ably larger than with France, but the position of
Paris as a banking centre makes the French capital figure prominently
in many operations where the French market is not directly concerned.
Despite the fact that sterling easily predominates, the volume of franc
and mark bills, too, is enormous. Drafts on Paris for from three to
five million francs and on Berlin for as many marks are not at all
infrequently traded in in the exchange market, and at times bills for
very much larger amounts have been drawn and offered for sale.

Bills drawn in other kinds of currency--guilders on Holland, for
instance, form an important part of the foreign exchange dealt in in a
market like New York, but are subservient in their rate fluctuations to
the movement of sterling, marks, and francs. The latter are, indeed,
the three great classes of exchange, and are the basis of at least
nine-tenths of all foreign exchange operations.

In the following chapter will be taken up the various forms of activity
of the foreign exchange department. No attempt is made to state out of
which kind of business bankers make most money, but before looking into
the more detailed description of how exchange business is conducted, it
may be well to fix in mind the fact that it is out of the "straight"
forms of foreign exchange business that the most profit is made. Highly
complicated operations are indulged in by some managers with more
theoretical than practical sense, and money is at times made out of
them, but on the whole the real money is made out of the kinds of
business about to be described. To the author's certain knowledge, the
exchange business of one of the largest houses in New York was for
years thus limited to what might be called "straight" operations. While
the profits might at times have been materially increased by the
introduction of a little more of a speculative element into the
business, the house made money on a large scale and avoided the losses
inevitable where business is conducted along speculative lines.

CHAPTER VI

HOW MONEY IS MADE IN FOREIGN EXCHANGE.
THE OPERATIONS OF THE FOREIGN DEPARTMENT

Complete description of the various forms of activity of the foreign
exchange department of an important firm would fill a large volume, but
there are certain stock operations in foreign exchange which are the
basis of most of the transactions carried out and the understanding of
which ought to go a long way toward making clear