draw interest until after maturity, unless the words
WITH INTEREST appear on the face. Notes draw interest after maturity
and until paid, at the legal rate.

A note should be presented for payment upon the exact day of maturity.
Notes made payable at a bank, or at any other place, must be presented
for payment at the place named. When no place is specified the note is
payable at the maker's place of business or at his residence.

In finding the date of maturity it is important to remember that when
a note is drawn _days after date_ the actual days must be counted, and
when drawn _months after date_ the time is reckoned by months.

To DISCOUNT a note is to sell it at a discount. The rates of discount
vary according to the security offered, or the character of the loan,
or the state of the money market. For ordinary commercial paper the
rates run from four to eight per cent. Notes received and given by
commercial houses and discounted by banks are not usually for a longer
period than four months.

VIII. THE CLEARING-HOUSE SYSTEM

In large cities cheques representing millions of dollars are deposited
in the banks every day. The separate collection of these would be
almost impossible were it not for the clearing-house system. Each
large city has its clearing-house. It is an establishment formed by
the banks themselves, and for their own convenience. The leading banks
of a city connect themselves with the clearing-house of that city, and
through other banks with the clearing-houses of other cities,
particularly New York. Country banks connect themselves with one or
more clearing-houses through city banks, which do their business for
them. The New York banks, largely through private bankers, branches of
foreign banking houses, connect themselves with London, so that each
bank in the world is connected indirectly with every other bank in the
world, and in London is the final clearing-house of the world.

[Illustration: The advantages of the clearing-house system.]

Suppose that the above diagram represents the banks and clearing-house
of a city, and also the two business houses of Brown and Smith. Brown
keeps his money on deposit in Bank E, and Smith in Bank B. Brown sends
(by mail) a cheque to Smith in payment of a bill. Now, Smith can come
all the way to Bank E, and, if he is properly identified, can collect
the cheque. He does not do this, however, but deposits Brown's cheque
in Bank B, the bank where he does his