EXCHANGE. 
6/0 
shall be the most advantageous to remit or 
draw on. If bills remained always -at par, 
or if the course of exchange was sus- 
ceptible of being regulated with accuracy, 
there would be no such thing as an advan- 
tage to be obtained in one more than the 
other. The data to go upon are easily to 
be obtained, as the current prices are always 
published at short intervals. 
The following examples will illustrate the 
nature of this subject. 
London and Amsterdam. 
Proportional Exchange. 
Quotation Quotation from 
at 
London. 
Amsterdam. 
Amsterdam 
37 3 
Genoa 
45 
83$ 
Hamburgh 
35 
34 
Leghorn. 
48$ 
90 
Lisbon 
62 
44i 
Madrid 
34$ 
88$ 
Paris 
25 15 
53$ 
Observation. — London gives the certain 
price to Amsterdam ; that is, 1/. sterling for so 
many shillings Flemish banco, more or less ; 
therefore, when London remits to Amster- 
dam, that place through which the highest 
course of exchange can be obtained is to be 
preferred, because more shillings Flemish 
will be received in exchange for one pound 
sterling. On the contrary, when London 
Las to draw upon Amsterdam, that place 
should be chosen which furnishes the lowest 
course, because less shillings Flemish will be 
given in exchange for a pound sterling. 
If you include the charges in the calcula- 
tion, insert, for an indirect remittance, 100 
in the divisor, and 100 less the charges in 
the dividend ; and, for an indirect draft, 
place 100 in the divisor, and 100 more the 
charges in the dividend. 
N. B. The above quotations are succes- 
sively combined in the following arbitrations 
to ascertain the advantage which may be 
derived from the comparison of the different 
■proportional exchanges. 
London and Amsterdam through Genoa. 
A bill on Genoa taken in London at 45 
pence sterling per pezza of 5-| lire fuori di 
banco is remitted to Amsterdam, and nego- 
tiated at 83$ grotes Flemish banco per pezza 
fuori di banco ; what is the proportional ex- 
■ehange between London and Amsterdam ? 
1 pound sterling — 240 pence 
45 pence = 1 pezza 
1 pezza = 834 grotes 
12 grotes = 1 shilling Flemish. 
Pule. — Multiply 20, iixed number, by the 
-course of exchange between Amsterdam and 
Genoa ; and divide the product by the course 
of London on Genoa, that is, x = 
.45 
37 If 
London on Amsterdam through Hamburgh. 
A bill on Hamburgh taken in London at 
35 shillings Flemish banco per pound sterling 
is remitted to Amsterdam, and negotiated at 
34 stivers banco for 2 marcs lubs banco : 
what is the proportional exchange between 
London and Amsterdam ? 
1 pound sterling = 35 shillings Flemish 
8 shillings Flemish = 3 marcs' 
2 marcs banco = 34 stivers banco 
6 stivers = 1 shilling Flemish. 
Rule. — Multiply the course of exchange 
between London' and Hamburgh by the 
course of Amsterdam on Hamburgh, and di- 
vide the product by 32, iixed number, that is, 
x 34 — 37 2$. 
32 
London and Amsterdam through Leghorn. 
A bill on Leghorn taken in London at 48$ 
pence sterling per pezza of 8 reals is remitted 
to Amsterdam, and negotiated at 90 grotes 
Flemish banco per pezza of 8 reals : what 
is the proportional exchange between Lon- 
don and Amsterdam ? 
1 pound sterling = 240 pence 
48$ pence = 1 pezza 
1 pezza = 90 grotes 
12 grotes = 1 shilling Flemish. 
Kule. — Multiply 20, fixed number, by the 
course of exchange between Amsterdam and 
Leghorn ; and divide the product by the 
course of London on Leghorn. 
48$ 20 
2 fraction 90 
97 div. 1800 
2 fraction 
97)3600(37 if 
London and Amsterdam through Lisbon. 
A bill on Lisbon taken in London at 62 
pence sterling per milreis is remitted to Am- 
sterdam, and negotiated at 44$ grotes Fle- 
mish banco per crusade of 400 reis : what is 
the proportional exchange between London 
and Amsterdam ? 
1 pound sterling = 240 pence. 
