A DAY IN AN EXCHANGE BOX 1. Practical exchange.—A very practical way to obtain an insight into foreign exchange is to study actual counter operations.
We have already seen how the rates are obtained from New York. Therefore, in our operations, we shall use the quotations given and consider them as the cost price to us of the various exchanges.
In the examples which follow, the allowance made for profit is nominal and the explanations necessarily brief ; hence reference should be made to the more de tailed information given in later chapters.
In practice, the conversions are, of course, arrived at by the use of exchange tables, but the actual work ing of conversion will be shown in the examples here given.
2. Demand sterling first customer is Mr. Bryant, who wants to send £420 to London. We quote him 4.87 and ask him to fill up and sign a requisition form. This form should be used in con nection with the sale of every kind of draft, foreign or domestic, as it eliminates the risk of misspelling names and of making other similar errors.
In filling out a sterling draft, great care should be taken to avoid wide spacing. The figures should be made very clear. The amount, commencing at the extreme left, should be written on a single line if possible. Shillings and pence, if there are any, should be written in full. Fractions of a penny should not be used. In England, checks are com monly written with the shilling sign (/) ; thus 7/2 means seven shillings and two pence, but the former method is safer.
By the exchange tables we find that Mr. Bryant must give us a check for $2,045.40.
Conversion : 420 x 4.87 = 2,045.40.
Mr. Meyers, a lawyer, now makes a requisition for the equivalent of $1,000, the amount of a legacy he has to remit to England, for which we give him a draft for £205-9-7, at $4.86%.
.8 Conversion: =205.48 or in money g205.9s7d.
Mr. Meyers has also to cable £1,000 to one of his clients in London, for which we require explicit in structions on the requisition regarding the name and address of the payee, and similar items. We charge
at the rate of $4.8725 per pound sterling and, in addi tion, the cost of the cable message, $2.00; the total is $4,874.50. Care should be taken in coding the cable, which should be checked by another officer.
The message, in plain English, not in code, should be forwarded to the London correspondent.
3. Sterling Ellen Smith brings in a crossed check' for £180, which we place to her credit at 4.82% realizing $868.50. The check is pay able to the order of Mrs. John Smith, and as the Eng lish banks are very particular about the indorsement's being exactly the same as that on the face of the check, we ask Mrs. Smith to sign it "Ellen Smith, wife of John Smith." If it is payable to Mrs. Ellen Smith it should be indorsed "Ellen Smith," the "Mrs." being disregarded. Indorsements on foreign checks or drafts should always be written, never stamped. , Sangster and Company, produce dealers, offer a 60 days sight draft, with documents attached, for £2,000 against a shipment of cheese to be surrendered on payment (D/P). We place the sum of £2,000 to their credit, after seeing that all the papers are in order and properly indorsed. Since the rate given is $4.81, they realize $9,620.
Attached to the draft, which is made out in dupli cate, are Marine bill of lading (in duplicate). Certificate of insurance for £2,150. Letter of hypothecation.' Before mailing, we indorse by written signature all documents to the order of our London correspond ent. The duplicate draft and bill of lading are sent by the next mail.
4. French exchange.—The first customer for French exchange wants a draft for fcs. 300.25. We sell to him at .1930 and receive $57.95. (These rates advance by hundredths of a cent.) We are careful to write out the date in words, for otherwise a check would be treated as a bill and taxed accordingly.
The body is filled in as in dollar checks, and the memorandum reads fcs. 300.25.