T11K WEALTH OF NATIONS.

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greater and greater. The bank of England, it is to be ob-served, by supplying its own coffers with coin, is indirectlyobliged to supply the whole kingdom, into which coin is con-tinually flowing trom those coders in a grcatyariety of ways.Whatever coin, therefore, was wanted to support this exces-sive circulation both of Scotch and English paper money,whatever vacuities this excessive circulation occasioned inthe necessary coin of the kingdom, the bank of England wasobliged to supply them. The Scotch banks, no doubt, paidall of them very dearly for their own imprudence and inatten-tion. But the bank of England paid very dearly, not onlyfor its own imprudence, but for the much greater imprudenceof almost all the Scotch banks.

The over-trading of some bold projectors in both parts ofthe United Kingdom , was the original cause of this excessivecirculation of paper money.

What a bank can with propriety advance to a merchant orundertaker of any kind, is not either the whole capital withwhich he trades, or even any considerable part of that capi-tal ; but that part of it only, which he would otherwise beobliged to keep by him unemployed and in ready money foranswering occasional demands. If the paper money whichthe bank advances never exceeds this value, it can never ex-ceed the value of the gold and silver, which would necessa-rily circulate in the country if there was no paper money; itcan never exceed the quantity which the circulation of thecountry can easily absorb and employ.

When a bank discounts to a merchant a real bill of ex-change drawn by a real creditor upon a real debtor, and which,as soon as it becomes due, is really paid by that debtor; itonly advances to him a part of the value which he wouldotherwise be obliged to keep by him unemployed and in readymoney for answering occasional demands. The payment ofthe bill, when it becomes due, replaces to the bank the valueof what it had advanced, together with the interest. Thecoders of the bank, so far as its dealings are confined to suchcustomers, resemble a water pond, from which, though astream is continually running out, yet another is continuallyrunning in, fully equal to that which runs out ; so that, with-out any further care or attention, the pond keeps alwaysequally, or very near equally full. Little or no expense canever be necessary for replenishing the coffers of such a bank.

A merchant, without over-trading, may frequently have