking of the 'unsinkable' liner is one of the most magnificent pieces of serious popular entertainment ever to emanate from Hollywood."[91]

The romantic and emotionally-charged aspects of the film were equally praised. Andrew L. Urban of Urban Cinefile said, "You will walk out of Titanic not talking about budget or running time, but of its enormous emotive power, big as the engines of the ship itself, determined as its giant propellers to gouge into your heart, and as lasting as the love story that propels it."[92] Owen Gleiberman of Entertainment Weekly described the film as, "A lush and terrifying spectacle of romantic doom. Writer-director James Cameron has restaged the defining catastrophe of the early 20th century on a human scale of such purified yearning and dread that he touches the deepest levels of popular moviemaking."[91] Janet Maslin of The New York Times commented that "Cameron's magnificent Titanic is the first spectacle in decades that honestly invites comparison to Gone With the Wind."[91] Richard Corliss of Time magazine, on the other hand, wrote a mostly negative review, criticizing the lack of interesting emotional elements.[93]

Some reviewers felt that the story and dialogue were weak, while the visuals were spectacular. Kenneth Turan's review in the Los Angeles Times was particularly scathing. Dismissing the emotive elements, he stated, "What really brings on the tears is Cameron's insistence that writing this kind of movie is within his abilities. Not only is it not, it is not even close."[94] Barbara Shulgasser of San Francisco Examiner gave Titanic one star out of four, citing a friend as saying, "The number of times in this unbelievably badly-written script that the two [lead characters] refer to each other by name was an indication of just how dramatically the script lacked anything more interesting for the actors to say."[95] Filmmaker Robert Altman called it "the most dreadful piece of work I've ever seen in my entire life".[96]

Titanic suffered backlash in addition to its success. In 2003, the film topped a poll of "Best Film Endings",[97] and yet it also topped a poll by The Film programme as "the worst movie of all time".[98] The British film magazine Empire reduced their rating of the film from the maximum five stars and an enthusiastic review, to four stars with a less positive review in a later edition, to accommodate its readers’ tastes, who wanted to disassociate themselves from the hype surrounding the film, and the reported activities of its fans (such as those attending multiple screenings).[99] Additionally, positive and negative parodies and other such spoofs of the film abounded and were circulated around the Internet, often inspiring passionate responses from fans of various opinions of the film.[100] Benjamin Willcock of DVDActive.com did not understand the backlash or the passionate hatred for the film. "What really irks me...," he said, "are those who make nasty stabs at those who do love it." Willcock stated, "I obviously don’t have anything against those who dislike Titanic, but those few who make you feel small and pathetic for doing so (and they do exist, trust me) are way beyond my understanding and sympathy."[71]

Cameron responded to the backlash, Kenneth Turan's review in particular. "Titanic is not a film that is sucking people in with flashy hype and spitting them out onto the street feeling let down and ripped off," he stated. "They are returning again and again to repeat an experience that is taking a 3-hour and 14-minute chunk out of their lives, and dragging others with them, so they can share the emotion." Cameron emphasized people from all ages (ranging from 8 to 80) and from all backgrounds were "celebrating their own essential humanity" by seeing it. He described the script as earnest and straightforward, and said it intentionally "incorporates universals of human experience and emotion that are timeless – and familiar because they reflect our basic emotional fabric" and that the film was able to succeed in this way by dealing with archetypes. He did not see it as pandering. "Turan mistakes archetype for cliche," he said. "I don't share his view that the best scripts are only the ones that explore the perimeter of human experience, or flashily pirouette their witty and cynical dialogue for our admiration." On the two critics who had been most lavish in their praise of Titanic, Cameron wrote: "When critics like Roger Ebert or Janet Maslin talk about film, they demonstrate a deep knowledge of and respect for their subject, a respect for filmmakers regardless of the specific blunders made on a particular film, and a genuine unwavering joy at the magic of cinema." He ended his article: "Forget about Clinton – how do we impeach Kenneth Turan?"[101]
[edit] Awards and honors

Titanic began its awards sweep starting with the Golden Globes, winning four, namely Best Motion Picture (Drama), Best Director, Best Original Score, and Best Song.[102] Kate Winslet and Gloria Stuart were also nominees but lost.[103] It won the ACE "Eddie" Award, ASC Award, Art Directors Guild Award, Cinema Audio Society Award, Screen Actors Guild Awards, (Best Supporting Actress Gloria Stuart), The Directors Guild of America Award, and Broadcast Film Critics Association Award (Best Director James Cameron), and The Producer Guild of America Awards.[104] It was also nominated for ten BAFTA awards, including Best Film and Director.[104]

The film was nominated for a record-tying 14 Academy Awards and won 11, including the Best Picture and Best Director.[104][105] It also picked up Best Cinematography, Best Costume Design, Best Visual Effects, Best Sound Mixing, Best Sound Editing, Best Original Score, Best Film Editing, Best Original Song, and Best Art Direction awards.[104] Kate Winslet, Gloria Stuart and the make-up artists were the three nominees that did not win. James Cameron's original screenplay and Leonardo DiCaprio were not nominees.[69] It was the second film to win eleven Academy Awards, after Ben-Hur.[104] The Lord of the Rings: The Return of the King would also match this record in 2004, with its 11 wins from 11 nominations.

Titanic won the 1997 Academy Award for Best Original Song, as well as three Grammy Awards for Record of the Year, Song of the Year, and Best Song Written Specifically for a Motion Picture or Television.[104][106] The film's soundtrack became the best-selling primarily orchestral soundtrack of all time, and became a worldwide success, spending 16 weeks at #1 in the United States and was certified diamond for over 11 million copies sold in the United States alone.[107] The soundtrack also became the best-selling album of 1998 in the U.S.[108] "My Heart Will Go On" won the Grammy Awards for Best Song Written Specifically for a Motion Picture or for Television. The film also won Best Male Performance for Leonardo DiCaprio and Best Movie at the MTV Movie Awards, Best Film at the People's Choice Awards, and Favorite Movie at the 1998 Kids' Choice Awards.[104] It won various awards outside the United States, including the Awards of the Japanese Academy as the Best Foreign Film of the Year.[104] Titanic eventually won nearly 90 awards and had an additional 47 nominations from various award-giving bodies around the world.[104] Additionally, the book about the making of the film was at the top of The New York Times' bestseller list for several weeks, "the first time that such a tie-in book had achieved this status".[16]

Since its release, Titanic has appeared on the American Film Institute's (AFI's) award-winning 100 Years… series. So far, it has ranked on the following six lists:
AFI's 100 Years... 100 Rank Source Notes
Thrills 25 [109] A list of the top 100 thrilling movies in American cinema compiled in 2001.
Passions 37 [110] A list of the top 100 love stories in American cinema, compiled in 2002.
Songs 14 [111] A list of the top 100 songs in American cinema, compiled in 2004. Titanic ranked 14th for Celine Dion's "My Heart Will Go On".
Movie quotes 100 [77] A list of the top 100 movie quotations in American cinema, compiled in 2005. Titanic ranked 100th for Jack Dawson's (Leonardo DiCaprio) yell of "I'm the king of the world!"
Movies 83 [112] A 2007 (10th anniversary) edition of 1997's list of the 100 best movies of the past century. Titanic was not eligible when the original list was released.
AFI's 10 Top 10 6 [113] The 2008 poll consisted of the top ten films in ten different genres. Titanic ranked as the sixth best epic film.
[edit] Home media
The inside contents of the 5-Disc collector's set

Titanic was released worldwide in widescreen and pan and scan formats on VHS and laserdisc on September 1, 1998.[114] The VHS was also made available in a deluxe boxed gift set with a mounted filmstrip and a color booklet. A DVD version was released on July 31, 1999 in a widescreen-only (non-anamorphic) single-disc edition with no special features other than a theatrical trailer. Cameron stated at the time that he intended to release a special edition with extra features later. This release became the best-selling DVD of 1999 and early 2000, becoming the first DVD ever to sell 1 million copies.[115] At the time, fewer than 5% of all U.S. homes had a DVD player. "When we released the original Titanic DVD, the industry was much smaller, and bonus features were not the standard they are now," said Meagan Burrows, Paramount's president of domestic home entertainment, which made the film's DVD performance even more impressive.[115]

An international two- and four-disc set followed on November 7, 2005.[116][115] The two-disc edition was marketed as the Special Edition, and featured the first two discs of the three-disc set, only PAL-enabled. A four-disc edition, marketed as the Deluxe Collector's Edition, was also released on November 7, 2005.[116]

Available only in the United Kingdom, a limited 5-disc set of the film, under the title Deluxe Limited Edition, was released with only 10,000 copies manufactured. The fifth disc contains Cameron's documentary Ghosts of the Abyss, which was distributed by Walt Disney Pictures. Unlike the individual release of Ghosts of the Abyss, which contained two discs, only the first disc was included in the set.[71][117]

With television broadcasts, the film airs occasionally across the United States on networks such as TBS and TNT. To permit the scene where Jack draws the nude portrait of Rose to be shown on network and specialty cable channels, in addition to minor cuts, the sheer, see-through blouse worn by Winslet was digitally painted black. Turner Classic Movies, however, known for showing films as they were originally presented theatrically, presented the original uncensored version of the film as recently as February 2010.
[edit] 3-D conversion and 2012 re-release

During the 2009 San Diego Comic-Con, Cameron announced that Titanic is in the process of being converted into 3-D and re-released in theaters at some point in 2011.[118][119][120] "We've tested it, seen a couple of minutes converted. It looks spectacular. But it really requires the filmmaker to be involved to make sure that the Stereo Space decisions are made correctly," he said.[120] He later specified that the actual date of re-release will be in April 2012, in order to coincide with the 100th anniversary of the sinking of the actual ship.[11] In a March 2010 interview with USA Today, Cameron stated, "I'm guessing six months to a year to do it right. We're targeting spring of 2012 for the release (of a 3D version of Titanic), which is the 100 year anniversary of the sailing of the ship."[11]

--

Finance is the science of funds management.[1] The general areas of finance are business finance, personal finance, and public finance.[2] Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted.

Finance works most basically through individuals and business organizations depositing money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organisations such as companies, governments or charities [3]. The investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.[dubious – discuss]

Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.[4]

The main techniques and sectors of the financial industry
Main article: Financial services

An entity whose income exceeds their expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.

A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who may sell it on to private investors, or other financial institutions such as pension funds. The stock give part ownership in that company in proportion to shares owned.

In return for the stock, the company receives cash, which it may use to expand its business; ("equity financing"), to reduce its debt[5]. Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.
[edit] Personal finance
Main article: Personal finance

Questions in personal finance revolve around

* How much money will be needed by an individual (or by a family), and when?
* Where will this money come from, and how?
* How can people protect themselves against unforeseen personal events, as well as those in the external economy?
* How can family assets best be transferred across generations (bequests and inheritance)?
* How does tax policy (tax subsidies or penalties) affect personal financial decisions?
* How does credit affect an individual's financial standing?
* How can one plan for a secure financial future in an environment of economic instability?

Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Personal financial decisions may also involve paying for a loan, or debt obligations.
[edit] Corporate finance
Main article: Corporate finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance (Small and Medium Enterprises). It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.

Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.

Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio – one has to decide what, how much and when to invest. To do this, a company must:

* Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
* Identify the appropriate strategy: active v. passive – hedging strategy
* Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm.
[edit] Capital
Main article: Financial capital

Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service.
[edit] The desirability of budgeting

Budget is a document which documents the plan of the business. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment. Also budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.
[edit] Capital budget

This concerns proposed fixed asset requirements and how these expenditures will be financed. Capital budgets are often adjusted annually and should be part of a longer-term Capital Improvements Plan.
[edit] Cash budget

Working capital requirements of a business should be monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of cash. The cash budget has the following six main sections:

1. Beginning Cash Balance - contains the last period's closing cash balance.
2. Cash collections - includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
3. Cash disbursements - lists all planned cash outflows for the period, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc)
4. Cash excess or deficiency - a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
5. Financing - discloses the planned borrowings and repayments, including interest.
6. Ending Cash balance - simply reveals the planned ending cash balance.

[edit] Management of current assets
[edit] Credit policy

Credit gives the consumer the opportunity to buy, purchase or acquire goods and services, and pay for them at a later date. This has its advantages and disadvantages as follows:
[edit] Advantages of credit trade

* Usually results in more customers than cash trade.
* Can charge more for goods to cover the risk of bad debt.
* Gain goodwill and loyalty of customers.
* People can buy goods and pay for them at a later date.
* Farmers can buy seeds and implements, and pay for them only after the harvest.
* Stimulates agricultural and industrial production and commerce.
* Can be used as a promotional tool.
* Increase the sales.
* Modest rates to be filled.

[edit] Disadvantages of credit trade

* Risk of bad debt.
* High administration expenses.
* People can buy more than they can afford.
* More working capital needed.
* Risk of Bankruptcy.
* May lose peace of mind.

[edit] Forms of credit

* Suppliers credit:
* Credit on ordinary open account
* Installment sales
* Bills of exchange
* Credit cards
* Contractor's credit
* Factoring of debtors
* Cash credit
* Cpf credits
* Exchange of product

[edit] Factors which influence credit conditions

* Nature of the business's activities
* Financial position
* Product durability
* Length of production process
* Competition and competitors' credit conditions
* Country's economic position
* Conditions at financial institutions
* Discount for early payment
* Debtor's type of business and financial position

[edit] Credit collection
[edit] Overdue accounts

* Attach a notice of overdue account to statement.
* Send a letter asking for settlement of debt.
* Send a second or third letter if first is ineffectual.
* Threaten legal action.

[edit] Effective credit control

* Increases sales
* Reduces bad debts
* Increases profits
* Builds customer loyalty
* Builds confidence of financial industry
* Increase company capitalisation
* Increase the customer relationship

[edit] Sources of information on creditworthiness

* Business references
* Bank references
* Credit agencies
* Chambers of commerce
* Employers
* Credit application forms

[edit] Duties of the credit department

* Legal action
* Taking necessary steps to ensure settlement of account
* Knowing the credit policy and procedures for credit control
* Setting credit limits
* Ensuring that statements of account are sent out
* Ensuring that thorough checks are carried out on credit customers
* Keeping records of all amounts owing
* Ensuring that debts are settled promptly
* Timely reporting to the upper level of management for better management.

[edit] Stock

Purpose of stock control

* Ensures that enough stock is on hand to satisfy demand.
* Protects and monitors theft.
* Safeguards against having to stockpile.
* Allows for control over selling and cost price.

Stockpiling

Main article: Cornering the market

This refers to the purchase of stock at the right time, at the right price and in the right quantities.

There are several advantages to the stockpiling, the following are some of the examples:

* Losses due to price fluctuations and stock loss kept to a minimum
* Ensures that goods reach customers timeously; better service
* Saves space and storage cost
* Investment of working capital kept to minimum
* No loss in production due to delays

There are several disadvantages to the stockpiling, the following are some of the examples:

* Obsolescence
* Danger of fire and theft
* Initial working capital investment is very large
* Losses due to price fluctuation

Rate of stock turnover

This refers to the number of times per year that the average level of stock is sold. It may be worked out by dividing the cost price of goods sold by the cost price of the average stock level.

Determining optimum stock levels

* Maximum stock level refers to the maximum stock level that may be maintained to ensure cost effectiveness.
* Minimum stock level refers to the point below which the stock level may not go.
* Standard order refers to the amount of stock generally ordered.
* Order level refers to the stock level which calls for an order to be made.

[edit] Cash
[edit] Reasons for keeping cash

* Cash is usually referred to as the "king" in finance, as it is the most liquid asset.
* The transaction motive refers to the money kept available to pay expenses.
* The precautionary motive refers to the money kept aside for unforeseen expenses.
* The speculative motive refers to the money kept aside to take advantage of suddenly arising opportunities.

[edit] Advantages of sufficient cash

* Current liabilities may be catered for meeting the current obligations of the company
* Cash discounts are given for cash payments.
* Production is kept moving
* Surplus cash may be invested on a short-term basis.
* The business is able to pay its accounts in a timely manner, allowing for easily-obtained credit.
* Liquidity
* Quick upfront payments.

[edit] Management of fixed assets
[edit] Depreciation

Depreciation is the allocation of the cost of an asset over its useful life as determined at the time of purchase. It is calculated yearly to enforce the matching principle.
[edit] Insurance
Main article: Insurance

Insurance is the undertaking of one party to indemnify another, in exchange for a premium, against a certain eventuality.

Uninsured risks

* Bad debt
* Changes in fashion
* Time lapses between ordering and delivery
* New machinery or technology
* Different prices at different places

Requirements of an insurance contract

* Insurable interest
o The insured must derive a real financial gain from that which he is insuring, or stand to lose if it is destroyed or lost.
o The item must belong to the insured.
o One person may take out insurance on the life of another if the second party owes the first money.
o Must be some person or item which can, legally, be insured.
o The insured must have a legal claim to that which he is insuring.
* Good faith
o Uberrimae fidei refers to absolute honesty and must characterise the dealings of both the insurer and the insured.

[edit] Shared Services

There is currently a move towards converging and consolidating Finance provisions into shared services within an organization. Rather than an organization having a number of separate Finance departments performing the same tasks from different locations a more centralized version can be created.
[edit] Finance of states
Main article: Public finance

Country, state, county, city or municipality finance is called public finance. It is concerned with

* Identification of required expenditure of a public sector entity
* Source(s) of that entity's revenue
* The budgeting process
* Debt issuance (municipal bonds) for public works projects

[edit] Financial economics
Main article: Financial economics

Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance.

It studies:

* Valuation - Determination of the fair value of an asset
o How risky is the asset? (identification of the asset-appropriate discount rate)
o What cash flows will it produce? (discounting of relevant cash flows)
o How does the market price compare to similar assets? (relative valuation)
o Are the cash flows dependent on some other asset or event? (derivatives, contingent claim valuation)

* Financial markets and instruments
o Commodities - topics
o Stocks - topics
o Bonds - topics
o Money market instruments- topics
o Derivatives - topics

* Financial institutions and regulation

Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterise the relationships.
[edit] Financial mathematics
Main article: Financial mathematics

Financial mathematics is a main branch of applied mathematics concerned with the financial markets. Financial mathematics is the study of financial data with the tools of mathematics, mainly statistics. Such data can be movements of securities—stocks and bonds etc.—and their relations. Another large subfield is insurance mathematics. This is also known as quantitative finance, practitioners as Quantitative Analysts.
[edit] Experimental finance
Main article: Experimental finance

Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions, and attempt to discover new principles on which such theory can be extended. Research may proceed by conducting trading simulations or by establishing and studying the behaviour of people in artificial competitive market-like settings.
[edit] Behavioral finance
Main article: Behavioral finance

Behavioral Finance studies how the psychology of investors or managers affects financial decisions and markets. Behavioral finance has grown over the last few decades to become central to finance.

Behavioral finance includes such topics as:

1. Empirical studies that demonstrate significant deviations from classical theories.
2. Models of how psychology affects trading and prices
3. Forecasting based on these methods.
4. Studies of experimental asset markets and use of models to forecast experiments.

A strand of behavioral finance has been dubbed Quantitative Behavioral Finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.
[edit] Intangible Asset Finance
Main article: Intangible asset finance

Intangible asset finance is the area of finance that deals with intangible assets such as patents, trademarks, goodwill, reputation, etc.
[edit] Related professional qualifications

There are several related professional qualifications in finance, that can lead to the field:

* Accountancy:
o Qualified accountant: Chartered Accountant (ACA - UK certification / CA - certification in Commonwealth countries), Chartered Certified Accountant (ACCA, UK certification), Certified Public Accountant (CPA, US certification)
o Non-statutory qualifications: Chartered Cost Accountant CCA Designation from AAFM
* Business qualifications: Master of Business Administration (MBA), Bachelor of Business Management (BBM), Master of Commerce (M.Comm), Master of Science in Management (MSM), Doctor of Business Administration (DBA)
* Generalist Finance qualifications:
o Degrees: Masters degree in Finance (MSF), Master of Financial Economics, Master of Finance & Control (MFC), Master Financial Manager (MFM), Master of Financial Administration (MFA)
o Certifications: Chartered Financial Analyst (CFA), Certified International Investment Analyst (CIIA), Association of Corporate Treasurers (ACT), Certified Market Analyst (CMA/FAD) Dual Designation, Corporate Finance Qualification (CF)
* Quantitative Finance qualifications: Master of Science in Financial Engineering (MSFE), Master of Quantitative Finance (MQF), Master of Computational Finance (MCF), Master of Financial Mathematics (MFM), Certificate in Quantitative Finance (CQF).


--

Accountancy is the art of communicating financial information about a business entity to users such as shareholders and managers.[1] The communication is generally in the financial´s form statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable.[2]

Accountancy is a branch of mathematical science that is useful in discovering the causes of success and failure in business. The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.[3]

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."[4]

Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in the Middle East. The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.[5]

Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information.[6] This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors.[7]

Today, accounting is called "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting. The body of rules that governs financial accounting is called Generally Accepted Accounting Principles, or GAAP.[8]

Etymology

The word "Accountant" is derived from the French word Compter, which took its origin from the Latin word Computare. The word was formerly written in English as "Accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in pronunciation and in orthography to its present form.[9]
[edit] History
[edit] Token accounting in ancient Mesopotamia
Map of the Middle East showing the Fertile Cresent circa. 3rd millennium BC

The earliest accounting records were found amongst the ruins of ancient Babylon, Assyria and Sumeria, which date back more than 7,000 years. The people of that time relied on primitive accounting methods to record the growth of crops and herds. Because there is a natural season to farming and herding, it is easy to count and determine if a surplus had been gained after the crops had been harvested or the young animals weaned.[5]
Complex accounting tokens made of clay, from Susa, Uruk period, cira 3500 BCE. Department of Oriental Antiquities, Louvre.

During the period 8000–3700 BCE, the Fertile Crescent witnessed the spread of small settlements supported by agricultural surplus. Tokens, shaped into simple geometric forms such as cones or spheres, were used for stewardship purposes in relation to identifying and securing this surplus, and are examples of accounts that referred to lists of personal property.[10] Some of them bore markings in the form of incised lines and impressed dots. Neolithic community leaders collected the surplus at regular intervals in the form of a share of the farmers’ flocks and harvests. In turn, the accumulated communal goods were redistributed to those who could not support themselves, but the greatest part was earmarked for the performance of religious rituals and festivals. In 7000 BCE, there were only some 10 token shapes because the system exclusively recorded agricultural goods, each representing one of the farm products levied at the time, such as grain, oil and domesticated animals.The number of token shapes increased to about 350 around 3500 BCE, when urban workshops started contributing to the redistribution economy. Some of the new tokens stood for raw materials such as wool and metal and others for finished products among which textiles, garments, jewelry, bread, beer and honey.[11]

The invention of a form of bookkeeping using clay tokens represented a huge cognitive leap for mankind.[12] The cognitive significance of the token system was to foster the manipulation of data. Compared to oral information passed on from one individual to the other, tokens were extra-somatic, that is outside the human mind. As a result, the Neolithic accountants were no longer the passive recipients of someone else's knowledge, but they took an active part in encoding and decoding data. The token system substituted miniature counters for the real goods, which eliminated their bulk and weight and allowed dealing with them in abstraction by patterning, the presentation of data in particular configurations. As a result, heavy baskets of grains and animals difficult to control could be easily counted and recounted. The accountants could add, subtract, multiply and divide by manually moving and removing counters.[13]
Globular token envelope with a cluster of accounting tokens. Clay, Susa, Uruk period (4000 to 3100 BCE). Department of Oriental Antiquities, Louvre.
Economic tablet with numeric signs. Proto-Elamite script in clay, Susa, Uruk period (3200 BC to 2700 BCE). Department of Oriental Antiquities, Louvre.

The Mesopotamian civilization emerged during the period 3700–2900 BCE amid the development of technological innovations such as the plough, sailing boats and copper metal working. Clay tablets with pictographic characters appeared in this period to record commercial transactions performed by the temples.[10] Clay receptacles known as bullae (Latin: 'Bubble'), were used in Elamite city of Susa which contained tokens. These receptacles were spherical in shape and acted as envelopes, on which the seal of the individuals taking part in a transaction were engraved. The symbols of the tokens they contained were represented graphically on their surface, and the recipient of the goods could check whether they matched with the amount and characteristics expressed on the bulla once they had received and inspected them. The fact that the content of bulla was marked on its surface produced a simple way of checking without destroying the receptacle, which constituted in itself an exercise in writing that, despite being born spontaneously as a support for the existing system for controlling merchant goods, ultimately became the definitive practice for non-oral communication. Eventually, bullae were replaced by clay tablets, which used symbols to represent the tokens.[14]

During the Sumerian period, token envelop accounting was replaced by flat clay tablets impressed by tokens that merely transferred symbols. Such documents were kept by scribes, who were carefully trained to acquire the necessary literary and arithmetic skills and were held responsible for documenting financial transactions.[15] Such records preceded the earliest found examples of cuneiform writing in the form of abstract signs incised in clay tablets, which were written in Sumerian by 2900 BCE in Jemdet Nasr. Therefore "token envelop accounting" not only preceded the written word but constituted the major impetus in the creation of writing and abstract counting.[10]
[edit] Accounting in the Roman Empire
Part of the Res Gestae Divi Augusti from the Monumentum Ancyranum (Temple of Augustus and Rome) at Ancyra, built between 25 BCE - 20 BCE.

The Res Gestae Divi Augusti (Latin: "The Deeds of the Divine Augustus") is a remarkable account to the Roman people of the Emperor Augustus' stewardship. It listed and quantified his public expenditure, which encompassed distributions to the people, grants of land or money to army veterans, subsidies to the aerarium (treasury), building of temples, religious offerings, and expenditures on theatrical shows and gladiatorial games. It was not an account of state revenue and expenditure, but was designed to demonstrate Augustus' munificence. The significance of the Res Gestae Divi Augusti from an accounting perspective lies in the fact that it illustrates that the executive authority had access to detailed financial information, covering a period of some forty years, which was still retrievable after the event. The scope of the accounting information at the emperor's disposal suggests that its purpose encompassed planning and decision-making.[16]

The Roman historians Suetonius and Cassius Dio record that in 23 BC, Augustus prepared a rationarium (account) which listed public revenues, the amounts of cash in the aerarium (treasury), in the provincial fisci (tax officials), and in the hands of the publicani (public contractors); and that it included the names of the freedmen and slaves from whom a detailed account could be obtained. The closeness of this information to the executive authority of the emperor is attested by Tacitus' statement that it was written out by Augustus himself.[17]
Roman writing tablet from the Vindolanda Roman fort of Hadrian's Wall, in Northumberland (1st-2nd century AD) requesting money to buy 5,000 measures of cereal used for brewing beer. Department of Prehistory and Europe, British Museum.

