Making Money Amnesiac: The 1882 Making of Modern Negotiability in the United Kingdom

ABSTRACT:Drawing on microeconomic literature that highlights the convoluted links between memory, money, and information insensitive assets, this paper empirically explores the history and legal construction of modern negotiability in late nineteenth-century London. Taking a broader view, I argue that the 1882 Bill of Exchange Act (BoExA) was important in reengineering the money-memory nexus. This was achieved by reworking preexisting legal rules enabling transferability of bills of exchange around the holder in due course (HDC) doctrine. As a result of the superior legal protection of theHDC of a negotiable instrument, the need to inquire into any underlying credit risk was obviated. If the private debt claim was recognized as negotiable, the HDC was equallyrecognized as possessing the right to full recovery. This legal development complemented microstructural changes in the money market such as the emergence of the lender of last resort macropolicy in thecontext of a rising investment-oriented financial ecology.