In conclusion we will briefly discuss some points of interest relative to bills which are of most importance in connection with the daily transactions of banks in these credit documents.

In the first place it is necessary to know something of the law relating to bills of exchange.

We have noticed previously that bills were a legal method by which money could be sent from London to foreign countries in the reign of Richard II. Subsequent to 1770 bills of small amounts circulated as bank notes. This was in consequence of an absence of banking facilities in the country. Bills of less than 20s. were in circulation and were utilised for the payment of wages. However, it was found that many of these small bills were unpaid and the loss fell upon the poorer classes. An Act was passed in 1775 prohibiting their use.

Mr. Chitty states that bills and promissory notes were not assessed with stamp duty in England before 1782, when the special exemption of 5 Will. and Mary, cap. 21, sec. 5, was repealed by the Act 22, George III., cap. 33, and scales of duty were imposed.

Subsequent Acts of Parliament increased the duties payable on the issue of bills. The most important Act relative to them is that of 1881, which codified the existing law relative to credit documents.

The basis of the law is founded upon a series of judicial decisions which were determined by the customs of trade. Mr. Chalmers states that the great bulk of the law relating to negotiable instruments is contained in the reported cases, which are very numerous. The last edition of Byles on bills cites more than 3000 cases. Contrary to the general rule in the law of England, the benefit of a contract arising on a bill of exchange is assignable and consideration will be presumed unless the contrary appear.

We have seen that they were used in England in the reign of Richard II., but the first recorded decision regarding them occurred in the reign of James I.

The courts for a long time regarded bills with jealousy as an exception to the common law, and restricted their use to merchants, but at last their obvious utility overcame the scruples of the judges. A bill of exchange is defined by the Act of 1881 to be "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 determinable future time, a sum certain in money to or to the other of a specified person, or to bearer ". Every indorsement on a bill really constitutes the indorser as a new drawer, and the indorsement admits the signature and capacity of every prior party, so that every indorsement on a bill is to a banker an additional security unless an indorsement is forged, which would have the effect of cancelling subsequent indorsements.

The custom of making bills payable at a bank is comparatively modern, and a holder could object to receive a bill so accepted.

Of course it is a great convenience for traders to make their bills payable at a bank, but unless there is a special agreement between the banker and his customer it is doubtful if the latter could make any claim against the former in case of refusal to pay bills. A banker is compelled to pay cheques providing he has funds belonging to his customer, but a bill of exchange is outside the relation of a banker to his customer.

The banks ought to consider whether it is desirable for them to undertake great risks in the payment of bills for their customers, when they are held liable for forged indorsements. It is impossible to verify indorsements, and therefore the law relating to bills ought to be assimilated to that of cheques, so that the banker should be protected in case a bill is paid with a forged indorsement.

The French Code protects bankers if bills are paid with forged indorsements.

As a protection the banks might decline to pay cash over the counter for bills made payable at their offices.

It is not an uncommon procedure in London for bills to be presented for payment and bank notes obtained in exchange, in order to wire the fate of such documents.

Another mode of protection might be obtained if the banks insisted that bills should only be paid with cheques attached. Of course safeguards such as these are not beneficial to the trading community, and therefore if the law could be assimilated to that of cheques no change of custom would be requisite.

As bills also form the method of settling international indebtedness, it would be advantageous if the law with regard to those instruments was identical throughout the world.

In France a bill represents a trade transaction, and therefore it does not circulate.

The bill must state on its face that value is received in goods, value received in cash, or value in account. In this country the law raises a prima facie presumption that value has been received.

Several interesting discussions relating to bills took place at a meeting of the Institute of Bankers held 19th December, 1879. At that meeting it was resolved that it would be desirable to abolish days of grace, now that the means of communication are so rapid. This has recently been done in the United States. Another point discussed was, whether conditional acceptances might not be abolished. However, the meeting was in favour of their retention. These conditional acceptances, which are bills payable on the delivery of bills of lading and shipping documents, meet the requirements of the foreign trade of this country, and are therefore beneficial. The third discussion at that meeting was, whether it would be desirable to impose restrictions upon the issue and circulation of accommodation paper. The French and other Codes state that such credit documents are illegal.

It was decided, however, that it was not considered advantageous to interfere with the present law, because many bills which appear to be accommodation paper are in reality trade transactions.