Cheque-ing Out

17 December 2009



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Britain's Banks to Abolish Cheques in 2018

In an age when financial innovation has cost the world trillions, it is interesting to note that one of the 17th century's financial creations has outlived its usefulness and will pass into history in October 2018. The Payments Council of Britain has decided that the bank cheque (check to American readers) is more trouble than its worth.

The British bank cheque is 350 years old, or so it appears from what is alleged to be the first such payment using this form. While the Romans did have a version in the 1st century BC (the praescription), the first of its kind in Britain was signed by a Mr. Vanacker who drew upon funds deposited with Morris and Clayton "scriveners and bankers." He asked them to pay a Mr. Delboe £400. Mr. Delboe must have been quite trusting as that sum would be 100 times as much today.

By 1717, the Bank of England was printing cheques to avoid fraud. The beauty of the system was that only depositors could get hold of that paper. By 1811, the Commercial Bank of Scotland was printing personalized cheques. Ultimately, this system failed to prevent fraud, and the cheque guarantee card made its appearance in the 20th century.

Cheque use in Britain peaked in 1990 with 11 million or so being written each day. That number has dropped to 4 million daily. Not only has their popularity declined, but they are expensive to use. The Payments Council says they cost a pound each to process. Cash machines, chip-and-PIN to say nothing of Internet banking have rendered the cheque rather pointless. So, they will die out quietly, unlike the collateralized debt obligation or the special investment vehicle (which haven't outlived their usefulness, having lacked a usefulness to begin with).

The best way to end this column is to quote an article by Lauren Thompson and Lucy Bannerman writing in The Times, "The honour of the most bizarre cheque ever written probably goes to A. P. Herbert, the prolific humourist, journalist, novelist and MP. In 1970, to celebrate 60 years of writing for Punch, he acted out one of his own fictitious legal cases, The Negotiable Cow, by writing out a cheque on the flank of a Golden Guernsey named Elba, walking it to the bank and cashing it." Here endeth the lesson.

© Copyright 2009 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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