and forwards it to the bank at Madison to collect. The Madison bank presents it to Mr. Osborne for payment.

If Osborne pays the draft, the bank stamps a receipt thereon, and gives the draft to Osborne. The bank keeps a certain amount as a collection fee, and returns the balance to the bank at Toledo, where Mr. Dunham receives the proceeds in cash or as a deposit credit.

If Osborne does not pay the draft, it is returned to the bank at Toledo with a statement of the reason for non-payment.

At the time of selling the goods the wholesale house may require the purchaser to accept a time draft. The wholesale house can then use the trade acceptance as security to borrow money at the bank, or it can sell the acceptance to the bank. At maturity the acceptanceis presented to the acceptor for payment. The following is an illustration of such an acceptance:

This draft is due thirty days after June 6, or July 6.

If a creditor has difficulty in collecting an account from a debtor he may draw a draft on him even though the terms at the time of sale made no mention of a draft. The debtor is not obliged to accept it or pay it, but since it will be presented to him by a bank in his own town he may do so in order to keep his reputation good with the bank.

197. Drafts with C. O. D. Shipments by Freight. When a merchant sells goods to be shipped by freight, he receives a bill of lading from the railroad company. This bill of lading is the railroad's receipt for the goods. To make a C. O. D. shipment the seller obtains an Order Bill of Lading from the railroad. The purchaser cannot get the goods from the railroad without surrendering the bill of lading. Therefore, a selling merchant, instead of sending the bill of lading direct to the purchaser, attaches it to a sight draft and sends the draft and the bill of lading to a bank in the purchaser's town.

In order to get the goods the purchaser must have the bill of lading; in order to get the bill of lading he must pay the draft at the bank.

198. Drafts to Avoid the Transfer of Funds. Three-party drafts are used for this purpose, but their use is not as customary as in the past. The following illustration will show the procedure.

T. D. Morrison of Chicago owes A. J. Sellers of New York $85.00. Mr. Sellers owes G. A. Davis & Co. of Chicago $150.00. Mr. Sellers draws the following draft, asking Mr. Morrison to pay G. A. Davis & Co. $85.00.

NO PROTEST TEAR THIS OFF BEFORE PRESENTING.

A.
J. Sellers

Value received and charge the same to account of

To P. D. Morrison,

No

Chicago Illa

THREE-PARTY SIGHT DRAFT

Oral Work

What two parties make a payment when this draft is used?

Explain how one transfer of money is saved.

How much will Sellers owe G. A. Davis & Co. after they have received this draft?

Three-party drafts may also be made payable after a stated time by using the terms explained on page 229.

Written Work

1. On July 13, you purchased from A. B. Butler of Minneapolis, Minnesota, an invoice of goods amounting to $123.60; terms, sight draft in 10 days, less 3%. On July 20, Mr. Butler drew a sight draft on you for the net amount of the bill. He indorsed the draft, and gave it to the Fourth Street Bank of Minneapolis for collection. The Minneapolis bank indorsed it and sent it to the First National Bank of your city. The draft was presented to you by the bank on the 23d of July.

Write the draft with indorsements.

If the First National Bank charged 15 cents for collection, how much did Mr. Butler receive in payment of the draft?

How much did you pay to the bank?

2. You purchased an invoice of goods from Winthrop and Monroe of Toledo, Ohio. Amount of invoice, $365.00. It was your first transaction with them and consequently you were unknown to them. As you wanted the goods immediately and did not wish to delay while inquiries were made regarding your credit, you instructed them to send the goods

by freight and send a sight draft, with bill of lading attached, to the First National Bank of your city. The sight draft, which was dated yesterday, arrived this morning. It was made payable to Winthrop and Monroe and was indorsed to the order of the bank.

Write the draft and show the indorsement made by Winthrop and Monroe.

Write a check in favor of the bank to pay the draft.

What will you receive in exchange for the check?

How will Winthrop and Monroe get their money?

3. On September 3, you purchased an invoice of goods from S. L. Norton of Springfield, Illinois. Terms, thirty-day draft from date of sale, less 1%. Amount of invoice, $75.00. On September 5, you received the draft in the mail; it was dated September 3, and was payable 30 days after date. You immediately accepted the draft and returned it to Mr. Norton.

Write the draft, and show your acceptance.

When will you be expected to pay the draft?

4. You owed S. D. Briggs of Winona, Minnesota, $75.00; Mr. Briggs owed F. R. Tuttle of your city, $136.00. On June 19, Mr. Briggs drew a sight draft on you for the amount of your debt, and sent it to Mr. Tuttle as part payment of his debt. Mr. Tuttle presented it to you. You gave Mr. Tuttle cash in payment of the draft, and received the draft as a receipt.

Write the draft.

How much did Briggs owe Tuttle after the draft was paid?

CHAPTER XX

FOREIGN MONEY AND EXCHANGE

FOREIGN MONEY

199. The trade between the United States and foreign countries necessitates changing money values of the United States coinage into that of foreign countries, and also changing values stated in the coinage of foreign countries into that of the United States. In order to provide a standard of comparative values, the Director of the United States Mint at frequent intervals estimates the values of foreign coins, and these values are proclaimed by the Secretary of the Treasury. This proclamation is then used as the standard in computing the value of foreign merchandise imported into this country, until the succeeding proclamation is issued. The data in the table on the following page are copied from a recent proclamation.

200. To reduce a value in foreign coinage to United States money. Multiply the value of the coin in United States money by the number of the coins.

Problem. Change 2500 francs to dollars.

201. To reduce a value in United States money to foreign coinage. Divide the value in United States money by the value of the foreign

1. The following table gives the value of the United States imports from, and exports to, various European countries in a recent year. Imports are stated in the coinage of the nation from which they came; use the preceding table of values and change the values to United States coinage. Exports are stated in the coinage of this country;