Burlington free press. [volume] (Burlington, Vt.) 1827-1865, 1860-07-06
PAR OF EXCHANGE.

A correspondent of the N. Y. World gives
lucid account of the par of exchange,
between this country and Great Britain. The
subject is one which puzzles many in the
community. A careful perusal of the fol-
lowing extracts will give clear notion Of the
matter
! Between the two countries, where the unit
/ Of price is in the same metal, there IS no
| difficulty 10 ascertalning the par Of exchange.
| An ounce of fne gold in London, or an ounce
of fine gold in New York, is an ounce Of fine
/ gold-neither more nor less; there is never
any deviation in the quality Of this article.
| In England the pound sterling is the money
/ of account, and the sovereign is the same
| thing in tale In this country dollar is the
name for both cur money Of account and in
tale. Al are bat names for certain weights
| of gold. that metal being the standard b tn
/ in England and this country. Now all we
| need to know to ascertain the par of sterling
| exchange IS, what IS the relative quantity of
/ pure gold in the two units-the snver ign
/ and the dollar? Without troubling tho
( reader with tine different portions Of alloy in
| the two, il is only necessary t. say that the
| sovereign contains 1l3 grains Of pure gold,
and the dollar % % 100 grains OF the same.
| Thus A. % ,22 gr. 81 o.: ll3 or S+.S6 Go.
| There j. a traction Of about 1909 0f grain
/ more pure gold in the sovereign, but this Is
not appreciable'
/ So the name Of Il3 grains OF pure gold in
| the currency Of this country IS 81 SO %. and
| in England il j. u sovereign OF pound ster-
| ling But the English continue the old folly
of reckoning the pound sterling by the Car
olus pillar dollars, now quite out of oiicuia-
/ ton. " hen in use they estimated them az
/ Is. Cd. each, or Hiue SirYe1css, and as
| the pound sterling is 20 sbillIngs,
/ or fortg Si1DeRces, we divide 40 by nine.
which gives S4.44 40; now add q
per cent. to this, say y %, and we have
/ S4S6s as the approximate price of this
/ pound sterling IN federal money. Therefore
we say that % per cent. premium IS the par
/ of erchanqe on London. While the mint laws
| of the two countries remain aS ttey are, ia
/ reference to the sovereign and dollar. ct
/ course this rate Of exchange must be I-rai.-
nently the same.
/ rs to the cost Of transporting g7ld. ta"
/ insurance, &c, these will vary with c.fca-i-
/ stances ana individuals some may carry l.
/ about their persons or in their ba--s2r,
/ some NAV insure while others may nJr. &c..
/ All this, / think, has nothing to do viz tne
matter 1t is as a commodity only thai goii
| is transported from one country TO au,- -r,
and not as money. In war, perhaps, it would
not be transported at all, or only at % -rlr
risk and cost nevertheless, the gold -.yr-
eign in London would mean precisely what
/ 81 SO .65 means her ; they are but twaal.a.-
for the same thing, and do not express vlil"
at all The raiHe of the ll3 grains OF lur"
gold depends, not upon its name IN sti'
or federal money, but upon what - -. -
change for. If it will pur"' - - w. U.s. .>i
s'ln9 ,iiilS ~ i-''' ID than in New YORK, it
w - "o'''' Il" -. q IN London as measured hy
3 III" specific article. II it will buy m.r4 of
all things, or of things generally in Loud1H. =.
then it is of a higher value there, on tire av-
erage, and if the difference is sufficient q
cover cost Of transportation and insurau--, e.
will be sure to 20 to London, As soon a>
this state Of things is developed, exchan-e IN
London rises IN New York Or, conversely,
If gold has u greater purchasing power and
consequent value in New York, exchange on
London falls, and the gold will come here.
Observe, however, the par Of exchange re-
mains unaffected by any Of these circumstaa-
ces; that is a fixture by the mint laws OF
the respective countries, as permanent as ,le
laws themselves. IL is the rate of exchange
that varies to accommodate the varying err
cumstanccs of freight, insurance, interest,
value of money, &c.