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When the people of any particular country have such confidence in

the fortune, probity and prudence of a particular banker, as to

believe that he is always ready to pay upon demand such of his

promissory notes as are likely to be at any time presented to

him, those notes come to have the same currency as gold and

silver money, from the confidence that such money can at any time

be had for them.

A particular banker lends among his customers his own promissory

notes, to the extent, we shall suppose, of a hundred thousand

pounds. As those notes serve all the purposes of money, his

debtors pay him the same interest as if he had lent them so much

money. This interest is the source of his gain. Though some of

those notes are continually coming back upon him for payment,

part of them continue to circulate for months and years together.

Though he has generally in circulation, therefore, notes to the

extent of a hundred thousand pounds, twenty thousand pounds in

gold and silver may, frequently, be a sufficient provision for

answering occasional demands. By this operation, therefore,

twenty thousand pounds in gold and silver perform all the

functions which a hundred thousand could otherwise have

performed.