Upon Daedalian Wings of Paper Money: Adam Smith and the Crisis of 1772

Hugh Rockoff

No 15594, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Adam Smith advocated laissez faire for most sectors of the economy, but he believed that banking and finance required several forms of regulation including usury laws and the prohibition of small-denomination bank notes. Smith's support for banking regulation appears to have been a response to the shocks that hit the Scottish banking system during the time that he was composing the Wealth of Nations. The most important was the Crisis of 1772, which has been described as the first modern banking crisis faced by the Bank of England. It resembles the Crisis of 2008 in a number of striking ways. This paper describes the Crisis of 1772, the other shocks that hit the Scottish banking system, and the evolution of Smith's views on the regulation of banking. It is based on Smith's writings, the secondary sources, and a quantification of the new issues of Scottish bank notes during Smith's era.

JEL-codes: N1 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-his, nep-hpe and nep-pke
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as “ Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking. ” Journal of Cultural Economy , Volume 4, Number 3 (August 2011): 255 - 284.

Downloads: (external link)
http://www.nber.org/papers/w15594.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:15594

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w15594

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().