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weight of gold or silver which the sum drawn : since this is the money of the of Portuguese money for which it is commercial world, and will every where drawn is supposed to contain, exchange be accepted in payment. Its apparent between London and Lisbon is said to be rise above this expense is to be ascribed at par; when it can be procured for less, to a depreciation of the currency, or exchange is said to be below par, or in some similar cause. We shall now enfavour of London ; when more must be ter more into the practical part of exgiven, exchange is said to be above par, change. or against London.

In treating this subject, we shall first The value of all the bills of exchange, give an idea of the nature of exchanges; which the merchants of London can and in the second place, we propose exdraw upon the merchants of any other plaining the peculiar terms in use among place, must in general be regulated by merchants relative to bills, the value of the consignments and re In transactions between a buyer and mittances, direct or indirect, through seller, both residing in the same place, it other countries, which they have made to is obvious that the mode of payment is that place, and consequently the course extremely simple. It takes place either of exchange affords an indication of the in cash or by bill, and is attended with state of the trade between different coun no intricacy of computation. Transactries. When bills upon Lisbon, for in- tions between two towns in the same stance, are scarce in London, and ex. country are almost equally easy. Paychange consequently above par, it is a ment in cash is out of the question, but sign that London owes more to Lisbon, the seller either draws on the buyer a than Lisbon to London : and the reverse bill payable at the residence of the buy. is a sign of the contrary.

er, or, if this residence is not a town of But there are other circumstances by extensive trade, the buyer domiciles his which the course of exchange is very acceptance at a place of this description; materially affected. Should the circu. that is, he makes it payable there. The lating coin of any country, v.g. be consi- simplicity of this process arises from the derably debased, and its real value, the money being of the same denomination quantity of gold or silver which it really in both places, and nearly of the same va. contains, be much less than its nominal lue. But in dealing with foreign coun. value, exchange may appear to be against tries, the calculation becomes less simple acountry, while actually it is in favour of from the difference of denomination; and it. Before the reformation of our silver although this causes no real difference in coinage in the reign of William III. we the value of money, yet obstacles exist are informed by Dr. Smith, the exchange to the conveyance of specie, which almost between England and Holland, comput- always prevent money from being of ed by the standard of their respective equal value in two different countries at mints, was 25 per cent. against England; the same time. but the current coin of England was at Among merchants resident in different that time rather more than 25 per cent. countries, bills serve nearly the same pur. below its standard value, and consequent- pose as cash to the inhabitants of the ly exchange was really in favour of Eng same town. They are the current coin, land. The issue of assignats, during the by which the buyer in one country rerevolution, depreciated the currency of pays the seller in another; they pass like France in a greater degree than was ever money from hand to hand; and this faci. known in any other instance ; and ac. lity of circulation would always make mocordingly the exchange between London ney of nearly equal value in two coun. and Paris became between 60 and 70 per tries, whose exchange of merchandize cent. against the latter place

should be nearly equal. But it seldom An unfavourable state of the exchange happens that the exchange of merchandize with any country furnishes a motive for is equal; there is almost always a balance exporting commodities to it. The mer. on one side or the other. Hence the chant, under these circumstances, can af. Auctuations of exchange. These fluctuford to sell his commodities as much ations are greater or less, according to cheaper as the premium which he is the amount of the balance to be paid, obliged to pay for a bill of exchange and according to the expence and diffiamounts to. Hence the course of ex- culty of conveying specie. By the er. change always tends to an equilibrium. pense of conveying specie, is meant the Indeed it can never really exceed the carriage and insurance; by the difficulty, expense of sending gold or silver bullion is meant the hazard of evading those to the place upon which the bill is prohibitory regulations, which in most

countries impede its exportation. So to give free currency to bills of exchange, powerful is the operation of these causes, by satisfying the buyer or holder of a good that the exchange is often high, even bill that the obligation in his hands is albetween neighbouring countries; for in- most as effectual as money. Having given stance, during 1793, the trade between so much power to the holder, it was Holland and England was completely thought adviseable to extend some indul. open, insurance was low, and the voyage gence also to the acceptor. Accordingly is known to be short, yet money was days of grace were allowed him, that is, it worth 10 or 12 per cent. more in Eng was ordered that the holder should take land than in Holland ; that is, a bill on no measures, and not even protest an acLondon cost on the exchange of Amster- ceptance, until the expiration of certain dam between 10 and 12 per cent, more days after the bill became due. In Lon. than the intrinsic value of the money. don three days of grace are allowed; in This continued until the spring of 1794, Amsterdam, six; in Hamburg, twelve ; when the King of Prussia having promis- in Dantzic, ten; in Copenhagen, eight; ed to act with vigour against the French, in Berlin, three; in the United States, on condition of receiving a large subsidy, three; and a different term in many other the remittance of a part of that subsidy mercantile countries. through Amsterdam caused an immediate The practice of giving days of grace is, fall in the rate of exchange between now at least, of no real uses for every acEngland and Holland.

