consisted in gold and silver. A prince, anxious 
to maintain his dominions at all times in 
the state in which he can most easily defend 
them, ought upon this account to guard not 
only against that excessive multiplication of 
paper money which ruins the very banks 
which issue it, but even against that multiplication 
of it which enables them to fill the greater 
part of the circulation of the country with 
The circulation of every country may 
be considered as divided into two different 
branches; the circulation of the dealers with 
one another, and the circulation between the 
dealers and the consumers. Though the same 
pieces of money, whether paper or metal, may 
be employed sometimes in the one circulation 
and sometimes in the other; yet as both are 
constantly going on at the same time, each requires 
a certain stock of money, of one kind 
or another, to carry it on. The value of the 
goods circulated between the different dealers 
never can exceed the value of those circulated 
between the dealers and the consumers; whatever 
is bought by the dealers being ultimately 
destined to be sold to the consumers. The 
circulation between the dealers, as it is carried 
on by wholesale, requires generally a pretty 
large sum for every particular transaction
That between the dealers and the consumers
on the contrary, as it is generally carried on 
by retail, frequently requires but very small 
ones, a shilling, or even a halfpenny, being often 
sufficient. But small sums circulate much 
faster than large ones. A shilling changes 
masters more frequently than a guinea, and a 
halfpenny more frequently than a shilling
Though the annual purchases of all the consumers
therefore, are at least equal in value 
to those of all the dealers, they can generally 
be transacted with a much smaller quantity of 
money; the same pieces, by a more rapid circulation
serving as the instrument of many 
more purchases of the one kind than of the other. 
Paper money may be so regulated as either 
to confine itself very much to the circulation 
between the different dealers, or to extend itself 
likewise to a great part of that between 
the dealers and the consumers. Where no 
bank notes are circulated under £10 value, as 
in London, paper money confines itself very 
much to the circulation between the dealers
When a ten pound bank note comes into the 
hands of a consumer, he is generally obliged 
to change it at the first shop where he has occasion 
to purchase five shillings worth of 
goods; so that it often returns into the hands 
of a dealer before the consumer has spent the 
fortieth part of the money. Where bank 
notes are issued for so small sums as 20s. as 
in Scotland, paper money extends itself to 
considerable part of the circulation between 
dealers and consumers. Before the act of 
parliament which put a stop to the circulation 
of ten and five shilling notes, it filled a still 
greater part of that circulation. In the currencies 
of North America, paper was commonly 
issued for so small a sum as a shilling, and 
filled almost the whole of that circulation. In 
some paper currencies of Yorkshire, it was issued 
even for so small a sum as a sixpence
Where the issuing of bank notes for such 
very small sums is allowed, and commonly 
practised, many mean people are both enabled 
and encouraged to become bankers. A person 
whose promissory note for £5, or even for 
20s. would be rejected by everybody, will get 
it to be received without scruple when it is issued 
for so small a sum as a sixpence. But 
the frequent bankruptcies to which such beggarly 
bankers must be liable, may occasion
very considerable inconveniency, and sometimes 
even a very great calamity, to many 
poor people who had received their notes in 
It were better, perhaps, that no bank notes 
were issued in any part of the kingdom for a 
smaller sum than £5. Paper money would 
then, probably, confine itself, in every part of 
the kingdom, to the circulation between the 
different dealers, as much as it does at present 
in London, where no bank notes are issued 
under L.10 value; L.5 being, in most part of 
the kingdom, a sum which, though it will purchase, 
perhaps, little more than half the quantity 
of goods, is as much considered, and is as 
seldom spent all at once, as L.10 are amidst 
the profuse expense of London
Where paper money, it is to be observed, is 
pretty much confined to the circulation between 
dealers and dealers, as at London
there is always plenty of gold and silver
Where it extends itself to a considerable part 
of the circulation between dealers and consumers
as in Scotland, and still more in 
North America, it banishes gold and silver 
almost entirely from the country; almost all 
the ordinary transactions of its interior commerce 
being thus carried on by paper. The 
suppression of ten and five shilling bank notes
somewhat relieved the scarcity of gold and 
silver in Scotland; and the suppression of 
twenty shilling notes will probably relieve it 
still more. Those metals are said to have become 
more abundant in America, since the 
suppression or some of their paper currencies
They are said, likewise, to have been more 
abundant before the institution of those currencies
Though paper money should be pretty 
much confined to the circulation between dealers 
and dealers, yet banks and bankers might 
still be able to give nearly the same assistance 
to the industry and commerce of the country
as they had done when paper money filled almost 
the whole circulation. The ready money 
which a dealer is obliged to keep by him, 
for answering occasional demands, is destined 
altogether for the circulation between himself