Accounting for Fractional-Reserve Banknotes and Deposits—or, What’s Twenty Quid to the Bloody Midland Bank?
By Lawrence H. White
This article appeared in the Winter 2003 issue of The Independent Review


Contrary to Hülsmann, fractional-reserve banking prevailed over warehouse banking by offering customers a better deal, not by government intervention. No examples of the legal suppression of an explicit money warehouse have ever been discovered, although examples of legally protected money warehousing can be found today, in such services as fully guaranteed gold storage and bank safe-deposit boxes (which U.S. law treats as a bailment).

Other Independent Review articles by Lawrence H. White
    Summer 2010   Central Banking in a Free Society
    Winter 2000   The Defining Moment: The Great Depression and the American Economy in the Twentieth Century

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