The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Banking School, Currency School, Free Banking School

  • Anna J. Schwartz
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_263

Abstract

The doctrines of the three nineteenth century schools differed. The Currency School believed that note issues should vary one-to-one with the Bank of England’s gold reserves. The Banking School believed that real bills, needs of trade and the law of reflux should govern bank operations. The Free Banking School believed that competitive private banks would not overissue, whereas a monopoly issuer did so. Other issues were debated. Was a central bank needed? Should a central bank be subject to rules or allowed discretion? How should money be defined? No one point of view carried the day and several of the issues that divided the schools are still debated today.

Keywords

Balance of payments Bank Charter Act 1833 (UK) Bank Charter Act 1844 (UK) Bank of England Bank of Ireland Bank of Scotland Banking School Bullion reserve Central banking Convertibility Country banks Credit Currency principle Currency School Free Banking School Fullarton, J. Gilbart, J. Gold standard Inflation Joint stock banking Law of reflux Longfield, M. McCulloch, J. R. Mill, J. S. Money supply Money, definition of Monopoly of note issue Needs of trade doctrine Norman, G. Note issue Overissue Overstone, Lord Parnell, H. Private banks Real bill doctrine Reserve-deposit ratio Rules versus discretion Schwartz, A. J. Scrope, G. P. Stocks and flows Tooke, T. Torrens, R. Trade cycles Wilson, J. 

JEL Classifications

N1 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Anna J. Schwartz
    • 1
  1. 1.