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admit of a compensation； and even an overbalance from the encrease of
industry and of credit； which may be promoted by the right use of
paper…money。 It is well known of what advantage it is to a merchant to
be able to discount his bills upon occasion； and every thing that
facilitates this species of traffic is favourable to the general
commerce of a state。 But private bankers are enabled to give such
credit by the credit they receive from the depositing of money in
their shops； and the bank of ENGLAND in the same manner； from the
liberty it has to issue its notes in all payments。 There was an
invention of this kind； which was fallen upon some years ago by the
banks of EDINBURGH； and which； as it is one of the most ingenious
ideas that has been executed in commerce； has also been thought
advantageous to SCOTLAND。 It is there called a BANK…CREDIT； and is of
this nature。 A man goes to the bank and finds surety to the amount； we
shall suppose； of a thousand pounds。 This money； or any part of it； he
has the liberty of drawing out whenever he pleases； and he pays only
the ordinary interest for it； while it is in his hands。 He may； when
he pleases； repay any sum so small as twenty pounds； and the interest
is discounted from the very day of the repayment。 The advantages；
resulting from this contrivance； are manifold。 As a man may find
surety nearly to the amount of his substance； and his bank…credit is
equivalent to ready money； a merchant does hereby in a manner coin his
houses； his household furniture； the goods in his warehouse； the
foreign debts due to him； his ships at sea； and can； upon occasion；
employ them in all payments； as if they were the current money of the
country。 If a man borrow a thousand pounds from a private hand；
besides that it is not always to be found when required； he pays
interest for it； whether he be using it or not： His bank…credit costs
him nothing except during the very moment； in which it is of service
to him： And this circumstance is of equal advantage as if he had
borrowed money at much lower interest。 Merchants； likewise； from this
invention； acquire a great facility in supporting each other's credit；
which is a considerable security against bankruptcies。 A man； when his
own bank…credit is exhausted； goes to any of his neighbours who is not
in the same condition； and he gets the money； which he replaces at his
convenience。
After this practice had taken place during some years at
EDINBURGH； several companies of merchants at GLASGOW carried the
matter farther。 They associated themselves into different banks； and
issued notes so low as ten shillings； which they used in all payments
for goods； manufactures； tradesmen's labour of all kinds； and these
notes； from the established credit of the companies； passed as money
in all payments throughout the country。 By this means； a stock of five
thousand pounds was able to perform the same operations as if it were
six or seven； and merchants were thereby enabled to trade to a greater
extent； and to require less profit in all their transactions。 But
whatever other advantages result from these inventions； it must still
be allowed that； besides giving too great facility to credit； which is
dangerous； they banish the precious metals； and nothing can be a more
evident proof of it； than a comparison of the past and present
condition of SCOTLAND in that particular。 It was found； upon the
recoinage made after the union； that there was near a million of
specie in that country： But notwithstanding the great encrease of
riches； commerce and manufactures of all kinds； it is thought； that；
even where there is no extraordinary drain made by ENGLAND； the
current specie will not now amount to a third of that sum。
But as our projects of paper…credit are almost the only expedient；
by which we can sink money below its level； so； in my opinion； the
only expedient； by which we can raise money above it； is a practice
which we should all exclaim against as destructive； namely； the
gathering of large sums into a public treasure； locking them up； and
absolutely preventing their circulation。 The fluid； not communicating
with the neighbouring element； may； by such an artifice； be raised to
what height we please。 To prove this； we need only return to our first
supposition； of annihilating the half or any part of our cash； where
we found； that the immediate consequence of such an event would be the
attraction of an equal sum from all the neighbouring kingdoms。 Nor
does there seem to be any necessary bounds set； by the nature of
