# Historical Question about US Finance ? **URL:** \ **Category:** Factual Questions\ **Created:** [December 9, 2002, 5:03pm UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545 "2002-12-09T17:03:12Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Rayne\_Man](https://avatars.discourse-cdn.com/v4/letter/r/df705f/32.png) [@Rayne\_Man](https://boards.straightdope.com/u/Rayne_Man)\ **Post date:** [December 9, 2002, 5:03pm UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/1 "2002-12-09T17:03:12Z")
I have just come across this puzzling sentence in Charles Dickens’ " A Christmas Carol" :- " This was a great relief , because ’ three days after sight of this First of Exchange pay to Mr. Ebenezer Scrooge or his order ’ and so forth , would become a mere United States security if there were no days to count by " Does this mean that in the 1840’s ( when the book was written ) the US economy was not at its best and to invest there was not recommended . Or am I misreading the phrase completely. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [December 9, 2002, 5:09pm UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/2 "2002-12-09T17:09:23Z")
I have found a comment on [this site](http://www.coinbooks.org/club_nbs_esylum_v04n52.html), though it’s rather off-hand and speculative: > [@](#): > > Dickens, of course, had no admiration for the United States, the inhabitants of which he considered coarse and buffoonish. Apparently, he had no better opinion of the soundness of American financial obligations. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [December 9, 2002, 9:04pm UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/3 "2002-12-09T21:04:09Z")
Interesting question. Dickens seems to have expected that readers would understand this little inside joke (a little “counting house humor”, if you will), but from a distance of 159 years, it’s hard to figure out what he’s talking about. The quote can be read in context at [http://www.stormfax.com/2dickens.htm](http://www.stormfax.com/2dickens.htm) The first point to be made is that, by “United States’ security”, he probably means a bank note, not a _government_ security. American government bonds were as safe in the 1840’s as they are today–maybe more so, since the national debt was a lot lower. American bank notes, on the other hand, _were_ notoriously unreliable. Most American banks were small and undercapitalized, and confined by government regulation to operation within a single state. Andrew Jackson had dismantled the government-sponsored central bank (The “Bank of the United States”) in the 1830’s, and effective private alternatives didn’t arise until after the Civil War. The U.S. was coming off of a nasty six-year recession in 1843, and bank failures were epidemic. So it appears that Mr. Scrooge has some type of American bank note in his hands, which has been endorsed by a more solvent British bank–probably the Bank of England–but for some reason the endorsement doesn’t kick in for three days. And Scrooge’s first reaction, when he sees that the Sun has gone out, is that the three days will never expire and he’ll be stuck forever with a “United States’ security”, which probably trades at a deep discount. Like I say, it’s counting house humor. A full explication of this passage would be worthy of Cecil, or at least an SDMS staff report. ---
**Author:** ![jiHymas](https://avatars.discourse-cdn.com/v4/letter/j/439d5e/32.png) [@jiHymas](https://boards.straightdope.com/u/jiHymas)\ **Post date:** [December 10, 2002, 4:27am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/4 "2002-12-10T04:27:01Z")
> [@](#): > > \*Originally posted by jklann \* > **So it appears that Mr. Scrooge has some type of American bank note in his hands, which has been endorsed by a more solvent British bank–probably the Bank of England–but for some reason the endorsement doesn’t kick in for three days.** I disagree. The part left in in quotations by Dickens (_three days after sight of this First of Exchange pay to Mr. Ebenezer Scrooge or his order_) would be a standard form of a Bill of Exchange. [This site](http://www.jimandellen.org/trollope/framley.7-12.html) discusses Bills of Exchange in general: > [@](#): > > _Discussion of Trollope’s ‘Framley Parsonage’_ > **The Bill of Exchange was a rather more sophisticated instrument. The definition runs to about four lines, which every student of law and accountancy would learn by heart, since it was good for a few marks in an examination – I can still repeat it almost word for word after fifty years. Nevertheless its principal features were that it promised to pay money after a fixed period, was signed by the person drawing it and accepted by someone else, known as the acceptor, who was the person responsible for paying the money. The bill that Mark Robarts signed at midnight in his bedroom at Chaldicotes probably went as follows :-‘Three months after this date, pay Mr Tozer the sum of four hundred pounds.’ It would be dated and signed by N Sowerby, and Mark would write across it ‘Accepted - M Robarts’. It was probably then given to the Tozers by Sowerby, probably in settlement for some other liability which he would otherwise have been unable to meet. Three months (and three days of grace) later, the bill would be payable by Mark. The Tozers were moneylenders, and would not allow Sowerby four hundred pounds against this document, even though it was accepted by the reputable Rev. M Robarts, but a lesser amount reflecting the interest on the money at usurious rates, and including an allowance for the risk that they were taking** The bit about “three days” are a standard grace period, according to [an unattributed 1911 Encyclopedia](http://97.1911encyclopedia.org/B/BI/BILL_OF_EXCHANGE.htm) > [@](#): > > _1911 Encyclopedia: Bills of Exchange_ > \*\*Stamp.