Business English: A Practice Book by Rose Buhlig

as, "Pay to ----" This check cannot now be cashed by anyone except the one named in the endorsement. [Illustration: EXPRESS MONEY ORDER] _Express Money Order._--An express money order is much like a check, except that it is drawn on an express company instead of on a bank and reads, for example: Continental Express Company agrees to transmit and pay to the order of ---- (the one to whom you are sending the money) ---- (the amount). The order is signed by the treasurer of the company and countersigned by the agent who sells it. You can buy such an order at any express office. It may be endorsed like a check. [Illustration: POSTAL MONEY ORDER] _Postal Money Order._--The other form of money order, the postal, is an agreement signed by the postmaster of one city that the postmaster of another city will pay the amount of money named in the order to the person named in the order. _Bank Draft._--A bank draft is very much like a check, except that instead of two individuals dealing with each other two banks conduct the transaction, their places of business being in different cities or villages. A bank draft is sometimes called a bank check, because in the case of both a draft and a check one party draws upon another with whom the first has funds deposited. As a general rule, banks and business houses require that remittances be sent to them by drafts drawn on New York or Chicago banks, as there is a charge called _exchange_ made in the collection of checks drawn on local banks. In the draft that follows, the State Bank of Utah, of which Henry T. McEwan is Assistant Cashier, makes out the draft. The bank which is ordered to pay the money is the National Park Bank of New York. The money is to be paid to Henry L. Fowler. The State Bank of Utah is called the drawer; the National Park Bank of New York, on whom the draft is drawn, is the drawee; Henry L. Fowler is the payee. [Illustration: BANK DRAFT] [Illustration: ENDORSEMENT] The payment indicated above was probably made without actually sending the money from Salt Lake City to New York. It was done in this way: Henry L. Fowler of Salt Lake City owes one hundred dollars to a man living in an Eastern city, let us say Charles Emery of Rochester, N. Y. Mr. Fowler goes to the State Bank of Utah in Salt Lake City and "buys a draft on New York," made payable to himself. The bank makes out the above, charging Mr. Fowler one hundred dollars plus a fraction of one per cent for its trouble. Mr. Fowler endorses it in full to Mr. Emery of Rochester and sends the draft to the latter. He has the draft made payable to himself so that the endorsement will constitute a full record of the transaction. Mr. Emery takes the draft to his own bank in Rochester, endorses it in blank, and receives the one hundred dollars. Thus Mr. Fowler has paid out the money and Mr. Emery has received it. The way the banks conduct the transaction is as follows: There are certain big money centers in the country; e.g., New York, Chicago, St. Louis, San Francisco. Important banks in other places have money on deposit in at least one bank in each of these centers. The banks which thus deal with one another are called _correspondents_. The National Park Bank is the correspondent of the State Bank of Utah. When Mr. Emery cashes the draft at his Rochester bank, the latter sends it to its New York correspondent, and at the same time charges the correspondent one hundred dollars. The correspondent presents the draft to the National Park Bank, which pays the money and charges the same amount to the State Bank of Utah. Explain how this settles the transaction. _Time Draft._--A time draft is much like a bank draft, in that two banks conduct the principal part of the transaction for two individuals, but no money is actually paid at the time the draft is drawn. The details of a transaction of this kind are explained on the following page. [Illustration: TIME DRAFT] Horace Prang of 1008 Elm Street, Columbus, Ohio, owes Loetzer & Co. five hundred dollars, due August 27, 1915. Loetzer & Co. make out the draft above and deposit it in the Bank of Buffalo. The latter sends the draft to its correspondent in Columbus, which presents the draft to Horace Prang. If he is willing to pay the note when it falls due, he writes across the face of it, "_Accepted_" adds the date, and signs his name. It is now returned to the Bank of Buffalo. The Bank of Buffalo will then discount the draft for Loetzer & Co. _Sight Draft._--A sight draft is much like a time draft, except that the amount is paid by the person on whom it is drawn as soon as it is presented, instead of after a stipulated length of time. [Illustration: SIGHT DRAFT] Suppose the Empire Elevator Co. of Buffalo has sold $420 worth of grain to the Smith Milling Co. of Springfield, Mass. When the grain is loaded on the cars, the railroad company gives the Empire Elevator Co. a bill of lading. Now, the Smith Milling Co. must possess this bill of lading before it can take the grain from the cars at Springfield. The Empire Elevator Co. deposits the bill of lading with the above draft in the Marine National Bank of Buffalo. This bank sends both to its correspondent in Springfield. The Springfield bank presents the draft to the Smith Milling Co., who may take the grain from the cars on payment of the draft. In case of non-payment, both draft and bill of lading are returned to the Marine National Bank of Buffalo, and the Empire Elevator Co. must make arrangements for the return or the disposal of the grain. =Exercise 301=