An Analysis Of The Modes Of Transacting Business, And The Merits Of Each System

The use of bills of exchange in the United States dates back to colonial times. They were devices employed by the States to be used in lieu of metallic money. A comparatively small proportion of them arose from commercial transactions and for this reason it could not be said that they were "trade bills." From the beginning of the nineteenth century up to the Civil War period, there was a steady increase in the proportion of this country's business done through the medium of bills drawn by the seller of goods on the buyer. It was during this time that the so-called "acceptance" played a prominent part in the commercial affairs of the country and stood relatively high as a class of commercial paper. The use of these "acceptances" during this period was as extensive in this country as it was in England then.

The Civil War, however, ushered in new conditions which demoralized commercial paper values and created a desire on the part of the business men throughout the country to acquire cash in preference to other assets. Out of this grew the pecuniary American system of cash discounts.