Now I'd probably rate this book a 2, but at the time, I enjoyed his style, or something...
Very elitist pov.
This book = Austrian School orientation;
p. 7 -Rothbard first to use interpretive appr. of Austrian monetary theory

p. 7 'praxeology' -" distinguishes Rothbard : In Rothbard's view, economic laws can be relied upon in interpreting these nonrepeatable historical events because the validity of these laws”or, better yet, their truth—can be established with certainty by praxeology, a science based on the universal experience of human action that is logically anterior to the experience of particular historical" events econ.= science

--horse hockey!

P. 8 "new economic historians view history as a laboratory in which economic theory is continually being tested." cites 'Douglass C. North, a Nobel Prize-winner in economics' as pioneer in this method...
p. 9 North = positivist w/2 problems: 1. his method limited to quantifiable vs. motivation related issues Who benefits from changes in policies and institutions
2. (p. 10) -2nd flaw = claimed rel. betw. theory history

P. 9 --says new economic historians methods leave quanti. data unexplained, miss 'purposive actions ... aimed at ' goals

p. 10 North uses history as empirical data to gather stats to test theory - economic history always changing [[he says this like it's a bad thing...]

-Rothbard focuses on motives, dismisses, J. K. Galbraith, and insists that one must understand other values and goals

P. 24 'when the steel industry lobbies for higher tariffs or reduced quotas, no sane adult, and certainly no competent historian, believes that it is doing so out of its stated concern for the public interest or national security. Despite its avowed motives, everyone clearly perceives that the primary motivation of the industry is economic,'
-Marshall Plan was to 'promote and subsidize' US export strength

P. 25 -so contextual events don't matter? 'the fact that heavy speculation against the German mark accompanied its sharp plunge on foreignexchange markets is not significant for an Austrian-oriented economic historian seeking to explain the stratospheric rise in commodity prices that characterized the German hyperinflation of the early 1920s.' --since he has supply-and-demand purchasing-power-parity theory of exchange rates,
p. 26 instead, looks at German Reichsbank motives;
--hmmm, -so he says check the motives of the decision-makers, not other factors...

P.27 states must be oligarchies because: 1. ruling class extorts taxes from productive classes, and if too many become ruling class, system breaks down,
and
2. law of comparative advantage: not everyone is talented at ruling [reminnds me of Sugar Ray Leonard's comment on his talent = 'beating up on ppl']

p. 29 'The ruling class, however, confronts one serious and ongoing problem: how to persuade the productive majority, whose tribute or taxes it consumes, that its laws, regulations, and policies are beneficial; '
--mass tax resistance on large scale bad for ruling class; intellectuals convince public to submit (claim else anarchy chaos)
P. 47 Great Britain on silver standard colonial America: pounds pence shillings;
' shilling defined as equal to 86 pure Troy grains of silver' & legal tender; 'gold guinea, weighing 129.4 grains ... equal ... silver.' -> bimetallic standard -> Gresham's Law;
-said overvalued $ circulates, undervalued leaves (out of the country or into hoards)

P. 48 government does it w/privldg of legal tender '17th, 18th-century Britain, the government maintained a mint ratio between gold and silver that consistently overvalued gold and undervalued silver in relation to world market prices'
-loss of silver, flood of gold;

-Rural areas: north: beaver fur, wampum for Indian trade, fish & corn = money; rice =$ in SC, pound of tobacco = VA currency via warehouse receipts w/full 100 % backing;
-urban & foreign trade: coins English & European (French
P. 49 'guinea, the Portuguese “joe,� the Spanish doubloon, and Brazilian coins, while silver coins included French crowns and livres.'

-asserts no need for national gov monopoly on coinage: 'indeed foreign gold and silver coins constituted much of the coinage in the United States until Congress outlawed the use of foreign coins in 1857.' free market -> foreign coin circulate w/value proportion to market weights;

-'leading specie coin circulating in America was the Spanish silver dollar, defined as consisting of 387 grains of pure silver.

-says was no scarcity of specie despite constant complaints in colonies; admits 'true that England, in a mercantilist attempt to hoard specie, kept minting for its own prerogative and outlawed minting in the colonies; it also prohibited the export of English coin to America. But this did not keep specie from America, for, as we have seen, Americans were able to import Spanish and other foreign coin, including English, from other countries'
--[[somehow this strikes me as saying if we couldn't take pounds sterling from England into Bath, that we could get by in Bath via notes from other countries -not very likely...]]