things； to this practice of hoarding。 A small city； like GENEVA；
continuing this policy for ages； might engross nine…tenths of the
money of EUROPE。 There seems； indeed； in the nature of man； an
invincible obstacle to that immense growth of riches。 A weak state；
with an enormous treasure； will soon become a prey to some of its
poorer； but more powerful neighbours。 A great state would dissipate
its wealth in dangerous and ill…concerted projects； and probably
destroy； with it； what is much more valuable； the industry； morals；
and numbers of its people。 The fluid； in this case； raised to too
great a height； bursts and destroys the vessel that contains it； and
mixing itself with the surrounding element； soon falls to its proper
level。
So little are we commonly acquainted with this principle； that；
though all historians agree in relating uniformly so recent an event；
as the immense treasure amassed by HARRY VII （which they make amount
to 2；700；000 pounds；） we rather reject their concurring testimony；
than admit of a fact； which agrees so ill with our inveterate
prejudices。 It is indeed probable； that this sum might be three…
fourths of all the money in ENGLAND。 But where is the difficulty in
conceiving； that such a sum might be amassed in twenty years； by a
cunning； rapacious； frugal； and almost absolute monarch？ Nor is it
probable； that the diminution of circulating money was ever sensibly
felt by the people； or ever did them any prejudice。 The sinking of the
prices of all commodities would immediately replace it； by giving
ENGLAND the advantage in its commerce with the neighbouring kingdoms。
Have we not an instance； in the small republic of ATHENS with its
allies； who； in about fifty years； between the MEDIAN and
PELOPONNESIAN wars； amassed a sum not much inferior to that of HARRY
VII？ For all the GREEK historians and orators agree； that the
ATHENIANS collected in the citadel more than 10；000 talents； which
they afterwards dissipated to their own ruin； in rash and imprudent
enterprizes。 But when this money was set a running； and began to
communicate with the surrounding fluid； what was the consequence？ Did
it remain in the state？ No。 For we find； by the memorable census
mentioned by DEMOSTHENES and POLYBIUS； that； in about fifty years
afterwards； the whole value of the republic； comprehending lands；
houses； commodities； slaves； and money； was less than 6000 talents。
What an ambitious high…spirited people was this； to collect and
keep in their treasury； with a view to conquests； a sum； which it was
every day in the power of the citizens； by a single vote； to
distribute among themselves； and which would have gone near to triple
the riches of every individual！ For we must observe； that the numbers
and private riches of the ATHENIANS are said； by ancient writers； to
have been no greater at the beginning of the PELOPONNESIAN war； than
at the beginning of the MACEDONIAN。
Money was little more plentiful in GREECE during the age of PHILIP
and PERSEUS； than in ENGLAND during that of HARRY VII： Yet these two
monarchs in thirty years collected from the small kingdom of MACEDON；
a larger treasure than that of the ENGLISH monarch。 PAULUS AEMILIUS
brought to ROME about 1；700；000 pounds Sterling。 PLINY says；
2；400；000。 And that was but a part of the MACEDONIAN treasure。 The
rest was dissipated by the resistance and flight of PERSEUS。
We may learn from STANIAN； that the canton of BERNE had 300；000
pounds lent at interest； and had above six times as much in their
treasury。 Here then is a sum hoarded of 1；800；000 pounds Sterling；
which is at least quadruple what should naturally circulate in such a
petty state； and yet no one； who travels in the PAIS DE VAUX； or any
part of that canton； observes any want of money more than could be
supposed in a country of that extent； soil； and situation。 On the
contrary； there are scarce any inland provinces in the continent of
FRANCE or GERMANY； where the inhabitants are at this time so opulent；
though that canton has vastly encreased its treasure since 1714； the
time when STANIAN wrote his judicious account of SWITZERLAND。
The account given by APPIAN of the treasure of the PTOLEMIES； is
so prodigious； that one cannot admit of it； and so much the less；
because the historian says； that the other successors of ALEXANDER
were also frugal； and had many of them treasures not much inferior。
For this saving humour of the neighbouring princes must necessarily
have checked the frugality of the EGYPTIAN monarchs； according to the
foregoing theory。 The sum he men