EXCHANGE

, in Arithmetic, is the bartering or exchanging the money of one place for that of another; or the finding what quantity of the money of one place is equal to a given sum of another, according to a given course of exchange.

The several operations in this case are only different applications of the Rule of Three. See most books of Arithmetic.

Arbitration of Exchange, is the method of remitting to, and drawing upon, foreign places, in such a manner as shall turn out the most profitable.

Arbitration is either Simple or Compound.

Simple Arbitration respects three places only. Here, by comparing the par of arbitration between a first and second place, and between the 1st and a 3d, the rate between the 2d and 3d is discovered; from whence a person can judge how to remit or draw to the most advantage, and to determine what that advantage is.

Compound Arbitration respects the cases in which the exchanges among three, four, or more places are concerned. A person who knows at what rate he can draw or remit directly, and also has advice of the course of exchange in foreign parts, may trace out a path for circulating his money, through more or fewer of such places, and also in such order, as to make a benefit of his skill and credit: and in this lies the great art of such negociations. See my Arithmetic, pa. 105, &c.