By Kevin Dowd
For many years, the philosophy of central banking reigned supreme, and was virtually unquestioned despite its shortcomings. Yet these problems--especially the inability to produce currency that does not inflate--have led to a resurgence in free, or laissez faire, banking. Some of this interest has focused on theoretical issues, but much historical work has been compiled on places and periods that experienced some form of free banking. The Experience of Free Bankingcontains the widest summary to date of this work, including assessments of free banking in Australia, the United States, Canada, China, Colombia, France, Scotland, and Switzerland, and a world overview. Competition in banking has been suppressed because it triggers rapid inflation, will destabilize the banking industry, and because banking is a natural monopoly. These case studies provide a historical laboratory in which these assumptions about free banking are tested, and in almost every instance, found to be invalid.