amount of money in its own currency (be it paper or gold) that the specified financial centre of each country is willing to give for a pound sterling on London. They vary almost daily, and are indications either of indebtedness or of the abundance or scarcity of money, and are described as favorable or unfavorable to this country according to whether they are high or low. A rate of exchange is an indication of indebtedness, according to the position of the balance of trade or indebtedness between the country fixing it and England. When in any given country this indebtedness is in favor of England, it is obvious that in that country bills on London for the purpose of remittance will be in demand, and will fetch more money; consequently the rate at which they will be purchased rises. When the balance of trade is against England, it is equally evident that bills on London are not so much wanted, and the price of them—that is the rate of exchange—consequently falls. But I have said that a rate of exchange may be an indication of abundance or scarcity of money in the country quoting it; and it is often so in this manner. Let us suppose that there is no balance of trade to settle between a given country and England, but that the rate, of discount, or value of money, in the former is, say, three per cent., while in England it is, say, four per cent. It follows that _primâ facie_ it is more profitable to send surplus money to England for employment than to keep it at home. In the absence of trade bills a demand for drafts transferring money to London sets in, and the rate of exchange rises. Let us now reverse this condition of things. Suppose money to be dearer in a given country than in England; it is evident in that case that capitalists here would find it more profitable to employ their money in that country than at home, and that the foreign rate of exchange would consequently fall. I have spoken hitherto of remittances by bills or drafts only, but it is obvious that a scarcity of these vehicles for the transfer of money may so drive up the rate of exchange that it becomes more profitable to send gold. When this point is reached the foreign rate of exchange is said to stand at “gold point.” If I have made myself clearly understood, the reader will now see how the rate of discount by attracting or repelling money affects the movement of gold in the Bank of England, and why, when the Bank desire to either simply protect their stock of gold or their “reserve,” and so prevent any contraction of the note issue, or to attract gold from abroad and so expand the circulation, or increase the “reserve,” they raise the official rate of discount step by step until the desired end is accomplished; or why, when the stock of gold is large and the note issue may with safety be contracted, they facilitate the trade of the country by lowering their minimum rate, at the risk of gold being required for export. He will, too, gain some slight idea of how the