-blames specie shortage on paper money issues via Gresham's law

-1642 MA dollar = 5 shillings; (led general colonial debasement) to attract more span. dollars to mk MA exports cheaper in dollar terms;
-> inflation & end of temporary export stimulus; English outlawed it in 1707;

P. 51 but they already had paper (MA = first in 1690 in Western wrld w/paper $ ...
not counting '“card money.� The governing intendant of Quebec, Monsieur Mueles, divided some playing cards into quarters, marked them with various monetary denominations, and then issued them to pay for wages and materials sold to the government. He ordered the public to accept the cards as legal tender, and this particular issue was later redeemed in specie sent from France.' ...)

-cites medieval China as first w/paper & printing;
-claims China had boom-bust too: See GordonTullock, Paper Money "Cycle in Cathay"

-MA 'plunder expeditions' against Quebec; lost this one, no loan from merchants - December 1690 printed lbs 7000 ; paid mutinous soldiers w/ pledge: 1. redeem in gold or silver from later tax collections 2. no new notes!
-says they lied in both: months later dropped issue limit -that's inflationary, yes...

-[[but 'the bills continued unredeemed for nearly 40 years.' not a problem,since lack of redemption was due to circulating use as currency w/benefits to local economy, imho...

-Feb. 1691 issued 40,0000 lbs more -> rapid depreciation vs. specie by 40% in 1 year
- 1692 made paper $ 'compulsory legal tender for all debts at par with specie, and by granting a premium of 5 percent on all payment of debts to the government made in paper notes.' -> via Gresham's L. specie left colony, drove up prices, hampered exports from MA;
-claims thus that paper issue was caused the shortage of specie, except that gee whiz, MA couldn't pay the guys in 1690 due to lack of specie in the first place!!


'in 1690, before the orgy of paper issues began, £200,000 of silver money was available in New England; by 1711, however, with Connecticut and Rhode Island having followed suit in paper money issue, £240,000 of paper money had been issued in New England but the silver had almost disappeared from circulation.'
***----But where does he get these figures from??

---the later lack of silver does not mean paper caused the shortage -again, MA couldn't pay soldiers, BEFORE paper issue...

-He also neglects MD colony successfull issue (thus far...)
(seems he may have his own motives and point to make about fiat money...)

P. 53 gov benefited from paper which he alleges did not solve shortage...

This is only in New England, all accepting each other's notes (so what one does all must do...)

P. 54 cites MA, CT, NC & SC, RI & PA depreciations; detailed NJ -inflationary boom & deflationary depression as supply contracted;
1748 after war w/France parliament pressed to retire paper; 1751 New England paper issues prohibited -> 1764 all new paper issues prohib. & retirement of notes
RI only New England colony not to resume specie payment & retire notes rapidly

[I wonder what he means by a ' brief adjustment" to specie resumption...]
also how is he defining 'more prosperous' ?

P. 55 claims 'Rhode Island still on depreciated paper, the result was that Newport, which had been a flourishing center for West Indian imports for western Massachusetts, lost its trade to Boston and languished in the doldrums'
-claims in note 7 that RI exported inflation to MA via paper money [a bit like the Western world does via the US Dollar nowadays...]

-claims lower deflation via wheat prices for Boston than Philadelphia (specie vs. paper), stable exchange rates

***Finally mentions MD:
'8 If Rhode Island was the most inflationary of the colonies, Maryland's monetary expansion was the most bizarre. In 1733, Maryland's public land bank issued £70,000 of paper notes, of which £30,000 was given away in a fixed amount to each inhabitant of the province. This was done to universalize the circulation of the new notes, and is probably the closest approximation in history of Milton Friedman's helicopter model, in which a magical helicopter lavishes new paper money in fixed amounts of proportions to each inhabitant. The result of the measure, of course, was rapid depreciation of new notes. However, the inflationary impact of the notes was greatly lessened by tobacco still being the major money of the new colony. Tobacco was legal tender in Maryland and the paper was not receivable for all taxes. '

-clearly favors metal (specie) -gold or bimetallic?

P. 56 Private Bank Notes
-1st European banks in Venice 14th century (calls credit 'money lenders' who lent own savings)

-puts 1st England banks (lending other ppls savings) to 'scriveners' early 17th c: clerks of contracts bonds

-no deposit banks in England 'til mid-17th c after
P. 57 king Charles I confiscated lbs 200,000 in gold 1638 as 'a loan' - merchants using goldsmiths warehouses in 1660's fractional reserve banking via receipts

[how many times have we heard this story, let us count the ways...]]
-note 12 cites Tullock 'Paper Money' on China 8th century fractional reserve banking

-cite MA Land Bank of 1740 alternative to gov. paper; 1741 Parliament outlawed land bank silver banks

P. 58 MA land bank backed by wealthy merchants & land speculators

P. 59 1775 Rev. War -Gouverneur Morris of NY landed aristocracy idea fiat paper $
-retire via future state taxes
-issued
$6 million 1775 (one year); Continental paper ; total $225 million 5 years
-dramatic depreciation against specie
[which specie -silver?]