Records of cash, commodities, and transactions were kept scrupulously by military personnel of the Roman army. An account of small cash sums received over a few days at the fort of Vindolanda cira 110 CE shows that the fort could compute revenues in cash on a daily basis, perhaps from sales of surplus supplies or goods manufactured in the camp, items dispensed to slaves such as cervesa (beer) and clavi caligares (nails for boots), as well as commodities bought by individual soldiers. The basic needs of the fort were met by a mixture of direct production, purchase and requisition; in one letter, a request for money to buy 5,000 modii (measures) of braces (a cereal used in brewing) shows that the fort bought provisions for a considerable number of people.[18]

The Heroninos Archive is name given to a huge collection of papyrus documents, mostly letters, but also including a fair number of accounts, which comes from Roman Egypt in 3rd century CE. The bulk of the documents relate to the running of a large, private estate[19] is named after Heroninos because he was phrontistes (Koine Greek: manager) of the estate which had a complex and standarised system of accounting which was followed by all its local farm managers.[20] Each administrator on each sub-division of the estate drew up his own little accounts, for day to day running of the estate, payment of the workforce, production of crops, the sale produce, the use of animals, and general expetidirure on the staff. This information was then summarized as pieces of papyrus scroll into one big yearly account for each particular sub—division of the estate. Entries were arranged by sector, with cash expenses and gains extrapolated from all the different sectors. Accounts of this kind gave the owner the opportunity to take better economic decisions because the information was purposefully selected and arranged.[21]

Simple accounting is mentioned in the Christian Bible (New Testament) in the Book of Matthew, in the Parable of the Talents.[22]
[edit] Islamic accounting & algebra

In the Holy Qur’an, the word hesab (Arabic: account) is used in its generic sense, relating to one's obligation to account to God on all matters pertaining to human endeavour. According to the Holy Qur’an, followers are required to keep records of their indebtedness (Sura 2, ayah 282), thus Islam thus provides general approval and guidelines for the recording and reporting of transactions.[23]

The Islamic law of inheritance (Sura 4, ayah 11) defines exactly how the estate is calculated after death of an individual. The power of testamentary disposition is basically limited to one-third of the net estate (i.e. the assets remaining after the payment of funeral expenses and debts), providing for every member of the family by allotting fixed shares not only to wives and children, but also to father and mothers.[24] The complexity of this law served as an impetus behind the development of algebra (Arabic: al-jabr) by Muhammad ibn Mūsā al-Khwārizmī and other medieval Islamic mathematicians. Al-Khwārizmī's Hisab al-jabr w’al-muqabala (Arabic: "The Compendious Book on Calculation by Completion and Balancing", Baghdad, c. 825) devoted a chapter on the solution to the Islamic law of inheritance using linear equations.[25] In the twelfth century, Latin translations of al-Khwārizmī's Kitāb al-Jamʿ wa-l-tafrīq bi-ḥisāb al-Hind (Arabic: Book of Addition and Subtraction According to the Hindu Calculation) on the use of Indian numerals, introduced the decimal positional number system to the Western world.[26]

The development of mathematics and accounting was intertwined during the Renaissance. Mathematics was in the midst of a period of significant development in the late 15th century. Hindu-Arabic numerals and algebra were introduced to Europe from Arab mathematics at the end of the 10th century by the Benedictine monk Gerbert of Aurillac, but it was only after Leonardo Pisano (also known as Fibonacci) put commercial arithmetic, Hindu-Arabic numerals, and the rules of algebra together in his Liber Abaci in 1202 that Hindu-Arabic numerals became widely used in Italy.[27]

While there is no direct relationship between algebra and bookkeeping, the teaching of the subjects and the books published addressed the same group, namely the children of merchants who were sent to reckoning schools (in Flanders and Germany) or abacus schools (known as abbaco in Italy), where they learned the skills useful for trade and commerce. There is probably no need for algebra in performing bookkeeping operations, but for complex bartering operations or the calculation of compound interest, a basic knowledge of arithmetic was mandatory and knowledge of algebra was very useful.[28]
[edit] Luca Pacioli and double-entry bookkeeping
Main articles: Luca Pacioli and Double-entry bookkeeping system

Bartering was the dominant practice for traveling merchants during the Middle Ages. When medieval Europe moved to a monetary economy in the 13th century, sedentary merchants depended on bookkeeping to oversee multiple simultaneous transactions financed by bank loans. One important breakthrough took place around that time: the introduction of double-entry bookkeeping,[29] which is defined as any bookkeeping system in which there was a debit and credit entry for each transaction, or for which the majority of transactions were intended to be of this form.[30] The historical origin of the use of the words ‘debit’ and ‘credit’ in accounting goes back to the days of single-entry bookkeeping in which the chief objective was to keep track of amounts owed by customers (debtors) and amounts owed to creditors. ‘Debit,’ is Latin for ‘he owes’ and ‘credit’ Latin for ‘he trusts’.[31]

The earliest extant evidence of full double-entry bookkeeping is the Farolfi ledger of 1299-1300.[29] Giovanno Farolfi & Company were a firm of Florentine merchants whose head office was in Nîmes who also acted as moneylenders to Archbishop of Arles, their most important customer.[32] The oldest discovered record of a complete double-entry system is the Messari (Italian: Treasurer's) accounts of the city of Genoa in 1340. The Messari accounts contain debits and credits journalised in a bilateral form, and contains balances carried forward from the preceding year, and therefore enjoy general recognition as a double-entry system.[33]
Pacioli's portrait, a painting by Jacopo de' Barbari, 1495, (Museo di Capodimonte).The open book to which he is pointing may be his Summa de Arithmetica, Geometria, Proportioni et Proportionalità.[34]

Luca Pacioli's "Summa de Arithmetica, Geometria, Proportioni et Proportionalità" (Italian: "Review of Arithmetic, Geometry, Ratio and Proportion") was first printed and published in Venice in 1494. It included a 27-page treatise on bookkeeping, "Particularis de Computis et Scripturis" (Italian: "Details of Calculation and Recording"). It was written primarily for, and sold mainly to, merchants who used the book as a reference text, as a source of pleasure from the mathematical puzzles it contained, and to aid the education of their sons. It represents the first known printed treatise on bookkeeping; and it is widely believed to be the forerunner of modern bookkeeping practice. In Summa Arithmetica, Pacioli introduced symbols for plus and minus for the first time in a printed book, symbols that became standard notation in Italian Renaissance mathematics. Summa Arithmetica was also the first known book printed in Italy to contain algebra.[35]

Although Luca Pacioli did not invent double-entry bookkeeping,[36] his 27-page treatise on bookkeeping contained the first known published work on that topic, and is said to have laid the foundation for double-entry bookkeeping as it is practiced today.[37] Even though Pacioli's treatise exhibits almost no originality, it is generally considered as an important work, mainly because of its wide circulation, it was written in vernacular Italian language, and it was a printed book.[38]

According to Pacioli, accounting is an ad hoc ordering system devised by the merchant. Its regular use provides the merchant with continued information about his business, and allows him to evaluate how things are going and to act accordingly. Pacioli recommends the Venetian method of double-entry bookkeeping above all others. Three major books of account are at the direct basis of this system: the memoriale (Italian: memorandum), the giornale (journal), and the quaderno (ledger). The ledger is considered as the central one and is accompanied by an alphabetical index.[39]

Pacioli's treatise gave instructions in how to record barter transactions and transactions in a variety of currencies – both being far more commonplace than they are today. It also enabled merchants to audit their own books and to ensure that the entries in the accounting records made by their bookkeepers complied with the method he described. Without such a system, all merchants who did not maintain their own records were at greater risk of theft by their employees and agents: it is not by accident that the first and last items described in his treatise concern maintenance of an accurate inventory.[40]

The nature of double-entry can be grasped by recognizing that this system of bookkeeping did not simply record the things merchants traded so that they could keep track of assets or calculate profits and losses; instead as a system of writing, double-entry produced effects that exceeded transcription and calculation. One of its social effects was to proclaim the honesty of merchants as a group; one of its epistemological effects was to make its formal precision based on a rule bound system of arithmetic seem to guarantee the accuracy of the details it recorded. Even though the information recorded in the books of account was not necessarily accurate, the combination of the double entry system's precision and the normalizing effect that precision tended to create the impression that books of account were not only precise, but accurate as well. Instead of gaining prestige from numbers, double entry bookkeeping helped confer cultural authority on numbers.[41]
[edit] Post-Pacioli

The spread of the Italian accounting rules over the rest of Europe and thence further afield, was the result of treatises, some of them strongly based on Pacioli's work, describing and explaining the system and its practice. The "Quaderno doppio" (trans. Double-entry Ledger, Venice, 1534) of Domenico Manzoni da Oderzo was one of the first reproductions of Pacioli's "Particularis de Computis et Scripturis". This work, important because of elaborate examples, was very popular and widespread among merchants: it enjoyed no less than seven editions between 1534 and 1574. Other books that are directly or indirectly based on Pacioli's work are Hugh Oldcastle's "A Profitable Treatyce called the Instrument or Boke to learne to knowe the good order of the kepyng of the famous reconynge called in Latyn, Dare and Habere, and in Englyshe, Debitor and Creditor" (London, 1543), a translation of Pacioli's treatise, and Wolfgang Schweicker's "Zwifach Buchhalten" (trans. Double-entry bookkeeping, Neurenberg, 1549), a translation of the "Quaderno doppio".[42]

It was the Dutch mathematician Simon Stevin who persuaded merchants to make it a rule to summarize accounts at the end of every year in a chapter entitled Coopmansbouckhouding op de Italiaensche wyse (Dutch: "Commercial Book-keeping in the Italian Way") of his Wisconstigheg hedachtenissen (Dutch: "Mathematical memoirs", Leiden, 1605–08). Although the balance sheet he required every enterprise to prepare every year was based on entries of the ledger, it was prepared separately from the major books of account. The oldest semi-public balance sheet recorded was that of the East India Company dated 30 April 1671, which was submitted to the company's General Meeting on in 30 August 1671. The publication and audit of the balance sheet was still a rarity in England until the passing of the Bank Charter Act 1844.[43]

In 1863, the Dowlais Iron Company had receovered from a business slump, but had no cash to invest for a new blast furnace, despite having made a profit. To explain why there were no funds to invest, the manager made a new financial statement that was called a comparison balance sheet, which showed that the company was holding too much inventory. This new financial statement was the genesis of Cash Flow Statement that is used today.[44]

Between the publication of Pacioli's "Particularis de Computis et Scripturis" and the 19th century, there were few other changes in accounting theory. There was a general theoretical consensus that the double-entry method was superior because it could solve so many accounting problems simultaneously, but despite this consensus, accounting practices were remarkably varied, and merchants in the 16th and 17th centuries seldom maintained the high standards of the double-entry method. The application of double entry bookkeeping varied across countries, industries, and individual firms, depending in part on its audience. This audience shifted in general from sole proprietorship alone to a larger more dispersed group of partnership, coinvestors, shareholders, and even eventually the state, as capitalism became more sophisticated.[45]

In the Ottoman Empire, which at its peak ruled over Anatolia, Middle East, North Africa, the Balkans and parts of Eastern Europe, the merdiban (Persian: ladder or stairs) accounting system that had been adopted from the Ilkhanate in the 14th century was used for 500 years until the end of the 19th century.[46] Both the Ilkhanians and the Ottomans used siyakat script (from the Arabic siyak, to lead or herd), which was stenographic writing style of Arabic used only in official documents which prevented ordinary people from reading important state correspondence.[47] The title for each entry is given by extending the last letter of the first word in a straight line, so that the lines between successive entries would be laid out in the style of steps of a ladder.[48] Permission to replace the merdiban accounting system with double-entry accounting was given by Sultan Abdülhamid II to the Ministry of Finance in 1880.[49]
[edit] Accounting scandals
Main article: Accounting scandals

The year 2001 witnessed a series of financial information frauds involving Enron Corporation, auditing firm Arthur Andersen, the telecommunications company WorldCom, Qwest and Sunbeam, among other well-known corporations. These problems highlighted the need to review the effectiveness of accounting standards, auditing regulations and corporate governance principles. In some cases, management manipulated the figures shown in financial reports to indicate a better economic performance. In others, tax and regulatory incentives encouraged over-leveraging of companies and decisions to bear extraordinary and unjustified risk.[50]

The Enron scandal deeply influenced the development of new regulations to improve the reliability of financial reporting, and increased public awareness about the importance of having accounting standards that show the financial reality of companies and the objectivity and independence of auditing firms.[50]

In addition to being the largest bankruptcy reorganization in American history, the Enron scandal undoubtedly is the biggest audit failure.[51] The scandal caused the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world. It involved a financial scandal of Enron Corporation and their auditors Arthur Andersen, which was revealed in late 2001. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron filed for Chapter 11 bankruptcy protection in December 2001.[52]

One consequence of these events was the passage of Sarbanes-Oxley Act in 2002, as a result of the first admissions of fraudulent behavior made by Enron. The act significantly raises criminal penalties for securities fraud, for destroying, altering or fabricating records in federal investigations or any scheme or attempt to defraud shareholders.[53]



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An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area. A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions.

Today the range of fields of study examining the economy include social sciences such as economics, sociology (economic sociology), history (economic history) and geography (economic geography). Practical fields directly related to the human activities involving production, distribution, exchange, and consumption of goods and services as a whole, range from engineering to management and business administration to applied science to finance. All kind of professions, occupations, economic agents or economic activities, contribute to the economy. Consumption, saving and investment are core variable components in the economy and determine market equilibrium. There are three main sectors of economic activity: primary, secondary and tertiary.

Etymology

The English words "economy" and "economics" can be traced back to the Greek words οἰκονόμος "one who manages a household" (derived from οἴκος "house", and νέμω "distribute (especially, manage)"), οἰκονομία "household management", and οἰκονομικός "of a household or family". The first recorded sense of the word "economy", found in a work possibly composed in 1440, is "the management of economic affairs", in this case, of a monastery. Economy is later recorded in more general senses including "thrift" and "administration". The most frequently used current sense, "the economic system of a country or an area", seems not to have developed until the 19th or 20th century.[1]
[edit] History
[edit] Ancient times

As long as someone has been making and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex. Sumer developed a large scale economy based on commodity money, while the Babylonians and their neighboring city states later developed the earliest system of economics as we think of, in terms of rules/laws on debt, legal contracts and law codes relating to business practices, and private property.[2]

The Babylonians and their city state neighbors developed forms of economics comparable to currently used civil society (law) concepts.[3] They developed the first known codified legal and administrative systems, complete with courts, jails, and government records.

Several centuries after the invention of cuneiform, the use of writing expanded beyond debt/payment certificates and inventory lists to be applied for the first time, about 2600 BC, to messages and mail delivery, history, legend, mathematics, astronomical records and other pursuits. Ways to divide private property, when it is contended... amounts of interest on debt... rules as to property and monetary compensation concerning property damage or physical damage to a person... fines for 'wrong doing'... and compensation in money for various infractions of formalized law were standardized for the first time in history.[2]
Greek drachm of Aegina. Obverse: Land turtle / Reverse: ΑΙΓ(INA) and dolphin. The oldest turtle coin dates 700 BC

The ancient economy was mainly based on subsistence farming. The Shekel referred to an ancient unit of weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC. and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight... just as the British Pound was originally a unit denominating a one pound mass of silver.

For most people the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece, where the present English word 'economy' originated, many people were bond slaves of the freeholders. Economic discussion was driven by scarcity. Aristotle (384-322 B.C.) was the first to differentiate between a use value and an exchange value of goods. (Politics, Book I.) The exchange ratio he defined was not only the expression of the value of goods but of the relations between the people involved in trade. For most of the time in history economy therefore stood in opposition to institutions with fixed exchange ratios as reign, state, religion, culture, and tradition.[citation needed]
[edit] Middle ages

In Medieval times, what we now call economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised venture capital (from ventura, ital.; risk) to finance their captures. The capital should be refunded by the goods they would bring up in the New World. Merchants such as Jakob Fugger (1459–1525) and Giovanni di Bicci de' Medici (1360–1428) founded the first banks.[citation needed] The discoveries of Marco Polo (1254–1324), Christopher Columbus (1451–1506) and Vasco de Gama (1469–1524) led to a first global economy. The first enterprises were trading establishments. In 1513 the first stock exchange was founded in Antwerpen. Economy at the time meant primarily trade
[edit] Early modern times

The European captures became branches of the European states, the so-called colonies. The rising nation-states Spain, Portugal, France, Great Britain and the Netherlands tried to control the trade through custom duties and taxes in order to protect their national economy. The so-called mercantilism (from mercator, lat.: merchant) was a first approach to intermediate between private wealth and public interest. The secularization in Europe allowed states to use the immense property of the church for the development of towns. The influence of the nobles decreased. The first Secretaries of State for economy started their work. Bankers like Amschel Mayer Rothschild (1773–1855) started to finance national projects such as wars and infrastructure. Economy from then on meant national economy as a topic for the economic activities of the citizens of a state.
[edit] The industrial revolution

The first economist in the true meaning of the word was the Scotsman Adam Smith (1723–1790). He defined the elements of a national economy: products are offered at a natural price generated by the use of competition - supply and demand - and the division of labour. He maintained that the basic motive for free trade is human self interest. The so-called self interest hypothesis became the anthropological basis for economics. Thomas Malthus (1766–1834) transferred the idea of supply and demand to the problem of overpopulation. The United States of America became the place where millions of expatriates from all European countries were searching for free economic evolvement. In Europe wild capitalism started to replace the system of mercantilism (today: protectionism) and led to economic growth. The period today is called industrial revolution because the system of production and division of labour enabled the mass production of goods.
[edit] Communism and its view of capitalism

Starting in England, simultaneous processes of mechanization, and the enclosures of the commons, led to increases in wealth for the controllers of capital, and mass poverty, starvation, urbanization and pauperization for much of the population[citation needed]. This led some, such as Karl Marx (1818–1883) and the German industrialist and philosopher Friedrich Engels, (1820–1895) to describe economy as the "system of capitalism".

Capitalism is characterized by the division of labor between worker and capitalist, in which the means of production are separated from the direct producers and are instead owned by a parasitical capitalist class. Marx and Engels believed that under capitalism, the working class produces surplus value, of which only a small percentage is returned to workers in the form of wages to provide for their bare subsistence. The rest of the surplus value is kept as profit, and is reinvested into the commodity cycle by the capitalist. The competitive forces of the market will drive capital to constantly accumulate "for the sake of more accumulation", resulting in monopolies, economic crisis and imperialism.

Marx and Engels viewed capitalism as a historically-specific mode of production, as with feudalism and hunter-gatherer societies, embedded with its own internal contradictions. Capitalism is the first mode of production in which the direct producers have no control over their conditions of labour or the means of production.

The declining living conditions of the working class would drive workers to collectively fight back as part of a class struggle, eventually overthrowing the capitalist state in a proletarian revolution and establishing a democratically planned economy, in which production is controlled by the direct producers themselves - the proletariat - in order to satisfy human needs, not accumulation of profits. Thus in the Communist Manifesto, Marx and Engels state that capitalism, in bringing to existence an urbanized working class, has created its own "gravediggers", as well as the material conditions and abundance ripe for a classless socialist society.

The first centrally planned economy was established after the Russian Revolution of 1917, led by the Bolshevik Party, in which production (and social life) was organized around workers' councils called soviets. Similar councils of democratically elected recallable worker delegates have existed in subsequent revolutions and revolutionary situations throughout the 20th Century, including the 1936 Spanish Revolution, the 1974 Carnation Revolution in Portugal, the 1979 Iranian Revolution and the 1980 Solidarity uprising in Poland.
[edit] After World War II

After the chaos of two World Wars and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy. This was explored and discussed by Friedrich August von Hayek (1899–1992) and Milton Friedman (1912–2006) who pleaded for a global free trade and are supposed to be the fathers of the so called neoliberalism. However, the prevailing view was that held by John Maynard Keynes (1883–1946), who argued for a stronger control of the markets by the state. The theory that the state can alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism in his honor. In the late 1950s the economic growth in America and Europe—often called Wirtschaftswunder (ger: economic miracle) —brought up a new form of economy: mass consumption economy. In 1958 John Kenneth Galbraith (1908–2006) was the first to speak of an affluent society. In most of the countries the economic system is called a social market economy.
[edit] Postmodern economy

What economist Robert Reich terms, "the not quite golden age" (WW II to the mid-1970s) gave way to the current global economy, or supercapitalism.[4] This economic revolution took place in tandem with a radical transformation of Western cultures, and the growth of oligarchical/plutocratic tendencies within the polities of Western democracies.

Discussion of such issues as the politics of the World Bank, the World Trade Organization and global players within the World Economic Forum, as well as global ecology and sustainability, have all influenced the definition of economy.

Joseph E. Stiglitz has defined economy to be a global public good. Economists like Peter Barnes and Alexander Dill are reclaiming the commons and providing definitions that embrace new phenomena like freeware. Game theorists such as Ernst Fehr and Klaus M. Schmidt are contradicting the notion of omnipresent economic self-interest. Under the gift economy extensive grassroot movements have arisen; also the credit programs of Nobel laureate Muhammed Yunus. In 2006 the World Bank started issuing its Wealth of Nations Report, tracking social and human capital.
[edit] Economic sectors
Main article: Economic sectors

The economy includes several sectors (also called industries), that evolved in successive phases.

* The ancient economy was mainly based on subsistence farming.

* The industrial revolution lessened the role of subsistence farming, converting it to more extensive and monocultural forms of agriculture in the last three centuries. The economic growth took place mostly in mining, construction and manufacturing industries.

* In the economies of modern consumer societies there is a growing part played by services, finance, and technology—the (knowledge economy).

In modern economies, there are four main sectors of economic activity:[citation needed]

* Primary sector of the economy: Involves the extraction and production of raw materials, such as corn, coal, wood and iron. (A coal miner and a fisherman would be workers in the primary sector.)
* Secondary sector of the economy: Involves the transformation of raw or intermediate materials into goods e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a dressmaker would be workers in the secondary sector.)
* Tertiary sector of the economy: Involves the provision of services to consumers and businesses, such as baby-sitting, cinema and banking. (A shopkeeper and an accountant would be workers in the tertiary sector.)
* Quaternary sector of the economy: Involves the research and development needed to produce products from natural resources. (A logging company might research ways to use partially burnt wood to be processed so that the undamaged portions of it can be made into pulp for paper.) Note that education is sometimes included in this sector.

More details about the various phases of economic development belong to the history section on this article. As this process was far from being homogeneous geographically, the balance between these sectors differs widely among the various regions of the world.

Other sectors include the

* Public Sector or state sector
* Private Sector or privately-run businesses
* Social sector or Voluntary sector

[edit] Economic measures

There are a number of ways to measure economic activity of a nation. These methods of measuring economic activity include:

* Consumer spending
* Exchange Rate
* Gross domestic product
* GDP per capita
* GNP
* Stock Market
* Interest Rate
* National Debt
* Rate of Inflation
* Unemployment
* Balance of Trade

[edit] GDP

The GDP - Gross domestic product of a country is a measure of the size of its economy. The most conventional economic analysis of a country relies heavily on economic indicators like the GDP and GDP per capita. While often useful, it should be noted that GDP only includes economic activity for which money is exchanged.
[edit] Informal economy
Main article: Informal economy

An informal economy is economic activity that is neither taxed nor monitored by a government, contrasted with a formal economy. The informal economy is thus not included in that government's Gross National Product (GNP). Although the informal economy is often associated with developing countries, all economic systems contain an informal economy in some proportion.

Informal economic activity is a dynamic process which includes many aspects of economic and social theory including exchange, regulation, and enforcement. By its nature, it is necessarily difficult to observe, study, define, and measure. No single source readily or authoritatively defines informal economy as a unit of study.

The terms "under the table" and "off the books" typically refer to this type of economy. The term black market refers to a specific subset of the informal economy. The term "informal sector" was used in many earlier studies, and has been mostly replaced in more recent studies which use the newer term.

Micro economics are focused on an individual person in a given economic society and Macro economics is looking at an economy as a whole. (town, city, region)
[edit] The largest economies by GDP (millions of USD)
2008 List by the International Monetary Fund[5] Rank↓ Country↓ GDP (millions of USD)↓
World 60,917,477[6]
European Union 18,387,785[6]
1 United States 14,441,425
2 Japan 4,910,692
3 China 4,327,448
4 Germany 3,673,105
5 France 2,866,951
6 United Kingdom 2,680,000
7 Italy 2,313,893
8 Russia 1,676,586
9 Spain 1,601,964
10 Brazil 1,572,839

--

Law[4] is a system of rules, usually enforced through a set of institutions.[5] It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people. Contract law regulates everything from buying a bus ticket to trading on derivatives markets. Property law defines rights and obligations related to the transfer and title of personal (often referred to as chattel) and real property. Trust law applies to assets held for investment and financial security, while tort law allows claims for compensation if a person's rights or property are harmed. If the harm is criminalised in a statute, criminal law offers means by which the state can prosecute the perpetrator. Constitutional law provides a framework for the creation of law, the protection of human rights and the election of political representatives. Administrative law is used to review the decisions of government agencies, while international law governs affairs between sovereign nation states in activities ranging from trade to environmental regulation or military action. Writing in 350 BC, the Greek philosopher Aristotle declared, "The rule of law is better than the rule of any individual."[6]

Legal systems elaborate rights and responsibilities in a variety of ways. A general distinction can be made between civil law jurisdictions, which codify their laws, and common law systems, where judge made law is not consolidated. In some countries, religion informs the law. Law provides a rich source of scholarly inquiry, into legal history, philosophy, economic analysis or sociology. Law also raises important and complex issues concerning equality, fairness and justice. "In its majestic equality", said the author Anatole France in 1894, "the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."[7] In a typical democracy, the central institutions for interpreting and creating law are the three main branches of government, namely an impartial judiciary, a democratic legislature, and an accountable executive. To implement and enforce the law and provide services to the public, a government's bureaucracy, the military and police are vital. While all these organs of the state are creatures created and bound by law, an independent legal profession and a vibrant civil society inform and support their progress.

Legal subjects

All legal systems deal with the same basic issues, but each country categorises and identifies its legal subjects in different ways. A common distinction is that between "public law" (a term related closely to the state, and including constitutional, administrative and criminal law), and "private law" (which covers contract, tort and property).[8] In civil law systems, contract and tort fall under a general law of obligations, while trusts law is dealt with under statutory regimes or international conventions. International, constitutional and administrative law, criminal law, contract, tort, property law and trusts are regarded as the "traditional core subjects",[9] although there are many further disciplines which may be of greater practical importance.
[edit] International law
Main articles: Public international law, Conflict of laws, and European Union law
Providing a constitution for public international law, the United Nations system was agreed during World War II

International law can refer to three things: public international law, private international law or conflict of laws and the law of supranational organisations.

