THE LETTER OF CREDIT.
Persons who are not much accustomed to travelling, or to doing business
for themselves in strange places, sometimes feel a good deal of
solicitude when called upon to act in such cases, from not knowing
beforehand exactly what they are to do. But there is never any occasion
for such solicitude. It is not at all necessary when you have occasion
to go to a bank, or to an office of any kind, or to a railway-station
where a great many different trains are coming and going, that you
should know beforehand what you are to do when you get there. All that
is necessary is that you should simply know _what you want_, and that
you should be able to state it intelligibly. It is the business of the
clerks, or of the persons in charge of the establishment, whatever it
may be, to show you how the business is to be done, when you once tell
them what it is.
It was about eleven o’clock on Monday morning that Grimkie was to set
out with Mrs. Morelle to go and get the letter of credit. Florence and
John were to go too, as they did not wish to be left at the hotel, but
they were to remain in the carriage while Grimkie and his aunt went
into the office.
Grimkie’s father was at the hotel at the time that they set out.
“Now, Grimkie,” said he, while Mrs. Morelle was putting on her bonnet
and shawl, “do you know where you are going?”
“Yes, sir,” said Grimkie, “you gave me the address of the banker, and I
have got it in my pocket.”
“Very good,” said his father.
“And now do you know how to do the business when you get there?”
“No, sir,” said Grimkie.
“Very good again,” said his father. “It is not necessary that you
should know how to do the business. It is not your duty to know. It is
the duty of the clerks there to do the business for you. But do you
know what the business is that you wish to have done?”
“Yes, sir,” said Grimkie. “To get a letter of credit.”
“In whose name?” asked his father.
“Mrs. Jane Morelle’s,” said Grimkie.
“For how much?” asked his father.
“For five hundred pounds,” said Grimkie.
“How long to run?” asked his father.
“For one year,” said Grimkie.
“Very good,” said his father. “That is all you want to know. And
remember, in all your travels, that if you have any business to do of
any kind, in any strange place, all that is necessary for you is to
know distinctly what you want, and to be able to state it intelligibly.
The people of the establishment will attend to all the rest.”
“Yes, sir,” said Grimkie. “I will remember it.”
Mrs. Morelle, who had been standing before the glass putting on her
bonnet and shawl during this conversation, listened to it with much
interest, and she felt great satisfaction and relief in hearing it. She
had very naturally felt some uneasiness and apprehension in setting out
upon such a tour, at the thought of being called upon often, as she
knew she must be, at railway stations, and public offices of various
kinds, to transact business without knowing at all how the business was
to be done.
But if all that is necessary in such places, she said to herself, is
that I should know what I want, and be able to state it intelligibly, I
think I shall get along very well.
In fact, Grimkie’s father meant what he said much more for Mrs.
Morelle than for Grimkie. He knew very well that boys of Grimkie’s
age were not usually very diffident, or distrustful of themselves, in
regard to the transaction of business of any kind, and that they did
not usually stand in need of any special encouragement.
When Grimkie entered the banking-house where he was to procure the
letter, he was at first somewhat abashed by the scene which presented
itself to view. He saw a very large room with doors opening in various
directions into other rooms, all full of desks, and clerks, and people
going and coming. There was a long counter with high desks, surmounted
by little balustrades rising above it, and open spaces here and there,
where people were receiving money, or delivering papers, or transacting
other business. Grimkie was for a moment quite bewildered, but after a
moment’s hesitation he recalled to mind the instructions which he had
received, and he went boldly up to the clerk who was nearest to him and
said,
“I came to see about a letter of credit.”
“Second desk to the right,” said the clerk, pointing with his pen, but
without raising his eyes from his work.
Grimkie, followed by Mrs. Morelle, went in the direction indicated. The
desk was a very large and handsome one, and an elderly gentleman of
very respectable appearance was sitting at it writing a letter. He went
on with his work, but in a moment, glancing his eye at Grimkie, he said,
“Well, my son?”
“I came to see about a letter of credit,” said Grimkie.
“What name?” asked the gentleman.
“Mrs. Jane Morelle,” replied Grimkie.
“Ah!” said the gentleman, and looking up from his work his eye fell
upon Mrs. Morelle, whom he now for the first time saw. He immediately
rose from his seat and offered Mrs. Morelle a chair.
“It is all arranged about your letter of credit,” said he, as he
resumed his seat, “except to take your signatures. You will only wish
to draw in London and Paris, I understand?”
“Yes, sir,” said Mrs. Morelle. “Mr. Jay thought that that would be all
that we should require.”
