current coin at Berlin, Paris, and London, would constitute this monetary unity without any confusion whatsoever.

The extent of the circulation of this note would have no other limits than those of civilization; indeed the places where banks exist, that is to say, Berlin, Paris, London, centralize, in fact, the financial transactions of the whole human race.

A similar bank would carry on business in relation to the following countries, Germany, France, England, Belgium, Holland, in precisely the same way as the National Bank of France has acted in respect to the provinces of France, and the Bank of the German Empire in respect to the markets of Hamburg, Frankfort, and Augsburg: that is to say, that the loss of exchange between one place and another would disappear for bills of exchange between these three towns-Paris, London, Beilin; and these towns become similar in position to the following-Lyons, Bordeaux, Marseilles, which, united by the game financial system, enjoy the same advantages.

In order to render the payment of a note to the bearer possible, at the choice of the bearer, in three different places, it only becomes necessary that the bank which originated the note should from time to time dispatch the precious metals from one place to another.

The same necessity forces itself on the Bank of France, the Bank of Germany, and the Bank of Belgium.

The expense necessitated by these dispatches of the metals would have to be added to the general expenses of carrying on the business, and to be deducted from the profits.

We will imagine, for example, a circulation of "bank money notes equal to that of the Bank of France, about £80,000,000. Let us imagine results by way of profit on the discount of £2,400,000, and a displacement of the precious metals from one place to another: for a total amount of £80,000,000 it must be calculated thus:

Profit on discount

...

...

Deduct per cent on £80,000,000, being for the
expense of removing metal

Profit remaining

...

£2,400,000

200,000

We give these figures so as to exemplify, as the English say, the reasoning. A new formation without the assistance of the Governments, without the support of national banks, will never quickly attain a circulation of £80,000,000; and, if ever, by its internal strength and in response to a general need it reached such a figure, it would soon exceed it, and that in proportions which are at this present time incalculable.

We have calculated the cost of the removals of specie at per cent. on the total amount of circulation.

It is very possible that this cost would be reduced to zero; indeed there exists a law of liquidation of debts between individuals, the consequence of which is that persons finish by paying without opening their purses, except in case of failure. This law of liquidation also governs transac tions between towns, between provinces, and between countries.

It is upon this law that the phenomenon of the circulation of the bank note rests, and in pure theory (but only thus) can one say that one gramme of

gold can suffice for all the commercial and industrial transactions of the whole world.

If (but there must be a great deal of if), if all the universe were at peace, entirely devoted to free trade, never subject to commercial and agricultural crises; if the terrestrial bank had its solvency accepted and as much by the Parisians as by the Kroumirs, the Hottentots, and the Chinese; if, in one word, the world was not the world it is, and man was a perfect being; if, &c., &c. !

The study of this theoretical law is good, inasmuch as it is the ideal towards which humanity unconsciously tends, and which it approaches by degrees. Unhappily humanity will never realise it.

The projected bank is, relatively, only a very small institution in comparison with universal and terrestrial plans, for its direct sphere of action is passed through at railway speed in four and twenty hours' time in its widest extent, that is to say, from Berlin to London.

Nothing prevents the bank notes being made payable in other places; but with the deduction of commission, they can be made payable at par in such centres as Paris, Berlin, London, because these centres settle their business matters at maturity among themselves; but to render them payable from the commencement of their formation, at New York, Calcutta, and Melbourne, it would be necessary to keep considerable balances in these cities or to pay the expense of the transmission of metal; disadvantages which would be compensated for by a commission which would have to be charged to account at the moment of payment.

We will reserve further details for another occasion.

IV.-Objections.

Two serious objections present themselves :

1. Would the Governments allow the formation of bank money? We believe them to be sufficiently, let us say for euphony, "intelligent" to wish to hinder it, but we believe such a prohibition to be impossible. A bank note "banco " would be, from a legal point of view, only a contract of delivery, bought and sold between individuals, against current coin. We call it a bank note so as to avoid using the term which might have been used by Proudhon (inexact in fact) of a circulating value.

2. What would the bank do in bi-metallic countries?

In mono-metallic countries its part is simple and one completely marked; in bi-metallic countries, which have not admitted the system of a parallel standard, its part would be difficult but profitable.

