uld sell it for less than $4.8665, but
would simply order the sovereign sent over here and cash it in for
$4.8665 himself. Always assuming that it cost nothing to bring over the
actual gold, every time it became possible to buy a draft for less than
$4.8665, some buyer would snatch at the chance.

Such a case, with L1 as the amount of the draft and the assumption of
no charge for importing the gold, is, of course, mentioned merely for
purposes of illustration. From it should, however, become clear the
whole idea underlying gold imports. A new sovereign laid down in New
York is worth, at any time, $4.8665. If it is possible to get the
sovereign over here for less than that--by paying $4.83 for a L1 draft
on London, for instance, and three cents for charges, $4.86 in all--it
is possible to bring the sovereign in and make money doing it.

Whether the gold imported is in the form of sovereigns or whether it
consists of bars makes not the slightest difference so far as the
principle of the thing is concerned. A sovereign is at all times worth
just so and so much at any United States assay office, and an ounce of
gold of any given fineness is worth just so and so much, too,
regardless of where it comes from. So that in importing gold, whether
the metal be in the form of coin or bars, the great thing is the
cheapness with which it can be secured in some foreign market. If it
can be secured so cheaply in London, for example, that the price paid
for each pound (sovereign) of the draft, plus the charge of bringing in
each sovereign, is less than what the sovereign can be sold for when it
gets here, it will pay to buy English gold and bring it in.

Exactly the same principle applies where the question is of importing
gold bars instead of sovereigns, except that bars cannot be bought in
London at a fixed rate. That, however, in no way affects the underlying
principle that in importing gold the profit is made by selling the gold
here for more dollars than the combined dollar-cost of the draft on
London with which the gold is bought and the charges incurred in
importing the metal. To illustrate, if the draft cost $997,000 and the
charges amounted to $3,000, the gold (whether in the form of
sovereigns, eagles or bars) would have to be sold here for at least
$1,000,000, to have the importer come out even.

With exports, the theory of the thing is to sell a draft on, say,
London, for more dollars than the dollar-cost of enough gold,