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tTieir feparate correfpondcnts. The rate of corriniinion was 

 reduced, in confcqucnce of the diminifhed trouble as well as 

 riflv ; the labour of keeping accounts, writing letters, re- 

 ceiving- and paying bills, was now transferred to one houfe, 

 which had before been divided among many; and anew 

 fec-urity was afforded to the tranfadlior.s between the metro- 

 polis and the coutitry, by the interpofcd credit of wealthy 

 and refpeftable country banks. 



The ertablilbment of fuch a fyflera of banks, and the 

 transference of ultimate payments to one particular place, 

 are in the natural courfe of that progrefTive fubdivifioii of 

 labour, which extends itfelf over au opulent and indtillriouG 

 country. The receipt and payment of money, inllcad of 

 being conducted at home, are transferred, bv eveiy trader, 

 to his banker; who devifes means both of abridging his own 

 labour, and of economifing the life of money, efpecially of 

 that coftly part of it which confi'ls of fpecie. By his (kill 

 and fuccefs m attaining theft objects, he manages an im- 

 portant part of trade, at an expeuce far inferior to what the 

 merchants thcmfelves muil hive incurred, had they conti- 

 nued to conduct it feparately by their own clerks. In pro- 

 portion, likewife, as the amount and number of payments 

 and receipts is augmented in one particular place, the bufi- 

 nefs of paying and receiving is more eafily and cheaply 

 tranfafted; the guineas or bank notes required, though 

 niore upon the whole, are fewer in proportion to the fums 

 paid and received. So complete, accordingly, and fo 

 fyitem^tic is that economy in the ufe of notes, which long 

 experience has introduced among the London bankers, that 

 the prefent pavments of thit metropolis could fcarcely be 

 tranfacted, with due regularity, if the quantity of notes 

 were to fufTer any confiderable diminution. In this they 

 are afli'.led by the fitncfs of bills of exchange and govern- 

 ment fecuritics to fupply the place of bank notes; tor the 

 interefl that grows on fuch negotiable paper while it is de- 

 tained, fave? all the lofs which the banker would undergo 

 from the detention of coin or notes; and there is a certain 

 fort and quantity of bills, on the converfion of which into 

 money he may rely almoil as contidently as on the changing 

 of a note into guineas, or of a guinea into filver. The in- 

 genuity of thefe money-dealers, in fparing the circulating 

 medium, is aptly illuilrated by a cuflom which prevails 

 among the city bankers. Each of them fends a clerk, at an 

 appointed hour in the afternoon, to a room provided for 

 their ufe. Each clerk there exchanges the drafts on other 

 bankers received at his own houfe for the drafts on his own 

 houfe received at the houfes of other b:inkers. The 

 balances of the feveral bankers are transferred from one to 

 another, in a manner which it is unnecclTary to explain in de- 

 tail, and the feveral balances are fnialiy wound up by each 

 rlerk into one balance. The difference between the whole 

 fum which each banker has to pay to all other city bankeis, 

 is, therefore, all that is difcharged in ba;ik notes or money; 

 a difference evidently much lefs in its amount than that to 

 which the feveral differences would be equal. 



But the econoniifcd ufe of circulating medium is by no 

 means the only collateral advantage that arifes from this 

 fyftem of banks, conneftcd in fubordiuation to each other, 

 ■with the great national bank at their head. Altliough a 

 very few of the country cftablifhments have occafion;<lly 

 fubjefted themfclves to the charge of enconnging rafh fpe- 

 culation, the fyftem, in its complex operation, has a real 

 tendency to ftrengthen as well as to enlarge the bafis of 

 credit. Bankers poffefs, from their fituation, very fuperior 

 means of dillinguithing the careful trader from the impro- 

 vident. Tile bill traifaftions of the niighhourhood pafs 

 under their infpedion; and by ihii information they are 



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enabled to menfure out confidence very nearly in a juft pr(V 

 poitior. In faft, it is confidercd as a regular branch of 

 then- profcflioaal experience, that they fhould appreciate the 

 credit of the various traders within their diflrift of circu- 

 lation ; and this fort of practical fagacity they are under- 

 flood to cultivate with great afiiduity. It is faid to be the 

 general practice of banks, to communicate fuch intelligence 

 for their mutual ad'.antage. Each of them endeavours to 

 limit, not only the fum which any one trader Ihall obtain 

 from thcmfelves, but the total amount alfo, fo far as they 

 arc able, of the fum which the fame perfon fhall borrow in 

 diflereiit places. They endeavour, above all, to difcourage 

 bills of accom.modatioii. While the tranfaftions of country- 

 traders are thus furveyed by the banks of their refpiftive 

 diftricls, thofe of the counti7 banks themfclves are fubjcft 

 to the view of the London bankers, their correlpondcnts; 

 and thcfe, again, are in fome degree controltd by the bank 

 of England, which rcftri£ts, according to its own difcretion, 

 the credit with which they are accommodated. Aftricsof 

 checks is thus maintained, which, thou.'.h far from ellabhfh- 

 ing a complete fecurity againft all injurious fpcculatioii, pre- 

 fents a powerful oblhiele to its progrefs. 



But the bank of England retains another check, of a 

 highly important nature, over the banks in the country. 

 The iffue of its own notes is reilrided, in ordinary times, by 

 the obligation to convert them into fpecie. The quantity 

 of country paper, even during the prefent times, is limited 

 by its accullomed convertibility into the notes of the bank 

 of England. If a particular country banker is imprudent 

 enough to iffue an extraordinary quantity of paper, while 

 that of the bank of England does not exceed the demands 

 of London circulation, a local rife of prices will be produced 

 within the dillridt of that country paper, but prices ia 

 Lo:-,don will remain as before. In this fituation, the holders 

 of country paper, in order that they mav purchafe goods 

 where they are cheaper, will return that paper to the banker, 

 demanding in return bank of England notes, or at leaft bills 

 upon London. The excefs of his notes will thus be co:i- 

 tinually returned upon the countn- banker, and he will at 

 length find himf-.-lf under the neceHity of limiting his iffue 

 to that quantity which the circulation of his own diftrict 

 can abforb. The quantity of bank cf England paper may 

 thus be faid to regulate the quantity of that which is iffued 

 by the country banks. It is not, that one uniform ratio it 

 maintained between thefe two quantities; but that both arc 

 in the fame proportion to the demand that is created lor 

 each by the trade which it is deftir.ed to circulate. When- 

 ever the bank of England paper happens to exceed what it 

 required for the purpofes of London circulation, the country 

 paper may become exceffive in the fame degree. Ar.d fuch 

 an excefs of bank of England paper may be produced, either 

 by a diminution in the number of payments, while that of 

 notes remains undisniniihed; or by whatever has a tendency, 

 while the number of payments remains unaugmcntcd, to 

 augment the number or the effedive power of the notes iu 

 circulation. 



The moll ferious danger to which the bank of Ei'gland 

 is expofed is that of being drained of its fpecie. To luth a 

 drain it may be fubjedled in conlequence of any alarm ih&t 

 occafions a great demand for guineas, either to be hoarded, or 

 to fupply the placeof paper thrown out of circulation. If the 

 alarm Ihould be of long continuance, and the bank maintains 

 in circulation no more than its ufual quantity of notes, it may 

 be altogether exhau'.ltd of its guineas, however fniall that 

 quaiitit) of notes may be; becaufe if thefe are always re- 

 iffued in loans upon the difcounts of bills, they may be per- 

 pctuallv returned upon the bank in demand for more fpecte. 

 ^ ^ Should 