* Public international law concerns relationships between sovereign nations. The sources for public international law development are custom, practice and treaties between sovereign nations, such as the Geneva Conventions. Public international law can be formed by international organisations, such as the United Nations (which was established after the failure of the League of Nations to prevent the Second World War),[10] the International Labour Organisation, the World Trade Organisation, or the International Monetary Fund. Public international law has a special status as law because there is no international police force, and courts (e.g. the International Court of Justice as the primary UN judicial organ) lack the capacity to penalise disobedience.[11] However, a few bodies, such as the WTO, have effective systems of binding arbitration and dispute resolution backed up by trade sanctions.[12]

* Conflict of laws (or "private international law" in civil law countries) concerns which jurisdiction a legal dispute between private parties should be heard in and which jurisdiction's law should be applied. Today, businesses are increasingly capable of shifting capital and labour supply chains across borders, as well as trading with overseas businesses, making the question of which country has jurisdiction even more pressing. Increasing numbers of businesses opt for commercial arbitration under the New York Convention 1958.[13]

* European Union law is the first and, so far, only example of a supranational legal framework. Given the trend of increasing global economic integration, many regional agreements—especially the Union of South American Nations—are on track to follow the same model. In the EU, sovereign nations have gathered their authority in a system of courts and political institutions. These institutions are allowed the ability to enforce legal norms both against or for member states and citizens in a manner which is not possible through public international law.[14] As the European Court of Justice said in the 1960s, European Union law constitutes "a new legal order of international law" for the mutual social and economic benefit of the member states.[15]

[edit] Constitutional and administrative law
Main articles: Constitutional law and Administrative law
The French Declaration of the Rights of Man and of the Citizen, whose principles still have constitutional value

Constitutional and administrative law govern the affairs of the state. Constitutional law concerns both the relationships between the executive, legislature and judiciary and the human rights or civil liberties of individuals against the state. Most jurisdictions, like the United States and France, have a single codified constitution, with a Bill of Rights. A few, like the United Kingdom, have no such document. A "constitution" is simply those laws which constitute the body politic, from statute, case law and convention. A case named Entick v Carrington[16] illustrates a constitutional principle deriving from the common law. Mr Entick's house was searched and ransacked by Sheriff Carrington. When Mr Entick complained in court, Sheriff Carrington argued that a warrant from a Government minister, the Earl of Halifax, was valid authority. However, there was no written statutory provision or court authority. The leading judge, Lord Camden, stated that,

The great end, for which men entered into society, was to secure their property. That right is preserved sacred and incommunicable in all instances, where it has not been taken away or abridged by some public law for the good of the whole ... If no excuse can be found or produced, the silence of the books is an authority against the defendant, and the plaintiff must have judgment.[17]

The fundamental constitutional principle, inspired by John Locke, holds that the individual can do anything but that which is forbidden by law, and the state may do nothing but that which is authorised by law.[18][19] Administrative law is the chief method for people to hold state bodies to account. People can apply for judicial review of actions or decisions by local councils, public services or government ministries, to ensure that they comply with the law. The first specialist administrative court was the Conseil d'État set up in 1799, as Napoleon assumed power in France.[20]
[edit] Criminal law
Main article: Criminal law

Criminal law, also known as penal law, pertains to crimes and punishment.[21] It thus regulates the definition of and penalties for offences found to have a sufficiently deleterious social impact but, in itself, makes no moral judgement on an offender nor imposes restrictions on society that physically prevents people from committing a crime in the first place.[22] Investigating, apprehending, charging, and trying suspected offenders is regulated by the law of criminal procedure.[23] The paradigm case of a crime lies in the proof, beyond reasonable doubt, that a person is guilty of two things. First, the accused must commit an act which is deemed by society to be criminal, or actus reus (guilty act).[24] Second, the accused must have the requisite malicious intent to do a criminal act, or mens rea (guilty mind). However for so called "strict liability" crimes, an actus reus is enough.[25] Criminal systems of the civil law tradition distinguish between intention in the broad sense (dolus directus and dolus eventualis), and negligence. Negligence does not carry criminal responsibility unless a particular crime provides for its punishment.[26][27]
A depiction of a 1600s criminal trial, for witchcraft in Salem

Examples of crimes include murder, assault, fraud and theft. In exceptional circumstances defences can apply to specific acts, such as killing in self defence, or pleading insanity. Another example is in the 19th century English case of R v Dudley and Stephens, which tested a defence of "necessity". The Mignonette, sailing from Southampton to Sydney, sank. Three crew members and Richard Parker, a 17 year old cabin boy, were stranded on a raft. They were starving and the cabin boy was close to death. Driven to extreme hunger, the crew killed and ate the cabin boy. The crew survived and were rescued, but put on trial for murder. They argued it was necessary to kill the cabin boy to preserve their own lives. Lord Coleridge, expressing immense disapproval, ruled, "to preserve one's life is generally speaking a duty, but it may be the plainest and the highest duty to sacrifice it." The men were sentenced to hang, but public opinion was overwhelmingly supportive of the crew's right to preserve their own lives. In the end, the Crown commuted their sentences to six months in jail.[28]

Criminal law offences are viewed as offences against not just individual victims, but the community as well.[22] The state, usually with the help of police, takes the lead in prosecution, which is why in common law countries cases are cited as "The People v ..." or "R (for Rex or Regina) v ..." Also, lay juries are often used to determine the guilt of defendants on points of fact: juries cannot change legal rules. Some developed countries still condone capital punishment for criminal activity, but the normal punishment for a crime will be imprisonment, fines, state supervision (such as probation), or community service. Modern criminal law has been affected considerably by the social sciences, especially with respect to sentencing, legal research, legislation, and rehabilitation.[29] On the international field, 108 are members of the International Criminal Court, which was established to try people for crimes against humanity.[30]
[edit] Contract law
Main article: Contract
The famous Carbolic Smoke Ball advertisement to cure influenza was held to be a unilateral contract

Contract law concerns enforceable promises, and can be summed up in the Latin phrase pacta sunt servanda (agreements must be kept).[31] In common law jurisdictions, three key elements to the creation of a contract are necessary: offer and acceptance, consideration and the intention to create legal relations. In Carlill v Carbolic Smoke Ball Company a medical firm advertised that its new wonder drug, the smokeball, would cure people's flu, and if it did not, the buyers would get £100. Many people sued for their £100 when the drug did not work. Fearing bankruptcy, Carbolic argued the advert was not to be taken as a serious, legally binding offer. It was an invitation to treat, mere puff, a gimmick. But the court of appeal held that to a reasonable man Carbolic had made a serious offer. People had given good consideration for it by going to the "distinct inconvenience" of using a faulty product. "Read the advertisement how you will, and twist it about as you will", said Lord Justice Lindley, "here is a distinct promise expressed in language which is perfectly unmistakable".[32]

"Consideration" indicates the fact that all parties to a contract have exchanged something of value. Some common law systems, including Australia, are moving away from the idea of consideration as a requirement. The idea of estoppel or culpa in contrahendo, can be used to create obligations during pre-contractual negotiations.[33] In civil law jurisdictions, consideration is not required for a contract to be binding.[34] In France, an ordinary contract is said to form simply on the basis of a "meeting of the minds" or a "concurrence of wills". Germany has a special approach to contracts, which ties into property law. Their 'abstraction principle' (Abstraktionsprinzip) means that the personal obligation of contract forms separately from the title of property being conferred. When contracts are invalidated for some reason (e.g. a car buyer is so drunk that he lacks legal capacity to contract)[35] the contractual obligation to pay can be invalidated separately from the proprietary title of the car. Unjust enrichment law, rather than contract law, is then used to restore title to the rightful owner.[36]
[edit] Tort law
Main article: Tort
The "McLibel" two were involved in the longest running case in UK history for publishing a pamphlet criticising McDonald's restaurants.

Torts, sometimes called delicts, are civil wrongs. To have acted tortiously, one must have breached a duty to another person, or infringed some pre-existing legal right. A simple example might be accidentally hitting someone with a cricket ball.[37] Under the law of negligence, the most common form of tort, the injured party could potentially claim compensation for his injuries from the party responsible. The principles of negligence are illustrated by Donoghue v Stevenson.[38] A friend of Mrs Donoghue ordered an opaque bottle of ginger beer (intended for the consumption of Mrs Donoghue) in a café in Paisley. Having consumed half of it, Mrs Donoghue poured the remainder into a tumbler. The decomposing remains of a snail floated out. She claimed to have suffered from shock, fell ill with gastroenteritis and sued the manufacturer for carelessly allowing the drink to be contaminated. The House of Lords decided that the manufacturer was liable for Mrs Donoghue's illness. Lord Atkin took a distinctly moral approach, and said,

The liability for negligence ... is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay ... The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.[39]

This became the basis for the four principles of negligence; (1) Mr Stevenson owed Mrs Donoghue a duty of care to provide safe drinks (2) he breached his duty of care (3) the harm would not have occurred but for his breach and (4) his act was the proximate cause, or not too remote a consequence, of her harm.[38] Another example of tort might be a neighbour making excessively loud noises with machinery on his property.[40] Under a nuisance claim the noise could be stopped. Torts can also involve intentional acts, such as assault, battery or trespass. A better known tort is defamation, which occurs, for example, when a newspaper makes unsupportable allegations that damage a politician's reputation.[41] More infamous are economic torts, which form the basis of labour law in some countries by making trade unions liable for strikes,[42] when statute does not provide immunity.[43]
[edit] Property law
Main article: Property law
A painting of the South Sea Bubble, one of the world's first ever speculations and crashes, led to strict regulation on share trading.[44]

Property law governs valuable things that people call 'theirs'. Real property, sometimes called 'real estate' refers to ownership of land and things attached to it.[45] Personal property, refers to everything else; movable objects, such as computers, cars, jewelry, and sandwiches, or intangible rights, such as stocks and shares. A right in rem is a right to a specific piece of property, contrasting to a right in personam which allows compensation for a loss, but not a particular thing back. Land law forms the basis for most kinds of property law, and is the most complex. It concerns mortgages, rental agreements, licences, covenants, easements and the statutory systems for land registration. Regulations on the use of personal property fall under intellectual property, company law, trusts and commercial law. An example of a basic case of most property law is Armory v Delamirie.[46] A chimney sweep's boy found a jewel encrusted with precious stones. He took it to a goldsmith to have it valued. The goldsmith's apprentice looked at it, sneakily removed the stones, told the boy it was worth three halfpence and that he would buy it. The boy said he would prefer the jewel back, so the apprentice gave it to him, but without the stones. The boy sued the goldsmith for his apprentice's attempt to cheat him. Lord Chief Justice Pratt ruled that even though the boy could not be said to own the jewel, he should be considered the rightful keeper ("finders keeper") until the original owner is found. In fact the apprentice and the boy both had a right of possession in the jewel (a technical concept, meaning evidence that something could belong to someone), but the boy's possessory interest was considered better, because it could be shown to be first in time. Possession may be nine tenths of the law, but not all.

This case is used to support the view of property in common law jurisdictions, that the person who can show the best claim to a piece of property, against any contesting party, is the owner.[47] By contrast, the classic civil law approach to property, propounded by Friedrich Carl von Savigny, is that it is a right good against the world. Obligations, like contracts and torts are conceptualised as rights good between individuals.[48] The idea of property raises many further philosophical and political issues. Locke argued that our "lives, liberties and estates" are our property because we own our bodies and mix our labour with our surroundings.[49]
[edit] Equity and trusts
Main articles: Equity (law) and Trust law
The Court of Chancery, London, early 19th century

Equity is a body of rules that developed in England separately from the "common law". The common law was administered by judges. The Lord Chancellor on the other hand, as the King's keeper of conscience, could overrule the judge made law if he thought it equitable to do so.[50] This meant equity came to operate more through principles than rigid rules. For instance, whereas neither the common law nor civil law systems allow people to split the ownership from the control of one piece of property, equity allows this through an arrangement known as a 'trust'. 'Trustees' control property, whereas the 'beneficial' (or 'equitable') ownership of trust property is held by people known as 'beneficiaries'. Trustees owe duties to their beneficiaries to take good care of the entrusted property.[51] In the early case of Keech v Sandford[52] a child had inherited the lease on a market in Romford, London. Mr Sandford was entrusted to look after this property until the child matured. But before then, the lease expired. The landlord had (apparently) told Mr Sandford that he did not want the child to have the renewed lease. Yet the landlord was happy (apparently) to give Mr Sandford the opportunity of the lease instead. Mr Sandford took it. When the child (now Mr Keech) grew up, he sued Mr Sandford for the profit that he had been making by getting the market's lease. Mr Sandford was meant to be trusted, but he put himself in a position of conflict of interest. The Lord Chancellor, Lord King, agreed and ordered Mr Sandford should disgorge his profits. He wrote,

I very well see, if a trustee, on the refusal to renew, might have a lease to himself few trust-estates would be renewed ... This may seem very hard, that the trustee is the only person of all mankind who might not have the lease; but it is very proper that the rule should be strictly pursued and not at all relaxed.

Of course, Lord King LC was worried that trustees might exploit opportunities to use trust property for themselves instead of looking after it. Business speculators using trusts had just recently caused a stock market crash. Strict duties for trustees made their way into company law and were applied to directors and chief executive officers. Another example of a trustee's duty might be to invest property wisely or sell it.[53] This is especially the case for pension funds, the most important form of trust, where investors are trustees for people's savings until retirement. But trusts can also be set up for charitable purposes, famous examples being the British Museum or the Rockefeller Foundation.
[edit] Further disciplines

Law spreads far beyond the core subjects into virtually every area of life. Three categories are presented for convenience, though the subjects intertwine and overlap.

Law and society

A trade union protest by UNISON while on strike

* Labour law is the study of a tripartite industrial relationship between worker, employer and trade union. This involves collective bargaining regulation, and the right to strike. Individual employment law refers to workplace rights, such as job security, health and safety or a minimum wage.
* Human rights, civil rights and human rights law are important fields to guarantee everyone basic freedoms and entitlements. These are laid down in codes such as the Universal Declaration of Human Rights, the European Convention on Human Rights (which founded the European Court of Human Rights) and the U.S. Bill of Rights. The Treaty of Lisbon makes the Charter of Fundamental Rights of the European Union legally binding in all member states except Charter of Fundamental Rights of the European Union – Poland and the United Kingdom.[54]
* Civil procedure and criminal procedure concern the rules that courts must follow as a trial and appeals proceed. Both concern a citizen's right to a fair trial or hearing.
* Evidence law involves which materials are admissible in courts for a case to be built.
* Immigration law and nationality law concern the rights of foreigners to live and work in a nation-state that is not their own and to acquire or lose citizenship. Both also involve the right of asylum and the problem of stateless individuals.
* Social security law refers to the rights people have to social insurance, such as jobseekers' allowances or housing benefits.
* Family law covers marriage and divorce proceedings, the rights of children and rights to property and money in the event of separation.

Law and commerce

* Company law sprang from the law of trusts, on the principle of separating ownership of property and control.[55] The law of the modern company began with the Joint Stock Companies Act 1856, passed in the United Kingdom, which provided investors with a simple registration procedure to gain limited liability under the separate legal personality of the corporation.
* Commercial law covers complex contract and property law. The law of agency, insurance law, bills of exchange, insolvency and bankruptcy law and sales law are all important, and trace back to the mediæval Lex Mercatoria. The UK Sale of Goods Acts and the US Uniform Commercial Code are examples of codified common law commercial principles.
* Admiralty law and the Law of the Sea lay a basic framework for free trade and commerce across the world's oceans and seas, where outside of a country's zone of control. Shipping companies operate through ordinary principles of commercial law, generalised for a global market. Admiralty law also encompasses specialised issues such as salvage, maritime liens, and injuries to passengers.
* Intellectual property law aims at safeguarding creators and other producers of intellectual goods and services. These are legal rights (copyrights, trademarks, patents, and related rights) which result from intellectual activity in the industrial, literary and artistic fields.[56]
* Restitution deals with the recovery of someone else's gain, rather than compensation for one's own loss.
* Unjust enrichment is the third pillar of civil law (along with contract and tort). When someone has been unjustly enriched (or there is an "absence of basis" for a transaction) at another's expense, this event generates the right to restitution to reverse that gain.

Law and regulation

The New York Stock Exchange trading floor after the Wall Street Crash of 1929, before tougher banking regulation was introduced

* Tax law involves regulations that concern value added tax, corporate tax, income tax.
* Banking law and financial regulation set minimum standards on the amounts of capital banks must hold, and rules about best practice for investment. This is to insure against the risk of economic crises, such as the Wall Street Crash of 1929.
* Regulation deals with the provision of public services and utilities. Water law is one example. Especially since privatisation became popular and took management of services away from public law, private companies doing the jobs previously controlled by government have been bound by varying degrees of social responsibility. Energy, gas, telecomms and water are regulated industries in most OECD countries.
* Competition law, known in the U.S. as antitrust law, is an evolving field that traces as far back as Roman decrees against price fixing and the English restraint of trade doctrine. Modern competition law derives from the U.S. anti-cartel and anti-monopoly statutes (the Sherman Act and Clayton Act) of the turn of the 20th century. It is used to control businesses who attempt to use their economic influence to distort market prices at the expense of consumer welfare.
* Consumer law could include anything from regulations on unfair contractual terms and clauses to directives on airline baggage insurance.
* Environmental law is increasingly important, especially in light of the Kyoto Protocol and the potential danger of climate change. Environmental protection also serves to penalise polluters within domestic legal systems.

[edit] Legal systems
Main article: Legal systems of the world

In general, legal systems can be split between civil law and common law systems.[57] The term "civil law" referring to a legal system should not be confused with "civil law" as a group of legal subjects distinct from criminal or public law. A third type of legal system— accepted by some countries without separation of church and state—is religious law, based on scriptures. The specific system that a country is ruled by is often determined by its history, connections with other countries, or its adherence to international standards. The sources that jurisdictions adopt as authoritatively binding are the defining features of any legal system. Yet classification is a matter of form rather than substance, since similar rules often prevail.
[edit] Civil law
Main article: Civil law (legal system)
First page of the 1804 edition of the Napoleonic Code

Civil law is the legal system used in most countries around the world today. In civil law the sources recognised as authoritative are, primarily, legislation—especially codifications in constitutions or statutes passed by government—and custom.[58] Codifications date back millennia, with one early example being the Babylonian Codex Hammurabi. Modern civil law systems essentially derive from the legal practice of the Roman Empire whose texts were rediscovered in medieval Europe. Roman law in the days of the Roman Republic and Empire was heavily procedural, and lacked a professional legal class.[59] Instead a lay person, iudex, was chosen to adjudicate. Precedents were not reported, so any case law that developed was disguised and almost unrecognised.[60] Each case was to be decided afresh from the laws of the state, which mirrors the (theoretical) unimportance of judges' decisions for future cases in civil law systems today. During the 6th century AD in the Eastern Roman Empire, the Emperor Justinian I codified and consolidated the laws that had existed in Rome, so that what remained was one-twentieth of the mass of legal texts from before.[61] This became known as the Corpus Juris Civilis. As one legal historian wrote, "Justinian consciously looked back to the golden age of Roman law and aimed to restore it to the peak it had reached three centuries before."[62] Western Europe, meanwhile, slowly slipped into the Dark Ages, and it was not until the 11th century that scholars in the University of Bologna rediscovered the texts and used them to interpret their own laws.[63] Civil law codifications based closely on Roman law, alongside some influences from religious laws such as Canon law and Islamic law,[64][65] continued to spread throughout Europe until the Enlightenment; then, in the 19th century, both France, with the Code Civil, and Germany, with the Bürgerliches Gesetzbuch, modernised their legal codes. Both these codes influenced heavily not only the law systems of the countries in continental Europe (e.g. Greece), but also the Japanese and Korean legal traditions.[66][67] Today, countries that have civil law systems range from Russia and China to most of Central and Latin America.[68] The United States follows the common law system described below.
[edit] Common law and equity
Main article: Common law
King John of England signs Magna Carta

Common law and equity are legal systems where decisions by courts are explicitly acknowledged to be legal sources. The "doctrine of precedent", or stare decisis (Latin for "to stand by decisions") means that decisions by higher courts bind lower courts. Common law systems also rely on statutes, passed by the legislature, but may make less of a systematic attempt to codify their laws than in a "civil law" system. Common law originated from England and has been inherited by almost every country once tied to the British Empire (except Malta, Scotland, the U.S. state of Louisiana, and the Canadian province of Quebec). In medieval England, the Norman conquest led to a unification of various tribal customs and hence a law "common" to the whole country. Perhaps influenced by Islamic legal practices around the time of the Crusades,[65] the common law developed when the English monarchy had been weakened by the enormous cost of fighting for control over large parts of France. King John had been forced by his barons to sign a document limiting his authority to pass laws. This "great charter" or Magna Carta of 1215 also required that the King's entourage of judges hold their courts and judgments at "a certain place" rather than dispensing autocratic justice in unpredictable places about the country.[69] A concentrated and elite group of judges acquired a dominant role in law-making under this system, and compared to its European counterparts the English judiciary became highly centralised. In 1297, for instance, while the highest court in France had fifty-one judges, the English Court of Common Pleas had five.[70] This powerful and tight-knit judiciary gave rise to a rigid and inflexible system of common law.[71] As a result, as time went on, increasing numbers of citizens petitioned the King to override the common law, and on the King's behalf the Lord Chancellor gave judgment to do what was equitable in a case. From the time of Sir Thomas More, the first lawyer to be appointed as Lord Chancellor, a systematic body of equity grew up alongside the rigid common law, and developed its own Court of Chancery. At first, equity was often criticised as erratic, that it varied according to the length of the Chancellor's foot.[72] But over time it developed solid principles, especially under Lord Eldon.[73] In the 19th century the two systems were fused into one another. In developing the common law and equity, academic authors have always played an important part. William Blackstone, from around 1760, was the first scholar to describe and teach it.[74] But merely in describing, scholars who sought explanations and underlying structures slowly changed the way the law actually worked.[75]
[edit] Religious law
Main article: Religious law

Religious law is explicitly based on religious precepts. Examples include the Jewish Halakha and Islamic Sharia—both of which translate as the "path to follow"—while Christian canon law also survives in some church communities. Often the implication of religion for law is unalterability, because the word of God cannot be amended or legislated against by judges or governments. However a thorough and detailed legal system generally requires human elaboration. For instance, the Quran has some law, and it acts as a source of further law through interpretation,[76] Qiyas (reasoning by analogy), Ijma (consensus) and precedent. This is mainly contained in a body of law and jurisprudence known as Sharia and Fiqh respectively. Another example is the Torah or Old Testament, in the Pentateuch or Five Books of Moses. This contains the basic code of Jewish law, which some Israeli communities choose to use. The Halakha is a code of Jewish law which summarises some of the Talmud's interpretations. Nevertheless, Israeli law allows litigants to use religious laws only if they choose. Canon law is only in use by members of the clergy in the Roman Catholic Church, the Eastern Orthodox Church and the Anglican Communion.
A trial in the Ottoman Empire, 1879, when religious law applied under the Mecelle

Until the 18th century, Sharia law was practiced throughout the Muslim world in a non-codified form, with the Ottoman Empire's Mecelle code in the 19th century being first attempt at codifying elements of Sharia law. Since the mid-1940s, efforts have been made, in country after country, to bring Sharia law more into line with modern conditions and conceptions.[77][78] In modern times, the legal systems of many Muslim countries draw upon both civil and common law traditions as well as Islamic law and custom. The constitutions of certain Muslim states, such as Egypt and Afghanistan, recognise Islam as the religion of the state, obliging legislature to adhere to Sharia.[79] Saudi Arabia recognises Quran as its constitution, and is governed on the basis of Islamic law.[80] Iran has also witnessed a reiteration of Islamic law into its legal system after 1979.[81] During the last few decades, one of the fundamental features of the movement of Islamic resurgence has been the call to restore the Sharia, which has generated a vast amount of literature and affected world politics.[82]
[edit] Legal theory
[edit] History of law
Main article: Legal history
King Hammurabi is revealed the code of laws by the Mesopotamian sun god Shamash, also revered as the god of justice

The history of law is closely connected to the development of civilization. Ancient Egyptian law, dating as far back as 3000 BC, contained a civil code that was probably broken into twelve books. It was based on the concept of Ma'at, characterised by tradition, rhetorical speech, social equality and impartiality.[83][84] By the 22nd century BC, the ancient Sumerian ruler Ur-Nammu had formulated the first law code, which consisted of casuistic statements ("if ... then ..."). Around 1760 BC, King Hammurabi further developed Babylonian law, by codifying and inscribing it in stone. Hammurabi placed several copies of his law code throughout the kingdom of Babylon as stelae, for the entire public to see; this became known as the Codex Hammurabi. The most intact copy of these stelae was discovered in the 19th century by British Assyriologists, and has since been fully transliterated and translated into various languages, including English, German, and French.[85]

The Old Testament dates back to 1280 BC, and takes the form of moral imperatives as recommendations for a good society. The small Greek city-state, Ancient Athens, and from about 8th century BC was the first society to be based on broad inclusion of its citizenry; excluding women and the slave class. However, Athens had no legal science, and no word for "law" as an abstract concept.[86] Yet Ancient Greek law contained major constitutional innovations in the development of democracy.[87]

Roman law was heavily influenced by Greek philosophy, but its detailed rules were developed by professional jurists, and were highly sophisticated.[88][89] Over the centuries between the rise and decline of the Roman Empire, law was adapted to cope with the changing social situations, and underwent major codification during Justinian I.[90] Although it declined in significance during the Dark Ages, Roman law was rediscovered around the 11th century when mediæval legal scholars began to research Roman codes and adapt their concepts. In mediæval England, the King's judges developed a body of precedent, which later became the common law. A Europe-wide Lex Mercatoria was formed so that merchants could trade with common standards of practice; rather than with the many splintered facets of local laws. The Lex Mercatoria, a precursor to modern commercial law, emphasised the freedom of contract and alienability of property.[91] As nationalism grew in the 18th and 19th centuries, Lex Mercatoria was incorporated into countries' local law under new civil codes. The French Napoleonic Code and the German became the most influential. In contrast to English common law, which consists of enormous tomes of case law, codes in small books are easy to export and easy for judges to apply. However, today there are signs that civil and common law are converging.[92] EU law is codified in treaties, but develops through the precedent laid down by the European Court of Justice.
The Constitution of India is the longest written constitution for a country, containing 444 articles, 12 schedules, numerous amendments and 117,369 words

Islamic law and jurisprudence developed during the Middle Ages.[93] The methodology of legal precedent and reasoning by analogy (Qiyas) used in early Islamic law was similar to that of the later English common law system.[94] This was particularly the case for the Maliki school of Islamic law active in North Africa, Islamic Spain and the Emirate of Sicily. Between the 8th and 11th centuries, Maliki law developed several legal institutions that were parallel with later common law institutions.[95]

