MODERN MONETARY SYSTEMS IT 
represented a given known weight of fine metal, the num- 
ber of francs necessary to pay £1000 could be ascertained 
in advance ; it amounted at par to 25,221 francs, and ex- 
penses in respect of transport, insurance, loss of interest, 
etc., only had to be added to this sum in order to ascertain 
the maximum price in francs of £1000 sterling delivered 
in London (export gold point). Similarly, the same costs 
only had to be deducted from 25,221 francs in order to 
ascertain the minimum value of £1000 sterling in French 
money transferred to Paris, for the French creditor who is 
obliged to have this sum transmitted in the form of specie 
and to have it recoined (import gold point).! 
This is the reason why, as between two countries which use 
the same metal and where that metal can be freely exported, 
imported and coined, a draft will not fetch a higher price 
than the cost of transmitting gold. This is the reason why, 
on the same assumption, the exchange rate is strictly 
limited by the gold points in the case of countries with a 
gold currency and by the silver points in the case of 
countries with a silver currency. Fluctuations in the rate 
of exchange are exceedingly small and the exchange may 
be said to be stable. 
It is easy to see how bimetallist countries, so long as they 
existed, were able, thanks to the concurrent use of two 
metals both of which could be freely exported, imported 
and coined, to transact business on a firm basis both with 
countries which have a silver currency and with those 
1 It should be observed that francs are bought and sold in London in the 
form of drafts on Paris and that sterling is similarly negotiated in Paris in 
the form of drafts on London. The two markets are in complete harmony 
if only for the reason that when, for instance, the pound sterling under the 
influence of a French credit balance on England costs less than 235-221 
francs in Paris where drafts on London are plentiful, it is also the case that 
under the same influence less than 25-221 francs will be given for [1 
sterling in London, where drafts on Paris are scarce. The exchange may 
be quoted in home currency—called “ quoting uncertain” or in a foreign 
currency, called “quoting certain.” In Paris, for instance, the pound is 
quoted in francs, so that a rise in the rate registers a fall in the value of 
the franc. Nevertheless, whenever we have to use the expression “the 
exchange rises” it should be understood to mean that the home currency 
has gone up in value, and vice versa.