ies, on the
other side, are the second great influence making for high exchange.
There come times when, for one reason or another, the movement of
securities is all one way, and when it happens that for any cause we
are the ones who are doing the buying, the exchange market is likely to
be sharply influenced upward by the demand for bills with which to make
payments. Such movements on a greater or less scale go on all the time
and constitute one of the principal factors which exchange managers
take into consideration in making their estimate of possible exchange
market fluctuations.

It is interesting, for instance, to note the movement of foreign
exchange at times when a heavy selling movement of American stocks by
the foreigners is under way. Origin of security-selling on the Stock
Exchange is by no means easy to trace, but there are times when the
character of the brokers doing the selling and the very nature of the
stocks being disposed of mean much to the experienced eye. Take, for
instance, a day when half a dozen brokers usually identified with the
operations of the international houses are consistently selling such
stocks as Missouri, Kansas & Texas, Baltimore & Ohio, or Canadian
Pacific--whether or not the inference that the selling is for foreign
account is correct can very probably be read from the movement of the
exchange market. If it is the case that the selling comes from abroad
and that _we_ are buying, large orders for foreign exchange are almost
certain to make their appearance and to give the market a very strong
tone if not actually to urge it sharply upward. Such orders are not
likely to be handled in a way which makes them apparent to everybody,
but as a rule it is impossible to execute them without creating a
condition in the exchange market apparent to every shrewd observer.
And, as a matter of fact, many an operation in the international stocks
is based upon judgment as to what the action of the exchange market
portends. Similarly--the other way around--exchange managers very
frequently operate in exchange on the strength of what they judge or
know is going to happen in the market for the international stocks.
With the exchange market sensitive to developments, knowledge that
there is to be heavy selling in some quarter of the stock market, from
abroad, is almost equivalent to knowledge of a coming sharp rise in
exchange on London.

Perhaps the best illustration of how exchange can be affected