508 THE WORK OF THE STOCK EXCHANGE 
by the extension of its members’ branch offices all over the 
country.’ One great factor tending toward the elimination 
of the manipulation of prices was provided by the opposition 
on foreign stock exchanges to it, transmitted to the New York 
market by arbitrageurs. This all comes back to the fact pre- 
viously mentioned,’ that the bigger and broader a market is, 
the more difficult it is for anyone to distort its prices even tem- 
porarily by manipulative tactics. 
Securities as a Medium of International Exchange.—But 
perhaps most important of all, this close connection between 
the New York and European securities exchanges made inter- 
national securities, owing to their instant negotiability here 
and abroad, practically a medium of exchange like gold or 
bank credit.’? As one well-known authority on finance and 
economics ** has put it: 
Securities form one of the greatest and the most important parts 
of the modern mechanism of exchange. They are, in many cases, as 
good as money, and in some cases are better than money. If a large 
shipment of money has to be made from New York to London, it is 
much more economical to ship securities of the same amount than 
to ship kegs of gold. 
This essential though little realized fact, that the interna- 
tional securities on the stock exchanges afford an acceptable 
substitute for gold as a medium of payment between nations, 
is of enormous importance with respect to America’s whole 
foreign trade. Tt therefore deserves detailed explanation here, 
even though such an explanation lead us into the thorny and 
seemingly irrelevant jungle of foreign exchange, visible and 
invisible trade balances, and kindred topics. 
Composition of the International Balance of Trade.—To 
understand the fundamental principles governing international 
trade. we must rid ourselves of the short-sighted but prevalent 
10 See Chapter XV, p. 409. 
1. See Chapter IV, p. 103. 
12 See Appendix XVIIIb. 
13 Charles A. Conant, “Wall Street and the Country”