d lending proceed in the
same manner as between domestic institutions. The chief peculiarities
of the foreign exchanges are due to the fact that different units of
value and sometimes different standards must here be reckoned with,
and that the precious metals, chiefly gold, are used in the settlement
of balances. Drafts drawn in the United States on English points, for
example, call for the payment of pounds sterling, those on French
points for francs, and those on German points for marks, while all
must be paid for in dollars.

The translation of the language of values of one country into that of
others thus involved requires the calculation of a so-called _par of
exchange_. By this is meant the relation between the weights of pure
metal contained in their respective units of value, if the countries
in question have the same standard, and the relation between the
market values of the metallic content of their units, if their
standards are different. Thus the par of exchange between this country
and England is $4.8665, since our dollar contains 23.22 grains of pure
gold and the English pound sterling 4.8665 times as many grains, or
113.0016. Our par of exchange with France is 19.294 cents, the
quotient of 4.4802, the number of grains of pure gold in the French
franc, divided by 23.22. Between China and the United States the par
of exchange is the market value in our dollars of the amount of silver
contained in the tael, the Chinese unit.

Another technical term employed in connection with the foreign
exchanges is _the gold points_. These are the points above and below
the par of exchange fixed by the addition in the one case, and the
subtraction in the other, of the cost of shipping gold between the two
places in question. They are the points between which the rates of
exchange fluctuate, or the points at which, when the rate of exchange
reaches them, gold moves between gold standard countries. Assuming
for example, that the cost of shipping gold between New York and
London is two cents per pound sterling, the gold points are 4.8865 and
4.8465, it being profitable to ship gold from New York to London when
sterling exchange reaches the former figure and to import gold from
London when it reaches the latter figure.

In the conduct of the foreign exchanges several classes of bills are
employed upon which the quotations differ, in part on account of
differences in their quality and in part on account of the interest
el