Partly as a result of the different relationships existing between the business and the bank as thus set forth, there is to be noted a peculiarity in the method of financing industry which has taken root in the United States. In this country it has become more and more the practice for the manufacturer, or, in some lines, the wholesaler or jobber, to finance the retailer, while the retailer finances the customer. This situation is seen in most extreme form in the sale of goods upon the installment plan. The manufacturer of farm machinery or pianos, let us say, sells his product to a jobber or distributor, who gives a note or acceptance for the amount due at a maturity which varies from trade to trade. The distributor then, either through a retailer or perhaps in direct sale to the customer, disposes of the goods which he has thus taken on. He allows the consumer to pay for them at so much a month over a period of, say, twelve months. It is clear that in this case the merchant who sells the machinery or pianos to the purchaser has to provide the capital for carrying them during the period of payment. This he can do if the manufacturer's claims upon him run for an equal length of time. In that event the real burden of financing the whole series of transactions may be transferred to the manufacturer's banker through the applications of the manufacturer to him for funds with which to carry his operations during the months between the selling date and the date of payment.

In foreign countries, although the American method of financing at the source has made progress of recent years, the older plan was that of doing the financing at the point of distribution. The manufacturer sold to the distributor on a short-term credit basis, and the distributor, if he needed funds, got them from the local bank. The credit he extended to the consumer was shorter, or in some cases the consumer might be requested to give paper for anything more than a very small current open account representing daily supplies.

This difference in financing was not so significant in foreign countries as it is in the United States, because the lending of funds to the retailer or distributor was then often done by a branch of the parent bank whose head office perhaps was situated at the point of manufacture. Still, the difference was of very considerable importance from the technical standpoint.