REDUCTION OF CURRENCIES. 387. The term currency signifies money, or the circulating medium of commerce. 388. Reduction of currencies is the process of changing money from the denominations of one country to the denominations of another, without altering its value. OBS. 1. The intrinsic value of the coins of different nations, depends upon their wright and the purity of the metal of which they are made. (Art. 146.a. Obs. 1.) The legal value of foreign coins is determined by the laws of the country. 2. For the present standard weight and purity of the gold and silver coins of the United States, see Art. 146.a. Obs. 2. 389. Foreign coins and moneys of account which have been made current in the United States, by act of Congress, with their values annexed. Ex. 1. Reduce £20 sterling to Federal money. Suggestion. The legal value of £1 is $4.84, consequently £20 must be 20 times as much; and $4.84 × 20=$96.80. Ans. 2. Reduce £5, 13s. 6d. to Federal money. Suggestion.-Reduce 13s. 6d. to the decimal of a pound, and multiply Operation. £1 $4.84 Ans. $27.467 $4.84 by the number of pounds; the £5, 13s. 6d.=£5.675 result is the answer. Hence, QUEST.-387. What is currency? 388. What is reduction of currencies ? 391. To reduce Sterling to Federal money. I. Reduce the given shillings, pence, and farthings to the decimal of a pound, and annex it to the pounds. II. Multiply the legal value of £1 expressed in Federal money, by the number of pounds with the decimal annexed, and point off the product as in multiplication of decimals. OBS. All foreign coins may be reduced to Federal currency, by multiplying the value of one expressed in Federal money by the number of coins. Reduce the following to Federal money. 3. £100, 5s. 5. £150, 7s. 6d. 7. £591, 12s. 8d. 1 far. 9. £623, 17s. 9d. 2 far. 11. 8763 francs. 13. 9271 florins. 4. £275, 15s. 6. £368, 16s. 4d. 2 far. 8. £463, 13s. 6d. 3 far. 10. £703, 11s. 4d. 1 far. 12. 2365 roubles, Russian. 14. 6235 taels, Chinese. 15. Reduce $27.467 to Sterling money. Suggestion. We divide the given dollars by $4.84, because $4.84 make £1. Then, reducing the decimal .675 to shillings and pence, the result is £5, 13s. 6d. Hence, 392. To reduce Federal to Sterling money. Operation. $4.84)$27.467 £5.675 Ans. £5, 13s. 6d. Divide the given sum by the legal value of £1 expressed in Federal money, and point off the quotient as in division of decimals. The figures on the left of the decimal point will be pounds; those on the right, decimals of a pound, which must be reduced to shillings, pence, and farthings. (Art. 201.) OBS. Federal money may be reduced to any foreign currency, by dividing the given sum by the Federal value of the unit money of the given currency. 16. Reduce $486.42 to ster. 17. Reduce $1452.50 to ster. 18. Reduce $16256.75 to ster. 19. Reduce $20273.375 to ster. QUEST.-391. How reduce Sterling money to Federal ? Obs. How may all foreign coins be reduced to Federal money? 392. How reduce Federal money to Sterling? Obs. How reduce Federal money to any foreign currency? 26. Reduce $45 to New England currency. Suggestion. Since there are 6s. N. E. cur. in $1, in $45 there are 45 times as many, or 270s. Now reducing the shillings to pounds, the result is £13, 10s. Hence, $45 6s. 2|0)27 0s. Ans. £13, 10s. 393. To reduce Federal money to the State currencies. Multiply the given sum by the number of shillings which, in the required currency, make $1, and the product will be the answer in shillings, and decimals of a shilling. Reduce the shillings to pounds, and the decimals to pence and farthings. (Art. 201.) OBS. For Table of the different State currencies and their origin, see p. 148. Reduce the following to the specified currencies. 27. $378 to N. E. currency. 28. $565.75 to N. E. currency. 29. $465.45 to N. Y. currency. 30. $875.50 to N. Y. cur. 31. $640.25 to Pa. currency. 32. $950.60 to Ga. currency. 33. $1000 to Canada cur. 34. $25.78 to Canada cur. 35. Reduce £15, 7s. 6d., N. Y. currency, to Federal money. Operation. £15, 7s. 307.0 s. and 6d. 0.5 s. 8)307.5 s. Suggestion.-Reducing the pounds to shillings, and the pence to the decimal of a shilling, we have 307.5s. Now, as 8s. N. Y. cur. make $1, 307.5s. will make as many dollars as 8 is contained times in 307.5; and 307.5÷8=$38.4375. Hence, Ans. $38.4375. 394. To reduce the State currencies to Federal money. Reduce the pounds to shillings, and the given pence and farthings to the decimal of a shilling; then divide the sum by the number of shillings which, in the given currency, make $1, and the quotient will be the answer in dollars and cents. Reduce the following examples to Federal money. 