equal, to what the circulation of the country 
could easily absorb and employ. Those companies
therefore, had so long ago given all 
the assistance to the traders and other undertakers 
of Scotland which it is possible for 
banks and bankers, consistently with their own 
interest, to give. They had even done somewhat 
more. They had over-traded a little, 
and had brought upon themselves that loss
or at least that diminution of profit, which, in 
this particular business, never fails to attend the 
smallest degree of over-trading. Those traders 
and other undertakers, having got so much 
assistance from banks and bankers, wished to 
get still more. The banks, they seem to have 
thought, could extend their credits to whatever 
sum might be wanted, without incurring 
any other expense besides that of a few reams 
of paper. They complained of the contracted 
views and dastardly spirit of the directors of 
those banks, which did not, they said, extend 
their credits in proportion to the extension of 
the trade of the country; meaning, no doubt
by the extension of that trade, the extension 
of their own projects beyond what they could 
carry on either with their own capital, or with 
what they had credit to borrow of private 
people in the usual way of bond or mortgage
The banks, they seem to have thought
were in honour bound to supply the deficiency, 
and to provide them with all the capital 
which they wanted to trade with. The 
banks, however, were of a different opinion 
and upon their refusing to extend their credits
some of those traders had recourse to an 
expedient which, for a time, served their 
purpose, though at a much greater expense, 
yet as effectually as the utmost extension of 
bank credits could have done. This expedient 
was no other than the well known shift of 
drawing and redrawing; the shift to which 
unfortunate traders have sometimes recourse
when they are upon the brink of bankruptcy
The practice of raising money in this manner 
had been long known in England; and, during 
the course of the late war, when the high 
profits of trade afforded a great temptation to 
over-trading, is said to have been carried on 
to a very great extent. From England it was 
brought into Scotland, where, in proportion 
to the very limited commerce, and to the very 
moderate capital of the country, it was soon 
carried on to a much greater extent than it 
ever had been in England. 
The practice of drawing and redrawing is 
so well known to all men of business, that it 
may, perhaps, be thought unnecessary to give 
any account of it. But as this book may come 
into the hands of many people who are not 
men of business, and as the effects of this 
practice upon the banking trade are not, perhaps, 
generally understood, even by men of 
business themselves, I shall endeavour to explain 
it as distinctly as I can. 
The customs of merchants, which were established 
when the barbarous laws of Europe 
did not enforce the performance of their contracts, 
and which, during the course of the 
two last centuries, have been adopted into the 
laws of all European nations, have given such 
extraordinary privileges to bills of exchange
that money is more readily advanced upon 
them than upon any other species of obligation
especially when they are made payable 
within so short a period as two or three months 
after their date. If, when the bill becomes 
due, the acceptor does not pay it as soon as it 
is presented, he becomes from that moment
bankrupt. The bill is protested, and returns 
upon the drawer, who, if he does not immediately 
pay it, becomes likewise a bankrupt. 
If, before it came to the person who presents 
it to the acceptor for payment, it had passed 
through the hands of several other persons
who had successively advanced to one another 
the contents of it, either in money or goods, 
and who, to express that each of them had in 
his turn received those contents, had all of 
them in their order indorsed, that is, written 
their names upon the back of the bill; each 
indorser becomes in his turn liable to the 
owner of the bill for those contents, and, if 
he fails to pay, he becomes too, from that moment
a bankrupt. Though the drawer, acceptor
and indorsers of the bill, should all of 
them be persons of doubtful credit; yet, still 
the shortness of the date gives some security 
to the owner of the bill. Though all of them 
may be very likely to become bankrupts, it is 
a chance if they all become so in so short
time. The house is crazy, says a weary traveller 
to himself, and will not stand very 
long; but it is a chance if it falls to-night, 
and I will venture, therefore, to sleep in it 
The trader A in Edinburgh, we shall suppose, 
draws a bill upon B in London, payable 
two months after date. In reality B in London 
owes nothing to A in Edinburgh; but he 
agrees to accept of A's bill, upon condition, that 
before the term of payment he shall redraw upon 
A in Edinburgh for the same sum, together 
with the interest and a commission, another 
bill, payable likewise two months after 
date. B accordingly, before the expiration 
of the first two months, redraws this bill upon 
A in Edinburgh; who, again before the expiration 
of the second two months, draws a second 
bill upon B in London, payable likewise 
two months after date; and before the expiration 
of the third two months, B in London redraws 
upon A in Edinburgh another bill payable 
also two months after date. This practice 
has sometimes gone on, not only for several 
months, but for several years together, the 
bill always returning upon A in Edinburgh 
with the accumulated interest and commission 
of all the former bills. The interest was five 
per cent. in the year, and the commission was 
never less than one half per cent. on each