MUTUAL BANKING. 31 



duty and supply its place by the revolution of debits and credits in 

 account, instead of the revolutions of the actual material money." 

 There are many practical processes by which the business- 

 world make credit perform the functions of money, among which 

 may be especially noticed— first, that by credit in account; and sec- 

 ond, that by bills of exchange. Mr, Beck thought out a Mutual 

 Bank by generalizing credit in account: Proudhon, by generalizing 

 the bill of exchange. 



BILLS OF EXCHANGE. 



Let it be supposed that there are ten shoe-manufacturers in Lynn, 

 who sell their shoes to ten shopkeepers in Boston; let it be supposed, 

 also, that there are ten wholesale grocers in Boston who furnish 

 goods to ten retail grocers in Lynn. If the value of the shoes equals 

 the value of the groceries, the ten retail grocers in Lynn would 

 have no occasion to send money to Boston to pay their indebted- 

 ness to the wholesale grocers; neither would the ten shopkeepers 

 in Boston have occasion to send money to Lynn to discharge their 

 debt to the ten shoe manufacturers; for the Lynn retail grocers 

 might pay the money to the the Lynn shoe-maufacturers; these 

 shoe-manufacturers writing to the Boston shopkeepers, who are 

 their debtors, requesting them to pay the Boston wholesale grocers, 

 who are the creditors of the Lynn retail grocers. It is very possi- 

 ble that the transactions of all these persons with each other might 

 be settled in this way without the transmission of any money either 

 from Boston to Lynn, or from Lynn to Boston. The transfer of 

 debts in the process here indicated gives rise to what are called, in 

 mercantile language, drafts, or bills of exchange; though regular 

 bills of exchange are seldom drawn in this country, except against 

 foreign account. A bill of exchange reads generally somewhat as 

 follows: 



"To Mr. E. F. days after sight, on this my first bill of ex- 

 change (second and third of the same date and tenor not paid) pay to 



A. B., without further advice from me, dollars, value received. 



and charge the same to account of your obedient servant, C. D." 



This form evidently implies that the bill is made out in tripli- 

 cates. The bill must also, of course be dated. A draft is a bill of 

 exchange drawn up with the omission of some of the solemnity and 

 particularity of the regular bill. 



Bills of exchange are useful, not only for the payment of debts 

 at distant places without transportation of the precious metals, 

 but also as a means by which a debt due from one person may be 

 made available for outainixo credit from iniother. It is usual in 

 every trade to give a certain length of crctiit for goods bought— 

 ninety days, six months, eight months, or a longer time, as may be 

 determined by the convenience of the parties, or by the cii>toin of 

 the paitieular trade and place. If a num has sold gooils to another 

 on six month's credit, he may draw a bill upon his debtor, payable 

 in six months, get his bill discounted at the bank and thus qualify 



