B A 
fmall films is paid in, till the whole be in this manner re¬ 
paid. All merchants, therefore, and almoft all men of 
bul'inefs, find it convenient to keep fuch cafh-accounts with 
them ; and are thereby interelfed. to promote the trade of 
thofe-companies, by readily receiving their notes in all 
payments, and by encouraging all thofe with whom they 
have any influence to do the fame. The banks, when their 
cullomers apply for money, generally advance it to them 
in their own promiffory notes. Thefe the merchants pay 
away, to the manufacturers for goods, the manufacturers 
to tire farmers for materials and provilions, the farmers to 
their landlords for rent, the landlords repay them to the 
merchants for the conveniences and luxuries with which 
they fupply them, and the merchants again return them 
to the banks in order to balance their cafh-accounts, or to 
replace what they have borrowed of them ; and thus al- 
moll the whole money-bufinefs of the country is tranfadl- 
ed by paper currency. 
By means of thefe cafh-accounts, every merchant can, 
without imprudence, carry on a greater trade than lie other- 
. wife could do. If there are two merchants, one in Lon- 
. don and the otiier in Edinburgh, who employ equal flocks 
in the fame branch of trade, the Edinburgh merchant can, 
with lefs hazard, carry on a greater trade, and give em¬ 
ployment to a greater number of people, than the London 
merchant. The London merchant mu ft always keep by 
him a conliderable Atm of money, either in his own cof- 
• fers or in thofe of his banker (who gives him no intereft 
for it), in order to anAver the demands continually coming 
upon him for payment of the goods which he purchales 
upon credit. Let the ordinary amount of this Aim be fup¬ 
pofed ;ool. The value of the goods in his warehoufe 
muft always be lefs by 500I. than it would have been had 
he not been obliged to keep fuch a fum unemployed. Sup- 
p.ofe that lie generally difpofes of his whole flock upon 
hand, or of goods to the value of his whole flock, once in a 
year. By being obliged m keep fuch a fum unemployed, he 
muff fell in a year 500I. worth lefs goods than he might 
otherwife have done. His annual profits muff be lefs by 
all that he could have made by the fale of 500I. worth 
more goods; and the number of people employed in pre¬ 
paring his goods for the market mtifl be lefs by all thofe 
that 500I. more flock could have employed. The mer¬ 
chant in Edinburgh, on the other hand, keeps no money 
unemployed for anfwering fuch occafional demands. When 
they adlually come upon him, he fatisfies them from his 
cafh account with the bank, and gradually replaces the 
fum borrowed with the money or paper which comes in 
from the occafional fales of his goods. With the fame 
flock, therefore, he can, without rifqite, have at all times in 
his warehoufe a larger quantity of goods than the London 
merchant; and can thereby both make a greater profit 
himfelf, and give conflant employment to a greater num¬ 
ber of induflrious people who prepare thofe goods for the 
market. Hence the great benefit which the country has 
derived from a trade carried on by the means deferibed. 
The other kind of banks confift of fuch as are inftituted 
wholly on the public account, and are called banks of de- 
pofit ; the nature of which not being generally underflood, 
the following explanation may not be unacceptable: The 
currency of a great (late, fuch as Britain, generally con- 
fids almoft entirely of its own coin. Should this curren¬ 
cy, therefore, be at any time worn, dipt, or otherwife de¬ 
graded below its ftandard value, the flate by a reforma¬ 
tion of its coin can effectually re-eftablifh its currency. 
