indorsement upon them. In which respect they were in every way equivalent to Bank Notes; moreover, there is not the same inducement to put a bill into circulation as a Bank Note, because the former increases in value as the day of payment approaches, and it is unprofitable to keep a note idle. But it is to the last degree unphilosophical to maintain that these two obligations are of different natures, because they are adapted to circulate in different degrees.

18. Every commercial lawyer would at once perceive the fundamental fallacy of the reasons why Colonel Torrens and others maintain that Bank Notes are Currency, and that Cheques and Bills of Exchange are not. They suppose that bank notes pass without indorsement, and that bills of exchange do not. Even if that were true, it would not be any valid ground for the distinction, because such a thing would in no way affect the nature of the instrument. It is wholly untrue to suppose that bank notes and money are the only things which close transactions. By the table given above it is seen that upwards of 95 per cent. of commercial payments and receipts were made by Messrs. Morrison and Co. in instruments of credit, other than bank notes.

But it is a very great mistake to say that bank notes pass without indorsement and bills of exchange do not. At the time the Bank of England was founded, it was supposed to be illegal for any such things as promissory notes to pass by assignment. The negotiability of bank notes had to be provided for by the Act. It was enacted, that all the Bank's bills obligatory and of credit, made or given to any person, might, by indorsement of such person, be freely assigned to any person who should voluntarily accept them, and so by such assignees toties quoties by indorsement thereon, and all such assignees might sue thereon in their

own names.

The assignment of the Goldsmith's notes, or the private bankers' notes, was held to be illegal much later than this. In 1703 it was decided that no promissory notes were assignable or indorsable over within the custom of merchants. In 1704 the Act was passed which allowed promissory notes to be assigned by indorsement like Bills of Exchange. It is true that the

1 Ch. IV., Sec. 1, § 27.

custom of indorsing Bank of England Notes, and, it is probable. country bank notes too, soon fell into disuse, but that makes no difference in the law of the subject.

It is also an error to suppose that Bills of Exchange require an indorsement at each transfer. A Bill of Exchange may be made payable to bearer, and then it requires no indorsement at all. Bills, however, are generally drawn payable to order, and then they require that the payee should indorse them; but he may do that without making himself liable on them, as is done in many cases. After the first indorsement in blank, the Bill is payable to bearer, and may be passed by mere delivery, in all respects like a Bank note. "I see no difference," said Lord Mansfield, "between a note indorsed in blank, and one payable to bearer." "And," says Mr. Justice Byles,1 "a transfer by mere delivery, without indorsement, of a Bill of Exchange, or Promissory Note, made or become payable to bearer, does not render the transferor liable on the instrument to the transferee.

"And it is conceived to be the general rule of the English law, and the fair result of the English authorities, that the transferor is not even liable to refund the consideration, if the bill or note so transferred by delivery, without indorsement, turns out to be of no value by reason of the failure of the other parties to it. For the sending to market of a bill or note payable to bearer without indorsing it, is primâ facie a sale of the bill. And there is no implied guarantee for the solvency of the maker, or of any other party.

"If a bill, or note, made or became payable to bearer, be delivered without indorsement, not in payment of a pre-existing debt, but by way of exchange for goods, for other bills or notes, or for money transferred to the party delivering the bill at the same time, such a transaction has been repeatedly held to be a sale of the bill by the party transferring it, and a purchase of the instrument, with all risks, by the transferee. It is extremely clear, said Lord Kenyon, that if the holder of a bill sent it to market without indorsing his name upon it, neither morality, nor the law of this country, will compel him to refund the money for which he sold it, if he did not know at the time that it was not a good bill.' So, when A gave a bankrupt, before his bankruptcy, cash for a bill, but refused to allow the bankrupt to A Treatise on the Law of Bills of Exchange, &c., 8th Edit., p. 146.

indorse it, thinking it better without his name, and afterwards, on dishonour of the bill, proved the amount under the commission, the Lord Chancellor ordered the debt to be expunged, observing that this was a sale of the bill. So, if a party discounts bills with a banker, and receives, in part of the discount, other bills, but not indorsed by the banker, which bills turn out to be bad, the banker is not liable. Having taken them without indorsement,' says Lord Kenyon, he has taken the risk on himself. The bankers were the holders of the bills, and, by not indorsing them, have refused to pledge their credit to their validity; and the transferee must be taken to have received them on their own credit only.' So where, in the morning, A sold B a quantity of corn, and, at three o'clock in the afternoon of the same day, B delivered to A, in payment, certain promissory notes of the Bank of C, which had then stopped payment, but which circumstance was not at the time known to either party, Bayley, J., said—If the notes had been given to A at the time when the corn was sold, he could have no remedy upon them against B. A might have insisted on payment in money, but, if he consented to receive the notes as money, they would have been taken by him at his peril.' Such seems the general rule governing the transfer by delivery, not only of ordinary Bills of Exchange and Promissory Notes, but also of Bank Notes. Nor is there any hardship in such a rule, for the remedy against the transferor may always be preserved by indorsement, or by special contract."

