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78 HASKINS & SELLS December Foreign Exchange Dollar Letters of Credit, Examination of Draft and Shipping Documents IN previous articles the discussion of dol-lar letters of credit and the specific example of an exporter in Japan shipping silk to an importer in New York have been developed to the point where the merchandise is on board the freight steamer bound for New York. The draft with shipping documents attached had been sold by the shipper to his local bank in Yokohama. The Yokohama bank had sent the draft by first mail steamer to its New York correspondent, who now presents it for acceptance to the New York bank which issued the letter of credit. According to custom in New York, one day is allowed for the acceptance of time drafts. So the draft is left for the foreign department clerks to examine and accept at their leisure, which is usually the evening of the day the draft is presented. The examination will begin by reading the draft through, to see that it is regular on its face. The draft will refer to the letter of credit under which it is drawn by number. This will enable the clerk to turn to the proper account in the "Letter of Credit Record" book, where a complete resume of the terms and conditions of the letter of credit are set forth. Here reference will be made to see that the draft is drawn within the period provided for by the letter of credit and according to the dating of the bills of lading. Shippers have been known, where they are late in making shipment, to date their draft back and thus mislead the accepting bank. On the question of shipments made after the period provided in the letter of credit, it is interesting to note that a prominent foreign exchange bank deliberately accepted a draft when shipment was made one day late, and sued the New York importer, claiming that there had been a substantial compliance with the agreement, and that the importer was not injured by the delay. This was done in order to preserve the good name of the bank among exporters abroad. The draft will, of course, be examined to see that it is drawn on the accepting bank, and not some other bank with which the importer also does business. The signature to the draft will be considered satisfactory if it is official in form. The accepting bank has no way of verifying the signatures of numerous foreign exporters, but the draft is accompanied by a consular invoice, which is evidence as to the identity of the shippers. This completes the examination of the draft. The accompanying documents will consist at least of shipper's or commercial invoice, consular invoice, insurance certificates, and two copies of bills of lading. The commercial and consular invoices will be examined together to see that the mer-
Object Description
Title |
Foreign exchange |
Subtitle |
Dollar letters of credit, examination of draft and shipping documents |
Author | Anonymous |
Subject |
Foreign exchange -- Accounting |
Citation | Haskins & Sells Bulletin, Vol. 01, no. 10 (1918 December 15), p. 78 |
Date-Issued | 1918 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 1-10-p78 |