nue to rise, according to the urgency of the demand.

Particular attention will be given later on to the way in which the
Bank of England and the other great foreign banks manipulate the money
market and so control the course of foreign exchange upon themselves,
but in passing it is well to note just why it is that when the interest
rate at any given point begins to go up, foreign exchange drawn upon
that point begins to go up, too. Remittances to the point where the
better bid for money is being made, are the very simple explanation.
Bankers want to send money there, and to do it they need bills of
exchange. An urgent enough demand inevitably means a rise in the
quotation at which the bills are obtainable. Which suggests very
plainly why it is that when the Directors of the Bank of England want
to raise the rate of exchange upon London, at New York or Paris or
Berlin, they go about it by tightening up the English money market.

The foregoing are the principal causes making for high exchange. The
causes which make up for low rates must necessarily be to a certain
extent merely the converse, but for the sake of clearness they are set
down. The division is about as follows:

1. Especially heavy exports of merchandise.

2. Large purchases of our stocks by the foreigners and the placing
abroad of blocks of American bonds.

3. Distrust on our part of financial conditions existing at some
point abroad where there are carried large deposits of American
capital.

4. High money rates here.

5. Unprofitably low loaning rates at some important foreign centre
where American bankers ordinarily carry large balances on deposit.

1. Just as unusually large imports of commodities mean a sharp demand
for exchange with which to pay for them, unusually large exports mean a
big supply of bills. In a previous chapter it has been explained how,
when merchandise is shipped out of the country, the shipper draws his
draft upon the buyer, in the currency of the country to which the
merchandise goes. When exports are heavy, therefore, a great volume of
bills of exchange drawn in various kinds of currency comes on the
market for sale, naturally depressing rates.

Exports continue on a certain scale all through the year, but, like
imports, are heavier at some times than others. In the Fall, for
instance, when the year's crops are being exported, shipments out of
the country invariably reach their zenith,