balance.

As to the rate of 4.84 received by the shipper, it is to be noted that
had the bill been drawn at less than sixty days' sight, he would have
received more dollars for it, while if it had been drawn at more than
sixty days' sight, he would have received less for it. The longer the
banker who takes the draft off the shipper's hands has to wait until he
can get his money back on it, the lower, naturally, the rate of
exchange he is willing to pay. On the same day that demand drafts are
selling at 4.87, sixty-day drafts may be selling at 4.84 and ninety-day
drafts at 4.83.

Assume, in this particular case, that the draft has been taken off the
shipper's hands by some foreign exchange banker in New York. By the
very first steamer the latter will forward it to his banking
correspondent abroad, with instructions to present it at once to the
parties on whom it is drawn, in order that they may mark it
"accepted--payable such-and-such-a-date." After that the bill is a
double obligation of the drawer and the drawee, and may be discounted
in the open market, for cash.

Just here it is necessary to digress and state that documentary
commercial bills are of two kinds--"acceptance" bills and "payment"
bills. In the case of the first-named, the documents are delivered to
the party on whom the bill is drawn as soon as he "accepts" the bill,
which puts him in a position to get possession of the merchandise at
once. In the case of a "payment" bill, the credit of the man on whom it
is drawn is not good enough to entitle him to such a privilege, and the
only way he can get actual possession of the goods is to actually pay
the draft under a rebate-of-interest arrangement. All bills drawn on
banks are naturally "acceptance" bills; and being discountable and thus
immediately convertible into cash abroad, command a better rate of
exchange in the New York market than "payment" bills, which may be
allowed to run all the way to maturity before a single pound sterling
is paid on them.

Except in the case of the shipment of perishable merchandise--grain
shipped in bulk, for instance. In that case the buyer on the other side
cannot afford to let the draft run, because the merchandise would
spoil. He is simply forced to pay it under rebate, in order to get
possession of the grain. And the rebate being always less than the
discount rate, less pounds sterling come off the face of the bill in
the process of _rebating_ than of _discounting_.