130 MODERN MONETARY SYSTEMS 
in greater detail the technique of normal exchanges.! But 
it is necessary to note a few of the essential data which it 
supplies. 
In the first place it will be observed that taking the 
exchange between two countries each possessing a cur- 
rency of the same metal which can be freely exported, 
imported and coined, the rate of exchange does not express, 
strictly speaking, a variation in the exchange value of the 
two currencies, Zaken in the abstract; the ratio between the 
two monetary units is all the time constant and fixed by 
the metallic par, or, in other words, by the respective 
weights of fine metal in these two units. It does express the 
variable rate of one of these currencies, not only trans- 
formed into another currency, but also zransported into 
another country. When sterling was quoted in Paris 
before the war at more than 25-221 francs, that is to say, 
when more than 24'221 francs was given for each pound 
sterling, the reason was that it was necessary to transport 
this sum to London ; the rate expressed, not the value of 
the franc, but the value of the gold franc delivered in 
London, where, as was known, one pound sterling could 
also be procured for 25221 francs. Conversely, if less 
than 25221 francs was given for one pound sterling the 
reason was that it would otherwise have been necessary to 
bring a certain number of pounds sterling to Paris, each 
one of which would, it is true, have represented 25-221 
francs, but only after it had been delivered in Paris. 
The extreme rates of exchange were therefore governed 
by the actual cost of shipping specie when necessary. 
The intermediate rates fluctuated about par within the 
limits of the gold points and were more or less than par 
according as the profits of negotiating bills of exchange 
went to the debtors or creditors of foreign countries ; in 
other words, according as the former or the latter had to 
have recourse to shipping the precious metals.?2 Thus as 
1 Various technical works may be consulted on this subject, in particular 
“La monnaie, le crédit et le change,” by M. Arnaune. 
2 This explains why bank notes occasionally stand at a premium on a 
foreign market. This was certainly not due, as was sometimes thought by