of the bill pays bank notes to the bank in
redeeming it. It very seldom happens that any real money passes between
them.

If the profits of a bank be, for example, two hundred thousand pounds a
year (a great sum to be made merely by exchanging one sort of paper
for another, and which shows also that the merchants of that place are
pressed for money for payments, instead of having money to spare to lend
to government,) it proves that the bank discounts to the amount of four
millions annually, or 666,666L. every two months; and as there never
remain in the bank more than two months' pledges, of the value of
666,666L., at any one time, the amount of bank notes in circulation at
any one time should not be more than to that amount. This is sufficient
to show that the present immense quantity of bank notes, which are
distributed through every city, town, village, and farm-house in
England, cannot be accounted for on the score of discounting.

Secondly, as a bank of deposit. To deposit money at the bank means to
lodge it there for the sake of convenience, and to be drawn out at any
moment the depositor pleases, or to be paid away to his order. When
the business of discounting is great, that of depositing is necessarily
small. No man deposits and applies for discounts at the same time;
for it would be like paying interest for lending money, instead of for
borrowing it. The deposits that are now made at the bank are almost
entirely in bank notes, and consequently they add nothing to the ability
of the bank to pay off the bank notes that may be presented for payment;
and besides this, the deposits are no more the property of the bank than
the cash or bank notes in a merchant's counting-house are the property
of his book-keeper. No great increase therefore of bank notes, beyond
what the discounting business admits, can be accounted for on the score
of deposits.

Thirdly, the bank acts as banker for the government. This is the
connection that threatens to ruin every public bank. It is through this
connection that the credit of a bank is forced far beyond what it ought
to be, and still further beyond its ability to pay. It is through this
connection, that such an immense redundant quantity of bank notes, have
gotten into circulation; and which, instead of being issued because
there was property in the bank, have been issued because there was none.

When the treasury is empty, which happens in almost every year of every
war, its