Research

The Experience of Free Banking


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FOREWORD TO THE FIRST EDITION (1992)


The idea for this book was initially suggested by Chris Tame of the Libertarian Alliance. Historical free banking came to prominence in the early 1980s with Lawrence H. White’s work on Scottish free banking, but it quickly became apparent that the Scottish experience was only one of a number of historical free banking episodes that had long been neglected by economists and monetary historians, and researchers were soon discovering more (and still are). He suggested it would be a good idea to bring some of these experiences together to see what could be learned from them, and this book is the result. I should therefore like to thank Chris for the initial idea, and Alan Jarvis of Routledge for his support and patience in seeing the project through to completion. Thanks are also due to Kurt Schuler for his helpful advice, and last, but certainly not least, to each of the authors who were kind enough to contribute to it. I hope these essays will persuade others of the importance of free banking and encourage them to explore it further.

FOREWORD TO THE SECOND EDITION


Free banking is a banking system in which banks issue their own notes under competitive conditions while typically operating on a commodity standard, in the absence of a central bank and in a legal environment in which the public are free to accept or reject bank currency as they choose. In 1992 Routledge published the first edition of The Experience of Free Banking, which included a set of country-case experiences of historical free banking systems (Australia, Canada, Colombia, Foochow in China, France, Ireland, Scotland, Switzerland and the US) and a world overview.

This second edition includes these earlier case studies, in several cases
updated, and a set of additional case studies (Belgium, Chile, Italy, Peru,
Northeast China and Sweden).

An innovative feature of the new edition is a reader’s guide to the literature that is intended to provide a starting point for future researchers looking into the many historical experiences of free banking. There is much more work to be done in this area. – Kevin Dowd, Editor of The Experience of Free Banking and Professor of Economics at Durham University Business School.

Introduction: The Experience of Free Banking


In recent years we have seen a smorgasbord of proposals for monetary and banking reform. Broadly speaking, these fall under the following headings. The first are proposals for more activist central banking: these include proposals for more quantitative easing (QE), helicopter money, modern monetary theory, negative interest rate policy, central bank digital currencies, and so forth. In one way or another, these proposals are predicated on the belief that central banks are not doing enough and should have more power or more discretion. The second are proposals for less activist or more rulebound central banks: these include proposals for the central bank to follow a Taylor Rule, a nominal GDP target, a money supply target (i.e. monetarism), peg the price of gold or go back to a gold standard. These are predicated on the belief that central banks are trying to do too much, or, more precisely, that they have too much discretion and that superior outcomes could be achieved if central banks were subject to more rules to restrain their discretion. The third are proposals for privately issued currency that is not derivative of central bank base money: recent examples include e-gold, the Liberty Dollar and cryptocurrency1; they also include numerous examples of community currency2 and earlier historical examples of private currency, of which there were very many.3 Finally, there are proposals to abolish central banking itself: these include proposals for 100 per cent reserve banking, currency boards4 and free banking.


Of these various schemes, it is arguable that only three – private money,5 currency boards and free banking – have been successfully repeated again and again. Of these three, my focus of interest here is the historical record of free banking systems. For many years until the last quarter of the twentieth century the philosophy of central banking had reigned supreme and virtually unquestioned, and even economists sympathetic to laissez-faire – such as Mints (1950), Hayek (1960) and Friedman (1960) – readily accepted that ‘money’ and banking should not be left to the unfettered competitive market process. A conventional wisdom ruled which held that competition in the issue of bank currency should be suppressed because it would lead to rapid inflation, or because it would destabilise the banking industry, or because the issue of currency was a natural monopoly. There was controversy over how much power the central bank should have and what it should do, but no ‘respectable’ economist suggested that central banking itself might be the root cause of our monetary troubles until Hayek began to suggest that the only way to achieve monetary stability might be to denationalise money (Hayek 1976). Hayek’s suggestion attracted considerable interest and free banking became the focal point of a major research effort. Although the idea seemed novel and even bizarre, it soon became apparent that free banking systems had existed in the past and indeed, that free banking had had a long and respectable history, but that its history had largely disappeared from economists’ collective memory. This book provides an expanded version of the first edition of The Experience of Free Banking, which was published in 1992. This second edition begins with an overview of the world experience of free banking which surveys no fewer than sixty different historical episodes. These experiences lasted from several years in some cases to more than a century in others, but they all had in common the standard features of bank freedom, multiple competitive note issuers and the absence of any government-sponsored ‘lender of last resort’. This overview is followed by fifteen chapters on the experiences of Australia, Belgium, Canada, Chile, Colombia, the Chinese city of Foochow (Fuzhou), Revolutionary France, Ireland, Italy, Northeast China, Peru, Scotland, Sweden, Switzerland and the ante-bellum United States.


