ABSTRACT
In the days when communications were difficult and dangerous it was very natural that merchants should evolve this simple method of avoiding the conveyance of gold or silver. Perhaps, originally, the creditor merchant simply asked a friend who was journeying to a distant city to collect a debt for him there, and the bill was simply an authorization to the debtor to pay the friend. But a further step would be so obvious that it would soon follow. Supposing a medieval merchant of London had exported wrool to the value of ioo florins to a merchant in Bruges. On enquiry he finds that another London mer chant has imported cloth from Bruges, also to the value of ioo florins. The London wool exporter will now draw a bill for ioo florins on the merchant who imported the wool from London. The London importer of the cloth will pay the wool exporter ioo florins for the bill and send the bill to the cloth exporter in Bruges, who will collect roo florins from the wool importer. Thus two debts will have been paid without any coin passing between Bruges and London. The bill of exchange is said, therefore, “ to bridge space.”
