EXCHANGE', in commerce, traffic by permutation, or the act of giving one thing or commodity for another. The receipt or payment of money in one country for the like sum in another, by means of bills of exchange. Thus, A in London, is creditor to B in New York, to the amount of 1001. C in London is debtor to 1) in New York, in a like sun' : by the operation of the bill of exchange, the London creditor is paid by the Lon don debtor, and the New York creditor is paid by the New York debtor ; and, con sequently, two debts are paid, though no specie is sent from London to New York, or from New York to London. This is the principle of a bill of exchange; and the great convenience here represented is the foundation of exchange itself. That variation shore and below par, which is called the course of exchange, results from the same causes that act upon the price of commodities of every other kind. If bills upon New York he scarce, that is, if New York is but little indebted to London, the London creditor, who wants hills on New York to remit. to that city, is obliged to purchase them dearly; then the course of exchange is above par : If, on the other band, London owes less to New York than New York owes to London, New York hills will be propor tionably plenty, and the exchange with that city below par. Hence, it is a max im that, when the course of exchange tises above par, the balance of trade runs against the country where it rises. In
London, bills of exchange arc bought and sold by brokers, who go round to the prin cipal merchants, and discover whether they are buyers or sellers of hills. A few of the brokers of most influence, after ascertaining the state of the relative sup ply of and demand for bills, suggest a price at which the greater part of the transactions or the day are settled, with such deviations as particular bills, from their being in very high or low credit, may be subject to. In London and other great commercial cities, a class of middle men speculate largely on the rise and fall of the exchange, buying bills when they expect a rise, and selling them when a fall is anticipated.—Exchange. in arith metic, is the finding what quantity of the money in one place is equal to a given sum of another, according to a certain, course of exchange.— Course of exchange is the current price betwixt two places, which is always fluctuating and onset tled.—A rbitration of exchange is a cal culation of the exchanges of different places to discover which is the most prof itable.—Exchange of prisoners, in war, the act of giving up men on both sides, upon certain conditions a-greed to by the contending parties.