e
against remittances of commercial and bankers' long paper. Bills of the
latter class, as has been pointed out, make up the bulk of foreign
exchange traded in, and its disposal naturally is the most important
phase of foreign exchange business. For after all, all cabling,
arbitraging in exchange, drawing of finance bills, etc., is only
incidental. What the foreign exchange business really is grounded on is
the existence of commercial bills called into existence by exports of
merchandise.

There are houses doing an extensive exchange business who never buy
commercial long bills, but the operations they carry on are made
possible only by the fact that most other houses do. A foreign exchange
department which does not handle this kind of exchange is necessarily
on the "outside" of the real business--is like a bond broker who does
not carry bonds with his own money but merely trades in and out on
other people's operations.

Buying and remitting commercial long bills is, however, no pastime for
an inexperienced man. Entirely aside from the question of rate, and
profit on the exchange end of the transaction, there must be taken into
consideration the matter of the credit of the drawer and the drawee,
the salability of the merchandise specified in the bill of lading, and
a number of other important points. This question of credit, underlying
to so great a degree the whole business of buying commercial long
paper, will be considered first.

The completely equipped exchange department has at its disposal all the
machinery necessary for investigating expeditiously the standing and
financial strength of any firm whose bills are likely to be offered in
the exchange market. Such facilities are afforded by subscription to
the two leading mercantile agencies, but in addition to this, the
experienced exchange manager has at his command private sources of
information which can be applied to practically every firm engaged in
the export business. The larger banks, of course, all have a regular
credit man, one of whose chief duties nowadays is to assist in the
handling of the bank's foreign exchange business. So perfect does the
organization become after a few years of the actual transaction of a
foreign exchange business that the standing of practically any bill
taken by a broker into a bank, for sale, can be passed upon instantly.
New firms come into existence, of course, and have to be fully
investigated, but the experienced manage