BILL OF EXCHANGE. 



633 



if not universally, only the face of the bill can, in 

 such case, be recovered of the drawer or indorser. 

 In one respect, foreign bills most generally, and in- 

 land bills and promissory notes in many places, differ 

 in construction from the literal import of the terms 

 of the instrument as to the creditor time of payment, 

 being, in fact, payable three days after the time spe- 

 cified ; these three days of additional credit being- 

 allowed under the name of grace : but this additional 

 credit is often expressed in the instrument itself, thus, 

 " Pay to A. B. or order, in sixty days and grace" 

 which is equivalent to sixty- three days. Another mode 

 of expression for the credit to be allowed on a bill is 

 by the word usance. Thus a bill is drawn payable at 

 one or two usances ; and it is necessary, in order to 

 ascertain the time of payment, to know what period 

 ia meant by a usance, and this will vary according to 

 the place at which, and on which, the bill is drawn. 

 The following is a statement of the usance and days 

 of grace for bills drawn upon some of the principal 

 commercial cities. 



C?" m. d. denotes months after date, m.s. months after 

 sight, d.d. days after date, d. a. days after sight, d. a. days 

 after acceptance. 



In the dating of bills, the new style is now used in 

 every country in Europe, with the exception of Russia. 



If, on presentment of a bill of exchange to the 

 drawee, he refuses to accept it according to its tenor, 

 the holder has an immediate cause of action against 

 tlie drawer iiiul imlorsi-rs, and may, on giving them 

 notice of the non acceptance, forthwith demand the 

 amount of the bill, though it was on a long credit, 

 and, if it had been accepted, he must have waited 

 three or six months for his money. This rule is per- 

 fectly equitable, since the drawer and indorsers im- 

 pliedly agree that the draft shall be accepted on 

 presentment, and, on its not being so, their promise 

 is violated. But the holder must give notice to the 

 drawer, and the other parties to whom he wishes to 

 resort, of the non-acceptance or non-payment of the 

 bill. In case of the dishonour of a bill, the holder 

 has generally the right to recover of the parties liable 

 to him, that is, the drawer and indorsers, not only the 

 amount expressed on the face of the bill, together 

 with the expenses of protest and interest, but some- 

 thing in addition, on account of his disappointment 

 in not having funds at the place on which the bill is 

 drawn, as he had a right to expect. The rate or 

 amount of this damage must, as is evident, be very 

 various, according to the distance of the places, the 

 credit on which the bill was drawn (in case of protest 

 for non-acceptance), and the rise or fall of exchange 

 on the same place after the purchase of the bill. One 

 rule of estimating the damage is the cost of re-ex- 



* In France, no days of grace are allowed on bills pay- 

 able a ri/r. 



t In Austria, bills payable at sight, or on demand, or at 

 less than seven days after sight or date, are not allowed 

 iiy day's of grace. 



change, or of another bill on the same place, with 

 the addition of one, two, &c., up to twenty per cent, 

 damages. In other places, no regard is had to re- 

 exchange, but the holder recovers a certain percent, 

 over the face of the bill, by way of damage, and this 

 rate is the same whether exchange may have risen 

 or fallen from the time of purchasing the bill to that 

 of its being returned dishonoured. 



Exchange appears to have been known anciently 

 at Tyre, Carthage, Athens, Corinth, Syracuse, and 

 Alexandria. The first well ascertained traces of it, 

 in modern times, are found subsequently to the 12th 

 century, in some of the provinces of France, particu- 

 larly at the fair of Champagne. It was brought to 

 perfection in Italy. Its great utility and convenience 

 consist in its negotiability. Suppose, for instance, a 

 number of persons to have, severally, sums of money 

 deposited in various countries. One, whose funds 

 are in South America, wishes to make purchases at 

 St Petersburg ; and one, who is entitled to the pro- 

 ceeds of a cargo at St Petersburg, wishes to make a 

 purchase at Canton ; and another, having funds at 

 Canton, desires to make an importation from South 

 America. By merely making and delivering a slip 

 of paper, each one will, in effect, transfer his funds 

 quite across the globe. Another advantage of ex- 

 change is the facility it affords in adjusting balances. 

 Its effect in this respect may be illustrated by the 

 practice of banks and bankers in some particular 

 cities. In London, for instance, the bankers meet at 

 a certain hour every day, to pay and receive payment 

 of each others' checks ; but the amount actually paid 

 will bear a very small proportion to the whole amount 

 of the checks, since the greater part is settled by 

 merely canceling the checks they hold against each 

 other. So where all the banks of a city, as is the 

 practice in many commercial towns, take indiscrimi- 

 nately each other's notes, and settle the balances 

 every day, they all make an exchange of the notes 

 which they hold against each other, and only pay over 

 in specie the balances. Thus, by the payment in spe- 

 cie of a comparatively very small sum, some hundreds 

 of thousands may circulate between these institutions 

 and their respective customers and depositors. In the 

 same manner the balances are adjusted between two 

 commercial countries, or all the commercial countries 

 of the world. Among the various British merchants, 

 for instance, some have sent goods to America, 

 others to France, and others to Holland, and each one 

 may wish to import goods from a country other than 

 that where his funds lie. One, accordingly, sells ex- 

 change on Amsterdam, and buys exchange on New 

 York, or, which is the same thing in effect, as far as 

 he is concerned, he orders his correspondent at Am- 

 sterdam to buy exchange on New York, and remit it 

 thither for his (the merchant's) account. If the funds 

 which some merchants have in each foreign place 

 are exactly equal to what is wanted by others in the 

 same place, the whole transaction is only a transfer 

 among themselves of each other's claims, or exchange, 

 and no balance remains ; whereas, without this faci- 

 lity, one, must order specie home from Amsterdam, 

 which the other would purchase of him to ship it to 

 New York; a transaction involving much delay, 

 besides the expense of freight and insurance. But 

 still, all the merchants of the country may wish to 

 invest or pay greater sums abroad than the proceeds 

 of all the exports already made or making from the 

 country amount to, in which case, the course of ex- 

 change is said to be against the country, and, in this 

 case, as in all others where the quantity of an article 

 wanted is greater than that offered in the market, 

 the price will rise, and foreign exchange will be 

 above par. So, if the quantity of exchange demand- 

 ed on any particular country is greater than that of- 



