Produced by The Online Distributed Proofreading Team at http://www.pgdp.net (This file was produced from images generously made available by The Internet Archive/Canadian Libraries) Elements of Foreign Exchange A FOREIGN EXCHANGE PRIMER By FRANKLIN ESCHER Special Lecturer on Foreign Exchange at New York University _Fifth Edition_ NEW YORK THE BANKERS PUBLISHING COMPANY 1915 LONDON EFFINGHAM WILSON, 54 THREADNEEDLE ST. Copyright 1910 By the Bankers Publishing Co. New York CONTENTS PAGE CHAPTER I. WHAT FOREIGN EXCHANGE IS AND WHAT BRINGS IT INTO EXIST 3 The various forms of obligation between the bankers and merchants of one country and the bankers and merchants of another, which result in the drawing of bills of exchange. CHAPTER II. THE DEMAND FOR BILLS OF EXCHANGE 15 A discussion of the six sources from which spring the demand for the various kinds of bills of exchange. CHAPTER III. THE RISE AND FALL OF EXCHANGE RATES 25 Operation of the five main influences tending to make exchange rise as opposed to the five main influences tending to make exchange fall. CHAPTER IV. THE VARIOUS KINDS OF EXCHANGE 45 A detailed description of: Commercial "Long" Bills--Clean Bills--Commercial "Short" Bills--Drafts drawn against securities sold abroad--Bankers' demand drafts--Bankers' "long" drafts. CHAPTER V. THE FOREIGN EXCHANGE MARKET 59 How the exchange market is constituted. The bankers, dealers and brokers who make it up. How exchange rates are established. The relative importance of different kinds of exchange. CHAPTER VI. HOW MONEY IS MADE IN FOREIGN EXCHANGE. THE OPERATIONS OF THE FOREIGN DEPARTMENT 68 An intimate description of: Selling demand bills against remittances of demand bills--Selling cables against remittances of demand bills--Selling demand drafts against remittances of "long" exchange--The operation of lending foreign money here--The drawing of finance bills--Arbitraging in Foreign Exchange--Dealing in exchange "futures." CHAPTER VII. GOLD EXPORTS AND IMPORTS 106 The primary movement of gold from the mines to the markets, and its subsequent distribution along the lines of favorable exchange rates. Description (with presentation of actual figures) of: The export of gold bars from New York to London--Import of gold bars from London--Export of gold bars to Paris under the "triangular operation." Shipments to Argentina. London as a "free" gold market and the ability of the Central Banks in Europe to control the movement of gold. CHAPTER VIII. FOREIGN EXCHANGE IN ITS RELATION TO INTERNATIONAL SECURITY TRADING 130