EXAMPLE.

An insurance was effected upon £3000, the value of a cargo of flax, from Riga to Hull, at 5 guineas per cent, to return £2. 10s. if the vessel sailed with convoy and arrived, which was the case; but the flax being damaged, sold only for £2250; whereas, if it had arrived sound, it would have sold for £3400. Required the amount of the particular average loss, the return of premium, for convoy and arrival; the whole amount to be recovered from the underwriters; and the rate per cent.

£3400 whole loss £1150:: £3000 amt, insu*.

£3000 amount insured

1015 average loss, to the nearest pound

£1985 amount upon which the return must be made 2 return per cent

* In this example the whole cost of the insurance is not required, and as so many examples of doing this have already been given, it is omitted.

TO FIND THE RATE PER CENT TO BE RECOVERED.

EXCHANGE is the paying or receiving of the money of one country for its equivalent in the money of another, by means of a written instrument, termed a bill of exchange.

The monies by which exchange is regulated, and in which accounts are kept, are generally the same; but, in many places they are imaginary*, as the pound sterling in England.

In commercial transactions with foreign countries, a knowledge of Exchanges is of the greatest importance; for, without this knowledge, it would be impossible to compare the prices of goods, in foreign markets, with each other; to judge of the most profitable mode of drawing or remitting money, or to export or import goods with the least probability of advantage.

of

The Par of Exchange is the intrinsie value of the money one country, compared with that of another country, which is estimated by the weight and purity of the gold or silver, which they respectively contain.

The Course of Exchange is the current value allowed for the money of one country, when reduced to the money of another country. This rate or price is seldom at par, but fluctuates, according to circumstances, like the prices of every other article of trade.

If the demand for bills of exchange, on any place, exceed the supply, this circumstance generally has the effect of rendering

* That is, having no real coin corresponding to them in value.

the course of exchange more favourable to that place, and vice versa; this demand aud supply must arise from the extent of the money transactions between the respective countries, which again are produced by the exportation or importation of goods, subsidies, the payment of armies, the wants of travellers, interest on foreign money, vested in the public funds, &c.

Although these circumstances must have considerable influence on the course of exchange, between two countries, yet they do not wholly regulate it; for the drafts or remittances, from one place or country to another, are frequently negociated through the medium of other countries; for example, the amount of goods, sent from America to the Continent of Europe, is often paid for by bills on London; and goods imported into England, from the shores of the Baltic, are generally paid through the medium of Hamburgh or Amsterdam; therefore, this circuitous mode of making payments must also have considerable effect on the course of exchange.

Sometimes the value of the coins of a country is altered, by the order of its government, while it retains the same nominal value. As this changes the par, it must also alter the course of exchange with other countries, in which the coins remain unaltered.

The course of exchange also differs, according to the time at which a bill of exhange is payable: those at a short date being more valuable than those at a distant date; not only by the interest, for the difference of time, but also on account of the assurance it affords, against risk, for the time the bill has longer to run.

The course of exchange is, nevertheless, confined, by particular circumstances, within certain limits. When this differs much from the true value, the merchants, to whom the difference is unfavourable, have recourse to the transportation of bullion, and even specie, instead of bills, which the vigilance of government cannot altogether prevent, although laws are often made to prohibit the exportation of specie.

When the rate of exchange is given between two places, one of the places always gives a certain fixed price, to receive an uncertain one. Thus, England gives a certain fixed sum, (a Pound sterling), for an uncertain variable price of the money of Holland, France, &c.; and, sometimes, England gives an uncertain, or variable price, (so many Pence,) for a certain fixed sum

of the money of other countries; as for the Piastre of Spain, the Milree of Portugal, &c.

The lower the course of exchange runs between two countries, the more favourable it is considered to be to the place or people in whose money it is reckoned; and vice versa. Thus, if the course of exchange, between London and Amsterdam, be at 9 guilders, per pound sterling, it is evident that it would re quire more sterling money to pay a debt due in Amsterdam, and fewer guilders to discharge a debt due in London, than when the exchange was at 11 guilders, per pound sterling. The Amsterdam merchant having to procure pounds sterling, to remit to London, buys them at a less price, when the exchange is low, than when it is high; but the London merchant, having to sell pounds sterling, (or to purchase guilders), will receive fewer of these, than when the course of exchange is higher; in this case the exchange is evidently in favour of Amsterdam; but the contrary of this would have been the case, if the course of exchange had been high.

USANCE is the usual time at which bills are drawn, between certain places; such as one, two, or three months after date; and double, or half-usance, means double or half of the usual time. If the usance be one month, 15 days are allowed for half

usance.

DAYS of GRACE are a certain number of days granted, after the term, mentioned in the bill, is expired: the number of these days are different, at different places. In England, 3 days of grace are allowed; at Hamburgh, 12; and at Madrid, 14; see page 356. Bills at sight, however, must be paid when presented.

ENGLAND.

IN England, accounts are kept in pounds, shillings, pence, and farthings; but the pound is imaginary, there being no current coin of the country of the value of one pound*.

The principal coins of this kingdom are the following:

Gold and silver are weighed by the pound Troy. (See the Table, page 161.)

In every well regulated country, there is a standard fixed by law for the degree of purity or fineness of its coins; that is, the proportion between the quantity of pure metal and alloy, is precisely fixed.

The fineness of gold is generally expressed in carats. Thus the whole weight of any piece of gold is supposed to be divided into 24 equal parts, called carats, and each carat into 4 grains. As the imaginary unit of reference may be any weight whatever, these denominations have no specific weight.

The standard for gold coin in Britain, is 22 carats of pure gold and 2 of alloy; hence the standard gold of this country is said to be 22 carats fine, one ounce of which is worth 3 pounds, 17 shillings, and 10 pence sterling.

The imaginary unit, in assaying silver, is divided into 12 ounces, and the ounce into 20 dwt.

Standard silver consists of 11 oz. 2 dwt. of pure silver and 18 dwts, of alloy, and is worth 5 shillings and 2 pence sterling, per ounce.

The coinage of gold and silver is regulated as follows:

One pound of standard gold, troy weight, is coined into 44 guineas; and a pound of standard silver is coined into 12 crowns, or 62 shillings.

From these regulations, it appears that the guinea weighs 5 dwts. 9 grs. and contains 118 grains of fine gold: that the crown weighs 464;+ grs. and contains 4293 grains of fine silver, and the inferior coins in proportion.