BIEL, GABRIEL (1430-1495), sometimes called the last of the scholastics, was born at Speyer about 1430. He enjoyed the esteem of the well-known Duke Eberhard of Würtemberg, and was one of his chief agents in founding (1477) the university of Tübingen, in which he became professor of theology. He was afterwards a member of the order of the Brothers of the Common Life. His principal work is entitled Collectorium Sententiarum, published in 1501. He belongs to the history of political economy by the portion of this work in which he treats of money from the moral or casuistic point of view. Though inferior to ORESME, the other distinguished scholastic economist, in penetration and clearness of thought, he shows a sound understanding of the fundamental principles of the theory of money. This part of the work was published separately by John Virdung at Mainz in 1541 under the title, De monetarum potestate simul et utilitate tractatus. It is also appended to the treatise of Marquard Freher, De re monetaria veterum Romanorum et hodierni apud Germanos imperii, 1605. (Roscher, Gesch. der Nat. Oekon. in Deutschland, p. 21 seq.; and H. Contzen, Gesch. der Volkswirthschaftlichen Lit. im Mittelalter, p. 161). J. K. I. BIGELOW, ERASTUS BRIGHAM, LL.D., born 1814, died 1879, was an active and successful man of affairs, the inventor of many improvements in textile machinery, especially of the power-loom for weaving carpets. As an advocate of protection, and prominent woollen manufacturer, he had much influence in shaping the complicated system of duties on wool and woollens adopted by the United States in 1867. His writings on tariff subjects show force and ability. He wrote also pamphlets and review articles on the currency and on general economic questions. Among his pamphlets may be mentioned Remarks on the Depressed Condition of Manufactures in Massachusetts, Boston, 1859, and Address on the Wool Industry of the United States, New York, 1869. F. W. T. Bigelow was noted as a manufacturer in the textile arts. He early gave attention to industrial subjects, and in particular to the tariff question. His first printed treatise on the depressed state of American manufactures appeared in 1858. This was followed in 1862 by his best work, The Tariff Question considered in regard to the Policy of England, and the interests of the United States. With Statistical and Comparative Tables, Boston, 1862, pp. 103. Appendix, pp. 242, quarto. The descriptive portion is largely historical, and is an attempt to show that the growth of English commerce was not due to free trade, but to other general causes, and that the removal of duties by England was no sacrifice. The statistical tables are valuable, and show a desire to bring together a great mass of data in a scientific way. The foregoing work is condensed and treated in a more popular form in The Tariff Policy of England and of the United States contrasted, Boston, 1877, pp. 61. Mr. Bigelow also published an Address on the Wool Industry of the United States, 1869; Relations of Labour and Capital (Atlantic Monthly, 1878). He was the first president of the National Association of Wool Manufacturers, organised in 1864; and had much to do in framing the tariff of 1867. [See sketch of his life in Bulletin of Nat. Assoc. of Wool Manuf., vol. ix. No. 4, 1879; also a brief memoir by Delano A. Goddard in Proc. of Mass. Hist. Soc., Oct. 1882.] D. R. D. BILL BROKING. Names do not always change with the things they describe. This is true of what is called "bill broking." When the business began early in this century the bill broker was really a broker-an agent between buyer and seller, procuring bills for the buyer, receiving a small commission for his trouble, but incurring no liability in respect of the transaction. The so-called "bill broker is not now really a broker at all. Such business is still transacted, and on a considerable scale, but those known as bill brokers are really a sort of bankers, receiving from bankers and others large deposits which they invest for the most part in bills of exchange, agreeing to repay on demand or on short notice. They do also sell bills, but, as they guarantee the bills sold to the buyer, their liability remains intact just as much as if they held them till maturity. The bills are their own, and they do not get rid of the risk of holding them by selling them. Thus the character of the business has entirely changed. That change was no doubt gradual, and arose probably from the fact that bankers wanted to employ surplus money without the trouble and risk of selecting bills, and without the danger involved in locking up their funds in a security which could not at all times be readily turned into cash. Here a distinction must be made. So far we have referred to what is popularly called bill broking. But there is another large branch of the bill business which consists in the negotiation of bills drawn by British houses on firms abroad in payment for goods exported from these islands. In dealing with such bills, questions of EXCHANGE (q.v.) are all-important. The bills are drawn in the money of the country where payable, and they have to be turned into English money for BILL BROKING the convenience of the merchant who sells them. The bill broker makes his calculation as to the currency of the bill, the rate of exchange, and the contingencies of an exchange