THE WEALTH OF NATIONS.

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It was the duty of the banks, they seemed to think, to lendfor as long a time, and to as great an extent, as they mightwish to borrow. The banks, however, by refusing in thismanner to give more credit to those, to whom they hadalready given a great deal too much, took the only methodby which it was now possible to save either their own credit,or the public credit of the country.

In the midst of this clamour and distress, a new bank wasestablished in Scotland for the express purpose of relievingthe distress of the country. The design was generous; butthe execution was imprudent, and the nature and causes ofthe distress which it meant to relieve, were not, perhaps, wellunderstood. This bank was more liberal than any other hadever been, both in granting cash accounts, and in discounting-bills of exchange. With regard to the latter, it seems to havemade scarce any distinction between real and circulatingbills, but to have discounted all equally. It was the avowedprinciple of this bank to advance, upon any reasonable secu-rity, the whole capital which was to be employed in those im-provements of which the returns are the most slow and distant,such as the improvements of land. To promote such im-provements was even said to be the chief of the public spiritedpurposes for which it was instituted. By its liberality ingranting cash accounts, and in discounting-bills of exchange,it, no doubt, issued great quantities of its bank notes. Butthose bank notes being, the greater part of them, over andabove what the circulation of the country could easily absorband employ, returned upon it, in order to be exchanged forgold and silver, as fast as they were issued. Its coffers werenever well filled. The capital which had been subscribed tothis bank at two different subscriptions, amounted to onehundred and sixty thousand pounds, of which eighty percent, only was paid up. This sum ought to have been paidin at several different instalments. A great part of the pro-prietors, when they paid in their first instalment, opened acash account with the bank; and the directors, thinkingthemselves obliged to treat their own proprietors with thesame liberality with which they treated all other men, allowedmany of them to borrow upon this cash account what theypaid in upon all their subsequent instalments. Such pay-ments, therefore, only put into one coffer what had the mo-ment before been taken out of another. But had the coffersof this bank been filled ever so well, its excessive circulation