Commercial letter of credit. A commercial letter of credit is an instrument issued by a banker
which authorizes the holder to draw upon the issuing banker at sight or otherwise to an amount
not exceeding the amount named in the letter. It is stipulated in the body of the instrument that the
amount of all drafts negotiated under it shall be indorsed on it so that it shall always show how
much of the credit remains. The names of bankers in various parts of the world (correspondents of
the issuing banker) who will cash drafts so drawn are printed on the letter. A considerable part of
the foreign purchases made by merchants is effected through letters of credit.