The shipping papers when received by the import commercial credit department are entered in its records and indorsed over to the importer or guarantor, as the case may be. With the docu ments the department sends a schedule giving details as to the amount of the draft, Loth the London and the New York ma turity dates, specification of the documents, the name of the steamer, and the nature of the merchandise; it also sends a trust receipt to be signed and returned to it. If the credit is guaran teed by a third party, the department may not insist upon the return of the trust receipt.
A trust receipt is a form of receipt for merchandise according to the terms of which the customers agree to hold the median dise for the bank's account as agents, under stipulated conditions. By virtue of this trust receipt, title in the merchandise remains with the bank until the draft is paid by the importer.
A trust receipt (Figure 43) reads as follows: Most banks will release goods on trust receipt signed by the importer for the purpose of delivering them to a bona fide pur chaser. A few banks decline to relinquish the merchandise for manufacture by the importer himself, because of the difficulty in identffying the materials once they have been transformed into finished goods.
Goods frequently arrive before the shipping documents which for some reason have been delayed. In this event banks usually release the merchandise to prevent it from going into general order, which would give rise to a charge for warehousing goods not immediately claimed. Also. when goods are perishable, it is advisable to facilitate their sale. The importer is compelled to give customs and steamship officials a bond of indemnity before they will permit him to remove the goods without producing the documents. The bank protects its interest in the goods by securing from its client a trust receipt and also a statement that he will not reject the shipment even if irregular. A bank may further insist upon having the goods consigned to its order. In general, banks grant this concession only to customers of good standing.' Documents received in the mail or handed over the counter with dollar drafts attached are handled in the same manner as those against which foreign correspondents have accepted drafts in foreign currency for the bank's account. Should, however,
any drafts be received and the accompanying documents be in complete, for instance, if the consular invoice be missing, the draft is not accepted or paid for until authority is received from the client to do so. When he declines to authorize the bank to take up a draft with incomplete documents, it is entered in a book for turned-down items with the necessary particulars, such as the amount of the draft, name of the presenting party, credit number, reason for refusal to honor the item, etc. Such items cannot be protested by the presenting bank until twenty-four hours after presentation, according to the Negotiable Instruments Law.
Handling the Bills of Exchange All acceptances, whether foreign or domestic, are noted on the customer's card opposite the respective credit, under drawings, with the New York due date. They are also entered in ticklers according to the date of maturity. Dollar acceptances are en tered in an acceptance book and numbered and stamped with the bank's acceptance stamp. The number of the credit and the nature of the merchandise are also indicated on the acceptance. Drafts drawn in United States gold are changed to United States currency, before acceptance. All long drafts received in the mail are tendered to the foreign collection department after acceptance to be disposed of according to instructions from the negotiating bank.
When seconds of exchange are received or presented before the first arrive, such seconds are accepted, provided they are in order and are accompanied by the necessary documents. The amounts of such drafts are entered in the list of seconds of ex change accepted and on the customer's card, say, in red ink, as a safeguard against acceptance also of the firsts of exchange. Such firsts of exchange, if received later, are stamped "second of exchange accepted." When seconds of exchange are received after the firsts have been accepted, they are stamped "original accepted." Several summarizing lists are prepared in the department: 1. Every morning a list of commercial letters of credit issued the previous day and a list of all dollar drafts accept6d the pre vious day are prepared and each day's transactions from Monday till Saturday are added. The lists are for use at the directors' weekly meeting.