never even heard of a mint par of exchange.
All they know is, that when exports are running large and bills in
great quantity are being offered, bankers are willing to pay them only
low rates--$4.83 or $4.84, perhaps, for the commercial bills they want
to sell for dollars. Conversely, when exports are running light and
bills drawn against shipments are scarce, bankers may be willing to pay
4.87 or 4.88 for them.

For a clear understanding of the mechanics of the exchange market there
is necessary a clear understanding of what the various forms of
obligations are which bring foreign exchange into existence.
Practically all bills originate from one of the following causes:

1. Merchandise has been shipped and the shipper draws his draft on
the buyer or on a bank abroad designated by him.

2. Securities have been sold abroad and the seller is drawing on
the buyer for the purchase price.

3. Foreign money is being loaned in this market, the operation
necessitating the drawing of drafts on the lender.

4. Finance-bills are being drawn, _i.e._, a banker abroad is
allowing a banker here to draw on him in pounds sterling at 60 or
90 days' sight in order that the drawer of the drafts may sell them
(for dollars) and use the proceeds until the drafts come due and
have to be paid.

1. Looking at these sources of supply in the order in which they are
given, it is apparent, first, what a vast amount of foreign exchange
originates from the direct export of merchandise from this country.
Exports for the period given below have been as follows:

1913 $2,465,884,000
1912 2,204,322,000
1911 2,049,320,000
1910 1,744,984,000
1909 1,663,011,000

Not all of this merchandise is drawn against; in some cases the buyer
abroad chooses rather to secure a dollar draft on some American bank
and to send that in payment. But in the vast majority of cases the
regular course is followed and the seller here draws on the buyer
there.

There are times, therefore, when exchange originating from this source
is much more plentiful than at others. During the last quarter of each
year, for instance, when the cereal and cotton crop exports are at
their height, exchange comes flooding into the New York market from all
over the country, literally by the hundreds of millions of dollars. The
natural effect is to depress rates--sometimes to a point where it
becom