l money. As in the case of foreign loans previously described, the
banker's credit and the banker's credit only is the basis of the whole
operation. The London bank never pays out any actual cash--it merely
"_accepts_" a four months' sight draft, knowing that before the draft
comes due and is presented at its wicket for payment, "cover" will have
been provided from New York. The New York banker, on the other hand,
merely sends over on account of the maturing draft in London the money
he receives from the importer. He is under an obligation to the London
banker to see that the whole L1,000 is paid off before the four months
are over, but he knows the party to whom he issued the credit, and
knows that before that time all the silk will have been manufactured
and sold and the proceeds turned over to him. At no time is he out of
any actual cash.

That being the case, the amount of commission he charges is really very
moderate--one-quarter of one per cent. for each thirty days of the life
of drafts drawn under credits being the "full rate." Under such an
arrangement an importer taking a credit stipulating that the drafts are
to be drawn at thirty days' sight would have to pay one-quarter of one
per cent.; at sixty days' sight, one-half of one per cent.; at ninety
days' sight, three-quarters of one per cent., etc. Such commission to
be collected at the time the drafts drawn under the credits fall due.

These are the "full rates"--naturally, few importers are required to
pay them, _actual_ rates being largely a matter of individual
negotiation and standing. Where the drafts under the credits run for
ninety days, for instance, as in the case of coffee imported from
Brazil, the full rate would be three-quarters of one per cent., but
very few firms actually pay over three-eighths of one per cent.
Similarly with credits issued for the importation of merchandise of
almost every other kind. Silk credits, with drafts running four months,
ought at the regular rate to cost one per cent.; but as a matter of
fact there are any number of good houses willing to do the business for
five-eighths of one per cent. One large international bank in New York,
indeed, is going so far as to offer to issue credits under which drafts
run _six_ months for a commission of five-eighths of one per cent.
Such a commission is entirely inadequate and no fair compensation for
the trouble and risk the banker takes. It means little more than that
the bank is w