of the
two bills are radically different. The three main kinds of bankers'
long bills will thus be taken up in the following order:

A. _Bills Drawn in the Regular Course of Business_

Such is the nature of foreign exchange business that bankers engaged in
it are continually drawing their sixty and ninety days' sight bills in
response to their own and their customers' needs. One example which
might be cited is that of the importer who has a payment to make on the
other side, sixty days from now, but who, having the money on hand,
wants to make it at once. Under some circumstances such an importer
might remit a demand draft on the basis of receiving a rebate of
interest for the unexpired sixty days, but more likely he would go to a
banker and buy from him a sixty days' sight draft for the exact amount
of pounds he owed. The cost of such a draft--which would mature at the
time the debt became due--would be less than the cost of a demand
draft, the importer getting his rebate of interest out of the cheaper
price he pays for the pounds he needs. Prepayments of this sort are
responsible every day for very large drawings of bankers' long bills.

B. _Long Bills Issued in the Operation of Lending Foreign Money_

Bills of this kind represent by far the greater proportion of bankers'
long bills sold in the exchange market. European bankers keep an
enormous amount of floating capital loaned out in this market, in the
making and renewing of which loans long bills are created as follows:

A banker on the other side decides to loan out, say, L100,000 in the
New York market. Arrangements having been made, he cables his New York
representative to draw ninety days' sight drafts on him for L100,000,
the proceeds of which drafts are then loaned out for account of the
foreign house. The matter of collateral, risk of exchange and, indeed,
all the other detail, will be fully described in the succeeding
chapters on how bankers make money out of exchange. For the time being
it is merely necessary to note that every time a loan of foreign
capital is made here--and there are days when millions of pounds are so
loaned out--bankers' long bills for the full amount of the loans are
created and find their way into the exchange market.

C. _Bankers' Long Bills Drawn for the Purpose of Raising Money_

Finance bills constitute the third kind of bankers' long exchange. In
this case, again, detailed discussion must be put off until the chapte