ondon or Paris, begins to ease decidedly. Large receipts of
gold from the mines, a bettering political outlook--these or many other
causes may bring it about that money in London, for instance, after a
period of high rates, may ease off faster than in Berlin or Hamburg. As
a result, American bankers having large balances in London and finding
it difficult to employ them profitably there, any longer, either
withdraw them entirely or have the money transferred to some other
point. In either case the operation will result in depressing the rate
of exchange on London, for the American banker will either draw on
London himself or, if he wants to transfer the money to Berlin or
Hamburg, will instruct the German bankers by cable to draw for his
account on London. In whatever way it is accomplished, the withdrawal
of capital from any banking point tends to lower the rate of foreign
exchange on that point.

These are the main influences bearing on the fluctuation of exchange.
Needless to say they are not exerted all one way, or one at a time, as
set forth. The international money markets are a most decidedly complex
proposition, and there is literally never a time when several
influences tending to put rates up are not conflicting with several
influences tending to put rates down. The actual movement of the rate
represents the relative strength of the two sets of influences. To be
able to "size up" the influences present and to gauge what movement of
rates they will result in, is an operation requiring, first, knowledge,
then judgment. The former qualification can perhaps be derived, in
small degree, from study of the foregoing pages. The latter is a matter
of mental calibre and experience.

CHAPTER IV

THE VARIOUS KINDS OF EXCHANGE

Before taking up the question of the activities of the foreign exchange
department and the question of how bankers make money dealing in
exchange, it may be well to fix in mind clearly what the various forms
of foreign exchange are. Following is a description of the most
important classes of bills bought and sold in the New York market:

1. _Commercial Long Bills_

[Illustration: Form of Commercial Long Bill]

Drafts drawn by shippers of merchandise upon buyers abroad, or upon the
banking representatives of the buyers abroad, at thirty days' sight or
more. The drafts may be accompanied by shipping documents or may be
"clean." The former kind of bill making up the greater part of the