Scottish Banking before 1845: A Model for Laissez-Faire?

Abstract

During the free era in eighteenth- and early nineteenth-century Scotland, there were a number of restrictions affecting the evolution of the system. Scottish banking was characterized by restrictions on small-denomination and interest-bearing notes. There were also restrictions inhibiting the development of capital markets and entry into banking. Furthermore, the Bank of England operated as a shadow central bank for the Scottish system. These considerations call into question the use of the Scottish banking experience as the appropriate model for laissez-faire and as evidence against the legal restrictions theory of money and the new monetary economics. Copyright 1989 by Ohio State University Press.