y here but on the other side before any reputable
London bank can be induced to "accept" its finance paper.

The ability to draw finance-bills of this kind often puts a house
disposed to take chances with the movement of the exchange market into
line for very considerable profit possibilities. Suppose, for instance,
that the manager of a house here figures that there is going to be a
sharp break in foreign exchange. He, therefore, sells a line of
ninety-day bills, putting himself technically short of the exchange
market and banking on the chance of being able to buy in his "cover"
cheaply when it comes time for him to cover. In the meantime he has the
use of the money he derived from the sale of the "nineties" to do with
as he pleases, and if he has figured the market aright, it may not cost
him any more per pound to buy his "cover" than he realized from the
sale of the long bills. In which case he would have had the use of the
money for the whole three months practically free of interest.

It is plain speculating in exchange--there is no getting away from it,
and yet this practice of selling finance-bills gives such an
opportunity to the exchange manager shrewd enough to read the situation
aright to make money, that many of the big houses go in for it to a
large extent. During the summer, for instance, if the outlook is for
big crops, the situation is apt to commend itself to this kind of
operation. Money in the summer months is apt to be low and exchange
high, affording a good basis on which to sell exchange. Then, if the
expected crops materialize, large amounts of exchange drawn against
exports will come into the market, forcing down rates and giving the
operator who has previously sold his long bills an excellent chance to
cover them profitably as they come due.

About the best example of how exchange managers can be deceived in
their forecasts is afforded by the movement of exchange during the
summer and fall of 1909. Impelled thereto by the brilliant crop
prospects of early summer, foreign exchange houses in New York drew and
sold finance-bills in enormous volume. The corn crop was to run over
three billion bushels, affording an unprecedented exportable
surplus--wheat and cotton were both to show record-breaking yields. But
instead of these promises being fulfilled, wheat and corn showed only
average yields, while the cotton crop turned out decidedly short. The
expected flood of exchange never materialized. On