a debt in
Paris.

[Illustration: A bill of exchange (banker's).]

Two illustrations of bills of exchange are given in this lesson. Each
is drawn in duplicate. The original is sold or sent abroad, while the
duplicate is preserved as a safeguard against the loss of the
original. When one is paid the other is of no value. Notice the
similarity between bills of exchange as shown here and commercial
drafts as shown in our last lesson.

The first form shows a draft made by a coal company upon a steamship
company to pay for coal supplied to a particular steamer. Suppose that
the steamship company has a contract with Robert Hare Powel & Co. of
Philadelphia to supply coal to their steamers. The steamer _Cardiff_,
when in port at Philadelphia, is supplied; the bill is certified to by
the engineer; the master (captain) of the vessel signs Powel & Co.'s
draft (and in doing this really makes it the captain's draft); the
bill is receipted. Now Powel & Co. sell this exchange (draft) on
London to a broker or banker doing a foreign business. It is forwarded
to London and presented in due time at the office of the Wales
Navigation Company for payment.

The second form shows a bill of exchange drawn by a Philadelphia
banking house upon a London banking house and payable to the order of
the firm buying the draft. C. H. Bannerman & Co. will send this bill
(the original) to pay an account in Europe. The first form bears the
same relation to a commercial draft that the second does to a
cashier's cheque.

[Illustration: First page of a letter of credit.]

XI. LETTERS OF CREDIT

The usual instruments of credit by means of which travellers abroad
draw upon their deposits at home are known as CIRCULAR LETTERS OF
CREDIT. These forms of credit are of such common use that every one
should be familiar with their form. We reproduce here a facsimile of
the first and second pages of a circular letter for L1000, copied with
slight change of names from an actual instrument. The first page shows
the credit proper authorising the various correspondents of the bank
issuing it to pay the holder, whose signature is given on its face,
money to the extent of L1000. The names of the banks who are
authorised to advance money upon the letter are usually printed upon
the third and fourth pages, though letters issued by well-known
banking houses are usually recognised by any banking house to which
they are presented.

The second illustration shows how