Issuance of Credits Requests for the issuance of export credits are received from abroad by letter or cable, and credits are advised in like manner. The work is naturally divided between a letter clerk and a cable clerk. Letters received by the letter clerk and requesting the issue of a credit are sent to the foreign bookkeepers to have the signatures verified and to have the balance of the account of the bank or firm requesting the credit noted thereon. After the credit has been referred to an officer for approval, the letter is given a number and this number is stamped upon the card record kept of credits and also on the folder of correspondence appertaining thereto. An advice of credit is then prepared in triplicate, the original for despatch to the beneficiary, one carbon for the foreign division files, and one for the department files. The advice is checked against the letter of instructions. If the approximate amount of the payment is not known, it is necessary for the letter clerk to write or telephone the beneficiary to learn his require ments. These funds may then be segregated in a special com mercial credit account which bears interest at the same rate as the regular account of the correspondent; the interest on the segre gated funds accrues to the regular account, so that there is no accumulation in the amount set aside. The majority of American banks on opening a confirmed letter of credit in favor of an ex porter do not set aside any actual funds, since they regard it as a credit rather than a cash transaction. Nevertheless quite a number of banks consider their confirmed letter of credit as an acknowledgment that funds are held for the use of the beneficiary in the sense that they are obligated to meet his drafts.
The cable derk handles incoming cables that pertain to the opening of new credits or to the amending or canceling of credits already established. The cable clerk ascertains the balance of the bank or firm requesting a credit and, in case of a confirmed credit, the amount of the bank's present contingent liability for account of the party in question. The credit is then referred to an officer for approval. It is customary to despatch a letter of advice giving the details of the credit and a telegraphic advice containing the gist of the credit, the cost of the telegram being charged to the foreign correspondent. A memorandum is kept of all charges incurred for cables sent, and the debtor concerns are billed and followed up until the charges are collected.
It is an almost universal practice in international banking where instructions of any nature are cabled, to follow them up with a confirmatory letter which may be simply a copy of the cable, or a letter explaining in somewhat more detail what is desired. When such confirmations are received by the depart ment, the confirmation clerk ascertains whether the original ad vice has been received or whether it has been delayed in transit, and whether its instructions have been properly executed. Whenever the confirmation contains further details than those contained in the cable or requires some alteration of the original instructions, the clerk makes the proper notations on the card record and advises the benefidary accordingly.
The Departmental Records The department bookkeeper keeps the contingent liability ledger, which contains a record of each credit opened, the details, the date of advice, whether by letter or cable, the number given by the foreign correspondent to the transaction, our num ber, the name of the party for whose account the foreign corre spondent is handling the transaction, the name of the beneficiary of the credit, the merchandise, and the amount, entered either in the confirmed or unconfirmed column as the case may be. This ledger is indexed first under the name of the country, then under the name of the city, and lastly under the name of the individual or bank. It shows, therefore, the foreign exchange position with respect to any correspondent at any time and is an index of the activities of the account.
When a new credit is opened, entry is made in the ledger; when payments are made, the amount is written off the credit. The ledger is balanced, say, weekly, and proved with the foreign bookkeepers. Acceptances are similarly balanced. The depart ment bookkeeper keeps a tickler showing the approaching neces sity of making periodic payments under clean credits, and sees that the payments are effected on the dates stipulated. He also records the advances to customers on export bills. This amount is balanced, say, weekly and proved with the foreign bookkeepers.
The number of the credit is indexed alphabetically under the name of the beneficiary; a similar index is made under the name of the consignee for whose account the credit is opened. Another record is kept of the expiration date of the credits.
Probably the most useful record kept in the department is the card record of each commercial credit, containing all the original data, all subsequent amendments, instructions, and other data which concern any action that the department may be asked to take. These cards are filed alphabetically under the names of the beneficiaries.
The folder files are arranged numerically according to the number assigned to the credit at the time of issue. The folders contain all correspondence and other data bearing upon the credit and each piece is stamped with the credit number.
Acceptances Under Export Credits When drafts are presented for acceptance, they are inspected and compared with the terms of the credit, and if found to be in proper form are numbered and recorded in the acceptance book against the corresponding numbers. The draft is then stamped across its face "Accepted," with the date, name of the bank, and signature of the officer. If documents accompany the draft they are sent abroad or retained as their nature requires. The date of the draft's maturity is calculated, and entered in the acceptance tickler, and the transaction is recorded in the liability ledger under the name of the party to be charged. If the holder of the draft desires that it be discounted, the bank discounts it either through its own domestic discount department or through an affiliated institution.