Now, as the trade between two coun tries never, unless under very unusual circumstances, consists solely of ship ments 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, be would buy a bill on Hamburg for remittance to A. For the reasons before mentioned, recourse would be had for this purpose to the money dealers ; and it is not difficult to conceive by what steps the procuring and supply ing 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 coun tries the commodities exchanged w ill never be exactly balanced. There is at 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 present ment 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 pre sentable 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 tern of days, and it was formerly not uncommon, when by agree ment the time of payment was deter mined, 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 vary ing 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 as A. should appoint, ex with the conciseness of mercantile 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 rea son 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 per son 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, pos session was of itself a sufficient voucher for payment, and the special superscrip tion therefore was soon frequently dis pensed with as unnecessary, the assign ment 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 indorse ment : the form first described, in which the assignee is named, is termed especial 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, chew the bill to the drawee, and procure from him an undertaking to pay it at maturity. If he refused, the bill was protested for non acceptance, 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 ac cepted 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 Partin 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 accept ance, the drawee became the principal debtor, to whom recourse must be had in the first instance, yet if upon regular pre sentment 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 dis honour 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, acknow ledged himself by the act of signing to have received value for the delivery of the order, it was not unreasonable that the "eimbursement 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 result therefore was this : if the drawee paid the bill, the matter was set tled; but if he dishonoured it, by a re fusal either to pay or to accept on due presentment, a notification of the disho nour 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 or upon the original consideration in respect of which it was drawn, if the acceptance had been re fused. In like manner, whoever satisfied the bill by payment, thereby discharged all parties posterior to himself, and ob tained a right against all who preceded him. Thus each successive indorsee bad the accumulated security of all the parties whose signatures were upon the instru ment as acceptor, drawer, or indorser, when it came into his hands.