We can think of these experiences as a collection of historical experiments, and certain broad conclusions are clearly visible. To start with, these experiments indicate that the mid-to-late-twentieth-century conventional wisdom about free banking should be rejected.

First, historical experiences of free banking were not prone to inflation. Free banks typically issued convertible currency whose value was tied to that of some ‘anchor’ monetary commodity, usually gold or silver.6 The price level was therefore tied to the relative price of the anchor commodity against a basket of goods and services, and if the banks had any ability to influence prices at all, it was distinctly limited. Inflations and deflations did occur, but they occurred in response to changes in market conditions for the anchor commodity (e.g. when there were gold discoveries), and these changes had similar effects on all economies on the same monetary standard regardless of whether they had free banking or not. Suspensions of convertibility in the absence of government intervention were extremely rare, if they ever occurred at all.7 Suspensions that occurred due to government intervention were always followed by monetary expansion and inflation. The claim that competition among unregulated banks would lead to an explosive money supply and rapid inflation has no support in the historical record and, indeed, inverts the truth that rapid inflations are always associated with systems of government-promoted overissue of fiat currency.

Second, the historical record gives little support to the claim that free competition tends to destabilise the banking system. On the contrary, the experiences of historical free banking suggest that free banking is, in general, highly stable. Overissues were usually disciplined by the banks’ clearing systems, which provided a rapid and effective reflux mechanism to return excess notes and deposits to their users; there is also some evidence that interest rates were more stable under free banking regimes than elsewhere (Pope 1989: 24); and in the absence of either government-sponsored liability insurance or a lender of last resort, banks needed to be careful in their lending, reserve and capital policies because they could not expect others to shoulder their losses or bail them out. Banks did sometimes fail under laissez-faire conditions, but these failures do not appear to have been seriously contagious. Free banking systems were rarely subject to major banking crises, and where such crises did occur, they can usually be attributed to state pressure for cheap loans from the banks, which undermined their financial health (e.g. Peru in the 1870s), or to other forms of state intervention (e.g. Australia in the 1890s).

Third, the historical experience of free banking contradicts the idea that the issue of currency is in any sense a natural monopoly. Historical free banking systems seem always to have shown some tendency towards economies of scale – branch banking would displace unit banking, for instance – and there would be a tendency for a small number of ‘big’ nationwide banks to emerge that would engage in all the major banking activities, including note issue. But economies of scale were never sufficiently pronounced that a single bank emerged with a monopoly in any one of these activities. More banks would issue deposits than issue notes, but any of the handful of big banks would also issue notes, and in no case did one note issuer drive out all the rest unless the government specifically intervened to suppress multiple note issues and thereby establish a monopoly over the note issue.

The potential benefits of free banking are illustrated by the Scottish experience (for more, see, for example, Cameron 1972). Competition was fierce, and the fight for market share honed bankers’ liquidity and capital management policies, their entrepreneurial skills and their willingness to innovate. Competition led them to introduce the cash credit account, an early form of overdraft, as well as the payment of interest on deposits. Competition gave an impetus to the development of branch banking, which enabled banks to exploit economies of scale as well as making them safer by facilitating the spreading of risks. There is little evidence that rivalry was ruinous, and the early ‘note duels’ – attempts to put rivals out of business by collecting a large number of their notes and unexpectedly demanding immediate redemption – soon gave way to clearing arrangements and other forms of mutually beneficial cooperation (e.g. facilities to lend to one another). Spreads between borrowing and lending rates were generally small. Banks gave commerce and industry access to credit that was both inexpensive and relatively easy to obtain, provided the public with loans and promoted habits of thrift by offering them higher returns on their savings than they could obtain elsewhere, and issued media of exchange that were more convenient and easier to hold than specie. In 1745, per capita income in Scotland was about half what it was in England at the time. However, a century later – a century that corresponds to the heyday of Scottish free banking – Scottish per capita income had risen to almost English levels despite England’s own rapid growth. Scotland suffered from a number of obvious disadvantages relative to England: greater distance to markets, an inferior infrastructure and fewer raw materials. It had the edge over England only in its superior banking and educational establishments, and contemporary writers – including Adam Smith in The Wealth of Nations – believed that the Scottish banking system had contributed in a major way to the country’s economic development.

