EXAMPLE

EXAMPLE. What is the sterling value of 731 piastres at 55$\backslash frac\{1\}\{2\}$d each?

L. 169 0 10$\backslash frac\{1\}\{2\}$ Ans.

Sterling money is reduced to money of Leghorn, by reverting the former operation; and exchange money is reduced to lire money by multiplying by 6, and lire money to exchange money by dividing by 6.

100 piastres of Leghorn are

In Naples = 134 ducats | In Geneva = 185$\backslash frac\{1\}\{2\}$ crowns.

The above are the chief places in Europe with which Britain exchanges directly; the exchanges with other places are generally made by bills on Hamburg, Holland, or Venice. We shall here, however, subjoin the par of exchange betwixt Britain and most of the other places in Europe with which she has any commercial intercourse.

The following places, viz. Switzerland, Nuremberg, Leipzig, Dresden, Osnaburgh, Brunswick, Cologne, Liege, Strasburgh, Cracow, Denmark, Norway, Riga, Revel, Narva, exchange with Britain, when direct exchange is made, upon the rixdollar, the par being 4s. 6d. sterling.

In North America and the West Indies, accounts, as in Britain, are kept in pounds, shillings, and pence. In North America they have few coins circulating among them, and on that account have been obliged to substitute a paper currency for a medium of their commerce; which having no intrinsic value, is subjected to many disadvantages, and generally suffers a great discount. In the West Indies coins are more frequent, owing to their commercial intercourse with the Spanish settlements.

Exchange betwixt Britain and America, or the West Indies, may be computed as in the following examples:

1. The neat proceeds of a cargo from Britain to Boston amount to 845l. 17s. 6d. currency: How much is that in sterling money, exchange at 80 per cent.?

If 180 : 100

9)4229 7 6

L. 469 18 7$\backslash frac\{1\}\{2\}$ Ster. Ans.

2. Boston remits to Britain a bill of 469l. 18s. 7$\backslash frac\{1\}\{2\}$d. sterling: How much currency was paid for the bill at Boston, exchange at 80 per cent.?

5)4229 7 6

845 17 6 currency. Ans.

3. How much sterling money will 1780l. Jamaica currency amount to, exchange at 40 per cent.?

Bills of exchange from America, the rate being high, is an expensive way of remitting money to Britain; and therefore merchants in Britain generally choose to have the debts due to them remitted home in sugar, rum, or other produce.

At Dublin, and all over Ireland, books and accounts are kept in pounds, shillings, and pence, as in Britain; and they exchange on the 100l. sterling.

The par of one shilling sterling is one shilling and one penny Irish; and to the par of 100l. sterling is 108l. 6s. 8d. Irish. The course of exchange runs from 6 to 15 per cent.

EXAMP. 1. London remits to Dublin 586l. 10s. sterling: How much Irish money will that amount to, exchange at 9½ per cent.

642.950625
Ans. 642l. 19s. Irish.

By practice.

2. How much sterling will 625l. Irish amount to, exchange at 10½ per cent.?

The several towns in Britain exchange with London

for a small premium in favour of London; such as, Exchange, 1, 1½, &c. per cent. The premium is more or less, according to the demand for bills.

EXAMP. Edinburgh draws on London for 860l. exchange at 1½ per cent.: How much money must be paid at Edinburgh for the bill?

To avoid paying the premium, it is an usual practice to take the bill payable at London a certain number of days after date: and in this way of doing, 73 days is equivalent to 1 per cent.

The course of exchange betwixt nation and nation naturally rises or falls according as the circumstances and balance of trade happen to vary. Now, to draw upon and remit to foreign places, in this fluctuating state of exchange, in the way that will turn out most profitable, is the design of arbitration. Which is either simple or compound.

In simple arbitration the rates or prices of exchange from one place to other two are given; whereby is found the correspondent price between the said two places, called the arbitrated price, or par of arbitration; and hence is derived a method of drawing and remitting to the best advantage.

EXAMP. 1. If exchange from London to Amsterdam be 33s. 9d. per pound sterling; and if exchange from London to Paris be 32d. per crown; what must be the rate of exchange from Amsterdam to Paris, in order to be put on a par with the other two?

240)12960(54d. Flem. per crown. Ans.

2. If exchange from Paris to London be 32d. sterling per crown; and if exchange from Paris to Amsterdam be 54d. Flemish per crown: what must be the rate of exchange between London and Amsterdam, in order to be on a par with the other two?

If

Ster. Flem. Ster.
d. d. d.
If 32 : 54 : : 240
240

216
108

12 s. d.

32) 12960 (405 (33 9 Flem. per 1. Ster. Ans.

From these operations it appears, that if any sum of money be remitted, at the rates of exchange mentioned, from any one of the three places to the second, and from the second to the third, and again from the third to the first, the sum so remitted will come home entire, without increase or diminution.

From the par of arbitration thus found, and the course of exchange given, is deduced a method of drawing and remitting to advantage, as in the following example.

3. If exchange from London to Paris be 32d. sterling per crown, and to Amsterdam 405d. Flemish per pound sterling: and if, by advice from Holland to France, the course of exchange between Paris and Amsterdam is fallen to 52d. Flemish per crown; what may be gained per cent. by drawing on Paris, and remitting to Amsterdam?

The par of arbitration between Paris and Amsterdam in this case by Ex. 1. is 54d. Flemish per crown. Work as under.

d. St. Cr. L. St. Cr.

If 32 : 1 : : 100 : 750 debit at Paris.

Cr. d. Fl. C. d. Fl.

If 1 : 52 : : 750 : 39000 credit at Amsterdam.

d. Fl. L. St. d. Fl. L. s. d. Ster.

If 405 : 1 : : 39000 : 96 5 11$\backslash frac\{1\}\{2\}$ to be remitted.
100

3 14 $\backslash frac\{1\}\{2\}$ c$\backslash frac\{1\}\{2\}$

But if the course of exchange between Paris and Amsterdam, instead of falling below, rise about the par of arbitration, suppose to 56d. Flemish per crown; in this case if you propose to gain by the negotiation, you must draw on Amsterdam, and remit to Paris. The computation follows:

L. St. d. Fl. L. St. d. Fl.

If 1 : 405 : : 100 : 40500 debit at Amsterdam.

d. Fl. Cr. d. Fl. Cr.

If 56 : 1 : : 40500 : 723$\backslash frac\{1\}\{2\}$ credit at Paris.

Cr. d. St. Cr. L. s. d. Ster.

If 1 : 32 : 723$\backslash frac\{1\}\{2\}$ : : 96 8 6$\backslash frac\{1\}\{2\}$ to be remitted.
100

3 11 5$\backslash frac\{1\}\{2\}$ gained per cent.

In negotiations of this sort, a sum for remittance is afforded out of the sum you receive for the draught; and your credit at the one foreign place pays your debt at the other.

In compound arbitration the rate or price of exchange between three, four, or more places, is given,

in order to find how much a remittance passing through them all will amount to at the last place; or to find the arbitrated price, or par of arbitration, between the first place and the last. And this may be done by the following