PREFACE

The practice of most writers on Foreign Exchange is to treat their subject as a phase of the banking problem, emphasizing the bankers’ methods of handling foreign bills of exchange, and giving but minor stress to the relations of the business man with the exchange markets. It is the opinion of the present writer that the needs of the business world and of the student are not adequately met by this common method of presenting the subject. The rapid expansion of the foreign trade of the United States, coupled with the abnormal condition of the exchange markets of the world, has increased, on the one hand, the importance of foreign bills in the transactions of our business men, and, on the other, the problems of national welfare and national policy which are the especial concern of the student. This volume is written with a view toward bringing into greater prominence these somewhat neglected aspects of the subject of Foreign Exchange. Without neglecting the banking mechanism through which the bills of exchange pass, the attempt is made to bring the discussion to bear upon the problems of the business man concerned with foreign trade, as well as upon the broader questions of national policy.

In stating and developing the basic principles of the subject, it has been necessary to assume a normal state of the exchange market, such as existed prior to the Great War. This method of treatment does not, however, place the book out of relation to present-day problems of the exchange markets. Wherever significant changes have taken place in the practice of the markets, allusion is made to these changes at appropriate points in the text as a means of emphasizing and qualifying the normal practices. That there is need for a thorough understanding of the principles which normally govern is daily disclosed by the devices which are put forward as remedies for existing abnormalities, and the attempts which are made to explain the present situation by the logic of post hoc ergo propter hoc. After all, our present difficulties are produced by the outworking of the same forces which, in normal times, govern the markets unnoticed. We cannot understand the situation to-day, much less effect an intelligent correction of it, without a thorough comprehension of normal principles.

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