Indeed, while supposing a large circulation, and consequently a great stock of the precious metals, it could take advantage to its profit of the monetary awkwardness of the various Governments of the world,

This is not the place to explain how the present monetary difficulty, the existence of a price of silver in London 14 per cent. below the legal rate in France, the fact that this silver is at par in Calcutta, the free mintage of silver by the Spanish Government, may give the opportunity to intelligent bankers of conjuring up profits, and finally let us say this-it is the thread of this article.

If the civilised Governments wish to put themselves above absurd national rivalries, a monetary union can easily be realised. The question of a double standard will be resolved by an international agreement,

special crises resulting from the actual aberration would disappear; but this understanding being only "Pia vota ad calendas Græcas," commerce must help itself, and we have shown it the way.

EDMOND VAN Geetruyen,

Formerly exchange broker, and of the precious metals.

Banking and Commercial Law.

NEGLIGENCE IN RELATION TO BILLS, NOTES, AND CHEQUES. THAT a man may incur a liability more extensive than he intended and was arranged between him and the person to whom he hands the bill, by putting his name to a blank bill, and that the rule which makes a bill void even at common law if after issue an alteration is made in a material part, is subject to the limitation that when the bill has been so carelessly written as to allow of an interpolation being made so as to increase the amount without being liable to detection, the bill is good for the increased amount in the hands of a bona fide holder for value, are settled rules of law. The principle, however, on which these rules depend has been variously, and, as it seems to us, sometimes wrongly, stated. We shall consider what these rules are, and what is the real principle on which they rest.

The rule as to acceptances and indorsations of blank bills cannot be better stated than in the words of the court in Foster v. MacKinnon (L. Rep. 4 C. P. 704): "If a man write his name across the back of a blank bill stamp and part with it, and the paper is afterwards improperly filled up, he is liable as indorser. If he write it across the face of the bill, he is liable as acceptor, when the instrument has once passed into the hands of an innocent indorsee for value before maturity, and liable to the extent of any sum which the stamp will cover." In the United States, where there is no stamp, the amount for which the blank may be filled up is unlimited (Byles on Bills, 12th edit.,188). It has been usual, as we shall see when we come to a detailed exposition of the cases, to explain this on the ground that by signing such a paper the person signing gives an implied mandate to fill up with any sum the stamp will cover, or any sum whatever when there is no stamp. Whatever may be the real principle, clearly it is not this. The last illustration-the case where there is no stamp, which is a logical consequence of the principle, shows its absurdity. No human being in signing a paper intends to make himself liable to an unlimited amount to the whole extent of his fortune, or more than the whole extent of his fortune. If one signs a bill the stamp of which will cover £100, and in parting with it says that the sum to be filled in is £10, it cannot be said that there is an implied mandate to fill it in with £100. On the contrary, there is an express injunction not to do so. Besides, if there were such a tacit mandate, the acceptor would be liable to the full extent even to the person to whom he has handed the bill, while, in fact, he is liable only to a bona fide holder to the extent for which value has been given.

The true ground of liability, it appears to us, is just this, that the acceptor has been in fault, has been negligent, and in a question with

an innocent third party he must bear the consequences of his fault. The case is an illustration of the broad general principle that when of two innocent parties one or other must suffer from the fraud of a third party, the one who must bear the loss is he who has been in fault, and whose fault has given occasion to the loss. A person who, intending to accept a bill for £10, signs a blank paper bearing a stamp that will cover £100, gives an opportunity to the person to whom he parts with the bill to perpetrate a fraud; and if a third party, acting in good faith, gives value for the bill filled up to the full amount of £100, the acceptor must suffer, not the holder.

In Schultz v. Astley (2 Bing. N. C. 544) the liability which an acceptor incurs by signing a blank bill was carried so far as to make him responsible to the amount the stamp will cover not only when the bill had been received by a third party acting in bona fide, but when it had been drawn by a third party. The case was referred to by Mr. Justice Crompton in a later case, reported in 2 L. J. Rep. Q. B. 293, as one which went to the utmost extent of the law. In the United States it has even been held that if the blank paper comes into the hands of a holder without notice, he may fill up the blank with a larger sum than the original holder was authorised to insert (Byles on Bills, 188), which is carrying the liability to a preposterous extent, although it is a logical consequence of the erroneous principle of tacit mandate. If the true principle applicable to this class of cases be that the acceptor must bear a loss to which his own negligence has given occasion, this ruling is not supportable. The acceptor has not been solely to blame. There has been negligence, at the very least, on the part of the third party. Receiving a blank bill, he has been put on his guard, and ought to have inquired of the acceptor what was the true amount of the obligation.

