In the theory of credit which is popularly accepted by the greater number of men in business, the idea of credit is undoubtedly associated with that of time. The borrower thinks of credit as a means of postponing the date of making an actual payment. Thus he speaks of credit extended for thirty or sixty days by a bank, or he says to his customer that the goods may be taken on a credit of ninety days. This concept of credit as simply a means of postponing the date of settlement is closely associated with the view of credit as a loan of money. The money is conceived of as being " borrowed" for a definite period during which it is used in some productive occupation resulting in a profit. These ideas also appear in a more or less modified form in much of the theoretical writing found in economic works on capital and interest. Indeed, the postponement of consumption has been by some given as the real reason for the payment of interest. An owner of capital or goods is conceived of as desiring to consume immediately the articles of which he stands possessed, as being induced to postpone his consumption of them by the payment of interest. The act of transferring the goods or wealth, or in some cases the "money," to the "borrower" is viewed as a grant of credit. Time, in short, is almost universally treated as a cardinal factor in the granting of credit.

It may be questioned whether this view affords a sound analysis of credit, as seen in connection with banking operations. Without attempting to discuss academically the theory of interest, one or two considerations bearing upon credit are worthy of special note. We have already defined the bank as a credit institution, or institution of credit, and we have seen that if A has a deposit on the books of the bank against which he draws, a check so used is spoken of constantly as a credit instrument, and the transfer made is a transfer of bank credit. From another part of our analysis, it will be plain that the service performed by the bank in granting credit is that of examining or testing the borrower's assets and business record as shown by his statement of condition. Accepting these views of the character of credit for the moment, a doubt is raised whether the service of the bank is actually a service which necessarily involves the element of time. It may easily be that a customer of a bank obtains an advance from it which he at once transfers to another depositor. The outcome of the transaction then is to shift the credit on the bank's books from A to B, and so long as B carries it without using it it may be conceived of as a time advance. Even though A has parted with the credit immediately upon getting it, the bank still continues to be obligated to meet it. On the other hand, B, when he received the transfer from A, may have used it to settle a previously existing debt to the bank, so that the credit is almost immediately canceled.