133 



BILL OF EXCHANGE. 



BILL OF EXCHANGE. 



134 



principal steps necessary to be taken in the case of all descriptions of 

 private bills, which are principally for enabling associations of indi- 

 viduals to undertake the formation of railways, roads, canals, docks, 

 and other such works. 



An important respect in which the passage through parliament of a 

 private bill differs from that of a public bill is the much higher amount 

 of fees paid in the case of the former to the clerks and other officers of 

 the two houses. Although the high amount of the fees payable on 

 private bills has been the subject of much complaint, and is un- 

 doubtedly, in some cases, a very heavy tax, it is to be remembered 

 that the necessary expense of carrying the generality of such bills 

 through parliament must always be very considerable, so long as the 

 present securities against precipitate and unfair legislation shall be 

 insisted on. The expenses of agency, of bringing up witnesses, and 

 the other expenses attending the making application to parliament for 

 a private bill, at present often amount to many times as much as the 

 fees. These fees, on the other hand, are considered to be some check 

 upon unnecessary applications for private bills, with which it is con- 

 tended that parliament would otherwise be inundated. The misfortune 

 is, that it is not the most unnecessary applications which such a check 

 really tends to prevent, but only the applications of parties who are 

 poor, which may be just as proper to be attended to as those of the 

 rich. 



A useful little manual on ' Private Bill Legislation, comprising the 

 steps required to be taken by Promoters or Opponents of a Private 

 Bill,' has been prepared by J. B. Bristowe, Esq., Barrister-at Law, and 

 was published early in 1859. 



BILL OF EXCHANGE, a well-known mercantile instrument, of 

 great and extensive usefulness, which may be described as a written 

 order or request addressed by one person to another, directing the 

 latter to pay on account of the former to some third person or his 

 order, or to the order of the person addressing the request, a certain 

 sum of money at a time therein specified. In commercial language, 

 the person giving this direction is called the drawer of the bill ; he to 

 whom it is addressed the drawee, or, if he accepts it, the acceptor ; 

 he in whose favour it is given the payee : if the payee indorses it, he is 

 called an indorser, and the person to whom it is indorsed, the indorsee, 

 who may in turn likewise become an indorser. Bills of Exchange are 

 in this country classified as foreign or inland bills. This distinction is 

 more than nominal, for it carries with it legal consequences of import- 

 ance, and depends upon the following circumstances. If the drawer or 

 drawee, or, if both the drawer and drawee of a bill, are resident in a 

 foreign country, it is a foreign bill ; but it is an inland bill, if it is both 

 drawn and made payable or if drawer and drawee are both within 

 the territory of the United Kingdom of Great Britain and Ireland, the 

 inlands of Man, Guernsey, Jersey, Alderney and Sark, and the islands 

 adjacent to any of them, being part of the dominions of her Majesty. 

 Thus, a bill drawn by a person in France upon a person in England, or 

 conversely, by one in England upon another in France, is a foreign bill : 

 but a bill which is drawn in London upon Edinburgh, or in Dublin, or 

 Douglas, of the Isle of Man, upon London, is not a foreign, but an 

 inland bill. 



At what time and by what people bills of exchange were first brought 

 into use, is a matter of history which has not been satisfactorily ascer- 

 tained. The invention has been variously assigned to the Jews and 

 Lombards, as a mode of secretly withdrawing their effects from France 

 and England, when, in the 13th century, they were banished for usury 

 to the Florentines flying from the successful faction of the Ghibel- 

 -and to the Mongolian conquerors of China. These, however, one 

 and all, are conjectures resting on no solid foundation. All that can 

 be safely affirmed is, that instruments of this kind were current among 

 the commercial states of Italy in the early part of the 1 4th century, 

 and that they were not unknown about the middle of the same century 

 in England. It has been commonly stated that the use of foreign bills 

 preceded that of inland, and the statement, when confined to England, 

 into which the practice was imported from other countries, is unques- 

 tionably true ; but there seems no fact or reason to lead to the suppo- 

 sition that the original application of the invention was restricted to 

 such uses. The object to be attained was the facilitation of exchange 

 between parties resident at a distance from each other, by dispensing 

 with the remittance of money in specie ; and whether the parties were 

 resident in different countries or in the same, the inconvenience would 

 equally exist, and the remedy be equally applicable. 



The history of bills of exchange would furnish much curious and 

 instructive matter, as illustrative of the progress of trade, from the 

 :; and somewhat clumsy operations of early times down to the 

 refined and complicated system of modern exchanges. Originally, as 

 lias been said, they were employed solely as the means of remittance, 

 nnd the exigency which brought them into use may be explained as 

 follows : A., at Hamburg, consigned goods to B., in London, either in 

 execution of an order, or as his factor for sale. B., thereupon, being 

 debtor to A. for the invoice amount, or the proceeds of the sale, as the 

 case might be, was desirous of remitting to A. accordingly. The 

 remittance could only be made in money or in goods ; but A. might 

 not want a return cargo of English commodities, and the sending out 

 of specie was both inconvenient and hazardous. For, first, the proper 

 coin was to be procured at the money-changers ; next, a ship was to be 

 found to carry it; then it wan to be safely deposited on board; an 



insurance, if so happy a contrivance had existed, was to be effected ; 

 and advices sent out by another vessel to A. If the ship arrived safe, 

 there was the unloading, the carriage, and delivery on the other side ; 

 if it were wrecked or captured, there was the entire loss, when uninsured, 

 and in case it had been insured, the trouble, still, of procuring payment. 

