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 £2000, and the market rate of
discount is 4 per cent. for three months' bills, the present value of
the bill is obviously £1980. 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 assisting
trade, and could not live without trade, and that trade if deprived of
their services would be gravely inconvenienced and could only resume its
present activity by making a new machinery more or less on the same
lines. The bill whose imaginary history has been traced, came into being