You are hereby authorized to draw on BANQUE NATIONALE DE CREDIT for account of AMERICAN IMPORTING CO. for any sum or sums not exceeding a total of (Pcs. 40,100.-) - at Ninety (90) days dateNew York City FRANCS FORTY THOUSAND ONE HUNDRED your drafts to be accompanied by Invoice, Consular Invoice and full set of Steamer Bills of Lading made out to the order of Irving Bank-Columbia Trust Company, New York, marked "Notify'MERICAN IMPORTING CO. New York City evidencing shipment of Two hundred (200) p.) kios net each BORDEAUX VALIUT HALVES at Fresight dred per 100 kilos cost and ilarch 3194. HEN Marine and warrisk Insurance is to be effected by buyers. The shipments must be made and drafts drawn not later than March 31,1923. All drafts must be marked: "Drawn under Irving Bank-Columbia Trust Company, New York, Irrevocable Credit No. 5000 One negotiable Bill of Lading of each set and Consular Invoice must be forwarded direct to the Irving Bank Columbia Trust Company, New York, immediately by the bank negotiating documents. All the remaining documents must accompany the drafts. We hereby agree with the drawers, endorsers and bona fide holders of the drafts drawn under and in compliance with the terms of this credit, that the same shall be duly honored by the above named drawees on presentation and surrender of the documents. -1213.25 1.23 Yours very truly, Assistant Manager Foreign Division. 223 An irrevocable import credit. This is a francs credit arranged by New York importers to enable them to make a purchase in France. The letter authorizes a French exporter to draw on a bank in Paris. seller has an agent in the buyer's town and his word is good at the seller's bank, it may be required that the original be delivered to the agent who telegraphs his principal that the letter of credit is in hand. These credits are widely used by importers not only for single shipments, but for an entire season's business. It enables the exporting producer to go ahead with his production, without prepayment, knowing that as fast as he ships the goods, he can draw on the bank and secure his money. These credits may be revoked with the consent of the payee (seller), but all goods which have been produced for the buyer up to the time of the receipt of the cancellation must be paid for. The cost of the credit is determined by the standing of the parties, and is regulated to some extent by the competition of the banks (see 158). If the credit is cabled or telegraphed to the seller's bank authorizing it to discount the seller's draft, the buyer pays the extra charges. The one asking for the credit signs an agreement with his bank in which he (1) agrees to reimburse the bank prior to the maturity thereof, at the current rate of exchange for first-class bankers' bills, (2) grants a lien on the goods and all documents, with a promise of any additional security demanded, (3) gives to the bank the power of sale of the goods, and (4) guarantees to make good any loss. When the goods arrive the buyer must arrange with the bank to get them, for the bank holds the documents and the goods are the banker's security. He may at once pay the amount of the draft. He may put up collateral security. He may have such good credit that the goods will be turned over to him under a trust receipt, in which the buyer binds himself to hold the goods in trust, to keep them insured in the bank's favor, and to hand the proceeds of all goods sold, until the credit is repaid, to the banker. COMMERCIAL CREDITS 225 TRUST RECEIPT New York, May 1st, 1923 Received in Trust from Irving Bank-Columbia Trust Co., New York, the merchandise specified in the Bill of Lading per s/s "Far East" and in consideration thereof the undersigned hereby agrees to hold said merchandise in storage as the property of said bank, with the liberty to sell the same for its account, and to hand the proceeds thereof to the said bank to apply against its acceptance on account of the undersigned and under the terms of the letter of credit noted below; and further agrees to hold said merchandise and the proceeds thereof in trust for the payment of said acceptance and of any other indebtedness of the undersigned to the said bank. The said bank may at any time cancel this trust and take possession of said merchandise or of the proceeds of such of the same as may then have been sold, wherever the said merchandise or proceeds may then be found; and all the provisions of this trust receipt shall apply to and be deemed to include said above mentioned merchandise if the same shall have been made up or used in the manufacture of any other goods or merchandise; and the said bank shall have the same rights and remedies against the said merchandise in its manufactured state, or the product of such manufac ture, as it would have had in the event that such merchandise had remained in its original state, and irrespective of the fact that other and different merchandise is used in completing such manufacture. In the event of any suspension, or failure, or assignment for the benefit of creditors, on the part of the undersigned, or of the non-fulfillment of any obligation, or of the non-payment at maturity of any acceptance made under said credit, or any. other credit issued by the said bank on account of the undersigned, cr of the non-payment of any indebtedness on the part of the undersigned to the said bank, all obligations, acceptances, indebtedness and liabilities whatsoever shall without notice, mature and become due and payable. The undersigned further agrees to keep said merchandise insured against fire to its full value, loss if any payable to the said bank, at the proper cost and expense of the undersigned, who