TUE WEALTH OF NATIONS.

293

The bills which A in Edinburgh drew upon B in London ,he regularly discounted two months before they were duewith some bank or banker in Edinburgh ; and the billswhich B in London redrew upon A in Edinburgh , he as re-gularly discounted either with the bank of England, or withsome other bankers in London . Whatever was advancedupon such circulating bills, was, in Edinburgh , advanced inthe paper of the Scotch banks, and in London , when theywere discounted at the bank of England, in the paper of thatbank. Though the bills upon which this paper had been ad-vanced were all of them repaid in their turn as soon as theybecame due; yet the value which had been really advancedupon the first bill was never really returned to the bankswhich advanced it; because, before each bill became due,another bill was always drawn to somewhat a greater amountthan the bill which was soon to be paid; and the discount-ing of this other bill was essentially necessary towards thepayment of that which was soon to be due. This payment,therefore, was altogether fictitious. The stream, which, bymeans of those circulating bills of exchange, had once beenmade to run out from the coffers of the banks, was never re-placed by any stream which really run into them.

The paper which was issued upon those circulating bills ofexchange amounted, upon many occasions, to the whole funddestined for carrying on some vast and extensive project ofagriculture, commerce, or manufactures; and not merely to•that part of it which, had there been no paper money, theprojector would have been obliged to keep by him, unem-ployed and in ready money for answering occasional de-mands. The greater part of this paper was, consequently,over and above the value of the gold and silver which wouldhave circulated in the country, had there been no papermoney. It was over and above, therefore, what the circula-tion of the country could easily absorb and employ, andupon that account immediately returned upon the banksin order to be exchanged for gold and silver, which they wereto find as they could. It was a capital which those pro-jectors had very artfully contrived to draw from those banks,not only without their knowledge or deliberate consent, butfor some time, perhaps, without their having the most distantsuspicion that they had really advanced it.

it wit a | t5s expensive titan that mentioned in the foregoing part of this note; but then it re-quired an established credit with more houses titan one in London , tin advantage which manyof these adventurers could not always find it easy to procure.