The Theory of Free Banking: Money Supply under Competitive Note Issue
This is a defense of the theory and practice of free banking, i.e. the competitive issue of money by private banks as opposed to the centralised and monopolised issuance of currency under a system of central banking.
The Theory of Free Banking: Money Supply under Competitive Note Issue (Lanham, MD.: Rowman & Littlefield, 1988).
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This title has been put online with the permission of the author.
People:
- Foreword: Lawrence H. White
- Author: George A. Selgin
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Table of Contents
- Contents
- Preface
- Foreword
- PART ONE: Setting the Stage
- 1: Overview
- Purpose and Plan of This Study
- The Historical Background
- The U.S. Experience
- 2: The Evolution of a Free Banking System
- Commodity Money
- The Development of Banks
- Assignability and Negotiability
- Benefits of Fiduciary Substitution
- Regular Note-Exchange
- Clearinghouses
- The Mature Free Banking System
- Long-Run Equilibrium
- PART TWO: Free Banking and Monetary Equilibrium
- 3: Credit Expansion with Constant Money Demand
- The Rule of Excess Reserves
- The Principle of Adverse Clearings
- Note-Brand Discrimination
- Monopolized Note Issue
- Illustration: The Post-1910 Australian Inflation
- 4: Monetary Equilibrium
- The Demand for Money
- The Market for Inside Money and the Market for Loanable Funds
- Opinions of Other Writers
- Transfer Credit, Created Credit, and Forced Savings
- 5: Changes in the Demand for Inside Money
- Increased Money Demand
- Decreased Money Demand
- 6: Economic Reserve Requirements
- The Conservation Theory
- Determinants of Reserve Demand
- Uniform Changes in Money Demand
- Variability of the Reserve Multiplier
- Credit Expansion “in Concert”
- Banks as Pure Intermediaries
- PART THREE: Free Banking versus Central Banking
- 7: The Dilemma of Central Banking
- The Knowledge Problem
- The Problem of Money Supply
- Defects of Monetary Guidelines
- 8: The Supply of Currency
- The Relative Demand for Currency
- Currency Supply under Free Banking
- Monopolized Currency Supply
- Instruments for Reserve Compensation
- Historical Illustrations
- Appendix: Reserve-Compensation Formulae
- 9: Stability and Efficiency
- Debtor-Creditor Injustice
- Commodity-Money Supply Shocks
- Bank Runs and Panics
- The Efficiency of Free Banking
- 10: Miscellaneous Criticisms of Free Banking
- Criticisms from Conventional Wisdom
- Fraud and Counterfeiting
- Restriction of Economic Growth and Full Employment
- Money Supply as Natural Monopoly
- Public Good and Externality Arguments
- Alleged Need for a “Lender of Last Resort”
- Expedience
- 11: Free Banking and Monetary Reform
- Rules, Authority, or Freedom?
- A Practical Proposal for Reform
- Conclusion
- Notes
- Chapter 1:: Overview
- Chapter 2:: The Evolution of a Free Banking System
- Chapter 3:: Credit Expansion with Constant Money Demand
- Chapter 4:: Monetary Equilibrium
- Chapter 5:: Changes in the Demand for Inside Money
- Chapter 6:: Economic Reserve Requirements
- Chapter 7:: The Dilemma of Central Banking
- Chapter 8:: The Supply of Currency
- Chapter 9:: Stability and Efficiency
- Chapter 10:: Miscellaneous Criticisms of Free Banking
- Chapter 11:: Free Banking and Monetary Reform
- Conclusion
- Bibliography
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