often altering, and names a price at which he buys the bill and takes all risks except that of non-payment. The amount of bills thus dealt in must be very large. But the bill broker proper has nothing to do with such bills. He is completely ignorant on all questions of exchange. The firms who deal in such bills are known as "foreign brokers," not as bill brokers. Leaving aside at present this special department of business in bills, there is really nothing peculiar in bill broking proper to distinguish it from banking on a great scale, except that a far larger proportion of the investments made by the bill broker must be made in bills of exchange for two reasons: (1) That he requires a large supply of bills of all dates to supply his customers who desire to purchase them, or to lend money on the deposit of bills as security, and (2) that, as he holds such large amounts payable at call or short notice, he requires a security which is perpetually revolving and coming to maturity as cash, and no known security answers this description so well as bills of exchange. He takes them daily of all dates, from a few days or weeks to run to six months, and they are perpetually falling in and supplying him with money. In It is a common observation that in banking no reserve is so good as a store of bills of exchange, and there is a constant demand for them on the part of banks, both in town and country, who cannot procure from their own customers a sufficient supply. It is one great part of the business of the bill broker to supply banks with this necessary aliment. The profit made on thus selling bills out and out is generally very small, but when once sold there is no further thought about the bill, if it is good; and the seller has the money in hand with which to make a fresh investment of the same kind. this way a bill broker may turn over his "money" many times in a year, and in the aggregate obtain a fair return, though his liabilities on bills will be apparently enormous, but really very small, as the proportion of unpaid bills in a well-managed business is extremely slight. The history of the business seems, at first sight, to imply that the risks run are peculiarly heavy, so many of the old firms having disappeared through failure. As a bill depends entirely on names, and not on property, except occasionally where "document bills" are negotiated, it is obvious that much knowledge and experience are required in the choice of such paper. And even where there is a certainty of the ultimate payment of bills, there may be a great risk of having to wait long for payment, and in the meantime of a heavy lockup of capital, a contingency which has often 141 caused much anxiety and embarrassment. have passed away the great house of Overend, Gurney & Co., the house of Sanderson, Sandeman & Co., Bruce, Buxton & Co., and divers houses of smaller repute. Such cases illustrate the peculiar dangers of the business, but that it can be maintained with safety and success is abundantly proved by the history of some of the companies who have conducted it during the past thirty years, and of private concerns of old standing still remaining vigorous notwithstanding the severe competition which has arisen, to say nothing of smaller houses which have sprung up and flourished since 1866. Probably it may safely be said that, since that famous date, banking and bill broking have been conducted as a rule with more caution than during previous periods, and that the abuse of credit generally has been less rampant, so that mere adventurers have had far more difficulty than formerly in negotiating made-up (¿.e. fictitious) bills. In this connection it may be proper to note the prevailing impression that out of a given amount of business far less is done on bills, and far more by cash payments than was done, say thirty years ago. As to the fact, there seems no doubt when the figures as to inland bill stamps are considered. From these it is evident that with an enlarged business fewer bills are created.1 Again it is said that the custom of obtaining loans from banks instead of accepting bills has much developed-that a man who owes money, instead of accepting for the amount, takes a loan from his bankers and pays cash. In this case there is credit, only in another and less visible form. A bill drawn and negotiated may pass into many hands, but the loan cannot be transferred, and remains a private affair between the banker and his customer. In most cases there is an important advantage to the debtor in paying cash, and banks prefer loans within certain limits, because they can generally charge a higher rate on a loan than on the discount of a bill. Probably both creditor and debtor prefer this mode of settlement to the creation of bills, because not only are stamps saved, but the nature of their relations in business is not in any way divulged beyond the banker's room. Another important cause of the diminution of foreign bills, that is of bills drawn on London by traders residing in foreign countries, is the development of the system of TELEGRAPHIC TRANSFERS, by which very large sums are now paid without the creation 1 It is not so easy to account for this change as to prove its existence. One cause, no doubt, is a great increase of the actual wealth of those engaged in the larger transactions of the country. Men who used to accept bills now pay cash, and procure important advantages thereby. This is observed in all parts of the country, and means of course that such traders have largely increased their cash resources, and so are enabled to dispense with CREDIT. 