be in the form of a letter to the issuing
banker's London correspondent, requesting him to "accept" the drafts of
the sellers of the silk in Canton up to a certain amount and under
certain conditions. These conditions, having to do with the "usance" of
the drafts (whether they were to be drawn at three, four, or six
months' sight) and with the shipping documents to accompany the drafts,
are all very fully set forth in the letter of credit itself. If the
silk has been bought on the basis of four months, for instance, the
credit would read that drafts are to be drawn at four months' sight.
Mention is also made as to whose order the bills of lading are to be
made, as to where the insurance is to be effected, etc., etc.

The silk importer having received this letter of credit from the banker
in New York, sends it by first mail (or, if the case be urgent, cables
its contents) to the seller of the silk out in Canton. The latter,
having received it, is then in a position to go ahead with his
shipment. The first thing he does is to put the silk aboard ship,
receiving from the steamship company a receipt (bill of lading) stating
that the ten bales have been put aboard, and making them deliverable
_to the order of the banker in New York_, who issues the credit. The
bill of lading being made out to his order is useless to anybody else.
He and he only can get the silk out of the ship when it arrives in New
York.

The shipper in Canton having received this bill of lading from the
steamship company and having properly insured the goods and received a
certificate stating that he has done so, is then in a position to go
ahead and draw his draft for the cost of the silk. The London
correspondent of the New York banker, to whom the letter of credit is
addressed, is, say, the Guaranty Trust Company of London. Upon that
institution the Canton silk firm, therefore, draws his draft in pounds
sterling for the cost of the silk, attaching to the draft the bill of
lading, an invoice, and the insurance certificate.

A pertinent inquiry at this point is as to why the letter of credit for
silk shipped from a city in China directs that drafts be drawn on
London--as to why London figures in the transaction at all? The answer
is that drafts on London are always readily negotiable, and that London
is the only city in the whole world drafts on which _are_ readily
negotiable in all places and at all times. A draft on New York or on
Berlin _might_ be n