much easier and
more nearly complete cancelation of indebtedness results. In effect,
all the debits and credits between the two countries are merged into
one big ledger balance, and the international shipment of gold bullion
finally made is just the amount needed to balance the accounts payable
at the time. Industrial indebtedness is represented in various forms:
bills of lading for goods shipped, drafts made by the creditor on his
debtor for goods shipped or property sold, checks or letters of credit
for travelers, bonds and notes public and private. These are the
objects dealt in by the bankers who are the agents to carry on the
work of exchange.

The balance of foreign exchanges is of essentially the same nature as
the domestic cancelation of indebtedness. It is going on constantly
between the two merchants in the same town, between two banks in
the same town who represent groups of merchants, between men in
neighboring towns, and between distant states like New York and
California.[8] The price of exchange to the individual is reduced
by the specializing of the business in the hands of a few dealers,
permitting the cancelation of indebtedness or offsetting of exchange,
and greatly reducing the amount of bullion to be transported in making
the payments. The cost to the bank of providing this exchange for its
customers varies as conditions change, but in any case is not great,
so that in domestic business when any charge is made it is usually at
a fixed rate, and is mainly for the service.

Sec. 9. #Par of exchange.# Foreign exchange from America to Europe is,
however, in two features different from domestic exchange: (a) the
cost of shipment of gold is greater; (b) the monetary units of the two
countries usually differ in name, weight, and fineness, and sometimes
in materials. We may define foreign exchange as the purchase and
sale of the right to receive a given kind and weight of metal or its
monetary equivalent in current funds at a specified time and place.
_Par of exchange_ between two countries using the same metal as
a standard is the number of units of the standard coin of the one
country that contains the same amount of fine metal as the standard
coin of the other country. There is no fixed par of exchange between
gold-using and silver-using countries: par of exchange between them
fluctuates with changes in the comparative values of the two metals.
The _gold shipping points_ for importing or exporting gol