THE WEALTH Of NATIONS.

270

It is chictiy by discounting bills of Exchange, that is, byadvancing money upon them before they are due, that thegreater part of banks and bankers issue their promissory notes.They deduct always, upon whatever sum they advance, thelegal interest till the bill shall become due. The paymentof the bill when it becomes due, replaces to the bank thevalue of what had been advanced, together with a clear pro-fit of the interest. The banker who advances to the mer-chant whose bill he discounts, not gold and silver, but hisown promissory notes, has the advantage of being able todiscount to a greater amount by the whole value of his pro-missory notes, which he finds, by experience, are commonlyin circulation. He is thereby enabled to make his clear gainof interest on so much a larger sum.

The commerce of Scotland , which at present is not verygreat, was still more inconsiderable when the two first bank-ing companies were established; and those companies wouldhave had but little trade, had they confined their business tothe discounting of bills of exchange. They invented, there-fore, another method of issuing their promissory notes; bygranting what they called cash accounts, that is, by givingcredit to the extent of a certain sum (two or three thousandpounds for example), to any individual who could procuretwo persons of undoubted credit and good landed estate tobecome surety for him, that whatever money should be ad-vanced to him, within the sum for which the credit had beengiven, should be repayed upon demand, together with thelegal interest. Credits of this kind are, I believe, commonlygranted by banks and bankers in all different parts of theworld. But the easy terms upon which the Scotch bankingcompanies accept of repayment are, so far as I know, pecu-liar to them, and have, perhaps, been the principal cause bothof the great trade of those companies, and of the benefitwhich the country has received from it.

Whoever has a credit of this kind with one of those com-panies, and borrows a thousand pounds upon it, for example,may repay this sum piece-meal, by twenty and thirty poundsat a time, the company discounting a proportionable part ofthe interest of the great sum from the day on which each ofthose small sums is paid in, till the whole be in this mannerrepaid. All merchants, therefore, and almost all men of bu-siness, find it convenient to keep such cash accounts withthem, and are thereby interested to promote the trade of those