this power of purchasing or consuming, and 
not in the pieces which convey it. 
But if this is sufficiently evident, even with 
regard to an individual, it is still more so with 
regard to a society. The amount of the metal 
pieces which are annually paid to an individual
is often precisely equal to his revenue
and is upon that account the shortest and best 
expression of its value. But the amount of 
the metal pieces which circulate in a society
can never be equal to the revenue of all its 
members. As the same guinea which pays 
the weekly pension of one man to-day, may 
pay that of another to-morrow, and that of a 
third the day thereafter, the amount of the 
metal pieces which annually circulate in any 
country, must always be of much less value 
than the whole money pensions annually paid 
with them. But the power of purchasing, or 
the goods which can successively be bought 
with the whole of those money pensions, as 
they are successively paid, must always be precisely 
of the same value with those pensions
as must likewise be the revenue of the different 
persons to whom they are paid. That revenue
therefore, cannot consist in those metal 
pieces, of which the amount is so much inferior 
to its value, but in the power of purchasing
in the goods which can successively be 
bought with them as they circulate from hand 
to hand
Money, therefore, the great wheel of circulation
the great instrument of commerce
like all other instruments of trade, though it 
makes a part, and a very valuable part, of the 
capital, makes no part of the revenue of the 
society to which it belongs; and though the 
metal pieces of which it is composed, in the 
course of their annual circulation, distribute 
to every man the revenue which properly belongs 
to him, they make themselves no part of 
that revenue
Thirdly, and lastly, the machines and instruments 
of trade, &c. which compose the 
fixed capital, bear this further resemblance to 
that part of the circulating capital which consists 
in money; that as every saving in the 
expense of erecting and supporting those machines
which does not diminish the introductive 
powers of labour, is an improvement of 
the neat revenue of the society; so every saving 
in the expense of collecting and supporting 
that part of the circulating capital which 
consists in money is an improvement of exactly 
the same kind
It is sufficiently obvious, and it has partly
too, been explained already, in what manner 
every saving in the expense of supporting the 
fixed capital is an improvement of the neat 
revenue of the society. The whole capital of 
the undertaker of every work is necessarily 
divided between his fixed and his circulating 
capital. While his whole capital remains the 
same, the smaller the one part, the greater 
must necessarily be the other. It is the circulating 
capital which furnishes the materials 
and wages of labour, and puts industry into 
motion. Every saving, therefore, in the expense 
of maintaining the fixed capital, which 
does not diminish the productive powers of 
labour, must increase the fund which puts industry 
into motion, and consequently the annual 
produce of land and labour, the real revenue 
of every society
The substitution of paper in the room of 
gold and silver money, replaces a very expensive 
instrument of commerce with one much 
less costly, and sometimes equally convenient. 
Circulation comes to be carried on by a new 
wheel, which it costs less both to erect and to 
maintain than the old one. But in what manner 
this operation is performed, and in what 
manner it tends to increase either the gross or 
the neat revenue of the society, is not altogether 
so obvious, and may therefore require 
some further explication
There are several different sorts of paper 
money; but the circulating notes of banks 
and bankers are the species which is best 
known, and which seems best adapted for this 
When the people of any particular country 
have such confidence in the fortune, probity 
and prudence of a particular banker, as to believe 
that he is always ready to pay upon demand 
such of his promissory notes as are likely 
to be at any time presented to him, those notes 
come to have the same currency as gold and 
silver money, from the confidence that such 
money can at any time be had for them. 
A particular banker lends among his customers 
his own promissory notes, to the extent
we shall suppose, of a hundred thousand 
pounds. As those notes serve all the purposes 
of money, his debtors pay him the same interest 
as if he had lent them so much money
This interest is the source of his gain. Though 
some of those notes are continually coming 
back upon him for payment, part of them 
continue to circulate for months and years together. 
Though he has generally in circulation
therefore, notes to the extent of a hundred 
thousand pounds, twenty thousand pounds 
in gold and silver may, frequently, be a sufficient 
provision for answering occasional demands
By this operation, therefore, twenty 
thousand pounds in gold and silver perform 
all the functions which a hundred thousand 
could otherwise have performed. The same 
exchanges may be made, the same quantity of 
consumable goods may be circulated and distributed 
to their proper consumers, by means 
of his promissory notes, to the value of a hundred 
thousand pounds, as by an equal value 
of gold and silver money. Eighty thousand 
pounds of gold and silver, therefore, can in 
this manner be spared from the circulation of 
the country; and if different operations of the 
same kind should, at the same time, be 
carried on by many different banks and bankers