36. £48, 15s. 4d. N. E. cur. cur. 37. £73, 48. 5d. N. E. currency. QUEST. 393. How reduce Federal money to the State currencies? 394. How reduce the State currencies to Federal money? EXCHANGE. 395. EXCHANGE in commerce, signifies the receiving or paying of money in one place, for an equal sum in another, by drafts or bills of Exchange. OBS. 1. A Bill of Exchange is a written order, addressed to a person, directing him to pay at a specified time, a certain sum of money to another person, or to his order. 2. The person who signs the bill is called the drawer or maker; the person In whose favor it is drawn. the buyer or remitter; the person on whom it is drawn, the drawee, and after he has accepted it, the accepter; the person to whom the money is directed to be paid, the payee; and the person who has legal possession of it, the holder or owner. 396. The acceptance of a bill or draft is a promise to pay it at maturity or the specified time. The common method of accepting a bill, is for the drawee to write the word accepted. and his name under it, across the bill, either on its face or back. OBS. If the payee wishes to sell or transfer a bill of exchange, it is necessary for him to endorse it, or write his name on the back of it. 397. The par of exchange is the standard by which the comparative worth of the currency of different countries is estimated. OBS. 1. The par of exchange may be either intrinsic, or nominal. The intrinsic par is the real value of the currency of different countries, as determined by the weight and purity of their respective coins. A nominal par is a conventional standard established by commercial usage, and may be above or below the intrinsic par. 2. Exchange is seldom stationary, or at par, long at a time. It varies according to the circumstances of trade. When the balance of trade is against a country, that is, when the exports are less than the imports, bills on the foreign country will be above par, for the rea-on that there will be a greater demand for them to pay the balance due abroad. On the other hand, when the balance of trade is in favor of a country, foreign bills will be below par, for the reason that fewer will be required. 3. The course of exchange is its fluctuation above and below par. 398. Exchange is of two kinds, inland or domestic, and foreign. Domestic exchange relates to monetary transactions between different places in the same country. Foreign exchange relates to monetary transactions between different countries. QUEST.-395. What is Exchange? Obs. What is a bill of exchange? Who is the drawer? The drawee? The payee? The owner? 396. What is the par of exchange? Of how many kinds is it? What is the intrinsic par? The nominal par. Obs. What is the course of exchange? 397. Of how many kinds is exchange? What is domestic exchange? Foreign? INLAND OR DOMESTIC EXCHANGE. 399. Inland, or Domestic Exchange, is reckoned at a certain per cent. on the legal currency of the country. $5588. NEW YORK, March 27th, 1853. 1. At sight, pay to the order of Messrs. Brady & Co., Fifty-five hundred and eighty-eight dollars, value received, and charge the same to WILLIAM Dwight. To Messrs. J. K. WALKER & Co. Merchants, Mobile. What is the value of this bill at 2 per cent. premium? Suggestion.-Since exchange is 2 per cent. premium, the draft is worth the amount stated in it, and 2 per cent. besides. We therefore find 2 per cent. on $5288, and add it to the draft. Hence, Operation. $5288 draft, .02 rate. $105.76 premium. $5393.76. Ans. 400. To calculate exchange on domestic bills or drafts, Multiply the amount of the bill by the given per cent. expressed in decimals, and the result will be the exchange. 2. A merchant in Philadelphia wishes to remit $8278 to New Orleans: what will a draft cost at 21 per cent. discount? 3. A man in St. Louis wishes to buy a draft on New York for $1127.50: what will it cost him at 1 premium? 4. A merchant in New Orleans consigned 500 bales of cotton, each weighing 378 lbs., to his agent in Boston, which the agent sold at 8 cents a pound, and charged 2 per cent. commission; the merchant finally sold a draft on his agent for the sum due him, at 1 per cent. premium: how much did he receive for his cotton? 5. B of New York sent 876 pieces of cloth, containing 35 yards apiece, to D in Cincinnati, and agreed to pay him 21 per cent. commission, and 3 per cent. guarantee. B sold the cloth at $4.87 per yard, paid $69.50 freight, and $35.15 insurance. For what sum can B draw on D; and what will he receive for his cloth, if he sells the draft at 11 per cent. premium? QUEST.-400. How do you calculate exchange on domestic bills or drafts? |