Page:Indian Journal of Economics Volume 2.djvu/399

OUI{RENOY The ratio I?twoon dollars s?d notes seems there- fore t? v?ry wi? the disparity between the rate of ezchailge. and the. v?l.ue of the. dollar ?s silver, pro- videel that silver o?n be ?eely exported. The margin by-which, the r?te o?n l?g behind silver parity will d?pe?d, upon ?e- cost of collecting silver and sending it to the most profitable b? silver in Hongkong, market. But there is litfie and therefore this arbitrage operation has to be carried. out i/t Mexican or Hong- kong dollars, or in fen, Cantonese subsidiary coin, or a?y?hing else o! that kind. The best, though not the only market for Mexican dolls, rs is at Shanghai, and this makes. it import?mt to compare the position ?! silver ia Hongkong and Shanghai. Now the disparity ot ?he sterling r?tes was olsen greater in Hongkong than in Shanghai even when silver w?s allowed to pass freely in v?riat?ons in wi? silver exchanges fiuetmat? within and ?he out o! the colony; hence wid? t?el ra?. At any given time, at a given price the silver-sterling fluctuate about a silver parity. They limits fixed by the cos? of sending sil.?or bullion to the centres when it can be marketed for gold.. Now it may happen that when the price o! silver advances the exchange is already high, and pressing, 'as it were, In that case trade against the silver specie point. conditions will allow of a rise if the condition pressing against tale, then the of the r?e which may keep pace with the rise o! price of. silver.--if the latter'does not go very fast. But of trade naturally established a rate the other specie point, i.e., a low rise in silver would be followed rol?utanfl// as it were, and a considerable lag might rasul$, which would be the greater, the more rapid and ext?ive the rise of. silver. In fact when silver rises. very rapidly ?he gonuino ?rsder generally steps b?k ou? o! the market and only inter-bank and