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Balance of Trade
Bank money is the generic term for all forms of currency issued by a bank instead of the government. Usually, banks would issue credit backed by their bullion reserves. Banks’ trustworthiness made bank money at least as secure as ordinary money.
Bank Money Quotes in The Wealth of Nations
The The Wealth of Nations quotes below are all either spoken by Bank Money or refer to Bank Money. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
).
Book 2, Chapter 2 Quotes
It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country. [...] The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enable the country to convert a great part of this dead stock into active and productive stock; into stock which produces something to the country.
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This chapter focuses on the way banks manage the money supply, which is one key component of society’s circulating capital. Specifically, Smith focuses on how paper bank money can help society better utilize its money, so that it can increase its rates of investment and economic growth to the highest possible level. It does so by turning “dead stock into active and productive stock,” which means it takes capital that would be sitting around unused and loans it out instead. For instance, if a merchant has £100 worth of gold bars sitting around in their safe, those bars are unproductive Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollit
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Bank Money Term Timeline in The Wealth of Nations
The timeline below shows where the term Bank Money appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 4, Chapter 3
...debasing reduces its value, while seigniorage raises it. In some countries, debts are payable in bank money , which is worth more than coin.
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...which are subject to coin debasing. To protect themselves, small-country merchants often demand payment in bank money , which is worth more than local coin. (This premium is called an agio.) For...
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...also took gold and silver bullion deposits in exchange for 95% of their value in bank money , plus a bullion receipt. This receipt could be sold to cover the 5% bank...
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...try to increase it. The Bank of Amsterdam solved this problem by permanently selling its bank money at a 5% agio and buying it at 4%. The Bank’s directors sign a yearly...
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