IV.: Course of exchange, what.

59. The price at a certain time and place, of bills of exchange for given sums drawn upon another place, is called the course of exchange between those two places at that time; and this is frequently different from the par, and more or less than an equivalent in fine silver or fine gold is to be paid in one place, for a given sum to be received in the other. Thus, supposing the par of exchange betwixt London and Paris to be 29¼ pence sterling for a French ecu; it might happen at one time that a bill upon Paris might be purchased at London, at the rate of 28 pence for an ecu; and that at another time no bill could be had under 30½ or 31 pence.

As the ballance of accounts between the several trading nations of the world, must be continually varying, and frequently shifting to different sides; so the course of exchange will be ever fluctuating, and it will be more advantageous to make remittances through certain channels at one time, and by different ways at another. But as it would be difficult for the gross body of merchants to unravel these intricate clues, and to find out and supply each other’s wants and conveniences; particular persons apply themselves to this business, and drawing and remitting by bills of exchange is it self a distinct trade. The remitter or trader in bills of exchange, must have a real stock or credit in the several places with which he corresponds; for bills, strictly speaking, pay no debts; they only transfer credit from one place to another; and whenever the demand for bills to one place, are greater than the remitters can answer by their credit or stock in other places, they must then transport as much bullion as will satisfy their correspondents. But the principal skill of a remitter consists in finding where and when bullion will fetch most, or where credit or bills are to be had cheapest, and where and when to transfer this credit to most advantage. For bills of exchange being substitutes for bullion, are themselves as much a commodity as bullion, or any thing else; and the dealers in them make their profits in the very same way that other merchants do, by observing the advantages of different markets.