Another consequence of the doctrine as to the liability incurred by accepting a bill in blank is that the acceptor is liable to a bʊná fide onerous indorsee, in whatever name the bill has been drawn and indorsed by the original holder. In London and South Western Bank v. Wentworth (L. Rep. 5 Exch. Div. 96), the liability of an acceptor in the case of what was really a forged indorsement arose in a peculiar set of circumstances. The defendant Wentworth had gone to an advertising money-lender, who undertook to procure for him a loan of £400 on getting a bill for £500. On the faith of this, the defendant gave the money-lender a blank acceptance on a paper bearing a stamp sufficient to cover £500. An obligation was given that the bill was to be negotiated, but nothing was said as to who was to draw or indorse it. Wentworth incautiously handed the bill over without getting the £400. When the bill was presented to the bank to be discounted it bore to be drawn and indorsed by “S. H. Head.” signatures of the drawer and indorser were in the same handwriting. The bill was presented at the bank by one Villars, a partner in a respectable firm of upholsterers who had an account with the bank. Villars stated that his firm had furnished the offices of a person named Samuel Head. On making inquiries of Wentworth's bankers, the answer to which proved satisfactory, the bank discounted the bill, making advances equal to the full value of the bill. £500. It was admitted that the bank had taken the bill in good faith, and without notice of any irregularity. On the bill falling due, Wentworth was applied to. He disputed his liability, and consequently an action was raised by the bank. At the trial he sought to bring evidence to show that the drawing and indorsement were forgeries,

The

and also to identify a witness, Samuel Head, with the "S. H. Head" represented to be the payee and the person as from whom Villars took the bill. This evidence was rejected as immaterial. On a motion for a new trial, on the ground of misdirection, the Exchequer Division sustained the ruling. On behalf of the acceptor, it was urged that, although by accepting a bill in blank the acceptor gives authority to fill in even a fictitious name, yet he could not have intended to authorise the person to whom he gave the bill to commit a forgery by inserting the name of a real person. This, said the Exchequer Division, "raises a novel question, aud one of some difficulty." The court held the accept or liable. If the acceptance had been made after the drawer's name had been inserted, the case might have been different, the acceptance being made on the faith of that name. (Not necessarily so, because, if a fictitious or even a real name had been inserted as that of the drawer by the person getting the bill with the knowledge and consent of the acceptor, it could not be said that the acceptance was on the faith of the drawer's name.) But the Exchequer Division held that the case "must be governed by the rules of law applicable not to cases in which the acceptor has signed his name after that of the drawer has been inserted, but by those which ought to prevail when the acceptor has signed his name upon a blank piece of stamped paper, or on a paper upon which a drawing in blank has been written." It was remarked that the case differed from that of a forged indorsement of the name of a real drawer in this among other respects; that, in such a case the acceptor, even supposing he paid to the bank, would still be liable to the drawer, whilst in this case he was not. The court observed that the question was one of some difficulty. We confess we do not see the difficulty. When it is admitted that the acceptor would have been liable, if a fictitious name had been inserted as that of the drawer and indorser, the whole case is abandoned. It is of no avail to say that it could not have been intended to authorise a forgery to be committed by inserting a real name. It might just as well be said that it could not have been intended to commit a forgery by inserting a fictitious name, and a forgery can be committed by using a fictitious just, as much as by using a real name. And, as regards the question of who is to bear the loss, if the bond fide onerous owner were to suffer, what would it matter to him whether the name inserted was a real or a fictitious name? And what does it matter to the acceptor? He has given an opportunity of perpetrating a fraud, and it is of little moment to him in what manner it is perpetrated. The supposed difficulty probably arose from the way in which the case was put on behalf of the acceptor. The argument for him proceeded on the assumption that such cases depend on the principle of implied mandate, which we have seen is not the true principle. Even, as for that matter, it does not seem to us that there is any implied mandate to insert a fictitious name any more than to insert a real name. The truth is that a wrong was done, and, on the principle already stated, the party who must suffer for it was the acceptor, who had been guilty of gross negligence in signing a blank bill and parting with it without getting the money. In a question between the defendant and Villars, who discounted the bill at the bank, evidence of the kind which was rejected, and as to how Villars got possession of the bill, would have been admissible. It is evident that he had not got the bill from Head, who, it is to be presumed, knew nothing about the matter.

Where a bill or cheque has been so carelessly written that the sum

VOL. XLII.

3