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Lessons from the American Experience with Free Banking

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  • Hugh Rockoff

Abstract

There has been considerable interest in recent years in historical experiments with "free banking." This paper examines once again the American experiments in the decades before the Civil War, and the recent literature on them. The lessons of this experience for four issues are considered: (1) the appropriate mechanism for controlling the monetary base, (2) the need for a lender of last resort, (3) the costs and benefits of a bank issued currency, and (4) the potential under a regime of free banking for wildcat banking.

Suggested Citation

  • Hugh Rockoff, 1989. "Lessons from the American Experience with Free Banking," NBER Historical Working Papers 0009, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberhi:0009
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    1. Kahn, James A, 1985. "Another Look at Free Banking in the United States [New Evidence on the Free Banking Era]," American Economic Review, American Economic Association, vol. 75(4), pages 881-885, September.
    2. King, Robert G., 1983. "On the economics of private money," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 127-158.
    3. Economopoulos, Andrew J, 1988. "Illinois Free Banking Experience," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 249-264, May.
    4. Rolnick, Arthur J & Weber, Warren E, 1983. "New Evidence on the Free Banking Era," American Economic Review, American Economic Association, vol. 73(5), pages 1080-1091, December.
    5. Charles Goodhart, 1988. "The Evolution of Central Banks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570734, December.
    6. Rockoff, Hugh, 1974. "The Free Banking Era: A Reexamination," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(2), pages 141-167, May.
    7. Cowen, Tyler & Kroszner, Randall, 1987. "The Development of the New Monetary Economics," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 567-590, June.
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    Cited by:

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    2. Pablo Martín-Aceña & Elena Martínez Ruíz & Pilar Nogués Marco, 2012. "The Bank of Spain: a National Financial Insitution," Documentos de Trabajo (DT-AEHE) 1205, Asociación Española de Historia Económica.
    3. Gorton, Gary, 1999. "Pricing free bank notes," Journal of Monetary Economics, Elsevier, vol. 44(1), pages 33-64, August.
    4. Gary Gorton, 1993. "Reputation Formation in Early Bank Debt Markets," NBER Working Papers 4400, National Bureau of Economic Research, Inc.
    5. Stefano Ugolini, 2018. "The Historical Evolution of Central Banking," Post-Print hal-01887004, HAL.
    6. Mehmet Hasan Eken & Erkut Baloglu, 2017. "Crypto Currencies and their Destinies in the Future," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 6(4), pages 01-11, April.
    7. Tobias Adrian & Adam B. Ashcraft & Nicola Cetorelli, 2013. "Shadow bank monitoring," Staff Reports 638, Federal Reserve Bank of New York.
    8. Michael D. Bordo, 2017. "Currency competition in Switzerland," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 68(01), pages 101-108, December.

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