The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XVIII. The stock exchange as an international market

Collection:: Economics Books

STOCK EXCHANGE AN INTERNATIONAL MARKET g13 Between the currencies of two gold standard nations, the rate of exchange will, of course, depend upon the actual amount of gold in their respective standard gold coins. This ratio is called the “par of exchange.” But when bank credit in terms of one coinage is exchanged for bank credit of a foreign coinage, these foreign exchange rates can and do fluctuate considerably. The Market for Foreign Exchange.—The current rate of Exchange arises from the conditions of supply and demand attending the purchase and sale of bills which are drawn in foreign currencies to make payments for the international traffic in goods and services. When, for example, an Ameri- can firm ships wheat to an English firm, it may obtain payment for the shipment by drawing a draft against the latter in pounds sterling and selling it, at the current rate of exchange, for American dollars. Similarly, if the American firm hires a British shipping company to transport the wheat to, say, Liverpool, the British company may elect to draw a dollar draft there against the American shipper and sell it, at the current rate for exchange, for pounds sterling. But while this is going on American buyers of English goods are seeking in New York, and British buyers of American goods are seek- ing in London, means of making their international payments. This they can do, with the assistance of a dealer in foreign exchange, by purchasing the drafts on the appropriate foreign country, which have been drawn by creditors of their own nationality, as shown above. For this reason there is a con- stant supply of and demand for sterling drafts in New York, and for dollar drafts in London. The rate of exchange be- tween dollars and pounds depends upon this double supply and demand for bills drawn in the two foreign currencies in the two centers. If more sterling bills, for example, are offered than demanded in New York, the rate for sterling here tends to decline from the mint par rate of exchange between pounds and dollars. and, of course, dollars rise in proportion above the

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