which they have made. The aggregate of these items of property comes hereby to be potentially owned by the creditors in approximately the proportion which the loans bear to the collateral plus the loans. The outcome of credit extension, in this respect, is a situation in which the creditors have become potential owners of such a fraction of the industrial equipment as would he represented by the formula : ' ,
capitalization ( = collateral + loans)
In a period of liquidation this potential ownership on the part of the creditors takes effect to
1 So long as the rating of the capitalized property remaina undiaturbed, the (ormula which expresses the creditors' claim maintaios the form ^ven above. It tben signifies nothing more than that the credIton hold a claim on such a proporlion of the aggregate capitalized propenj' involved as tbeir advances bear to the aggregai* capitalteation. But so soon as a rerating of the capitalized propeny enters lbs problem the formula becomes
capitalization + A capitalizatloa
capitalization — A capitalization according aa the rerating of capitalization ia In tbe direcUon of
enhancement or depreciation : — — or During
cap + A cap cap — A cap brisk times, when capitalization advances, the claim represented by a given loan covers a decreasing proportion of the