From time to time, as balances of accounts increase on the one side or the other, shipments of actual money become necessary, but these are only a small fraction of the total amount of the bills of exchange.

Similarly, the settlement of accounts between any two localities can be made by the shipment of comparatively small sums of money.

Under the Federal Reserve Act the reserve banks are in various ways assuming the functions of the correspondent banks.
The wider use and acceptance of individual checks at long distances from the banks upon which they are drawn limit by so much the proportion of special bills of exchange drawn by the banks themselves.
Domestic exchange involves just the same principles as foreign exchange of funds, except that in the latter, usually, two different units of standard money are used.

In connection with the discussion of foreign trade below, foreign exchanges will be explained and further light will be thrown upon the adjustment of the money supplies and levels of prices of the various sections of a single country as well as between different countries.
Sec.9.

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