banks, and the bill brokers or discount houses
which deal in bills of exchange and constitute the discount market. Thus
we see that there is in London a highly specialized and elaborate
machinery for making and dealing in these bills, which are the currency
of international trade. Let us recapitulate the history of the bill and
see the part contributed to its career by each wheel in the machine. We
imagined a bill drawn by an Argentine seller against a cargo of wheat
shipped to an English merchant. The bill will be drawn on a London
accepting house, to whom the English merchant is liable for its due
payment. The Argentine merchant, having drawn the bill, sells it to the
Buenos Ayres branch of a South American bank, formed with English
capital, and having its head office in London. It is shipped to London,
to the head office of the South American bank, which presents it for
acceptance to the accepting house on which it is drawn, and then sells
it to a bill broker at the market rate of discount. If the bill is due
three months after sight, and is for L2000, and the market rate of
discount is 4 per cent. for three months' bills, the present value of
the bill is obviously L1980. The bill broker, either at once or later,
probably sells the bill to a bank, which holds it as an investment until
its due date, by which time the importer having sold the wheat at a
profit, pays the money required to meet the bill to his banker and the
transaction is closed. Thus by means of the bill the exporter has
received immediate payment for his wheat, the importing merchant has
been supplied with credit for three months in which to bring home his
profit, and the bank which bought the bill has provided itself with an
investment such as bankers love, because it has to be met within a short
period by a house of first-rate standing.

All this elaborate, but easily working machinery has grown up for the
service of commerce. It is true that bills of exchange are often drawn
by moneylenders abroad on moneylenders in England merely in order to
raise credit, that is to say, to borrow money by means of the London
discount market. Sometimes these credits are used for merely speculative
purposes, but in the great majority of cases they are wanted for the
furtherance of production in the borrowing country. The justification of
the English accepting houses, and bill brokers, and banks (in so far as
they engage in this business), is the fact that they are a