62 pence = 1000 reis 
400 reis = 44$ grotes 
1 2 grotes = 1 shilling Flemish 
Rule. — Multiply 50, fixed number, by the 
course of exchange between Amsterdam and 
Lisbon ; and divide the product by the 
course of London on Lisbon, that is, 
50_x__44f _ 35 j 0 » 
62 
London and Amsterdam through Madrid. 
A bill on Madrid taken in London at 34$ 
pence sterling per dollar of exchange is re- 
mitted to Amsterdam, and negotiated at 88$ 
grotes Flemish banco per ducat of exchange : 
what is the proportional exchange between 
London and Amsterdam ? 
1 pound sterling = 240 pence 
34$ pence = 1 dollar 
375 dollars = 272 ducats 
1 ducat = 88$ grotes 
12 grotes = 1 shilling Flemish. 
Rule. — Multiply 1088, fixed number, by 
the course of exchange between Amsterdam 
and Madrid ; and divide the product by 75, 
fixed number, multiplied by the course of 
London on Madrid, 
75 1088 
34 $ 88 $ 
-300 8704 
225 8704 
37$ 272 
2587$ 96016 
2 fraction 2 fraction 
5175 div. 5175)192032(37 1^ result. 
London and Amsterdam through Paris. 
A bill on Paris taken in London at 25 
3 
livres 15 sols tournois per pound sterling is 
remitted to Amsterdam, and negotiated at 
53$ grotes Flemish banco for 3 francs: what 
is the proportional exchange between Lon- 
don and Amsterdam ? 
1 pound sterling = 25$ livres tournois 
8 1 livres tournois =80 francs 
3 francs = 53$ grotes 
12 grotes = 1 shilling Flemish. 
Rule. — Multiply 20, fixed number, by the 
course of exchange between London and 
Paris, and by the course of Amsterdam 6n 
Paris ; divide the product by 729, fixed num- 
ber : that is — = 37 9$. 
„ 729 
Recapitulation of the proportional exchange 
between London and Amsterdam. ° 
Through Genoa it comes out at 37 1 $ 
Hamburgh - - 37 2$ 
Leghorn - - - 37 Q 
Lisbon will answer to draw 35 1 o '{ 
Madrid - - 37 1 d 
Paris will answer to remit 37 9$ 
Direct course between London and | „ 
Amsterdam \ ° **• 
Application to remit. — It appears by the 
comparison of the above-mentioned ex- 
changes, that the proportional exchange upon 
Paris is the highest, and consequently, that 
it would be more advantageous to remit to 
Amsterdam by that place than by either of 
the others, or by a direct bill, Such remit- 
tance would establish an indirect course of 
37 9$, instead of the direct, 37 3 ; so that 
a merchant would receive 37 shillings 9$ 
grotes Flemish in exchange for one pound 
sterling. 
37 3 direct course : 37 9$ 
indirect course : : 100: 101 9 
Less for charges, at 4 per 5 
cent. - - 0 15 o( 
Advantage resulting from the l 1 ^ 
arbitration - 0 14 1 ) 
1 
1 
100 0 0 
Application to draw. — If a merchant at 
London had to value on Amsterdam, instead 
of drawing directly, he would order his cor- 
respondent at Amsterdam to take a bill on 
Lisbon at 44$, and either to remit it thither 
to provide for drafts from London upon Lis- 
bon at 62, or to remit it to London to be 
negotiated at the same price. Such opera- 
tion would establish an indirect course of 35 
10$, instead of the direct, 37 3 ; so that a 
merchant would give only 35 shillings 10$ 
grotes Flemish for one pound sterling. 
37 3 direct course : 35 10$ 
indirect course : : 100/. : 96 6 10 
Add for charges, at $ per 
cent. - 0 15 0 
Advantage resulting from 
the arbitration 2 18 2 
3 13 2 
100 0 0 
London and Genoa. 
Proportional exchange. 
Quotation Quotation 
Genoa 
at London. 
46 
from Genoa. 
Amsterdam 
37 4 
84$ 
Hamburgh 
35 4 
46$ 
Leghorn 
50 
124$ 
Lisbon 
61$ 
765 
Madrid 
34$ 
660 
Paris 
25 2 
94$ 
