currency which can easily circulate there, cannot exceed the sum of gold and
silver which would be necessary for transacting the annual exchanges of
twenty shillings value and upwards usually transacted within that country.
Should the circulating paper at any time exceed that sum, as the excess
could neither be sent abroad nor be employed in the circulation of the
country, it must immediately return upon the banks, to be exchanged for gold
and silver. Many people would immediately perceive that they had more of
this paper than was necessary for transacting their business at home; and as
they could not send it abroad, they would immediately demand payment for it
from the banks. When this superfluous paper was converted into gold and
silver, they could easily find a use for it, by sending it abroad; but they
could find none while it remained in the shape of paper. There would
immediately, therefore, be a run upon the banks to the whole extent of this
superfluous paper, and if they showed any difficulty or backwardness in
payment, to a much greater extent ; the alarm which this would occasion
necessarily increasing the run.

Over and above the expenses which are common to every branch of trade, such
as the expense of house-rent, the wages of servants, clerks, accountants,
etc. the expenses peculiar to a bank consist chiefly in two articles: first,
in the expense of keeping at all times in its coffers, for answering the
occasional demands of the holders of its notes, a large sum of money, of
which it loses the interest; and, secondly, in the expense of replenishing
those coffers as fast as they are emptied by answering such occasional
demands.

A banking company which issues more paper than can be employed in the
circulation of the country, and of which the excess is continually returning
upon them for payment, ought to increase the quantity of gold and silver
which they keep at all times in their coffers, not only in proportion to