21st November, 1919. 



The President, Professor Gkegg Wilson, in the Chair. 



FLUCTUATIONS IN THE FOREICN EXCHANGES. 



By Professor F. T. Lloyd-Dodd, M.A., D.Sc. 



Head of Coynmerce Department, Municipal Technical 



Institute, Belfast. 



To the ordinary individual the term " Foreign Exchanges," 

 if it conveys any impression at all, merely brings to mind mystic 

 columns of figures which appear periodically in the morning 

 newspaper. If his curiosity is still unsatisfied, he may turn up 

 the reference in the Encyclopaedia Britanica where it is defined 

 as "The system by which commercial nations discharge their 

 debt to each other." Having read that, he feels that he knows 

 all that is worth knowing on the subject. 



There is, however, a great deal more in it than that ! 

 Foreign Exchange is admittedly a complex subject, and on the 

 surface is full of appalling pitfalls and intricacies to the unwary. 

 Once one has delved beneath the surface, he finds it an absorbing 

 and fascinating study. For those who have not either time or 

 inclination to study the subject deeply, it is possible, with little 

 difficulty, to grasp the principle on which foreign exchange is 

 based, so as to take an intelligent interest in exchange fluctua- 

 tions. 



Stated briefly, foreign exchange is the buying and selling of 

 the money of other countries. From our point of view, foreign 

 exchange is the business of exchanging foreign money into English 

 money ; and we would naturally expect that the exchange would 

 be carried out at a fixed ratio of so many dollars or francs for a 

 sovereign. But this is by no means the case. Money is a com- 

 modity, and like other commodities is subject to the law of supply 

 and demand. If there is a large supply of foreign money for sale, 

 with a small demand, the price goes down. If on the other hand 

 there is a small supply and a large demand, the price rises, 



