Lost Traveler's Checks (or cheques).

Factual Questions
1

This thread (Are any big sunken treasures still unfound? - Factual Questions - Straight Dope Message Board) aimed at sunken treasure made me remember something we used to speculate about years ago.

Take, for example, the American Express, or First National City, or Cook’s travelers’ checks that went down with the Titanic. Though perhaps a few survivors took with them the necessary documentation to get refunds, it could not have been many. There was then, presumably, little or no way for most travelers or successors to demonstrate the amount lost, and thus, presumably none of the three, or other travelers’ check issuers, made many payments to survivors or successors. Is that correct?

Now, these companies presumably keep a certain amount of cash to pay for the amount of daily cashed travelers’ checks, but they didn’t keep the entirety of the amount of checks they sold in cash, they invested most of it. That’s how they made money on the deal. “If you lend me a certain amount of money and allow me to do anything I want with it, I will, through the international recognition of my soundness, allow you to write checks in places where know one knows you,” was the deal. And further, “If you can prove to me you lost them, I’ll remunerate you.” But we know that in the case of a sinking ship or an aircraft disaster, it’s unlikely that most folks would be able to retrieve the necessary documentation for partial or complete refunds. Again, is that correct?

So the speculation is, of course:

**How much money have American Express, citigroup (the successor of National City Bank), and Cooks (or Cook’s successors) made off uncashed, and never to be found and cashed, travelers checks and interest on them?
**
I’m not a CPA, so I wouldn’t pretend to be able to go through an annual report to even get an estimate. Is there a way?

Or, again, am I wrong, and is this, too, is sunken treasure?

2

This is basically an unclaimed bank deposit, isn;t it? You lend money to Amex, and then (by negotiating the cheque) assign to someone else the right to reclaim the loan.

I don’t know, but I suspect that for Amex the big earnings come from (a) getting interest-free loans, and (b) being paid a fee by the lender for each loan accepted.

Sure, if the loans are unclaimed, that increases their profitability. But the liablility to repay the loan presumably remains on the bank’s books indefinitely, so the unclaims loans are just the very longest of a large portfolio of loans, most of whcih are pretty short term. Obviously borrowing interest-free for a very long time is more profitable than borrowing interest-free for a short time, but in all likelihood only a very small fraction of the loans are unclaimed. Indivdually they may be very profitablek, but the profit will be dwarfed by the profit from the huge volume of loans that are reclaimed.

3

UDS,

I don’t disagree in terms of the relative proportion, though I think it might be probably higher than many might think.

The interesting thing about the lost travelers’ check money is that (1) it could be “eternal.” That is to say, that as long as Amex, or citibank, etc, keep a corporate existence. And (2) it will never end, without any further service or good being provided. And let’s face it, it has to be hundreds of millions in capital. Titanic, Lusitania, Andria Doria, PanAm 103, burned houses, you name it. For a long while, more than a century, every disaster might have had a travelers’ check implication, from a house burning to a shipwreck to an airplane crash.

Moreover, as the sales of travelers’ checks ebbs, the amount they have to save in reserve for payment also declines, giving them more capital to invest.

So, is there a way to estimate how much that is?

4

Oh, and as I said in the OP, one got a list of the numbers of the checks, and you could check off the ones used, and if the checks were lost, after a certain amount of time, you could claim a refund. But if you didn’t have that list, you were SOL. So you had to give the list to someone who wasn’t traveling with you, and they had to have the interest of fighting with Amex over it. So the “some one else with the right to reclaim the loan” might not have always been successful.