The Florence daily tribune., 1902-01-13
LETTER OF CREDIT.
BETTER THAN CASH OR BILLS OF
EXCHANGE.
Travelling Around the World on "a Com
mercisi Introduction Written on Paper
Cash Is Not Carried In Large sums
by Travellers.

lures of the business substitute for
actual money, and substitute that is
used by nearly every transatlantic
traveller. Is the letter OF credit, says
the Boston Herald To illustrate
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 100000.
The average traveller does not care to
load himself down with any such sum.
because, in addition to the inconven-
ience OF handling 1t, he makes himself
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 a 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-
timated the trip win cost him Mr..
Jones betakes himself to a banking
house In this city which Issues letters
of credit and obtains such n document.
1t is usually a large folder On the
first page is an engraved letter of
introduction, The banker, address
Ing his correspondents in whatever
no ri Of thA hax Is
by formally taking the liberty. etc."
of introducing Mr.. Jones, and certify
ing that his credit is equal to the sum
of 100000. 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 a social point
of view. to receive such a letter. This
is one of the old-fashioned 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 1t, that he is not
only financially sound, but socially SO;
otherwise the letter Is refused him
He can buy bill of exchange on the
basis of dollars and cents, but not a
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 a signature which shall
be similar 20 the one affixed by him at
the bottom of the letter of credit The
sum he has drawn is de5ited 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 1t goes, whether the place be
Rome, Algiers Yokohama Calcutta,
Melbourne. Durham or any one OF 500
places that might be named. If there
is no stated correspondent in place.
the place is not too small for the pre-
gentation of his letter of credit pro
vided 1t is in the civilized world and
there Is bank there. Nor Is this all
The banking house, through its va.
rious agencies, becomes a sort of spon-
sOr and personal guardian. The let
ter of credit becomes in reality let
him many courtesies. II 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 its 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
he die, his financial sponsors will en-
gage that his remains are decently
cared for and his personal effects
guarded. When Mr.. Jones returns to
Boston he calls on his bankers and
surrenders his letter of credit. The
various amounts he has drawn are
added. he pays a commission of 1 per