Higher Banking

STEWART BEACHis the executive editor of THIS WEEKand the author of many books and articles.

Whenever I go abroad I carry personal financing in two forms: a wallet of traveler’s checks and a letter of credit from my bank. The traveler’s checks are in small denominations for casual needs or transit across a country’s borders. The letter of credit provides major sums, but these must be negotiated during banking hours.

Incidentally, the only place I have ever been charged for cashing an American Express check was in Savannah, Georgia. I approached a bank teller and was told that such a transaction must be okayed by the front office. An officer readily initialed two twenty-dollar checks when I had countersigned them, but put the bite on me for twenty-five cents each. In some surprise, I protested that never, anywhere, had I been charged for this service. The friendly man said flintily, “You always will be here,” and so I was. The embarrassing thing was that I was without the local currency. I had no Confederate quarters.

Normally, American Express checks are negotiable anywhere and anytime, but a letter of credit is a more adventurous experience. You are driving along, let us say, in your hired car, and you realize that you are very low in pounds, new francs, marks, lire, guilders, or schillings. Clearly a bit of banking is indicated, and when you stop in the next town you consult the pamphlet entitled “List of Correspondents.” This will tell you who is prepared to honor your letter of credit.

You enter the bank and produce a letter of identification which bears your own signature and the signatures of two vice presidents of your bank at home. When this has been digested by the official, you reach into a second pocket for the letter of credit itself. (“As a precaution against misuse in case of loss or theft, the holder of a Letter of Credit should carry it apart from the Letter of Identification.”)

With both letters in hand, the staff must now determine whether they are authorized to give you money. The proof of this is in a great ledger whose pages are pasted with forms. They must first find their samples of the papers you have presented. Now the nice question develops of whether they will accept your documents on faith or feel they must search through the columns and columns of facsimiles in the big book for the signatures on your letter of identification. In England, if you have already made a draft or two, they like to believe that some sharp-eyed predecessor has found the signatures. But on the Continent, banks are somewhat more chary. Duty compels them to try, at least, to find your men on the list.

Now, the vice presidents of your bank have cleverly made this impossible. My own bank permits any one of several hundred people to sign, but no one, it seems, whose signature can be easily deciphered is vice-presidential timber. The happy tourist goes abroad with his letter of identification and his letter of credit in separate pockets, never having noticed the signatures or caring about them. And suddenly he comes across a bank officer who cares very much.

This happened to me in Holland one day. I stopped in a branch of the Amsterdamsche Bank, where my credentials were most courteously accepted, and the official retired into a back room and closed theI door. Some twenty minutes later he emerged with a frustrated air and asked if I was familiar with the signatures on my letter of identification. He had brought out the great ledger.

I said no, I had never looked at the names, but I took the ledger confidently, studying the squiggles which had made man after man into a vice president. Then I tried comparing them with the squiggles on my letter, and it was like trying to identify Egyptian hieroglyphs of the Middle Kingdom. I couldn’t read one of them. The nice Hollander said he couldn’t either. But since banks in England had given me money, he felt he could safely do so.

I signed the draft, and he passed me a satisfying number of guilder notes.

I have never been turned down when I asked for money on my letter of credit, but those signatures bother the banks. If they will only accept the form, as they do in most places, that is fine. If they insist on playing the match game, then you must be patient. They will recognize defeat in the end and give you the money. But it would be so much more comforting if they could find some name like “William Henry Harrison" in bold and legible script on your letter of identification, and read the same name in the book.

My most pleasant experiences have come in England. There are all those lovely branch banks through the shires, and you would think that if your letter of credit could be drawn on at, say, Lloyds in one town, it would be good at the same bank in another. Not at all. That’s why you have to carry the “List of Correspondents.”

One morning, after a night in Brighton which had cost me dear, I realized, in tipping the hall porter for all the grand services of a grand hotel, that I was short of money. Instead of tangling with Brighton traffic, I drove to a more quiet watering place and entered the appropriate correspondent bank. It was midmorning, and as it chanced, no other customers were present. The manager and his assistant were the sole staff, and when I approached the counter the assistant greeted me.

“I would like to draw a hundred dollars in pounds on my letter of credit,” I announced, handing it over with the other letter.

The assistant’s eyes lighted, and he hurried to the manager, who took the forms eagerly. “Yes, yes. Well, let’s see if we do it,” I heard him say, and he took down one of those ledgers with which I was so familiar. He pushed over pages excitedly, stopped, and made his comparison of the forms. “Yes, yes. We do,” he told the assistant, who sped back to the counter, brought down a long pad, and began to work endless sums. After a time I asked what he was doing. “Determining the exchange, sir,” he said. “But don’t you know what it is?” I inquired. “Oh, yes, sir,” he replied. “That is, we know what it is for twenty dollars. “Then why don’t you just multiply by five?” I suggested. He looked up aghast. “There might be some pence difference,” he said.

The bank was filled with the whir of happy industry, as the assistant’s pencil raced up and down the columns and the manager, out of sight, was presumably working some other part of the transaction. It seemed to require the constant bustle of opening and closing drawers.

“If it’s a great deal of trouble,” I offered, “I have some traveler’s checks. You could just cash those.”

The manager heard this defeatist suggestion and came out of hiding. “Oh, no, sir,”he said proudly, as he handed me a draft to sign. “We like this. Keeps us on our toes. This is higher banking!”

I got my money — “four pence ha’penny more than if the exchange for twenty dollars had been multiplied by five,” the assistant beamed. It was miles later when I realized my friends had not questioned the signatures. Nor had they completed their higher banking: they had forgotten to affix the required stamp on the draft and have me inscribe my own illegible signature across it.