There were a good many people, too, 
upon this occasion, who, from a diffidence of 
repayment, did not bring their silver into 
the Bank of Scotland; and there was, besides, 
some English coin, which was not called in. 
The whole value of the gold and silver, therefore, 
which circulated in Scotland before the 
Union, cannot be estimated at less than a million 
sterling. It seems to have constituted 
almost the whole circulation of that country
for though the circulation of the Bank of 
Scotland, which had then no rival, was considerable, 
it seems to have made but a very 
small part of the whole. In the present times, 
the whole circulation of Scotland cannot be 
estimated at less than two millions, of which 
that part which consists in gold and silver
most probably, does not amount to half a million
But though the circulating gold and 
silver of Scotland have suffered so great a diminution 
during this period, its real riches and 
prosperity do not appear to have suffered any. 
Its agriculture, manufactures, and trade, on 
the contrary, the annual produce of its land 
and labour, have evidently been augmented
It is chiefly by discounting bills of exchange
that is, by advancing money upon them 
before they are due, that the greater part of 
banks and bankers issue their promissory notes
They deduct always, upon whatever sum they 
advance, the legal interest till the bill shall 
become due. The payment of the bill, when it 
becomes due, replaces to the bank the value 
of what had been advanced, together with a 
clear profit of the interest. The banker, who 
advances to the merchant whose bill he discounts
not gold and silver, but his own promissory 
notes, has the advantage of being able 
to discount to a greater amount by the whole 
value of his promissory notes, which he finds
by experience, are commonly in circulation
He is thereby enabled to make his clear gain 
of interest on so much a larger sum
The commerce of Scotland, which at present 
is not very great, was still more inconsiderable 
when the two first banking companies 
were established; and those companies would 
have had but little trade, had they confined 
their business to the discounting of bills of exchange
They invented, therefore, another 
method of issuing their promissory notes; by 
granting what they called cash accounts, that is, 
by giving credit, to the extent of a certain sum 
(two or three thousand pounds for example), 
to any individual who could procure two persons 
of undoubted credit and good landed estate 
to become surety for him, that whatever 
money should be advanced to him, within the 
sum for which the credit had been given, 
should be repaid upon demand, together with 
the legal interest. Credits of this kind are, I 
believe, commonly granted by banks and 
bankers in all different parts of the world. 
But the easy terms upon which the Scotch 
banking companies accept of repayment are, 
so far as I know, peculiar to them, and have, 
perhaps, been the principal cause, both of the 
great trade of those companies, and of the benefit 
which the country has received from it. 
Whoever has a credit of this kind with one 
of those companies, and borrows a thousand 
pounds upon it, for example, may repay this 
sum piece-meal, by twenty and thirty pounds 
at a time, the company discounting a proportionable 
part of the interest of the great sum
from the day on which each of those small 
sums is paid in, till the whole be in this manner 
repaid. All merchants, therefore, and almost 
all men of business, find it convenient to 
keep such cash accounts with them, and are 
thereby interested to promote the trade of 
those companies, by readily receiving their 
notes in all payments, and by encouraging all 
those with whom they have any influence to do 
the same. The banks, when their customers 
apply to them for money, generally advance it 
to them in their own promissory notes. These 
the merchants pay away to the manufacturers 
for goods, the manufacturers to the farmers 
for materials and provisions, the farmers to 
their landlords for rent; the landlords repay 
them to the merchants for the conveniencies 
and luxuries with which they supply them, 
and the merchants again return them to the 
banks in order to balance their cash accounts
or to replace what they may have borrowed of 
them; and thus almost the whole money business 
of the country is transacted by means of 
them. Hence the great trade of those companies
By means of those cash accounts, every merchant 
can, without imprudence, carry on a 
greater trade than he otherwise could do. If 
there are two merchants, one in London and 
the other in Edinburgh, who employ equal 
stocks in the same branch of trade, the Edinburgh 
merchant can, without imprudence
carry on a greater trade, and give employment 
to a greater number of people, than the London 
merchant. The London merchant must 
always keep by him a considerable sum of 
money, either in his own coffers, or in those 
of his banker, who gives him no interest for 
it, in order to answer the demands continually 
coming upon him for payment of the goods 
which he purchases upon credit. Let the ordinary 
amount of this sum be supposed five 
hundred pounds; the value of the goods in his 
warehouse must always be less, by five hundred 
pounds, than it would have been, had he 
not been obliged to keep such a sum unemployed
Let us suppose that he generally disposes 
of his whole stock upon hand, or of 
goods to the value of his whole stock upon 
hand, once in the year. By being obliged to 
keep so great a sum unemployed, he must sell 
in a year five hundred pounds worth less goods