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BILL OF EXCHANGE. 



BILL OF EXCHANGE. 



was found expedient, or it insensibly became the practice, to fix them 

 by t definite wale; and hence probably aroM what wai called the 

 ntarr between two port* or countries, being, as the name would teem 

 to import, the period fixed by image, at which, with reference to the 

 date, a bill wai presentable for payment. Afterwards these UBMKHS 

 came to signify the periods at which the merchants of any particular 

 country or port were in the practice of paying the bills ao drawn upon 

 them, and these customary periods being of course universally knowu 

 mercial men, the word usance soon came to signify a specific 



term of days, and it was formerly therefore not uncommon, when by 

 agreement the time of payment was determined, to draw foreign bills 

 payable at one, two, or more usances. In modern times, the more 

 frequent practice has been to make them payable at so many days after 

 light, or at so many months or days after date. Again, in times when 

 money was less at command than at present, it was but reasonable, 

 that even after the maturity of the bill a short space should be allowed 

 to the drawee for providing the requisite cash ; and hence it became 

 usual to grant what we term day* of graft, which, though varying as to 

 limits in different communities, are yet binding within the limits 

 recognised in each community as of the law and custom of merchants. 



Originally, as we have supposed, the bill was a letter addressed by B. 

 to C , directing him to pay A. But an obvious improvement would 

 early suggest itself, namely, that as it might not be convenient to A. to 

 present the letter in person, he should have authority given him to 

 appoint another, by whom the presentment might be mode and the 

 money received in his stead. It assumed therefore the form of a 

 direction to pay A., or such person as A. should nominate and appoint, 

 expressed with the quaint conciseness of mercantile phraseology, thus : 

 " Pay A., or order." But if the letter or bill in the hands of A. were 

 assignable, there was no reason why it should not be equally so in the 

 hands of his assignee, and thug by the operation of the words " or 

 order," it obtained the character of a negotiable instrument or sign of 

 value, transferable from hand to hand by a simple act of delegation 

 apparent upon some part of it. So essential to bills, and almost innate 

 to the invention of them, does this quality now appear to be, that it 

 excites no wonder to mid it recognised by the law of some count ries, 

 Much as Scotland, as a property inherent in the instrument and inde- 

 pendent of words of transfer. In the majority of commercial countries, 

 however, it is otherwise. In them a sagacious wisdom, or a happy 

 accident, by making the transfer-ability of bills dependent on the use of 

 words of transfer, has thus enriched the world with .1 variety of instru- 

 ments adapted to the purposes of society. A bill without words of 

 transfer is in England not transferable, and is payable only to the 

 payee named ; one containing the words " or order," is transferable by 

 written assignment only ; whereas a bill payable to " bearer," or to 

 " A. or bearer," is transferable from hand to hand by delivery merely. 

 The words " or order," were no doubt the earlier form of this addition. 

 In the case of such an instrument, the form of assignment, it may be 

 readily conceived, would at first run in some such language as this : 

 " Pay the within to D., or his order signed A.," and by a similar 

 superscription D. might in like manner assign his right to K., and E. to 

 F., and so on. But as the bill was of course deli vered to each successive 

 assignee, possession was of itself .1 sufficient voucher for payment . and 

 the special superscription therefore being frequently dispen-ed with as 

 unnecessary, the assignment of the prior holder came to be indicated 

 by his signature alone, but with a difference of legal effect in each of 

 these forms of assignment. For a bill under the full form is not after- 

 wards transferable except by the written alignment of the person 

 named ; whereas the other form IIOH the same effect of making tin- l.ill 

 assignable by delivery without writing, as though the word - I 

 appeared in the body of the instrument. The practice of writing the 

 assignment on the back of the instrument has given it the name of 

 imluneauHt ; and the form first described, in which the assignee is 

 named, is termed a ipecial indorsement, or on indorsement In full ; ami 

 the mere signature of the assignee an indorsement in blank-. 



When bills were drawn payable, not as at first, on sight, but at some 

 future day, it won natural that the first holder who had the opportunity 

 of doing so should, during the currency of the specified period, show 

 the bill to the drawee, and procure from him an undertaking to pay it 

 at maturity. If be refused, the bill was protested for non-acceptance, 

 and notice of the dishonour was immediately communicated to the 

 drawer. If he gave the undertaking either verbally or in writing upon 

 the bill or otherwise, he was said to have accepted it, and he became 

 thenceforth liable, as the acceptor, for the amount specified ; for, by 

 the acceptance, the drawee hod affirmed the right of the drawer to call 

 upon him for payment of the money at the time specified, and he bad 

 accented to the transfer of that right, in accordance with the tenor of 

 the instrument presented to him. If, therefore, after accept.. 