Ancient India and China represent distinct traditions of law, and have historically had independent schools of legal theory and practice. The Arthashastra, probably compiled around 100 AD (although it contains older material), and the Manusmriti (c. 100–300 AD) were foundational treatises in India, and comprise texts considered authoritative legal guidance.[96] Manu's central philosophy was tolerance and Pluralism, and was cited across Southeast Asia.[97] This Hindu tradition, along with Islamic law, was supplanted by the common law when India became part of the British Empire.[98] Malaysia, Brunei, Singapore and Hong Kong also adopted the common law. The eastern Asia legal tradition reflects a unique blend of secular and religious influences.[99] Japan was the first country to begin modernising its legal system along western lines, by importing bits of the French, but mostly the German Civil Code.[100] This partly reflected Germany's status as a rising power in the late 19th century. Similarly, traditional Chinese law gave way to westernisation towards the final years of the Ch'ing dynasty in the form of six private law codes based mainly on the Japanese model of German law.[101] Today Taiwanese law retains the closest affinity to the codifications from that period, because of the split between Chiang Kai-shek's nationalists, who fled there, and Mao Zedong's communists who won control of the mainland in 1949. The current legal infrastructure in the People's Republic of China was heavily influenced by Soviet Socialist law, which essentially inflates administrative law at the expense of private law rights.[102] Due to rapid industrialisation, today China undergoing a process of reform, at least in terms of economic, if not social and political, rights. A new contract code in 1999 represented a move away from administrative domination.[103] Furthermore, after negotiations lasting fifteen years, in 2001 China joined the World Trade Organisation.[104]
[edit] Philosophy of law
Main article: Jurisprudence

But what, after all, is a law? [...] When I say that the object of laws is always general, I mean that law considers subjects en masse and actions in the abstract, and never a particular person or action. [...] On this view, we at once see that it can no longer be asked whose business it is to make laws, since they are acts of the general will; nor whether the prince is above the law, since he is a member of the State; nor whether the law can be unjust, since no one is unjust to himself; nor how we can be both free and subject to the laws, since they are but registers of our wills.
Jean-Jacques Rousseau, The Social Contract, II, 6.[105]

The philosophy of law is commonly known as jurisprudence. Normative jurisprudence is essentially political philosophy, and asks "what should law be?", while analytic jurisprudence asks "what is law?". John Austin's utilitarian answer was that law is "commands, backed by threat of sanctions, from a sovereign, to whom people have a habit of obedience".[106] Natural lawyers on the other side, such as Jean-Jacques Rousseau, argue that law reflects essentially moral and unchangeable laws of nature. The concept of "natural law" emerged in ancient Greek philosophy concurrently and in entanglement with the notion of justice, and re-entered the mainstream of Western culture through the writings of Thomas Aquinas and the commentaries of Islamic philosopher and jurist Averroes.[107][108]

Hugo Grotius, the founder of a purely rationalistic system of natural law, argued that law arises from both a social impulse—as Aristotle had indicated—and reason.[109] Immanuel Kant believed a moral imperative requires laws "be chosen as though they should hold as universal laws of nature".[110] Jeremy Bentham and his student Austin, following David Hume, believed that this conflated the "is" and what "ought to be" problem. Bentham and Austin argued for law's positivism; that real law is entirely separate from "morality".[111] Kant was also criticised by Friedrich Nietzsche, who rejected the principle of equality, and believed that law emanates from the will to power, and cannot be labelled as "moral" or "immoral".[112][113][114]

In 1934, the Austrian philosopher Hans Kelsen continued the positivist tradition in his book the Pure Theory of Law.[115] Kelsen believed that although law is separate from morality, it is endowed with "normativity"; meaning we ought to obey it. While laws are positive "is" statements (e.g. the fine for reversing on a highway is €500); law tells us what we "should" do. Thus, each legal system can be hypothesised to have a basic norm (Grundnorm) instructing us to obey. Kelsen's major opponent, Carl Schmitt, rejected both positivism and the idea of the rule of law because he did not accept the primacy of abstract normative principles over concrete political positions and decisions.[116] Therefore, Schmitt advocated a jurisprudence of the exception (state of emergency), which denied that legal norms could encompass of all political experience.[117]
Bentham's utilitarian theories remained dominant in law until the 20th century

Later in the 20th century, H. L. A. Hart attacked Austin for his simplifications and Kelsen for his fictions in The Concept of Law.[118] Hart argued law is a system of rules, divided into primary (rules of conduct) and secondary ones (rules addressed to officials to administer primary rules). Secondary rules are further divided into rules of adjudication (to resolve legal disputes), rules of change (allowing laws to be varied) and the rule of recognition (allowing laws to be identified as valid). Two of Hart's students continued the debate: In his book Law's Empire, Ronald Dworkin attacked Hart and the positivists for their refusal to treat law as a moral issue. Dworkin argues that law is an "interpretive concept",[119] that requires judges to find the best fitting and most just solution to a legal dispute, given their constitutional traditions. Joseph Raz, on the other hand, defended the positivist outlook and criticised Hart's "soft social thesis" approach in The Authority of Law.[120] Raz argues that law is authority, identifiable purely through social sources and without reference to moral reasoning. In his view, any categorisation of rules beyond their role as authoritative instruments in mediation are best left to sociology, rather than jurisprudence.[121]
[edit] Economic analysis of law
Main article: Law and economics

In the 18th century Adam Smith presented a philosophical foundation for explaining the relationship between law and economics.[122] The discipline arose partly out of a critique of trade unions and U.S. antitrust law. The most influential proponents, such as Richard Posner and Oliver Williamson and the so-called Chicago School of economists and lawyers including Milton Friedman and Gary Becker, are generally advocates of deregulation and privatisation, and are hostile to state regulation or what they see as restrictions on the operation of free markets.[123]
Richard Posner, one of the Chicago School, runs a blog with Bank of Sweden Prize winning economist Gary Becker.[124]

The most prominent economic analyst of law is 1991 Nobel Prize winner Ronald Coase, whose first major article, The Nature of the Firm (1937), argued that the reason for the existence of firms (companies, partnerships, etc.) is the existence of transaction costs.[125] Rational individuals trade through bilateral contracts on open markets until the costs of transactions mean that using corporations to produce things is more cost-effective. His second major article, The Problem of Social Cost (1960), argued that if we lived in a world without transaction costs, people would bargain with one another to create the same allocation of resources, regardless of the way a court might rule in property disputes.[126] Coase used the example of a nuisance case named Sturges v Bridgman, where a noisy sweetmaker and a quiet doctor were neighbours and went to court to see who should have to move.[40] Coase said that regardless of whether the judge ruled that the sweetmaker had to stop using his machinery, or that the doctor had to put up with it, they could strike a mutually beneficial bargain about who moves house that reaches the same outcome of resource distribution. Only the existence of transaction costs may prevent this.[127] So the law ought to pre-empt what would happen, and be guided by the most efficient solution. The idea is that law and regulation are not as important or effective at helping people as lawyers and government planners believe.[128] Coase and others like him wanted a change of approach, to put the burden of proof for positive effects on a government that was intervening in the market, by analysing the costs of action.[129]
[edit] Sociology of law
Main article: Sociology of law

Sociology of law is a diverse field of study that examines the interaction of law with society and overlaps with jurisprudence, economic analysis of law and more specialised subjects such as criminology.[130] The institutions of social construction and legal frameworks are the relevant areas for the discipline's inquiry. At first, legal theorists were suspicious of the discipline. Kelsen attacked one of its founders, Eugen Ehrlich, who sought to make distinct the differences between positive law, which lawyers learn and apply, and other forms of 'law' or social norms that regulate everyday life, generally preventing conflicts from reaching lawyers and courts.[131][132]
Max Weber in 1917, Weber began his career as a lawyer, and is regarded as one of the founders of sociology and sociology of law,

Around 1900 Max Weber defined his "scientific" approach to law, identifying the "legal rational form" as a type of domination, not attributable to people but to abstract norms.[133] Legal rationalism was his term for a body of coherent and calculable law which formed a precondition for modern political developments and the modern bureaucratic state and developed in parallel with the growth of capitalism.[130] Another sociologist, Émile Durkheim, wrote in The Division of Labour in Society that as society becomes more complex, the body of civil law concerned primarily with restitution and compensation grows at the expense of criminal laws and penal sanctions.[134] Other notable early legal sociologists included Hugo Sinzheimer, Theodor Geiger, Georges Gurvitch and Leon Petrażycki in Europe, and William Graham Sumner in the U.S.[135][136]
[edit] Legal institutions

It is a real unity of them all in one and the same person, made by covenant of every man with every man, in such manner as if every man should say to every man: I authorise and give up my right of governing myself to this man, or to this assembly of men, on this condition; that thou givest up, thy right to him, and authorise all his actions in like manner.
Thomas Hobbes, Leviathan, XVII

The main institutions of law in industrialised countries are independent courts, representative parliaments, an accountable executive, the military and police, bureaucratic organisation, the legal profession and civil society itself. John Locke, in his Two Treatises of Government, and Baron de Montesquieu in The Spirit of the Laws, advocated for a separation of powers between the political, legislature and executive bodies.[137] Their principle was that no person should be able to usurp all powers of the state, in contrast to the absolutist theory of Thomas Hobbes' Leviathan.[138] Max Weber and others reshaped thinking on the extension of state. Modern military, policing and bureaucratic power over ordinary citizens' daily lives pose special problems for accountability that earlier writers such as Locke or Montesquieu could not have foreseen. The custom and practice of the legal profession is an important part of people's access to justice, whilst civil society is a term used to refer to the social institutions, communities and partnerships that form law's political basis.
[edit] Judiciary
Main article: Judiciary

A judiciary is a number of judges mediating disputes to determine outcome. Most countries have systems of appeal courts, answering up to a supreme legal authority. In the United States, this is the Supreme Court;[139] in Australia, the High Court; in the UK, the House of Lords;[140] in Germany, the Bundesverfassungsgericht; in France, the Cour de Cassation.[141][142] For most European countries the European Court of Justice in Luxembourg can overrule national law, when EU law is relevant. The European Court of Human Rights in Strasbourg allows citizens of the Council of Europe member states to bring cases relating to human rights issues before it.[143]
The judges of the International Court of Justice in the Hague

Some countries allow their highest judicial authority to over-rule legislation they determined as unconstitutional. In Roe v Wade, the U.S. Supreme Court overturned a Texas law which forbade the granting of assistance to women seeking abortion.[144] The U.S.'s constitution's fourteenth amendment was interpreted to give Americans a right to privacy, and thus a woman's right to choose abortion.

A judiciary is theoretically bound by the constitution, much as legislative bodies are. In most countries judges may only interpret the constitution and all other laws. But in common law countries, where matters are not constitutional, the judiciary may also create law under the doctrine of precedent. The UK, Finland and New Zealand assert the ideal of parliamentary sovereignty, whereby the unelected judiciary may not overturn law passed by a democratic legislature.[145] In communist states, such as China, the courts are often regarded as parts of the executive, or subservient to the legislature; governmental institutions and actors exert thus various forms of influence on the judiciary.[146] In Muslim countries, courts often examine whether state laws adhere to the Sharia: the Supreme Constitutional Court of Egypt may invalidate such laws,[147] and in Iran the Guardian Council ensures the compatibility of the legislation with the "criteria of Islam".[147][148]
[edit] Legislature
Main article: Legislature
The debating chamber of the European Parliament

Prominent examples of legislatures are the Houses of Parliament in London, the Congress in Washington D.C., the Bundestag in Berlin, the Duma in Moscow, the Parlamento Italiano in Rome and the Assemblée nationale in Paris. By the principle of representative government people vote for politicians to carry out their wishes. Although countries like Israel, Greece, Sweden and China are unicameral, most countries are bicameral, meaning they have two separately appointed legislative houses. In the 'lower house' politicians are elected to represent smaller constituencies. The 'upper house' is usually elected to represent states in a federal system (as in Australia, Germany or the United States) or different voting configuration in a unitary system (as in France). In the UK the upper house is appointed by the government as a house of review. One criticism of bicameral systems with two elected chambers is that the upper and lower houses may simply mirror one another. The traditional justification of bicameralism is that an upper chamber acts as a house of review. This can minimise arbitrariness and injustice in governmental action.[149]

To pass legislation, a majority of Members of Parliament must vote for a bill (proposed law) in each house. Normally there will be several readings and amendments proposed by the different political factions. If a country has an entrenched constitution, a special majority for changes to the constitution will be required, making changes to the law more difficult. A government usually leads the process, which can be formed from Members of Parliament (e.g. the UK or Germany). But in a presidential system, an executive appoints a cabinet to govern from his or her political allies whether or not they are elected (e.g. the United States or Brazil), and the legislature's role is reduced to either ratification or veto.[150]
[edit] Executive
Main article: Executive (government)
The G20 meetings are composed of representatives of each country's executive branch

The executive in a legal system serve as a government's centre of political authority. In a parliamentary system, as with Britain, Italy, Germany, India, and Japan, the executive is known as the cabinet, and composed of members of the legislature. The executive is chosen by the Prime Minister or Chancellor, whose office holds power under the confidence of the legislature. Because popular elections appoint political parties to govern, the leader of a party can change in between elections. The head of state is apart from the executive, and symbolically enacts laws and acts as representative of the nation. Examples include the German president (appointed by the Parliament); the Queen of the United Kingdom (a hereditary title), and the Austrian president (elected by popular vote). The other important model is the presidential system, found in France, the U.S. and Russia. In presidential systems, the executive acts as both head of state and head of government, and has power to appoint an unelected cabinet. Under a presidential system, the executive branch is separate from the legislature to which is not accountable.[151][152]

Although the role of the executive varies from country to country, usually it will propose the majority of legislation, and propose government agenda. In presidential systems, the executive often has the power to veto legislation. Most executives in both systems are responsible for foreign relations, the military and police, and the bureaucracy. Ministers or other officials head a country's public offices, such as a foreign ministry or interior ministry. The election of a different executive is therefore capable of revolutionising an entire country's approach to government.
[edit] Military and police
Main articles: Military and Police
U.S. Customs and Border Protection officers

While military organizations have existed as long as government itself, the idea of a standing police force is relatively modern concept. Mediæval England's system of traveling criminal courts, or assizes, used show trials and public executions to instill communities with fear to maintain control.[153] The first modern police were probably those in 17th-century Paris, in the court of Louis XIV,[154] although the Paris Prefecture of Police claim they were the world's first uniformed policemen.[155]

Weber famously argued that the state is that which controls the legitimate monopoly of the means of violence.[156][157] The military and police carry out enforcement at the request of the government or the courts. The term failed state refers to states that cannot implement or enforce policies; their police and military no longer control security and order and society moves into anarchy, the absence of government.[158]
[edit] Bureaucracy
Main article: Bureaucracy
The United Nations' New York headquarters houses civil servants that serve its 192 member states.

The etymology of "bureaucracy" derives from the French word for "office" (bureau) and the Ancient Greek for word "power" (kratos).[159] Like the military and police, a legal system's government servants and bodies that make up its bureaucracy carry out the directives of the executive. One of the earliest references to the concept was made by Baron de Grimm, a German author who lived in France. In 1765 he wrote,

The real spirit of the laws in France is that bureaucracy of which the late Monsieur de Gournay used to complain so greatly; here the offices, clerks, secretaries, inspectors and intendants are not appointed to benefit the public interest, indeed the public interest appears to have been established so that offices might exist.[160]

Cynicism over "officialdom" is still common, and the workings of public servants is typically contrasted to private enterprise motivated by profit.[161] In fact private companies, especially large ones, also have bureaucracies.[162] Negative perceptions of "red tape" aside, public services such as schooling, health care, policing or public transport are a crucial state function making public bureaucratic action the locus of government power.[162] Writing in the early 20th century, Max Weber believed that a definitive feature of a developed state had come to be its bureaucratic support.[163] Weber wrote that the typical characteristics of modern bureaucracy are that officials define its mission, the scope of work is bound by rules, management is composed of career experts, who manage top down, communicating through writing and binding public servants' discretion with rules.[164]
[edit] Legal profession
Main article: Legal profession
In civil law systems such as those of France, Germany, Italy, Spain and Greece, there is a distinct category of notary, a legally trained public official, compensated by the parties to a transaction.[165] This is a 16th-century painting of such a notary by Flemish painter Quentin Massys.

A corollary of the rule of law is the existence of a legal profession sufficiently autonomous to be able to invoke the authority of the independent judiciary; the right to assistance of an advocate in a court proceeding emanates from this corollary—in England the function of barrister or advocate is distinguished from legal counselor (solicitor).[166] As the European Court of Human Rights has stated, the law should be adequately accessible to everyone and people should be able to foresee how the law affects them.[167] In order to maintain professionalism, the practice of law is typically overseen by either a government or independent regulating body such as a bar association, bar council or law society. Modern lawyers achieve distinct professional identity through specified legal procedures (e.g. successfully passing a qualifying examination), are required by law to have a special qualification (a legal education earning the student a Bachelor of Laws, a Bachelor of Civil Law or a Juris Doctor degree[168]), and are constituted in office by legal forms of appointment (being admitted to the bar). Most Muslim countries have developed similar rules about legal education and the legal profession, but some still allow lawyers with training in traditional Islamic law to practice law before personal status law courts.[169] In China and other developing countries there are not enough law-trained people to staff the existing judicial systems, and, accordingly, formal standards are more relaxed.[170]

Once accredited, a lawyer will often work in a law firm, in a chambers as a sole practitioner, in a government post or in a private corporation as an internal counsel. In addition a lawyer may become a legal researcher who provides on-demand legal research through a library, a commercial service or through freelance work. Many people trained in law put their skills to use outside the legal field entirely. Significant to the practice of law in the common law tradition is the legal research to determine the current state of the law. This usually entails exploring case-law reports, legal periodicals and legislation. Law practice also involves drafting documents such as court pleadings, persuasive briefs, contracts, or wills and trusts. Negotiation and dispute resolution skills (including ADR techniques) are also important to legal practice, depending on the field.[171]
[edit] Civil society
Main article: Civil society
A march in Washington D.C. during the U.S. Civil Rights Movement in 1963

Classical republican concept of "civil society" dates back to Hobbes and Locke.[172] Locke saw civil society as people who have "a common established law and judicature to appeal to, with authority to decide controversies between them."[173] German philosopher Georg Wilhelm Friedrich Hegel distinguished the "state" from "civil society" (burgerliche Gesellschaft) in Elements of the Philosophy of Right.[174] Hegel believed that civil society and the state were polar opposites, within the scheme of his dialectic theory of history. The modern dipole state–civil society was reproduced in the theories of Alexis de Tocqueville and Karl Marx.[175][176] Nowadays in post-modern theory civil society is necessarily a source of law, by being the basis from which people form opinions and lobby for what they believe law should be. As Australian barrister and author Geoffrey Robertson QC wrote of international law,

... one of its primary modern sources is found in the responses of ordinary men and women, and of the non-governmental organizations which many of them support, to the human rights abuses they see on the television screen in their living rooms.[177]

Freedom of speech, freedom of association and many other individual rights allow people to gather, discuss, criticise and hold to account their governments, from which the basis of a deliberative democracy is formed. The more people are involved with, concerned by and capable of changing how political power is exercised over their lives, the more acceptable and legitimate the law becomes to the people. The most familiar institutions of civil society include economic markets, profit-oriented firms, families, trade unions, hospitals, universities, schools, charities, debating clubs, non-governmental organisations, neighbourhoods, churches, and religious associations.[178]
[edit] Gangs, Organized Crime and Secret Societies
Main article: Secret society

Just as within larger State governments organized crime syndicates, modern day gangs, (ie. the Hells Angels, Guardian Angels, Crips, et al.) and secret societies have had and do have their own set of laws. Many of these associations have regulations which in fact are codified and others which are to be understood almost instinctively by their members. It should be noted here that just as in the myriad list of ever changing U.N. resolutions, Federal, state and local laws a violation of any of these shared codes of conduct with in these groups based on an ignorance of their agreed upon laws, whether it is written or otherwise, is no excuse against disciplinary measures where the smallest infraction can be a capital offense.

Almost with out exception, and equal in many ways to that of professed legal governments although not necessarily to those of legitimate governments of the World, these organizations demand a stronger sense of patriotism or allegiance to their societies than the individual is expected to have to their biological families, to their Country, to the Earth and humanity itself or even, if they in fact have one...to that of their religious faith.

Based upon their size many of these institutions have very sophisticated governing bodies complete with an executive, a legislature, a judiciary and a "police force" which is often composed of the lower members who generally pay in some form or another taxes to the governing body for the benefits the soldiers have as members or for the protection that they are provided by being members of these alliances.

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Li Lianjie (born April 26, 1963) better known by his stage name Jet Li, is a Chinese martial artist, actor, film producer, wushu champion, and international film star who was born in Beijing, China and who has currently taken up Singapore citizenship. After three years of intensive training with Wu Bin, Li won his first national championship for the Beijing Wushu Team. After retiring from wushu at age 17, he went on to win great acclaim in China as an actor making his debut with the film Shaolin Temple (1982). He went on to star in many critically acclaimed martial arts epic films, most notably the Once Upon A Time In China series, in which he portrayed folk hero Wong Fei-hung. His first role in a Hollywood film was as a villain in Lethal Weapon 4 (1998), but his first Hollywood film leading role was in Romeo Must Die (2000). He has gone on to star in many Hollywood action films, most recently starring beside Jackie Chan in The Forbidden Kingdom (2008), and as the titular villain in The Mummy: Tomb Of The Dragon Emperor (2008) opposite Brendan Fraser. He is set to star in the upcoming film The Expendables.

Early life and martial arts career
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Li was born Li Lianjie in Beijing, People's Republic of China. Li's father died when he was two years old, leaving the family to struggle on its own, with Li being the youngest of two boys and two girls.

Li was eight when his talent for wushu was noticed at a summer course at school, and he began his practice there. Li participated in the sport of wushu in the non-sparring event. He began his wushu on the Beijing Wushu Team, an athletic group organized to perform martial arts forms during the All China Games. As a member of the team, he received wushu training and went on to win fifteen gold medals and one silver medal in Chinese wushu championships. According to Li, once, as a child, when the Chinese National Wushu Team went to perform for President Richard Nixon in the United States, he was asked by Nixon to be his personal bodyguard. Li replied, "I don't want to protect any individual. When I grow up, I want to defend my one billion Chinese countrymen!" which earned him much respect in his homeland.[1]

Li is a master of several styles of wushu, especially Changquan (Northern Longfist Style) and Fanziquan (Tumbling fist). He has also studied other arts including Baguazhang (Eight trigram palm), Taijiquan (Tai chi), Xingyiquan (Shape intent fist), Zuiquan (Drunken fist), Ying Zhao Quan (Eagle Claw Fist) and Tang lang quan (Praying mantis fist). He did not learn Nanquan (Southern fist), because his training focused only in the Northern Shaolin Styles. He has also studied some of wushu's main weapons, such as San jie gun (Three sectional staff), Gun (Staff), Dao (Broadsword), Jian (Straight sword) and many more.
[edit] Acting career
[edit] Chinese films
Jet Li's hand print and autograph at the Avenue of Stars in Hong Kong.

The fame gained by his sports winnings led to a career as a martial arts film star, beginning in mainland China and then continuing into Hong Kong. Li acquired his screen name in 1982 in the Philippines when a publicity company thought his real name was too hard to pronounce. They likened his career to an aircraft, which likewise "takes-off" as quickly, so they placed the name Jet Li on the movie posters. Soon everybody was calling him by this new name, which was also based on the nickname, "Jet," given to him as a young student, due to his speed and grace when training with the Beijing Wushu team. He made his debut with the 1982 film Shaolin Temple. Some of his more famous Chinese films include:

* The Shaolin Temple series (1, 2 and 3), which are considered to be the films which sparked the rebirth of the real Shaolin Temple in Dengfeng, China;
* The Once Upon a Time in China series (Chinese title: Wong Fei Hung), about the legendary Chinese folk hero Master Wong Fei Hung.
* Fist of Legend (Chinese title: Jing Wu Ying Xiong), a remake of Bruce Lee's Fist of Fury.
* The Fong Sai Yuk films about another Chinese folk hero.

Li starred in the 1995 film High Risk, where Jet Li plays a Captain who becomes disillusioned after his wife is murdered by crime lords. Along the way, he pairs up with a wacky sell-out actor, Frankie (played by Jacky Cheung), and proceeds to engage in a series of violent battles in a high-rise building. The setting is similar to that of Die Hard and both their Chinese film titles. This movie is notable in that director Wong Jing had such a terrible experience working with Jackie Chan in Jing's previous film City Hunter that he chose to make Cheung's character a biting satire of Chan. Jet Li would later publicly apologize to Chan for taking part in it.
[edit] American films
Jet Li at the preview of The Warlords at SF World Cinema, CentralWorld, Bangkok.

In 1998, he made his American film debut in Lethal Weapon 4 which also marked the first time he had ever played a villain in a film. He agreed to do Lethal Weapon 4 after the producer Joel Silver promised to give him the leading role in his next film, Romeo Must Die (2000) which was a box office hit.

Li turned down Chow Yun-Fat's role in Crouching Tiger, Hidden Dragon (2000) because he promised his wife that he would not make any films during her pregnancy.[2] He also turned down the role of Seraph in The Matrix trilogy, based on his belief that the role was not one which required his skills and that the films were iconic and stunning enough without adding his name to the cast list.

In 2001, he appeared in two more Hollywood films: The One and Kiss Of The Dragon opposite Bridget Fonda which did moderately well at the box office. In July 2001, Li agreed to produce and star in an action film with Jackie Chan which was to be released in 2002 or 2003, but no further news of their collaboration surfaced until 2006. In 2002, the period martial arts epic film Hero was released in the Chinese market. This film was both a commercial and critical success and became the highest-grossing motion picture in Chinese film history at the time.[3] In 2003 he reunited with producer Joel Silver for the action thriller film Cradle 2 The Grave where he starred alongside rapper DMX and fellow martial artist Mark Dacascos. In 2004, Li lent his likeness, voice and provided motion capture work for the video game Jet Li: Rise to Honor.

Li departed from his usual martial arts action films with the 2005 dramatic film, Unleashed (a.k.a. Danny the Dog), where he portrays an adult with the mentality of a child who has been raised like an animal. Although his martial arts skills were utilized extensively, it was a somber film with more depth than had been previously seen in Li's films, and co-starred dramatic actors Bob Hoskins and Morgan Freeman.

