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price of a currency is above the legal price, a black market 

 in that currency will develop in that country. If it is not per- 

 mitted to develop in that country, it will develop outside 



the country. 



Foreign Exchange 



One of the frequent methods of circumventing the fixed 

 official exchange rates is for the owner of foreign currency 

 to sell his private check for local currency. An Englishman 

 leaving England is allowed to take with him only 10. If he 

 is coming to the United States, he will need more. One prac- 

 tice is to go to an American living in England and offer 

 pounds for a United States dollar check. The Englishman is 

 willing to pay above the official price in order to get the 

 much needed dollars. When he arrives in New York, he 

 cashes the dollar check. 



Others smuggle out English paper money to be sold in the 

 New York market. During the summer of 1943 it was re- 

 ported that such notes brought $2.50 per pound whereas the 

 official rate was $4.04. The number of ways of getting around 

 pegged exchange rates are no doubt legion. 



Black Markets in Commodities 



There have been innumerable illustrations of black mar- 

 kets in commodities as well as in currencies. It was the op- 

 eration of smugglers and free traders in black markets that 

 broke up the English government-granted mercantile sys- 

 tem typified by the East India and Hudson's Bay trading 

 monopolies. American clipper ships during the 1790's sailed 

 around the world to out-of-the-way ports of the East Indies 

 and bought pepper from the natives at higher than the mo- 

 nopoly 's "ceiling prices' ' to producers, and sold it in the 

 world's markets at less than the monopoly's "ceiling prices" 

 to consumers. These were very profitable black-market op- 

 erations and it was reported that the descendants of some 



