than he might otherwise have done. His annual 
profits must be less by all that he could 
have made by the sale of five hundred pounds 
worth more goods; and the number of people 
employed in preparing his goods for the market 
must be less by all those that five hundred 
pounds more stock could have employed
The merchant in Edinburgh, on the other 
hand, keeps no money unemployed for answering 
such occasional demands. When 
they actually come upon him, he satisfies them 
from his cash account with the bank, and gradually 
replaces the sum borrowed with the 
money or paper which comes in from the occasional 
sales of his goods. With the same 
stock, therefore, he can, without imprudence
have at all times in his warehouse a larger 
quantity of goods than the London merchant
and can thereby both make a greater profit 
himself, and give constant employment to a 
greater number of industrious people who prepare 
those goods for the market. Hence the 
great benefit which the country has derived 
from this trade
The facility of discounting bills of exchange
it may be thought, indeed, gives the English 
merchants a conveniency equivalent to the cash 
accounts of the Scotch merchants. But the 
Scotch merchants, it must be remembered, 
can discount their bills of exchange as easily 
as the English merchants; and have, besides, 
the additional conveniency of their cash accounts. 
The whole paper money of every kind which 
can easily circulate in any country, never can 
exceed the value of the gold and silver, of 
which it supplies the place, or which (the commerce 
being supposed the same) would circulate 
there, if there was no paper money. If 
twenty shilling notes, for example, are the 
lowest paper money current in Scotland, the 
whole of that currency which can easily circulate 
there, cannot exceed the sum of gold and 
silver which would be necessary for transacting 
the annual exchanges of twenty shillings 
value and upwards usually transacted within 
that country. Should the circulating paper 
at any time exceed that sum, as the excess 
could neither be sent abroad nor be employed 
in the circulation of the country, it must immediately 
return upon the banks, to be exchanged 
for gold and silver. Many people 
would immediately perceive that they had 
more of this paper than was necessary for 
transacting their business at home; and as 
they could not send it abroad, they would immediately 
demand payment for it from the 
banks. When this superfluous paper was 
converted into gold and silver, they could easily 
find a use for it, by sending it abroad
but they could find none while it remained in 
the shape of paper. There would immediately
therefore, be a run upon the banks to the 
whole extent of this superfluous paper, and if 
they showed any difficulty or backwardness in 
payment, to a much greater extent; the alarm 
which this would occasion necessarily increasing 
the run
Over and above the expenses which are common 
to every branch of trade, such as the expense 
of house-rent, the wages of servants, 
clerks, accountants, &c. the expenses peculiar 
to a bank consist chiefly in two articles: first, 
in the expense of keeping at all times in its 
coffers, for answering the occasional demands 
of the holders of its notes, a large sum of money
of which it loses the interest; and, secondly, 
in the expense of replenishing those 
coffers as fast as they are emptied by answering 
such occasional demands
A banking company which issues more paper 
than can be employed in the circulation 
of the country, and of which the excess is continually 
returning upon them for payment
ought to increase the quantity of gold and silver 
which they keep at all times in their coffers
not only in proportion to this excessive 
increase of their circulation, but in a much 
greater proportion; their notes returning upon 
them much faster than in proportion to the 
excess of their quantity. Such a company
therefore, ought to increase the first article of 
their expense, not only in proportion to this 
forced increase of their business, but in a much 
greater proportion. 
The coffers of such a company, too, though 
they ought to be filled much fuller, yet must 
empty themselves much faster than if their 
business was confined within more reasonable 
bounds, and must require not only a more violent
but a more constant and uninterrupted 
exertion of expense, in order to replenish them. 
The coin, too, which is thus continually drawn 
in such large quantities from their coffers
cannot be employed in the circulation of the 
country. It comes in place of a paper which 
is over and above what can be employed in 
that circulation, and is, therefore, over and above 
what can be employed in it too. But as 
that coin will not be allowed to lie idle, it 
must, in one shape or another, be sent abroad
in order to find that profitable employment 
which it cannot find at home; and this continual 
exportation of gold and silver, by enhancing 
the difficulty, must necessarily enhance 
still farther the expense of the bank, in 
finding new gold and silver in order to replenish 
those coffers, which empty themselves 
so very rapidly. Such a company, therefore, 
must in proportion to this forced increase of 
their business, increase the second article of 
their expense still more than the first. 
Let us suppose that all the paper of a particular 
bank, which the circulation of the country 
can easily absorb and employ, amounts exactly 
to forty thousand pounds, and that, for 
answering occasional demands, this bank is 
obliged to keep at all times in its coffers ten 
thousand pounds in gold and silver. Should 
this bank attempt to circulate forty-four thousand