Modern monetary systems

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Monograph

Identifikator:: 1753210836

URN:: urn:nbn:de:zbw-retromon-128414

Document type:: Monograph

Author:: Nogaro, Bertrand http://d-nb.info/gnd/117039713

Title:: Modern monetary systems

Place of publication:: London

Publisher:: King

Year of publication:: 1927

Scope:: XII, 236 S.

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Monetary theory and its application in practice

Collection:: Economics Books

NORMAL EXCHANGES 223 of francs in New York could no longer differ widely from this rate; for Americans having a debt to recover in Paris would rather ask their debtor to make them a remittance than sell francs (bills on Paris) at New York at a lower rate than 15 francs to the dollar. On the other hand, the rate of the franc in relation to the dollar could not rise above 15 francs (after deducting the cost of transporting gold) if the Exchange Office receives gold at this rate, or even if it purchases at the same rate of 15 francs (minus the cost of transporting gold to France) bills drawn by French exporters over and above the actual requirements of the market. For these exporters will have the certainty of receiving not less than 15 francs (after deducting the cost of transport) for each dollar in selling their bills at this rate to the Office and will, therefore, refuse to sell their bills on the market at a lowerrate than the new parity, after deducting the import gold point. The franc quotations in New York could not, even in these circumstances, differ widely from the Paris rate. For purchasers of francs in New York instead of paying more than 15 francs to the dollar (plus the cost of transport) would ship gold to France, where every gold dollar would be exchanged for 15 francs. Or, again, they would request their French creditors to draw bills on them and, as we have seen, these bills would be negotiated in Paris at a minimum rate of I§ francs less the cost of import. This mechanism is in no way imaginary; it is, in fact, employed for the purpose of holding the exchanges in countries which make a rational use of the gold exchange standard, such as Austria and the Philippine Islands. It has no other basis than the normal play of arbitration for the benefit of a market which will guarantee the conver- tibility of its home currency into foreign currencies and of foreign currencies into home currency at the same rate. It prevents the appreciation as well as the depreciation of the home currency, which will only fluctuate within the two gold points. It is fundamentally identical with the classical mechanism of gold points as between countries with a gold circulation ; it merely affords the possibility of substituting

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