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610. The person who makes and signs a draft is the drawer. The person to whom it is addressed is the drawee. The drawee when he accepts the draft becomes the acceptor. The person to whom the draft is payable is the payee.

In the case described above, who is the drawer ? the drawee? the acceptor? the payee ?

611. If the payee wishes to transfer the draft to another person, he writes his own name across the back of the paper; this is called an indorsement, and the payee then becomes an indorser. The person to whom the draft is so transferred is an indorsee. If the indorsee wishes to transfer the draft to a third person, he also writes his name under that of the former indorser. He thus becomes a second indorser; and there may be a third indorser, a fourth, and so on indefinitely.

612. The person who holds the draft at any time (the payee or the last indorsee) is called the holder.

The holder looks for payment first to the acceptor, and then to the indorsers in their order. Each indorser is liable to pay the draft when the acceptor and previous indorsers have failed to do so. To avoid becoming liable, an indorser may write over his name the words “ Without recourse."

Drafts may be “at sight” or “on time”; bankers charge less for the latter than for the former, the difference in price being equivalent to a discount for the given time.

When our exports to another country, England for example, exceed in value our imports from that country, more money is due to us from the English merchants than is due to them from our merchants. The larger sum due us in England will make it easy for us to buy bills of exchange on England. They will be plenty here, and the price of them will fall. If they can be bought for less than their face, they are at a discount, or below par.

On the contrary, when the value of the goods imported from England exceeds the value of those sent to England, more money is due

to the English merchants from us than is due to us from them. The smaller sums due us in England will then make it difficult for us to buy bills of exchange on England, and the price of them will rise. If they cost more than their face, they are at a premium, or above par.

613. Bills of exchange are either foreign bills or inland bills. Foreign bills are those which are drawn or are payable in a foreign country ; and for this purpose each of the United States is foreign to the others. Inland bills are drawn and payable in the same State.

614. Examples for the Slate. 1. What is the cost in Philadelphia of a draft on San Francisco for $800 at 1% premium ?

2. What is the cost of a draft on Detroit for $ 2500 at }% premium ?

3. What is the cost of a draft on New York for $ 700 at 12 days after sight, premium }%?

4. What is the cost of a sixty days' draft on New York for $ 2000 at 2% discount?

5. I bought a bill on Chicago for $ 700 at a discount of 1%. What did I pay ?

615. ILLUSTRATIVE EXAMPLE. What is the face of a draft on New York bought in St. Louis for $ 8820, when the discount is 2%?

WRITTEN WORK.

$ 1-2% of $1 = $0.98, cost of $ 1.

$8820 - $0.98 = 9000. Ans. $ 9000.

6. What is the face of a draft that may be bought for $500 at a discount of 14%?

7. A merchant in New York bought a draft on Cincinnati at 1% premium for $275. What was the face of the draft ?

Exchange with Europe. 616. Exchange with Europe is effected chiefly through large business centres, as London, Paris, Hamburg, etc.

In computing foreign exchange, it is necessary to change the values expressed in the currency of one country to equivalent values exjessed in the currency of another country.

un page 311 of the Appendix will be found a list of the monetary units of foreign countries, with their values in United States money, as proclaimed by the Secretary of the Treasury, Jan. 1, 1886; also on sage 312, tables of English, French, and German money.

The rates of exchange between this country and the principal business centres are given from day to day in the newspapers. The following is an extract showing the exchange value of the pound sterling in United States money ; the number of francs and centimes which equal a dollar ; and the exchange value of 4 marks in cents :

We quote bankers' 60-day bills on London at $4.84 @ 4.841, and shortsight bills at $ 4.86, both in gold. On Paris, francs 5.15 per dollar for short sight, and 5.183 for 60-day bills. Gossler & Co.'s rates on Hamburg for 60-day bills are 95, and short-sight bills 95%.

In making bills on foreign countries, it is customary to write two or more of the same tenor and date, the payment of either one of which cancels the other one or two. And to provide against accident in their transmission, it is customary to send two, at least, of a set, at different times, or by different modes of conveyance.

617. Examples for the Slate. 8. What was the cost of the following bill in U. S. money, the rate of exchange being $ 4.86 ? £500.

Boston, Aug. 23, 1876. At sight of this first of Exchange, second and third unpaid, pay to Brown, Smith, Co., or order,

Five Hundred Pounds sterling, value received, and charge the same to the account of

Kidder, Peabody & Co. To Messrs. McCalmont Bros. & Co.,

3 Crown Court, London.

9. T. Van Horn, of New York, bought of R. J. Birney & Co. a set of exchange payable at sight for £1000 sterling on Brown, Shipley, & Co., of Liverpool, at $4.84. What was the cost in gold?

10. What is the cost in gold of a set of exchange on Paris for 550 francs, exchange being 5.15 per dollar ?

11. What is the cost of a 60 days' bill on Paris for 568.6 francs, exchange being 5.183 ?

12. What is the cost of a draft on Hamburg for 200‘marks when the quotation is 95 ?

13. What is the cost in New Orleans of a bill on London for £75 10 s, when exchange is there quoted at $ 4.85}? (See Appendix, page 312.)

14. When exchange is $4.86, what is the face of a bill on London which can be bought for $ 9720 ?

15. What is the face of a draft on London which can be bought for $ 1938.42, the rate of exchange being $ 4.84 ?

United States Bonds.

618. Governments and corporations sometimes borrow money, giving, as evidence of the loans, certificates or notes payable at or within some definite time, with interest at stated periods. Such certificates or notes are called bonds.

619. Bonds sometimes have certificates attached, promising the holder certain sums of interest as they become due upon the bonds. These interest certificates are called coupons.

NOTE I. When the interest is paid, the coupons are cut off by the holder and given up as receipts.

Note II. The extraordinary expenses of the government of the United States during the civil war were met in part by the sale of bonds.

620. United States coupon bonds are issued in the denominations of $ 50, $ 100, $ 500, and $ 1000. Registered

bonds are issued in the same denominations, and also in denominations of $ 5000 and $ 10000.

Bonds are usually named according to the rate of interest they bear.

621. The following is a list of the more important United States bonds not redeemed in 1886:

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Bonds are bought and sold as other stocks. Their prices from day to day are quoted in the newspapers.

622. The rules of percentage already illustrated apply to bonds.

623. Examples for the Slate.

16. When U. S. bonds are sold at 108}, what is received for eight $ 500 bonds?

17. When U. S. bonds are worth 106}, what will $ 850 in bonds cost?

18. What amount in bonds shall I receive for $ 2675 invested in U. S. 4's at 107 ?

19. What shall I pay a broker for a $ 1000 U. S. 4 % bond at 110}, and two $ 1000 U. S.:4} % bonds at 1133, with his brokerage of 4 % ?

20. How much money must I remit to a broker that he may purchase for me three U. S. bonds of $ 1000 each, the bonds selling at 109, and his commission being \ %?

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