 Now suppose (to take the simplest case) that some third person, C., 

 were about to take his departure from Hamburg to London, mutual 

 convenience would suggest the following arrangement : A. would 

 deliver to C. an open letter addressed to B., requesting him to pay to 

 C. the amount intended to be remitted ; and C., on receiving the letter 

 into his possession, would pay directly to A. the value of it in money 

 current at Hamburg, and having carried it over to London would there 

 receive from B. the sum specified. By this simple contrivance much 

 of the expense, and all the risk and trouble of remittance would be 

 saved to B. or A. ; and C., besides having a more convenient and port- 

 able sign of wealth, would probably receive a bonus, that is, some 

 advantage for the accommodation. It is obvious, however, that to 

 bring the machinery into operation several things would be wanting : 

 such as, first, knowledge by both parties of the mutual want ; secondly, 

 confidence on the side of C. that the money would be paid by B. on 

 presentment of the letter of request, or that in default of payment by 



B. he might safely look for reimbursement to A. ; and, thirdly, the 

 assessment of the present value of the letter, or, in other words, the 

 determining how much C. ought to give A. in ready money of Ham- 

 burg for the sum specified in the letter, to be paid at a future day in 

 money of England. Now one branch of this last requisite, the adjust- 

 ment of the comparative value of different currencies, fell directly 

 within the province of the money-dealers, who, from their stalls or 

 banquet at the great fairs and marts of exchange, received the name of 

 banquiers (bankers), and as all persons about to remit or to proceed to 

 foreign countries resorted to them for the requisite coin, they would 

 be enabled to furnish the merchants with information as to the other 

 particulars also, and would thus naturally become the negotiators of 

 this sort of exchanges. 



But the transactions by way of letters of exchange would have been 

 very limited, had they depended on the occasional coincidence of a 

 party setting out in person to the country to or from which the remit- 

 tance was to be made. There were, however, other cases in which the 

 like operation might be made available ; for although A. might not 

 want goods from England in return for those shipped by him 'from 

 Hamburg, other Hamburg merchants might, and it might thus happen 

 that, at the very time of the intended remittance, B. had money owing 

 to him at Hamburg in respect of goods so shipped. Let it be supposed 

 then that C,, instead of setting out in person to London, were about to 

 remit money to B., it is obvious that in that case the whole or a por- 

 tion, as well of B.'s debt to A., as of C.'s debt to B., might be extin- 

 guished by a simple arrangement of the same kind as that before 

 described. B. would write a letter addressed to C., requesting him to 

 pay a specified sum to A., or, in mercantile phrase, would draw upon 



C. in favour of A. ; this letter or draft he would remit, as payment, to 

 A., who upon presentment to C. would receive from him the amount, 

 and would give credit to B. in account accordingly. 



To advance a step further, B. might not at the moment have any 

 debtor at Hamburg through whom the substitution could be made ; 

 but as the trade between two countries is never, unless under unnatural 

 circumstances, entirely unilateral consisting, that is to say, solely of 

 shipments of goods on the one part, and solely of remittances of money 

 on the other it would happen that if B. had not, other London mer- 

 chants would have, sums of money owing from Hamburg. When 

 therefore the convenience of this method of exchanges had been felt, 

 it wae natural that B., when desirous of remitting, should endeavour to 

 find out some person so circumstanced, from whom he might procure 

 an order upon his debtor ; in other words, that he should buy a bill on 

 Hamburg for remittance to A. For the reasons before mentioned, 

 recourse would be had for this purpose to the money-dealers ; and it is 

 not difficult to conceive by what steps the business of procuring and 

 supplying bills soon became in their hands a distinct and important 

 branch of trade. 



Nor, indeed, without the intervention of such dealers, could the 

 system ever have become extensively useful ; because although it is 

 true, as has been said, that in the commercial intercourse of two 

 countries it seldom happens that either is merely buyer or merely 

 seller, it is equally rare that the value of the commodities exchanged is 

 exactly balanced. There would consequently be at times a scarcity of 

 bills upon one country and an excess of those upon some other. But 

 as the system gradually matured itself, the dealers through whom the 

 exchanges were effected would find their advantage in adjusting the 

 demand and supply by sending or procuring the superfluous bills in 

 one market to fill up the void in another ; and would thus be enabled, 

 in general, to furnish the required accommodation on payment of a 

 proportionate premium. 



In the meantime, the instrument of transfer, which in this country 

 had received the name of a bill of exchange, assumed a concise and 

 permanent form, and became clothed with such properties and incidents 

 as experience showed to be necessary or convenient. At first, no 

 doubt, the order was to pay on presentment to the drawee, or as it was 

 expressed in the instrument, " on sight." But, as the intervals between 

 drawing and presentment would necessarily be extremely variable, it 