142 BILL BROKING-BILL OF EXCHANGE of a bill. Formerly, for instance, almost the whole of the enormous produce and credit business between America and England was effected by sixty days bills. Now, it is said that the amount of bills of this description is not onethird of what it formerly was. This alone would mean a great reduction in the aggregate of bills, and the same process is going on, more or less, as to the trade with the East, etc. So, from various causes, the creation of bills no longer keeps pace with the extension of business; and complaints are frequent that "bills are scarce," that "it is impossible to find bills enough for the demand," and so on, the result being that holders of bills often have the discount market under control; hence the bank minimum rate no longer guides the market during considerable periods, and the machinery of the money market is dislocated, the bank being compelled to have recourse to unusual and extraordinary means of reducing the supply of loanable capital in the market. It is perhaps worth noting here that while thirty years ago, the Bank of England was one of the largest holders of bills of exchange, it is now believed to be one of the smallest amongst the larger holders. This change arises from the enormous growth of the deposits of other banks, which deposits are largely invested in bills, and as these fall due, are re-invested in the same security, so that there arises a continual demand for bills, and a tendency to depression of rates of discount. It is difficult for the bank to counteract this tendency. The amounts in question are too large, and as deposits seem ever on the increase and bills are not increasing in proportion, we have seen in recent years longer periods of "cheap money" than have ever before been known in the history of our commerce. Other interesting observations arise in reference to the comparison of our own practice as to bills and that of other countries of commercial importance. Take the case of France. It is said that there is no trade in Paris in bills as there is in London. The Bank of France holds always a large amount of bills which she has discounted for customers, but of course they are held till maturity and are not dealt in. She, having | branches all over France, is the great French collector of money. Moreover credit is not developed in France as with us, so that bills are not created in sufficient quantity to support a great trade in them. Bills are of necessity drawn from Paris on all parts of France, and they are said to be mostly held by the Bank of France, but the bill is not, as with us, the most important of all banking securities (see BANK OF FRANCE; CLEARING HOUSE). Take again the United States. In Chicago, for instance, the great distributing houses do not generally draw on local centres for the amounts due to them by smaller traders. They hold these as book debts which they collect as they can, in the meantime borrowing from banks for what they may themselves require. In England, on the contrary, such houses draw bills even for very small amounts which they discount in the market, thus avoiding a lock-up of capital. It cannot be said that credit is not fully developed in America, but in form it dif fers materially from our system. In some of the great eastern cities the custom is said to be different, and to resemble more that with which we are familiar, and in New York there is a limited market in bills, but not at all on the London scale. Banks buy bills and hold them, but there do not appear to be great houses collecting and dealing in bills after our fashion. Bill broking in fact may be said to be one of those British institutions which are peculiar to our country and arise from the peculiar nature of our commercial operations. It is a growth of that great expansion of credit which has so long distinguished our country, and to which we owe so much of our prosperity. The system is liable to much abuse, and has at times been grieviously abused, but it is not, therefore, to be set down as mischievous and useless. It is one of those means of economising the use of loanable capital which are intrinsically valuable and important, and are therefore certain to survive criticism, however severe. W. F. BILL OF EXCHANGE. The word bill, meaning generally a statement in writing, is derived from bulla (Lat.) Bills of exchange, which may be divided generally between "inland" and "foreign," those which take their origin in transactions in one country only, and those which arise from transactions beyond the limits of that country in which they are payable, are among the most important of COMMERCIAL INSTRUMENTS (q.v.) Bills, properly speaking, represent debts, they may be used, by negotiation, to transfer these debts from one person to another, and first-class bills form one of the best securities which a banker can hold (see BILL BROKING). They sometimes, however, are drawn without being based on any genuine transactions; in this case their standing is more doubtful (see ACCOMMODATION BILL; CROSS DRAWING; KITE). Foreign bills sometimes originate in exchange operations, and are hence often employed in