Foreign exchange is a broad term referring to the business of
international bills of exchange. These bills of exchange take the form
of drafts representing an evidence of debt in the form of a negotiable
instrument, the drawer or maker constituting the creditor, the drawee
the debtor, and the title to such bill being vested in the payee.
These drafts take the form of acceptances, often endorsed by acceptance
banking companies. When drawn against merchandise exported they are
often accompanied by documents—such as the receipt of the transportation
company, or bills of lading, certificates of insurance, certificates of
inspection, weight, etc. These foreign bills of exchange may be drawn
against securities which are sold as merchandise. They may appear as
authorized commercial or banking credits or as finance bills.
They may be drawn against actual cash funds or credits in banks, but,
whatever they are, they comprise at last merely the order of the drawer
or maker upon the drawee or debtor to pay to a payee a certain amount of
money in the currency of the country upon which they are drawn, in
pounds sterling in London, in pesetas in Spain, in francs in France,
in lire in Italy, in dollars in New York. The forms of these bills are
well established and can be found in any of the many comprehensive
works on international exchange.
These bills may be at sight, payable on presentation, or thirty,
sixty, or ninety days; they may be with documents attached or without
documents attached; they may be acceptance bills or payment bills. The
scope of this book does not permit of an elaborate discussion of the
mere forms of such bills or the mechanism employed by the banks in
handling such bills or the mathematics of converting one currency into
another.