Perhaps the best (and certainly the most colourful) assessment of Scottish free banking was given by Sir Walter Scott writing under the alias of Malachi Malagrowther. Defending the Scottish system against detractors who didn’t understand it, he proclaimed (Malagrowther 1826: 38–39):

 
Here stands Theory, a scroll in her hand, full of deep and mysterious combinations of figures, the least failure in any one of which may alter the result entirely, and which you must take on trust … There lies before you a practical System, successful for upwards of a century. The one allures you with promises, as the saying goes, of untold gold, – the other appeals to miracles already wrought in your behalf. The one shows you provinces, the wealth of which has been tripled under her management – the other a problem which has never been practically solved. Here you have a pamphlet – there a fishing town – here the long-continued prosperity of a whole nation – and there the opinion of a professor of Economics [KD: an Englishman, presumably], that in such circumstances she ought not by true principles to have prospered at all.”

Free banking ended because it was suppressed for political, fiscal or ideological reasons and not because of any inherent flaws. By any reasonable criterion, whether it be price stability, financial stability or efficiency, the central banking systems that replaced free banking performed worse – in some cases, far worse – than their predecessors.

Taxonomy


Let me now descend into the definitional morass that lurks beneath. The first issue is how to define ‘free banking’. I would say that there is no single ‘right’ definition of the term and I don’t want to police its boundary. We should respect the heterogeneity of real-world experience that delights historians but torments those who try to squeeze history into neat little boxes.

We do, however, need a working definition and, at the start of the Foreword to this edition, I offered the following definition, which will suffice for our purposes (emphasis added):

 
“Free banking is a banking system in which banks issue their own notes under competitive conditions while typically operating on a commodity standard, in the absence of a central bank and in a legal environment in which the public are free to accept or reject bank currency as they choose.”

Let’s deconstruct this definition and note that I have highlighted the important terms.

The first such term is ‘competitive conditions’, which implies that banks competed with each other and that there was free or fairly free entry to the market. However, in practice, the playing field among the banks was not always a level one. For example, the Piedmontese Banca Nazionale and the Riksbank were privileged banks even during the Italian and Swedish free banking periods.

There is the phrase that the ‘public are free to accept or reject bank currency as they choose’ – the freedom of the public to reject a bank’s currency underpins the competitiveness of the market in which the bank operates.

Then there is the term ‘central bank’, which I interpret to be a bank that has monopoly privileges over the supply of currency, holds the reserves of the banking system, and is a lender of last resort for the other banks and maybe their regulator too.

Next there is the term ‘commodity standard’. The most common commodity standards were gold, silver, bimetallism and copper standards. Among the historical free banking experiences, the English-speaking countries of the nineteenth century tended to operate on a gold standard, but the non-English-speaking countries usually did not.

Finally, there is the adjective ‘typically’. This adjective is a weasel word that alludes to a number of potential qualifiers to the phrase ‘operating on a commodity standard.’ The easiest such case is where the medium of redemption – the asset or instrument handed over when a note is redeemed, which would be gold under a gold standard – is switched to something else of value, but the principle of convertibility into something valuable and hence the discipline against overissue are still maintained. For example, after news of the landing of French troops in Wales in February 1797 led to panic in England, an Order in Council was passed to allow the Bank of England to suspend the convertibility of its notes into gold. Scottish banks followed suit and began redeeming their notes with Bank of England notes instead.8 Another example was the formal suspension of gold payments by New Zealand banks on the outbreak of World War I in 1914 in favour of a sterling exchange standard, which made little practical difference to these banks because they were already settling most payments in sterling balances by this time. In both the Scottish and New Zealand cases the suspension of gold convertibility made little practical difference to the note issue discipline under which banks operated.

The other cases arise where convertibility itself is suspended. The issue of currency is then governed by whatever rule replaces convertibility and it is an open question whether a banking system with suspended convertibility can be properly described as a ‘free’ one. I am not going to engage with the nitpickers on that issue, but I will make a couple of observations:

  • The first is that if a suspension of convertibility is temporary and expected to be temporary, then the suspension of convertibility ‘merely’ interrupts the normal operation of the system and (arguably) does little lasting damage to it. To give an example, early Scottish free banks would sometimes issue notes with an ‘option clause’ that permitted the issuing banks to defer redemption of their notes for a short period. This option clause gave banks an additional means to handle liquidity problems (e.g. such as those caused by a note duel) and is not fundamentally at odds with the basic principle of convertibility.9

  • The other observation is that historically the suspension of convertibility was sometimes a key point in a process by which free banking systems eventually gave way to monopoly currency issue and central banking. Examples of this process are provided by the experiences of Italian and Peruvian free banking. Italy had somewhat free banking from 1860 to 1866, but suspended gold convertibility in 1866, restored it in 1883, suspended it again in 1887 and established a de facto note issue monopoly in 1893. Peru had classical free banking from 1862 to 1873, when the Peruvian government started to intervene in the banking system; convertibility was then suspended in 1875 and private note issue was ended in 1879.


