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.

The commerce of Scotland, which at present is not very great, was still more
inconsiderable when the two first banking companies were established ; and
those companies would have had but little trade, had they confined their
business to the discounting of bills of exchange. They invented, therefore,
another method of issuing their promissory notes; by granting what they call
cash accounts, that is, by giving credit, to the extent of a certain sum
(two or three thousand pounds for example), to any individual who could
procure two persons of undoubted credit and good landed estate to become
surety for him, that whatever money should be advanced to him, within the
sum for which the credit had been given, should be repaid upon demand,
together with the legal interest. Credits of this kind are, I believe,
commonly granted by banks and bankers in all different parts of the world.
But the easy terms upon which the Scotch banking companies accept of
repayment are, so far as I know, peculiar to them, and have perhaps been the
principal cause, both of the great trade of those companies,and of the
benefit which the country has received from it.

Whoever has a credit of this kind with one of those companies, and borrows a
thousand pounds upon it, for example, may repay this sum piece-meal, by