Bills of exchange & British imperial power

Consider this problem. You are running a global trading empire. It is long before the days of telegraph or telephone. You have ships, naval and merchant, dotted across the globe. You have colonies and trading posts across the globe, including a recently established penal colony at Port Jackson.

The ships and isolated outposts have to be re-supplied. Ships have to be fixed, lost mariners returned to home ports. In a dispersed global operation, you can't control everything from Whitehall. You can't just send money. Enter the bill of exchange, a central weapon of imperial power.

British officials around the world including consuls, ship's captains and governors in remote NSW had delegated power to issue bills on the home government. These pieces issued by one person to a second person stated that a third person, the Government in London, would pay the second person so much money. A simple idea originally invented in China that greased the wheels of empire.

You are a ship's captain or governor needing supplies. You buy them by issuing a bill that the supplier can present to officials in London and get paid. These bills are accepted because they were paid.

Today we would shudder at the risks involved. Risks to those accepting, more risks to the government. How do you budget, how do you prevent fraud, corruption, when thousands of officials and military officials spread across the globe have the individual authority on their own account to issue what we can think of as official cheques (a cheque is a bill of exchange) on the public purse? How do you audit? Surely you must need tens of thousands of officials checking and auditing?

Well, no. It was a different world. There were systems in place that allowed transactions to be checked. However, the divide between public and private was more elastic then. A certain amount of what today we would call corruption was allowed. The division between private and public was more elastic, there was more gray space.

The key thing is that the system worked. In practical terms, it kept the empire going. Taken to excess, corruption could have destroyed the empire or reduced its efficiency. That didn't happen in the case of the British Empire. Part of the reason for this lies in values, part administrative checks that did take place, part the commercial nature of that empire that made for a practical approach.

The bill system was central to the evolution of the early colony in NSW. As we say today, follow the money!