Thus, there is a big difference between a temporary suspension of convertibility in a free banking system where that suspension is expected to be temporary, and a permanent suspension of convertibility that leads to the end of free banking itself.

Most of the case studies in this book can be described as cases of ‘classical’ free banking operating under moderately ideal conditions (e.g. of peace and geographical and political stability). However, not all the case studies included here fit that description. Let me give two examples from the cases in this book.

One is US banking in the ante-bellum period, which consisted of a collection of state-by-state experiments that varied considerably in their nature and success. Some were close to my sense of classical free banking and some were not; some were called ‘free banking’ after the New York Free Banking Act of 1838, but the New York–style ‘free banking’ system differed in important ways from classical free banking, most especially in its bond collateral requirements; some other ante-bellum state experiences entailed monopoly banks or no banks; and we should not overlook those rare and almost mythical cases of ‘wildcat’ banking (for more, see Selgin 2021), which misled scholars for well over a century into the false conviction that the entire experience of ante-bellum banking could be dismissed as a disaster.

A second example is the free banking experience of Northeast China in the early twentieth century. This region faced political turmoil as the weak Chinese national government, Russia, Japan and Chinese warlords fought for control over it. The money supply included a multitude of different currency forms, both pre-modern and modern, issued by banks of each of the three nations, and no less than three different metallic monetary anchors: gold, silver and copper. Of particular significance is the effort in 1917 by the dominant regional Chinese government, the regime of the warlord Zhang Zuolin, to introduce a new version of the official currency of Fengtian Province, a silver-denominated currency known as the ‘Fengtian dollar’ (feng piao) to bring stability and order to the region’s financial markets. In the first eight years of its existence, the feng piao came close to providing a uniformly accepted medium of exchange and unit of account across the region. However, the feng piao depreciated after Zhang Zuolin abandoned its metallic link in 1925 and demanded the printing of increasing amounts of the currency to finance his military ventures. In a nutshell, the experience of Northeast China in this period demonstrates both the ability of market competition to achieve monetary stability and unification, and the potentially catastrophic consequences of abandoning a market-based monetary system.

Currency board systems


There are also other systems without central banks, the best known of which are currency board systems. A currency board issues notes, and in many historical cases also coins and deposits, that are fully convertible into an anchor currency or commodity at a fixed rate and backed 100 per cent or slightly more by net foreign reserves. Currency boards have usually but not always been monopoly issuers of notes. Their defining characteristic, which differentiates them from a central bank, is that they are rule-bound monetary institutions without the power to engage in any form of discretionary monetary policy. Their assets are entirely foreign. They are fully convertible, do not operate as a lender of last resort or regulate the commercial banking system. Instead, the fiscal regime is subordinated to the monetary regime and a hard budget constraint is imposed on politicians.

Currency boards were first established in Mauritius in 1849 and were widely copied throughout the British Empire. By about 1950, the currency board system had reached its zenith, and then rapidly declined as currency boards were converted into central banks. Hong Kong returned to a currency board system in 1983 during a currency crisis, having abandoned the currency board system for over a decade while it let the Hong Kong dollar float. Currency boards then became a topic of interest again after the fall of the Soviet Union in the early 1990s, and new currency boards were set up by teams led by Steve Hanke in Argentina (1991),10 Estonia (1992), Lithuania (1994), Bosnia (1997) and Bulgaria (1997).11 (A separate one was also set up in Macao in 1995 in imitation of the Hong Kong currency board.) Writing in 2002, Hanke observed that currency boards’ performance is unambiguously superior to central banks’ performance whether judged in terms of GDP growth, average inflation or the fiscal deficit as a percentage of GDP.12

‘Free issue’ systems


There are also ‘free issue’ systems, which Schuler (2013) defines as systems

 
“…in which bank liabilities are not convertible into a commodity or foreign currency at a set rate, no party external to the commercial banking system such as a central bank issues a monetary base into which bank liabilities are convertible at a set rate (usually 1:1), and legal requirements compel people to use the local currency. The last characteristic sets them apart from all free banking systems, historical or imagined.

