290 TIIE NATURE AND CAUSES OF

tion of profit, which in this particular business never fails toattend the smallest degree of overtrading. Those tradersand other undertakers, having got so much assistance frombanks and bankers, wished to get still more. The banks,they seem to have thought, could extend their credits towhatever sum might be wanted, without incurring any otherexpense besides that of a few reams of paper. They com-plained of the contracted views and dastardly spirit of thedirectors of those banks, which did not, they said, extendtheir credit in proportion to the extension of the trade of thecountry; meaning, no doubt, by the extension of that tradethe extension of their own projects beyond what they couldcarry on, either witli their own capital, or with what theyhad credit to borrow of private people in the usual way ofbond or mortgage. The banks, they seem to have thought,were in honour bound to supply the deficiency, and to pro-vide them with all the capital which they wanted to tradewith. The banks, however, were of a different opinion, andupon their refusing to extend their credit, some of those tra-ders had recourse to an expedient which, for a time, servedtheir purpose, though at a much greater expense, yet as ef-fectually as the utmost extension of bank credits could havedone. This expedient was no other than the w r ell knownshift of drawing and re-drawing; the shift to which unfortu-nate traders have sometimes recourse when they are uponthe brink of bankruptcy. The practice of raising money inthis manner had been long known in England, and during thecourse of the late war, when the high profits of trade affordeda great temptation to over-trading, is said to have been carriedon to a very great extent. From England it was broughtinto Scotland , where, in proportion to the very limited com-merce, and to the very moderate capital of the country, itwas soon carried on to a much greater extent than it hadever been in England.

The practice of drawing and re-drawing is so well knownto all men of business, that it may perhaps be thought unnecessary to give an account of it. But as this book maycome into the hands of many people who are not men of bu-siness, and as the effects of this practice upon the bankingtrade are not perhaps generally understood even by men ofbusiness themselves, I shall endeavour to explain it as dis-tinctly as 1 can.

The customs of merchants, which were established when