The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1869-03-11
THURSDAY, MARCH IL, 1859.
uo,don Fivr-twenty QuOtattOns-SteF"
Hog Exchange.

The reader who compares the oaily Poi'u
age quotations of fVe-tweDties III "feA' D,i
tain and In the Cnited States, reducing 'ne
Iatter from currency to gold equiVslent' mas
n parm.nent difference OF about per cent.
batweeu the rates, the London price being that
much less. II he should ask for an explana-
tion. he will probably be told that 1t is due to
a difference Of exchange. But we all know
that II there were any such real difference the
hve-twenties would be- speedily returned upon
us; yet 30 far is that from being the case,
that they form steady ebjeot of export. The
true explanation of the phenomenon 30 GU
riously illustrates the tepacity of established
errors, that briet article on the subject may
not be without interest.
In the year 1704 Queen Anne issued
PROCLAMATION to her colonies instructing
them that the assays at the London Mint
showed the Spanish dollar to contain not
more than four shilliDgs sixpence sterling,
and giving certain instructions based upon
this fact. From that day to this all trausac-
tions In exchange or in securities between
this country and Great Britain have assumed
that the par value of the dollar is four shil-
DkS
that the pound sterling is worth "a 44449.
During the 165 years since this proclamation
was issued an entire revolution has occurred
in the money systems Of the two countries.
The Spanish silver dollar, then current
in the colonies, is replaced by q gold
dollar issued by q republic then undresmed
Of. The sterling money OF silver, with which
it was compared, has likewise disappeared,
and gold standard OF different value substi-
tuted. And yet, though the objects of COM
psrison no longer exist, the ratios then esta-
blished are continued under entirely changed
conditions. As matter OF fact, comparing
the present gold standards of the two countries
one with another, the gold dollar is worth 4s.
Id, or the pound equals s4S6 6-10. In
other words, the fictitious par of 4s. Cd. or SAD.
to the dollar of gold Overvalues the dollar 81
per oent.
According to this fiction, when security
importing to be for dollars is sold in London,
or q bill of exchange on London is sold in the
United States, the dollar Is assumed to be 54
pence. and as It is in fact 81 per cent. less,
the true par is reached by assuming 81 per
cent. discount on the security sold for sterling,
and u per cent. premium on the sterling ex-
change sold for dollars.
For example, suppose sos quoted at s3
In London: this means that the purchaser
pays SO per cent. OF 81 pence for each dollar
Of principal; that is to say, he settles at the
rate Of A 1916 pence per dollar. The true
par OF the dollar In gold being 49t pence,
the actual percentage is 81 per cent;
In other words, 81 per cent. more than
the nominal quotation of SO per cent. So
that the dealer In London corrects the
fictitious generalization of the dollar by a
corresponding reduction in the percentage bid
for his securities.
The dollar at Frankfort is assumed to be
worth two and half forms, and in Paris & We
francs, an generalization in the former case,
and an undervaluation in the latter case.
which appear in the quotations of fiye-twen-
ties. But we shall not further enlarge upon
these Irregularities, which are Of far less i'm
portanoe than those growing ont of the false
London quo'ations.
In quoting exchange, however, there is no
anomaly in our transactions with any country
except Great Britain. In all other cases, with
this single exception, the moneys of one
country are compared directly with
the moneys of the other, without any
assumed par or percentage based on 1t. We
give 80 many cents for the form or thaler,
or get so many francs for the dollar, and so
on. With England only we assume par
and false one at that, established five gene.
rations since. Under this fiction the public at
large, and some wise legislators, are deluded
with the idea that exchange with England is
permanently against this country, when it is
often Gas at this very day. against her, and
that our 5-2OS sell in London at SO, when they
in fact fetch 81, or within a small fraction Of
British oonsols.
Perhaps we shall have to await, for the cor,
reotion of this absurdity, the time when in
ternational moneys Of account and coins shal
be established; but as the evil is really q
serious one, and the remedy perfectly simple
there seems no reason why It's application
should be delayed. Let the dollar, whether
In securities or in the purchase OF exchange
be rated In pence, not at fixed bat alta vary
ing rate, depending upon the ordinary fluctus
tiops of price. This wOuld not be novelty
for. except in dealings with the United States
IL Is the only mode by which the dollar
other countries ia rated. Exchange on China
spain. and South American ia always quotes
in pence to the dollar. According as ex
change is In favor of or against Grea