In the long history of international trade the main points of friction have been assurance of payment for the seller and assurance of delivery for the buyer. Where there is business to be done, traders have, over the centuries, usually found ways and means. From their practices have evolved the familiar modern lubricants for these friction points, letters of credit (which will be referred to hereafter as "credits"), insurance contracts, bills of lading, and the inspection services offered by various private and governmental agencies. The credit in the form we now know it developed during the nineteenth century and is a most efficient solution for the seller's problem. Its practical importance in international commerce can hardly be overstated. It is both the servant of such trade, and a stimulus to it. No better example of its use and value in the movement of goods across international boundaries is to be found than in the commerce between Japan and the United States. Japan imported American goods worth one billion seven hundred million dollars during 1962. In the same period the United States imported Japanese goods worth one billion dollars. It is estimated that ninety-five per cent of this tremendous flow of goods moved under credits. The volume of the import-export business varies from year to year. The percentage affected by credits remains fairly constant.
Kohei Izawa, Kazuaki Sono & Warren L. Shattuck,
Letters of Credit in Japanese-United States Trade,
38 Wash. L. Rev.
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