While it has always been acknowledged that the delivery of a bill without indorsement, in exchange for a valuable consideration, is a sale of it, it has frequently been said that, if the bill be indorsed, it is only a loan. We have pointed out the ambiguity of the word loan already. It is often said that a banker lends his customer money on the security of bills. But this is an inaccurate mode of statement. What the banker does is to buy a debt due to his customer, and, when he indorses the bill, his customer gives him a limited warranty of its soundness. If the banker lent his customer the money, it would be his duty to repay it. But that is not so. It is the acceptor's business to pay the bill, and, if he does not do so, the banker may, by giving his customer immediate notice, and making a demand make his customer take back the bill, and repay the money. But

if the banker fail in giving immediate notice, his remedy against his customer is gone.

But the Law of Continuity shews the fallacy of the doctrine that Bank Notes payable to bearer on demand alone are Currency. Lord Overstone rigorously restricts the term to such notes. But would not notes payable one minute after demand be Currency? or one hour? or two, or three, or four hours? Would not notes payable one day after demand be Currency? or two or three days? Lord Overstone denied that Bank post bills which are issued payable seven days after sight, are Currency. According to this doctrine, if a man deposits money in the Bank and receives in exchange for it a bank note payable on demandthat is Currency; but if he ask, for his own convenience, for a note payable seven days after sight-that is not Currency ! But the note becomes payable on demand on the seventh day after sight, and then, by their own definition, it is Currency. What was it before? It used formerly to be the custom for banks in the country to issue notes payable 20 days after demand. These notes circulated and produced all the effects of money. What were they, if they were not Currency? Cheques are payable on demand. How are they not Currency as much as notes? How are Bills of Exchange not Currency on the day they become payable? And, if they are so then, what were they before? It is quite plain that there can be but one answer. They are all species of Currency, though differing in degree, and the distinction between them is untenable.

Nay, according to this doctrine a Bank Note itself is only Currency during about six hours out of the twenty-four: because it is only payable on demand during banking hours, say from 9 a.m. to 3 p.m. As soon as the clock strikes three the Note is not payable till next day; and, consequently, it is not Currency, and has ceased to affect the foreign exchanges. Therefore, at 5 minutes before three it is Currency, and 5 minutes after three it is not Currency. So at 5 minutes before nine a.m. it is not Currency, at 5 minutes after nine it is Currency. We must leave our readers to judge whether such doctrines are sound philosophy.

Not only are Colonel Torrens's statements of law perfectly inaccurate, but also his statements of fact and the routine of business. He asserts that Bills of Exchange are not Currency

because they are intended to be, and are, ultimately liquidated in coin or bank notes. Such a statement as this shews the most profound ignorance of the ordinary routine business of banking; for comparatively very few bills are ever paid by means of coin or bank notes; in modern times they are almost universally paid by means of Bank Credits: and, consequently, by Colonel Torrens's own definition, these Bank Credits must be money.

19. But we must point out the further conclusions which the doctrines set forth by these witnesses lead to, which may somewhat surprise their advocates.

They say that the fundamental essence of Currency or Money is that it "closes a debt."

Now to this we shall reply as was the fashion in the glorious old days of special pleading-(1) there is no debt to close; and (2) it does not close the debt.

1. When money is exchanged for goods no debt arises and if it be said that the money closes the debt which would have arisen on the sale of the goods, it is perfectly obvious that it may equally be said that the goods close the debt which would have arisen on the sale of the money. It is simply an exchange; and the goods and the money close the debt equally on each side. Therefore, if it be the essence of Currency to "close debt," the goods are Currency for precisely the same reason that the money is.

It is quite common in the City to discharge a debt by stock: now by this the debt is closed, and, consequently, according to this doctrine, the Stock is Currency or Money.

So in innumerable cases it is the custom to discharge a debt by a payment of goods. A baker or a tea merchant becomes indebted to a wine merchant, and for the sake of convenience he may take payment in bread or tea. If he does so, then the debt is closed; and by this doctrine the bread or the tea are Currency or Money.

So in all cases of Barter or Exchange of goods, the goods on each side discharge or close the debt which would have arisen without the exchange; consequently, the goods exchanged on either side are equally Currency or Money.

Furthermore, let us test the doctrine by cases regarding other paper documents.

A merchant, suppose, puts his acceptance into circulation :