EXCHANGE. 
countries ill commercial intercourse with 
Great Britain. 
In transactions between a buyer and 
seller, both residing in the same place, it is 
obvious that the mode of payment is ex- 
tremely simple. It takes place either in 
cash or by bill, and is attended with no in- 
tricacy of computation. Transactions be- 
tween two towns in the same country are 
almost equally easy. Payment in cash is 
out of the question, but the seller either 
draws on the buyer a bill payable at the re- 
sidence of the buyer, or if this residence is 
not a town of extensive trade, the buyer do- 
miciles his acceptance at a place of this 
description ; that is, he makes it payable 
there. The simplicity of this process arises 
from the money being of the same denomi- 
nation in both places, and nearly of the 
same value. But in dealing with foreign 
countries, the calculation becomes less 
simple from the difference of denomina- 
tion ; and although this causes no real dif- 
ference in the value of money, yet obstacles 
exist to the conveyance of specie, which al- 
most always prevent money from being of 
equal value in two different countries at the 
same time. 
Among merchants resident in different 
countries, bills serve nearly the same pur- 
pose as cash to the inhabitants of the same 
town. They are the current coin, by which 
the buyer in one country repays the seller in 
another ; they pass like money from hand 
to hand; and this facility of circulation 
would always make money of nearly equal 
value in two countries, whose exchange of 
merchandize should be nearly equal. But 
it seldom happens that the exchange of 
merchandize is equal ; there is almost always 
a balance on one side or the other; this 
balance must be paid in money ; and money 
is consequently of greatest value on the spot 
where payment must take place. Hence 
the fluctuations of exchange. These fluc- 
tuations are greater or less according to the 
amount of the balance to be paid, and ac- 
cording to the expense and difficulty of 
conveying specie. By the expense of con- 
veying specie is meant the carriage and in- 
surance ; by the difficulty, is meant the 
hazard of evading those prohibitory regu- 
lations, which in most countries impede its 
exportation. So powerful is the operation 
of these causes, that the exchange is often 
high, even between neighbouring countries ; 
for instance, 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 England than in Hol- 
land ; that is, a bill on London cost on the 
exchange of Amsterdam between 10 and 
12 per cent, more than the intrinsic value 
of the money. This continued until the 
spring of 1794, when the King of Prussia 
having promised 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 be- 
tween England and Holland. At other pe- 
riods of the war, it has been thought ad- 
visable that government should export spe- 
cie rather than turn the course of exchange 
against us by the formidable operation of re- 
mitting asubsidy in bills. 
II. Having explained the origin of fluc- 
tuations in exchange, we shall next ad- 
vert to the peculiar terms, used in bill 
transactions. 
Usance. This term, derived like many 
of our mercantile phrases from the Italian, 
(usanzia) means the customary period 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.” Between England 
and Hamburgh, and between 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 in- 
creases with the distance of two countries 
from each other, and was regulated by 
the time formerly required for the con- 
veyance of bills. In the American and 
West India trades, the phrase is not known, 
and the common term of a bill is sixty or 
ninefy days after sight. 
The word usance continues to be employ- 
ed only from conformity to ancient custom ; 
for it has no signification which would not 
be equally well expressed by the more ge- 
nerally intelligible phrase of months or 
days. 
Days of grace. It has been judged fit by 
the legislatures of different countries, to con- 
sider the acceptance of a bill of exchange as 
an engagement decidedly obligatory on the 
acceptor. If he fail in paying it, he not only 
loses his credit, but the holder of the bill 
may, in most countries, arrest either his 
person or his property. The policy of 
these enactments is to give free currency 
to bills of exchange, by satisfying the 
