504 THE WORK OF THE STOCK EXCHANGE
expanded in scope, perfection of technique, and economic sig-
nificance both here and abroad.
By reason of this development in arbitrage, domestic and
foreign prices for American “international” securities were
kept much closer together than ever before, and these issues
enjoyed a much broader market; for when New York would
not buy, London and other foreign centers would, and vice
versa. On the other hand, American economic conditions
came to play a much more immediate and important part in
the foreign markets, and foreign conditions in our markets.
If our Spanish War shook the British markets, so their Boer
War shook ours. But the effect of this closer community of
interest between security markets was on the whole highly
beneficial, since it facilitated a vast flow of European capital
into our gigantic railway and other business projects.
International arbitrage, of course, involves a thorough
knowledge of foreign stock market practices. Foreign sys-
tems of price quotation are sometimes on a very different
basis than our own; in London, for example, bonds are
usually quoted “flat,” but in New York usually “with inter-
est.” * Also, contrasting with our cash settlement, foreign
stock exchanges sometimes employ a fortnightly term settle-
ment. When it was necessary to ship certificates from abroad
to deliver in New York, usually the sales on the New York
Stock Exchange were made for delivery by the seller at his
option any time within 30 days (“seller 30” in the jargon of
Wall Street), instead of being made “regular way” for delivery
the next full business day. Arbitrage transactions, like other
speculative dealings, involve the assumption of risks for pos-
sible private profits. So keen is the competition between ar-
bitrageurs here and abroad, that prices are kept close together,
and normally arbitrage profits are small indeed in comparison
with the trained skill, extensive facilities, and capital risks
which they require
2 See Chapter X, p. 268.
