the receipt of the news abroad
over night will make the London market open up strong in the morning.
To buy stock right at the closing of the market here for the purpose of
selling it out next morning in London at the opening is an operation
not without risk, but one which is likely to make money. A lower
opening abroad would, of course, spoil the whole plan, and force a
loss, but just there comes in the ability and judgment of the man who
is handling the business. His judgment need by no means be infallible
for the house to make a great deal of money.

Concerning arbitraging in bonds, practically everything depends not
only on the judgment and skill, but on the facilities and connections
of the man in charge. In the great "open" market in New York and in the
great "open" market in London, American bonds are being continually bid
for and offered in a way which gives an expert in touch with both
markets a chance to buy here and sell there, or vice versa, at a
profit. Such men are employed by bond houses with international
connections, and spend their time doing practically nothing else but
keeping in close touch with open market bids and offers for stocks and
bonds and trying to buy in one market and sell in another. Such trades
are frequently put through on a very profitable basis, profits of a
clear point or more being not at all uncommon.

As for the degree of risk to be taken in business of this kind, that is
entirely at the discretion of the arbitrageur. Where a firm bid of
ninety-nine, good for the day, for instance, is given, there is no risk
in cabling a bid of ninety-eight to London, but where the bid is not
firm at all, or where it is only firm for five minutes, or in many
other cases, the man who cables his own bid of ninety-eight is taking a
certain amount of risk. Often enough he gets the bonds in London at
ninety-eight, only to find that the ninety-nine bid in New York has
been withdrawn.

Knowledge of what risks to take and of what risks to leave alone
constitutes expertness in this line of business. Seldom can the
transaction be absolutely closed at both ends and any substantial
profit be made. Most of the time the correctness of the bond expert's
judgment as to how he can sell somewhere else what he has bought, is
what determines the amount of money he will make or lose.

CHAPTER IX

THE FINANCING OF EXPORTS AND IMPORTS

Interesting as the movement of gold and the international money mark