But the currency of a fmall (late, fuch as Genoa or Ham¬ 
burgh, can feldotn confift altogether in its own coin, but 
muft be made up, in a great meafure, of the coins of all 
the neighbouring dates with which its inhabitants have a 
continual intercourfe. Such a flate, therefore, by reform¬ 
ing its coin, will not always be able to reform its curren¬ 
cy. If foreign bills of exchange are paid in this curren¬ 
cy, the uncertain value of any Aim, of what is in its own 
nature fo uncertain, muft render the exchange always ve¬ 
ry much againft fuch a (late, its currency being, in all fo¬ 
reign markets, neceffarily valued eveq below what it is 
N K. 6 79 
worth. In order to remedy the inconvenience to which this 
difadvantageous exchange mud have fubjected their mer¬ 
chants, fuch fmall dates, when they began to attend to 
the intereft of trade, have frequently enaited, that foreign 
bills of exchange of a certain value fhottld be paid, not 
in common currency, but by an order upon, or by a trans¬ 
fer in the books of, a certain bank, edablidied upon the 
credit and under the protection of the flate ; this bank be¬ 
ing always obliged to pay, in good and true money, exact¬ 
ly according to the ftandard of the date. The banks of 
Venice, Genoa, Amderdam, Hamburgh, and Nuremberg, 
feent to have been all originally edablidied with this view, 
though fome of them may have afterwards been made 
fubfervient to other purpofes. The money of fuch banks, 
being better than the common currency of the country, 
neceffarily bore an agio, which was greater or fmaller, ac¬ 
cording as the currency was fuppofed to be more or lefs 
degraded below the dandard of the date. The agio of the 
bank of Hamburgh, for example, which is faid to be com¬ 
monly about 14 per cent, is the fuppofed difference be¬ 
tween the good dandard money of the date, and the dipt, 
worn, and diminidied, currency, poured into it from all 
the neighbouring countries. 
Bank of Amsterdam. Previous to the-year 1609, 
the great quantity of dipt and worn foreign coin, which 
the extendve trade of Amderdam brought from all parts 
of Europe, reduced the value of its currency about 9 per 
cent, below that of good money frefh from the mint. Such 
money no fooner appeared, than it was melted down or 
carried away, as it always is in fuch circumdances. The 
merchants, with plenty of currency, could not always find 
a Aifficient quantity of good money to pay their bills of 
exchange; and the value of thofe bills, in fpite of feve- 
ral regulations which were made to prevent it, became in 
a great meafure uncertain. In order to remedy thefe in¬ 
conveniences, a bank was edablidied in 1609 under the 
guarantee of the city. The bank received both foreign 
coin, and the light and worn coin of the country, at its 
real and intrinfic value in the good dandard money of the 
country, deducting only fo much as was neceffary for de¬ 
fraying the expence of coinage, and the other neccdary 
expence of management. For the value which remained 
after this fmall deduction was made, it gave a credit in its 
books. This credit was called bank-money ; which, as it 
reprefented money exadlly according to the dandard of 
the mint, was always of the fame real value, and intrin- 
fically worth more than current money. It was at the fame 
time enabled, that all bills drawn upon or negociated at 
Amderdam of the value of 600 guilders and upwards 
fhould be paid in bank-money, which at once took away 
all uncertainty in the value of thofe bills. Every mer¬ 
chant, in confequence of this regulation, was obliged to 
keep an account with the bank in order to pay his foreign 
bills of exchange, which necelfarily occafioned a certain 
demand for bank-money. 
Bank-money, over and above both its intrinfic fuperio- 
rity to currency, and the additional value which tins de¬ 
mand neceffarily gives it, has likewife fome other advan¬ 
tages. It is fecure from fire, robbery, and other accidents; 
the ci.ty of Amderdam is bound for it; it can be paid away 
by a fimple transfer, without the trouble of counting, or 
the ride of tranfporting it from one place to another. In 
confequence of thofe different advantages, it feems from 
the beginning to have borne an agio ; and it is generally 
believed that all the money originally depofited.in the bank 
was allowed to remain there, nobody caring to demand 
payment of a debt which he could fell for a premium in 
the market. Befides, this money could not be brought 
from thofe coders without previoudy paying for the keep. 
Thofe depofits of coin, or which the bank was bound 
to redore in coin, condituted the original capital of the 
bank, or the whole value of what is reprefented by bank- 
money. At prefent they are fuppofed to eonditure but a 
very fmall part of it. In order to facilitate the trade in 
bullion, the bank has been for many years in the practice 
of giving credit in its books upon depofits of gold and 
