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. The
same exchanges may be made, the same quantity of consumable goods may be
circulated and distributed to their proper consumers, by means of his
promissory notes, to the value of a hundred thousand pounds, as by an equal
value of gold and silver money. Eighty thousand pounds of gold and silver,
therefore, can in this manner be spared from the circulation of the country
; and if different operations of the the same kind should, at the same time,
be carried on by many different banks and bankers, the whole circulation
may thus be conducted with a fifth part only of the gold and silver which
would otherwise have been requisite.

Let us suppose, for example, that the whole circulating money of some
particular country amounted, at a particular time, to one million sterling,
that sum being then sufficient for circulating the whole annual produce of
their land and labour; let us suppose, too, that some time thereafter,