exchange, while it is true that rates
at times rise and fall with all the violence so often displayed in the
security markets, most of the time they move within a comparatively
narrow range. On an ordinary business day, for instance, the change is
not apt to run over fifteen points (15/100 of a cent per pound). In the
morning, demand sterling may be at, say, 4.86; at noon a moderate
demand for bills may carry the rate, first, to 4.8605, then to 4.8610;
and finally, perhaps, to 4.8615. On fairly large offerings of bills the
market might then recede to, say, 4.8605, ending the day five points
up. And that would be an ordinary day--by no means the kind of a day
the exchange market always sees, but a day corresponding to a stock
market session in which the market leaders rise or fall a point or so.

There are times, of course, when very different conditions prevail. An
unexpected rise in the bank rate in London, the announcement of a big
loan or any one of many different happenings, are apt to cause a
reduction in the exchange market and a bewildering movement of rates up
and down. At such times a rise or fall of fifty points in sterling
within half an hour is not at all out of the ordinary, while in times
of panic, or when great crises impend, the fluctuations will be three
or four times as great. During the latter part of October, 1907, and in
November, the exchange market fluctuated with greater violence than,
perhaps, at any other time since the gold standard was firmly
established. Thrown completely out of gear by the premium of 3-1/2 per
cent. a day for currency during the panic time, the exchange markets
for some time would rise and fall several cents in the pound on the
same day. Completely baffled by this erratic movement, many bankers
temporarily withdrew entirely from the market.

As to the relative importance of the different kinds of exchange,
sterling, of course, occupies the most prominent position. What
proportion of the total of exchange dealt in in the New York market
consists of sterling it is impossible to determine, but that it is as
great as the volume of all the other kinds of exchange put together can
safely be said. Many big dealers, indeed, make a specialty of sterling,
and if they handle any other bills at all, do so only on a very small
scale. As to whether francs or marks come next in volume, there is a
difference of opinion. With Germany our direct financial transactions
are probably consider