In 2006, the martial arts film epic Fearless, was released worldwide. Although he will continue to make martial arts films, Fearless is his last wushu epic. In Fearless, he played Huo Yuanjia, the real-life founder of Chin Woo Athletic Association, who reportedly defeated foreign boxers and Japanese martial artists in publicized events at a time when China's power was seen as eroding. Together with the film Fist of Legend, Li has portrayed both Chen Jun, the student and avenger of Huo Yuanjia (aka Fok Yun Gap), as well as Huo Yuanjia himself. Fearless was released on January 26, 2006 in Hong Kong, followed by a September 22, 2006 release in the United States where it reached second place in its first weekend.
“ I stepped into the martial arts movie market when I was only 16. I think I have proved my ability in this field and it won't make sense for me to continue for another five or 10 years. Huo Yuanjia is a conclusion to my life as a martial arts star. ”

Li has stated in an interview with the Shenzhen Daily newspaper that this will be his last martial arts epic, which is also stated in the film's television promotions. However, he plans to continue his film career in other genres. Specifically, he plans to continue acting in action and martial arts films; epic films deal more with religious and philosophical issues.

Li's 2007 Hollywood film, War, was released in August of that year, and re-teamed him with actor Jason Statham, who previously starred with him in The One, and action choreographer Corey Yuen. War raked in a disappointing $23 million at the box office, becoming one of Li's lowest grossers in America; however, it was a hit on video, accumulating nearly $52 million in rental revenue, more than doubling its box office take.[4] With the exception of Romeo Must Die and the worldwide release of Hero, most of Li's American films have been only modest hits like Kiss Of The Dragon, The One, Unleashed, Cradle 2 the Grave, and the worldwide release of Fearless.

In late 2007, Li returned again to China to participate in the China/Hong Kong co-production of the period war film The Warlords with Andy Lau and Takeshi Kaneshiro. This film with its focus on dramatics rather than martial arts netted Li the Hong Kong Film Award for Best Actor.

Li and fellow martial arts veteran Jackie Chan appeared together onscreen for the first time in The Forbidden Kingdom, which began filming in May 2007 and was released to critical and commercial success on April 18, 2008. The film was based on the legend of the Monkey King from the Chinese folk novel Journey to the West.[5][6] Li also starred as the lead villain in the fantasy action film The Mummy: Tomb Of The Dragon Emperor with actors Brendan Fraser, Isabella Leong and Michelle Yeoh.[7]

After an one-year hiatus from filmmaking, Jet Li returned to acting in 2009, portraying a mercenary in the film The Expendables, teaming up with action stars Sylvester Stallone, Arnold Schwarzenegger, Bruce Willis, Jason Statham, Dolph Lundgren, Mickey Rourke, Steve Austin, Terry Crews, and Randy Couture.
[edit] Personal life
Jet Li with Jackie Chan in Hong Kong.

Li is a practitioner of Tibetan Buddhism.[8] His master is Lho Kunsang[9] of the Drikung Kagyu lineage of the Kagyu school.[10]

In 1987, Li married Beijing Wushu Team member and Kids from Shaolin co-star Huang Qiuyan,[11] with whom he had two daughters. They divorced in 1990, Since 1999, he has been married to Nina Li Chi (born Li Zhi), a Shanghai-born, Hong Kong-based actress. He has two daughters with her as well, Jane (born 2000) and Jada (born 2002).

Li was in the Maldives when a tsunami hit during the 2004 Indian Ocean earthquake. Although it was widely reported at the time that he had died during the disaster,[12] he only suffered a minor foot injury, caused by a piece of floating furniture, while he was guiding his 4-year-old daughter Jane to safety. The two were by the pool and slightly above the beach when the wave came ashore.[13]

In 2009, Li who previously had American citizenship, after years working in the United States, is thought to have renounced his American citizenship and taken up Singaporean citizenship,[14] although no official confirmation has been provided by Singapore authorities.[15] On July 28, 2009, the chairman of One Foundation (the Charity fund of Jet Li) announced that Jet Li had indeed become a Singaporean citizen.[14] He was said to have chosen Singapore for its education system for his two daughters.[14] By moving to Singapore, Jet Li is following in the footsteps of Chinese actress Gong Li.
[edit] Philanthropy

Li has been a "philanthropic ambassador" of the Red Cross Society of China since January 2006. He contributed 500,000 yuan (US$62,500) of box office revenues from his film Fearless to the Red Cross' psychological sunshine project, which promotes mental health.[16]

In April 2007, touched by his life-shaking experience in the Maldives when he was close to dying during the 2004 tsunami, Li formed his own non-profit foundation called The One Foundation.[17][18] The One Foundation supports international disaster relief efforts in conjunction with the Red Cross as well as other efforts, including mental health awareness and suicide prevention. Since the starting of the foundation, Li has been involved with recovery efforts in seven disasters, including the 2008 Sichuan earthquake.[13]

Li discussed his commitment to philanthropy in an interview with the December 2009 issue of Alliance magazine, stating that "grassroots NGOs can help the government in its blind spots. Government relief is not always detail-oriented. Grassroots NGOs can’t be as big as a government effort, but they need to be flexible and independent."[1

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Option (finance)
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In finance, an option is a contract between a buyer and a seller that gives the buyer of the option the right, but not the obligation, to buy or to sell a specified asset (underlying) on or before the option's expiration time, at an agreed price, the strike price.

In return for granting the option, the seller collects a payment (the premium) from the buyer. Granting the option is also referred to as "selling" or "writing" the option.

* A call option gives the buyer of the option the right but not the obligation to buy the underlying at the strike price.
* A put option gives the buyer of the option the right but not the obligation to sell the underlying at the strike price.

If the buyer chooses to exercise this right, the seller is obliged to sell or buy the asset at the agreed price.[1][2] The buyer may choose not to exercise the right and let it expire. The underlying asset can be a piece of property, a security (stock or bond), or a derivative instrument, such as a futures contract.

The theoretical value of an option is evaluated according to several models. These models, which are developed by quantitative analysts, attempt to predict how the value of an option changes in response to changing conditions. Hence, the risks associated with granting, owning, or trading options may be quantified and managed with a greater degree of precision, perhaps, than with some other investments. Exchange-traded options form an important class of options which have standardized contract features and trade on public exchanges, facilitating trading among independent parties. Over-the-counter options are traded between private parties, often well-capitalized institutions that have negotiated separate trading and clearing arrangements with each other.

Another important class of options, particularly in the U.S., are employee stock options, which are awarded by a company to their employees as a form of incentive compensation. Other types of options exist in many financial contracts, for example real estate options are often used to assemble large parcels of land, and prepayment options are usually included in mortgage loans. However, many of the valuation and risk management principles apply across all financial options.

Contract specifications

Every financial option is a contract between the two counterparties with the terms of the option specified in a term sheet. Option contracts may be quite complicated; however, at minimum, they usually contain the following specifications:[3]

* whether the option holder has the right to buy (a call option) or the right to sell (a put option)
* the quantity and class of the underlying asset(s) (e.g. 100 shares of XYZ Co. B stock)
* the strike price, also known as the exercise price, which is the price at which the underlying transaction will occur upon exercise
* the expiration date, or expiry, which is the last date the option can be exercised
* the settlement terms, for instance whether the writer must deliver the actual asset on exercise, or may simply tender the equivalent cash amount
* the terms by which the option is quoted in the market to convert the quoted price into the actual premium-–the total amount paid by the holder to the writer of the option.

[edit] Types of options

The primary types of financial options are:

* Exchange traded options (also called "listed options") are a class of exchange traded derivatives. Exchange traded options have standardized contracts, and are settled through a clearing house with fulfillment guaranteed by the credit of the exchange. Since the contracts are standardized, accurate pricing models are often available. Exchange traded options include:[4][5]
o stock options,
o commodity options,
o bond options and other interest rate options
o stock market index options or, simply, index options and
o options on futures contracts

* Over-the-counter options (OTC options, also called "dealer options") are traded between two private parties, and are not listed on an exchange. The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, at least one of the counterparties to an OTC option is a well-capitalized institution. Option types commonly traded over the counter include:

1. interest rate options
2. currency cross rate options, and
3. options on swaps or swaptions.

* Employee stock options are issued by a company to its employees as compensation.

[edit] Option styles
Main article: Option style

Naming conventions are used to help identify properties common to many different types of options. These include:

* European option - an option that may only be exercised on expiration.
* American option - an option that may be exercised on any trading day on or before expiration.
* Bermudan option - an option that may be exercised only on specified dates on or before expiration.
* Barrier option - any option with the general characteristic that the underlying security's price must pass a certain level or "barrier" before it can be exercised
* Exotic option - any of a broad category of options that may include complex financial structures.[6]
* Vanilla option - by definition, any option that is not exotic.

[edit] Valuation models
Main article: Valuation of options

The value of an option can be estimated using a variety of quantitative techniques based on the concept of risk neutral pricing and using stochastic calculus. The most basic model is the Black-Scholes model. More sophisticated models are used to model the volatility smile. These models are implemented using a variety of numerical techniques.[7] In general, standard option valuation models depend on the following factors:

* The current market price of the underlying security,
* the strike price of the option, particularly in relation to the current market price of the underlier (in the money vs. out of the money),
* the cost of holding a position in the underlying security, including interest and dividends,
* the time to expiration together with any restrictions on when exercise may occur, and
* an estimate of the future volatility of the underlying security's price over the life of the option.

More advanced models can require additional factors, such as an estimate of how volatility changes over time and for various underlying price levels, or the dynamics of stochastic interest rates.

The following are some of the principal valuation techniques used in practice to evaluate option contracts.
[edit] Black-Scholes
Main article: Black–Scholes

In the early 1970s, Fischer Black and Myron Scholes made a major breakthrough by deriving a differential equation that must be satisfied by the price of any derivative dependent on a non-dividend-paying stock. By employing the technique of constructing a risk neutral portfolio that replicates the returns of holding an option, Black and Scholes produced a closed-form solution for a European option's theoretical price.[8] At the same time, the model generates hedge parameters necessary for effective risk management of option holdings. While the ideas behind the Black-Scholes model were ground-breaking and eventually led to Scholes and Merton receiving the Swedish Central Bank's associated Prize for Achievement in Economics (often mistakenly referred to as the Nobel Prize),[9] the application of the model in actual options trading is clumsy because of the assumptions of continuous (or no) dividend payment, constant volatility, and a constant interest rate. Nevertheless, the Black-Scholes model is still one of the most important methods and foundations for the existing financial market in which the result is within the reasonable range.[10]
[edit] Stochastic volatility models
Main article: Heston model

Since the market crash of 1987, it has been observed that market implied volatility for options of lower strike prices are typically higher than for higher strike prices, suggesting that volatility is stochastic, varying both for time and for the price level of the underlying security. Stochastic volatility models have been developed including one developed by S.L. Heston.[11] One principal advantage of the Heston model is that it can be solved in closed-form, while other stochastic volatility models require complex numerical methods.[11]
[edit] Model implementation
Further information: Valuation of options

Once a valuation model has been chosen, there are a number of different techniques used to take the mathematical models to implement the models.
[edit] Analytic techniques

In some cases, one can take the mathematical model and using analytical methods develop closed form solutions such as Black-Scholes and the Black model. The resulting solutions are useful because they are rapid to calculate, and their "Greeks" are easily obtained.
[edit] Binomial tree pricing model
Main article: Binomial options pricing model

Closely following the derivation of Black and Scholes, John Cox, Stephen Ross and Mark Rubinstein developed the original version of the binomial options pricing model.[12] [13] It models the dynamics of the option's theoretical value for discrete time intervals over the option's duration. The model starts with a binomial tree of discrete future possible underlying stock prices. By constructing a riskless portfolio of an option and stock (as in the Black-Scholes model) a simple formula can be used to find the option price at each node in the tree. This value can approximate the theoretical value produced by Black Scholes, to the desired degree of precision. However, the binomial model is considered more accurate than Black-Scholes because it is more flexible, e.g. discrete future dividend payments can be modeled correctly at the proper forward time steps, and American options can be modeled as well as European ones. Binomial models are widely used by professional option traders.
[edit] Monte Carlo models
Main article: Monte Carlo methods for option pricing

For many classes of options, traditional valuation techniques are intractable due to the complexity of the instrument. In these cases, a Monte Carlo approach may often be useful. Rather than attempt to solve the differential equations of motion that describe the option's value in relation to the underlying security's price, a Monte Carlo model uses simulation to generate random price paths of the underlying asset, each of which results in a payoff for the option. The average of these payoffs can be discounted to yield an expectation value for the option.[14]
[edit] Finite difference models
Main article: Finite difference methods for option pricing

The equations used to model the option are often expressed as partial differential equations (see for example Black–Scholes PDE). Once expressed in this form, a finite difference model can be derived, and the valuation obtained. This approach is useful for extensions of the option pricing model, such as changing assumptions as to dividends, that are not able to be represented with a closed form analytic solution. A number of implementations of finite difference methods exist for option valuation, including: explicit finite difference, implicit finite difference and the Crank-Nicholson method. A trinomial tree option pricing model can be shown to be a simplified application of the explicit finite difference method.
[edit] Other models

Other numerical implementations which have been used to value options include finite element methods. Additionally, various short rate models have been developed for the valuation of interest rate derivatives, bond options and swaptions. These, similarly, allow for closed-form, lattice-based, and simulation-based modelling, with corresponding advantages and considerations.
[edit] Risks

As with all securities, trading options entails the risk of the option's value changing over time. However, unlike traditional securities, the return from holding an option varies non-linearly with the value of the underlier and other factors. Therefore, the risks associated with holding options are more complicated to understand and predict.

In general, the change in the value of an option can be derived from Ito's lemma as:

dC=\Delta dS + \Gamma \frac{dS^2}{2} + \kappa d\sigma + \theta dt \,

where the Greeks Δ, Γ, κ and θ are the standard hedge parameters calculated from an option valuation model, such as Black-Scholes, and dS, dσ and dt are unit changes in the underlier price, the underlier volatility and time, respectively.

Thus, at any point in time, one can estimate the risk inherent in holding an option by calculating its hedge parameters and then estimating the expected change in the model inputs, dS, dσ and dt, provided the changes in these values are small. This technique can be used effectively to understand and manage the risks associated with standard options. For instance, by offsetting a holding in an option with the quantity − Δ of shares in the underlier, a trader can form a delta neutral portfolio that is hedged from loss for small changes in the underlier price. The corresponding price sensitivity formula for this portfolio Π is:

d\Pi=\Delta dS + \Gamma \frac{dS^2}{2} + \kappa d\sigma + \theta dt = \Gamma \frac{dS^2}{2} + \kappa d\sigma + \theta dt\,

[edit] Example

A call option expiring in 99 days on 100 shares of XYZ stock is struck at $50, with XYZ currently trading at $48. With future realized volatility over the life of the option estimated at 25%, the theoretical value of the option is $1.89. The hedge parameters Δ, Γ, κ, θ are (0.439, 0.0631, 9.6, and -0.022), respectively. Assume that on the following day, XYZ stock rises to $48.5 and volatility falls to 23.5%. We can calculate the estimated value of the call option by applying the hedge parameters to the new model inputs as:

dC = (0.439 \cdot 0.5) + \left(0.0631 \cdot \frac{0.5^2}{2} \right) + (9.6 \cdot -0.015) + (-0.022 \cdot 1) = 0.0614

Under this scenario, the value of the option increases by $0.0614 to $1.9514, realizing a profit of $6.14. Note that for a delta neutral portfolio, where by the trader had also sold 44 shares of XYZ stock as a hedge, the net loss under the same scenario would be ($15.86).
[edit] Pin risk
Main article: Pin risk

A special situation called pin risk can arise when the underlier closes at or very close to the option's strike value on the last day the option is traded prior to expiration. The option writer (seller) may not know with certainty whether or not the option will actually be exercised or be allowed to expire worthless. Therefore, the option writer may end up with a large, unwanted residual position in the underlier when the markets open on the next trading day after expiration, regardless of their best efforts to avoid such a residual.
[edit] Counterparty risk

A further, often ignored, risk in derivatives such as options is counterparty risk. In an option contract this risk is that the seller won't sell or buy the underlying asset as agreed. The risk can be minimized by using a financially strong intermediary able to make good on the trade, but in a major panic or crash the number of defaults can overwhelm even the strongest intermediaries.
[edit] Trading

The most common way to trade options is via standardized options contracts that are listed by various futures and options exchanges. [15] Listings and prices are tracked and can be looked up by ticker symbol. By publishing continuous, live markets for option prices, an exchange enables independent parties to engage in price discovery and execute transactions. As an intermediary to both sides of the transaction, the benefits the exchange provides to the transaction include:

* fulfillment of the contract is backed by the credit of the exchange, which typically has the highest rating (AAA),
* counterparties remain anonymous,
* enforcement of market regulation to ensure fairness and transparency, and
* maintenance of orderly markets, especially during fast trading conditions.

Over-the-counter options contracts are not traded on exchanges, but instead between two independent parties. Ordinarily, at least one of the counterparties is a well-capitalized institution. By avoiding an exchange, users of OTC options can narrowly tailor the terms of the option contract to suit individual business requirements. In addition, OTC option transactions generally do not need to be advertised to the market and face little or no regulatory requirements. However, OTC counterparties must establish credit lines with each other, and conform to each others clearing and settlement procedures.

With few exceptions,[16] there are no secondary markets for employee stock options. These must either be exercised by the original grantee or allowed to expire worthless.
[edit] The basic trades of traded stock options (American style)

These trades are described from the point of view of a speculator. If they are combined with other positions, they can also be used in hedging. An option contract in US markets usually represents 100 shares of the underlying security.[17]
[edit] Long call
Payoff from buying a call.

A trader who believes that a stock's price will increase might buy the right to purchase the stock (a call option) rather than just buy the stock. He would have no obligation to buy the stock, only the right to do so until the expiration date. If the stock price at expiration is above the exercise price by more than the premium (price) paid, he will profit. If the stock price at expiration is lower than the exercise price, he will let the call contract expire worthless, and only lose the amount of the premium. A trader might buy the option instead of shares, because for the same amount of money, he can control (leverage) a much larger number of shares.
[edit] Long put
Payoff from buying a put.

A trader who believes that a stock's price will decrease can buy the right to sell the stock at a fixed price (a put option). He will be under no obligation to sell the stock, but has the right to do so until the expiration date. If the stock price at expiration is below the exercise price by more than the premium paid, he will profit. If the stock price at expiration is above the exercise price, he will let the put contract expire worthless and only lose the premium paid.
[edit] Short call
Payoff from writing a call.

A trader who believes that a stock price will decrease, can sell the stock short or instead sell, or "write," a call. The trader selling a call has an obligation to sell the stock to the call buyer at the buyer's option. If the stock price decreases, the short call position will make a profit in the amount of the premium. If the stock price increases over the exercise price by more than the amount of the premium, the short will lose money, with the potential loss unlimited.
[edit] Short put
Payoff from writing a put.

A trader who believes that a stock price will increase can buy the stock or instead sell a put. The trader selling a put has an obligation to buy the stock from the put buyer at the put buyer's option. If the stock price at expiration is above the exercise price, the short put position will make a profit in the amount of the premium. If the stock price at expiration is below the exercise price by more than the amount of the premium, the trader will lose money, with the potential loss being up to the full value of the stock. A benchmark index for the performance of a cash-secured short put option position is the CBOE S&P 500 PutWrite Index (ticker PUT).
[edit] Option strategies
Main article: Option strategies
Payoffs from buying a butterfly spread.
Payoffs from selling a straddle.
Payoffs from a covered call.

Combining any of the four basic kinds of option trades (possibly with different exercise prices and maturities) and the two basic kinds of stock trades (long and short) allows a variety of options strategies. Simple strategies usually combine only a few trades, while more complicated strategies can combine several.

Strategies are often used to engineer a particular risk profile to movements in the underlying security. For example, buying a butterfly spread (long one X1 call, short two X2 calls, and long one X3 call) allows a trader to profit if the stock price on the expiration date is near the middle exercise price, X2, and does not expose the trader to a large loss.

An Iron condor is a strategy that is similar to a butterfly spread, but with different strikes for the short options - offering a larger likelihood of profit but with a lower net credit compared to the butterfly spread.

Selling a straddle (selling both a put and a call at the same exercise price) would give a trader a greater profit than a butterfly if the final stock price is near the exercise price, but might result in a large loss.

Similar to the straddle is the strangle which is also constructed by a call and a put, but whose strikes are different, reducing the net debit of the trade, but also reducing the likelihood of profit in the trade.

One well-known strategy is the covered call, in which a trader buys a stock (or holds a previously-purchased long stock position), and sells a call. If the stock price rises above the exercise price, the call will be exercised and the trader will get a fixed profit. If the stock price falls, the trader will lose money on his stock position, but this will be partially offset by the premium received from selling the call. Overall, the payoffs match the payoffs from selling a put. This relationship is known as put-call parity and offers insights for financial theory. A benchmark index for the performance of a buy-write strategy is the CBOE S&P 500 BuyWrite Index (ticker symbol BXM).
[edit] Historical uses of options

Contracts similar to options are believed to have been used since ancient times. In the real estate market, call options have long been used to assemble large parcels of land from separate owners, e.g. a developer pays for the right to buy several adjacent plots, but is not obligated to buy these plots and might not unless he can buy all the plots in the entire parcel. Film or theatrical producers often buy the right — but not the obligation — to dramatize a specific book or script. Lines of credit give the potential borrower the right — but not the obligation — to borrow within a specified time period.

Many choices, or embedded options, have traditionally been included in bond contracts. For example many bonds are convertible into common stock at the buyer's option, or may be called (bought back) at specified prices at the issuer's option. Mortgage borrowers have long had the option to repay the loan early, which corresponds to a callable bond option.

In London, puts and "refusals" (calls) first became well-known trading instruments in the 1690s during the reign of William and Mary.[18]

Privileges were options sold over the counter in nineteenth century America, with both puts and calls on shares offered by specialized dealers. Their exercise price was fixed at a rounded-off market price on the day or week that the option was bought, and the expiry date was generally three months after purchase. They were not traded in secondary markets.

Supposedly the first option buyer in the world was the ancient Greek mathematician and philosopher Thales. On a certain occasion, it was predicted that the season's olive harvest would be larger than usual, and during the off-season he acquired the right to use a number of olive presses the following spring. When spring came and the olive harvest was larger than expected he exercised his options and then rented the presses out at much higher price than he paid for his 'option'.[19][citation needed]

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Mutual fund
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This article is about mutual funds in the United States and Canada. For other forms of mutual investment, see Collective investment scheme.

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).[1] The mutual fund will have a fund manager that trades (buys and sells) the fund's investments in accordance with the fund's investment objective. In the U.S., a fund registered with the Securities and Exchange Commission (SEC) under both SEC and Internal Revenue Service (IRS) rules must distribute nearly all of its net income and net realized gains from the sale of securities (if any) to its investors at least annually. Most funds are overseen by a board of directors or trustees (if the U.S. fund is organized as a trust as they commonly are) which is charged with ensuring the fund is managed appropriately by its investment adviser and other service organizations and vendors, all in the best interests of the fund's investors.

Since 1940 in the U.S., with the passage of the Investment Company Act of 1940 (the '40 Act) and the Investment Advisers Act of 1940, there have been three basic types of registered investment companies or mutual funds: open-end funds, unit investment trusts (UITs); and closed-end funds. Other types of funds that have gained in popularity are exchange traded funds (ETFs) and hedge funds, discussed below. Similar types of funds also operate in Canada, however, in the rest of the world, mutual fund is used as a generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment companies (OEICs), unitized insurance funds, undertakings for collective investments in transferable securities (UCITS, pronounced "YOU-sits") and SICAVs (pronounced "SEE-cavs").

History

Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924, and, after one year, it had 200 shareholders and $392,000 in assets. The entire industry, which included a few closed-end funds, represented less than $10 million in 1924.

The stock market crash of 1929 hindered the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the U.S. Securities and Exchange Commission (SEC) and provide prospective investors with a prospectus that contains required disclosures about the fund, the securities themselves, and fund manager. The Investment Company Act of 1940 sets forth the guidelines with which all SEC-registered funds must comply.

With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s, there were approximately 270 funds with $48 billion in assets. The first retail index fund, First Index Investment Trust, was formed in 1976 and headed by John Bogle, who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University[2]. It is now called the Vanguard 500 Index Fund and is one of the world's largest mutual funds, with more than $100 billion in assets.

A key factor in mutual-fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual retirement accounts (IRAs). Even people already enrolled in corporate pension plans could contribute a limited amount (at the time, up to $2,000 a year). Mutual funds are now popular in employer-sponsored "defined-contribution" retirement plans such as (401(k)s) and 403(b)s as well as IRAs including Roth IRAs.

As of October 2007, there are 8,015 mutual funds that belong to the Investment Company Institute (ICI), a national trade association of investment companies in the United States, with combined assets of $12.356 trillion.[3] In early 2008, the worldwide value of all mutual funds totaled more than $26 trillion.[4]
[edit] Usage, investment objectives

Since the Investment Company Act of 1940, a mutual fund is one of three basic types of investment companies available in the United States.[5]

Mutual funds may invest in many kinds of securities (subject to its investment objective as set forth in the fund's prospectus, which is the legal document under SEC laws which offers the funds for sale and contains a wealth of information about the fund). The most common securities purchased are "cash" or money market instruments, stocks, bonds, other mutual fund shares, and more exotic instruments such as senior loans and derivatives like forwards, futures, options and swaps. Some funds' investment objectives (and or its name) define the type of investments in which the fund invests. For example, the fund's objective might state "...the fund will seek capital appreciation by investing primarily in listed equity securities (stocks) of U.S. companies with any market capitalization range." This would be "stock" fund or a "domestic/US stock" fund since it stated U.S. companies. A fund may invest primarily in the shares of a particular industry or market sector, such as technology, utilities or financial services. These are known as specialty or sector funds. Bond funds can vary according to risk (e.g., high-yield junk bonds or investment-grade corporate bonds), type of issuers (e.g., government agencies, corporations, or municipalities), or maturity of the bonds (short- or long-term). Both stock and bond funds can invest in primarily U.S. securities (domestic funds), both U.S. and foreign securities (global funds), or primarily foreign securities (international funds). Since fund names in the past may not have provided a prospective investor a good indication of the type of fund it was, the SEC issued a rule under the '40 Act which aims to better align fund names with the primary types of investments in which the fund invests, commonly called the "name rule". Thus, under this rule, a fund must invest under normal circumstances in at least 80% of the securities referenced in it's name. for example, the "ABC New Jersey Tax Free Bond Fund" would generally have to invest, under normal circumstances, at least 80% of its assets in tax-exempt bonds issued by the state of New Jersey and its political subdivisions. Some fund names are not associated with specific securities so the name rule has less relevance in those situations. For example, the "ABC Freedom Fund" is such that its name does not imply a specific investment style or objective. Lastly, an index fund strives to match the performance of a particular market index, such as the S&P 500 Index. In such a fund, the fund would invest in securities and likely specific derivates such as S&P 500 stock index futures in order to most closely match the performance of that index.

