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‘Your flexible friend’: the bill of exchange in theory and practice in the fifteenth century

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  • Jim Bolton
  • Francesco Guidi‐Bruscoli

Abstract

The bill of exchange was the most important written instrument in the international financial world of the later middle ages. Using the evidence of nearly 2,000 bills of exchange, protested bills of exchange, and letters of advice recorded in the ledgers of Filippo Borromei & Partners of Bruges and London, 1436–8, we argue that it was a far more flexible instrument than has previously been thought. The maturity of bills could be changed by agreement rather than necessarily using the standard usance periods, and payment by instalments occurred, extending the length of the ‘loan’ considerably. In practice, exchange rates varied from day to day and within the day itself, while bills were offered as sureties for the fulfilment of other contracts. We also confirm the arguments of other historians that the main purpose of this instrument was the transfer of capital back and forth across western Europe, usually along well‐known axes such as London to Venice or Bruges to Barcelona, with exchange and re‐change playing only a minimal role in the Borromei's operations. As at the Lyon fairs 100 years later, the ‘flexible friend’ helped make the world of international, regional, and local trade and finance go round.

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  • Jim Bolton & Francesco Guidi‐Bruscoli, 2021. "‘Your flexible friend’: the bill of exchange in theory and practice in the fifteenth century," Economic History Review, Economic History Society, vol. 74(4), pages 873-891, November.
  • Handle: RePEc:bla:ehsrev:v:74:y:2021:i:4:p:873-891
    DOI: 10.1111/ehr.13070
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    1. G. A. Holmes, 1960. "Florentine Merchants In England, 1346–1436," Economic History Review, Economic History Society, vol. 13(2), pages 193-208, December.
    2. J. L. Bolton & Francesco Guidi Bruscoli, 2008. "When did Antwerp replace Bruges as the commercial and financial centre of north‐western Europe? The evidence of the Borromei ledger for 14381," Economic History Review, Economic History Society, vol. 61(2), pages 360-379, May.
    3. Puttevils, Jeroen, 2015. "Tweaking financial instruments: bills obligatory in sixteenth-century Antwerp," Financial History Review, Cambridge University Press, vol. 22(3), pages 337-361, December.
    4. Werner, Richard A., 2016. "A lost century in economics: Three theories of banking and the conclusive evidence," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 361-379.
    5. Adrian R. Bell & Chris Brooks & Tony K. Moore, 2017. "Cambium non est mutuum: exchange and interest rates in medieval Europe," Economic History Review, Economic History Society, vol. 70(2), pages 373-396, May.
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    Cited by:

    1. Bindseil, Ulrich & Pantelopoulos, George, 2022. "Towards the holy grail of cross-border payments," Working Paper Series 2693, European Central Bank.

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