Cheque and Credit history landing page qoute

The cheque has its origins in the ancient banking system, in which customers would issue orders to their bankers to pay money to named recipients. Over the past 350 years or so the cheque has evolved from a basic ‘bill of exchange’ to the form we know today.

Cheques are not legal tender, rather legal documents whose use is governed by the Bills of Exchange Act 1882 and the Cheques Acts of 1957 and 1992.

 

Romans and Knights Templar

The Romans had praescriptiones or IOUs – one such promissory note, written in Latin on a wooden tablet originally covered with beeswax, and dated by modern reckoning 8th January 57AD, is the earliest evidence of commercial activity in what was to become London’s financial heart. It was found during the construction of the new European headquarters for Bloomberg in Queen Victoria Street in 2013 to 2014.

But the first bankers offering financial services in Europe are often considered to be the Knights Templar over a thousand years later between 1100 and 1300 AD. Leveraging on their continental connections these “poor” warrior monks, who dedicated themselves to the defence of Christian pilgrims going to Jerusalem, became wealthy through the provision of financial services. The pilgrims needed money for the journey; they could leave their cash at Temple Church in London and withdraw value along the way to Jerusalem against a letter of credit (another form of IOU) provided by the Templars.

 

Bills of exchange

The Templars’ idea was developed further through the bill of exchange, the precursor to the cheque, during the 13th century in Italy, as a legal device to allow international trade without the need to carry around large amounts of gold and silver. Their use was subsequently adopted in France, and from there the practice was brought to England.

The first known reference to these bills in English law is in a 14th century statute, which states that they could be used to carry funds out of the country. Back then bills were for international business use and were not used for trades within England or by individuals. The bills were usually payable abroad at a future date and in a currency other than that of the drawer’s home country.