Evening star. [volume] (Washington, D.C.) 1854-1972, 1892-11-05
KITING DRAFTS.
How to Become Napoleon of Finance on
No Capital at All.


No Capital at All.
ssNoU HAVEN'T GOT AN THAT YOU
Il could lend me?' said the shabby man
with six days growth of beard.
why, certainly, old fellow" replied his
friend, handing over bank note .'But what is
the matter? The last time we met you seemed
on the food tide of prosperity
$50 was, replied the other sadly. "Unfor-
tunately, my business has gone to smash ire
trievably"
"What was it?'
"Oh, ii was something in q sort Of specula-
tive line, very light and profitable SO long as it
lasted. / don't mind telling YOU about it.
strictly in confidence. My occupation was
What is known as 'kiting drafts'"
"Whst on earth is that?''
We'll, it is something in the way Of tinan-
ciering-a method of making money by theory
rather than practice. Had it not been for an
unjustifed lack of confidence on the mart OF
persons with whom I had business relations
might still be doing very we'll The basis Of
the whole business is credit, without which the
world could not get along and all industries
would have to come TO a standstill. To begin
with, let us say that borrow Sl00"
Yes, that's easy enough so far
"On the contrary, my dear fellow. that is the
only difficult part Of the whole performance.
Once having obtained the Sl00 the rest is easy
enough. give my note for the amount at
sixty days. Now, Won know that | live in Balti-
more and that until recently was employed in
one Of the departments"
"Yes, certainly"
Ton that point the speculative plan hinges TO
a certain extent. Just before the note comes
due make draft in Washington on myself in
baltimore at ten days sight for amount
sufficient to cover the note and interest. This
draft have discounted and with the money
pay the note
That is clear as mud"
Now, you observe that I have got the note
ont OF the way. All have to do is to paw the
draft ten DAYS later. But a day or two before
1t becomes due draw in Baltimore on myself
In Washington for a sum large enough 20 cover
the first draft. This second draft | have dis
counted, paving the first draft and L am not
obliged to pay the second draft until ten DAYS
later. 1 pay it by drawing from Washington
on myself in Baltimore
But YOU can't keep that up indeinitelv.'
"On the contrary. that was NV modest eff ort
1t goes without saving that 20 long as | could
keep the thing going on that plan need never
pay the original Sl00. Obviously | would be
that much ahead on the speculation"
'But you couldn't live on that very long"
''Of course not But it was possible for me
10 rereat the thing again and again. and so
multiply my operations indefinitely. Inasmuch
a. my notes and drafts were always promptly
paid when they fell due my credit was neces-
sarily first-rate. All / needed was credit to
conduct a speculative business such as de-
scribe. Beginning in every case by borrowing
sum of money on my note, could paw up
and yet retain the money for an endless period
by kiting drafts to cover il back and forth be-
tween Washington and Baltimore. L did not
need to borrow the cash from any bank, which
would have required an indorser. got all the
money required from two or three friends in
sums Of 600 or $500. The notes gave them
were always paid, with interest so that thew
lent me the same amounts again and again. and
l was thus enabled each time to start a new
series of drafts
That was certainly great scheme
Immense. Why. my dear sir. l had drafts
flying SO thick between here and Baltimore
that must have added considerably to the
banking business between the two cities Nv
desk at the department was covered every
morning with letters from the banks contain
ing notifications, &c. L began TO feel like a
veritable Napoleon OF finance In fact. the oc-
cupation engrossed so much of nv attention
that had very little time TO devote to nv Of
nee duties. Consequently, somewhat TO nv
surprise, found myself suddenly bounced one
fine day. II would not have mattered much.
my speculative scheme being in such prosper
ous way. only that during the same week nv
Baltimore bank. for some unaccountable reason,
refused to discount one of my drafts. / could
not procure the money otherwise at short no.
tice, and the result was that my entire specula-
ton fell to pieces. NV credit vanished and NV
drafts were protested by the score At present
several actions at law are threatening me in
Baltimore. and that is the reason WHY am in
Washington. Much obliged to you for the $40,
old man."