42: A bill of exchange from 1828: monetary policy. This week’s object looks much like a cheque. True, it’s very old – dated 5 January 1828 – but it has the essentials of the cheques that we still use today, though increasingly rarely.
There is a ‘drawer’ – the account against whose resources the cheque is drawn; and there is a ‘payee’ – the party that will get the money promised; and there is an amount to be paid – £500 in sterling. The drawer seems to be The Bank of the United States, most likely acting on behalf of one of its customers; that’s plausible since, despite its grand name, that bank was as much a commercial operation as one with public obligations. The payee – the one who gets the money – is Thomas Cadwalader, who came from a prominent Pennsylvania family of Quaker merchants and whose father had fought against the British in the War of Independence.
Perhaps Cadwalader needed the considerable sum involved – at least £40,000 in today’s money – in a hurry. Because the really significant thing about this cheque is that it’s not a cheque at all. It’s a bill of exchange and it’s due for payment 60 days after its issue date. In addition, and vitally important, it has been ‘accepted’ – ie, guaranteed – by one of the great banking names of the time, the London office of Baring Brothers. The fact of Barings’ imprimatur on this bill (it’s in the bottom left-hand corner) makes it almost as good as cash. Technically, it is an acceptance credit – accepted, that is, by Barings – of prime quality. So, when it is sold to a ‘discounter’, it will change hands at the smallest possible discount to its face value.