The gentleman then called to a handsome-looking young clerk who was
writing at a desk near by, and asked him if he would be kind enough
to take Mrs. Morelle’s signature. So the clerk conducted her to a
table at a little distance, near a window, where there were writing
materials, and asked her to write her name three or four times, at some
little distance apart, upon a sheet of paper which he gave her. Grimkie
followed his aunt to the table, and the clerk, after having given the
directions, went away and left Mrs. Morelle to write at her leisure.
“I’m all in a trepidation,” said Mrs. Morelle, taking the pen, “and it
won’t be written well.”
“That will be just right, then, Auntie,” said Grimkie, “for you will
be all in a trepidation when you go to draw the money in the foreign
cities, and so the writing will be the same.”
Mrs. Morelle smiled, and then proceeded to write her name four times,
in a column on the left hand side of the paper, each signature being at
the distance of two inches from the other.
By the time that she had finished writing, the clerk came and took
the paper. He then said to her that if she would remain seated a few
minutes, he would bring the letter of credit to her.
Accordingly, in a few minutes he returned, bringing with him a letter
folded and enclosed in a very strong envelope. Mrs. Morelle took the
envelope, and then bowing to the clerk, and also to the gentleman at
the desk, she and Grimkie retired.
As soon as they had returned to the hotel, Grimkie was curious to open
the letter of credit and read it. He found that it was a handsomely
printed form, covering one side of a sheet of letter paper, with the
blanks filled up by a pen. It was as follows:
“New York, _May 28, 1860_.
“_Messrs. de Rothschild Brothers, Paris._
“_Messrs. N. M. Rothschild and Son, London._
“_Gentlemen_:
“This letter will be presented to you by _Mrs. Jane Morelle_, in
whose favor we beg to open a credit with you collectively, for the
sum of £500—_say Five Hundred Pounds_, to which extent be pleased to
furnish payments in sums as required, without deduction, and against
receipts, inscribing the amounts paid on the reverse of this letter,
and reimbursing yourselves in accordance with our letter of advice,
transmitting receipts at the same time.
“(Signed) Yours, most respectfully,
“_August Belmont and Co._”
“This credit is in favor for _two years from date_.”
The parts of the letter which are printed in Italics, were in
manuscript in the original. The rest was the printed form. You will
observe that the parts which were in manuscript comprise all those
portions of the letter which would require to be varied for different
travellers applying for letters, while the printed portion consists of
what would be the same for all.
Besides the letter of credit, Grimkie’s father recommended to Mrs.
Morelle to take a considerable supply of English gold with her—as much
as she could conveniently carry—to use when she first landed; for she
might desire, he said, to travel about England for a while before going
to London, which was the first place where her letter of credit could
be made available.
“Besides,” said he, “it is a little cheaper for you to carry gold. The
gold which you buy here and take with you, does not cost quite so much
as that which you obtain there, through your letter of credit; for,
besides being repaid for the actual value of the gold, the bankers
require something for themselves, as their profit on the transaction.”
“That’s fair,” said Grimkie. “But then why can’t we take it _all_ in
gold, and so get it all cheaper?”
“Because then you lose in interest money more than you save,” said
his father. “Suppose, for example, a person is going to spend three
thousand dollars in a year, in travelling in Europe—fifteen hundred
dollars the first six months, and fifteen hundred in the second. Now
the last fifteen hundred, if he leaves it at home, well invested,
will bring in, during the first half of the year, say forty or fifty
dollars, which will much more than pay the banker’s commission. So it
is better for him to leave it invested, and take it from the banker’s
when the time comes for using it. And then, besides, the danger of
being robbed is very much greater in taking a very large sum in gold
with you. It is best, therefore, for you to rely upon your letter of
credit, except for what you require at the outset, and that it is well
to take with you in gold.”
So it was arranged that Grimkie should go with Mrs. Morelle to a money
broker’s in Wall-street, whose address his father gave him, to get some
sovereigns.
A money-broker is a man who keeps the different kinds of money of
all the different foreign nations for sale. Merchants, shipmasters,
travellers and other persons coming home from foreign parts, are always
bringing home certain quantities of this money. As it will not pass
current in this country, they usually take it to a money-broker’s and
sell it. He pays them for it a little less than its intrinsic value. In
this way he keeps a supply of all kinds of foreign money constantly on
hand, and in passing by his office you often see these coins in the
window for sale, just as you see books in the window of a bookstore,
or toys in that of a toy-shop, and travellers who wish to visit any
foreign countries, or persons who wish to send money there for any
purpose, go to these brokers and buy the kind of money which they
require—though, of course, they have to pay for it a little _more_
than its intrinsic value, just as those who brought it into the country
were obliged to sell it for a little less. The difference is the
broker’s profit.
The coin which Mrs. Morelle wished to buy was sovereigns. The value of
the sovereign is a pound. It is divided into twenty shillings, which
are represented by silver coins of nearly the size of an American
quarter of a dollar.