Most mutual funds' investment portfolios are continually monitored by one or more employees within the sponsoring investment adviser or management company, typically called a portfolio manager and their assistants, who invest the funds assets in accordance with its investment objective and trade securities in relation to any net inflows or outflows of investor capital (if applicable), as well as the ongoing performance of investments appropriate for the fund. A mutual fund is advised by the investment adviser under an advisory contract which generally is subject to renewal annually.

Mutual funds are subject to a special set of regulatory, accounting, and tax rules. In the U.S., unlike most other types of business entities, they are not taxed on their income as long as they distribute 90% of it to their shareholders and the funds meet certain diversification requirements in the Internal Revenue Code. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free municipal bond income are tax-free to the shareholder. Taxable distributions can be either ordinary income or capital gains, depending on how the fund earned those distributions. Net losses are not distributed or passed through to fund investors.
[edit] Net asset value
Main article: Net asset value

The net asset value, or NAV, is the current market value of a fund's holdings, minus the fund's liabilities, that is usually expressed as a per-share amount. For most funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day. The public offering price, or POP, is the NAV plus a sales charge. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds (the shares of which are traded by investors) may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by the different classes.

Some mutual funds own securities which are not regularly traded on any formal exchange. These may be shares in very small or bankrupt companies; they may be derivatives; or they may be private investments in unregistered financial instruments (such as stock in a non-public company). In the absence of a public market for these securities, it is the responsibility of the fund manager to form an estimate of their value when computing the NAV. How much of a fund's assets may be invested in such securities is stated in the fund's prospectus.

The price per share, or NAV (net asset value), is calculated by dividing the fund's assets minus liabilities by the number of shares outstanding. This is usually calculated at the end of every trading day.
[edit] Average annual return

US mutual funds use SEC form N-1A to report the average annual compounded rates of return for 1-year, 5-year and 10-year periods as the "average annual total return" for each fund. The following formula is used:[6]

P(1+T)n = ERV

Where:

P = a hypothetical initial payment of $1,000.

T = average annual total return.

n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or fractional portion).
[edit] Turnover

Turnover is a measure of the fund's securities transactions, usually calculated over a year's time, and usually expressed as a percentage of net asset value.

This value is usually calculated as the value of all transactions (buying, selling) divided by 2 divided by the fund's total holdings; i.e., the fund counts one security sold and another one bought as one "turnover". Thus turnover measures the replacement of holdings.

In Canada, under NI 81-106 (required disclosure for investment funds) turnover ratio is calculated based on the lesser of purchases or sales divided by the average size of the portfolio (including cash).
[edit] Expenses and expense ratios

Mutual funds bear expenses similar to other companies. The fee structure of a mutual fund can be divided into two or three main components: management fee, non-management expense, and 12b-1/non-12b-1 fees. All expenses are expressed as a percentage of the average daily net assets of the fund.
[edit] Management fees

The management fee for the fund is usually synonymous with the contractual investment advisory fee charged for the management of a fund's investments. However, as many fund companies include administrative fees in the advisory fee component, when attempting to compare the total management expenses of different funds, it is helpful to define management fee as equal to the contractual advisory fee plus the contractual administrator fee. This "levels the playing field" when comparing management fee components across multiple funds.

Contractual advisory fees may be structured as "flat-rate" fees, i.e., a single fee charged to the fund, regardless of the asset size of the fund. However, many funds have contractual fees which include breakpoints so that as the value of a fund's assets increases, the advisory fee paid decreases. Another way in which the advisory fees remain competitive is by structuring the fee so that it is based on the value of all of the assets of a group or a complex of funds rather than those of a single fund.
[edit] Non-management expenses

Apart from the management fee, there are certain non-management expenses which most funds must pay. Some of the more significant (in terms of amount) non-management expenses are: transfer agent expenses (this is usually the person you get on the other end of the phone line when you want to purchase/sell shares of a fund), custodian expense (the fund's assets are kept in custody by a bank which charges a custody fee), legal/audit expense, fund accounting expense, registration expense (the SEC charges a registration fee when funds file registration statements with it), board of directors/trustees expense (the members of the board who oversee the fund are usually paid a fee for their time spent at meetings), and printing and postage expense (incurred when printing and delivering shareholder reports).
[edit] 12b-1/Non-12b-1 service fees

In the United States, 12b-1 service fees/shareholder servicing fees are contractual fees which a fund may charge to cover the marketing expenses of the fund. Non-12b-1 service fees are marketing/shareholder servicing fees which do not fall under SEC rule 12b-1. While funds do not have to charge the full contractual 12b-1 fee, they often do. When investing in a front-end load or no-load fund, the 12b-1 fees for the fund are usually .250% (or 25 basis points). The 12b-1 fees for back-end and level-load share classes are usually between 50 and 75 basis points but may be as much as 100 basis points. While funds are often marketed as "no-load" funds, this does not mean they do not charge a distribution expense through a different mechanism. It is expected that a fund listed on an online brokerage site will be paying for the "shelf-space" in a different manner even if not directly through a 12b-1 fee.
[edit] Investor fees and expenses

Fees and expenses borne by the investor vary based on the arrangement made with the investor's broker. Sales loads (or contingent deferred sales loads (CDSL)) are included in the fund's total expense ratio (TER) because they pass through the statement of operations for the fund. Additionally, funds may charge early redemption fees to discourage investors from swapping money into and out of the fund quickly, which may force the fund to make bad trades to obtain the necessary liquidity. For example, Fidelity Diversified International Fund (FDIVX) charges a 10 percent fee on money removed from the fund in less than 30 days.
[edit] Brokerage commissions

An additional expense which does not pass through the fund's income statement (statement of operations) and cannot be controlled by the investor is brokerage commissions. Brokerage commissions are incorporated into the price of securities bought and sold and, thus, are a component of the gain or loss on investments. They are a true, real cost of investing though. The amount of commissions incurred by the fund and are reported usually 4 months after the fund's fiscal year end in the "statement of additional information" which is legally part of the prospectus, but is usually available only upon requrest or by going to the SEC's or fund's website. Brokerage commissions, usually charged when securities are purchased and again when sold) are directly related to portfolio turnover which is a measure of trading volume/velocity (portfolio turnover refers to the number of times the fund's assets are bought and sold over the course of a year). Usually, higher rate of portfolio turnover (trading) generates higher brokerage commissions. The advisors of mutual fund companies are required to achieve "best execution" through brokerage arrangements so that the commissions charged to the fund will not be excessive as well as also attaining the best possible price upon buying or selling.


[edit] Types of mutual funds
[edit] Open-end fund, forms of organization, other funds

The term mutual fund is the common name for what is classified as an open-end investment company by the SEC. Being open-ended means that, at the end of every day, the fund continually issues new shares to investors buying into the fund and must stand ready to buy back shares from investors redeeming their shares at the then current net asset value per share.

Mutual funds must be structured as corporations or trusts, such as business trusts, and any corporation or trust will be classified by the SEC as an investment company if it issues securities and primarily invests in non-government securities. An investment company will be classified by the SEC as an open-end investment company if they do not issue undivided interests in specified securities (the defining characteristic of unit investment trusts or UITs) and if they issue redeemable securities. Registered investment companies that are not UITs or open-end investment companies are closed-end funds. Closed-end funds are like open end except they are more like a company which sells its shares a single time to the public under an initial public offering or "IPO". Subsequently, the fund's shares trade with buyers and sellers of shares in the secondary market at a market-determined price (which is likely not equal to net asset value) such as on the New York or American Stock Exchange. Except for some special transactions, the fund cannot continue to grow in size by attracting more investor capital like an open-end fund may.
[edit] Exchange-traded funds
Main article: Exchange-traded fund

A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an open-end investment company. ETFs combine characteristics of both mutual funds and closed-end funds. ETFs are traded throughout the day on a stock exchange, just like closed-end funds, but at prices generally approximating the ETF's net asset value. Most ETFs are index funds and track stock market indexes. Shares are issued or redeemed by institutional investors in large blocks (typically of 50,000). Most investors purchase and sell shares through brokers in market transactions. Because the institutional investors normally purchase and redeem in in kind transactions, ETFs are more efficient than traditional mutual funds (which are continuously issuing and redeeming securities and, to effect such transactions, continually buying and selling securities and maintaining liquidity positions) and therefore tend to have lower expenses.

Exchange-traded funds are also valuable for foreign investors who are often able to buy and sell securities traded on a stock market, but who, for regulatory reasons, are limited in their ability to participate in traditional U.S. mutual funds.
[edit] Equity funds

Equity funds, which consist mainly of stock investments, are the most common type of mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in the United States. [7] Often equity funds focus investments on particular strategies and certain types of issuers.
[edit] Capitalization

Fund managers and other investment professionals have varying definitions of mid-cap, and large-cap ranges. The following ranges are used by Russell Indexes: [8]

* Russell Microcap Index – micro-cap ($54.8 – 539.5 million)
* Russell 2000 Index – small-cap ($182.6 million – 1.8 billion)
* Russell Midcap Index – mid-cap ($1.8 – 13.7 billion)
* Russell 1000 Index – large-cap ($1.8 – 386.9 billion)

[edit] Growth vs. value

Another distinction is made between growth funds, which invest in stocks of companies that have the potential for large capital gains, and value funds, which concentrate on stocks that are undervalued. Value stocks have historically produced higher returns; however, financial theory states this is compensation for their greater risk. Growth funds tend not to pay regular dividends. Income funds tend to be more conservative investments, with a focus on stocks that pay dividends. A balanced fund may use a combination of strategies, typically including some level of investment in bonds, to stay more conservative when it comes to risk, yet aim for some growth.[citation needed]
[edit] Index funds versus active management
Main articles: Index fund and active management

An index fund maintains investments in companies that are part of major stock (or bond) indexes, such as the S&P 500, while an actively managed fund attempts to outperform a relevant index through superior stock-picking techniques. The assets of an index fund are managed to closely approximate the performance of a particular published index. Since the composition of an index changes infrequently, an index fund manager makes fewer trades, on average, than does an active fund manager. For this reason, index funds generally have lower trading expenses than actively managed funds, and typically incur fewer short-term capital gains which must be passed on to shareholders. Additionally, index funds do not incur expenses to pay for selection of individual stocks (proprietary selection techniques, research, etc.) and deciding when to buy, hold or sell individual holdings. Instead, a fairly simple computer model can identify whatever changes are needed to bring the fund back into agreement with its target index.

Certain empirical evidence seems to illustrate that mutual funds do not beat the market and actively managed mutual funds under-perform other broad-based portfolios with similar characteristics. One study found that nearly 1,500 U.S. mutual funds under-performed the market in approximately half of the years between 1962 and 1992.[9] Moreover, funds that performed well in the past are not able to beat the market again in the future (shown by Jensen, 1968; Grinblatt and Sheridan Titman, 1989).[10]
[edit] Bond funds

Bond funds account for 18% of mutual fund assets. [11] Types of bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature. Municipal bond funds generally have lower returns, but have tax advantages and lower risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also come with greater risk.
[edit] Money market funds

Money market funds hold 26% of mutual fund assets in the United States. [12] Money market funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit (CDs), money market shares are liquid and redeemable at any time.
[edit] Funds of funds

Funds of funds (FoF) are mutual funds which invest in other mutual funds (i.e., they are funds composed of other funds). The funds at the underlying level are often funds which an investor can invest in individually, though they may be 'institutional' class shares that may not be within reach of an individual shareholder). A fund of funds will typically charge a much lower management fee than that of a fund investing in direct securities because it is considered a fee charged for asset allocation services which is presumably less demanding than active direct securities research and management. The fees charged at the underlying fund level are a real cost or drag on performance but do not pass through the FoF's income statement (statement of operations), but are usually disclosed in the fund's annual report, prospectus, or statement of additional information. FoF's will often have a higher overall/combined expense ratio than that of a regular fund. The FoF should be evaluated on the combination of the fund-level expenses and underlying fund expenses, as these both reduce the return to the investor.

Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same advisor), although some invest in unaffilated funds (those managed by other advisors) or both. The cost associated with investing in an unaffiliated underlying fund may be higher than investing in an affiliated underlying because of the investment management research involved in investing in fund advised by a different advisor. Recently, FoFs have been classified into those that are actively managed (in which the investment advisor reallocates frequently among the underlying funds in order to adjust to changing market conditions) and those that are passively managed (the investment advisor allocates assets on the basis of on an allocation model which is rebalanced on a regular basis).

The design of FoFs is structured in such a way as to provide a ready mix of mutual funds for investors who are unable to or unwilling to determine their own asset allocation model. Fund companies such as TIAA-CREF, American Century Investments, Vanguard, and Fidelity have also entered this market to provide investors with these options and take the "guess work" out of selecting funds. The allocation mixes usually vary by the time the investor would like to retire: 2020, 2030, 2050, etc. The more distant the target retirement date, the more aggressive the asset mix.
[edit] Hedge funds
Main article: Hedge fund

Hedge funds in the United States are pooled investment funds with loose, if any, SEC regulation, unlike mutual funds. Some hedge fund managers are required to register with SEC as investment advisers under the Investment Advisers Act of 1940. [13] The Act does not require an adviser to follow or avoid any particular investment strategies, nor does it require or prohibit specific investments. Hedge funds typically charge a management fee of 1% or more, plus a “performance fee” of 20% of the hedge fund's profit. There may be a "lock-up" period, during which an investor cannot cash in shares. A variation of the hedge strategy is the 130-30 fund for individual investors.
[edit] Mutual funds vs. other investments

Mutual funds offer several advantages over investing in individual stocks. For example, the transaction costs are divided among all the mutual fund shareholders, which allows for cost-effective diversification. Investors may also benefit by having a third party (professional fund managers) apply expertise and dedicate time to manage and research investment options, although there is dispute over whether professional fund managers can, on average, outperform simple index funds that mimic public indexes. Yet, the Wall Street Journal reported that separately managed accounts (SMA or SMAs) performed better than mutual funds in 22 of 25 categories from 2006 to 2008. This included beating mutual funds performance in 2008, a tough year in which the global stock market lost US$21 trillion in value. [14] [15] In the story, Morningstar, Inc said SMAs outperformed mutual funds in 25 of 36 stock and bond market categories. Whether actively managed or passively indexed, mutual funds are not immune to risks. They share the same risks associated with the investments made. If the fund invests primarily in stocks, it is usually subject to the same ups and downs and risks as the stock market.
[edit] Share classes

Many mutual funds offer more than one class of shares. For example, you may have seen a fund that offers "Class A" and "Class B" shares. Each class will invest in the same pool (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and/or distribution arrangements with different fees and expenses. These differences are supposed to reflect different costs involved in servicing investors in various classes; for example, one class may be sold through brokers with a front-end load, and another class may be sold direct to the public with no load but a "12b-1 fee" included in the class's expenses (sometimes referred to as "Class C" shares). Still a third class might have a minimum investment of $10,000,000 and be available only to financial institutions (a so-called "institutional" share class). In some cases, by aggregating regular investments made by many individuals, a retirement plan (such as a 401(k) plan) may qualify to purchase "institutional" shares (and gain the benefit of their typically lower expense ratios) even though no members of the plan would qualify individually. [16]As a result, each class will likely have different performance results. [17]

A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the length of time that they expect to remain invested in the fund). [17]
[edit] Load and expenses
Main article: Mutual fund fees and expenses

A front-end load or sales charge is a commission paid to a broker by a mutual fund when shares are purchased, taken as a percentage of funds invested. The value of the investment is reduced by the amount of the load. Some funds have a deferred sales charge or back-end load. In this type of fund an investor pays no sales charge when purchasing shares, but will pay a commission out of the proceeds when shares are redeemed depending on how long they are held. Another derivative structure is a level-load fund, in which no sales charge is paid when buying the fund, but a back-end load may be charged if the shares purchased are sold within a year.

Load funds are sold through financial intermediaries such as brokers, financial planners, and other types of registered representatives who charge a commission for their services. Shares of front-end load funds are frequently eligible for breakpoints (i.e., a reduction in the commission paid) based on a number of variables. These include other accounts in the same fund family held by the investor or various family members, or committing to buy more of the fund within a set period of time in return for a lower commission "today".

It is possible to buy many mutual funds without paying a sales charge. These are called no-load funds. In addition to being available from the fund company itself, no-load funds may be sold by some discount brokers for a flat transaction fee or even no fee at all. (This does not necessarily mean that the broker is not compensated for the transaction; in such cases, the fund may pay brokers' commissions out of "distribution and marketing" expenses rather than a specific sales charge. The purchaser is therefore paying the fee indirectly through the fund's expenses deducted from profits.)

No-load funds include both index funds and actively managed funds. The largest mutual fund families selling no-load index funds are Vanguard and Fidelity, though there are a number of smaller mutual fund families with no-load funds as well. Expense ratios in some no-load index funds are less than 0.2% per year versus the typical actively managed fund's expense ratio of about 1.5% per year. Load funds usually have even higher expense ratios when the load is considered. The expense ratio is the anticipated annual cost to the investor of holding shares of the fund. For example, on a $100,000 investment, an expense ratio of 0.2% means $200 of annual expense, while a 1.5% expense ratio would result in $1,500 of annual expense. These expenses are before any sales commissions paid to purchase the mutual fund.

Many fee-only financial advisors strongly suggest no-load funds such as index funds. If the advisor is not of the fee-only type but is instead compensated by commissions, the advisor may have a conflict of interest in selling high-commission load funds.

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Physiology is the science of the functioning of living systems. It is a subcategory of biology. In physiology, the scientific method is applied to determine how organisms, organ systems, organs, cells and biomolecules carry out the chemical or physical function that they have in a living system. The word physiology is from Greek φύσις, physis, "nature, origin"; and -λογία, -logia, "study of". Physiology is a scientific study of the ways in which the bodies of living things work.

History

Human physiology dates back to at least 420 B.C. and the time of Hippocrates,[1] the father of medicine. The critical thinking of Aristotle and his emphasis on the relationship between structure and function marked the beginning of physiology in Ancient Greece, while Claudius Galenus (c. 126-199 A.D.), known as Galen, was the first to use experiments to probe the function of the body. Galen was the founder of experimental physiology.[2] The ancient Indian books of Ayurveda, the Sushruta Samhita and Charaka Samhita, also had descriptions on human anatomy and physiology. The medical world moved on from Galvanism only with the appearance of Andreas Vesalius and William Harvey.[3]

During the Middle Ages, the ancient Greek and Indian medical traditions were further developed by Muslism physicians, most notably Avicenna (980-1037), who introduced experimentation and quantification into the study of physiology in The Canon of Medicine. Many of the ancient physiological doctrines were eventually discredited by Ibn al-Nafis (1213–1288), who was the first physician to correctly describe the anatomy of the heart, the coronary circulation, the structure of the lungs, and the pulmonary circulation, for which he is considered the father of circulatory physiology.[4] He was also the first to describe the relationship between the lungs and the aeration of the blood, the cause of pulsation,[5] and an early concept of capillary circulation.[6]

Following from the Middle Ages, the Renaissance brought an increase of physiological research in the Western world that triggered the modern study of anatomy and physiology. Andreas Vesalius was an author of one of the most influential books on human anatomy, De humani corporis fabrica.[7] Vesalius is often referred to as the founder of modern human anatomy.[8] Anatomist William Harvey described the circulatory system in the 17th century,[9] demonstrating the fruitful combination of close observations and careful experiments to learn about the functions of the body, which was fundamental to the development of experimental physiology. Herman Boerhaave is sometimes referred to as a father of physiology due to his exemplary teaching in Leiden and textbook Institutiones medicae (1708).[citation needed]

In the 18th century, important works in this field were by Pierre Cabanis, a french doctor and physiologist.[citation needed]

In the 19th century, physiological knowledge began to accumulate at a rapid rate, most notably[peacock term] in 1838 with the Cell theory of Matthias Schleiden and Theodor Schwann, which radically stated that organisms are made up of units called cells. Claude Bernard's (1813–1878) further discoveries ultimately led to his concept of milieu interieur (internal environment), which would later be taken up and championed as "homeostasis" by American physiologist Walter Cannon (1871–1945).[clarification needed]

In the 20th century, biologists also became interested in how organisms other than human beings function, eventually spawning the fields of comparative physiology and ecophysiology.[10] Major figures in these fields include Knut Schmidt-Nielsen and George Bartholomew. Most recently, evolutionary physiology has become a distinct subdiscipline[11].
[edit] Schools

There are an abundance of universities that allow students to major in physiology. It is considered one of the fastest growing majors for undergraduate students.[citation needed]
[edit] Honors and awards

The highest honor awarded in physiology is the Nobel Prize in Physiology, awarded since 1901 by the Royal Swedish Academy of Sciences.

--

PHP: Hypertext Preprocessor is a widely used, general-purpose scripting language that was originally designed for web development to produce dynamic web pages. For this purpose, PHP code is embedded into the HTML source document and interpreted by a web server with a PHP processor module, which generates the web page document. As a general-purpose programming language, PHP code is processed by an interpreter application in command-line mode performing desired operating system operations and producing program output on its standard output channel. It may also function as a graphical application. PHP is available as a processor for most modern web servers and as standalone interpreter on most operating systems and computing platforms.

PHP was originally created by Rasmus Lerdorf in 1995[1] and has been in continuous development ever since. The main implementation of PHP is now produced by The PHP Group and serves as the de facto standard for PHP as there is no formal specification.[2] PHP is free software released under the PHP License.

PHP originally stood for personal home page.[2] It began in 1994 as a set of Common Gateway Interface (CGI) binaries written in the C programming language by the Danish/Greenlandic programmer Rasmus Lerdorf.[3][4] Lerdorf initially created these Personal Home Page Tools to replace a small set of Perl scripts he had been using to maintain his personal homepage. The tools were used to perform tasks such as displaying his résumé and recording how much traffic his page was receiving.[2]

He combined these binaries with his Form Interpreter to create PHP/FI, which had more functionality. PHP/FI included a larger implementation for the C programming language and could communicate with databases, enabling the building of simple, dynamic web applications. Lerdorf released PHP publicly on June 8, 1995, to accelerate bug location and improve the code.[5] This release was named PHP version 2 and already had the basic functionality that PHP has today. This included Perl-like variables, form handling, and the ability to embed HTML. The syntax was similar to Perl but was more limited, simpler, and less consistent.[2]

Zeev Suraski and Andi Gutmans, two Israeli developers at the Technion IIT, rewrote the parser in 1997 and formed the base of PHP 3, changing the language's name to the recursive initialism PHP: Hypertext Preprocessor.[2] The development team officially released PHP/FI 2 in November 1997 after months of beta testing. Afterwards, public testing of PHP 3 began, and the official launch came in June 1998. Suraski and Gutmans then started a new rewrite of PHP's core, producing the Zend Engine in 1999.[6] They also founded Zend Technologies in Ramat Gan, Israel.[2]

On May 22, 2000, PHP 4, powered by the Zend Engine 1.0, was released.[2] As of August 2008 this branch is up to version 4.4.9. PHP 4 is no longer under development nor will any security updates be released.[7][8]

On July 13, 2004, PHP 5 was released, powered by the new Zend Engine II.[2] PHP 5 included new features such as improved support for object-oriented programming, the PHP Data Objects extension (which defines a lightweight and consistent interface for accessing databases), and numerous performance enhancements.[9] In 2008 PHP 5 became the only stable version under development. Late static binding has been missing from PHP and has been added in version 5.3.[10][11]

A new major version has been under development alongside PHP 5 for several years. This version was originally planned to be released as PHP 6 as a result of its significant changes, which included plans for full Unicode support. However, Unicode support took developers much longer to implement than originally thought, and the decision was made in March 2010[12] to move the project to a branch, with features still under development moved to a trunk.

Changes in the new code include the removal of register_globals,[13] magic quotes, and safe mode.[7][14] The reason for the removals was that register_globals had given way to security holes, and magic quotes had an unpredictable nature, and was best avoided. Instead, to escape characters, magic quotes may be substituted with the addslashes() function, or more appropriately an escape mechanism specific to the database vendor itself like mysql_real_escape_string() for MySQL. Functions that will be removed in future versions and have been deprecated in PHP 5.3, will produce a warning if used.[15]

Many high-profile open-source projects ceased to support PHP 4 in new code as of February 5, 2008, because of the GoPHP5 initiative[16], provided by a consortium of PHP developers promoting the transition from PHP 4 to PHP 5.[17][18]

PHP currently does not have native support for Unicode or multibyte strings; Unicode support is under development for a future verson of PHP and will allow strings as well as class, method, and function names to contain non-ASCII characters.[19][20]

PHP interpreters are available on both 32-bit and 64-bit operating systems, but on Microsoft Windows the only official distribution is a 32-bit implementation, requiring Windows 32-bit compatibility mode while using Internet Information Services (IIS) on a 64-bit Windows platform. As of PHP 5.3.0, experimental 64-bit versions are available for MS Windows.[21]
[edit] Licensing

PHP is free software released under the PHP License, which insists that:

* The name "PHP" must not be used to endorse or promote products derived from this software without prior written permission.[22]

This makes it incompatible with the GNU General Public License (GPL) because restrictions exist regarding the use of the term PHP.[23]
[edit] Release history

--

Usage

PHP is a general-purpose scripting language that is especially suited to server-side web development where PHP generally runs on a web server. Any PHP code in a requested file is executed by the PHP runtime, usually to create dynamic web page content. It can also be used for command-line scripting and client-side GUI applications. PHP can be deployed on most web servers, many operating systems and platforms, and can be used with many relational database management systems. It is available free of charge, and the PHP Group provides the complete source code for users to build, customize and extend for their own use.[30]

PHP primarily acts as a filter,[31] taking input from a file or stream containing text and/or PHP instructions and outputs another stream of data; most commonly the output will be HTML. Since PHP 4, the PHP parser compiles input to produce bytecode for processing by the Zend Engine, giving improved performance over its interpreter predecessor.[32]

Originally designed to create dynamic web pages, PHP now focuses mainly on server-side scripting,[33] and it is similar to other server-side scripting languages that provide dynamic content from a web server to a client, such as Microsoft's Active Server Pages, Sun Microsystems' JavaServer Pages,[34] and mod_perl. PHP has also attracted the development of many frameworks that provide building blocks and a design structure to promote rapid application development (RAD). Some of these include CakePHP, Symfony, CodeIgniter, and Zend Framework, offering features similar to other web application frameworks.

The LAMP architecture has become popular in the web industry as a way of deploying web applications. PHP is commonly used as the P in this bundle alongside Linux, Apache and MySQL, although the P may also refer to Python or Perl or some combination of the three.

