BOOK

IV.

to obtain a new receipt for another fix months. This, however, though it happens feldom, is faid to happen fometimes, and more frequently with regard to gold, than with regard to filver, on account of the higher warehouse-rent which is paid for the keeping of the more precious metal.

THE perfon who by making a deposit of bullion obtains both a bank credit and a receipt, pays his bills of exchange as they become due with his bank credit; and either fells or keeps his receipt according as he judges that the price of bullion is likely to rife or to fall. The receipt and the bank credit feldom keep long together, and there is no occafion that they should. The person who has a receipt, and who wants to take out bullion, finds always plenty of bank credits, or bank money to buy at the ordinary price; and the perfon who has bank money, and wants to take out bullion, finds receipts always in equal abundance.

THE Owners of bank credits, and the holders of receipts, conftitute two different forts of creditors against the bank. The holder of a receipt cannot draw out the bullion for which it is granted, without re-affigning to the bank a fum of bank money equal to the price at which the bullion had been received. If he has no bank 'money of his own, he must purchase it of those who have it. The owner of bank money cannot draw out bullion without producing to the bank receipts for the quantity which he wants. If he has none of his own, he must buy them of those - who

7

III.

who have them. The holder of a receipt, when CHA P. he purchases bank money, purchases the power of taking but a quantity of bullion, of which the mint price is five per cent. above the bank price. The agio of five per cent. therefore, which he commonly pays for it, is paid, not for an imaginary, but for a real value. The owner of bank money, when he purchases a receipt, purchases the power of taking out a quantity of bullion of which the market price is commonly from two to three per cent. above the mint price. The price which he pays for it, therefore, is paid likewise for a real value. The price of the receipt, and the price of the bank money, compound or make up between them the full value or price of the bullion.

UPON depofits of the coin current in the country, the bank grants receipts likewife as well as bank credits; but thofe receipts are frequently of no value, and will bring no price in the market. Upon ducatoons, for example, which in the currency pafs for three guilders three ftivers each, the bank gives a credit of three guilders only, or five per cent. below' their current value. It grants a receipt likewife intitling the bearer to take out the number of ducatoons depofited at any time within fix months, upon paying onefourth per cent. for the keeping. This receipt will frequently bring no price in the market. Three guilders bank money generally fell in the market for three guilders three ftivers, the full value of the ducatoons, if they were taken out of the bank; and before they can be taken out, Q 2

one

BOOK one-fourth per cent. must be paid for the keepIV. ing, which would be mere lofs to the holder of

the receipt. If the agio of the bank, however, fhould at any time fall to three per cent. fuch receipts might bring fome price in the market, and might fell for one and three-fourths per eent. But the agio of the bank being now generally about five per cent. fuch receipts are frequently allowed to expire, or as they exprefs it, to fall to the bank. The receipts which are given for depofits of gold ducats fall to it yet more frequently, because a higher warehouserent, or one-half per cent. must be paid for the keeping of them before they can be taken out again. The five per cent. which the bank gains, when depofits either of coin or bullion are allowed to fall to it, may be confidered as the warehouse-rent for the perpetual keeping of fuch depofits.

THE fum of bank money for which the receipts are expired must be very confiderable. It muft comprehend the whole original capital of the bank, which, it is generally fuppofed, has been allowed to remain there from the time it was firft depofited, nobody caring either to renew his receipt or to take out his depofit, as, for the reasons already affigned, neither the one nor the other could be done without lofs. But whatever may be the amount of this fum, the proportion which it bears to the whole mass of bank money is fuppofed to be very finall. The bank of Amfterdam has for thefe many years paft been the great warehouse of Europe for bul

HII.

lion, for which the receipts are very feldom CHAP. allowed to expire, or, as they exprefs it, to fall to the bank. The far greater part of the bank money, or of the credits upon the books of the bank, is fuppofed to have been created, for thefe many years paft, by fuch depofits which the dealers in bullion are continually both making and withdrawing.

No demand can be made upon the bank but by means of a recipe or receipt. receipt. The fmaller mass of bank money, for which the receipts are expired, is mixed and confounded with the much greater mafs for which they are ftill in force; fo that, though there may be a confiderable fum of bank money, for which there are no receipts, there is no fpecific fum or portion of it, which may not at any time be demanded by one. The bank cannot be debtor to two perfons for the fame thing; and the owner of bank money who has no receipt, cannot demand payment of the bank till he buys one. In ordinary and quiet times, he can find no difficulty in getting one to buy at the market price, which generally correfponds with the price at which he can fell the coin or bullion it intitles him to take out of the bank.

IT might be otherwife during a public calamity; an invafion, for example, such as that of the French in 1672. The owners of bank money being then all eager to draw it out of the bank, in order to have it in their own keeping, the demand for receipts might raife their price to an exorbitant height. The holders of them

BOOK might form extravagant expectations, and, inIV. ftead of two or three per cent. demand half the

bank money for which credit had been given upon the depofits that the receipts had refpectively been granted for. The enemy, informed of the conftitution of the bank, might even buy them up, in order to prevent the carrying away of the treafure. In fuch emergencies, the bank, it is fuppofed, would break through its ordinary rule of making payment only to the holders of receipts. The holders of receipts, who had no bank money, muft have received within two or three per cent. of the value of the deposit for which their refpective receipts had been granted. The bank, therefore, it is faid, would in this cafe make no fcruple of paying, either with money or bullion, the full value of what the owners of bank money who could get no receipts were credited for in its books; paying at the fame time two or three per cent. to fuch holders of receipts as had no bank money, that being the whole value which in this ftate of things could justly be fuppofed due to them.

EVEN in ordinary and quiet times it is the intereft of the holders of receipts to deprefs the agio, in order either to buy bank money (and confequently the bullion, which their receipts. would then enable them to take out of the bank) fo much cheaper, or to fell their receipts to those who have bank money, and who want to take out bullion, fo much dearer; the price of a receipt being generally equal to the difference between the market price of bank money, and

that