A portion of the loans of many banks consists of investments in solid bonds, but the bulk of the loans of banks are made on commercial paper;time and demand loans are made upon collaterals of many descriptions. The larger banks loan, on an average,from fifty to one hundred thousand dollars a day. A very large proportion of the commercial paper discounted is first handled by note brokers.

Banks discount paper for their depositors - and simply term the operation discounting; but when they go outside of their line of depositors, in making investments in time paper, they call it buying paper. They generally buy from private bankers and note brokers.

National banks are prohibited from loaning over ten per cent,of their capital to any one individual or corporation, except upon paper representing actually existing merchandise.

Accurate Interest. The Treasury Department at Washington pays accurate interest, founded on a basis of 365 days to the year. The great majority of banks pay and charge interest on a basis of 360 days to the year.

Money "On Call." National banks located in clearing-house centers, find it a very convenient thing to put out quite a percentage of their loans on call. In some cities banks have a habit of borrowing on call from each other at clearing-house settlements. Call loans are payable on demand and are secured by demand notes.

Collaterals. If a business man borrow $1,000 from a bank on his note and give ten shares of stock to the bank to be held by it simply as security, the stock thus given would be termed collateral. These collaterals are not the bank's property, and the bank is responsible for their safe-keeping. If coupons mature while bonds are being held as collateral, the owners are usually allowed to collect the amount for which they sell. Sometimes one note is given as collateral security for another which is discounted.

The Name "Bank." In some of the states the title Bank can be lawfully used by anyone;in other states,for instance, New York and Massachusetts, the title Bunk can be used only by duly incorporated banks which are organized and conducted under the provisions and restrictions of the state banking laws.