Letters Of Credit

( Originally Published 1918 )

A Letter of Credit is a letter from a bank or mercantile house addressed to its agents or correspondents elsewhere, requesting them to pay or advance money to the bearer of the letter.

How Secured. The person who obtains a letter of this kind usually is required to deposit an equivalent sum with the person or firm from whom be obtains it, in money, bonds, mortgages or stocks.

A Copy of the Letter is also sent by mail to the person addressed, in which the bearer is so described that he may be recognized.

If the Letter Is Not Accepted by the person to whom it is addressed the bearer should at once notify the author and give the reason why it has not been honored.

Party Held Responsible. The party whose signature the letter bears is held responsible for the amount involved, if the person to whom it is addressed accepts it.

Form of Letter of Credit

350 Broadway, New York, Jan. 10, 19-.
London, Eng.

DEAR SIRS: We take pleasure In introducing to you Mr. Chas. P. Hodder of this city, who visits England for the purpose of investing in property in the city or vicinity of London, and desires to open a credit with you of Fifteen Thousand Dollars. We hereby authorize you to honor his drafts to an amount not exceeding in the aggregate the above-named sum and charge the same to us.

The signature of Mr. Hodder accompanies this. Yours very respectfully,
FOSTER, WALKER & CO. Signature of Chas. P. Hodder.

Foster, Walker & Co.'s Letter Sent by Mail:

350 Broadway, New York, Jan. 10, 19-.

MESSRS. HAVART, REED & CO., London, Eng.

GENTLEMEN : We have today granted a letter of credit on your house (as per enclosed duplicate) to Mr. Chas. P. Hodder for Fifteen Thousand Dollars.

Mr. Hodder is forty five years of age, five feet ten inches tall, has a light complexion, light brown hair, and blue eyes. Respectfully yours,


A Guarantee Letter of Credit

Jackson, Miss., March 9, 19.

Chicago, Ill.

DEAR SIR: Mr. Ira F. Van Arsdale, the bearer of this letter, is an extensive dealer in boots and shoes in this city, and is now about visiting your city for the first time, with a view of purchasing goods. We have reason to know the condition of his financial ability and his promptness in meeting his liabilities. We therefore readily guarantee the payment of any indebtedness that he may contract with your house not exceeding Ten Thousand Dollars.

Very respectfully,
175 Moline St.

The Letter Sent by Mail:

175 Moline St., Jackson, Miss., March 9, 19.

Chicago, Ill.

DEAR SIR: We have today given a guarantee letter of credit upon you for Ten Thousand Dollars in merchandise. The bearer of our letter of credit is Mr. Ira F. Van Arsdale, an acquaintance of ours and a prominent merchant of this city.

Mr. Van Arsdale is thirty years old, six feet tall, has a dark complexion, with dark hair and eyes.

We commend him to your kind consideration.



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