ceptor, knowing that he may avail himÜ. Having explained the origin of self of them, does not fail to do it, and Auctuations in exchange, we shall next it would be considered quite ridiculous advert to the peculiar terms used in bill in the holder of a bill to send it for paytransactions.

ment before the end of the three days. Usance. This term, derived, like many So that when a bill is drawn at sixty days of our mercantile phrases, from the Ita. sight or date, the only effect of the days lian (uzanzia) means the customary pe- of grace is to make sixty, sixty-three. riod at which bills used to be drawn from Protest. This is the notarial act which one particular country on another. This denotes that an irregularity has taken period between Holland and England was place in regard to the bill, either that it a month. “At two usance pay to order is not accepted, or that it is not paid. In of, &c.” in such a bill means, “at two some branches of trade it is customary, months after date pay to order, &c.” Be. in cases of non-acceptance, not to extend, tween England and Hamburgh, and be. but only to note, à protest. Noting a tween England and France, usance is also protest is said, when a notary only records a month. Between England and Portugal the irregularity; to extend a protest, im. or Spain, it is two months; and between plies that he has written out on a stamp England and Italy it is three months. Its a formal statement of that irregularity. length evidently increases with the dis In a case of non-acceptance, the pro. tance of two countries from each other, test-gives the holder of course no power and was regulated by the time formerly over the person on whom the bill is required for the conveyance of bills. In drawn, but it enables him in some counthe American and West India trades, the tries to demand security from the per. phrase is not known, and the common son of whom he received it; in other term of a bill is sixty or ninety days after countries, the holder can do little or nosight.

thing with a protest for non-acceptance ; The word usance continues to be em- and in these cases he generally conployed only from conformity to ancient tents himself with noting a bill when custom ; for it has no signification, which acceptance is refused. In the British would not be equally well expressed by West India trade, for example, it is the more generally intelligible phrase of much more customary merely to note months or days.

bills for non-acceptance, than to extend Days of grace. It has been judged fit, the protest ; for it is only in particular coby the legislatures of different countries, lonies (St. Vincent, for instance) that to consider the acceptance of a bill of ex the holder can take prompt measures change as an engagement decidedly obli- to oblige the drawer to find security to gatory on the acceptor. If he failin pay. him for the amount of the bill : But on ing it, he not only loses his credit, but refusal of payment, a protest should althe holder of the bill may, in most coun ways be extended; otherwise the holdtries, arrest either his person or his pro- er would, by this omission, relieve every perty. The policy of these enactments is, indorser on the bill from responsibi

lity, and have no resourse, except on into permanent loan offices. Now there the drawer. If an accepted bill is re. can be no doubt but that a bank, like fused payment, it is a proof that the ac an individual, has a right to lend its capiceptor is insolvent. The holder may tal to whom, and for as long a period, either proceed against the acceptor, or as it pleases; but on the other hand it he may send back the bill to the last is evident, that the profitable nature of indorser, or if there be no indorser, to the banking business consists in its lend. the drawer. The drawer, or last in- ing to a greater amount than its capidorser, as the case may be, is pledged tal. If it does not do so, its expenses to refund the amount immediately to the will diminish its dividends below the holder. This mode being generally the legal interest. But how is a bank to speediest means of reimbursement, the lend more than its capital? We answer, holder always prefers it when he can ob- in two ways, first, by lending the money tain payment by it; but in case of the in- of depositors, and secondly, by lending solvency of both drawer and acceptor, the its credit in the shape of bank notes. holder retains the bill, and gets what he This latter operation is performed by can from the estates of both.

a bank's giving its promissory note, payWhen the Bank of England finds that able on demand, without interest, in ex. a merchant has suspended payment, their change for the promissory note of an rule is to examine all the bills drawn up individual, payable in a specified time, on him, which have been discounted by for which the interest is charged. If, then, different persons at the Bank, and to send a bank note is kept in circulation withnotice to these persons that the Bank ex. ' out being presented for payment, until pect the bills will be taken up, and the the note, in exchange for which it was money refunded. It is disreputable not issued, becomes due and paid, the bank to comply as early as possible with this has gained the interest, without any adintimation.

