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528. The Money of Account of any country consists of the denominations of the money of that country in which accounts are kept.
529. The Act of March 3, 1873, provides that “the value of the standard coins ... of the world shall be estimated annually by the Director of the Mint, and be proclaimed on the first day of January by the Secretary of the Treasury.”
530. In accordance with this law, the following table was published by the Secretary of the Treasury, Jan. 1, 1888:
U. 8. MONEY
.34,5 Belgium, Franc,
G. and S.,
.19,3 Bolivia, Boliviano,
.69,9 Brazil, Milreis of 1000 reis, Gold,
.54,6 British America, Dollar,
$1.00 Central America, Dollar,
.91,8 Chili, Peso,
.91,2 Cuba, Peso,
.92,6 Denmark, Crown,
.26,8 Ecuador, Sucre,
Pound of 100 piastres, Gold, 4.94,3
G. and S., .19,3
4.86,63 Greece, Drachma,
G. and S., .19,3 German Empire, Mark,
.23,8 Japan, Yen,
.99,7 India, Rupee of 16 annas, Silver,
.33,2 Italy, Lira,
G. and S.,
.19,3 Liberia, Dollar,
1.00 Mexico, Dollar,
.75,9 Netherlands, Florin,
G. and S., .40,2 Norway, Crown,
.26,8 Peru, Sol,
Silver, .69,9 Portugal, Milreis of 1000 reis, Gold,
Rouble of 100 copeeks, Silver, Spain,
Peseta of 100 centimes, G. and S., .19,3 Sweden, Crown,
.26,8 Switzerland, Franc,
G. and S.,
.19,3 Tripoli, Mahbub of 20 piasters, Silver,
.63 Tunis, Piaster of 16 caroubs, Silver,
.11,8 Turkey, Piaster,
.04,4 U.S. of Colombia, Peso,
.69,9 Venezuela, Bolivar,
.19,3 531. Bills of Exchange are usually made payable either 3 days after sight or 60 days after sight. The latter are quoted at a lower rate, on account of the discount.
532. Most of the dealings in foreign exchange are with the commercial centres mentioned in the following table, taken from a recent New York paper:
3 days. Prime banking sterling bills on London, 4 82 @4 83 4 84 4 844 Good bankers' and prime com'l, 4 81 4 82 483 4 84 Good commercial,
4 804 81 4 817@4 821 Paris (francs),
5 2425 241 5 21 @5 19 Antwerp (francs),
5 245 241 5 21/@5 19 Swiss (francs)
5 23 20° 5 203@5 183 Amsterdam (guilders),
39 40 403@ 407 Hamburg (reichmarks),
933 @ 94 943@ 94 Frankfort (reichmarks),
94 941 94 Bremen (reichmarks),
93 @ 94 94 @ 94 Berlin (reichmarks),
933 94 945 943 Remittances to and from other places are frequently made in bills on these leading ones, especially London.
In the London quotations “prime” bills are those on the best banking houses,“good” are those on houses in good credit, but in less demand than the prime.' "Commercial” signifies merchants' drafts, which generally rate below bankers'. In the quotations on Paris, Antwerp, and Switzerland the franc is the unit, and the quotation gives the number of francs and centimes to the dollar. The exchange on Amsterdam is the number of cents to the guilder; while on Hamburg, Frankfort, Bremen, and Berlin, the quotation gives the number of cents in 4 reichsmarks. email@example.com indicates the highest and lowest prices on the day on which the quotations were made.
REMARK.—United States securities are quoted in London on a gold basis instead of a greenback one, of 4 shillings to the dollar, hence they usually appear lower than with us.
533. A Letter of Credit is a letter from a banking bouse in one country to one or more of their correspondents in another, directing them to pay to the person in whose favor the letter is written, any sum not exceeding a certain amount specified in the letter.
2. What must be paid in New York city for a bill of ex• change on London for £450, at 3 days sight, at $4.88 to the pound sterling ?
OPERATION. SOLUTION.-If £1 cost $4.88, £450 cost 450 times $4.88 14.88, which is $2196. Hence the following
$2196.00 Rule.-Find the cost of a unit of the currency in which the bill is given, and multiply the face by it for the cost, or divide the cost by it for the face..
WRITTEN EXERCISES. 2. What will be the cost in Philadelphia of the following draft, exchange at 60 days being $1.84 ?
Ans. $2420. Exchange for £500. PHILADELPHIA, July 1, 1875.
Sixty days after sight of this First of Exchange (second and third unpaid) Pay to the order of Chas. Smith, Five Hundred Pounds Sterling, for value received, and charu the same to account of
PETER WRIGHT & Sons. To MESSRS. BROWN BROTHERS, LIVERPOOL.
3. What must a merchant in Canton pay for a draft of $1134, if 1 tael=$1.63 ?
Ans. 695.71- taels. 4. i wish to remit 5400 francs to Paris; what will a draft cost me in New York, if 1 franc=19.6¢? Ans. $1058.40.
5. A merchant in London sold a consignment of wbeat from Odessa for £420; what will be the face of a draft on Odessa for the amount, if £l=6 roubles 70 copecks ?
