Most interpretations of American free banking experiences in the nineteenth century focus on the failure of what is commonly believed to have been an experiment in unregulated banking. In this dissertation completed in 1988, economist Karen Y. Palasek advances the thesis that not only was free banking a strictly regulated system, but the reasons for its failure stem directly from the regulations themselves and from the regulatory ties between bond collateral requirements for competitively issued redeemable banknotes and a large volume of government debt which was essentially used as a reserve by free banks.
To illustrate the impediments presented by free banking laws, Palasek compares free banking experiences in New York to bank experiences in New England under the Suffolk System. She argues that the New England regional banking system that developed under the Suffolk was essentially a laissez-faire banking system, producing stability and safety for noteholders and depositors through market-driven behavioral constraints on the banks. New York, arguably the best example of American free banking, compares unfavorably on both stability and safety to the more laissez-faire system. The implications of this reexamination of free banking and the recent debates over the causes of instability in the free banking era have a bearing on modern reconsideration of deregulation and the self-regulating properties of a laissez-faire monetary system in the areas of stability, safety, and adequacy of banking facilities.
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This is the critical analysis to which Mises refers in Human Action, 3rd ed.
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In the sciences of human action, it is impossible to test conclusions. The “facts” of human history are complex ones, resultants of many causes. These causes can only be isolated by theory, theory that is necessarily a priori to these historical facts.
Case for a Genuine Gold Dollar, The
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Single Tax: Economic and Moral Implications, The
(1997) in The Logic of Action Two, UK: Edward Elgar, pp.294-305.
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The purpose of this essay is to discuss and celebrate the life and work of one of the great creative minds of our century.
Foreword to The Theory of Money and Credit by Mises
Ludwig von Mises’ The Theory of Money and Credit is, quite simply, one of the outstanding contributions to economic thought in the twentieth
Memorandum on Catholicism, Protestantism, and Capitalism
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Time, Complexity, and Change: Ludwig M. Lachmann’s Contributions to the Theory of Capital
Published in Advances in Austrian Economics, Vol. 3, 1996.
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in Jack Birner and Rudy van Zijp, eds., Hayek, Coordi
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Shenoy Capital and Developing Nations Adobe Acrobat 6.0
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The Historical vs. the Deductive Method in Political Economy
The offering which the most prominent leader of the younger generation of the historical school has made to the founder and head of that school, Wi
The Non Sequitur of the Dependence Effect
From the Southern Economic Journal, Vol. 27, April 1961.
Dr. Palasek is the Director of Educational and Academic Programs at the John Locke Foundation.
The amazing fact is that the great majority of British people are not yet consciously aware that they are living in a very severe economic crisis.
