coffers at the bank are empty also. It is in this condition of
emptiness that the minister has recourse to emissions of what are called
exchequer and navy bills, which continually generates a new increase of
bank notes, and which are sported upon the public, without there being
property in the bank to pay them. These exchequer and navy bills (being,
as I have said, emitted because the treasury and its coffers at the bank
are empty, and cannot pay the demands that come in) are no other than
an acknowledgment that the bearer is entitled to receive so much money.
They may be compared to the settlement of an account, in which the
debtor acknowledges the balance he owes, and for which he gives a note
of hand; or to a note of hand given to raise money upon it.

Sometimes the bank discounts those bills as it would discount merchants'
bills of exchange; sometimes it purchases them of the holders at the
current price; and sometimes it agrees with the ministers to pay an
interest upon them to the holders, and keep them in circulation. In
every one of these cases an additional quantity of bank notes gets into
circulation, and are sported, as I have said, upon the public, without
there being property in the bank, as banker for the government, to pay
them; and besides this, the bank has now no money of its own; for the
money that was originally subscribed to begin the credit of the bank
with, at its first establishment, has been lent to government and wasted
long ago.

"The bank" (says Smith, book ii. chap. 2.) "acts not only as an ordinary
bank, but as a great engine of State; it receives and pays a greater
part of the annuities which are due to the creditors of the _public_."
(It is worth observing, that the _public_, or the _nation_, is always
put for the government, in speaking of debts.) "It circulates" (says
Smith) "exchequer bills, and it advances to government the annual amount
of the land and malt taxes, which are frequently not paid till several
years afterwards." (This advancement is also done in bank notes,
for which there is not property in the bank.) "In those different
operations" (says Smith) "_its duty to the public_ may sometimes have
obliged it, without any fault of its directors, _to overstock the
circulation with paper money_."--bank notes. How its _duty_ to _the
public_ can induce it _to overstock that public_ with promissory bank
notes which it _cannot pay_, and thereby expose the individuals of that
public