Mr. Banker: Yes, and will bring other advantages to the business interests of the country of almost incalculable importance, as we shall soon see. Now, the question is how to gain these ends. Two things must be accomplished in this connection, if we are to profit by every advantage that can possibly be taken in our trade with each other, as well as in our trade with other countries.
First: The Bills of Exchange must be of such a high character as to invite those, who need them to pay debts with, to take them unhesitatingly.
Second: The Bills of Exchange must become known to those who may want to use them to pay debts with, instead of shipping the actual money.
Mr. Merchant: Of course, you gentlemen are aware that our debts abroad are being settled in just this way today to a very large extent, and I do not think that you need worry very much about the Bills of Exchange not becoming known to those who need them to pay debts with, if they are made of such a high character as to command a market, for the market will at once develop and make itself felt. That is, I mean a general market for Bills of Exchange of unquestioned character. The only thing for us to do is to give our Bills of Exchange such a standing as to command ready and general acceptance in the commercial world. How can we do that?
Mr. Banker: That can be accomplished in a very simple, easy and natural way, if we will only adopt it. Let me illustrate what I mean.
Today, A, living in this country, sells a bill of goods, say for $50,000, to some one in Great Britain; the purchaser in Great Britain arranges with his bank to accept a 60 or 90 day bill drawn on it by the American shipper. Such drafts are drawn on well-known bankers, and when accepted become virtually a time-deposit at the bank, and therefore can always be disposed of at the lowest current rate of interest. This arrangement is a very great advantage to the English business man, as it enables him to use the high credit of the bank in carrying on his business.
At the present time our National Banks are not authorized to accept drafts made in this way, but if they were authorized to do so, the credit of our banks would be given to the drafts made by one business man upon another whether the drafts were domestic or foreign. Such an obligation is the most desirable one for a bank or an investor to hold, as a temporary investment for the following reasons:
First: The draft arises out of a transaction where goods passing from buyer to seller are equal in value to the face of the draft. The goods are actually in transit, and the draft is economically a title to the goods.
Second: The seller is invariably good, or at least thought to be.
Third: The buyer is invariably good, or thought to be.