II. Specimen of Export Credit. IRVING NATIONAL BANK OF NEW YORK New York, June 18th, 1919 EXPORT CREDIT No. 191 EXPIRING November 30, 1919 Messrs. John Doe & Company Gentlemen: We are informed that you will draw upon us for account of................Jose Alfaut....sight...........to the extent of Ten Thousand and 00/100 Dollars ($10,000.00)......................covering a shipment of merchandise. Documents (complete sets unless otherwise stated) comprising Bills of Lading issued to............order, endorsed in blank............. Invoices Insurance policies covering marine and war risk. to be delivered to us against payment. Insurance as above. This letter is for your guidance in preparing documents and conveys no engagement on the part of this Bank as we have no instructions to confirm the Credit. Bills of Lading issued by Forwarding Agents will not be accepted unless specifically authorized herein and any modifications of the terms of the credit must be in writing over authorized signatures of this Bank. Drawings must clearly specify the number of this Credit. 12. Specimen of Import Letter of Credit. IMPORT LETTER OF CREDIT (DOLLARS) Credit No. 134567 $100,000-U.S.C. GUARANTY TRUST COMPANY OF NEW YORK New York, February 11, 1919 John Doe & Company, Dear Sirs: Johnson Crawford At the request and for the account of......... & Company, New York..........we hereby authorize you to value on Guaranty Trust Company of New York, New York at................Four (4) Months sight.....for the sum not exceeding a total of................One hundred thousand dollars ($100,000) accompanied by commercial invoice, consular invoice, bills of lading Marine and war-risk, insurance certificates representing....cost, insurance and freight shipment of............. Raw Silk from Yokohama, Japan, to New York Insurance.....Marine and war-risk insurance to be effected by the shippers Bills of lading for such shipments must be drawn to the order of.................Guaranty Trust Company of New York, New York A copy of the consular invoice and one bill of lading must be sent by the bank negotiating drafts, direct to Guaranty Trust Company of New York, New York. The amount of each draft negotiated must be endorsed hereon. We hereby agree with bona fide holders that all drafts drawn by vitrue of this Credit, and in accordance with the above stipulated terms, shall meet with due honor upon presentation at the Guaranty Trust Company of New York, New York, if drawn and negotiated to.................. May 31, 1919. GUARANTY TRUST COMPANY OF NEW YORK N. B. Drafts drawn under this Credit must bear the clause "drawn under Letter of Credit No. 134567, Dated February 11, 1919," In accordance with cable instructions received from... Banco Mercantil Americano de Colombia, Bogota.............we open a revocable credit in your favor for account of The South American Import Company, Bogota, Colombia amount $50,000.00 (Fifty thousand Dollars) covering shipment of coffee cleaning machinery from New York to Barranquilla, Colombia. Drafts under this Letter of Credit are to be drawn at. sight on......usand are to be accompanied by a set of Shipping Documents which must meet with our approval, consisting of: Shipper's Invoices...... Consular invoices if such documents are required in connection with this shipment. Marine and War Risk insurance policies............. Full set of occan steamer Bills of Lading............made out to order and endorsed in blank, or to the order of the Banco Mercantil Americano de Colombia. It must be understood that payments under this Credit will only be ma te provided the goods are actually on board or loading on the Vessel named in the B/L. If Government regulations restrict the issue of order Bills of Laling, please communicate with us and we will advise you in the premises. Marine insurance should cover from Warehouse to Warehouse, and not less than ten days after arrival, and also include deviation clause, craft and lighter clause, negligence and/or latent defect clause. Policies reading Free of Particular Average completely, must not be tendered without prior arrangement with us. This Letter of Credit is issued subject to all regulations and enactments of the United States Government and its Allies and to any proclamations of the President governing export shipments. The documents should be presented whenever possible in time to le forwarded on the steamer carrying the merchandise. This Letter of Credit expires June 30, 1919 unless sooner revoked. If you are unable to comply with the terms as indicated above, please communicate with us promptly, and oblige, Yours respectfully, GUARANTY TRUST COMPANY OF NEW YORK This is a form of an export credit, opened by a foreign buyer through the Guaranty Trust Company of New York, in favor of a manufacturer, exporter, or shipper in the United States. The specimen shown is a revocable credit, which means that although a date of expiration is placed on the credit, it is, nevertheless, subject to cancellation at any time. 15. Specimen of an Irrevocable Export Credit. GUARANTY TRUST COMPANY OF NEW YORK. To The American Export Association, 140 Broadway, New York City. Dear Sirs: EXPORT CREDIT instructions received from cable In accordance with Banco Mercantil Americano del Peru, Lima, Peru..... we open an irrevocable credit in your favor for account of........The South American Import Company, Lima, Peru Amount $100,000.00............ ..Dollars) covering shipment of (One hundred thousand. general merchandise from New York to Callao, Peru. Drafts under this Letter of Credit are to be drawn at....... sight on........usand are to be accompanied by a set of Shipping Documents which must meet with our approval, consisting of: Shipper's invoices...... Consular invoices if such documents are required in connection with this shipment. Marine and War Risk insurance policies............. Full set of ocean steamer Bills of Lading........made out to order and endorsed in blank, or to the order of the Banco Mercantil Americano del Peru. This Letter of Credit is Valid only upon there having been issued an appropriate Export License, covering the transaction. It must be understood that payments under this Credit will only be made provided the goods are actually on board or loading on the Vessel named in the B/L. If Government regulations restrict the issue of order Bills of Lading, please communicate with us and we will advise you in the premises. Marine insurance should cover from Warehouse to Warehouse, and not less than ten days after arrival, and also include deviation clause, craft and lighter clause, negligence and/or latent defect clause. Policies reading Free of Particular Average completely, must not be tendered without prior arrangement with us. This Letter of Credit is issued subject to all regulations and enactments of the United States Government and its Allies and to any proclamations of the President governing export shipments. The documents should be presented whenever possible in time to be forwarded on the steamer carrying the merchandise. This Letter of Credit expires June 30,1919........ If you are unable to comply with the terms as indicated above, please communicate with us promptly, and oblige, Yours respectfully, GUARANTY TRUST COMPANY OF NEW YORK This credit differs from the revocable export credit,in that, as an irrevocable credit, it cannot be cancelled prior to the date specified in the credit, without the consent of the party in whose favor it is issued. (Courtesy of Guaranty Trust Company of New York.) 3. BANK ACCEPTANCE PRACTICE. Bank acceptances have been in use for centuries in the financial centers of Europe. They are new credit instruments in American usage, and in the few years of their use they have proved so valuable an adjunct to the financial mechanism of the nation that the rapid extension of their use and the perfecting of the conditions favoring such expansion (as a broad acceptance discount market and the removal of certain still existing restrictions) can be confidently looked forward to as the natural development of the system. The term acceptance is given to a draft or bill of exchange drawn to order, for a definite sum of money, payable at a definite time after the date of the draft or after its presentation to the drawee, the obligation to pay having been "accepted" by the drawee, by means of an acknowledgment written or stamped across the face of the instrument and signed by him. This acknowledgment constitutes the agreement of the drawee to pay the draft at maturity in accordance with its tenor, without any qualifying conditions. Such an accepted draft is negotiable. The vendor of merchandise draws upon the buyer for the price of the merchandise sold to him. The buyer accepts the draft. This constitutes a "trade acceptance." But the buyer may arrange with a bank that the vendor shall draw on that bank and the bank shall accept the draft for the buyer's account. This draft becomes a bank acceptance. And indeed, the Federal Reserve Board defines a bank_acceptance as "a draft or bill of exchange of which the acceptor is a bank or trust company, or a firm, person, company, or corporation engaged in the business of granting bankers' acceptance credits." Such instruments offer an excellent means of investment. The responsibility for their payment is based upon the credit standing of financially solvent banking institutions. The acceptances are covered by bankers' clients either by deposit of clearing house funds one day prior to maturity, or deposit of cash or check of the Federal Reserve Bank on the day of maturity, or a debit to the client's account on the day of maturity against funds cleared. Section 13 of the Federal Reserve Act, as amended, pro |