. Acceptances, trade and bankers'. st remit the proceeds to Brown & Co. Ifthis payment is made promptly, Smith & Co. will secure anycash discount allowed by the latter. 152 ACCEPTANCES At the time of making the acceptance or as soon as Smith?wants the goods, the bank will return the bill of lading to Smith& Co., either on an open credit or against a trust receipt, accord-ing to the credit of Smith & Co, and the terms of acceptanceagreement. There are various forms of trust receipts tc suitvarious conditions. (A sample form applicable to one set ofconditions is hereto annexed.) The cost of this
. Acceptances, trade and bankers'. st remit the proceeds to Brown & Co. Ifthis payment is made promptly, Smith & Co. will secure anycash discount allowed by the latter. 152 ACCEPTANCES At the time of making the acceptance or as soon as Smith?wants the goods, the bank will return the bill of lading to Smith& Co., either on an open credit or against a trust receipt, accord-ing to the credit of Smith & Co, and the terms of acceptanceagreement. There are various forms of trust receipts tc suitvarious conditions. (A sample form applicable to one set ofconditions is hereto annexed.) The cost of this money to Smith & Co. will be the discount plusthe acceptance charge of the accepting bank, say % of 1 percent flat, amounting on ninety-days paper to a rate of 1 percent per annum. The rate of discount of the banks acceptanceto-day should be between 3 per cent and 3% per cent, dependingon the standing of the accepting bank, sO that the total cost ofthe money to Smith & Co. would be between 4 per cent and. 4^ per cent as against from 4% to 6 per cent which theirmoney cost them under the old system of single name paper. That is, the merchant who pays only 4% per cent on his notesto-day can get the money through acceptances at a net qostof about 4 per cent, and the merchant who pays 5 per cent or 6per cent on his notes can get the money through acceptances at4% to 4% per cent. The large saving here is apparent. A second possible method of doing this business is the methodwhich has been used for very many years in financing businesswith foreign countries, and is considered preferable by the Fed-eral Reserve Board for domestic business also. Under thismethod, the draft would be drawn by Brown & Co. instead ofby Smith & Co. Smith & Co. would apply to the River NationalBank for an acceptance credit of $50,000 in favor of Brown &Co., the credit to be against 90-days sight draft with two copiesof bill of lading attached, insurance certificate attached, and anyother documents tha
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