Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-10-24

its. If 10000. coo is shipped to Europe that
means loss of eh7 d simount of reserves 10
the banks, and SaaoeO,0oo gold is equal to
,SS0,O00.C0O of credits. inasmuch as one dol
lar of gold is Capable of supporting four
dc RS of credit. Guild exports however,
never come until rates of exchange rise to a
ship gold than toTemit bills. Moreover, the
gold may be shippedI say to France, al
though actually OwedIJto England for if we
owe England and England owes France. the
gold, instead OF being shipped to England
and then reshipped to France. is shipped
directly from New York to France. thus
saving both time 'andfeXpense. This is what
is called "a triangular transaction
"Commerciar' and Bankers Bills.
Bills of foreign exchange are of two
kinds, viz, commercial bills, which are
drawn against commodities. such as cotton,
grain and provisions, and bankers bills,
which ar, drawn by bankers against their
foreign credits. These credits may be the
result either of sales of commodities or of
exports of gold, or of sales of securities,
or of loans obtained abroad. By these
bankers bills credit balance in London
becomes instantly available in New York.
The operations of exchange thus provide for
payment for our exports of cotton. grain
and other products as well as for the great
financial transactions involving immense
transfers of credits.
While in recent years many banks in the
country towns, as well as in the larger cities,
have gone into foreign exchange to some
extent. it is still true that the larger trans
actions are conducted by the leading in
ternational banking houses in New York
such as ]. P. Morgan I CO.. Kuhn Loeb
& Co, Speyer & Co., Ladenburg, Thalman
& Co., Heidelbach, Ickelheimer & Co, Bar
ing AIagoun & Co. and Lazard Freres The
profits O the business have been reduced to
narrow margins in New York. On bust
ness of 81, eco a day a profit may not
amount to more than $3.50 but even that
small percentage is regarded as Satisfacto-
ry, and if kept up for every business day
would aggregate $4,000 a year. a profit
of $500 on expectation of $1,000 600 of
gold is said to be enough to influence
sh pment This is only one-fiftieth of / per
cent, very small percentage considering
the risn, but it has been well said that
business is now done by decimal points
Mills instead of cents now constitute pro-
fits in great transactions.
Foreign Experts Employed.
1t is believed that the principal exchange
houses have tacit understanding among
themselves to rates There is no cast
iron agreement. but a sort of community
of interests Operations of exchange often
seem very mysterious. 1t is difficult to
derstand them. There are times when the
market appears to be subject to clever
manipula ton. The exchange department of
the leading houses and banks are generally
in charge of able experts, most of them
Germans and graduates of German uni
versties and German banking houses. They
command high salaries, for they are thor
oughly trained in their business and Amer
leans. strange to say, have not to any large
extent gone into this line of work.
The greatest exchange operation in the
history of the world was probably that by
which France SO quickly paid her enormous
war indemnity to Germany.
SERENO S. PRATT.