business with
banks abroad, but the more important part of what they do is to deal in
foreign exchange among the banks. They are known as always having on
hand for sale large lines of commercial and bankers' bills, while on
the other hand they are always ready to buy, at the right price.

After this class of houses come the regular brokers--the independent
and unattached individuals who spend their time trying to bring buyer
and seller together, and make a commission out of doing it. In a market
like New York the number of exchange brokers is very large. Like
bond-brokerage, the business requires little in the way of office
facilities or capital, and is attractive to a good many persons who are
willing to accept the small income to be made out of it in return for
being in a business where they are independent.

Foreign exchange brokerage, like all other employment of the middleman,
is not what it used to be. Before the business became overcrowded as it
is now, exchange brokers made their quarter-cent in the pound
commission, and could depend on a respectable income. But nowadays
brokers swarm among the foreign exchange bankers and dealers, doing
business on any commission they can get, which is not infrequently as
little as 1/128 of one per cent., say, $1.50, for buying or selling
francs 100,000. In handling sterling, the broker is lucky if he makes
his five points (5/100 of a cent per pound), which means that for
turning over L10,000 he would be rewarded with the sum of $5. Under
such conditions it is not difficult to see how hard it is to make any
money to speak of out of foreign exchange brokerage.

The dealers, of course, fare much better. Handling commercial bills
where the question of credit affects the price, they have a chance to
make more of a profit, and buying and selling bills for their own
account they naturally are entitled to make more than the man without
capital, who simply tries to get in between the buyer and the seller.
Dealing in exchange, especially for out-of-town clients, is a highly
profitable business, but one which takes time, brains, experience and
money to build up. Dealers representing large out-of-town sellers of
exchange are very much in the position of the New York agents of
manufacturing companies who sell goods on commission.

There being no regular market in which foreign exchange rates are made,
it follows that the establishment of rates each morning and during the
course of eac