As of April 2007, over 20 million Internet domains had web services hosted on servers with PHP installed and mod_php was recorded as the most popular Apache HTTP Server module.[35] Significant websites are written in PHP including the user-facing portion of Facebook,[36] Wikipedia (MediaWiki),[37] Yahoo!,[citation needed] MyYearbook,[citation needed] Digg,[citation needed] Joomla, eZ Publish, WordPress,[38] YouTube in its early stages,[citation needed] Drupal, Tagged[citation needed] and Moodle.[39]
[edit] Security

The National Vulnerability Database stores all vulnerabilities found in computer software. The overall proportion of PHP-related vulnerabilities on the database amounted to: 20% in 2004, 28% in 2005, 43% in 2006, 36% in 2007, 35% in 2008, and 30% in 2009.[40] Most of these PHP-related vulnerabilities can be exploited remotely: they allow crackers to steal or destroy data from data sources linked to the webserver (such as an SQL database), send spam or contribute to DoS attacks using malware, which itself can be installed on the vulnerable servers.

These vulnerabilities are caused mostly by not following best practice programming rules: technical security flaws of the language itself or of its core libraries are not frequent (23 in 2008, about 1% of the total). [41][42] Recognizing that programmers cannot be trusted, some languages include taint checking to detect automatically the lack of input validation which induces many issues. Such a feature is being developed for PHP,[43] but its inclusion in a release has been rejected several times in the past.[44][45]

Hosting PHP applications on a server requires a careful and constant attention to deal with these security risks.[46] There are advanced protection patches such as Suhosin and Hardening-Patch, especially designed for web hosting environments.[47]
[edit] Syntax
Main article: PHP syntax and semantics






echo "Hello World";
/* echo("Hello World"); works as well, although echo isn't a
function (it's a language construct). In some cases, such
as when multiple parameters are passed to echo, parameters
cannot be enclosed in parentheses */
?>




PHP code embedded within HTML

PHP only parses code within its delimiters. Anything outside its delimiters is sent directly to the output and is not processed by PHP (although non-PHP text is still subject to control structures described within PHP code). The most common delimiters are to close PHP sections. delimiters are also available, as are the shortened forms as well as ASP-style short forms <% or <%= and %>. While short delimiters are used, they make script files less portable as their purpose can be disabled in the PHP configuration, and so they are discouraged.[48] The purpose of all these delimiters is to separate PHP code from non-PHP code, including HTML.[49]

The first form of delimiters, , in XHTML and other XML documents, creates correctly formed XML 'processing instructions'.[50] This means that the resulting mixture of PHP code and other markup in the server-side file is itself well-formed XML.

Variables are prefixed with a dollar symbol and a type does not need to be specified in advance. Unlike function and class names, variable names are case sensitive. Both double-quoted ("") and heredoc strings allow the ability to embed a variable's value into the string.[51] PHP treats newlines as whitespace in the manner of a free-form language (except when inside string quotes), and statements are terminated by a semicolon.[52] PHP has three types of comment syntax: /* */ marks block and inline comments; // as well as # are used for one-line comments.[53] The echo statement is one of several facilities PHP provides to output text (e.g. to a web browser).

In terms of keywords and language syntax, PHP is similar to most high level languages that follow the C style syntax. If conditions, for and while loops, and function returns are similar in syntax to languages such as C, C++, Java and Perl.
[edit] Data types

PHP stores whole numbers in a platform-dependent range. This range is typically that of 32-bit signed integers. Unsigned integers are converted to signed values in certain situations; this behavior is different from other programming languages.[54] Integer variables can be assigned using decimal (positive and negative), octal, and hexadecimal notations. Floating point numbers are also stored in a platform-specific range. They can be specified using floating point notation, or two forms of scientific notation.[55] PHP has a native Boolean type that is similar to the native Boolean types in Java and C++. Using the Boolean type conversion rules, non-zero values are interpreted as true and zero as false, as in Perl and C++.[55] The null data type represents a variable that has no value. The only value in the null data type is NULL.[55] Variables of the "resource" type represent references to resources from external sources. These are typically created by functions from a particular extension, and can only be processed by functions from the same extension; examples include file, image, and database resources.[55] Arrays can contain elements of any type that PHP can handle, including resources, objects, and even other arrays. Order is preserved in lists of values and in hashes with both keys and values, and the two can be intermingled.[55] PHP also supports strings, which can be used with single quotes, double quotes, or heredoc syntax.[56]

The Standard PHP Library (SPL) attempts to solve standard problems and implements efficient data access interfaces and classes.[57]
[edit] Functions

PHP has hundreds of base functions and thousands more via extensions. These functions are well documented on the PHP site; however, the built-in library has a wide variety of naming conventions and inconsistencies. PHP currently has no functions for thread programming, although it does support multiprocess programming on POSIX systems.[58]
[edit] 5.2 and earlier

Functions are not first-class functions and can only be referenced by their name, directly or dynamically by a variable containing the name of the function.[59] User-defined functions can be created at any time without being prototyped.[59] Functions can be defined inside code blocks, permitting a run-time decision as to whether or not a function should be defined. Function calls must use parentheses, with the exception of zero argument class constructor functions called with the PHP new operator, where parentheses are optional. PHP supports quasi-anonymous functions through the create_function() function, although they are not true anonymous functions because anonymous functions are nameless, but functions can only be referenced by name, or indirectly through a variable $function_name();, in PHP.[59]
[edit] 5.3 and newer

PHP gained support for closures. True anonymous functions are supported using the following syntax:

function getAdder($x)
{
return function ($y) use ($x) {
return $x + $y;
};
}

$adder = getAdder(8);
echo $adder(2); // prints "10"

Here, getAdder() function creates a closure using parameter $x (keyword "use" forces getting variable from context), which takes additional argument $y and returns it to the caller. Such a function can be stored, given as the parameter to other functions, etc. For more details see Lambda functions and closures RFC.

The goto flow control device was made available in PHP 5.3 and is used as follows:

function lock()
{
$file = fopen("file.txt","r+");
retry:
if(flock($file,LOCK_EX))
{
fwrite($file, "Success!");
fclose($file);
return 0;
}
else
goto retry;
}

When lock() is called, PHP opens a file and tries to lock it. retry:, the target label, defines the point to which execution should return if flock() is unsuccessful and the goto retry; is called. goto is not unrestricted and requires that the target label be in the same file and context.
[edit] Objects

Basic object-oriented programming functionality was added in PHP 3 and improved in PHP 4.[2] Object handling was completely rewritten for PHP 5, expanding the feature set and enhancing performance.[60] In previous versions of PHP, objects were handled like value types.[60] The drawback of this method was that the whole object was copied when a variable was assigned or passed as a parameter to a method. In the new approach, objects are referenced by handle, and not by value. PHP 5 introduced private and protected member variables and methods, along with abstract classes and final classes as well as abstract methods and final methods. It also introduced a standard way of declaring constructors and destructors, similar to that of other object-oriented languages such as C++, and a standard exception handling model. Furthermore, PHP 5 added interfaces and allowed for multiple interfaces to be implemented. There are special interfaces that allow objects to interact with the runtime system. Objects implementing ArrayAccess can be used with array syntax and objects implementing Iterator or IteratorAggregate can be used with the foreach language construct. There is no virtual table feature in the engine, so static variables are bound with a name instead of a reference at compile time.[61]

If the developer creates a copy of an object using the reserved word clone, the Zend engine will check if a __clone() method has been defined or not. If not, it will call a default __clone() which will copy the object's properties. If a __clone() method is defined, then it will be responsible for setting the necessary properties in the created object. For convenience, the engine will supply a function that imports the properties of the source object, so that the programmer can start with a by-value replica of the source object and only override properties that need to be changed.[62]

Basic example of object-oriented programming as described above:

Class Person
{

public $first;
public $last;

public function __construct($f,$l)
{

$this->first = $f;
$this->last = $l;

}

public function greeting()
{

return 'Hello, my name is ' . $this->first . ' ' . $this->last . '.';
// return 'Hello, my name is ' . $this->first . ' ' . $this->last . '.'; also works when not called from Person::greeting()

}

}

$him = new Person('John','Smith');
$her = new Person('Sally','Davis');

echo $him->greeting(); // prints "Hello, my name is John Smith."
echo '
';
echo $her->greeting(); // prints "Hello, my name is Sally Davis."

[edit] Speed optimization

PHP source code is compiled on-the-fly to an internal format that can be executed by the PHP engine.[63][64] In order to speed up execution time and not have to compile the PHP source code every time the webpage is accessed, PHP scripts can also be deployed in executable format using a PHP compiler.

Code optimizers aim to reduce the runtime of the compiled code by reducing its size and making other changes that can reduce the execution time with the goal of improving performance. The nature of the PHP compiler is such that there are often opportunities for code optimization,[65] and an example of a code optimizer is the eAccelerator PHP extension.[66]

Another approach for reducing overhead for high load PHP servers is using an Opcode cache. Opcode caches work by caching the compiled form of a PHP script (opcodes) in shared memory to avoid the overhead of parsing and compiling the code every time the script runs. An opcode cache, APC, will be built into an upcoming release of PHP.[67] Opcode caching is also available in Zend Server Community Edition.
[edit] Compilers

The PHP language was originally implemented using a PHP interpreter. Several compilers now exist, which decouple the PHP language from the interpreter:

* phc - a C++ based compiler for PHP, using the Zend run-time for maximum compatibility
* Roadsend - achieves native compilation by compiling to bigloo scheme, which in turn is compiled to C, then to machine code
* Raven - a rewrite of Roadsend PHP (rphp), based on LLVM and a new C++ runtime
* Phalanger - compiles source code written in the PHP scripting language into CIL byte-code
* Caucho Resin/Quercus - compiles PHP to Java bytecode
* HipHop - developed at Facebook and now available as open source, transforms the PHP Script into C++, then compiles it.
* php-to-scala - converts PHP to human-readable Scala source code, which the developer can compile to Java bytecode

Advantages of compilation include not only better execution speed, but also obfuscation, static analysis, and improved interoperability with code written in other languages.[68]
[edit] Resources

PHP includes free and open source libraries with the core build. PHP is a fundamentally Internet-aware system with modules built in for accessing FTP servers, many database servers, embedded SQL libraries such as embedded PostgreSQL, MySQL and SQLite, LDAP servers, and others. Many functions familiar to C programmers such as those in the stdio family are available in the standard PHP build.[69]

PHP allows developers to write extensions in C to add functionality to the PHP language. These can then be compiled into PHP or loaded dynamically at runtime. Extensions have been written to add support for the Windows API, process management on Unix-like operating systems, multibyte strings (Unicode), cURL, and several popular compression formats. Some more unusual features include integration with Internet Relay Chat, dynamic generation of images and Adobe Flash content, and even speech synthesis. The PHP Extension Community Library (PECL) project is a repository for extensions to the PHP language.[70]

Zend provides a certification exam for programmers to become certified PHP developers.

--

MySQL is a relational database management system (RDBMS)[1] that runs as a server providing multi-user access to a number of databases. MySQL is officially pronounced /maɪˌɛskjuːˈɛl/ ("My S-Q-L"),[2] but is often pronounced /maɪˈsiːkwəl/ ("My Sequel"). It is named for original developer Michael Widenius's daughter My.[3]

The MySQL development project has made its source code available under the terms of the GNU General Public License, as well as under a variety of proprietary agreements. MySQL is owned and sponsored by a single for-profit firm, the Swedish company MySQL AB, now owned by Sun Microsystems, a subsidiary of Oracle Corporation.[4]

Members of the MySQL community have created several forks such as Drizzle and MariaDB. Both forks were in progress before the Oracle acquisition (Drizzle was announced 8 months before the Sun acquisition).

Free-software projects that require a full-featured database management system often use MySQL. Such projects include (for example) WordPress, phpBB, Drupal and other software built on the LAMP software stack. MySQL is also used in many high-profile, large-scale World Wide Web products including Wikipedia, Google and Facebook.

Uses

Many web applications use MySQL as the database component of a LAMP software stack. Its popularity for use with web applications is closely tied to the popularity of PHP, which is often combined with MySQL. Several high-traffic web sites (including Flickr,[5] Facebook,[6][7] Wikipedia,[8] Google[9] (though not for searches), Nokia[10] and YouTube[11]) use MySQL for data storage and logging of user data.
[edit] Platforms and interfaces

MySQL code uses C and C++. The SQL parser uses yacc and a home-brewed lexer, sql_lex.cc[12]

MySQL works on many different system platforms, including AIX, BSDi, FreeBSD, HP-UX, i5/OS, Linux, Mac OS X, NetBSD, Novell NetWare, OpenBSD, OpenSolaris, eComStation, OS/2 Warp, QNX, IRIX, Solaris, Symbian, SunOS, SCO OpenServer, SCO UnixWare, Sanos, Tru64 and Microsoft Windows. A port of MySQL to OpenVMS also exists.[13]

All major programming languages with language-specific APIs include Libraries for accessing MySQL databases. In addition, an ODBC interface called MyODBC allows additional programming languages that support the ODBC interface to communicate with a MySQL database, such as ASP or ColdFusion. The MySQL server and official libraries are mostly implemented in ANSI C/ANSI C++.
[edit] Management and Graphical Frontends
MySQL Workbench in Windows, displaying the Home Screen which streamlines use of its full capabilities

MySQL is primarily an RDBMS and therefore ships with no GUI tools to administer MySQL databases or manage data contained within. Users may use the included command-line tools,[14] or download MySQL frontends from various parties that have developed desktop software and web applications to manage MySQL databases, build database structure, and work with data records.
[edit] Official

The official MySQL Workbench is a free integrated environment developed by MySQL AB, that enables users to graphically administer MySQL databases and visually design database structure. MySQL Workbench replaces the previous package of software, MySQL GUI Tools. Similar to other third-party packages but still considered the authoritative MySQL frontend, MySQL Workbench lets users manage the following:

* Database design & modeling
* SQL development — replacing MySQL Query Browser
* Database administration — replacing MySQL Administrator

MySQL Workbench is available in two editions, the regular free and open source Community Edition which may be downloaded from the MySQL website, and the proprietary Standard Edition which extends and improves the feature set of the Community Edition.
[edit] Third party

Several other third-party proprietary and free graphical administration applications (or "Frontends") are available that integrate with MySQL and enable users to work with database structure and data visually. Some well-known frontends are:

* phpMyAdmin - a free Web-based frontend widely installed by Web hosts worldwide, since it is developed in PHP and only requires the LAMP stack.
* HeidiSQL - a full featured free frontend that runs on Windows, and can connect to local or remote MySQL servers to manage databases, tables, column structure, and individual data records. Also supports specialised GUI features for date/time fields and enumerated multiple-value fields[15].
* Adminer - a free MySQL frontend written in one PHP script, capable of managing multiple databases, with many CSS skins available.
* Navicat - a series of proprietary graphical database management applications, developed for Windows, Macintosh and Linux.
* Other available proprietary MySQL frontends include Aqua Data Studio, dbForge Studio for MySQL, Epictetus, Oracle SQL Developer, SchemaBank, SQLyog, SQLPro SQL Client, Toad, Toad Data Modeler and Marshal SQLUtility.

[edit] Deployment

MySQL can be built and installed manually from source code, but this can be tedious so it is more commonly installed from a binary package unless special customizations are required. On most Linux distributions the package management system can download and install MySQL with minimal effort, though further configuration is often required to adjust security and optimization settings.

Though MySQL began as a low-end alternative to more powerful proprietary databases, it has gradually evolved to support higher-scale needs as well.

It is still most commonly used in small to medium scale single-server deployments, either as a component in a LAMP based web application or as a standalone database server. Much of MySQL's appeal originates in its relative simplicity and ease of use, which is enabled by an ecosystem of open source tools such as phpMyAdmin.

In the medium range, MySQL can be scaled by deploying it on more powerful hardware, such as a multi-processor server with gigabytes of memory.

There are however limits to how far performance can scale on a single server, so on larger scales, multi-server MySQL deployments are required to provide improved performance and reliability. A typical high-end configuration can include a powerful master database which handles data write operations and is replicated to multiple slaves that handle all read operations.[16] The master server synchronizes continually with its slaves so in the event of failure a slave can be promoted to become the new master, minimizing downtime. Further improvements in performance can be achieved by caching the results from database queries in memory using memcached, or breaking down a database into smaller chunks called shards which can be spread across a number of distributed server clusters.[17]
[edit] Features

As of April 2009[update], MySQL offers MySQL 5.1 in two different variants: the MySQL Community Server which is the open source version and Enterprise Server which is the commercial one.[18] They have a common code base and include the following features:

* A broad subset of ANSI SQL 99, as well as extensions
* Cross-platform support
* Stored procedures
* Triggers
* Cursors
* Updatable Views
* True Varchar support
* INFORMATION_SCHEMA
* Strict mode
* X/Open XA distributed transaction processing (DTP) support; two phase commit as part of this, using Oracle's InnoDB engine
* Independent storage engines (MyISAM for read speed, InnoDB for transactions and referential integrity, MySQL Archive for storing historical data in little space)
* Transactions with the InnoDB, BDB and Cluster storage engines; savepoints with InnoDB
* SSL support
* Query caching
* Sub-SELECTs (i.e. nested SELECTs)
* Replication support (i.e. Master-Master Replication & Master-Slave Replication) with one master per slave, many slaves per master, no automatic support for multiple masters per slave.
* Full-text indexing and searching using MyISAM engine
* Embedded database library
* Partial Unicode support (UTF-8 and UCS-2 encoded strings are limited to the BMP)
* Partial ACID compliance (full compliance only when using the non-default storage engines InnoDB, BDB and Cluster)
* Shared-nothing clustering through MySQL Cluster
* Hot backup (via mysqlhotcopy) under certain conditions[19]

The developers release monthly versions of the MySQL Server. The sources can be obtained from MySQL's web site or from MySQL's Bazaar repository, both under the GPL license.
[edit] Distinguishing features

MySQL implements the following features, which some other RDBMS systems may not:

* Multiple storage engines, allowing one to choose the one that is most effective for each table in the application (in MySQL 5.0, storage engines must be compiled in; in MySQL 5.1, storage engines can be dynamically loaded at run time):
o Native storage engines (MyISAM, Falcon, Merge, Memory (heap), Federated, Archive, CSV, Blackhole, Cluster, Berkeley DB, EXAMPLE, and Maria)
o Partner-developed storage engines (InnoDB, solidDB, NitroEDB, Infobright (formerly Brighthouse), Kickfire, XtraDB, IBM DB2[20])
o Community-developed storage engines (memcache engine, httpd, PBXT, Revision Engine)
o Custom storage engines
* Commit grouping, gathering multiple transactions from multiple connections together to increase the number of commits per second.

[edit] Product History

Milestones in MySQL development include:

* Original development of MySQL by Michael Widenius and David Axmark beginning in 1994[21]
* First internal release on 23 May 1995
* Windows version was released on 8 January 1998 for Windows 95 and NT
* Version 3.23: beta from June 2000, production release January 2001
* Version 4.0: beta from August 2002, production release March 2003 (unions)
* Version 4.01: beta from August 2003, Jyoti adopts MySQL for database tracking
* Version 4.1: beta from June 2004, production release October 2004 (R-trees and B-trees, subqueries, prepared statements)
* Version 5.0: beta from March 2005, production release October 2005 (cursors, stored procedures, triggers, views, XA transactions)

The developer of the Federated Storage Engine states that "The Federated Storage Engine is a proof-of-concept storage engine",[22] but the main distributions of MySQL version 5.0 included it and turned it on by default. Documentation of some of the short-comings appears in "MySQL Federated Tables: The Missing Manual".

* Sun Microsystems acquired MySQL AB on 26 February 2008.[4]
* Version 5.1: production release 27 November 2008 (event scheduler, partitioning, plugin API, row-based replication, server log tables)

Version 5.1 contained 20 known crashing and wrong result bugs in addition to the 35 present in version 5.0.[23]
MySQL 5.1 and 6.0 showed poor performance when used for data warehousing — partly due to its inability to utilize multiple CPU cores for processing a single query.[24]

* Oracle acquired Sun Microsystems on January 27, 2010. Oracle and Sun

[edit] Future releases

The MySQL 6 roadmap outlines support for:

* Referential integrity and Foreign key support for all storage engines is targeted for release in MySQL 6.1 (although it has been present since version 3.23.44 for InnoDB).
* Support for supplementary Unicode characters, beyond the 65,536 characters of the Basic Multilingual Plane (BMP); announced for MySQL 6.0.
* A new storage engine called Falcon. A preview of Falcon is available on MySQL's website.

[edit] Support and licensing

Via MySQL Enterprise MySQL AB offers support itself, including a 24/7 service with 30-minute response time. The support team has direct access to the developers as necessary to handle problems. In addition, it hosts forums and mailing lists, employees and other users are often available in several IRC channels providing assistance.

In addition to official product support from Sun, other companies offer support and services related to usage of MySQL. For example, Pythian offers full database administration, architecture, optimization and training services. Percona and 42sql offer services related to optimization and Monty Program Ab offers non-recurring engineering such as patches to MySQL. OpenQuery provides MySQL training.

Buyers of MySQL Enterprise have access to binaries and software certified for their particular operating system, and access to monthly binary updates with the latest bug-fixes. Several levels of Enterprise membership are available, with varying response times and features ranging from how to and emergency support through server performance tuning and system architecture advice. The MySQL Network Monitoring and Advisory Service monitoring tool for database servers is available only to MySQL Enterprise customers.

Potential users can install MySQL Server as free software under the GNU General Public License (GPL), and the MySQL Enterprise subscriptions include a GPL version of the server, with a traditional proprietary version available on request at no additional cost for cases where the intended use is incompatible with the GPL.[25]

Both the MySQL server software itself and the client libraries use dual-licensing distribution. Users may choose the GPL,[26] which MySQL has extended with a FLOSS License Exception. It allows Software licensed under other OSI-compliant open source licenses, which are not compatible to the GPL, to link against the MySQL client libraries.[27]

Customers that do not wish to follow the terms of the GPL may purchase a proprietary license.[28]

Like many open-source programs, MySQL has trademarked its name, which others may use only with the trademark holder's permission.[29]
[edit] Corporate backing history

In October 2005, Oracle Corporation acquired Innobase OY, the Finnish company that developed the third-party InnoDB storage engine that allows MySQL to provide such functionality as transactions and foreign keys. After the acquisition, an Oracle press release[30] mentioned that the contracts that make the company's software available to MySQL AB would be due for renewal (and presumably renegotiation) some time in 2006. During the MySQL Users Conference in April 2006, MySQL issued a press release that confirmed that MySQL and Innobase OY agreed to a "multi-year" extension of their licensing agreement.[31].

In February 2006, Oracle Corporation acquired Sleepycat Software,[32] makers of the Berkeley DB, a database engine providing the basis for another MySQL storage engine. This had little effect, as Berkeley DB was not widely used, and was deprecated (due to lack of use) in MySQL 5.1.12, a pre-GA release of MySQL 5.1 released in October 2006.[33]

In January 2008, Sun Microsystems bought MySQL[34] for USD $1 billion.

In April 2009, Oracle Corporation entered into an agreement to purchase Sun Microsystems,[35] then owners of the MySQL intellectual property. Sun's board of directors unanimously approved the deal, it was also approved by Sun's shareholders, and by the U.S. government on August 20, 2009.[36] On December 14, 2009, Oracle pledged to continue to enhance MySQL.[37] as it had done for the previous 4 years. The Oracle acquisition was approved by the European Commission on January 21, 2010[38].

--

HTML, which stands for HyperText Markup Language, is the predominant markup language for web pages. It provides a means to create structured documents by denoting structural semantics for text such as headings, paragraphs, lists etc as well as for links, quotes, and other items. It allows images and objects to be embedded and can be used to create interactive forms. It is written in the form of HTML elements consisting of "tags" surrounded by angle brackets within the web page content. It can include or can load scripts in languages such as JavaScript which affect the behavior of HTML processors like Web browsers; and Cascading Style Sheets (CSS) to define the appearance and layout of text and other material. The W3C, maintainer of both HTML and CSS standards, encourages the use of CSS over explicit presentational markup.[1]

Origins
Tim Berners-Lee

In 1980, physicist Tim Berners-Lee, who was a contractor at CERN, proposed and prototyped ENQUIRE, a system for CERN researchers to use and share documents. In 1989, Berners-Lee wrote a memo proposing an Internet-based hypertext system.[2] Berners-Lee specified HTML and wrote the browser and server software in the last part of 1990. In that year, Berners-Lee and CERN data systems engineer Robert Cailliau collaborated on a joint request for funding, but the project was not formally adopted by CERN. In his personal notes,[3] from 1990 he lists[4] "some of the many areas in which hypertext is used", and puts an encyclopedia first.
[edit] First specifications

The first publicly available description of HTML was a document called HTML Tags, first mentioned on the Internet by Berners-Lee in late 1991.[5][6] It describes 20 elements comprising the initial, relatively simple design of HTML. Except for the hyperlink tag, these were strongly influenced by SGMLguid, an in-house SGML based documentation format at CERN. Thirteen of these elements still exist in HTML 4.[7]

HTML is a text and image formatting language used by web browsers to dynamically format web pages. Many of the text elements are found in the 1988 ISO technical report TR 9537 Techniques for using SGML, which in turn covers the features of early text formatting languages such as that used by the RUNOFF command developed in the early 1960s for the CTSS (Compatible Time-Sharing System) operating system: these formatting commands were derived from the commands used by typesetters to manually format documents. However the SGML concept of generalized markup is based on elements (nested annotated ranges with attributes) rather than merely point effects, and also the separation of structure and processing: HTML has been progressively moved in this direction with CSS.