vance of capital. Now it must be plain, Accommodation Bills. By this term are that the faculty of a bank to trade thus understood bills drawn, not on occasion of upon its credit, without the danger of a real transaction, but for the purpose of stopping payment, depends upon the affording a temporary supply of money, length of time for which it makes loans. or accommodation to the parties. Such The shorter the period at which it disbills obtain currency for several reasons. counts bills and notes, the greater is It is often difficult to distinguish a real the extent to which it can safely loan, from a fictitious bill : even when a bill is in as much as the command of its reconsidered fictitious, it will still obtain sources is more within its reach. If a currency, as the holder of it has the dou- bank, for instance, were to limit its. ble security of the drawer and acceptor. loans to thirty days, it would have the com. It is as valid as a real bill, the law consider mand of all its capital and means withing only whether the holder has given va in that short space of time, and thus lue for it, and protecting him in the reco be enabled to defend itself against any very of that value : the shortness of the run which would be likely to be made term also (seldom exceeding two months, by the presentment of its notes for pay. and never almost exceeding three) natu- ment, or the drawing out of the money rally induces persons to think, that, als of the depositors. But, on the other though the drawer and acceptor be of hand, if a bank were to give its notes, doubtful credit, they will not fail quite so payable on demand, in exchange for the soon; and, in the worst event, the holder notes of individuals, payable in six has the prospect of a double chance of months, its excessive issues over and recovery from the estates of both parties. above the amount of its capital must be

In the United States of America, the very limited, or it will be in danger of Banks avowedly sanction the practice of more immediate demands than it is able accommodation, and discount notes which to meet, from its immediate resources. they know to be fictitious. These notes Now this has been precisely the situaare understood to be renewable, not so tion of the banks in many parts of the much at the pleasure of the bank, as United States. Although the notes disof the borrowers of the money, and the counted by them have been usually consequence has been, that the banks drawn at 60 days, (which has been the have lost sight of the object of their term adopted in Great Britain and A. institution, and, instead of confining their merica, and elsewhere, as the longest at loans to the anticipation of funds, for which banks should anticipate commershort periods, have resolved themselves cial capital,) yet the implied understand


ing that they were not to be paid, but that bank notes were depreciated ; that renewed, when due, has virtually deprived helpless, aged, and labouring people, who the banks of the real command of their were living upon fixed incomes, or wages, resources ; and this has been the chief were deprived by them of their property; cause, why all the banks in the United and that a system of over-trading, ruinStates, except those of New England, ous to the merchant, would be the rewere obliged to suspend specie payments sult. Still they persevered, and still in August, 1814, or soon after.

would they continue to persevere, if a Since we have thus touched upon the resolution of Congress, and the establishsuspension of specie payments by our ment of a formidable rival, the Bank of banks, and have pointed out one of the the United States, had not compelled causes thereof, it may not be amiss to them to recur to the moral obligation of pursue the subject a little further. Whilst contracts. That institution, which comour banks, from a general spirit of over- menced its operations at Philadelphia on trading, and particularly in that kind of the first of January, 1817, effected an arloan for long periods, which cannot fail rangement with the banks of that city, to paralize the power of a banker, they New York, Baltimore, and Richmond, for were induced, either from motives of pa. the resumption of specie payments on triotism or of speculation, to make con- the 20th of February following, which siderable loans to the government. These engagement has been thus far complied loans called for an issue of bank notes, with, (March 1817.) the same as if they were made to indi During the deplorable anarchy which viduals, and the circulation being sur so long prevailed amongst the banks, a charged with paper, more of these notes number of curious particulars were exwere returned for payment than the hibited, in relation to foreign as well as banks could meet, with their immediate domestic exchanges. The course of ex

The excess occasioned by change between all the different cities, these loans to government might, it is measured in paper money, showed pretrue, have been absorbed by reversing cisely the degree of the different deprethe operation, that is, by selling the ciations, and the difference in price, at stock for the very notes with which it different cities, of a bill upon Boston, was purchased; but the banks, influence where money was standard, was always ed in this respect by a sordid spirit of equal to the relative degree of depreciaavarice, preferred the disreputable alter- tion. Specie also bore at every place, native of stopping payment, whilst they upon an average, the same relation to papossessed ample means to support their per as a bill upon Boston, and this was credit. But this was not all. During a of itself sufficient to show, that all the state of war, it was an easy matter to talk about balance of trade was idle and palliate the disgraceful measure, by re- deceptive. presenting to the public that it was one EXCHANGES, arbitration of, are calculaof choice, and not of necessity; but what tions, made to find through what interought to have been the course of the mediate place it will be most advantabanks after the restoration of peace? geous to draw or remit. Surely to return to the practice of cor The person who draws a bill of exrect and honourable principles, by pay. change, is called the drawer; he upon ing their notes with the punctuality which whom it is drawn, the drawee; and if he they demand from others: So far, how. undertake to pay the amount, he is then ever, from pursuing this course, they called the acceptor. The person to whose plunged themselves deeper into disgrace order it to be paid, is called the payee, and the public into distress. Consider. and if he appoint another to receive the ing themselves as no longer bound to money, that other is called the indorsee, the fulfilment of contracts, no longer as the payee is, with respect to him, the obliged to limit the amount of their indorser; and any one who happens for loans, they extended their purchases of the time to be in possession of the bill, is government stock, and their discounts of called the holder of it. notes, to an excess, which created a de It was above stated, that the real ex. preciation of their paper from 15 to 30 change between two countries never can per cent.