The only clearly established historical case of a free issue system was Hong Kong from 1974 to 1983.13 To be sure, the Hong Kong experience has some features akin to free banking. Chu (2002, p. 49) describes the Hong Kong banking system as having been ‘virtually unregulated’ from 1935 to 1964, although he also points out that the right to issue notes was restricted to only three banks and the right to issue coins and small denomination notes was restricted to the Hong Kong Government. Some light regulations were introduced in the Banking Ordinance of 1964, and subsequent reforms were made later. However, since 1935 Hong Kong banks have never been at liberty simply to issue as many notes as they see fit on the security of general assets. Instead, Hong Kong since 1935 has been a currency board system, with the unusual wrinkle, imitated only in Macau, that banks act as agents for the currency board in issuing notes rather than the board issuing notes directly. Banks could not (and still cannot) issue notes unless they deposit corresponding foreign reserves with the Hong Kong Monetary Authority.”

Relevance of historical free banking to the current day


The ultimate question, however, is whether the historical experience of free banking has any relevance to the modern world. I would that say it does. The historical record shows that free banking is not prone to inflation, does not produce banking instability and does not produce a banking monopoly. These are big pluses. Plus if it worked in the past, then there is every reason to think it would work again in the future. Of course, getting free banking back into the Overton Window where it is considered politically possible is another matter. But the option exists and is highly attractive.

In this context, free banking has to be seen against two alternatives that (superficially at least) share with it the ideal of getting the government out of the monetary and banking system – a currency board and 100 per cent reserve banking.

We discussed the former system a couple of pages ago. Suffice to say that a currency board is a highly attractive system that gives a way to slay inflation and stabilise interest rates almost overnight and its historical track record is, in essence, almost perfect. One can also set up a currency board in such a way that the currency board has a sunset clause so that the currency board system segues into free banking once the board itself disappears.

Then there is 100 per cent reserve banking, a system long proposed by the Mises Institute14 and more recently promoted by Positive Money.15 This system involves 100 per cent reserves and is guaranteed to be able to pay out at all times. Such a system would ban banks from creating money and place the responsibility for money creation firmly on the central bank itself, however. At the same time, it would also stop bank lending, which raises the question of where lending would come from. As George Selgin notes, supporters of this idea fail to convincingly explain why they oppose fractional-reserve free banking. As he explains (Selgin 2018b):

 
“They oppose it for a variety of reasons, one of which is their belief that, in a truly free-market setting, fractional-reserve banking wouldn’t survive. Instead, they insist, 100-percent reserve banks would prevail. That they haven’t is due, in their opinion, to a banking industry playing field slanted in favour of fractional-reserve banks, especially by either implicit or explicit deposit guarantees financed through forced levies upon all banks, and sometimes by taxation or inflation. In short, fractional-reserve banking has been nurtured by government subsidies.

Free bankers have tried responding to this argument by noting how fractional-reserve banking has prevailed under every sort of bank regulatory regime, from the earliest beginnings of banking, not excepting regimes that involved very little regulation, like those of Scotland, Canada, and Sweden, and that lacked even a trace of government guarantees or other sorts of artificial support. But since some 100-percenters seem unmoved by this approach, I here take a different tack, which consists of pointing out that every significant 100-percent bank known to history was a government sponsored enterprise that depended for its existence on some combination of direct government subsidies, compulsory patronage, or laws suppressing rival (fractional reserve) institutions. Yet despite the special support they enjoyed, and their solemn commitments to refrain from lending coin deposited with them, they all eventually came a cropper [because they couldn’t resist lending out].”

So the issue boils down to a trade-off between enabling banks to lend more, on the one hand, versus exposing them to the risks of fractional-reserve banking, on the other. However, I will not go into the merits and demerits of that debate here.

We now turn to Kurt Schuler’s overview chapter on the world experience of free banking.

