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It is chiefly by discounting bills of exchange, that is, by

advancing money upon them before they are due, that the greater

part of banks and bankers issue their promissory notes. They

deduct always, upon whatever sum they advance, the legal interest

till the bill shall become due. The payment of the bill, when it

becomes due, replaces to the bank the value of what had been

advanced, together with a clear profit of the interest. The

banker, who advances to the merchant whose bill he discounts, not

gold and silver, but his own promissory notes, has the advantage

of being able to discount to a greater amount by the whole value

of his promissory notes, which he finds, by experience, are

commonly in circulation. He is thereby enabled to make his clear

gain of interest on so much a larger sum.