Berners-Lee considered HTML to be an application of SGML, and it was formally defined as such by the Internet Engineering Task Force (IETF) with the mid-1993 publication of the first proposal for an HTML specification: "Hypertext Markup Language (HTML)" Internet-Draft by Berners-Lee and Dan Connolly, which included an SGML Document Type Definition to define the grammar.[8] The draft expired after six months, but was notable for its acknowledgment of the NCSA Mosaic browser's custom tag for embedding in-line images, reflecting the IETF's philosophy of basing standards on successful prototypes.[9] Similarly, Dave Raggett's competing Internet-Draft, "HTML+ (Hypertext Markup Format)", from late 1993, suggested standardizing already-implemented features like tables and fill-out forms.[10]

After the HTML and HTML+ drafts expired in early 1994, the IETF created an HTML Working Group, which in 1995 completed "HTML 2.0", the first HTML specification intended to be treated as a standard against which future implementations should be based.[9] Published as Request for Comments 1866, HTML 2.0 included ideas from the HTML and HTML+ drafts.[11] The 2.0 designation was intended to distinguish the new edition from previous drafts.[12]

Further development under the auspices of the IETF was stalled by competing interests. Since 1996, the HTML specifications have been maintained, with input from commercial software vendors, by the World Wide Web Consortium (W3C).[13] However, in 2000, HTML also became an international standard (ISO/IEC 15445:2000). The last HTML specification published by the W3C is the HTML 4.01 Recommendation, published in late 1999. Its issues and errors were last acknowledged by errata published in 2001.
[edit] Version history of the standard
HTML
HTML.svg

* HTML and HTML5
* Dynamic HTML
* XHTML
* XHTML Mobile Profile and C-HTML
* Canvas element
* Character encodings
* Document Object Model
* Font family
* HTML editor
* HTML element
* HTML Frames
* HTML5 video
* HTML scripting
* Layout engine
* Quirks mode
* Style sheets
* Unicode and HTML
* W3C and WHATWG
* Web colors
* WebGL
* Web Storage
* Comparison of
o document markup languages
o web browsers
o layout engines for
+ HTML
+ HTML5
# HTML5 Media
+ Non-standard HTML
+ XHTML

This box: view • talk • edit
[edit] HTML version timeline

November 24, 1995
HTML 2.0 was published as IETF RFC 1866. Supplemental RFCs added capabilities:

* November 25, 1995: RFC 1867 (form-based file upload)
* May 1996: RFC 1942 (tables)
* August 1996: RFC 1980 (client-side image maps)
* January 1997: RFC 2070 (internationalization)

In June 2000, all of these were declared obsolete/historic by RFC 2854.
January 1997
HTML 3.2[14] was published as a W3C Recommendation. It was the first version developed and standardized exclusively by the W3C, as the IETF had closed its HTML Working Group in September 1996.[15]
HTML 3.2 dropped math formulas entirely, reconciled overlap among various proprietary extensions, and adopted most of Netscape's visual markup tags. Netscape's blink element and Microsoft's marquee element were omitted due to a mutual agreement between the two companies.[13] A markup for mathematical formulas similar to that in HTML wasn't standardized until 14 months later in MathML.
December 1997
HTML 4.0[16] was published as a W3C Recommendation. It offers three variations:

* Strict, in which deprecated elements are forbidden,
* Transitional, in which deprecated elements are allowed,
* Frameset, in which mostly only frame related elements are allowed;

Initially code-named "Cougar",[17] HTML 4.0 adopted many browser-specific element types and attributes, but at the same time sought to phase out Netscape's visual markup features by marking them as deprecated in favor of style sheets. HTML 4 is an SGML application conforming to ISO 8879 - SGML.[18]
April 1998
HTML 4.0[19] was reissued with minor edits without incrementing the version number.
December 1999
HTML 4.01[20] was published as a W3C Recommendation. It offers the same three variations as HTML 4.0, and its last errata were published May 12, 2001.
May 2000
ISO/IEC 15445:2000[21][22] ("ISO HTML", based on HTML 4.01 Strict) was published as an ISO/IEC international standard. In the ISO this standard falls in the domain of the ISO/IEC JTC1/SC34 (ISO/IEC Joint Technical Committee 1, Subcommittee 34 - Document description and processing languages).[21]
As of mid-2008, HTML 4.01 and ISO/IEC 15445:2000 are the most recent versions of HTML. Development of the parallel, XML-based language XHTML occupied the W3C's HTML Working Group through the early and mid-2000s.

[edit] HTML draft version timeline

October 1991
HTML Tags,[5] an informal CERN document listing twelve HTML tags, was first mentioned in public.
July 1992
First informal draft of the HTML DTD,[1] with six subsequent revisions
November 1992
HTML DTD 1.1 (the first with a version number, based on RCS revisions, which start with 1.1 rather than 1.0), an informal draft
June 1993
Hypertext Markup Language[23] was published by the IETF IIIR Working Group as an Internet-Draft (a rough proposal for a standard). It was replaced by a second version [2] one month later, followed by six further drafts published by IETF itself [3] that finally led to HTML 2.0 in RFC1866
November 1993
HTML+ was published by the IETF as an Internet-Draft and was a competing proposal to the Hypertext Markup Language draft. It expired in May 1994.
April 1995 (authored March 1995)
HTML 3.0[24] was proposed as a standard to the IETF, but the proposal expired five months later without further action. It included many of the capabilities that were in Raggett's HTML+ proposal, such as support for tables, text flow around figures, and the display of complex mathematical formulas.[25]
W3C began development of its own Arena browser for testing support for HTML 3 and Cascading Style Sheets, but HTML 3.0 did not succeed for several reasons. The draft was considered very large at 150 pages and the pace of browser development, as well as the number of interested parties, had outstripped the resources of the IETF.[13] Browser vendors, including Microsoft and Netscape at the time, chose to implement different subsets of HTML 3's draft features as well as to introduce their own extensions to it.[13] (See Browser wars) These included extensions to control stylistic aspects of documents, contrary to the "belief [of the academic engineering community] that such things as text color, background texture, font size and font face were definitely outside the scope of a language when their only intent was to specify how a document would be organized."[13] Dave Raggett, who has been a W3C Fellow for many years has commented for example, "To a certain extent, Microsoft built its business on the Web by extending HTML features."[13]
January 2008
HTML 5[26] was published as a Working Draft by the W3C.
Although its syntax closely resembles that of SGML, HTML 5 has abandoned any attempt to be an SGML application, and has explicitly defined its own "html" serialization, in addition to an alternative XML-based XHTML 5 serialization.[27]

[edit] XHTML versions
Main article: XHTML

XHTML is a separate language that began as a reformulation of HTML 4.01 using XML 1.0. It continues to be developed:

* XHTML 1.0,[28] published January 26, 2000 as a W3C Recommendation, later revised and republished August 1, 2002. It offers the same three variations as HTML 4.0 and 4.01, reformulated in XML, with minor restrictions.
* XHTML 1.1,[29] published May 31, 2001 as a W3C Recommendation. It is based on XHTML 1.0 Strict, but includes minor changes, can be customized, and is reformulated using modules from Modularization of XHTML, which was published April 10, 2001 as a W3C Recommendation.
* XHTML 2.0,[30]. There is no XHTML 2.0 standard. XHTML 2.0 is incompatible with XHTML 1.x and, therefore, would be more accurate to characterize as an XHTML-inspired new language than an update to XHTML 1.x.
* XHTML 5, which is an update to XHTML 1.x, is being defined alongside HTML 5 in the HTML 5 draft.[31]

[edit] Markup

HTML markup consists of several key components, including elements (and their attributes), character-based data types, and character references and entity references. Another important component is the document type declaration, which specifies the Document Type Definition. As of HTML 5, no Document Type Definition will need to be specified, and will only determine the layout mode [4].

The Hello world program, a common computer program employed for comparing programming languages, scripting languages, and markup languages is made of 9 lines of code in HTML, albeit Newlines are optional:

Hello World!

This Document Type Declaration is for HTML 5.

If the declaration is not included, most browsers will render using "quirks mode."[32]
[edit] Elements
Main article: HTML element

HTML documents are composed entirely of HTML elements that, in their most general form have three components: a pair of element tags with a "start tag" and "end tag"; some element attributes given to the element within the tags; and finally, all the actual, textual and graphical[clarification needed], information content that will be rendered on the display. An HTML element is everything between and including the tags. A tag is a keyword enclosed in angle brackets.

A common form of an HTML element is:

content to be rendered

The name of the HTML element is also the name of the tag. Note that the end tag's name starts with a slash character, "/".

The most general form of an HTML element is:

content to be rendered

By not assigning attributes most start tags default their attribute values.

There are some basic types of tags: Heading of the HTML:.... Usually the title should be included in the head, for example:





Headings:

Heading1

Heading2

Heading3

Heading4

Heading5

Heading6

Paragraph Partition:

Paragraph 1

Paragraph 2

Newline:
. The difference between
and

is that 'br' breaks a line without altering the semantic structure of the page, whereas 'p' sections the page into paragraphs. Here is an example:

This
is a paragraph
with
line breaks

Annotation:



Annotations can help to understand the coding and do not display in the webpage.

There are several types of markup elements used in HTML.

* Structural markup describes the purpose of text. For example,

Golf

establishes "Golf" as a second-level heading, which would be rendered in a browser in a manner similar to the "HTML markup" title at the start of this section. Structural markup does not denote any specific rendering, but most Web browsers have standardized default styles for element formatting. Text may be further styled with Cascading Style Sheets (CSS).
* Presentational markup describes the appearance of the text, regardless of its function. For example boldface indicates that visual output devices should render "boldface" in bold text, but gives no indication what devices which are unable to do this (such as aural devices that read the text aloud) should do. In the case of both bold and italic, there are elements which usually have an equivalent visual rendering but are more semantic in nature, namely strong emphasis and emphasis respectively. It is easier to see how an aural user agent should interpret the latter two elements. However, they are not equivalent to their presentational counterparts: it would be undesirable for a screen-reader to emphasize the name of a book, for instance, but on a screen such a name would be italicized. Most presentational markup elements have become deprecated under the HTML 4.0 specification, in favor of CSS based style design.
* Hypertext markup makes parts of a document into links to other documents. HTML up through version XHTML 1.1 requires the use of an anchor element to create a hyperlink in the flow of text: Wikipedia. In addition, the href attribute must be set to a valid URL. For example, the HTML markup, Wikipedia, will render the word "Wikipedia" as a hyperlink. An example to render an image as a hyperlink is: .

[edit] Attributes

Most of the attributes of an element are name-value pairs, separated by "=", and written within the start tag of an element, after the element's name. The value may be enclosed in single or double quotes, although values consisting of certain characters can be left unquoted in HTML (but not XHTML).[33][34] Leaving attribute values unquoted is considered unsafe.[35] In contrast with name-value pair attributes, there are some attributes that affect the element simply by their presence in the start tag of the element[5] (like the ismap attribute for the img element[36]).

Most elements can take any of several common attributes:

* The id attribute provides a document-wide unique identifier for an element. This can be used by stylesheets to provide presentational properties, by browsers to focus attention on the specific element, or by scripts to alter the contents or presentation of an element. Appended to the URL of the page, it provides a globally-unique identifier for an element; typically a sub-section of the page. For example, the ID "Attributes" in http://en.wikipedia.org/wiki/HTML#Attributes
* The class attribute provides a way of classifying similar elements. This can be used for semantic or presentation purposes. Semantically, for example, classes are used in microformats. Presentationally, for example, an HTML document might use the designation class="notation" to indicate that all elements with this class value are subordinate to the main text of the document. Such elements might be gathered together and presented as footnotes on a page instead of appearing in the place where they occur in the HTML source.
* An author may use the style non-attributal codes presentational properties to a particular element. It is considered better practice to use an element’s id or class attributes to select the element with a stylesheet, though sometimes this can be too cumbersome for a simple and specific or ad hoc application of styled properties.
* The title attribute is used to attach subtextual explanation to an element. In most browsers this attribute is displayed as what is often referred to as a tooltip.

The abbreviation element, abbr, can be used to demonstrate these various attributes:

HTML

This example displays as HTML; in most browsers, pointing the cursor at the abbreviation should display the title text "Hypertext Markup Language."

Most elements also take the language-related attributes lang and dir.
[edit] Character and entity references
See also: List of XML and HTML character entity references

As of version 4.0, HTML defines a set of 252 character entity references and a set of 1,114,050 numeric character references, both of which allow individual characters to be written via simple markup, rather than literally. A literal character and its markup counterpart are considered equivalent and are rendered identically.

The ability to "escape" characters in this way allows for the characters < and & (when written as < and &, respectively) to be interpreted as character data, rather than markup. For example, a literal < normally indicates the start of a tag, and & normally indicates the start of a character entity reference or numeric character reference; writing it as & or & or & allows & to be included in the content of elements or the values of attributes. The double-quote character ("), when used to quote an attribute value, must also be escaped as " or " or " when it appears within the attribute value itself. The single-quote character ('), when used to quote an attribute value, must also be escaped as ' or ' (should NOT be escaped as ' except in XHTML documents) when it appears within the attribute value itself. However, since document authors often overlook the need to escape these characters, browsers tend to be very forgiving, treating them as markup only when subsequent text appears to confirm that intent.

Escaping also allows for characters that are not easily typed or that aren't even available in the document's character encoding to be represented within the element and attribute content. For example, the acute-accented e (é), a character typically found only on Western European keyboards, can be written in any HTML document as the entity reference é or as the numeric references é or é. The characters comprising those references (that is, the &, the ;, the letters in eacute, and so on) are available on all keyboards and are supported in all character encodings, whereas the literal é is not.
[edit] Data types

HTML defines several data types for element content, such as script data and stylesheet data, and a plethora of types for attribute values, including IDs, names, URIs, numbers, units of length, languages, media descriptors, colors, character encodings, dates and times, and so on. All of these data types are specializations of character data.
[edit] Document type declaration

HTML documents are required to start with a Document Type Declaration (informally, a "doctype"). In browsers, the function of the doctype is to indicate the rendering mode—particularly to avoid quirks mode.

The original purpose of the doctype was to enable parsing and validation of HTML documents by SGML tools based on the Document Type Definition (DTD). The DTD to which the DOCTYPE refers contains machine-readable grammar specifying the permitted and prohibited content for a document conforming to such a DTD. Browsers, on the other hand, do not implement HTML as an application of SGML and by consequence do not read the DTD. HTML 5 does not define a DTD, because of the technology's inherent limitations, so in HTML 5 the doctype declaration, , does not refer to a DTD.

An example of an HTML 4 doctype is



This declaration references the DTD for the Strict version of HTML 4.01, which does not include presentational elements like font, leaving formatting to Cascading Style Sheets and the span and div element. SGML-based validators read the DTD in order to properly parse the document and to perform validation. In modern browsers, this doctype activates standards mode as opposed to quirks mode.

In addition, HTML 4.01 provides Transitional and Frameset DTDs, as explained below.
[edit] Semantic HTML
Main article: Semantic HTML

Semantic HTML is a way of writing HTML that emphasizes the meaning of the encoded information over its presentation (look). HTML has included semantic markup from its inception,[37] but has also included presentational markup such as , and tags. There are also the semantically neutral span and div tags. Since the late 1990s when Cascading Style Sheets were beginning to work in most browsers, web authors have been encouraged to avoid the use of presentational HTML markup with a view to the separation of presentation and content.[38]

In a 2001 discussion of the Semantic Web, Tim Berners-Lee and others gave examples of ways in which intelligent software 'agents' may one day automatically trawl the Web and find, filter and correlate previously unrelated, published facts for the benefit of human users.[39] Such agents are not commonplace even now, but some of the ideas of Web 2.0, mashups and price comparison websites may be coming close. The main difference between these web application hybrids and Berners-Lee's semantic agents lies in the fact that the current aggregation and hybridisation of information is usually designed in by web developers, who already know the web locations and the API semantics of the specific data they wish to mash, compare and combine.

An important type of web agent that does trawl and read web pages automatically, without prior knowledge of what it might find, is the Web crawler or search-engine spider. These software agents are dependent on the semantic clarity of web pages they find as they use various techniques and algorithms to read and index millions of web pages a day and provide web users with search facilities without which the World Wide Web would be only a fraction of its current usefulness.

In order for search-engine spiders to be able to rate the significance of pieces of text they find in HTML documents, and also for those creating mashups and other hybrids, as well as for more automated agents as they are developed, the semantic structures that exist in HTML need to be widely and uniformly applied to bring out the meaning of published text.[40]

Presentational markup tags are deprecated in current HTML and XHTML recommendations and are illegal in HTML 5.

Good semantic HTML also improves the accessibility of web documents (see also Web Content Accessibility Guidelines). For example, when a screen reader or audio browser can correctly ascertain the structure of a document, it will not waste the visually impaired user's time by reading out repeated or irrelevant information when it has been marked up correctly.
[edit] Delivery

HTML documents can be delivered by the same means as any other computer file; however, they are most often delivered either by HTTP from a Web server or by e-mail.
[edit] HTTP

The World Wide Web is composed primarily of HTML documents transmitted from Web servers to Web browsers using the Hypertext Transfer Protocol (HTTP). However, HTTP is used to serve images, sound, and other content in addition to HTML. To allow the Web browser to know how to handle each document it receives, other information is transmitted along with the document. This meta data usually includes the MIME type (e.g. text/html or application/xhtml+xml) and the character encoding (see Character encoding in HTML).

In modern browsers, the MIME type that is sent with the HTML document may affect how the document is initially interpreted. A document sent with the XHTML MIME type is expected to be well-formed XML, and syntax errors may cause the browser to fail to render it. The same document sent with the HTML MIME type might be displayed successfully, since some browsers are more lenient with HTML.

The W3C recommendations state that XHTML 1.0 documents that follow guidelines set forth in the recommendation's Appendix C may be labeled with either MIME Type.[41] The current XHTML 1.1 Working Draft also states that XHTML 1.1 documents should[42] be labeled with either MIME type.[43]
[edit] HTML e-mail
Main article: HTML e-mail

Most graphical e-mail clients allow the use of a subset of HTML (often ill-defined) to provide formatting and semantic markup not available with plain text. This may include typographic information like coloured headings, emphasized and quoted text, inline images and diagrams. Many such clients include both a GUI editor for composing HTML e-mail messages and a rendering engine for displaying them. Use of HTML in e-mail is controversial because of compatibility issues, because it can help disguise phishing attacks, because it can confuse spam filters and because the message size is larger than plain text.
[edit] Naming conventions

The most common filename extension for files containing HTML is .html. A common abbreviation of this is .htm, which originated because some early operating systems and file systems, such as DOS and FAT, limited file extensions to three letters.
[edit] HTML Application
Main article: HTML Application

An HTML Application (HTA; file extension ".hta") is a Microsoft Windows application that uses HTML and Dynamic HTML in a browser to provide the application's graphical interface. A regular HTML file is confined to the security model of the web browser, communicating only to web servers and manipulating only webpage objects and site cookies. An HTA runs as a fully trusted application and therefore has more privileges, like creation/editing/removal of files and Windows Registry entries. Because they operate outside the browser's security model, HTAs cannot be executed via HTTP, but must be downloaded (just like an EXE file) and executed from local file system.
[edit] Current variations

Since its inception, HTML and its associated protocols gained acceptance relatively quickly. However, no clear standards existed in the early years of the language. Though its creators originally conceived of HTML as a semantic language devoid of presentation details[5], practical uses pushed many presentational elements and attributes into the language, driven largely by the various browser vendors. The latest standards surrounding HTML reflect efforts to overcome the sometimes chaotic development of the language[6] and to create a rational foundation for building both meaningful and well-presented documents. To return HTML to its role as a semantic language, the W3C has developed style languages such as CSS and XSL to shoulder the burden of presentation. In conjunction, the HTML specification has slowly reined in the presentational elements.

There are two axes differentiating various variations of HTML as currently specified: SGML-based HTML versus XML-based HTML (referred to as XHTML) on one axis, and strict versus transitional (loose) versus frameset on the other axis.
[edit] SGML-based versus XML-based HTML

One difference in the latest HTML specifications lies in the distinction between the SGML-based specification and the XML-based specification. The XML-based specification is usually called XHTML to distinguish it clearly from the more traditional definition; however, the root element name continues to be 'html' even in the XHTML-specified HTML. The W3C intended XHTML 1.0 to be identical to HTML 4.01 except where limitations of XML over the more complex SGML require workarounds. Because XHTML and HTML are closely related, they are sometimes documented in parallel. In such circumstances, some authors conflate the two names as (X)HTML or X(HTML).

Like HTML 4.01, XHTML 1.0 has three sub-specifications: strict, loose, and frameset.

Aside from the different opening declarations for a document, the differences between an HTML 4.01 and XHTML 1.0 document—in each of the corresponding DTDs—are largely syntactic. The underlying syntax of HTML allows many shortcuts that XHTML does not, such as elements with optional opening or closing tags, and even EMPTY elements which must not have an end tag. By contrast, XHTML requires all elements to have an opening tag or a closing tag. XHTML, however, also introduces a new shortcut: an XHTML tag may be opened and closed within the same tag, by including a slash before the end of the tag like this:
. The introduction of this shorthand, which is not used in the SGML declaration for HTML 4.01, may confuse earlier software unfamiliar with this new convention. A fix for this is to include a space before closing the tag, as such:
.[44]

To understand the subtle differences between HTML and XHTML, consider the transformation of a valid and well-formed XHTML 1.0 document that adheres to Appendix C (see below) into a valid HTML 4.01 document. To make this translation requires the following steps:

1. The language for an element should be specified with a lang attribute rather than the XHTML xml:lang attribute. XHTML uses XML's built in language-defining functionality attribute.
2. Remove the XML namespace (xmlns=URI). HTML has no facilities for namespaces.
3. Change the document type declaration from XHTML 1.0 to HTML 4.01. (see DTD section for further explanation).
4. If present, remove the XML declaration. (Typically this is: ).
5. Ensure that the document’s MIME type is set to text/html. For both HTML and XHTML, this comes from the HTTP Content-Type header sent by the server.
6. Change the XML empty-element syntax to an HTML style empty element (
to
).

Those are the main changes necessary to translate a document from XHTML 1.0 to HTML 4.01. To translate from HTML to XHTML would also require the addition of any omitted opening or closing tags. Whether coding in HTML or XHTML it may just be best to always include the optional tags within an HTML document rather than remembering which tags can be omitted.

A well-formed XHTML document adheres to all the syntax requirements of XML. A valid document adheres to the content specification for XHTML, which describes the document structure.

The W3C recommends several conventions to ensure an easy migration between HTML and XHTML (see HTML Compatibility Guidelines). The following steps can be applied to XHTML 1.0 documents only:

* Include both xml:lang and lang attributes on any elements assigning language.
* Use the empty-element syntax only for elements specified as empty in HTML.
* Include an extra space in empty-element tags: for example
instead of
.
* Include explicit close tags for elements that permit content but are left empty (for example,

, not

).
* Omit the XML declaration.

By carefully following the W3C’s compatibility guidelines, a user agent should be able to interpret the document equally as HTML or XHTML. For documents that are XHTML 1.0 and have been made compatible in this way, the W3C permits them to be served either as HTML (with a text/html MIME type), or as XHTML (with an application/xhtml+xml or application/xml MIME type). When delivered as XHTML, browsers should use an XML parser, which adheres strictly to the XML specifications for parsing the document's contents.
[edit] Transitional versus strict

HTML 4 defined three different versions of the language: Strict, Transitional (once called Loose), and Frameset. The Strict version is intended for new documents and is considered best practice, while the Transitional and Frameset versions were developed to make it easier to transition documents that conformed to older HTML specification or didn't conform to any specification to a version of HTML 4. The Transitional and Frameset versions allow for presentational markup, which is omitted in the Strict version. Instead, cascading style sheets are encouraged to improve the presentation of HTML documents.

Because XHTML 1 only defines an XML syntax for the language defined by HTML 4, the same differences apply to XHTML 1 as well.

The Transitional version allows the following parts of the vocabulary, which are not included in the Strict version:

* A looser content model
o Inline elements and plain text are allowed directly in: body, blockquote, form, noscript and noframes
* Presentation related elements
o underline (u)
o strike-through (s)
o center
o font
o basefont
* Presentation related attributes
o background and bgcolor attributes for body element.
o align attribute on div, form, paragraph (p), and heading (h1...h6) elements
o align, noshade, size, and width attributes on hr element
o align, border, vspace, and hspace attributes on img and object elements
o align attribute on legend and caption elements
o align and bgcolor on table element
o nowrap, bgcolor, width, height on td and th elements
o bgcolor attribute on tr element
o clear attribute on br element
o compact attribute on dl, dir and menu elements
o type, compact, and start attributes on ol and ul elements
o type and value attributes on li element
o width attribute on pre element
* Additional elements in Transitional specification
o menu list (no substitute, though unordered list is recommended)
o dir list (no substitute, though unordered list is recommended)
o isindex (element requires server-side support and is typically added to documents server-side, form and input elements can be used as a substitute)
o applet (deprecated in favor of object element)
* The language attribute on script element (redundant with the type attribute).
* Frame related entities
o iframe
o noframes
o target attribute on anchor, client-side image-map (imagemap), link, form, and base elements

The Frameset version includes everything in the Transitional version, as well as the frameset element (used instead of body) and the frame element.
[edit] Frameset versus transitional

In addition to the above transitional differences, the frameset specifications (whether XHTML 1.0 or HTML 4.01) specifies a different content model, with frameset replacing body, containing frame elements, and optionally noframes, with a body.
[edit] Summary of specification versions

As this list demonstrates, the loose versions of the specification are maintained for legacy support. However, contrary to popular misconceptions, the move to XHTML does not imply a removal of this legacy support. Rather the X in XML stands for extensible and the W3C is modularizing the entire specification and opening it up to independent extensions. The primary achievement in the move from XHTML 1.0 to XHTML 1.1 is the modularization of the entire specification. The strict version of HTML is deployed in XHTML 1.1 through a set of modular extensions to the base XHTML 1.1 specification. Likewise someone looking for the loose (transitional) or frameset specifications will find similar extended XHTML 1.1 support (much of it is contained in the legacy or frame modules). The modularization also allows for separate features to develop on their own timetable. So for example XHTML 1.1 will allow quicker migration to emerging XML standards such as MathML (a presentational and semantic math language based on XML) and XForms—a new highly advanced web-form technology to replace the existing HTML forms.

In summary, the HTML 4.01 specification primarily reined in all the various HTML implementations into a single clear written specification based on SGML. XHTML 1.0, ported this specification, as is, to the new XML defined specification. Next, XHTML 1.1 takes advantage of the extensible nature of XML and modularizes the whole specification. XHTML 2.0 will be the first step in adding new features to the specification in a standards-body-based approach.
[edit] Hypertext features not in HTML

HTML lacks some of the features found in earlier hypertext systems, such as typed links, source tracking, fat links, and more.[45] Even some hypertext features that were in early versions of HTML have been ignored by most popular web browsers until recently, such as the link element and in-browser Web page editing.

Sometimes Web services or browser manufacturers remedy these shortcomings. For instance, wikis and content management systems allow surfers to edit the Web pages they visit.
[edit] WYSIWYG Editors

There are some WYSIWYG editors in which the user lays out everything as it is to appear in the HTML document using a graphical user interface, and the editor renders this as an HTML document, no longer requiring the author to have extensive knowledge of HTML.

Web page editing is clearly dominated by the WYSIWYG editing model. But, this model has been criticized,[46][47] primarily because of the low quality of the generated code, and there are voices advocating a change to the WYSIWYM model.

WYSIWYG editors remains a controversial topic because of their perceived flaws such as:

* Relying mainly on layout as opposed to meaning, often using markup that does not convey the intended meaning but simply copies the layout.[48]
* Often producing extremely verbose and redundant code that fails to make use of the cascading nature of HTML and CSS.
* Often producing ingrammatal markup often called tag soup.
* As a great deal of information of HTML documents is not in the layout, the model has been criticized for its 'what you see is all you get'-nature. [49]

Nevertheless, since WYSIWYG editors offer convenience over hand-coded pages as well as not requiring the author to know the finer details of HTML, they still dominate web authoring.
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