EARLY ACCOUNTING PROBLEMS OF FOREIGN EXCHANGE.
Abstract It would be a serious mistake to underestimate the importance of money substitutes in medieval and early modern times. The Italians especially were clever in replacing specie by other devices in the settlement of debts. Among merchants the setting over of debts was a common practice despite the absence of negotiable instruments. Local payments were often made by transfer in bank or by transfer of credit on books of an ordinary merchant or a merchant-banker. Transfer orders were given not in writing but by word of mouth. Such banks existed in most parts of Europe however, places where no transfer banks existed, prominent merchant-bankers comprising of foreigners sometimes accepted deposit accounts for clearing purposes. The use of oral commands to pay was rather satisfactory for the purpose of making local payments, but this method was not suitable for the purpose of making funds available in a distant place. In foreign trade, the use of written instruments was therefore a necessity. The bill of exchange became at an early date the principal instrument by which funds were transferred from place to place without shipping any specie.
- DOI
- 10.2308/tar-7127536
- Volume
- 19 (4)
- Pages
- 381-407
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref