egotiated at a point like Canton, but to be sure
that the exporter of the silk will get the best rate of exchange for
his drafts, the drafts must be drawn on London, the financial center of
the world. One of the chief points to the whole business of taking out
a credit, in fact, is to provide a point on which the shipper can draw
satisfactorily.

Assume now that the silk has been put aboard ship bound for the United
States, that the shipper has drawn, say, a draft for L1,000 at four
months' sight on the Guaranty Trust Co., London, and has attached
thereto the bill of lading and the insurance certificate. Taking this
draft around to his bank the shipper sells it for local currency at the
then prevailing rate for four months' sight drafts drawn on London. The
fact that it is drawn at four months' sight means that he will get a
lower rate of exchange for it than if it were drawn payable on demand,
but that was the arrangement with the buyer in New York--that the
drafts against the silk were to have four months to run.

Having sold this draft to his bank in Canton and received local
currency therefor, the shipper of the silk is out of the transaction.
He has shipped the goods and he has his money. What becomes of the
draft he drew is the next important point to consider. But so far as
the exporter is concerned, the transaction is closed, and he is ready
for the next operation.

The silk has now been set afloat for New York, and the draft purchased
by the Canton banker is on its way to London for acceptance. Long
before the silk gets to New York the draft will have reached London and
will have been presented to the cashier of the Guaranty Trust Co.,
there, who, of course, was apprised of the credit opened on his bank at
the time such credit was originally issued in New York. Examining the
draft and the documents carefully to see that they conform with the
terms of the credit, the cashier of the Guaranty Trust Co., London,
formally "accepts" the draft, marking it payable four months from the
date it was presented to him. The accepted draft he hands back to the
messenger of the bank who brought it in; the bill of lading, insurance
certificate, and invoice he keeps. By the next mail steamer he
dispatches these papers to the banker in New York who issued the
credit.

For the time being, at least, that is to say, till the accepted draft
comes due, the London banker is out of the transaction, which is now
narrowed down to the