Outside of London there are a few banks permitted to issue notes, a survival of an older system of bank ing. These notes are generally of small denomina tion, and as there is a charge for collection in London, their circulation is purely local.
4. Coinage of as we have seen, the exchanges between two different gold standard coun tries are determined in large part by the relation of the amount of pure gold in their respective coins, the mint par, the shipping points for gold depend upon the ease with which the gold coin or bar gold of one coun try can be made available for payments in the other. Hence the necessity of reckoning with the price which is paid for gold by the mint or by the banks of the other country and the terms of payment.
Great Britain coins 1,869 sovereigns from 40 lbs. troy of standard gold 11/12 fine, and the value of an ounce of standard gold is therefore £3 17s. (77.87465 shillings) ; of an ounce of pure gold £4 4s. 11.45d. (84.95416 shillings) ; and an ounce of mint or eagle gold £3 16s. (76.458744 shillings).
The United States coins 800 gold dollars from 43 ounces of mint gold 9/10 fine and the value of an ounce of mint or eagle gold as it is called, is therefore $18.60465, of an ounce of pure gold $20.671835, and of an ounce of standard gold $18.949182. These are also the Canadian values.
The Bank of England pays immediately for gold at the rate of 77s. 9d. per ounce standard.
The Royal mint in London and its four branches in Melbourne, Perth, Sydney and Ottawa, take any quantity of gold for coinage, which is free, but deliver the corresponding coins—at the rate of 77s. 10Y2d. per oz. standard—a fortnight after the receipt of the gold.
The difference of corresponds to about 4 per cent interest for 14 days on the ounce value.
Under normal conditions the Bank of England pays £3 17s. 9d. per ounce for standard bar gold (or at the rate of for $4.8744) and buys United States eagles at about £3 16s. per ounce (or at the rate of £1 for $4.8719) but these prices occasionally vary.
On August 13, 1914, the announcement was made that the Bank of England was willing to purchase gold at Ottawa, thru the Dominion Government, and to pay cash in London against same at the fixed price for gold bars at 77s. 6d. per
ounce standard and United States eagles at 76s. per ounce. It is useful to know how to arrive at the equivalent dollar rates.
In the case of standard gold, divide $18.949182 by the London price per ounce in pounds and decimals of a pound.
18.9 t9182 ;£3.875 — 4.8901 per 1 pound sterling at £3 17s. 6d. per ounce standard gold. Or a rough calculation may be made by adding .0026 cent to par ($4.866(3) for each half penny decrease from 77s. 4.8666+(.0026X9) or .0234=$4,8900 For eagle or United States mint gold, divide $18.60465 by the price per ounce (£3 —16 — 1:3.60465 — $4.8932 €.3.S0:2 or add .0027 cent to par for each half penny decrease from 76s. 5V9d.
4.8666 -K10 X .0027) or .027 = $4.8936.
5. Stamps and interest.—Illustrations in earlier chapters have noted the fact that due allowance must be made for the stamp duties imposed by foreign coun tries. The role that interest pays has been fully dis cussed, but in the actual work of transacting foreign exchanges an exact knowledge of interest usage is of value.
The English stamp tax on bills of exchange amounts to one shilling for every £100, or nearly a quarter of a cent per pound ($0.0024). In exchange calculations an allowance for stamps is made of lAo of 1 per cent. Checks, three-day sight bills and under, require only a penny stamp no matter what the amount.
In computing interest three days of grace must be allowed, tho of course such a rule does not apply to checks or sight drafts. Interest is calculated by taking the exact number of days and the year at 365 days.
6. How London quotes exchange.—Quotations on South America, China, India, Russia, Portugal and Spain are given in pence per foreign unit, while all other countries are quoted in foreign money per pound sterling. Quotations on South Africa, Aus tralia and other British colonies using the pound sterling are quoted at a discount or premium on £100.