to reply to a letter and inclose his cheque.
It is really more convenient, and safer, too, for there is some risk
in sending personal cheques through the mail. There are some houses
that make all their payments by cheques, while there are others which
prefer to have their creditors at a distance draw on them for the
amounts due.

If a business man who has been accustomed to honour drafts continues
for a period to dishonour them, the banks through which the drafts
pass naturally conclude that he is unable to meet his liabilities.

Some houses deposit their drafts for collection in their home banks,
while others have a custom of sending them direct to some bank in or
near the place where the debtor resides. If the place is a very small
one the collection is sometimes made through one of the express
companies.

When goods are sold for distinct periods of credit, and it is
generally understood that maturing accounts are subject to sight
drafts, there should be no need of notifying the debtor in advance.
Some houses, however, make a general custom of sending notices ten
days in advance, stating that a draft will be drawn if cheque is not
received in the meantime.

Notice the illustrations. The protest notice at the left of Nos. 1, 2,
and 4 is intended for the bank presenting the draft for payment. The
reason for this will be fully explained in our lesson on protested
paper. (See LESSON XIII.) No. 2 shows an accepted draft payable to the
order of a bank in the city upon which it is drawn. No. 1 is payable
to the order of a bank in the city of the drawer. No. 3 is a sight
draft payable to the order of a bank and accepted payable at a bank.
No. 4 is a time draft payable to "_ourselves_"--that is, the
Pennsylvania Steel Company.

Drafts are often discounted at banks before acceptance where the
credit of the drawer is good. In such cases the drafts which are
dishonoured are charged up against the drawer's account.

X. FOREIGN EXCHANGE

It is quite in order that we should follow lessons on the
clearing-house and commercial drafts with a lesson on foreign
exchange.

We learned in the last lesson that commercial drafts are made use of
to facilitate the collection of accounts. They are simply formal
demands for the payment of legitimate debts. When these formal demands
are made upon foreign debtors they are called bills of exchange; and
the process of buying and selling these drafts, the drafts themselves,
and the fluct