Ans 2814 roubles. 6. By the first quotation in the table, Art. 532, what amount of exchange on Geneva at 3 days sight will $1200 in gold buy?
Ans. 6247.50 francs.
To be omitted unless otherwise directed. 7. At the first quotation, how much exchange on Berlin at 60 days sight, will $1000 currency buy? Ans. 4266.66+ reichsmarks.
8. How much in currency would a bill on Amsterdam for 4000 guilders cost, at the first quotation, 60 days sight, when gold was selling at 1137 ?
Ans. $1806.331. 9. Mecke & Co., of Bremen, wish to remit 4370 reichsmarks to their correspondent in New York; what will be the face of a draft for 3 days at the second quotation ?
Ans. $1153.58 10. A commission merchant in Cadiz having sent to his correspondent in Philadelphia an invoice of sherry, valued at 8400 pesetas, draws op him for the cost, exchange being 1 peseta-20.14; what woul have been the advantage to the consignee of remitting a draft on Cadiz, 1 peseta being worth 19.3° in Philadelphia ?
11. A gentleman about to visit Europe obtains a letter of credit from Fisk, Hatch & Co., depositing bonds as security; he draws in Paris 2000 francs July 1, the bill of exchange at 60 days reaching New York, July 17; on his return, Sept. 15, he settled the account; what must be pay, commission 1%, exchange 5.241?
ARBITRATION OF EXCHANGE. 534. Arbitration of Exchange, also called Circular Exchange, is the method of making exchange between two places by means of one or more intermediate excbanges.
535. Simple Arbitration is that in which there is only one intermediate exchange; Compound Arbitration is that in wbich there are two or more intermediate excbanges.
As rates of exchange constantly vary, it is often more advantageous to make the exchange by passing through several intermediate places than by a direct remittance, and the object of arbitration is to enable a person to ascertain which will be most profitable.
1. A mercbant wishes to pay a debt in Paris of 4680 francs, remitting thrcugb London, exchange between Paris and London being at £1=26 francs, and between London and New York £l=$4.90; what will it cost in New York ?
SOLUTION.- If we represent the required number of dollars by 2, we have x=4680 francs,
$x=4680 francs 26 francs=£1, and £1=$4.90. Now, the pro
26 f.= £1 duct of the first set of values will equal the pro
£1=$4.90 duct of the second set; hence the product of the second set, divided by the product of all the first
= $882 set except x, will equal x, from which we have r=$882.
2. A merchant in Savannab wishes to remit $2000 to Cincinnati; exchange on New Orleans is % premium; between New Orleans and St. Louis 1% discount; between St. Louis and Cincinnati £% discount; what was the value of the remittance in Cincinnati if sent through these cities?
SOLUTION.-According to the given rates $1.004 in Savannah=$1 in New Orleans;
x Cin.= $2000 S. und $0.99 in New Orleans =$1 in St. Louis;
$1.004 S.=$1 N. 0. and $0.994 in St. Louis=$1 in Cincinnati;
$0.99 N. 0.=$1 St. L. hence, as above explained, x=$2025.29.
$0.994 St. L. = $1 Cin,
= $2025.29 Rue.-I. Represent the sum required by x, affixing the proper unit of currency, place it equal to the given rum,
and arrange the given rates of exchange so that in any two consecutive equations the same unit of currency shall stand on opposile cides.
II. If commission is charged for DRAWING, place 1 minus the rate on the LEFT if the coST OF EXCHANGE is required, and on the right if PROCEEDS are required; but if com mission is charged for REMITTING, place 1 plus the rate on the right if cost is required and on the LEFT if PROCEEDS are required.
III. Divide the product of the numbers on the right by the product of the numbers on the left, cancelling equal factors; the result will be the required sum.
WRITTEN EXERCISES. 3. If exchange between New York and Amsterdam is 40€ per florin, and between Amsterdam nd St. Petersburg is 15 florins to 8 roubles, what must be paid in St. Petersburg for a bill on New York for $1200? Ans. 1600 roubles.
4. When exchange between Boston and London is £9= $46, between London and Paris is £2=54 francs, and between Paris and Stockholm is 7 francs=5 crowns; how much must be paid in Boston for a bill on Stockholm, for 2400 crowns? required the difference between it and the direct exchange at 1 crown=274.
Ans. $11.95. 5. A merchant in Baltimore having purchased goods in Berlin to the value of 5000 marks, remits through London, Antwerp, and Amsterdam, at the following rates: £1=$4.85; £l=25.15 francs; 1 guilder=2.5 francs; 1 guilder=1.875 reichsmarks; what will the remittance cost him in Balti. more, allowing 4% brokerage in London? Ans. $1288.83.
To be omitted unless otherwise directed. 6. A man in San Francisco wishes to pay a debt of $5200 in Philadelphia; the direct exchange is 2% in favor of Philadelphia, but the exchange on Chicago is 13% in favor of Chicago, and between Chicago and Philadelphia 4% in favor of Philadelphia; required the difference between the direct and circular exchange.