TIIE AVEALTII OF NATIONS.

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into motion, and consequently the annual produce of land andlabour, the real revenue of every society.

The substitution of paper in the room of gold and silvermoney, replaces a very expensive instrument of commerce withone much less costly, and sometimes equally convenient.Circulation comes to be carried on by a new wheel, which itcosts less both to erect and to maintain than the old one.But in what manner this operation is performed, and in whatmanner it tends to increase either the gross or the neat reve-nue of the society, is not altogether so obvious, and may there-fore require some further explication.

There are several different sorts of paper money ; but thecirculating notes of banks and bankers are the species whichis best known, and which seems best adapted for this purpose.

When the people of any particular country have such con-fidence in the fortune, probity, and prudence of a particularbanker, as to believe that he is always ready to pay upon de-mand such of his promissory notes as are likely to be at anytime presented to him; those notes come to have the samecurrency as gold and silver money, from the confidence thatsuch money can at any time be had for them.

A particular banker lends among his customers his ownpromissory notes, to the extent, we shall suppose, of a hun-dred thousand pounds. As those notes serve all the pur-poses of money, his debtors pay him the same interest as ifhe had lent them so much money. This interest is the sourceof his gain. Though some of those notes are continuallycoming back upon him for payment, part of them continue tocirculate for months and years together. Though he hasgenerally in circulation, therefore, notes to the extent of ahundred thousand pounds, twenty thousand pounds in goldand silver may, frequently, be a sufficient provision for an-swering occasional demands. By this operation, therefore,twenty thousand pounds in gold and silver perform all thefunctions which a hundred thousand could otherwise haveperformed. The same exchanges may be made, the samequantity of consumable goods may be circulated and distri-buted to their proper consumers, by means of his promissorynotes, to the value of a hundred thousand pounds, as by anequal value of gold and silver money. Eighty thousandpounds of gold and silver, therefore, can, in this manner, bespared from the circulation of the country; and if differentoperations of the same kind should, at the same time, be car-