EXCHANGE 



in the way of the export of gold. 

 Consequently their subjects might 

 be deterred or prevented from 

 making remittances in specie, al- 

 though the rate of exchange had 

 passed the gold point. 



We can now discern the modus 

 operandi of the exchange market. 

 There is a demand, constant in kind 

 but variable in intensity, for the 

 means of meeting claims in every 

 centre of commercial activity. 

 Bankers and brokers specialise in 

 the practice of buying remittances. 

 They know who is likely to have 

 them for sale. Frequently they 

 sell their own foreign balances and 

 embark upon various delicate 

 operations in order to restore 

 them. For more than a century, 

 however, there has been a ten- 

 dency to settle all international in- 

 debtedness by means of bills on 

 London, and it has been the policy 

 of London to honour all inter- 

 national obligations in gold. 



Until the outbreak of the Great 

 War in 1914 this availability of 

 gold was an unbroken tradition. 

 Occasionally the workings of inter- 

 national finance led to the pros- 

 pect of a shortage in London's 

 gold resources, but that state of 

 affairs was remedied by raising 

 the Bank of England rate so as 

 to attract gold from abroad by 

 the offer of higher interest. The 

 effect of this gold-paying policy 

 was to render the draft on London 

 negotiable throughout the world, 

 and to create a preference for it as 

 against drafts on any other mone- 

 tary centre. The possessor of a 

 sound draft on London knew that 

 it was as good as gold ; he lacked 

 this assurance if he held only a 

 draft on Berlin or Paris. The effect 

 of this knowledge and preference 

 was to stimulate the settling of all 

 international obligations by drafts 

 on London, rather than by drafts 

 on the place where the business 

 which created the obligation had 

 actually been done. 



A fine (i.e. absolutely first-class) 

 bill of exchange, payable at a 

 future date, is clearly an instru- 

 ment whose usefulness is not con- 

 fined to the original holder. If he 

 requires the money forthwith, he 

 can discount the bill with his 

 banker. The banker will, however, 

 pay more for it if it is accepted by 

 some firm of the highest repute. 

 From this fact has arisen the prac- 

 tice, on the part of banks and cer- 

 tain eminent mercantile firms and 

 finance houses, of systematically 

 accepting approved bills, in return 

 for a commission. Firms who 

 specialise in this class of business 

 are known as accepting-houses. 



Bibliography. The Theory of the 

 Foreign Exchanges, G. J. G. Go- 



3041 



schen, new ed. 1896 ; A B C of the 

 Foreign Exchanges, G. Clare, 4th 

 ed. 1905 ; Money, Exchange and 

 Banking, H. T. Easton, 2nd ed. 

 1907 ; Money Changing, H. Withers, 

 new ed. 1915. 



Exchange. Name given to a 

 building wherein merchants meet 

 for the transaction of business. It 

 is frequently referred to as 'Change 

 and is the equivalent of the French 

 bourse. Prominent among such 

 buildings is the Royal Exchange, 

 London. In modern times many 

 forms of business have their own 

 exchange. There are stock ex- 

 changes in London, Montreal, 

 Sydney, Johannesburg, and other 

 large cities. London has a hop ex- 

 change and a coal exchange, while 

 many towns have a corn exchange. 

 See Stock Exchange. 



Exchange (Lat. ex, out ; late 

 Lat. cambiare, to change ; Fr. 

 echange ). As a legal term this has 

 two principal meanings. Exchange 

 of lands in England is effected by 

 deed of exchange. A true deed of 

 exchange demands that like shall 

 be given for like, though not neces- 

 sarily in value : a freehold for a 

 freehold, leasehold for leasehold, 

 copyhold for copyhold. The par- 

 ties to the deed must actually enter 

 upon the property to complete the 

 transaction ; so that the deed is 

 void if one party to the deed 

 dies before entry. Exchange of 

 livings by incumbents is allowed 

 by ecclesiastical law. Each in- 

 cumbent resigns his living into 

 the hands of the bishop, who then 

 inducts them both into their new 

 livings ; but, as in exchange of 

 lands, if one dies before both are 

 inducted, the exchange becomes 

 null and void. 



Exchange, MILITARY. Term de- 

 signating the privilege extended to 

 officers of the regular and Indian 

 armies of exchanging with one 

 another from one unit or corps to 

 another. Officers desiring to ex- 

 change must forward their appli- 

 cations to the War Office, stating 

 their reasons, and accompanied by 

 the recommendations of the com- 

 manding officers concerned, who 

 must certify that the exchange 

 does not originate through any 

 question affecting the honour, 

 character, or professional efficiency 

 of the applicants. Medical cer- 

 tificates are also required stating 

 that the officer is in a fit state of 

 health for duty in the locality 

 where the unit to which he desires 

 to transfer is stationed. Exchanges, 

 when sanctioned, are notified in 

 The London Gazette. Exchanges 

 are usually made for private 

 reasons, and are made between 

 officers of similar rank. See Com- 



EXCHEQUER 



Exchange and Mart, THE. 

 Name sometimes given to the 

 London paper, the full title of 

 which is The Bazaar, Exchange 

 and Mart (q.v.). 



Exchequer. Name given in 

 England to the department en- 

 trusted with the duty of receiving 

 the royal revenues. The word 

 means a chess board because it 

 was by means of a device of this 

 kind that the early accounts were 

 kept. The late Lat. equivalent is 

 scaccarium, and the Dialogus de 

 Scaccario, a treatise of the time of 

 Henry II, gives most of our exist- 

 ing information about the early 

 exchequer. The sittings were 

 held at Winchester and then at 

 Westminster. 



The early kings had both a trea- 

 sury and an exchequer, and the 

 functions of the two have been 

 somewhat intermingled even until 

 the present day. The Dialogue 

 tells how the exchequer met, the 

 justiciar, treasurer, chancellor, and 

 other high officials with their clerks 

 attending its meetings, how the re- 

 ceipts were entered on rolls, and 

 how tallies were used in this con- 

 nexion. It met twice a year, at 

 Easter and Michaelmas, and its 

 main dealings were with the sheriffs 

 who attended to account for the 

 royal revenues which they had 

 collected or failed to collect. In 

 addition to this court there was a 

 lower exchequer, which was a per- 

 manent department and in prac- 

 tice a branch of the treasury. ^ 



Gradually certain changes were 

 introduced. The treasurer took 

 the place of the justiciar as 

 its president, and then these high 

 officials ceased to attend its sittings 

 in person. The seal, hitherto held 

 by the chancellor, was given to a 

 new official, and the chancellor of 

 the exchequer came into being. 

 The chief members were known as 

 barons, and as they began to hear 

 cases affecting the revenue, they 

 resolved themselves into one of the 

 regular courts of law, the court of 

 exchequer, with a court of appeal, 

 the court of exchequer chamber, 

 which existed from 1357 to 1830. 



As the country became richer, 

 the duties of the exchequer be- 

 came more varied and numerous. 

 It dealt not only with the accounts 

 of the counties, but with others 

 which concerned the royal revenue. 

 The exchequer continued in exist- 

 ence until the 19th century. It 

 collected and paid out the royal 

 income and expenditure, while its 

 five barons, under a chief baron, 

 heard cases as a court of law. 



In 1834 great changes were 

 made, the old exchequer being 

 practically abolished, the pay- 

 master-general taking over its 



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