As has thus been seen, when a definite line of credit has been assigned to the business man the first step has been taken toward the establishment of a fixed relationship between him and his banker. The banker, however, has a second and very important part to play in the process of financing his customer. This consists in overseeing the use of the credit and so far as possible aiding the customer in the wise employment of it. The banker is not called upon ordinarily to interfere with the doings of the business man or to exhibit an undue inquisitiveness about his transactions. It is, however, essential from his own standpoint that the credit which he extends shall be as nearly liquid as possible, and in order to attain this end he is called upon to watch carefully the transactions of his customer and to see that so far as practicable the right type of paper is made as representing given classes of advances. For example, suppose that the banker has come to the conclusion that customer A is entitled to a total line of credit of, say, $100,000. He might simply permit the customer to draw on him for this amount as the latter saw fit, giving his notes as he used the cash. It is preferable, however, that he should advise with the customer and reach an agreement as to the form which the advances shall take. Thus, it may be that the customer has drafts coming due for his spring stock of merchandise and that these amount to $50,000. By paying them immediately he can obtain a discount of, perhaps, 3 per cent. It is therefore desirable that he arrange with his banker to meet these drafts as they come in. Perhaps this will be done through a direct loan to the customer, evidenced by his note, or, as in foreign trade, it may be accomplished by an agreement on the part of the bank to let the drafts be drawn on it, subject to immediate payment or to acceptance. However the transactions may be arranged, the fact is the bank has definitely set aside $50,000 out of the entire line for the purpose of liquidating payments to be made for the purpose of putting goods on the shelves. Again, the customer may show in his statement to the banker that he has outstanding at all times about $50,000 of good accounts, running perhaps sixty days. The question will then necessarily come up whether the banker ought to let him have direct loans on the strength of those accounts up to, say, 50 or 60 per cent of their amount. If so, this may mean that another $25,000 is tentatively set aside subject to the call of the customer for the purpose of enabling him to anticipate the amounts which his customers are expected to pay him within the next few months. It may be that the business man has been in the habit of selling his goods on what is called trade acceptance; in other words, that his customers have signed acceptances at sixty days' sight when they received the goods, or it may be that he has simply sold them the goods on open account. If he has trade acceptances in his safe, it may be thought best to say to him that he may discount such acceptances up to a given percentage or to the whole of their face value, but in any case the action of the banker is equivalent to telling him that he may expect as a part of his line of credit, say, $25,000 as against goods sold. It may be expected that this portion of his line will be increased as his sales increase, provided that the character of his own customers is as good as ever. The important point is that an allotment of credit against sales of goods has been made to him. Evidently the banker will expect to decrease the credit which he has granted against merchandise on the shelves as the stock falls off, while on the other hand he will increase the amount of credit granted against book accounts or trade acceptances as the outstanding claims increase. A great deal has been said, in some discussions of this subject, of the relative advantages of trade acceptances and of straight notes as a basis of bank lending. This type of discussion has but little basis. There is no particular kind of paper which entitles a customer to more or less credit at the bank, and it is chiefly a matter of imagination to suppose that the conversion of open accounts into trade acceptances will permit the banker with safety to lend more largely. In considering two-name paper, the decision of the banker whether to discount or not is invariably based upon what he knows of the stronger of the two names. If the banker is financing a business man whose sales are largely to other business men whose names are stronger than his own, there may be some advantage in obtaining from the latter their accepted paper - provided he can induce them to give it, which is usually not the case. But if the business man's customers are no stronger than himself, his banker's action in discounting is determined by what is known of his own financial solvency.