comparative value of different currencies, fell directly within the province of the money-dealers or bankers, and as all persons about to remit or to proceed to foreign countries resorted to them for the requisite coin, they would furnish the merchants with information as to the other particulars also, and would thus become the negotiators of this sort of exchanges.

But there were other cases in which the like operation might take place, for although A. might not want goods from England in return for those shipped by him from Hamburg, other Hamburg merchants might, and so it might happen that at the 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 going to London, were about to remit money to B., in that case the whole or a portion, as well of B.'s debt to A. as of C.'s debt to B., might be settled 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. accordingly.

Now, as the trade between two countries never, unless under very unusual circumstances, consists solely of shipments of goods on the one part, and solely of remittances of money on the other-it might happen that if B. had not a debtor at Hamburg other London merchants would have sums of money owing from Hamburg. B. would endeavour to find out some such merchant, from whom he might procure an order upon his debtor; in other words, he would buy a bill on Hamburg for remittance to A. For the reasons before mentioned, recourse would be had for this purpose to the moneydealers; and it is not difficult to conceive by what steps the procuring and supplying of bills soon became in their hands a distinct business.

Indeed, without the intervention of such dealers, the system could never have become extensively useful; because in

the commercial intercourse of two countries the commodities exchanged will never be exactly balanced. There is at times a scarcity of bills upon one country and an excess of those upon some other: but this inequality is equalized by the care of those persons whose business it is to deal in bills; for they send or procure the superfluous bills in one market to meet the demand in another.

The instrument of transfer, or bill of exchange, now assumed a concise and permanent form. At first the order would probably be, 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 be variable, it became the practice to fix them by a definite scale; and hence probably arose what was.called the usance between two ports or countries, or the period fixed by usage, at which, with reference to the date, a bill was presentable for payment. Afterwards these usances came to signify the periods at which the merchants of any particular country or port were in the practice of paying the bills so drawn upon them, and these customary periods being universally known, the word usance soon came to signify a specific term of days, and it was formerly 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 sight, or at so many months or days after date. In course of time the practice was also established of granting what was termed days of grace, or a short time to the drawee for providing the requisite cash: these days of grace, though varying as to limits in different communities, are generally recognised as part of the custom of merchants.

Originally, as we have supposed, the bill was a letter addressed by B. to C., directing him to pay A. But as it might not be convenient to A. to present the letter in person, it became usual to give him authority to appoint another, by whom the presentment might be made and the money received. It assumed therefore the form of a direction to pay A., or such

other person as A. should appoint, expressed with the conciseness of mercantile language, thus: “Pay A., or order." But if the letter or bill in the hands of A. were assignable, that is transferable by him to another person, there was no reason why it should not be so in the hands of his assignee, and thus by the operation of the words "or order," it obtained the character of a negotiable instrument or sign of value, transferable from one person to another. The assignment might be in such form as this: "Pay the within to D., or his order-signed A.," and by a similar superscription D. might in like manner assign the bill to E., and E. to F., and so on. But as the bill was of course delivered to each successive assignee, possession was of itself a sufficient voucher for payment, and the special superscription therefore was soon frequently dispensed with as unnecessary, the assignment of the prior holder being indicated by his signature alone. In England, and in some other countries, it has long been the practice to write the assignment on the back of the instrument, and it has thence received the name of an indorsement: the form first described, in which the assignee is named, is termed a special indorsement, or an indorsement in full; and the mere signature of the assigner is called an indorsement in blank.

