very small part of the money which, being 
forced abroad by those operations of banking
is employed in purchasing foreign goods for 
home consumption, is likely to be employed in 
purchasing those for their use. The greater 
part of it will naturally be destined for the 
employment of industry, and not for the maintenance 
of idleness
When we compute the quantity of industry 
which the circulating capital of any society 
can employ, we must always have regard to 
those parts of it only which consist in provisions
materials, and finished work; the other, 
which consists in money, and which serves 
only to circulate those three, must always be 
deducted. In order to put industry into motion
three things are requisite; materials to 
work upon, tools to work with, and the wages 
or recompence for the sake of which the work 
is done. Money is neither a material to work 
upon, nor a tool to work with; and though 
the wages of the workman are commonly paid 
to him in money, his real revenue, like 
that of all other men, consists, not in the money
but in the money's worth; not in the 
metal pieces, but in what can be got for 
The quantity of industry which any capital 
can employ, must evidently be equal to the 
number of workmen whom it can supply with 
materials, tools, and a maintenance suitable to 
the nature of the work. Money may be requisite 
for purchasing the materials and tools 
of the work, as well as the maintenance of the 
workmen; but the quantity of industry which 
the whole capital can employ, is certainly not 
equal both to the money which purchases, and 
to the materials, tools, and maintenance, which 
are purchased with it, but only to one or other 
of those two values, and to the latter more 
properly than to the former. 
When paper is substituted in the room of 
gold and silver money, the quantity of the materials
tools, and maintenance, which the whole 
circulating capital can supply, may be increased 
by the whole value of gold and silver which 
used to be employed in purchasing them. The 
whole value of the great wheel of circulation 
and distribution is added to the goods which 
are circulated and distributed by means of it. 
The operation, in some measure, resembles 
that of the undertaker of some great work
who, in consequence of some improvement in 
mechanics, takes down his old machinery, and 
adds the difference between its price and that 
of the new to his circulating capital, to the 
fund from which he furnishes materials and 
wages to his workmen
What is the proportion which the circulating 
money of any country bears to the whole 
value of the annual produce circulated by 
means of it, it is perhaps impossible to determine. 
It has been computed by different authors 
at a fifth, at a tenth, at a twentieth, and 
at a thirtieth, part of that value. But how 
small soever the proportion which the circulating 
money may bear to the whole value of 
the annual produce, as but a part, and frequently 
but a small part, of that produce, is 
ever destined for the maintenance of industry
it must always bear a very considerable 
proportion to that part. When, therefore, by 
the substitution of paper, the gold and silver 
necessary for circulation is reduced to, perhaps, 
a fifth part of the former quantity, if 
the value of only the greater part of the 
other four-fifths be added to the funds which 
are destined for the maintenance of industry
it must make a very considerable addition 
to the quantity of that industry, and, 
consequently, to the value of the annual produce 
of land and labour
An operation of this kind has, within these 
five-and-twenty or thirty years, been performed 
in Scotland, by the erection of new banking 
companies in almost every considerable 
town, and even in some country villages
The effects of it have been precisely those 
above described. The business of the country 
is almost entirely carried on by means of the 
paper of those different banking companies, 
with which purchases and payments of all 
kinds are commonly made. Silver very seldom 
appears, except in the change of a twenty 
shilling bank note, and gold still seldomer
But though the conduct of all those different 
companies has not been unexceptionable, and 
has accordingly required an act of parliament 
to regulate it, the country, notwithstanding
has evidently derived great benefit from their 
trade. I have heard it asserted, that the trade 
of the city of Glasgow doubled in about fifteen 
years after the first erection of the banks 
there; and that the trade of Scotland has 
more than quadrupled since the first erection 
of the two public banks at Edinburgh; of 
which the one, called the Bank of Scotland
was established by act of parliament in 1695, 
and the other, called the Royal Bank, by royal 
charter in 1727. Whether the trade, either 
of Scotland in general, or of the city of Glasgow 
in particular, has really increased in so 
great a proportion, during so short a period, I 
do not pretend to know. If either of them has 
increased in this proportion, it seems to be an 
effect too great to be accounted for by the sole 
operation of this cause. That the trade and 
industry of Scotland, however, have increased 
very considerably during this period, and that 
the banks have contributed a good deal to this 
increase, cannot be doubted. 
The value of the silver money which circulated 
in Scotland before the Union in 1707, and 
which, immediately after it, was brought into 
the Bank of Scotland, in order to be recoined, 
amounted to £411,117 : 10 : 9 sterling. No 
account has been got of the gold coin; but it 
appears from the ancient accounts of the mint 
of Scotland, that the value of the gold annually 
coined somewhat exceeded that of the silver[27].