As an illustration let us take a clipping from the Chicago Tribune, quoting the rates for "foreign exchange." Under the heading "Foreign Exchange Market" it starts in by saying: "Foreign exchange closed steady at the following rates." "Steady" means a demand and prices likely to remain as they are "Firm" would mean good demand, with prices tending upward; "strong," a large demand, with prices certain to go higher. "Dull" or "weak" would, of course, mean very little or no demand, with prices tending lower.

Under the head of "selling" rates it gives:

"Selling rates," in this case, mean the prices that were charged customers who wished to remit abroad.

The first item, "cable transfers," is where amount of money desired to be paid abroad is deposited here, and the bank or concern with which you are transacting the business cables its correspondent abroad to pay the amount to the person at the address you designate. Of course, it would be necessary for those making such transfers to have funds or credit abroad for such purpose. When it is desired to have money paid at interior places, the cablegram will be sent to the nearest city at which the bank or concern here has funds, and it will be forwarded by mail there, causing a delay of perhaps only a few hours. Ordinarily, within one or two hours from the time you deposit the money here it will be paid to the person abroad whom you designate.

The quotations for checks London, checks Paris, and checks Berlin are the rates at which they would have sold you a demand check or draft payable at those particular cities. If you wanted a check payable at some other point in Great Britain, France, or Germany, they undoubtedly would have charged you a higher rate, since their balances are kept only at principal trade centers, and their arrangements for payment of their paper at interior or other points are that the bank correspondents there will honor their paper and reimburse themselves by drawing upon the trade centers for the amount plus their commission for cashing, hence adding to the cost of performing the service.

The next item is "checks Holland 40 1/4." This means they would charge for a check or draft on any point in Holland at the rate of 40% cents per gulden or guilder, the money of that country .

Following the above there appears in our newspaper clipping the heading "Buying Rates," which means the rates at which the banks purchased the various classes of commercial paper named. The quotations are as follows:

The first quotation, 60 days London Bankers 4.84 1/4," is for drafts drawn by bankers payable sixty days after sight (meaning after acceptance abroad) against their account in a bank upon which draft is drawn. The banker issuing such draft has 60 days (if necessary) in which to place funds abroad to meet payment of this draft; therefore a bank will often sell its sixty-day draft with the belief that it will be able to purchase and place the amount abroad to meet the same before draft is due, at a lower rate than at which it sold, and thus make a profit. There are other cases where a bank will sell its sixty-day draft on the market to obtain the use of the money for that period.

The next item, "60 days London documentary 4.84 1/2" is what is known as a foreign commercial bill of exchange, which I will explain more fully later. The documents referred to are the bills of lading and the insurance certificates, representing a shipment of goods abroad. The draft is drawn payable sixty days after sight, which is the time credit extended to purchaser by the seller.

The three-day quotations mentioned on Antwerp and Hamburg are for drafts payable three days after sight. The custom of drawing drafts three days after sight on points in European countries outside of Great Britain is because no days of grace are allowed on the continent as in Great Britain, and the three days are granted to insure payment being made, and thus avoid "protest fees," which often are very exorbitant.

The sixty-day Holland bills are issued and paid under practically the same conditions as the "sixty-day London bankers" just mentioned, although drawn against commodities exported. They are what is termed "clean bills" by reason of there being no documents attached.

We may also find in our paper the following items which pertain to foreign exchange transactions: Under the head of "Money Markets of the World" it reads: "Discounts at London, 2% per cent.; Paris, 2 7-16 per cent.; Berlin, 1% per cent." Foreign discount rates mean the rate per cent. charged or allowed on drafts discounted or paid before due. These particular rates mentioned apply to drafts drawn on bankers.

Here is also another newspaper quotation "Sterling exchange - posted rates 4.88, actual rates 4.87 1/4, documentary rates 4.84." Posted, or nominal, rates are those posted daily on bulletins of leading New York dealers in exchange for use of the general public, and apply more particularly to smaller sums. Actual rates are inside terms made to brokers or large buyers for large sums. Documentary rates are for commercial bills of exchange.