"I am sorry that your absence occurs just at this time, however short it may be: for every day may make so important a difference in the course of exchange as may materially affect our commercial concerns. How long the exchange may remain as it is there is no saying, as there is a rumour of the enforcement of tithe on the cultivation of madder in Great Britain; and this will bring the madder of a Presbyterian country like ours, which pays no tithe, into the market, at an advantage which must tempt those merchants to export largely who are now importing. If, besides this, certain relaxations of monopoly which are talked of should take place, to the advantage of Dutch commerce, our exports to Great Britain will be so abundant as presently to turn the course of exchange. It is our part, then, while we can get bills cheap, to urge our business to the fair limits of our capital, that we may have the fewer debts to pay to England when that competition for bills arises which must certainly follow the present abundance. I did business with Visscher this afternoon, as you were not here to do it for me. He is too busy (making his fortune, I suppose, out of the variations of exchange) to have a word to say to his old friends till after 'Change hours. I fancy that the bills on England which have fallen in value bring a pretty profit into the broker's pocket when transmitted to Paris, where the exchange is greatly in favour of England. Visscher must be making much more by this state of things than he lost a while ago by the variation which took place in consequence of the depreciation of money in Paris. A fine lot of bills in his hands, which would have borne a premium over night, were gladly disposed of at a discount the next day. Visscher has never forgiven the over-issue of paper which caused this; but he is making up for it now. His charge per cent. on these transactions is no trifling gain in these busy days. When the exchange is once more at par, he will spare us a day at Saardam to talk over a little speculation in which it seems to me that we may share with advantage.
"It is rumoured on 'Change to-day that a certain provincial bank has taken up a suspicion of the means by which a present neighbour of yours is floating a scheme which he boasts of as promising great things. It is said that a confederation of needy men have tried the now unusual trick of drawing on one another in a circle, and thus raising money to carry on their scheme, which they may or may not be eventually able to pay. The bank in question has been gradually getting out of the scrape for some time past, not forcing the parties to a bankruptcy, but making more and more difficulty about discounting their bills. The other banks which have been favoured with the custom of the parties are taking the hint, it is said, and looking close into the character of the transaction. If so, the truth of the matter will soon appear. Meanwhile, should any speculator fall in your way, beware of his representations; particularly if he talks of the distress of the country, and attributes it to the timidity of the banks. The country is prosperous, and the banks know what they are about full as well as he. When I have said 'beware,' I have said that which makes me think it worth while to send a special messenger with my letter. Besides this, I have only to say that I shall be glad to see you at home; and that if your mother has any fine pasturage untenanted, our Danish cattle may as well be landed in her neighbourhood, and fattened on her meadows as on those of a stranger. Arrange this as you please. * * *"
In the days when extensive alterations in the currency of trading countries were common, commerce was much indebted to the intervention of such men as Visscher. The bill-brokers held the power of equalizing the exchange, or of preventing its variations from exceeding a certain limit. The variations of the real exchange can, it is true, never exceed the limit fixed by the cost of transmitting metals; for, as soon as the premium which a merchant has to pay on the bill he wishes to purchase is higher than the expense of sending gold and silver, he, and others circumstanced like himself, will pay debts in money, the competition for bills will be lessened, and their price will fall: but the tendency which the exchange has to correct itself is much assisted by the operations of the bill-brokers, who, as they deal in the bills of many countries, can transport this kind of currency from places where it is superabundant to places where it is scarce. Like all other traders, they seek to buy where their article is cheapest, and to sell where it is dearest; and this, of course, lessens the cheapness and the dearness in different places. At the present time, the bills on England were cheap at Amsterdam, and dear in Leghorn; and Visscher, and other bill-brokers, by buying up bills on England, and transmitting them to Leghorn, assisted in equalizing the demands of Holland and England, and also of Leghorn and England, on each other, and thus aided in restoring the exchange to par.
But when the currency of any country is altered, no operations of the bill-brokers, or of any one else, can prevent the exchange from appearing to sustain a great variation, though those who understand the circumstances, and are not apt to be alarmed by the mere sound of words, know that, in such a case, if the exchange be really at par, it cannot be nominally so, and do not therefore trouble themselves about the apparent difference. This nominal variation does not affect trade; because the decrease in the price of goods to be exported answers to the discount which the exporting merchant sustains on his foreign bill: that is, if an English merchant draws a bill on Amsterdam for 1000 guilders in return for 90l. worth of goods, the discount at which the Englishman sells his bill exactly answers the saving he has made from the price of the goods exported being lowered through the depreciation of the English currency: while the premium which the bill would bear in Paris answers to the apparent surplus of the 100 guilders. The holders of bills drawn before the alterations in the currency took place are affected by such changes; and such liabilities to profit and loss are among the evils attendant upon fluctuations in currency; but the amount of exportation and importation, and therefore the real exchange, are in no wise affected by alterations in the representative of their value.