hereby agrees to pay all charges for storage on said merchandise. or any and all other expenses incurred thereon. It is further agreed that any failure on the part of the undersigned to fully carry out any of the provisions, terms or conditions of this receipt or agreement, or of the agreement under which the said bank issued the letter of credit by which the said merchandise was purchased, even if known to said bank, shall not be deemed a waiver of performance of any such provision, term or condition or otherwise by said bank, or a waiver of any of its rights or remedies under either said receipt or agreement or of the agreement under which the said bank issued the letter of credit noted below; and any waiver in order to operate as such must be in writing and also endorsed hereon and properly signed by the said bank and nothing in this agreement contained shall in any way effect, vary or impair any of the provisions of the letter of credit under which said merchandise was purchased, and of terms, conditions or provisions of the agree ment under which said letter of credit was issued. The undersigned hereby agrees to deliver to the said bank, upon demand, collateral security to its satisfaction, should the market value of the merchandise referred to herein suffer any decline, and also gives to the said bank a lien on all the property given unto or left in the possession of, or hereafter given or left in the possession of said bank, by or for the account of the undersigned, and also upon any present or future balance of the deposit account of the undersigned with the said bank, for the amount of any liability hereunder or otherwise of the under signed to the said bank. Amount $37,586.03 (Thirty-seven thousand, hundred eighty-six and 3/100) Under L/C No. Due Abroad Due Here June 30, 1923 five Dated Jan. 9, 1923 Trust Receipt given by importer in exchange for Bill of Lading, etc. 162. A sterling credit. Suppose a Dallas buyer wishes to buy silks from a Lyons exporter to the amount of 2000 francs, and he arranges for a sterling credit with his Dallas bank. This letter authorizes the Frenchman to draw a sixty-day draft on the London Joint City and Midland Bank for the account of the Dallas bank for not to exceed 80 pounds, in payment for certain silk to be shipped according to directions prior to a certain time. After the exporter has made shipment, he goes with the letter of credit, bill of lading, and other documents, to his own bank in Lyons. He draws a draft on the London bank for as many pounds as at that day's rate yields 2000 francs. This draft as well as the documents are made out to the Frenchman's order. He indorses them payable to his bank. If the documents and the draft are in accordance with the credit, the banker takes them all, including in this case the letter of credit (the amount of each draft is indorsed on the letter and it is returned with the last draft), and the French exporter is paid. The letter may require that one bill of lading and other documents be sent direct to a customhouse broker in New York to facilitate their entry and reship the goods to the order of the Dallas bank. If so, a certificate of the disposal of the documents is sent with the other bill of lading and a copy of the invoice to the London bank. The Lyons banker forwards the bill to his London correspondent who presents it to the London Joint City and Midland Bank for acceptance. This bank has already received a copy of the letter of credit and forms of advice, so it accepts the bill and detaches all the documents. The correspondent of the Lyons bank then discounts the bill in the London market and credits the account of the Lyons bank. The documents are forwarded to the Dallas bank with an advice as to the date of the acceptance. A DOLLAR CREDIT 227 When the goods arrive in Dallas the importer arranges with the bank to get the documents and the goods. Fifteen days before the maturity of the draft the Dallas buyer gives his bank funds sufficient to buy a bankers' sight on London for the amount of the face of the draft, plus its charge for the service. The Dallas bank mails this to the London Joint City and Midland Bank, which then is in funds to pay the Frenchman's draft when it is presented by the holder. 163. A dollar credit. - A New York merchant wishes to buy wool from a dealer in Buenos Aires and arranges a dollar credit with a New York bank, providing for a ninety-day draft on that bank. The Argentine dealer upon receipt of the order and the letter of credit ships the goods as directed and draws a draft for the amount of the invoice, if the price is quoted in U. S. dollars, or for the number of U. S. dollars equivalent at that day's rate to the amount of the invoice, if the price is quoted in Argentine pesos. This draft with the letter and the shipping documents attached is offered for sale at the branch or correspondent of the New York bank that granted the credit. If everything has been properly done, the Argentino gets his money. The draft and the documents are forwarded to the New York bank which accepts the bill, keeps the documents, and sells the clean bill to the Federal Reserve Bank of New York, or some other money lender. When the wool arrives the New York merchant arranges with his bank to get the wool, sells it, and the day before the maturity of the bill supplies the bank with the funds to pay it. If the Argentine seller had sold the draft to some other than a branch or correspondent of the New York bank, the draft and documents would have been sent to the New York agent of the purchasing bank, who would have presented it to the New York bank for acceptance, delivered the documents, and sold |