The work of the Stock Exchange

Bibliographic data

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

514 THE WORK OF THE STOCK EXCHANGE mint par rate. Similarly, if more dollar drafts are demanded than offered in London, dollars will tend to buy more pounds and pounds fewer dollars so long as this condition remains. The same rate of exchange is maintained in both London and New York through constant arbitraging between the two centers by foreign exchange dealers all over the world. In New York and London, rates of foreign exchange with the home currency are made and quoted individually by the leading banks and financial firms engaging extensively in this business. In Paris and Berlin official dealings and quotations in foreign exchange occur on the stock exchanges. Neither the London nor the New York Stock Exchange concern them- selves with dealings in foreign exchange.® In practice, the fluctuations in foreign exchange rates between two gold standard countries usually occur within the so-called “gold points,” which are rates respectively above and below the par rate of exchange for the given foreign currency. The difference between the par rate of exchange and either gold point represents the cost of shipping gold between the two countries. For this reason, should British sterling drop below its lower “gold point” in terms of American dollars, it would at once become cheaper for the British to make payments in America by shipping gold thither rather than by purchasing American bank credit in the form of bills and drafts drawn in dollars at the unfavogable current exchange rate. Con- versely, should British sterling rise above its upper “gold point” with American dollars, British credit in sterling would at once prove more expensive for Americans than gold ship- ments to Great Britain. When a nation is not upon the gold standard, no such gold points, of course, exist and its rate of exchange with foreign gold currencies may fluctuate wildly unless artificially “pegged” or stabilized in some way. These principles were strikingly illustrated by the experience of many European currencies during and after the World War. Since all goods and services sold in foreign trade must be "5 See Appendix XVIII.

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