or metal； may be employed sometimes in the one circulation and
sometimes in the other； yet as both are constantly going on at
the same time； each requires a certain stock of money of one kind
or another to carry it on。 The value of the goods circulated
between the different dealers； never can exceed the value of
those circulated between the dealers and the consumers； whatever
is bought by the dealers； being ultimately destined to be sold to
the consumers。 The circulation between the dealers； as it is
carried on by wholesale； requires generally a pretty large sum
for every particular transaction。 That between the dealers and
the consumers； on the contrary； as it is generally carried on by
retail； frequently requires but very small ones； a shilling； or
even a halfpenny； being often sufficient。 But small sums
circulate much faster than large ones。 A shilling changes masters
more frequently than a guinea； and a halfpenny more frequently
than a shilling。 Though the annual purchases of all the
consumers； therefore； are at least equal in value to those of all
the dealers； they can generally be transacted with a much smaller
quantity of money； the same pieces； by a more rapid circulation；
serving as the instrument of many more purchases of the one kind
than of the other。
Paper money may be so regulated as either to confine itself
very much to the circulation between the different dealers； or to
extend itself likewise to a great part of that between the
dealers and the consumers。 Where no bank notes are circulated
under ten pounds value； as in London； paper money confines itself
very much to the circulation between the dealers。 When a ten
pound bank note comes into the hands of a consumer； he is
generally obliged to change it at the first shop where he has
occasion to purchase five shillings' worth of goods； so that it
often returns into the hands of a dealer before the consumer has
spent the fortieth part of the money。 Where bank notes are issued
for so small sums as twenty shillings； as in Scotland； paper
money extends itself to a considerable part of the circulation
between dealers and consumers。 Before the Act of Parliament；
which put a stop to the circulation of ten and five shilling
notes； it filled a still greater part of that circulation。 In the
currencies of North America； paper was commonly issued for so
small a sum as a shilling； and filled almost the whole of that
circulation。 In some paper currencies of Yorkshire； it was issued
even for so small a sum as a sixpence。
Where the issuing of bank notes for such very small sums is
allowed and commonly practised； many mean people are both enabled
and encouraged to become bankers。 A person whose promissory note
for five pounds； or even for twenty shillings； would be rejected
by everybody； will get it to be received without scruple when it
is issued for so small a sum as a sixpence。 But the frequent
bankruptcies to which such beggarly bankers must be liable may
occasion a very considerable inconveniency； and sometimes even a
very great calamity to many poor people who had received their
notes in payment。
It were better； perhaps； that no bank notes were issued in
any part of the kingdom for a smaller sum than five pounds。 Paper
money would then； probably； confine itself； in every part of the
kingdom； to the circulation between the different dealers； as
much as it does at present in London； where no bank notes are
issued under ten pounds' value； five pounds being； in most parts
of the kingdom； a sum which； though it will purchase； little more
than half the quantity of goods； is as much considered； and is as
seldom spent all at once； as ten pounds are amidst the profuse
expense of London。
Where paper money； it is to be observed； is pretty much
confined to the circulation between dealers and dealers； as at
London； there is always plenty of gold and silver。 Where it
extends itself to a considerable part of the circulation between
dealers and consumers； as in Scotland； and still more in North
America； it banishes gold and silver almost entirely from the
country； almost all the ordinary transactions of its interior
commerce being thus carried on by paper。 The suppression of ten
and five shilling bank notes somewhat relieved the scarcity of
gold and silver in Scotland； and the suppression of twenty
shilling notes would probably relieve it still more。 Those metals
are said to have become more abundant in America since the
suppression of some of their paper currencies。 They are said；
likewise； to have been more abundant before the institution of
those currencies。
Though paper money should be pretty much confined to the
circulation between dealers and dealers； yet banks and bankers
might still be able to give nearly the same assistance to the
industry and commerce of the country as they had done when paper
money filled almost the whole circulation。 The ready money which
a dealer is obliged to keep by him； for answering occasional
demands； is destined altogether for the circulation between
himself and other dealers of whom he buys goods。 He has no
occasion to keep any by him for the circulation between himself
and the consumers； who are his customers； and who bring ready
money to him； instead of taking any from him。 Though no paper
money； therefore； was allowed to be issued but for such sums as
would confine it pretty much to the circulation between dealers
and dealers； yet； partly by discounting real bills of exchange；
and partly by lending upon cash accounts； banks and bankers might
still be able to relieve the greater part of those dealers from
the necessity of keeping any considerable part of their stock by
them； unemployed and in ready money； for answering occasional
demands。 They might still be able to give the utmost assistance
which banks and bankers can； with propriety； give to traders of
every kind。
To restrain private people； it may be said； from receiving
in payment the promissory notes of a banker； for any sum whether
great or small； when they themselves are willing to receive them；
or to restrain a banker from issuing such notes； when all his
neighbours are willing to accept of them； is a manifest violation
of that natural liberty which it is the proper business of law
not to infringe； but to support。 Such regulations may； no doubt；
be considered as in some respects a violation of natural liberty。
But those exertions of the natural liberty of a few individuals；
which might endanger the security of the whole society； are； and
ought to be； restrained by the laws of all governments； of the
most free as well as of the most despotical。 The obligation of
building party walls； in order to prevent the communication of
fire； is a violation of natural liberty exactly of the same kind
with the regulations of the banking trade which are here
proposed。
A paper money consisting in bank notes； issued by people of
undoubted credit； payable upon demand without any condition； and
in fact always readily paid as soon as presented； is； in every
respect； equal in value to gold and silver money； since gold and
silver money can at any time be had for it。 Whatever is either
bought or sold for such paper must necessarily be bought or sold
as cheap as it could have been for gold and silver。
The increase of paper money； it has been said； by augmenting
the quantity； and consequently diminishing the value of the whole
currency； necessarily augments the money price of commodities。
But as the quantity of gold and silver； which is taken from the
currency； is always equal to the quantity of paper which is added
to it； paper money does not necessarily increase the quantity of
the whole currency。 From the beginning of the last century to the
present time； provisions never were cheaper in Scotland than in
1759； though； from the circulation of ten and five shilling bank
notes； there was then more paper money in the country than at
present。 The proportion between the price of provisions in
Scotland and that in England is the same now as before the great
multiplication of banking companies in Scotland。 Corn is； upon
most occasions； fully as cheap in England as in France； though
there is a great deal of paper money in England； and scarce any
in France。 In 1751 and in 1752； when Mr。 Hume published his
Political Discourses； and soon after the great multiplication of
paper money in Scotland； there was a very sensible rise in the
price of provisions； owing； probably； to the badness of the
seasons； and not to the multiplication of paper money。
It would be otherwise； indeed； with a paper money consisting
in promissory notes； of which the immediate payment depended； in
any respect； either upon the good will of those who issued them；
or upon a condition which the holder of the notes might not
always have it in his power to fulfil； or of which the payment
was not exigible till after a certain number of years； and which
in the meantime bore no interest。 Such a paper money would； no
doubt； fall more or less be