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the cheque, with other distant cheques, to its correspondent, the National Bank of the Republic, Chicago, on deposit, in many instances in about the same sense that K deposited the cheque in the Citizens Bank. The National Bank of the Republic sends the cheque, with other cheques, to its New York correspondent, the National Park Bank. It may possibly send to Philadelphia direct, or even to Media; but this is very unlikely. The National Park Bank sends the cheque to its Philadelphia correspondent, say the Penn National Bank. Now the clearing-house clerk of the Penn National carries the cheque to the Philadelphia clearing-house and enters it, with other cheques, on the First National of Media. Custom, however, differs very greatly in this particular. Many near-by country banks clear through city banks; others clear less directly. If the First National Bank of Philadelphia is known at the clearing-house as the representative of the First National Bank of Media it likely has money belonging to this Media bank on deposit. In that case the cheque is charged up against the account of the First National of Philadelphia. This bank then sends the cheque to the First National of Media, by which it is charged up against B. This system of collection of cheques is about as perfect as is the post-office system of carrying registered mail.
[Illustration: Backs of two paid cheques.]
Now, the banks and clearing-houses through which the cheque passes on its way home stamp their indorsements and other information upon the back. Our illustration shows the backs of two cheques which have "travelled." Millions of dollars are collected by banks daily in this way, and all without expense to their customers. It is estimated that these collections cost the New York City banks more than two million dollars a year in loss of interest while the cheques are en route. Ten thousand collection letters are sent out daily by the banks of New York City alone.
IX. COMMERCIAL DRAFTS
A COMMERCIAL DRAFT bears a close resemblance to a letter from one person to another requesting that a certain sum of money be paid to the person who calls, or to the bank or firm for whom he is acting. For instance, the draft shown in the first illustration might be worded something like this:
St. Louis, Mo., Feb. 22, 1899.
Mr. Robert Elsmere, Jefferson City, Mo.
My dear Sir:
Will you kindly pay to the messenger from the ---- Bank who will call to-morrow the sum of three hundred and ninety-seven dollars and charge to my account?
Yours, very truly, David Grieve.
[Illustration: A sight draft developed from the above letter.]
Commercial usage, however, recognises a particular form in which this letter is to be written, and the address of the person for whom it is intended is usually written at the lower left-hand corner instead of on an envelope. Commercial drafts usually reach the persons upon whom they are drawn through the medium of the banks rather than directly by mail. Let us illustrate. Suppose that A of Chicago owes B of Buffalo $200, and B desires to collect the amount by means of a draft. He fills in a blank draft, signs it, and addresses it on the lower left-hand corner to A. Instead of sending it by mail he takes it to his bank--that is, deposits it for collection. It will reach a Chicago bank in about the same way that cheques for collection go from one place to another. A messenger from the Chicago bank will carry the draft to A's office and present it for payment or for acceptance. If it is a sight draft--that is, a draft payable when A sees it--he may give cash for it at once and take the draft as his receipt. If he has not the money convenient he may write across the face "Accepted, payable at (his) Bank," as in the illustration. It will then reach his bank and be paid as his personal cheque would be, and should be entered in his cheque-book. Banks usually give one day upon sight drafts. The draft will not be presented a second time, but will be held at the bank until the close of the banking hours the next day, where A can call to pay if he chooses. Leniency in the matter of time will depend largely upon B's instructions and the bank's attitude toward A. If the draft is a time draft--that is, if B gives A time, a certain number of days, in which to pay it--A, if he wishes to pay the draft, accepts it. He does this by writing the word accepted with the date and his signature across the face of the draft. He may make it payable at his bank as he would a note, if he so desires. He then returns the