BILL BROKER. Bill brokers are mer chants whose special business it is to buy and to sell bills. They buy them from traders and sell many of them to bankers, their profit being obtained from a difference in the rates, the bankers buying from the brokers at one eighth or one-sixteenth per cent. per annum below the market rate. A country banker, although he discounts bills for his customers, does not obtain such a supply of first-class bills as he can procure from the brokers, and it is to his advantage to buy bills in this way, because he can purchase just when he pleases and what he pleases. If he anticipates requir ing a certain sum of money at a certain date, he may purchase bills from the brokers which will mature at the time he requires the funds, and, in addition, in dealing with brokers and discount houses of high stand ing, he obtains their guarantee that the bills will be met at maturity. When bill brokers re-discount bills with hankers, instead of indorsing each bill they usually give a guarantee to cover all the bills. An exchange broker is a dealer in foreign bills, Like all other merchants who deal in highly-priced commodities, bill brokers require a large amount of funds wherewith to trade ; this is formed by their own capital (often great), loans from hankers repayable at call or at short notice. and, in many cases,
deposits received from the public. A number of the most important bill broking concerns are limited companies. There are several methods in which bankers may lend money to bill brokers (when a banker buys bills, that is re-discounts the bills a broker has discounted, the transaction is not a loan but a purchase) ; he may lend an amount for a long fixed period, say thirty days, on the security of the deposit of a batch of bills, or for a short fixed period, say a week, or " from day to day," or " over night." The rate of interest charged is invariable during the period fixed, but, as a rule, the longer the period the higher the rate. The rate on " money over night," however, depends more than the others on the immediate necessities of the brokers, who have to meet requirements to-day but expect to be in funds to-morrow ; this " money over night " rate is sometimes relatively high, because brokers are willing to pay a little more rather than have to borrow from the Bank of Eng land, where their loan would have to be for a fixed period, say three to ten days, while the brokers might not want the money for so long.