Though the discovery or invention of bills of exchange cannot be ascribed with certainty to any precise period, they are for the first time unmistakably referred to in laws of the commercial nations of Southern Europe in the latter part of the thirteenth century, and they probably came into frequent use soon after that time. Perhaps the earliest bill of exchange of which we have an authentic copy is one made at the beginning of the fifteenth century, and which approaches pretty nearly to the form now in use. A translation of the instrument from the Italian. in which it was written, is as follows:--
"Francisco de Prato and Company at Barcelona. In the name of God, Amen. The 28th day of April, 1404. Pay by this first of exchange at usance to Pietro Gilberto and Pietro Olivo one thousand scuti at ten shillings Barcelona money per scuto, which thousand scuti are in exchange with Giovanni Colombo at twenty-two grosses per scuto, and place to our account; and Christ keep you." "ANTONIO QUARTI SAB. DI BRUGIS."
For this curious relic of commercial history we are indebted to the fact that the mercantile company upon which the bill was drawn failed to pay it, whereupon the parties fell into a dispute about the matter of damages, and the magistrates of Bruges wrote to those of Barcelona, setting forth this bill with the facts of the case, and requesting information upon the usage respecting bills of exchange in their city.
A bill drawn in England about the year 1500 bears less resemblance to the form now used, and instead of commencing and ending with the devout expressions of the Italian bill, it has the formal words, "Be it known to all M'e y't I," etc., and "hereto I bynde me myn executours and all my Goodis, wheresoever they may be founde, in Wytnesse whereof I have written and sealyed this Byll, the X Day of," etc. It was made payable to a person named, "or to the Bringer of this Byll."
Bills of exchange were first used only for the benefit of a specified payee, but it was not long before the element of negotiability was added to foreign bills, which, thus perfected, became at once the indispensable instruments of commerce which they now are. The negotiability of inland bills and of promissory notes was not recognized till long afterwards. In England, inland bills were not used in any form till about the middle of the seventeenth century; and Lord Holt, in a case reported half a century later, said he remembered the time when actions upon inland bills first began. Indeed, the earliest case in which foreign bills of exchange are mentioned in the English Reports is as late as the first year of the reign of James I., though they appear to have been known to the courts in the preceding reign of Elizabeth, for there are extant precedents of declarations upon them of that period. The earliest reported case of an inland bill occurs in 1663. It appears that the negotiability of promissory notes was a matter of doubt with the Court of Queen's Bench as late as 1702. The court seem to have felt very little confidence in their own opinion upon the question; for Chief Justice Holt, after urging his opinion against the negotiability of such instruments, took occasion to speak with two or three of the most famous merchants in London, as to the consequences it was alleged would follow from obstructing their negotiability; and on another day he says that they had told him it was very frequent with them to make such notes, and that they looked upon them as bills of exchange, and that they had been used a matter of thirty years, and were frequently transferred and indorsed as bills of exchange. In 1704 Parliament put an end to the dispute between Lord Holt and the merchants by recognizing the negotiable qualities of promissory notes which now belong to them.