Some payments which the bank is requested to make abroad are handled by letter payments. In this letter the foreign corre spondent is requested to make a given payment and charge the bank's account. A debit and credit ticket is put through much like the tickets and stubs in connection with drafts.
The Sale of Foreign Drafts by Interior Correspondents By special arrangement it is made possible for certain of the New York bank's correspondents in the interior of the country to draw directly upon certain designated banks among the New York bank's foreign correspondents for its account. The New York bank furnishes the interior banks with a list of its foreign correspondents upon which they may draw their own drafts on London, Paris, or other points, in specified currencies, and bring into the transaction their account with the New York bank and the New York bank's account with its correspondent abroad.
To handle this kind of transaction special forms are used and the interior banks are advised as to the rates of exchange they are to charge. These rates are always above the existing market rate so as to protect the New York bank against any slight fluctua tion from day to day. The quoted rates are changed from time to time with broad changes in the market. If the interior bank wishes to make a profit on the transaction, it charges a higher rate of exchange if the bill is drawn in foreign currency, and a flat charge if drawn in dollars.
The interior bank writes its own draft on the foreign corre spondent and advises the New York bank of the transaction, enclosing with the advice either a check to cover or instructions to charge its account. The advice to New York is by telegraph if the drawing is for important amounts and there is any possi bility that the draft will be presented for payment before the bank can confirm to the drawee. The New York bank then ad vises its foreign correspondent to honor the draft when presented and charge to its account. The foreign branches of the New York bank, if it has any, also use the same device, drawing drafts on all parts of the world and letting the drawee banks reimburse themselves by charging the New York bank's account kept with them.
Cable Transfers A cable transfer is the transfer of funds abroad by cable. It is analogous to telegraphic transfers in domestic business.
Requests for cable transfers must give the complete name of the applicant and of the beneficiary. The cable transfer clerk deddes how the transaction shall be executed; he determines upon the drawee either from standing instructions or from in quiry made of the men in charge of the position sheets. The traders give the rate of exchange. All this information is noted upon the request, and from it is prepared in triplicate a state ment showing the amount to be paid, the rate, the dollar equiva lent, the payee, the drawee bank, and the amount of cable charges. Cable charges for drafts of large amount may be waived. The statement is stamped "Received payment" or it serves as a bill, as the case may be, and is sent or handed to the applicant as an acknowledgment of the request. The duplicate remains in the department as a permanent record. The tripli cate is filed with the auditing department.
The transfer clerk also makes out tickets covering the trans action, either crediting the drawee's account and charging the account of the applicant, or charging Unpaid Exchange, which will be credited later when payment by cash or check covering the cost of the transfer is received. Payment should be received before the cable is actually sent; only exceptional banks should be privileged to pay for the transfer the day the payment is effected abroad.
The clerk words the message as he thinks it should be cabled.
This message, together with the request, is turned over to the cable department, which, from these instructions, codes the mes sage ordering payment. In this message a bank officer inserts the test words. If the cable transfer clerk, the cable department, and the bank officer each keep a record of these transfers, a very definite check is provided on the work.
The Foreign Paying Teller All cables and the letters pertaining to payments and book transfers are delivered by the mail clerk to the foreign paying teller. He sorts them on the basis of their importance and cares first for those demanding expedition.