HOW THEY FIX THE EXCHANGE RATE.

Hokitika Guardian, 16 August 1923, Page 4

HOW THEY FIX THE EXCHANGE RATE.

(By (1. Ward Brice.) ZURICH

“Wh.it dn you give for English banknotes ?’’ is a question which thousands of British holiday-makers during the next few months will ask across t-e exchange eoimters of foreign banks. Tire mistrust with which the rej»ly is often received arises from the widespread belief among tourists tint the rate of exchange given hv Continental ha niters is a haphazard figure quoted in proportion to the apparent gullibility of the client; and that in attitude of indignant seeptioi.-m on his part will alter it in liis favour. But the traveller who makes the inquiry at any reputable bunk on the l Continent of Europe is really putting himself in contact with cue of the most complicated and. since .flic war, one of the most romantic departments of that outwardly dull business of hanking. The figure which the exchange clerk gives in reply, whether satisfactory or not. is the result of a complex game of inquiry ami counter-inquiry, quotation purchase and sale played at top speed sim-e breakfast-time that morning hv wireless and telegraph and telephone, in which every capital and mmiy other big cities of Europe have taken parr. ( me of the world-centres of this game is prosperous, Carman-looking Zuiicli; another is cnsiuupolitnn (ienevn. For m continent of switchback currencies the stolid Swiss franc has become more than ever the universally accepted index. Boland even drafts her national Budget in Swiss francs. In all the i'.rg.T towns of Switzeiland the gleaming while facades of licv. or enlarged hanks speak of the business which this sitnaticn brings, and little Swiss hoys whose traditii na| ambition was to be ! head w: iters, now aim alternatively at 1 1,(.’ liming hankers.

The specialised celling of a cambist'. 1 , pise bank clerks who handle exchange me called, must, indeed, provide as much excitement of its kind as even i o small boy's imagination desires, lor it consists of buying and selling large sum in different and iluctuuling currencies t vor the long-distance leie„ln lie under the strain of having to male.- lightning calculations and take adjun on them within the Heeling space nf a limited trunk-call. All over i'.uphis bu-iuc'S of arbitrage is simuli’i; .hi -h going on. ••|t i- like a spider’s well stretching owe the whole ( oiitineni.’’ a cunihiste. vg.,: ~ ihe roiMaocc of his culling <icvi,.; d; d :! to me. ■•When anything InipI . uldch -inris a tremor at any point uf i ’ the whole well quivers mol rcTh,' st.inning el this weh begins at S t.-ck c-c.v v.ok-dav morning at Zurich amd (ienot a. T! ... , .iiohistes. tutil long-distailcc tel. . !c.no-receivers, (damped to their lic-'il . have hefo o them the closing nx.-l .r.gc pi ices in New Y'.l'k of the <|m I cfore. and a mini her of overnight (~•(! o-i for the sale or purchase of varying 'o n! . in all Hie currencies, stable iivd do e- at , iii.rmal and feverish, ol .Steadily working through a lid ol t• link-rdl- to each other and to Vienna Budapest ami Beilin, they begin finding out the lie.st pkHe to sell and tile clnapc-t in Inly. \i ;• In .uf '.) o'clock all the Swiss cambisU-s ring up Baris, whoso quotations have instant reaction el) their mark'd. At 10 they all telephone Bon dan (which gets to business late), and red dim. to opening prices there the Sm • tv I ••.- go up or down. I mien Ip, I lie way. wall elmniclcrirtii- io'idai it.v. "quotes uncertain.' as the lamhi-ic, -ay. tVluf they mean is t';."f Buininn exchange brokers quote lac ; m■ mil oi foreign ciiviemy obtainable fur the pound sterling while t miliucatnl (•.iiinlries give the amount uf tl.cir own i uiTciicy that tliey will pay charge for a definite noil of foreign

; .\" the of inforninii<-h rona.ril|in i I'l-i' o.i in (ilier cii])ilnis widens ; l!'ii>"L. , li' iii the il.i.v ilk* work uf tvirli I i-.!>-i-li I renines ciiii*-t::lltly ; lII'.I'I <.)■:I!:III- i: 1 1. Mr mii-t instantly j jin i 1 1 m t unity In i-rfi ii curi'Piicy jln ; I hue if In- has jii-i heard that hr j <•: n ! ny H luoie cheaply in another. 'l'ia- «<;v.! C'l.iipr! flirinn tin* French I*..]■ ‘'You'l'e rut oil'!’') iiirnies in th<‘ itil- 11i mai'o-i of nil cntiibisi.es. 'I. iiey lia.r a f-vii i::lernutii.ntil ln t if ::n .".iiiotmt mill into liavo her;: i ilriinilcly mentioned tlio haigiiin r< i hi, air. .mil it i-. at once i*tsiifirm-*(i hy a i on at uj j'ont rates., .1 ill .-Id!, ti ■ i • ill y cUSt ihl'ir bank:. a h rue sin*i, so to kelp them they l ure an imo'idoiix llicrlianieitl vi (hi I. they work w :lh a>w iftiie.-i <ji;i,. l I -.•markable. Ji coiisiei i i,l a liormuntill cylinder ;il cut hit. lour, .n.'iecil ivitii schedules el' li-.-iijf ts.tes. Over this lii - eli.-e----!y j;ii.;tlit*i* skeleton rvliii.ler, the luti'a of \- '■ j ich a:r ;; 1 o marked v.it'* litiui'es. Ii- dipping Mi* latter to ami I'm Ike ( arh i!i,;;e lie"!; i- aide to read oil' ruin- I ];:• i'i riite-i heLuten two foreign it lire: 11 :t*s v iihi.it! workiiie; eai Ii out into ! lie: (OV!l. When tile day i.- al its height the left j hand of the en nibi-.le spins this ealtni- [ lamr, his tight In ini scribbles ligiiio.. lij s and ear., nre.gli eil to the telephone, and his eye. rake the list ol prices icei'ieed from other cities. At 11 o’clock in most exchange ecu ires: the eimbistes of all ilk* local hen!.- meat at a ele-arljlf'-liolt-e. where i;:;eh h a his telephone eahili. and it: is io. a r:--;i!t if the comparisons mule lto*•:■ lif t the i-eisideni of tin* clearingliottse tixi's th.e mean rate of exchange fc.- the day. whirl), inslainly telegraphed evc.tyv here, is ipioted to the doubling Hriii-h tom Ist who lias ‘ilrtfdiniry-” to change.