The sovereign is a gold coin, nearly as large as an American five
dollar piece. There is gold enough in a new sovereign fresh from the
mint, to come to four dollars and eighty-six cents, as determined by
the assaying officers of the United States. The average amount of gold
in the sovereigns in circulation is, however, only four dollars and
eighty-four cents. That is, the new ones have two cents worth of gold
in them more than the average of those in circulation.
How much you have to pay for sovereigns when you go to buy them at a
broker’s depends upon how many he has in hand, or expects soon to
receive, and upon the demand for them. When a great many sovereigns
are wanted and the supply is not large, of course the price rises, and
in a reverse of circumstances it falls. Grimkie’s father told him that
probably he would have to pay four ninety, or four ninety-one for them
on the day when he went with Mrs. Morelle to purchase them.
If, instead of purchasing sovereigns at the broker’s, the traveller
obtains them of the banker’s through a letter of credit, they cost him,
on account of commissions and charges, nearly five dollars apiece.
American travellers, therefore, generally reckon the sovereigns which
they expend in Europe in their travels, and in the purchases which they
make, as so many times five dollars.
On entering the broker’s office, Mrs. Morelle and Grimkie at once
heard a great chinking of coin, as people were counting it out, either
paying or receiving it. There was a long counter on one side of the
room, with clerks behind it, and beyond the clerks, against the wall,
were shelves, with boxes of coin, and little heaps of coin, some in
piles, and some in rolls, enveloped in paper. A man, who looked like a
seafaring man, was standing at the counter in one place, with a bag of
gold which he had just opened, and he was now pouring out the coin from
it. It was a bag of doubloons which he had brought from some Spanish
country. Near by was a young man, who was just counting and putting
into a bag a quantity of sovereigns which he had been purchasing. There
were various others at different places along the counter engaged in
similar transactions.
Mrs. Morelle had concluded to reserve about seventy-five dollars, for
her expenses in going to Boston, and to invest all the rest of the
money which she had with her in sovereigns. But Grimkie, who seemed
to want to get hold of as many sovereigns as possible, said to her as
they were coming in the carriage toward the office that he thought that
seventy-five dollars was more than would be necessary to take them to
Boston. But she said that possibly some accident might happen which
would lead to extra expense, and it was always best to have enough.
“And then if I have anything left over,” said she, “we can purchase
sovereigns with it in Boston, the morning before we sail.”
Accordingly Grimkie, holding in his hands eight bills of a hundred
dollars each, went with Mrs. Morelle to a vacant place at the counter,
and said that he wished to buy some sovereigns, and asked the price.
“How many will you want?” asked the clerk.
“About a hundred and sixty,” said Grimkie. He had previously made a
calculation that he could have rather more than a hundred and sixty for
the eight hundred dollars.
“I have got eight hundred dollars here,” said Grimkie, “which I wish to
change into sovereigns.”
“We can let you have them for four ninety,” said the clerk.
Then taking a little slip of paper and a pencil he made a calculation,
and presently said,
“You can have a hundred and sixty-three sovereigns, and a little over,
for the eight hundred dollars.”
“How much will one hundred and sixty-five cost?” asked Mrs. Morelle.
The clerk, after figuring a little more on his paper, said that they
would come to eight hundred and eight dollars and fifty cents exactly.
“Then let us take a hundred and sixty-five,” said Mrs. Morelle, “and I
will pay the eight dollars fifty.”
So Mrs. Morelle took eight dollars and fifty cents from her purse, and
put it with the eight hundred dollars, and Grimkie gave the whole to
the clerk. He counted it and put it away, and then proceeded to count
out the sovereigns, laying them in piles, as he counted them, of fifty
each.
“Would you like a bag to put them in?” asked the clerk.
Grimkie said he would like one very much.
So the clerk gave him a small, brown linen bag, large enough to contain
the coin. While Grimkie was putting the money into the bag, it occurred
to him that perhaps it would be well to have a little English silver.
“We shall also have need of a little change, Auntie,” said he, “when we
first land, for the porters or the cabmen.”
“I can give you silver for one of the sovereigns,” said the clerk, “if
you wish.”
So Grimkie gave back one of the sovereigns to the clerk, and the clerk
in lieu of it counted out twenty silver coins not quite so large as a
quarter of a dollar. He left them on the counter for Grimkie to count
over after him, and began to attend to another customer.
“That’s right, Auntie,” said Grimkie: “twenty is right. Twelve pence
make a shilling; twenty shillings make a pound.”
Grimkie wrapped up the twenty shillings in a piece of paper, and put
them into the mouth of his bag, and then putting the bag in his pocket,
he assisted Mrs. Morelle into the carriage, and after getting in
himself, he ordered the coachman to drive to the hotel.