EXCHANGE. 





countries impede its exportation. So 

 powerful is the operation of these causes, 

 that the exchange is often high, even 

 between neighbouring countries; for in- 

 stance, during 1793, the trade between 

 Holland and England was completely 

 open, insurance was low, and the voyage 

 is known to be short, yet money was 

 worth 10 or 12 per cent, more in Eng- 

 land than in Holland ; that is, a bill on 

 London cost on the exchange of Amster- 

 dam between 10 and 12 per cent, more 

 than the intrinsic value of the money. 

 This continued until the spring 1 of 1794, 

 when the King of Prussia having promis- 

 ed to act with vigour against the French^ 

 on condition of receiving a large subsidy, 

 the remittance of a part of that subsidy 

 through Amsterdam caused an immediate 

 fall in the rate of exchange between 

 England and Holland. 



II. Having explained the origin of 

 fluctuations in exchange, we shall next 

 advert to the peculiar terms used in bill 

 transactions. 



Usance. This term, derived, like many 

 of our mercantile phrases, from the Ita- 

 lian (uzanzia) means the customary pe- 

 riod at which bills used to be drawn from 

 one particular country on another. This 

 period between Holland and England was 

 a month. " At two usance pay to order 

 of, &c." in such a bill means, " at two 

 months after date pay to order, &c." Be- 

 tween England and Hamburgh, and be- 

 tween England and France, usance is also 

 a month. Between England and Portugal 

 -or Spain, it is two months ; and between 

 England and Italy it is three months. Its 

 length evidently increases with the dis- 

 tance of two countries from each other, 

 and was regulated by the time formerly 

 required for the conveyance of bills. In 

 the American and West India trades, the 

 phrase is not known, and the common 

 term of a bill is sixty or ninety days after 

 sight. 



The word usance continues to be em- 

 ployed only from conformity to ancient 

 custom ; for it has no signification, which 

 would not be equally well expressed by 

 the more generally intelligible phrase of 

 months or days. 



Days of grace. It has been judged fit, 

 by the legislatures of different countries, 

 to consider the acceptance of a bill of ex- 

 change as an engagement decidedly obli- 

 gatory on the acceptor. If he fail in pay- 

 ing it, he not only loses his credit, but 

 the holder of the bill may, in most coun- 

 tries, arrest either his person or his pro- 

 perty. The policy of these enactments is, 



to give free Currency to bills of exchange, 

 by satisfying the buyer or holder of a good 

 bill that the obligation in his hands is al- 

 most as effectual as money. Having given 

 so much power to the holder, it was 

 thought adviseable to extend some indul. 

 gence also to the acceptor. Accordingly 

 days of grace were allowed him, that is, it 

 was ordered that the holder should take 

 no measures, and not even protest an ac- 

 ceptance, until the expiration of certain 

 days after the bill became due. In Lon- 

 don three days of grace are allowed ; in 

 Amsterdam, six ; in Hamburg, twelve ; 

 in Dantzic, ten; in Copenhagen, eight ; 

 in Berlin, three ; in the United States, 

 three ; and a different term in many other 

 mercantile countries. 



The practice of giving days of grace is, 

 now at least, of no real use ; for every ac- 

 ceptor, knowing that he may avail him- 

 self of them, does not fail to do it, and 

 it would be considered quite ridiculous 

 in the holder of a bill to send it for pay- 

 ment before the end of the three days. 

 So that when a bill is drawn at sixty days 

 sight or date, the only effect of the days 

 of grace is to make sixty, sixty-three. 



Protest. This is the notarial act which 

 denotes that an irregularity has taken 

 place in regard to the bill, either that it 

 is not accepted, or that it is not paid. In 

 some branches of trade it is customary, 

 in cases of non-acceptance, not to extend, 

 but only to note, a protest. Noting a 

 protest is said, when a notary only records 

 the irregularity ; to extend a protest, im- 

 plies that he has written out on a stamp 

 a formal statement of that irregularity. 



In a case of non-acceptance, the pro- 

 test gives the holder of course no power 

 over the person on whom the bill is 

 drawn, but it enables him in some coun- 

 tries to demand security from the per- 

 son of whom he received it ; in other 

 countries, the holder can do little or no- 

 thing with a protest for non-acceptance ; 

 and in these cases he generally con- 

 tents himself with noting a bill when 

 acceptance is refused. In the British 

 West India trade, for example, it is 

 much more customary merely to note 

 bills for non-acceptance, than to extend 

 the protest ; for it is only in particular co- 

 lonies (St. Vincent, for instance) that 

 the holder can take prompt measures 

 to oblige the drawer to find security to 

 him for the amount of the bill : But on 

 refusal of payment, a protest should al- 

 ways be extended ; otherwise the hold- 

 er would, by this omission, relieve every 

 indorser on the bill from responsibi- 



