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).
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 2002/03 issue of The Independent Review.
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| Other Independent Review articles by Lawrence H. White | |
| Summer 2010 | Central Banking in a Free Society |
| Winter 1999/00 | The Defining Moment:The Great Depression and the American Economy in the Twentieth Century |
