Historic Negotiable Instruments

You will find some interesting examples of negotiable instruments below.  The first is a bill of exchange or draft drawn by John Hunter on Thomlinson and Hanbury, London merchants, and made payable to Benjamin Franklin.  Note Franklin's indorsement on the reverse side of the bill can be seen through the paper.  

This is another bill of exchange or draft but it is not a mercantile instrument.  The draft is drawn on the United States by the Treasurer of Loans of the Continental Congress and is payable at the Office of the American Commissioners in Paris.  The instrument was used to pay the interest on sums loaned to the United States, in this case, by George Washington.  With this instrument, Washington could draw on funds the French government made available to the United States in Paris denominated in livres.  This draft was part of a sheet of four identical bills.  If the payee presented the first bill the others would not be honored. If the first bill was lost, however, the payee could present the second and, if need be, eventually the third and fourth.  Issuance of the identical bills thus protected the payee from loss of the instrument in transit, a real risk when Britannia ruled the seas.


The following draft is a bill of exchange drawn on Baring Brothers, London, by the Bank of the United States, Philadelphia.  It is signed by Nicholas Biddle, President of the Bank.  Baring Brothers was one of London's most venerable merchant banks.  It failed, however, in 1995 when the world learned one of the bank's managers lost over $1.4 billion speculating on futures contracts.

The following instrument is a note used to engage in foreign exchange issued by the Bank of the United States one year after Andrew Jackson elected not to renew its charter.  As you can see from the instrument, the Bank was rechartered by Pennsylvania but it failed a few years later in 1841.  Note the instrument is signed by Nicholas Biddle in his capacity as President of the Bank.

The instruments that follow are ante-bellum state bank notes.   The beauty of the engraving on these notes was meant to inspire confidence which, unfortunately, was not always well placed.  The second instrument shown below was issued by the Kirtland Safety Society Bank which was founded by the leaders of the Church of Jesus Christ of Latter Day Saints.  The note is signed by the prophet, Joseph Smith, in his capacity as cashier.

The following instruments were issued by national banks. During the Civil War, Congress authorized federally chartered banks to issue notes backed by bonds the banks purchased from the Comptroller of the Currency. Congress also imposed a tax on state bank notes.  These measures were designed to finance the War and bring stability to the nation's currency.  In 1935, the United States Treasury assumed the obligation of issuing national bank notes. After that, private commercial banks ceased participating in the issuance of currency but their deposit accounts remain the lion's share of the nation's money supply. Depositors can make payments based on the value of these accounts by any number of methods including checks and electronic funds transfers under articles 4 and 4A of the Uniform Commercial Code.

This draft was drawn by Wells Fargo's San Francisco branch on the New York branch.  The payee indorsed the instrument in blank and negotiated to Jay Cooke & Company the infamous railroad financeer.  Jay Cooke's indorsement appears on the reverse side of the draft.  Notice the tax stamp on the lower left hand corner of the draft.


This is a certificate of deposit issued by an Iowa bank in 1901 and paid in 1902.  The engraving of the dog no doubt represents the bank's fidelity.

Here are two items that are non-negotiable under the Uniform Commercial Code.  Do you see why?  Items of this nature were once quite common.  Although rare today, they have not disappeared.  See, The Ithaca Hours Web Site.