connection with the financial liabilities of governments. The amount of the bills of exchange in existence at one time in the United Kingdom is very large. It was estimated by W. Leatham (Letters to Sir C. Wood, 2d ed. p. 13), as being £135,000,000 in 1841, by W. Newmarch as not much less than £180,000,000 or probably £200,000,000 in 1856 (TOOKE and NEWMARCH, History of Prices, vol. vi. p. 588), by R. H. Inglis Palgrave, as being from £300,000,000 to £350,000,000 in 1872 (Notes on Banking, p. 36). The amount is probably not larger now (1891). BILL OF EXCHANGE, LAW OF The BILL OF EXCHANGE, LAW OF. law relating to bills, notes, and cheques, differs from other branches of our mercantile law in two respects. First, it has been codified by the Bills of Exchange Act 1882 (45 & 46 Vict. c. 61), and secondly, the act in question applies to the whole of the United Kingdom; so that with the exception of two Scotch rules which are specially preserved, there is now a practically uniform body of rules for England, Scotland, and Ireland. By § 3 of the act a bill of exchange is defined as "an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person or to bearer." The person who gives the order is called the DRAWER, the person thereby ordered to pay is called the drawee, and if he signifies his assent to the order in due form he is then called the ACCEPTOR. An acceptance must be in writing on the bill and be signed by the drawee (§ 17). When a bill is payable to a person named or to his order, it may be transferred by his endorsement. The person to whom it is so transferred is called the endorsee. The term "holder" includes alike the bearer of a bill payable to bearer, an original payee, and an endorsee. 143 As it with some foreign system. French law, which adheres rigidly to the original theory of the uses of bills, offers the best contrast. In France a bill represents a trade transaction, in England it is merely an instrument of credit. English law gives full play to the system of accommodation paper (see ACCOMMODATION BILL); Thus French law endeavours to stamp it out. in England it is not necessary to express on the face of a bill that value has been given, for the In law raises a presumption to that effect. France the nature of the value given must be expressed, and a false statement of value voids the bill in the hands of all parties with notice. In England a bill may be drawn and payable in the same place. According to French law, though the rule is said of recent years to be disregarded in practice, the place where a bill is drawn must be so far distant from the place where it is payable that there may be a possible rate of exchange between the two. A false statement of places so as to evade this rule voids the bill in the hands of parties with notice. the French lawyers put it, a bill of exchange necessarily presupposes a contract of exchange. In England a bill may be drawn payable to bearer. In France it must be drawn payable to order; if it were not so the rule requiring the consideration to be expressed would be a nullity. In England a bill payable to order becomes payable to bearer when endorsed in blank. In France an endorsement in blank merely operates as a procuration. In England if a bill be refused acceptance, a right of action against the drawer and endorsers at once accrues to the holder. This is the logical consequence of the currency theory. In France no cause of action arises unless the bill is again dishonoured at maturity; the holder in the meantime is only entitled to demand security from the drawer and endorsers. In England a sharp distinction is drawn between current and overdue bills. person who becomes the holder of a bill after its maturity, acquires and can give no better title to it than the person from whom he took it had. In France no such distinction appears to be drawn (see Chalmers on Bills of Exchange, ed 3, Introd., pp. xlv.-xlvii.) A In some foreign countries any creditor is entitled to draw on his debtor for the amount of his debt, but in England the right to draw arises only from special agreement. A reason for the English rule may perhaps be found in the fact that at common law, apart from special agreement, it is the duty of the debtor to seek out his creditor, as soon as the debt is due, and to tender the money to him. Bills of exchange are said to have originated with the Florentines in the 12th century. From Italy their use spread to France, and from thence to England, and throughout the commercial world generally. A bill of exchange in its origin was an instrument by which a trade debt due in one place was transferred in another, thereby avoiding the necessity of transmitting cash from place to place. But in England mercantile usage adopted into law by judicial decisions has enlarged the original idea, and has created, by means of bills and notes, a perfectly flexible paper currency. Perhaps the full force of the English definition cited above is best brought out by contrasting | of all kinds, and inland bills payable otherwise Bills of exchange payable on demand may be stamped with either impressed or adhesive stamps, the stamp duty being one penny. Foreign notes and bills must of course be stamped with adhesive stamps. Inland notes 144 BILL OF EXCHANGE, LAW OF than on demand, must be drawn on impressed stamps. All notes and bills, other than bills payable on demand, are