Rensselaer Republican, Volume 12, Number 27, Rensselaer, Jasper County, 19 March 1880 — Bullion and exchange. [ARTICLE]

Bullion and exchange.

It is desirable to mention a mode of international payment of debts dqe/by one country to another which Js dAily carried on to an Immense extent, and strikingly illustrates the nature-nnd action of money. These payments are made with bullion—that is, with gold or silver uncoined, in its natural state of bars or ingots of metaL The necessity for such a payment in coin of metal arises from the tact that ono oountry has bought from another more than it has sold to it, and consequently must pay the balance with acme form of money. The transmission of coin would be subject to the inconvenience that the coin sent over would be w stranger in the new country it entered; the stamp would be a trodblesome surplusage, ultimately requiring to be effaced Dy melting. Gold coin does its work by means of the value of the metal, gold; and thoa wu can understand that an equal freight of bullion will be accepted as a payment equivalent to the same weight of gold in coin, without the incumbrance of a stamp. The process by which the quantity of the bullion required to be sent across is calculated is somewhat complicated, but on many Recounts it in very important to understand it. I»,)t us suppose that England has bought more French goods than France has liought of English goods; she has to remit a quantity of gold of the value of the difference to France. The debts which this remittance is made to pay are all counted in French francs; the traders of France have so many francs to receive of England. The calculation is effected by means of what is called the rate of exchange—that is, the number of francs which are the equal in value of the English pound or sovereign. The par of exchange, as it is termed, indicates the exact equal value of a sovereign in francs. Thus, a. sovereign and a twenty-franc napoleon are compared in weight, and it is found that the sovereign contains a little more gold in weight than one and ode-fourth napoleon, true par being about twenty-five and one-eighth francs. A French creditor, therefore, who has to receive payment from England, must receive a sovereign, that is, the gold contained in a sovereign, for every twenty-five and one-eighth francs he is entitled to receive; and that quantity of bullion is sent to him from England. He gets the gold of as many napoleons as his bill amounts to. This explanation supposes that the calculation is made when the exchange between the two countries is at par; that is, when the sovereign will fetch in French money exactly as much gold as it contains. But the exchange is seldom at par, and the variations are sometimes serioua. Thia, however, ia a matter which it ia impossible to enter into in thia place.— Bonamy Price, in Fraser's Magazine.