BILL of Exchange

BILL of Exchange, is a security, originally invented among merchants in different countries, for the more easy remittance of money from the one to the other, which has since spread itself into almost all pecuniary transactions. It is an open letter of request from one man to another, desiring him to pay a sum named therein to a third person on his account; by which means a man at the most distant part of the world may have money remitted to him from any trading country. If A lives in Jamaica, and owes B who lives in England

100l.; now if C be going from England to Jamaica, he may pay B this 100l. and take a bill of exchange drawn by B in England upon A in Jamaica, and receive it when he comes thither. Thus does B receive his debt, at any distance of place, by transferring it to C; who carries over his money in paper credit, without danger of robbery or loss. This method is said to have been brought into general use by the Jews and Lombards, when banished for their usury and other vices; in order the more easily to draw their effects out of France and England into those countries in which they had chosen to reside. But the invention of it was a little earlier; for the Jews were banished out of Guienne in 1287, and out of England in 1290, and in 1236 the use of paper-credit was introduced into the Mogul empire in China.—In common speech, such a bill is frequently called a drought; but a bill of exchange is the more legal as well as mercantile expression. The person, however, who writes this letter is called, in law, the drawer; and he to whom it is written, the drawee; and the third person or negotiator to whom it is payable (whether specially named or the bearer generally) is called the payee.

These bills are either foreign or inland; foreign, when drawn by a merchant residing abroad upon his correspondent in England, or vice versa; and inland, when both the drawer and the drawee reside within the kingdom. Formerly foreign bills of exchange were much more regarded in the eye of the law than inland ones, as being thought of more public concern in the advancement of trade and commerce. But now by two statutes, the one 9 and 10 W. III. c. 17, the other 3 and 4 Ann. c. 9, inland bills of exchange are put upon the same footing as foreign ones: what was the law and customs of merchants with regard to the one, and taken notice of merely as such, being by those statutes expressly enacted with regard to the other. So that there is now in law no manner of difference between them. In drawing foreign bills of exchange, it is customary to give two or three of the same date and tenor to be sent by different conveyances, that in case of accidents the person to whom they are sent may not be disappointed; in which case it is mentioned in the body of the bill, that it is the 1st, 2d, or 3d bill of exchange; so that when one is paid it discharges all the rest. Inland bills for any sum must be on 6d. stamped paper.