3 for the draft he sold on Paris.

Between such cities as have been used in the foregoing illustrations
rates are not apt to be wide enough apart to afford any such actual
profit, but the chance for arbitraging does exist and is being
continuously taken advantage of. So keenly, indeed, are the various
rates in their possible relation to one another watched by the exchange
men that it is next to impossible for them to "open up" to any
appreciable extent. The chance to make even a slight profit by shifting
balances is so quickly availed of that in the constant demand for
exchange wherever any relative weakness is shown, there exists a force
which keeps the whole structure at parity. The ability to buy drafts on
Paris relatively much cheaper at London than at New York, for instance,
would be so quickly taken advantage of by half a dozen watchful
exchange men that the London rate on Paris would quickly enough be
driven up to its right relative position.

It is impossible in this brief treatise to give more than a suggestion
of the various kinds of exchange arbitration being carried on all the
time. Experts do not confine their operations to the main centers, nor
is three necessarily the largest number of points which figure in
transactions of this sort. Elaborate cable codes and a constant use of
the wires keep the up-to-date exchange manager in touch with the
movement of rates in every part of Europe. If a chance exists to sell a
draft on London and then to put the requisite balance there through an
arbitration involving Paris, Brussels, and Amsterdam, the chances are
that there will be some shrewd manager who will find it out and put
through the transaction. Some of the larger banking houses employ men
who do little but look for just such opportunities. When times are
normal, the margin of profit is small, but in disturbed markets the
parities are not nearly so closely maintained and substantial profits
are occasionally made. The business, however, is of the most difficult
character, requiring not only great shrewdness and judgment but
exceptional mechanical facilities.

7. _Dealing in "Futures_"

As a means of making--or of losing--money, in the foreign exchange
business, the dealing in contracts for the future delivery of exchange
has, perhaps, no equal. And yet trading in futures is by no means
necessarily speculation. There are at least two broad classes of
legitimate operation in which the buying and selling of