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The "line of credit." Banks give a depositor, as a rule, a line of credit amounting to five times his average balance on deposit. The theory, as usually understood, is that by his depositing, say, $1,000, the bank is enabled to make loans to the extent of $5,000, the depositor, other things being equal, being given the preference. The actual situation, however, is that the bank, in typical cases, upon receiving the borrower's credit and money and converting it into its own credit, lends the depositor an amount of its own credit equal to the total it has received $5,000, in our present illustration but requires that the depositor use not more than four-fifths of it, leaving one-fifth which the bank may use as a reserve against cash demands upon which the bank, however, receives interest. The borrower from a commercial bank pays a rate of interest 20 per cent higher than that of the same nominal rate paid to the industrial bank or trust company, since the latter holds much of its funds as time deposits, against which a one per cent reserve is sufficient to take care of cash demands. The extra rate of interest paid to the commercial bank is, however, com BANKING 623 Pensated for by the value of the convenient checking system, but the account will not be larger than the borrower requires as a reserve against his check payments; he will secure his larger funds, if need be, from an investment bank or trust company, or through a note broker, in which circumstances he can use the whole amount of the funds derived from the sale of his credit. What is a bankable proposition? The question is frequently asked, just what is a bankable proposition? The following rules may be laid down. It is not presumed to dictate that a bank should not grant a loan unless all these elements are present, but they should be present if the relations between the bank and its customer are to be enduring and mutually profitable....