In light of the ongoing debate concerning Scottish independence, it is instructive to consider the history of Parliament’s influence upon Scottish monetary arrangements. So long as it remained free from Parliament’s interference, the Scottish monetary system proved itself to be both a remarkably efficient engine of economic growth and far less subject to crises than its English counterpart. Nevertheless, despite fervent pleas from the arrangements’ champions, starting in 1845 Parliament began chipping away at Scottish banks’ note-issuing privileges, with the ultimate aim of perfecting the Bank of England’s currency monopoly. In so doing, instead of creating a sounder British currency system, it has succeeded in undermining the once-celebrated Scottish system.

Prof George Selgin is Professor of Economics at the University of Georgia, a Senior Fellow at the Cato Institute, and an associate editor at Econ Journal Watch. His areas of expertise are monetary economics, macroeconomics and economic history. He is the author of The Theory of Free Banking (1988), Less than Zero: The Case for a Falling Price Level in a Growing Economy (1997), and Good Money: Birmingham Button-Makers, the Royal Mint, and the Beginnings of Modern Coinage (2008) and of numerous scholarly articles for academic journals including the Journal of Economic History, the Economic Journal, the Journal of Money, Credit, and Banking, and the Journal of Economic Literature.

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