Exchange

Exchange, in political economy, denotes first the practice - in its simplest form, barter - of a man's changing goods of which he has produced or obtained an excess, for goods of which another has an excess but of which he himself has need. Commercially the word often signifies the practice prevailing among merchants of different towns or countries of regulating their mutual accounts without the transfer of money from the one country or the other. To take the simplest form, the bill of exchange: suppose A in London buys goods of B in Antwerp. B has bought goods to a like amount in value in London. A, instead of remitting money to B in Antwerp, pays it over to B's London creditor on B's order, i.e. B "draws a bill" on A in favour of the creditor, and sends it to A for "acceptance." [Discount, Bills.] The question as between countries is complicated by the different and varying proportion of the value of the currency of one country in the other, the prevailing rate of exchange, as it is called, requiring special adjustments. Exchange is "at par" when imports exactly balance exports, and the. premium is a measure of the demand for bills, to save the risk of remitting specie. Exchange also is the name given to the building where merchants meet to adjust accounts and transact business. Such is the Royal Exchange of London, built by Sir Thomas Gresham in imitation of the Bourse at Antwerp. Exchange in law is where an estate is exchanged for one of similar value and limitation - e.g. fee-simple for fee-simple, life-estate for life-estate.