 refused to pay the bill when due, he was responsible to the drawer, 

 both in respect of his original debt and his express engagement on the 

 Instrument, and to the other parties to the lull on th contract which 

 it contain*. Such u the obligation assumed by the acceptor ; but the 

 right of the holder takes a more extcnive range. For although, afU'r 

 acceptance, the drawee became the principal debtor, to whom therefore 

 recourse must bo had in the first i upon regular pre- 



sentment he made default in jaynicnt, the holder n< 



his remedy against him alone, but might resort to all prior jwirtic.1 

 whose names appeared upon the instrument. For a the indorsement, 



like the original drawing, conferred the right to receive the money, it 

 was to be presumed that neither hod been made without an equivalent , 

 and it was but justice, therefore, that on the dishonour of the bill by 

 the drawee, the holder should receive back the value which he hod 

 given; and as every person whose signature, whether as dra> 

 mdorser, appeared upon the bill acknowledged himself by the act of 

 signing to have received value for the delivery of the order, it was not 

 unreasonable that the reimbursement should bo claimed, not merely 

 from the party from whose hands the bill had been received, but also 

 from the drawer and every subsequent party whose name preceded 

 that of the holder. The result therefore was this : if the drawee paid 

 according to the tenor of the bill, the arrangement was complete, and 

 all parties were satisfied ; but if he dishonoured it, by a refusal 

 to pay or to accept on due presentment, a notification of the dishonour 

 was conveyed by the holder to all parties preceding him, or to such as 

 he thought fit to call upon for indemnity ; if then lie drawer paid the 

 money, or, as it was termed, loot up the bill, all the other parties ware 

 exonerated, and the drawer hod his remedy against the drawee, u|H>n 

 the bill if accepted, or upon the original consideration in resjivct of 

 which it was drawn, if the acceptance had been refused. In like man- 

 ner, whoever satisfied the bill by payment, thereby discharged all 

 parties posterior to himself, and obtained a right against all who p, , . 

 ceded him. Thus each successive indorsee had the accumulated 

 security of all the parties whose signatures were upon the instrument 

 aa acceptor, drawer, or indoraer, when it came into his hands. 



As bills remitted to or from places abroad are liable to be lost in 

 their passage, it became usual, in order to obviate the inomv 

 thence resulting, to draw them in (; that is to say, two . 

 ports of each bill were drawn, and described as the first, second, third, 

 and so on, each containing a condition that it should be payable only 

 while the others remained unpaid. This practice of drawing in sets is 

 mode available for another purpose. The payee having indorsed and 

 paid away one part, frequently remits another part to son 

 correspondent at the place of the drawee's residence, to be by him pie- 

 sented for acceptance, with a direction added, by way of memorandum, 

 to the bill, that, when accepted, it U to be held for the use of tin- 

 person who shall duly present the other ]irt or part* for payment at 

 maturity. The advantage of this arrangement is obvious : if the hill 

 be accepted, it is held, according to the direction, till maturity ; if 

 refused, it U protested, and notice is given to the drawn. I'pMii this 

 protest the drawer may be called upon to give security f< ir t ! 

 pa\ mi-lit of the bill at the expiration of its currency ; or, as occ.i-ionally 

 happens, some correspondent of the drawer at the place u|>n which 

 the bill is drawn accepts it for his honour, and thereby places himself 

 in the situation of the original drawee, being liable as acceptor to all 

 parties subsequent to the drawer. Such an acceptance is allied an 

 acceptance sujira protet, or for honour, and may be made at any time 

 during the currency of the bill, and on behalf of any i>arty who is 

 liable upon it after default made by the drawee. In short, without 

 entering into further details, by successive modifications and impiovc- 

 meiits the letter of request has become at length a very useful and 

 convenient instrument of exchange, the operation of which a> a vehicle 

 of remittance at the present day will be apparent, fioni the following 

 illustration. 



A person in London luw a ]yment to make in Paris, say, for cn. 

 venience, of I nun/. Instead of remitting the money, he goes to an 

 exchonge-liroker. and purchases from him a bill on Paris equivalent to 

 that sum. But how is that equivalent U) be ascertained .' or, in other 

 words, for what amount in French money is the bill to IK' drawn : In 

 the di termination of this question there are several item- of calculation. 

 The l>ill will be jiayable in France; how many francs then are equal to 

 1000/. By the mint regulations between England and France, I 

 ling of English money in equal to 25 francs 20 cent-, which is therefore 

 the nominal or standard />ar of exchange between the t 

 According to this scale, then, Kino/, in London would be worth 25,200 

 francs in Paris. But the par is fixed on the supposition that tl 

 reticles of the two countries respectively are uniformly of the 

 and purity established by the Mint; whereas, not uiifrequently. tin 

 coin is debased by alloy or attrition, and the relative value undergoes a 

 correxponding alteration. This deviation however is well known, and 

 may be regarded as comparatively constant. But there are other cir- 

 cumstances affecting the ratio of value of a more fluctuating and 

 unsteady operation. When, for instance, any considerable portion of 

 the circulating medium < the two countries between which 



the exchange is to be effected consists of a]>aper curt' . n.lard 



is materially affected by the quantity of paper in circulation. Without 

 entering into an exposition of the law of this variation, it is suit 

 to remark, that a redundancy of |KI]HT money has invariably th. 

 of depreciating the standard, or, in other words, of raising tin \ aim- of 

 the /. is compared with the same nominal sum in ;/<//.(/ 



This effect in temporary only when the ]>.IJKT is com- 

 into specie on demand ; if inconvertible, it is txjth permanent and con- 

 '". Thus it is well known that. at. one |>criod during the war 

 wlii.'h foil,, wid the tirst French ({evolution, the English guiii> 

 north '2<l. in money, estimated according to the value of the I/, sterling 

 in bank notes. At that time therefore th, i-ound would fall 



far In-low the Mint standard of 3/. 17. lltji/. per ounce, and a propor- 

 ill b- produced on the rate of exchange with any 