exceed the expense and risk of transIn vain were they told, that the system porting gold and silver from one place to pursued by them was dishonourable and the other; and yet, notwithstanding the Tuinous. That the prices of commo- correctness of this position, most commerdities were elevated, just in the degree cial people in the United States were led


into erroneous opinions from the mere ap- the bill, he is not at liberty afterwards to pearances of things. In the year 1812, change his mind; or if his clerk say that the nominal exchange in Philadelphia the bill will be accepted, it is an accept. upon London was as low as 25 per cent. ance. But the most usual mode of acbelow par; and in 1815, as high as 20 per ceptance is, for the acceptor to put his cent, above par. The cause of it was, name upon the face of the bill, accompathat, in the former case, the currency of nied by the date of presentment, when America was sound, whilst that of Lon the bill is payable at such a period after don was greatly depreciated ; and in the sight. The validity of an acceptance, latter case, the currency of Philadelphia, however, being founded in different by the stoppage of specie payments by countries upon the custom of merchants, the banks, was depreciated vastly below reference must be had to them for a mithat of London. From an examination nute detail. into this subject, and from comparing the relative value of paper money, in both considerable trading cities, wherein the

Exchange signifies also a place in most countries, with the standard, and also merchants, negociants, agents, bankers, taking the rate of exchange upon London brokers, interpreters, and other persons at Boston, where the currency continued concerned in commerce, meet on certain sound, it resulted, that, during the whole days, and at certain times thereof, to con of this period of nominal fluctuation, the fer and treat together of matters relating real exchange at no time was higher or

to exchanges, remittances, payments, adlower than the expenses, &c. of transmit

ventures, assurances, freightments, and ting bullion. it very often happens that bill pay. sea and land.

other mercantile negociations, both by ments take place by indirect channels. A

These assemblies are, in some counBristol merchant, purchasing grain in Holland, makes the Dutch merchant reim. tries, held with so much exactness, that burse himself by drawing on a mercan

the absence of a merchant, &c. makes him tile house in London or Amsterdam ; or if suspected of drawing to a failure of the Dutch merchant draw on the Bristol bankruptcy, as not being able to stand merchant himself, he makes it a condi. the change. tion that the bill shall be accepted pay The most considerable exchanges in able in London. The object of this is to Europe are, those of Amsterdam, and give an easy currency in negociation to that of London, called the Royal Exthe bill. The Dutch merchant sells his change. See Royal EXCHANGE. bill on the Amsterdam exchange; where, for one man who wishes to buy a bill on Bristol, he will find twenty who wish to purchase on London. Hence, the ten Table of the Par of Exchange between dency of all exchange transactions to the United States and Foreign Councertain central points. That point is al. tries, in 1817. ways the principal trading city in the country. Throughout Great Britain, a bill on London is preferred to a bill on Pound Sterling of Great Britain 4 44 any other place; and what London is to


4 this country, Amsterdam, in its better Livre Tournois of France

184 days, was to Europe.

Franc of France

19 Every country town in Great Britain is Guilder or Florin of United said to have its par of exchange on Lon. Netherlands

39 don. By this is meant the term or num Mark Banco of Hamburgh

331 ber of days at which the country bank Rix Dollar of Denmark and will give a bill on London in exchange Sweden

1 00 for cash. This term is greater or less, Mill Rea of Portugal

1 24 according to the distance from London. A Johannes

16 00 In Bristol it is twenty-five days, in Liver. A Doubloon

14 93} pool thirty, in Glasgow forty-five, and in An English Guinea

4 662 the more remote parts of Scotland fifty A Ruble of Russia

66 days.

A Dollar of Spain

1 00 It is important to know, that a very Rial Plate of Spain

10 small matter will amount to an accept. Pagoda of India

1 94 ance. If the person upon whom a bill Tale of China

1 48 is drawn say, verbally, that he will accept Rupee of Bengal


Dolls, Cts.

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