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“In the present century centralised banking systems have come to be regarded as the usual concomitant, if not one of the conditions of the attainment of an advanced stage of economic development. The belief in the desirability of central bank organisation is universal. Recently also there have been attempts to widen the unit of control in the movement towards international banking institutions and international co-operation between the already existing central banks of the separate countries. There is, however, a noticeable lack of any systematic examination of the bases of the alleged superiority of centralised banking over its alternative.

Practically all the discussion on the relative merits of a centralised monopolistic banking system and a system of competitive banks all possessing equal rights to trade, took place in a period of some forty to fifty years in the nineteenth century, since when it has never been reopened. In that period, however, the subject was one of the most keenly debated of its time. This is especially true of France, and indeed the period of about twenty years during which French thinkers occupied themselves with this problem is perhaps the most productive of any in French economic literature, both from the point of view of Output and from the standpoint of its quality in comparison with that of other countries in the same years.” Read more.

The Rationale of Central Banking and the Free Banking Alternative
Vera C. Smith
With forward by Leland Yeager
Indianapolis: Liberty Fund, 1990.

Tom Duncan

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