rs when the bulk of the
new issues are brought out in the Spring and other years when the Fall
season sees most of the new financing. But whatever the time of the
year, one thing is certain--the issue of any amount of American bonds
with Europe participating largely means a full supply of foreign
exchange not only during the time the issues are actually being brought
out, but for long afterward.

There used to be a saying among exchange dealers that cotton exports
make exchange faster than anything, but nowadays bond sales abroad have
come to take first place. For foreign participation in syndicates
formed to underwrite new issues almost invariably means the drawing of
bills representing the full amount of the foreign participation. A
syndicate is formed, for instance, to take off the hands of the X Y Z
railroad $30,000,000 of new bonds, the arrangement being that the
railroad is to receive its money at once and that the syndicate is to
take its own time about working off the bonds. Half the amount, say,
has been allotted to foreign houses. Immediately, the drawing of
L3,000,000, or francs 75,000,000, as the case may be, begins. The
foreign houses have to raise the money, and in nine cases out of ten,
their way of doing it is to arrange with some representative abroad to
let them draw long drafts, against the deposit of securities on this
side. These drafts, in pounds or francs, at sixty to ninety days'
sight, they can sell in the exchange market for dollars, thus securing
the money they have agreed to turn over to the railroad. In the
meantime, during the life of the drafts they have set afloat and before
they come due and have to be paid off, the bankers here can go about
selling the bonds and getting back their money. Perhaps before the
sixty or ninety days, as the case may be, are over, the syndicate may
have sold out all its bonds and its foreign members have been put in a
position where they can pay off all the drafts they set afloat
originally in order to raise the money.

Very often, however, it will happen that on account of one reason or
another, sixty days pass or ninety days pass without the syndicate
having been able to dispose of its bonds. In that case the long bills
drawn on the foreign bankers have to be "renewed"--that being a process
for which ample provision has, of course, been made. In a succeeding
chapter, full description of how long bills of exchange coming due are
renewed will be made. Just h