Foreign exchange bankers keep balances in several financial centers against which they draw and sell demand drafts or " checks," as they are commonly called. As the name indicates, they are payable on presentation and demand. "Cable exchange," or "Cables," differs from sight drafts only in that the foreign banker who is to pay out the money is instructed to do so by cablegram instead of by letter. Generally, foreign exchange bankers who sell cables carry large balances on the other side. These balances may be accumulated by remittance of all kinds of bills, both time and demand.

Time drafts sell at a lower rate than sight bills because of the loss of interest on the amount to be paid. Cables cost more than the ordinary sight bill by at least the cost of the cablegram. "Posted rates" are the bankers' public notices of the rates of exchange. They apply to bills for small amounts and actual sales of large bills may vary considerably from these posted rates. The bills of houses enjoying high credit generally command a better price than others. The price of time bills is affected by the rates for money at the foreign center because they are remitted for acceptance and usually discounted at the prevailing rate there.

Bankers' long bills drawn at sixty and ninety days' sight may be divided into three classes: (1) long bills drawn in the regular course of business; (2) long bills issued in the operation of lending foreign money; (3) finance bills. Bankers engaged in the foreign exchange business are constantly called upon to supply customers with bills drawn at sixty and ninety days' sight. Take, for example, the case of a New York importer who has an obligation maturing in London in two months but who has the money on hand and wants to pay it now. Instead of sending demand sterling, that is, a demand draft on London, and getting a rebate of interest for the sixty days, he will more likely send a sixty days' sight draft, the cost of which will be considerably less than a demand draft.

The great proportion of bankers' long bills arise from the lending of money in foreign financial centers. Luro-pean bankers keep millions of dollars loaned out in the New York market. Bankers' long bills are created in the making and renewing of these loans and find their way into the exchange market.1