e circulation will bear only one
million of paper, one million only will be circulated; and it can be of
no real importance either to the Banker or merchant, whether the whole
be issued in discounting bills, or a part be so issued, and the
remainder be issued by means of these cash accounts.

It may perhaps be necessary to say a few words on the subject of the two
metals, gold and silver, which are employed in currency, particularly as
this question appears to perplex, in many people's minds, the plain and
simple principles of currency. "In England," says Dr. Smith, "gold was
not considered as a legal tender for a long time after it was coined
into money. The proportion between the values of gold and silver money
was not fixed by any public law or proclamation; but was left to be
settled by the market. If a debtor offered payment in gold, the creditor
might either reject such payment altogether, or accept of it at such a
valuation of the gold, as he and his debtor could agree upon."

In this state of things it is evident that a guinea might sometimes
pass for 22_s._ or more, and sometimes for 18_s._ or less, depending
entirely on the alteration in the relative market value of gold and
silver. All the variations too in the value of gold, as well as in the
value of silver, would be rated in the gold coin,--it would appear as if
silver was invariable, and that gold only was subject to rise or fall.
Thus, although a guinea passed for 22_s._ instead of 18_s._ gold might
not have varied in value, the variation might have been wholly confined
to the silver, and therefore 22_s._ might have been of no more value
than 18_s._ were before. And on the contrary, the whole variation might
have been in the gold: a guinea, which was worth 18_s._ might have risen
to the value of 22_s._

If now we suppose this silver currency to be debased by clipping, and
also increased in quantity, a guinea might pass for 30_s._; for the
silver in 30_s._ of such debased money might be of no more value than
the gold in one guinea. By restoring the silver currency to its mint
value, silver money would rise; but it would appear as if gold fell, for
a guinea would probably be of no more value than 21 of such good
shillings.

If now gold be also made a legal tender, and every debtor be at liberty
to discharge a debt by the payment of 420 shillings, or twenty guineas,
for every 21_l._ that he owes, he will pay in one or the other according
as he can most