All the great changes connected with banking and credit documents have occurred during the present century. It has witnessed the formation of joint-stock banks and other kindred financial institutions, in addition to a great development of the modern system of trade based upon credit.

At the beginning of the century we find bills of exchange largely used in order to carry on the business of the country. These credit documents were more of the character of bank notes.

Mr. H. Thornton gives a very clear account of the great uses of bills of exchange. He says: "These documents obviate the necessity of sending gold from one place to another. Let us suppose there are in London 10 manufacturers, who sell their articles to 10 shopkeepers in York, by whom the said articles are retailed; and that in York there are 10 manufacturers, who sell their goods to 10 shopkeepers in London. This trade can be managed by transfers.

"Letters ordering the transfer of the debt are termed bills of exchange. They are bills by which the debt of one person is exchanged for the debt of another, and the debt, perhaps, which is due in one place for the debt due in another. These bills can be converted into money or they are discountable. Bills are also accepted as payment, although having some time to run. To possess some article which so long as it is detained shall produce a regular interest, which shall be subject to no fluctuation in price, which by the custom of commerce shall pass in certain cases as a payment and shall likewise be convertible into ready money by the sacrifice of a small discount, is the true policy of the merchant. Liverpool and Manchester effect their business by bills at one or two months drawn on London. The bills annually drawn by the banks of these towns amount to many millions. The banks obtain a small commission on the transaction. Bills are drawn on London from every quarter of the kingdom, and remittances are sent to meet them. While London draws no bills, or next to none, upon the country, London has become the trading metropolis of Europe, and indeed of the whole world."

We have also an interesting account showing the development of private banking in the country, and the manner by which bills of exchange came into the hands of these bankers. A hundred years ago travelling in this country was attended with many difficulties; consequently, the transmission of money was somewhat risky. The people, therefore, found it advantageous to leave their surplus capital with the shopkeeper on market days, rather than run the risk of carrying it home. The country shopkeepers occupied an important position in the towns. They drew bills on London and also sent remittances to the metropolis. They would occasionally give gold to their customers, taking in return bills on the metropolis, which were then remitted with other bills to London correspondents. People who required cash for their credit documents obtained it from the shopkeeper, who charged something for the transaction. The shopkeeper then printed "Bank" over his door, and engraved these words on the cheques upon which he drew his bills. Money was also taken on deposit at interest and utilised in discounting bills.

In the early part of this century, bills were largely used in Yorkshire for the payment of debts among the small manufacturers and among the dealers in wool, cattle and corn; and were in amounts of £10 to £30, and were proverbial for their dirty appearance and the number of endorsements. The most important point in connection with them was that they were very rarely unpaid.

Mr. Leatham in 1841 stated that "bills perform every function that can be assigned to the notes of the Bank of England, with a quality to make remittances by post which the notes cannot possess; and the only specific difference between them is that a limited time is attached to one and not to the other. But when at maturity bills are converted into gold with as much legal certainty as bank notes; when the origin of bills is bond fide and legitimate, I place them with the security of the drawer, acceptor, and perhaps twenty indorsements on the back, in the first class of our currency, before notes, and next to gold. I know of no purpose of money except wages to which bills are not applicable, in the provinces throughout this kingdom, though not seen in London in making payments. It is in the recollection of many persons that all the woollen business of the West Riding was conducted by bills of exchange at two months' date, as low as £5, drawn without stamps, with gold for wages, without the intervention of bank notes, previous to the last war."

We have, therefore, evidence showing that the country bankers in the early part of the present century transacted their business by means of bills of exchange, and also considered that the said instruments performed the functions of a currency.

Various Committees of the House of Commons, in discussing the position of the Bank of England and the state of the currency, referred to bills as an important factor with regard to these questions. Thus in 1810 and in 1819 some interesting facts relating to bills were published, and again in 1832 Mr. Burgess stated that a contraction in the quantity of bank notes in circulation produced directly a much greater relative contraction in the volume of the bill currency. Again, in 1840 Lord Overstone stated: "I consider the money of the country to be the foundation, and bills of exchange to be the superstructure raised upon it. I conceive that bills of exchange are an important form of banking operations. Bills of exchange, being an important form of credit, will feel the effect of that contraction in a very powerful degree."

The evidence given tends to show that bills were regarded as playing an important part as a circulating medium. Not many years had elapsed in the present century when it witnessed a great development in the use of credit documents. This became necessary in consequence of a great growth in English commerce, and assumed the form of a development of credit. Now credit has effected a complete revolution in trade. It has been the means of economising our metallic circulation and also assisting to transfer the capital of the country from hand to hand. Great facilities were required in order to conduct the modern trade based upon credit, and this was effected by the formation of joint-stock banks. The surplus capital of the country found its way into these new institutions, and was transferred from districts where it was not required to other places where it could be utilised at a profit. The formation of joint-stock banks therefore increased the bill circulation of the country.