Suppose Mr. White of Chicago owes Mr. Brown of Boston $200 for groceries
and Mr. Allen of Boston owes Mr. Warner of Chicago $200 for rent.
Wouldn’t it save expense and trouble if Mr. White should go to Mr.
Warner and Mr. Allen to Mr. Brown? Thereby two debts are cancelled by
two city transactions and no money need be sent from one city to
another.
This is all there is to Exchange, only in business life banks instead of
individuals transact the business.
Only a small percentage of the money really passes from one city to
another.
Exchange in the United States is carried on mostly by banks located in
the large cities, which charge a small fee for transacting the
business.