ous fluctuation
in the exchange rate--sometimes up from the mint par, sometimes down.

Before going on to discuss the various causes influencing the movement
of exchange rates, there is one point which should be very clearly
understood. _Two_ countries, at least, are concerned in the fluctuation
of every rate. Take, for example, London and New York, and assume that,
at New York, exchange on London is falling. That in itself means that,
in London, exchange on New York is rising.

For the sake of clearness, in the ensuing discussion of the influences
tending to raise and lower exchange rates, New York is chosen as the
point at which these influences are operative. Consideration will be
given first to the influences which cause exchange to go up. In a
general way, it will be noticed, they conform with the sources of
demand for exchange given in the previous chapter. They may be
classified about as follows:

1. Large imports, calling for large amounts of exchange with which
to make the necessary payments.

2. Large purchases of foreign securities by us, or repurchase of
our own securities abroad, calling for large amounts of exchange
with which to make payment.

3. Coming to maturity of issues of American bonds held abroad.

4. Low money rates here, which result in a demand for exchange with
which to send banking capital out of the country.

5. High money rates at some foreign centre which create a great
demand for exchange drawn on that centre.

1. Heavy imports are always a potent factor in raising the level of
exchange rates. Under whatever financial arrangement or from whatever
point merchandise is imported into the United States, payment is almost
invariably made by draft on London, Paris, or Berlin. At times when
imports run especially heavy, demand from importers for exchange often
outweighs every other consideration, forcing rates up to high levels. A
practical illustration is to be found in the inpour of merchandise
which took place just before the tariff legislation in 1909. Convinced
that duties were to be raised, importers rushed millions of dollars'
worth of merchandise of every description into the country. The result
was that the demand for exchange became so great that in spite of the
fact that it was the season when exports normally meant low exchange,
rates were pushed up to the gold export point.

2. Heavy purchasing movements of our own or foreign securit