—Bills of exchange must be stamped, but the act of 1882 does not regulate the stamp. It merely saves the operation of the stamp laws, which necessarily vary from time to time according to the fluctuating needs and policy of the exchequer. Under the Stamp Act 1891, bills payable on demand are subject to a fixed stamp duty of one penny, and by the Finance Act 1899, a similar privilege is extended to bills expressed to be payable not more than three days after sight or date. The stamp may be impressed or adhesive. All other bills are liable to an ad valorem duty. inland bills must be drawn on stamped paper, but foreign bills, of course, can be stamped with adhesive stamps. As a matter of policy, English law does not concern itself with foreign revenue laws. For English purposes, therefore, it is immaterial whether a bill drawn abroad is stamped in accordance with the law of its place of origin or not. On arrival in England it has to conform to the English stamp laws. > > Maturity.—A bill of exchange is payable on demand when it is expressed to be payable on demand, or at sight, or on presentation or when notice for payment is expressed. In calculating the maturity of bills payable at a future time, three days, called days of grace, must be added to the nominal due date of the bill. For instance, if a bill payable one month after sight is accepted on the 1st of January, it is really payable on the 4th of February, and not on the 1st of February as its tenor indicates.\*\* So what Dickens is saying here is: 'This was a great relief, because a perfectly good cheque payable in three days would become as worthless as dot-com stock if there were no days to count by." In the context of the times, ‘American security’ had the same connotation as “oil well”, “Florida real-estate”, “gold mine” or “dot-com stock” has had in others - as was pointed out by **jklann** ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [December 10, 2002, 4:35am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/5 "2002-12-10T04:35:49Z")
Hey, I still like oil wells. ---
**Author:** ![jiHymas](https://avatars.discourse-cdn.com/v4/letter/j/439d5e/32.png) [@jiHymas](https://boards.straightdope.com/u/jiHymas)\ **Post date:** [December 10, 2002, 5:41am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/6 "2002-12-10T05:41:23Z")
I found some detail on ‘American Securities’ in _Wall Street, A History_, **Charles R. Geisst** , Oxford University Press 1997, ISBN 0-19-511512-0. > [@](#): > > _Wall Street, A History_ > \*\*When the Second Bank of the United States went out of business in 1836, many states quickly began to feel the economic pinch…Many states had used regularly used the Bank of the United States to support their bond issues. When it failed, they were no longer able to borrow from the bank to pay their interest, and eight states went into default (Arkansas, Indiana, Illinois, Louisiana, Maryland, Michigan, Mississippi and Pennsylvania, in addition to the Florida territory)…On the other side, the states’ refusal to pay interest brought opprobrium down on the entire country. Unfortunately, the United States as a whole was achieving the same sort of reputation abroad. Its image became so tarnished that the British dubbed their former subjects ‘a nation of swindlers’. \*\* Geisst’s source for the 'nation of swindler’s quote is **Mira Wilkens** (or Wilkins? - bibliography and note differ), _A History of Foreign Investment in the United States to 1914_, Harvard Univesrity (sic) Press, 1989. So that seems clear, typographical errors in the Geisst book notwithstanding! > [@](#): > > _Originally posted by Ringo_ > **Hey, I still like oil wells** Well sure, but you’re from Houston. They’re easy to like when you have three in your back yard! ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [December 10, 2002, 6:13am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/7 "2002-12-10T06:13:55Z")
Good point about the bonds–when I said that American government bonds were safe, I should have restricted my comment to _federal_ government bonds. State bonds were a notoriously risky proposition throughout the 19th Century. All in all, I guess Dickens was right! ---
**Author:** ![Wumpus](https://avatars.discourse-cdn.com/v4/letter/w/8c91f0/32.png) [@Wumpus](https://boards.straightdope.com/u/Wumpus)\ **Post date:** [December 10, 2002, 6:34am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/8 "2002-12-10T06:34:26Z")
Also bear in mind that at the time the safest, most secure bonds in the world were _British_ government bonds, which is what Dickens is implicitly comparing the American security with. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [December 11, 2002, 2:51am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/9 "2002-12-11T02:51:57Z")
> [@](#): > > Good point about the bonds–when I said that American government bonds were safe, I should have restricted my comment to federal government bonds. State bonds were a notoriously risky proposition throughout the 19th Century. DID the Federal Government issue bonds at that date? ---
**Author:** ![jiHymas](https://avatars.discourse-cdn.com/v4/letter/j/439d5e/32.png) [@jiHymas](https://boards.straightdope.com/u/jiHymas)\ **Post date:** [December 11, 2002, 4:19am UTC](https://boards.straightdope.com/t/historical-question-about-us-finance/141545/10 "2002-12-11T04:19:06Z")
> [@](#): > > \*Originally posted by samclem \* > \*\*DID the Federal Government issue bonds at that date? \*\* Yes, according to the [Joint Economic Committee of the US Congress](http://www.house.gov/jec/fiscal/debt.pdf) > [@](#): > > _Executive Summary_ > **The Continental Congress began issuing debt securities in 1776, and the United States has had outstanding debt ever since**