EXAMP

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?

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?

32) 12960(405 (33 9 Flem. per l. 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 0$\backslash frac\{1\}\{2\}$

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 Exchange, 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