If the course of the exchange is watched with anxiety, it should be with regard to the nominal and not the real variation. As a test of the state of the currency of the country its deviations are important, and cannot be too narrowly observed by those in whom the power resides of enlarging and contracting the currency. But the real variation might be safely left to itself, even if there were no intervention of bill-brokers by which equalization is secured. The variation can never pass the amount by which the cost of transmitting payments in metal exceeds that of making payment in bills. This cost can never be great while there is a set of persons, like bill-brokers, to buy bills where they are cheapest, and sell them where they are dearest; and thus, by arbitrating the exchanges of different countries, equalize the whole. As such equalization aids the security of property, commerce is largely indebted to the intervention of this class of dealers.
If any means could be found by which the rise and fall of money could take place at once and equally all over the trading world, there would be an end to nominal variations of exchange, and commerce would be divested of one of its mysteries: but this can never be while production is more abundant in one place than another; and while the cost of the carriage of commodities increases with distance. Mrs. Snoek found it cheaper living at Winkel than at Amsterdam: that is, the great articles of consumption were produced at hand, and had no cost of carriage to bear; and the value of the precious metals was therefore higher at Winkel than in Amsterdam, so much higher as to induce the Amsterdam exporter who made purchases of her butter and cheese to pay her in that commodity which was cheap to him while it was dear to her,--money. In return for the produce of her farm, which was shipped from her neighbourhood, there was a flow of money from Amsterdam to Winkel; a flow which would continue till money, becoming more plentiful at Winkel, fell in value so as to make it better worth the while of both parties that Mrs. Snoek should be paid in commodities. If the respective commodities should balance each other in value, so as to show that there was the same proportion of money in both places, no money would be transmitted; but if money at length abounded at Winkel more than at Amsterdam, it would become worth Mrs. Snoek's while, in her turn, to buy the merchant's commodities with that which was cheap to her while it was dear to him. Such inequalities must exist in different parts of the same country, and, much more, in different countries; and, while they do exist, the coins of countries will change their relative value, and there will be nominal variations of the exchange, wholly independent of the total amount of sales between different countries.
At present, as in all former times, money was dearer at Winkel than at Amsterdam; Mrs. Snoek delivered the produce of her farm to be shipped at the dyke near her own abode, and was paid in money from Amsterdam. As this suited her views of prudence, she designed to remain, with her family, where she was, while Winkel continued to be a cheap place of residence. Slyk was happy to hear this, both as it afforded a prospect of many opportunities of confirming his hold on Heins's speculative enthusiasm and his purse; and because it was likely to bring more of Messrs. Vanderput and Snoek's herds of lean foreign cattle to fatten on the pastures round Winkel. Mrs. Snoek had but little pasturage to let while she kept up a fine dairy of her own; and Jakob's drained fields would be tenanted as fast as they were ready to bear the weight of the herds that hungered for the rich verdure which springs from such a soil as he could boast of. This matter was settled on the road homewards; Heins seeing nothing in such an arrangement inconsistent with the caution recommended by his partner; and Mrs. Snoek thinking it well that her son should obtain something from Jakob in exchange for the advances made or to be made. Not that her opinion was asked by Heins. Being a man of business, he cared little for the opinion of any woman; but, nevertheless, he had no objection to her approbation.
Orders were left with Jan to bring back the work-people without delay; and Gertrude was sorry to hear, before Heins's departure in the afternoon, that he hoped to come again shortly to visit his family, and his very good friends the Slyks. She did not choose to acknowledge the look which conveyed that they would not be the only causes of his return. She had the hope, however, that his Danish cattle were included with herself in his unexpressed regards.
Chapter VII.
A NIGHT'S PROBATION.
"Why must Gertrude go so soon?" asked Christian of his mother, one fine evening, when the little family were seated at their homely supper. "I am sure when she came, she did not mean to go away so soon. Nobody wishes her to go."