New-York tribune., 1920-02-23

il
foreign exchange market is the
most difficult for sightseers to visit.
Even out in Kansas and Nebraska, folk
nave been reading Of late of the aero
oatic tumbles Of pounds, francs. lire
and marks, and, in their next visit
East, VIII perhaps express desire to
see the agile exchanges perform.
The American people--all except the
Few experts,--have only recently dis
covered foreign exchange. In the old
days: outside Of foreign traders and
tourists, the subject played an ex-
tremely small part in the consciousness
OF citizens of the United States. The
enhancement of interest originates not
only from the recent dramatic changes
In the dollar value Of the European
currencies, but also from America 8
new position as the great creditor ma
tlon Of the world.
A Homeless Market
Although. the buying and the selling
Of bills of exchange expanded MANY
times during and since the World War.
the character of dealing in them has
remained substantially unchanged. The
foreign exchange market lies without
the range of accessible places for
sightseers to visit because it Is with
out home. Unlike the Curb Market,
which is minus a roof, the exchanges
market has not even a definite geo.
graphical location in the open air.
when buyers and sellers meet face to
face.
The telephone is the means by which
mlnds meet IN the New York foreign
exchange market, which, in terms of
space, is some seventy-five banks. trust
companies, and banking houses, linked
together by network of telephones.
Instead of getting in touch with every
other bank to find out the state Of
the highly f1uctuating market at any
given nome ment, the bank communicates
with middleman-the foreign ex-
change broker. 1t has been estimated
that 30 per cent OF tho trading in for
e,ign exchange in New York is done
through brokers, who work for a small
commission. Sometimes, instead of
acting as agents for the banks and re-
ceiving commission, they become
dealers or principals. and make a profit
on each transaction instead of a com
mission. Many of the bankers feel
that it is not fair for the brokers to
do this, as they arc usually in full pos
session Of all the facts regarding the
desires of all the buyers and sellers of
exchange, and, in the opinion Of some
bankers. take advantage Of their in
formation in a way that is contrary to
the interest of the banks that patron-
ize them. This feeling is SO strong
that some of the larger brokers now
are doing chiefly 4 commission busi-
ness-thnt is, acting solely as agents
for the banks and accepting none Of
the risks that the principal must as
sumo.
Machinery of 1t
Some Of the large brokers have as
many as fifty private wires in their
Offices. One broker during business
hours is in almost constant touch with
seventy-five financial institutions, in
cluding several in Boston, Philadelphia
and Chicago, who ere the main buyers
and sellers of exchange. With three
assistants, this mid6leman in the mar
ket in which the moneys of all nations
are traded in, sits at his desk every
weekday except Saturday, half day
from 8 in the morning until S at
night and turns from telephone to tele-
phone, keeping ever informed as to
which institutions want to sell ex-
change and at what prices and as to
which institutions desire to buy and
at what prices. Thus, he serves his
economic function--in finding the
seller for the buyer and vice versa.
w iiSii Hc eaClS dS ~ DIOkeT ana not as q
principal he receives one-eighth to one
sixteenth of point for every pound
sterling that he buys and sells. In
the case of francs, the average com
mission, which may vary according to
private arrangements, is one-half point.
On an active day f5,000.0O0, 100000
francs, 10000, 900 lire and 10000 600
marks change hands. Transactions in
the other currencies are very much
smaller in volume.
In the case of pesetas and marks
the commission is one point. The com
mission is smallest in the most dealt
IN exchanges and largest in the least
dealt in. The commission is small. but
the volume of business done is ex
tremely large and the reward for
dal 8 work in the exchange brokerage
is considerable. Altogether, there are
only about fifty foreign exchange brok-
ers in New York, it is said, and most
OF the business is done by handful
The ranks of exchange brokers have
security. rere. maturity, Bid Ask Yield