The Springfield herald., 1901-12-27
LETTER OF CREDIT.
BETTER THAN CASH OR BILLS OF
EXCHANGE.
Travelling Around the World on a Com
merciai Introd uction Written on Paper
Cash Is Not Carried In Large Sums
by Travellers.


lures of the business substitute for
actual money. and a substitute that is
used by nearly every transatlantic
traveller, is the letter of credit, says
the Boston Herald. To illustrate a
typical case, let us introduce Mr..
Jones. He decides that he would like
to spend year in travel. and. after
mapping out an itinerary, he makes
an estimate of the amount of money
1t will be necessary for him to spend.
He fixes the amount, say, at $4,000.
The average traveller does not care to
load himself down with any such sum.
because, in addition to the inconven-
ience of handling it, he makes himself
a possible target for thieves. in case
they learn of his possessions. He
can. of course, divide this sum into
smaller amounts by drawing bills OF
exchange. payable on certain banks in
certain cities throughout the world,
but the letter of credit affords much
more simple and satisfactory method
of keeping himself supplied with
funds. After arranging his itinerary
and satisfying himself that he can af-
ford to eXpend the amount he has es-
tsAAted the trip will cost him Mr..
Jones betakes himself to a banking
house in this city which issues letters
of credit and obtains such document.
1t is usually large folder. On the
first page is an engraved letter of
introduction. The banker, address
ing his correspondents in whatever
~ of tha hap hn
by formally taking the liberty, etc"
of introducing Mr.. Jones. and certify
ing that his credit is equal to the sum
of $4,000. At the foot of the page
Mr.. Jones signs his name. Another
page of the document is ruled off into
spaces in which are to be filled the
various amounts drawn. Still another
page is devoted to list of banks in
different cities and towns in the world
at which such a letter will be hon
ored. This letter is not merely an
assurance that Mr.. Jones is good"
for the amount named. but that he Is
proper person. from social point
of view, to receive such a letter. This
is one of the oldfashioned features
of banking which is not based entire
ly on a dollar-and-cents basis. Mr..
Jones must furnish assurances to the
banking house, in case he Is person
ally unacquainted with any of the
persons conducting it, that he is not
only financially sound, but socially so;
otherwise the letter is refused him.
He can buy a bill of exchange on the
basis of dollars and cents, but not
letter of credit. With this letter of
credit Mr.. Jones may travel to any
part of the civilized world, without
taking with him a cent of money, and
always feel sure that his financial
wants. within the limits of the sum
named therein, will be supplied. Be-
fore leaving. he must place under the
control of the banking house the
amount named in the letter. either in
cash or its financial equivalent. After
paying for his steamer passage he
carries with him from this country
only sufficient money to cover incl
dental expenses. When he reaches
London he calls upon the correspond
ents of the banking house, presents
his letter and draws as much as he
may wish for current expenses. He
is required to furnish no further iden-
tification than signature which shall
be similar to the one affixed by him at
the bottom Of the letter of credit. The
sum he has drawn Is debited on
blank page of his letter, SO that he
knows Just what his balance is at any
time. When he reaches Paris he pro-
duces the same letter and repeats the
operation. The second amount is also
debited At Berlin he does likewise,
and SO it goes, whether the place be
Rome. Algiers, Yokohama, Calcutta,
Melbourne, Durham or any one of 500
places that might be named. II there
is no stated correspondent in place,
the place is not too small for the pre-
sentation of his letter of credit, pro-
vided it is in the civilized world and
there is bank there. Nor is this all.
The banking house, through Its va
rious agencies, becomes sort OF spon-
sor and personal guardian. The let
ter of credit becomes in reality let
ter of introduction and opens up to
him many courtesies. If his friends
in this country wish to write to him
they address the letters in care of the
London banking house. whose letter
of credit he carries. and that house.
through it's mail forwarding depart
ment, sees to it that all communica-
tions intended for him are sent to
whatever point of his itinerary may
be his abiding place for the time be-
ing. More than that, should he be-
come i'll while on his travels, his let
ter is a guarantee that some one rep
resenting the local correspondent will
take an interest in his case. and should