Now we will suppose the contrary of this supposition; that is, that England owes more to France than France to England. Under these conditions a debtor in London will find a difficulty in procuring a draft on Paris. He may try to procure it at the rate of 25·22 francs, but he will find others competing for the available drafts, and he will be forced to buy at a lower rate of exchange, say 25·17. Competition will result in further reductions, until a point is reached when it is as cheap to send gold and pay the cost of transmission; that is, when the rate falls to about 25·12½. Thus though one sovereign is always equal to 25·22 francs, coin for coin, yet the price of bills expressed in these coins will vary within certain limits according to demand and supply. The exchange in London on Paris, or any other centre, will always tend to keep approximately level with the exchange at that centre on London. As an illustration, let us take an extreme case. Suppose we quoted Paris at 25·20 and Paris quoted us at 25·30. A foreign banker in London, on seeing these quotations, would wire to his Paris correspondent to draw on him for, let us say, £1,000 and sell the draft, which would realise 25,300 francs. At the same time he would draw on his Paris friend for 25,300 francs and sell the draft in London, for which, at the rate of 25·20, he would receive £1,004 nearly. The Paris correspondent would be cleared, as he has drawn and sold a draft for 25,300 francs, and he has paid a draft drawn on him for the same amount; but the foreign banker in London has received £1,004, and only has to provide £1,000 to meet the draft drawn on him, leaving a profit of £4. He would not be the only one to perform this little operation, however, and the combined action of all such arbitrage dealers would promptly level quotations. We will now turn our attention from theories to some actual facts, and examine how the business in foreign bills is conducted in London. The usual meaning of the term “Bourse” or “Exchange” is a place where merchants assemble to transact their business. We have our own famous Royal Exchange, although nowadays it is hardly famous for the meetings of merchants. It is a building which has survived its original purpose, but it is of interest as being an historic relic of the place where the foundation of our great commercial supremacy was laid.