112 
Arbitrage transactions are the sales and 
purchases of stocks which are effected by letter, 
telegram and telephone between the Stock 
Exchanges of different countries. In these 
international dealings the level of the respec 
tive quotations at any two centres is deter 
mined by the current rate of exchange between 
them. The rate of exchange becomes the 
arbiter of value—hence the term arbitrage. 
For instance : Paris quotes Turks in francs, 
and it is therefore necessary to work out the 
French franc-quotation by the rate of exchange 
into its equivalent in English money before 
an arbitrage dealer can determine whether it 
is possible to buy or sell Turks more advan-, 
tageously through his agent on the London 
market than he can buy and sell them on his 
own Bourse. It is the constant rush on the 
part of arbitrageurs to buy stocks in the 
market where quotations are low, and to sell 
them in the market where quotations are high, 
which keeps internationally-dealt-in stocks at 
a uniform price at the various centres. 
In these international securities, of course, 
the most powerful centre determines the quo 
tation. Thus, if the Paris public is more 
interested in Turks than Berlin, Paris is able 
to absorb or supply larger quantities of stock, 
and it is then the Paris market which controls