and to render it, upon that account, as difficult 
as possible to distinguish between a real 
and a fictitious bill of exchange, between a 
bill drawn by a real creditor upon a real debtor
and a bill for which there was properly no 
real creditor but the bank which discounted 
it, nor any real debtor but the projector who 
made use of the money. When a banker had 
even made this discovery, he might sometimes 
make it too late, and might find that he had 
already discounted the bills of those projectors 
to so great an extent, that, by refusing to 
discount any more, he would necessarily make 
them all bankrupts; and thus by ruining them, 
might perhaps ruin himself. For his own interest 
and safety, therefore, he might find it 
necessary, in this very perilous situation, to 
go on for some time, endeavouring, however, 
to withdraw gradually, and, upon that account
making every day greater and greater difficulties 
about discounting, in order to force 
these projectors by degrees to have recourse
either to other bankers, or to other methods 
of raising money: so as that he himself might, 
as soon as possible, get out of the circle. The 
difficulties, accordingly, which the Bank of 
England, which the principal bankers in London
and which even the more prudent Scotch 
banks began, after a certain time, and when 
all of them had already gone too far, to make 
about discounting, not only alarmed, but enraged, 
in the highest degree, those projectors
Their own distress, of which this prudent and 
necessary reserve of the banks was, no doubt
the immediate occasion, they called the distress 
of the country; and this distress of the country
they said, was altogether owing to the ignorance
pusillanimity, and bad conduct of 
the banks, which did not give a sufficiently-liberal 
aid to the spirited undertakings of those 
who exerted themselves in order to beautify
improve, and enrich the country. It was the 
duty of the banks, they seemed to think, to 
lend for as long a time, and to as great an extent
as they might wish to borrow. The 
banks, however, by refusing in this manner to 
give more credit to those to whom they had 
already given a great deal too much, took the 
only method by which it was now possible to 
save either their own credit, or the public credit 
of the country
In the midst of this clamour and distress, a 
new bank was established in Scotland, for the 
express purpose of relieving the distress of the 
country. The design was generous; but the 
execution was imprudent, and the nature and 
causes of the distress which it meant to relieve
were not, perhaps, well understood. This bank 
was more liberal then any other had ever been, 
both in granting cash-accounts, and in discounting 
bills of exchange. With regard to 
the latter, it seems to have made scarce any 
distinction between real and circulating bills
but to have discounted all equally. It was the 
avowed principle of this bank to advance upon 
any reasonable security, the whole capita, 
which was to be employed in those improvements 
of which the returns are the most slow 
and distant, such as the improvements of land
To promote such improvements was even said 
to be the chief or the public-spirited purposes 
for which it was instituted. By its liberality 
in granting cash-accounts, and in discounting 
bills of exchange, it, no doubt, issued great 
quantities of its bank notes. But those bank 
notes being, the greater part of them, over 
and above what the circulation of the country 
could easily absorb and employ, returned upon 
it, in order to be exchanged for gold and silver, 
as fast as they were issued. Its coffers were 
never well filled. The capital which had been 
subscribed to this bank, at two different subscriptions
amounted to one hundred and sixty 
thousand pounds, of which eighty per cent
only was paid up. This sum ought to have 
been paid in at several different instalments
A great part of the proprietors, when they paid 
in their first instalment, opened a cash-account 
with the bank; and the directors, thinking 
themselves obliged to treat their own proprietors 
with the same liberality with which they 
treated all other man, allowed many of them 
to borrow upon this cash-account what they 
paid in upon all their subsequent instalments
Such payments, therefore, only put into one 
coffer what had the moment before been taken 
out of another. But had the coffers of this 
bank been filled ever so well, its excessive circulation 
must have emptied them faster than 
they could have been replenished by any other 
expedient but the ruinous one of drawing upon 
London; and when the bill became due
paying it, together with interest and commission
by another draught upon the same place. 
Its coffers having been filled so very ill, it is 
said to have been driven to this resource within 
a very few months after it began to do business
The estates of the proprietors of this 
bank were worth several millions, and, by 
their subscription to the original bond or contract 
of the bank, were really pledged for answering 
all its engagements. By means of 
the great credit which so great a pledge necessarily 
gave it, it was, notwithstanding its 
too liberal conduct, enabled to entry on business 
for more than two years. When it was 
obliged to stop, it had in the circulation about 
two hundred thousand pounds in bank notes
In order to support the circulation of those 
notes, which were continually returning upon 
it as fast as they were issued, it had been constantly 
in the practice of drawing bills of exchange 
upon London, of which the number 
and value were continually increasing, and, 
when it stopt, amounted to upwards of six 
hundred thousand pounds. This bank, therefore, 
had, in little more than the course of two 
years, advanced to different people upwards of 
eight hundred thousand pounds at five per 
cent. Upon the two hundred thousand pounds