8?4 J'. 'HINTON In ?he fir8? place R will be noticed ?hs? common denominator is ?he I?por mpney. are reckoned in that b?8is, because the All sgios the banks, the debts in books, are all, by convention, understood to I?e psyab? in Bank notes. It will be seen that the subsidiary coins were at a discount compared with the silver dollar, while the latter was at a discount compared with the note. At a later time, illustrated by Fig. ? (p. 879), the dollar was st s premium compared with the note: subsidiary coin, too, once enjoyed s premium over the note and the silver dollar. These are the anomalies of which we have. to attempt an explanation. The second market, that in Foreign Exchange, is formed by the Hongkong bankers for the exchange of
gold and silver orerifts. The brokers who rush from
bank to bank quoting offer? and demands st varying rates constitute the mechanism by which the market equili- brium is established 'st s price which "clears the market". ]?very bank receives telegrams from other silver markets, notably Shanghai, and buys or 8ells on the information thus ob?ne?. In this way. differences in price between Hongkong . and other centres are more or less completely arbritraged. The merchants also form part of this market. come to the banks to cover th? risk of They loss on their t?snsaction as s consequence of the vagaries of the exchange. Some want to buy, some to sell gold. Their wants are balanced against each other in the market, together with speculative accounts and the private requirements of the banks acting for their agencies elsewhere. The banks aim t? cover the dsfly aggregate of their buying transactions by sates a? as good s rate as possible, but this is not an e?sy task as the m?rket [s very lively st times and there is much outside speculation, mostly harmful. The