When bills were drawn payable at some future day, one might suppose that the first holder who had the opportunity of doing so should, during the currency of the specified period, shew the bill to the drawee, and procure from him an undertaking to pay it at maturity. If he refused, the bill was protested for nonacceptance, 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 became thenceforth liable, as the acceptor, for the amount specified. For the effect of the acceptance was this: the drawee thereby affirmed the right of the drawer to call upon him for payment of the money, and he assented to the transfer of the right. If, therefore, after acceptance, he refused to pay the bill when due, he was responsible to the

drawer as having acknowledged himself to be his debtor, and to the payee or other party in possession of the bill, in respect of his express engagement. But the right of the holder was not confined to the acceptor; for although, after acceptance, the drawee became the principal debtor, to whom recourse must be had in the first instance, yet if upon regular presentment the drawee did not pay, the holder was not bound to take measures against him alone, but might resort to all prior parties whose names appeared upon the instrument. For as the indorsement gave the right to receive the money, it was to be presumed that it had not 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 had given: and as every person, whose signature, whether as drawer or indorser, 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 be claimed, not merely from the party from whose hands the bill had been received, but also from the drawer and every other party whose name preceded that of the holder. The resuit therefore was this: if the drawee paid the bill, the matter was settled; but if he dishonoured it, by a refusal either 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 the drawer paid the money, or as it was termed took up the bill, all the other parties were exonerated, and the drawer had his remedy against the drawee, upon the bill if accepted, or upon the original consideration in respect of which it was drawn, if the acceptance had been refused. In like manner, whoever satisfied the bill by payment, thereby discharged all parties posterior to himself, and obtained a right against all who preceded him. Thus each successive indorsee had the accumulated security of all the parties whose signatures were upon the instrument as acceptor, drawer, or indorser, when it came into his hands.

Bills of exchange are also much used as follows:-A tradesman may not be able to pay ready money, but he can give the seller an order for payment on some other person, receiving or paying the difference, as the case may be, and making an allowance by way of interest, or, which is the same thing in other words, paying an extra price, in proportion to the time of the bill's currency. To the seller this mode of dealing is better than the giving of a naked credit, as he gets an additional chance of payment, and a written acknowledgment of his debt. When the negotiability of inland bills was admitted, they served all the purposes of actual money, because in the same manner as the original seller had taken the order in payment, another would receive it from him in the purchase of other commodities; or it might be at once discounted or converted into cash by application to a money-dealer.

The drawing of a bill supposes that the drawee either has in his possession funds of the drawer, or is his debtor to the amount specified in the order: it was therefore an easy step in the transactions of wholesale dealing for the seller to draw upon the buyer, for the price of the goods, a bill payable to his (the seller's) own order at some future day. This bill the buyer immediately accepted, and thus in effect acknowledged himself to be the debtor of the drawer to the amount specified, and engaged to pay the holder at maturity. By this arrangement, now very general, the buyer obtains credit for the term at the expiration of which the bill is made payable, and the seller has the advantage of a fixed day for payment

Bills of Exchange are also frequently drawn and accepted under such circumstances as follow:-There are in most of the principal trading ports of the world, merchants who carry on the business of general factors or agents for sale, and whose establishments are known among mercantile men under the name of commission-houses. The course of dealing with such houses is, for the most part, this:-A., a manufacturer at Manchester, consigns a cargo of cotton pieces to B. and Co., a commission-house at Mexico, for sale on his account. The English correspondents of B. and Co. are Messrs. C. and Co. of London. By an arrangement among these several parties A. draws on C. and Co. for half or twothirds, as may be agreed, of the invoice price of the goods consigned, and by discounting the bill with his banker obtains at once an instalment in money, which immediately returns into his capital, and becomes useful in producing more goods. Ultimately, account sales are furnished by the Mexican house, and A. again draws on C. and Co. for the balance in his favour. Annual balances are struck between B. and Co. and C. and Co., and remittances by bills for the adjustment of the account complete the transaction. Now the advantages of this anticipatory part-payment are obvious, more especially in the trade with distant countries, as South America or the East Indies. But the practice has degenerated into something of an abuse; for it has of late been frequent with the consigners of goods to make out invoices with prices artificially high, and so to procure a remunerating return even from the proportion for which they are authorized to draw in advance. The effect is to throw upon the consignees the whole risk, which was formerly shared between the two, and proportionately to impair the steadiness and security of commerce.

Good bills, as already observed, may be always discounted. Accordingly, any man whose credit is good may at any time raise money upon a bill drawn, accepted, or indorsed by himself. If his