Chapters



  • Introduction – The Experience of Free Banking, by Kevin Dowd (p.1)

  • The World History of Free Banking, by Kurt Schuler (p.13)

  • Free Banking in Australia, by Kevin Dowd (p.50)

  • Free Banking in Belgium, 1835-1850, by Patrick Mardini and Kurt Schuler (p.81)

  • Free Banking in Canada, by Kurt Schuler (p.99)

  • Free Banking in Chile, by Juan Pablo Couyoumdjian (p.114)

  • Free Banking in Colombia, by Adolfo Meisel (p.129)

  • Free Banking in Foochow, by George Selgin (p.138)

  • Free Banking in France, 1796-1803, by Philippe Nataf (p.157)

  • Free Banking in Ireland, by Howard Bodenhorn (p.172)

  • Competitive Note Issue in Italy, 1860-1893, by Alberto Mingardi (p.192)

  • Free Banking in Early-Twentieth Century Northeast China, by Thomas R. Gottschang (p.218)

  • Free Banking in Peru, by Luis Felipe Zegarra (p.235)

  • Free Banking in Scotland before 1844, by Lawrence H. White (p.256)

  • Free Banking in Sweden, by Lars Jonung (p.285)

  • Free Banking in Switzerland After the Liberal Revolutions in the Nineteenth Century, by Ernst Juerg Weber (p.314)

  • US Banking in the Free Banking Period, by Kevin Dowd (p.302)


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About the Authors


Kevin Dowd 

Kevin Dowd ([email protected]) is Professor of Finance and Economics at Durham University

Howard Bodenhorn 

Howard Bodenhorn ([email protected]) is a professor in the John E. Walker Department of Economics at Clemson University and a research associate at the National Bureau of Economic Research.

Juan Pablo Couyoumdjian 

Juan Pablo Couyoumdjian ([email protected]) is an associate professor at the Facultad de Gobierno, and Facultad de Economía y Negocios, at the Universidad del Desarrollo, Santiago, Chile.

Thomas R. Gottschang 

Thomas R. Gottschang ([email protected]) is Professor of Economics and Asian Studies at the College of the Holy Cross.

Patrick Mardini 

Patrick Mardini is founder and President of the Lebanese Institute for Market Studies.

Adolfo Meisel 

Adolfo Meisel ([email protected]) is Rector of the Universidad del Norte, Barrangquilla, Atlántico, Colombia.

Alberto Mingardi 

Alberto Mingardi ([email protected]) is Full Professor of History of Political Thought at IULM University in Milan and the Director General of the Istituto Bruno Leoni.

Philippe Nataf

Philippe Nataf ([email protected]) is Directeur de Recherche à l’Institut de statistiques de l’Université de Paris.

Kurt Schuler 

Kurt Schuler ([email protected]) is Senior Fellow in Financial History at the Center for Financial Stability in New York City. 

George A. Selgin 

George A. Selgin ([email protected]) is the Director of the Center for Financial and Monetary Alternatives based at the Cato Institute. 

Ernst Juerg Weber 

Ernst Juerg Weber ([email protected]) is Senior Honorary Research Fellow at the Department of Economics, University of Western Australia.

Lawrence H. White 

Lawrence H. White ([email protected]) is Professor of Economics at George Mason University. 

Luis Felipe Zegarra 

Luis Felipe Zegarra ([email protected]) is Professor, CENTRUM Católica Graduate Business School, Pontificia Universidad Católica del Perú.

Footnotes

  1. For more on these case studies, see Dowd (2014). Suffice to say that both were highly successful until Uncle Sam took them down.
  2. For numerous instances, see the many successful instances of community currency discussed in the International Journal of Community Currency Research.
  3. See also, for example, Timberlake (1987a,b), Champ (2007) or White (2022), to give just a handful of examples.
  4. We say a little more about currency boards later in this chapter.
  5. I leave aside crypto: suffice to note that the historical performance of crypto is hugely controversial.
  6. In most cases, there was just the one dominant ‘anchor’ commodity, but this was not always so: in the Northeast China experience, there were three monetary anchors: gold, silver and copper.
  7. It is possible, however, that examples might be found among the US suspensions of 1837 and 1841, which originated with the banks and then were confirmed by state governments.
  8. Selgin (2018a) has more on this episode.
  9. For more on option clauses, see, for example, Dowd (1991) or Meulen (1934: ch. 9).
  10. Hanke (2002: 102–3) explains, however, that the Argentinian currency board experiment collapsed in 2002 after having been extensively meddled with by Domingo Cavallo.
  11. Kurt Schuler was also involved in the last four of these cases.
  12. For more on currency boards, see Hanke (2002), Strezewski (2020) or Schuler et al. (2024).
  13. In correspondence, Kurt informs me that New Zealand from January 1931 to January 1933 might also qualify as a free issue system.
  14. For example, Rothbard himself argued that fractional-reserve banking was inherently fraudulent. See Rothbard (2008: 94–110).
  15. See, for example, https://positivemoney.org/about/who-we-are/.



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