Check

A check (or “cheque” in Britain) is a written order for a bank to pay money. The term “check” seems to have evolved from orders for payment called “Exchequer orders” that were drawn on the Exchequer, the British treasury. The British Exchequer got its name from the checkered cloth that covered the tables in the rooms where cash payments were counted, or checked. The cloth was either black lined with white, or green with redlined squares. Government officials, pensioners, or whoever had a claim on government revenue received written orders that authorized an Exchequer official, or teller, to pay cash in the amount owed.

Checks were not called “checks” when they first came into use in the last half of the seventh century, but were called “drawn notes.” These notes, an innovation of the British goldsmith bankers, allowed an individual to order his or her goldsmith banker to make a payment of gold to a third party. In 1686, a young nobleman wrote the following drawn note on his father’s banker:

Pray do mee the favor to pay his bird-man four guineas for a paire of parakeets that I had of him. Pray don’t let anybody either my Ld or Lady know that you did it and I will be sure my selfe to pay you honestly againe. —Arthur Somerset.

Early English checks always began with “pray” or “pray pay.” Checks grew in popularity in the 19th century. In England, the Bank Charter Act of 1844 pushed banks toward deposit banking with checks and away from the issuance of bank notes. During the Civil War, the U.S. federal government put a tax on bank notes issued by state banks, forcing the state banks to take up deposit banking with checks. In 1865, France simplified its law on the use of checks, and deposit banking with checks became widespread.

Checks are now the most common means of payment in the developed countries. They circumvent the need to carry large sums of cash and can be written for any amount. Checks are usually less acceptable than cash, but cashier’s checks and certified checks are on par with cash as an acceptable means of payment. A cashier’s check is issued by a bank against itself and bears the signature of a bank officer. A certified check is a check guaranteed by the bank on which the check is written. Checks are negotiable, meaning they can be transferred to another person by endorsement.