safe for a bank to have a smaller amount of notes in stock
than the average amount which is out in circulation; so that the whole
amount of bank-notes, both in circulation and in hand, may be
calculated at seven millions. The fluctuation at the above terms is so
remarkable, that we are tempted to give an account of the number of
notes delivered and received by the bank of Scotland in exchange with
other banks during the months of May and November 1840:--

Notes Notes
Delivered. Received.
1840,
May 1, L 51,000 L 43,000
... 5, 52,000 32,000
... 8, 44,000 45,000
... 12, 43,000 48,000
... 15, 54,000 64,000
... 19, *132,000 *172,000
... 22, 98,000 69,000
... 26, 38,000 33,000

Nov. 3, 38,000 32,000
... 6, 37,000 33,000
... 10, 51,000 61,000
... 13, *99,000 *138,000
... 17, 67,000 80,000
... 20, 66,000 49,000
... 24, 52,000 33,000
... 27, 66,000 42,000

*Term Settlements.

It will be seen from the above table how rapidly the system of bank
exchange absorbs the over-issue, and how instantaneously the paper
drawn from one bank finds its way into the hands of another.

If further proof were required of the absurdity of the notion, that a
paper circulation has a necessary tendency to over-issue, the
following fact is conclusive. The banking capital in Scotland has
_more than doubled_ between the years 1825 and 1840--a triumphant
proof of their increased stability; whilst the circulation has been
nearly stationary, but, if any thing, _rather diminished than
otherwise_. We quote from a report to the Glasgow Chamber of Commerce.

"The first return of the circulation was made in Scotland in
1825. Every one knows the extraordinary advance which Scotland
has made between that period and 1840; for instance, in the
former of these years, she manufactured 55,000 bales of cotton,
in the latter, 120,000 bales. In 1826, the produce of the iron
furnaces was 33,500 tons; in 1840, about 250,000 tons.