r any given set of conditions is extremely
doubtful.

As to the profit on business of this kind it can be said that the
average, where the best bills are used, runs not much over twenty
points (one-fifth of a cent per pound sterling). From that, of course,
profits actually made run up as high as one cent or even two cents per
pound, according to the amount of risk involved. The buying of cheap
bills is, however, a most precarious operation. One single mistake, and
the whole profit of months may be completely wiped out. The proposition
is a good deal like lending money on insecure collateral, or like
lending to doubtful firms. There are banking houses which do it, have
been doing it for years, and by reason of an intuitive feeling when
there is trouble ahead have been able to avoid heavy losses. Such
business, however, can hardly be called high-class banking practice.

4. _The Operation of Making Foreign Loans_

In its influence upon the other markets, there is perhaps no more
important phase of foreign exchange than the making of foreign loans in
the American market. How great is the amount of foreign capital
continually loaned out in this country has been several times suggested
in previous pages. The mechanics of these foreign loaning operations,
the way in which the money is transferred to this side, etc., will now
be taken up.

To begin at the very beginning, consider how favorable a field is the
American market for the employment of Europe's spare banking capital.
Almost invariably loaning rates in New York are higher than they are in
London or Paris. This is due, perhaps, to the fact that industry here
runs on at a much faster pace than in England or France, or it may be
due to the fact that we are a newer country, that there is no such
accumulated fund of capital here as there is abroad. Such a hypothesis
for our own higher interest rates would seem to be supported by the
fact that in Germany, too, interest is consistently on a higher level
than in London or Paris, Germany, like ourselves, being a vigorous
industrial nation without any very great accumulated fund of capital
saved by the people. But whatever the reason, the fact remains that in
New York money rates are generally on so much more attractive a basis
than they are abroad that there is practically never a time when there
are not hundreds of millions of dollars of English and French money
loaned out in this market.

To go back no further than th