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The Rationale of Central Banking and the Free Banking Alternative; Smith, Vera C.
4 paragraphs found.
Chapter 1

In the twentieth century most countries have finally decided in favour of a central banking system, but in the nineteenth century (at least up to 1875), again, most especially on the Continent and in the United States—in England the system as it stood after the passage of the Bank Act of 1844 was not seriously challenged after that date—it was still a matter of dispute as to what sort of form the banking system should take. It is notable that when laisser-faire theories and politics were at their height so far as other industries were concerned, banking was already regarded as in another category. Even the most doctrinaire free-traders, with the possible exception of Courcelle-Seneuil in France, were unwilling to apply their principles to the business of banking. It was widely contended that banking must be the subject of some special regulations, although what precise form these regulations should take remained an open question for several decades.

Chapter 6

Chapter VI
The Development of Central Banking in Germany *40

The history of banking in Germany, like that of the United States, should properly be considered in terms of the separate States, but it is impossible to do that here and we shall concentrate our attention on the main events in Prussia, with an occasional reference to the policy of other States. The setting in Germany is dissimilar to that in the other countries we have so far considered, for the reason that Germany at no time adopted true laisser-faire principles in her commercial policy, and therefore it is less surprising to find State intervention in banking in this country than in any other.

Chapter 7

Chapter VII
Discussions on the Theory of the Subject in England and America Prior to 1848

Although the discussion of free banking had its beginning in England, it never reached such large proportions there as it did on the Continent. This may have been due to the much greater degree of freedom that had always existed in England giving rise to a more rapid growth of banking there than in either France or Germany, and therefore to a less pressing need for reform. Moreover, by the time laisser-faire politics had taken up its stand against privileged monopolies, the Bank of England and the system of which it had become the pivot were far too well established to be easily remodelled, whereas on the Continent the banking systems were less firmly established and therefore more subject to discussion.

Chapter 8

As a member first of the Chamber of Deputies and later of the Senate, Chevalier had plenty of opportunity of attracting public attention to his views. He adopted the attitude *40 that since free trade and all that laisser-faire principles implied was now the accepted policy, since the era of monopolies was said to have passed and competition was regarded as being beneficial to the community, the burden of the proof of the contention that the same system was not applicable to banking was on those who asserted it and not on those who denied it; because on the face of it those who oppose free banking oppose also freedom to build railways, and free exchange in general, which, as he knew, they did not do, and he insisted that they had as yet given no sufficient reason for the attitude they took towards banking. Wolowski took up the other side in a book *41 of extensive proportions, which contained, however, no very original additions to what had already been said on the subject. It was almost wholly a repetition of the views expressed by others and a commentary on the trend of policy already adopted in the matter. But his doctrinal importance in the French developments must not be under-estimated, for he stood out among the French school as the most emphatic adherent of the use of the rate of discount as a means of controlling specie flows.