f commercial paper, regardless of
whether the interest is collected in advance or not.

_3. The Conduct of Checking Accounts_

A checking account is an ordinary book account on which are credited
the cash deposited by a customer and the proceeds of collections,
loans, and discounts made on his behalf, and on which are debited
payments made to him in cash or on his behalf to other people or to
the bank itself. These payments are made on orders signed by the
customer and known as checks.

The ordinary customer of a commercial bank every day brings to the
bank the cash he receives as the result of the day's business, and the
checks received, drawn on his own and other banks, and is credited
with the amount on the books of the bank as well as on a passbook
which he himself retains. If he needs cash during the day, he presents
to the bank a check payable to himself for the amount needed, and
receives the kinds and denominations wanted; and if he wants to make
payments to his creditors in other forms than cash, he sends them
checks on his bank payable to their order, or a check drawn by his
bank on some bank in another place, usually called a draft, which he
has obtained by exchanging for it a check drawn to the order of his
bank. To the amount of these payments his account at the bank is
debited, and from time to time his passbook is left at the bank for
the entry therein of the debits made to date and its subsequent return
to him.

The customer must take care that his account is not overdrawn, that
is, that the debits on his account do not exceed the credits, since
overdrafts, except by accident or for very short periods and small
amounts, are not allowed in this country, and in other countries,
where they are allowed, they must be provided for in advance by a
special agreement between the bank and the customer, which usually
involves the deposit with the bank of ample security. In order to
avoid overdrafts, the customer in this country agrees with his banker
on what is known as a "line," that is, a maximum amount of loans or
discounts to be allowed. Whenever his credit balance falls to a
certain minimum, also established by agreement with the bank, the
latter discounts for him the paper of his customers, that is, bills of
exchange drawn on them or their promissory notes in his favor, or his
own promissory notes. The proceeds of these discounts are credited on
his account like deposits of cash or of checks for collec