VIII.: Bullion is not exported till the exchange is at a certain limit from par.

63. Merchants always prefer bills of exchange, whilst they are to be had at moderate rates, before bullion or cash, which with them is the same thing; and bullion is never transported from one place to another, till the exchange is at a certain distance from par; and this distance is again limited by the expence of transporting bullion, wherein is included, besides the freight, commission and insurance. And hence, the whole fluctuation in the course of exchange is very different between different places. Betwixt London and Paris, the exchange must vary about ¾ per cent. from par, before bullion, at least in any quantity, will be sent from either side. The freight of bullion from London to Calais is about ¼ per cent. from thence to Paris about ⅛, insurance in the whole to Paris about ⅜, which make altogether ¾ per cent.; and so much at least the exchange must be against us, before any bullion will be sent from London to Paris; and it must be as much in our favour, before any bullion will be brought hither from thence. By this reckoning, the exchange betwixt London and Paris may vary 1½ per cent. before gold or silver will move towards either side. To Amsterdam, the expence of transporting bullion from London, is less than to Paris; to some other places, this expence is greater, and accordingly the exchange varies less or more between different countries; because, as hath been before observed, the transportation of bullion keeps the course of exchange within a certain limit.

Bills are frequently drawn, and bullion carried, between two places that are even in their accounts, to pay debts in a third place. If the exchange betwixt Calais and Paris be against Calais, and it be at par directly between Calais, London and Paris; a merchant at Calais will pay his debts at Paris by a bill upon London: And if the exchange betwixt him and Paris and betwixt London and Paris will permit, our Calais merchant will purchase a London bill by sending gold thither, instead of sending it directly to Paris. It is in finding and taking the advantages of the several markets, that the mystery of this traffic by exchange doth principally consist.

This short account may suffice to explain the general theory of exchanges; a theory curious in it self, and the practical part is extreamly useful for the purposes of foreign commerce. But to meddle with that, doth not fall within the compass of my design.

AN

ESSAY

UPON

MONEY and COINS.

PART II.

wherein is shewed,

That the established Standard of MONEY should not be violated or altered, under any pretence whatsoever.

LONDON,

Printed: Sold by G. Hawkins at Milton’s Head, by the Middle Temple-Gate, in Fleet-street.

M.DCC.LVIII.