subject to an ad valorem stamp duty (Stamp Act 1870, §§ 45-55 and Schedule). Section 72 of the Bills of Exchange Act provides that when a bill or note is issued out of the United Kingdom it is not to be impeached because it is not stamped in accordance with the law of the place of issue. This affirms a general rule that the courts of one country take no cognisance of the revenue laws of another country. The enactment is clearly a fair one, as the present stamp act requires bills issued abroad to be stamped here, and makes no allowance for the foreign stamp. The acceptor is the party primarily liable on a bill. By accepting it he " engages that he will pay it according to the tenor of his acceptance" (§ 54). The holder is entitled to require an absolute acceptance, but if the drawee will only give a qualified or conditional acceptance, the holder may either treat this as a refusal to accept, or at his peril take the qualified acceptance (§§ 19, 44). The drawer of a bill is in the nature of a surety for the acceptor. He "engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or any endorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken" (§ 55). The endorser of a bill is in the nature of a new drawer, and his obligations to subsequent parties resemble those of the drawer. When a bill is dishonoured the holder must, subject to certain specified exceptions (§ 50), give notice of dishonour to the drawer and endorsers he wishes to charge, and if the bill be a foreign bill he must also protest it. An inland bill may be noted, but no legal consequences attach to this proceeding, except the right to recover the noting expenses. When the liabilities of the drawer and endorsers are fixed by taking the proper proceedings on dishonour, the holder may either sue all the parties to the bill concurrently, or he may sue them in succession until he has recovered the amount of the bill with his damages and costs. Sometimes, when it is doubtful whether the drawee will accept or whether he will be in a position to pay when the bill matures, the bill specifies some other person to whom the holder may resort in case of need. This person is called the "besoin " or case of need." If he accepts the bill he is called an "acceptor for honour," and if he pays it he is called a "payer for honour." He must not pay the bill till it has been duly noted or protested for non-payment by the original drawee. On payment he becomes entitled to exercise the rights of the holder as against the party for whose honour he paid and all parties antecedent to him (§§ 65-68). Comparing bills of exchange with other contracts, it will appear that the majority of the peculiar rules relating to them are deducible from the fact of their negotiability. A contract or chose in action is not assignable at common law, though in equity the benefit of it might be assigned subject to all equities between the parties. But a bill of exchange is part of the mercantile currency of the country, and its primary object is that it should circulate freely from hand to hand and that every honest holder should be able to deal with it like cash. A bill payable to order may be negotiated by the endorsement of the holder, completed by delivery. A bill payable to bearer, or endorsed in blank, may be negotiated by mere delivery. The consideration for its issue, acceptance, and negotiation is presumed until the contrary is shown or a prima facie case of fraud is made out, in which case the onus of proof is shifted (§ 30). If a bill gets into the hands of a "holder in due course" (§ 29), he gets an absolute title, and no antecedent fraud other than forgery affects him (§ 38). So strong is this rule in English law that if a person puts a blank signature on stamp paper, it is treated as an authority to any person to whom the paper is delivered to fill it up as a bill for any amount the stamp will cover, and if the bill, when complete, gets into the hands of a holder for value without notice, no objection that the paper was improperly dealt with is allowed to prevail (§ 20). The laws of all countries agree in the rule that no title can be made to a bill through a forged signature, but English law is peculiarly severe on the party who pays the bill (§ 24). Except in the case of a demand draft drawn on a banker (§ 60) the person who pays a bill pays it at his peril if the party presenting it claims under a forged endorsement. Thus if the drawee of a bill accepts it, payable at his bankers, after a forged endorsement has been placed on it, the bankers cannot debit his account with the amount of such payment. Under the continental codes, a banker who paid such a bill without any notice of the fraud would be protected. A further peculiarity of English law is the compulsory allowance of three days of grace on all bills payable otherwise than on demand (§ 14). It is believed that all the continental codes now agree in abolishing this fictitious maturity for bills, but the holder is generally entitled to wait one or two days before the bill is protested. From the references to foreign law already made, it appears that the practice of the mercantile world, with reference to bills of exchange, is by no means uniform. Rules, therefore, are required for regulating this conflict of laws, and they are provided by § 72 of the act, their guiding principle being the maxim "locus regit actum.' |