It will be noticed that two prices are quoted opposite each centre in the “Course of Exchange.” These prices do not represent the figure at which bills can be bought and sold, like Stock Exchange quotations. As regards the “long” rates, the two prices indicate the price ruling for different classes of paper, _bank_ paper and _trade_ paper. Bank bills will discount abroad at a lower rate than commercial bills, as with us; and therefore in calculating the long exchange on bank bills a smaller amount has to be allowed for interest than with commercial bills. Hence, of these two quotations the lower rate is for bank paper, and the higher rate for trade paper. As regards the two rates for short quotations, the explanation is that “demand” bills are understood to mean any draft having up to ten days to run. A bill which is not due for ten days is, of course, not worth as much as a draft due at once. The standing of the parties to the draft also affects the quotation to some extent. There is still to be considered the important question of how the Foreign Exchanges are connected with our Money Market, and how they influence and are influenced by the Bank Rate and the value of money in England. It is evident that if the market rate of discount for first-class paper is higher in London than in Paris, a French banker will earn more interest on his money if he buys London bills than if he buys Paris bills. But when dealing with foreign bills, “exchange” comes into the question as well as interest. This further factor introduces an element of speculation which is not present with the home article. Suppose, for example, the Paris market rate to be 3 per cent. and the London rate 4 per cent.—the cheque exchange standing at 25·22 and the long rate in Paris of bills on London consequently at about 24·97. A banker in Paris buys a three months bill _on_ London for £100, paying for it 2,497 francs. When the bill falls due it can be sold as a sight draft. If the _short_ exchange remains at 25·22 it will realise 2,522 francs, showing 25 francs as the interest for three months on the amount invested, that is at the rate of 4 per cent. per annum, as against 3 per cent. per annum, which is the rate which would have been earned in France for these three months. If when the bill matures the short exchange is, say, 25·12, for the £100 draft the interest will be 15 francs only, or at the rate of 2½ per cent. per annum. On the other hand, if the short rate is 25·32 when the draft matures, the interest will be 35 francs, or about 5½ per cent. per annum.