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 re pays the seller in another ; they pass like money from hand to hand ; and this faci lity of circulation would always make mo ney of nearly equal ;value in two coun tries, whose exchange of merchandize should be nearly equal. But it seldom happens that the exchange of merehandiz e is equal ; there is almost always a balance on one Aide or the other. Hence the fluctuations of exchange. These fluctu ations are greater or less, according to the amount of the balance to be paid, and according to the expence and diffi culty of conveying specie. By the ex pense of conveying specie, is meant the carriage and insurance ; by the difficulty, is meant the hazard of evading those prohibitory regulations, 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 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 of 1794, whep 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.
H. 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 andEngland 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 tw 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 hefail 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 currencyto 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 lity, and have no recourse, except on the drawer. If an accepted bill is re fused payment, it is a proof that the ac ceptor is insolvent. The holder may either proceed against the acceptor, or he may send back the bill to the last indorser, or if there he no indorser, to the drawer. The drawer, or last in dorser, as the case may be, is pledged to refund the amount immediately to the holder. This mode being generally the speediest means of reimbursement, the holder always prefers it when he can ob tain payment by it ; but in case of the in solvency of both drawer and acceptor, the holder retains the bill, and gets what he can from the estates of both.