1 thought on “Free banking was robust and effective”

  1. Posted 29/04/2013 at 15:27 | Permalink

    Nice post. The fourth paragraph seems slightly misleading though, it seems to imply that instability in the English banking system in the early 19th century was due to the BoE’s public responsibility for the currency and it’s lender of last resort role, however, I’m not entirely sure it played this role until later in the century, after Bagehot wrote the central bank manual. In my opinion, the main cause of instability around this time was the law that restricted banks to a minimum of 6 shareholders, repealed around 1825.

    With the regard to free banking in general, are there any examples where free banking systems have had to cope with wide scale deleveraging, much like we’ve been seeing over the last few years?

Comments are closed.