P. 60 soldiers paid in Continentals -worthless, farmers forced to accept
p. 61 -by war's end all state paper withdrawn; loan certificates also used as currency, depreciated, remained as peacetime federal debt due to Robert Morris (Phil.) agitated for par redeemable debt & fed assumption of state debts
-claims reasons 1. subsidize speculators 2. to gain federal taxing power

P. 62 Morris disciple = Alexander Hamilton
-claims Morris wanted: strong central government, federal tax power, public debt payable by permanent taxes;
-'spring of 1781, Morris introduced a bill to create the first commercial bank, as well as the first central bank, in the history of the new Republic. This bank, headed by Morris himself, the Bank of North America, was not only the first fractional reserve commercial bank in the U.S.; it was to be a privately owned central bank, modeled after the Bank of England.'
-money backed by specie, but inflationary; opened 1782 w/it's notes good for taxes at par with specie; claims all other banks forbidden

--V. very interesting note 18: 'Morris candidly put it, this windfall to the public debt speculators at the expense of the taxpayers would cause wealth to flow into those hands which could render it most productive. [b:The Power of the Purse: A History of American Public Finance 1776-1790|750100|The Power of the Purse A History of American Public Finance 1776-1790|E. James Ferguson|https://d.gr-assets.com/books/1347310546s/750100.jpg|736238] p. 124.

P 63
-bank lent to government to buy pub. debt, reimbursed via taxes
-also deposited all congressional funds, lent Congress 1.2million $
-depreciated outside Phil. (bank hq);
-end 1783 Morris had sold fed gov. stock
---note claims, in prev. Rothbard book, Morris embezzled lots for him & friends...

P. 64 end of Rev. war contraction of paper resumed imports (from G Britain he says...) - deflation by half by mid 1780's
-states trying to pay war debt w/out high taxes;
-again claims paper issues 'shortage' of money; cites NC: merchants had to accept local paper in NC but couldn't pay foreign creditors w/it.
-claims Bank of No America didn't help: Banks of NY & MA (Boston) both got regional

P. 65 monopolies -> expansion & then contraction of credit, making recession worse

-bimetallic coin -quotes Jefferson in J. Laurence Laughlin 1901: spanish silver dollar ubiquitousness -> dollar = basic US currency

- new Constitution (Article I section 8) coinage powers -> 'Coinage Act of 1792 on the recommendation of Secretary of Treasury Alexander Hamilton’s “Report on the Establishment of a Mint� of the year before.25 '
-fixed 15-1 silver - gold, silver dollar & $10 gold eagle;
-problem = market fluxuations via Mexican silver mines -> '15.75-to-1. The latter figure was enough of a gap between the market and mint ratios to set Gresham’s Law into operation so that by 1810 gold' -> gold leaving US, silver flooding US
-says 1810-1834 only had silver coin in US


p. 68 complex left 'of Gresham’s Law, the United States was left, especially after 1820, with no gold coins and only Spanish fractional silver coin in circulation.32'
-alleges 'scarcity' of specie was made up...
-claims Hamilton allied w/Morris, continuation of Bank of No America: 'Bank of the United States in February 1791. The charter of the bank was for 20 years, and it was assured a monopoly of the privilege of having a national charter...'

p. 69 -'Bank of the United States engaged in massive temporary lending to the government, which reached $6.2 million by 1796' -> inflation (cites 'wholesale prices rose from an index of 85 in 1791 to a peak of 146 in 1796, an increase of 72 percent.34In addition, speculation boomed in government securities and real estate values were driven upward.35'
-loves to use the word 'pyramiding' as in pyramid scheme? ...
-claims commercial banks boomed: 'eight new banks were founded shortly thereafter, in 1791 and 1792, and 10 more by 1796.' -> 18 new banks in 5 years
--> 'grave constitutional argument, the Jeffersonians arguing that the Constitution gave the federal government no power to establish a bank. Hamilton, in turn, paved the way for virtually unlimited expansion of federal power by maintaining that the Constitution “implied� a grant of power for carrying out vague national goals. The Hamiltonian interpretation won out officially in the decision of Supreme Court Justice John Marshall in McCulloch v. Maryland(1819).37'
-says Justice John Marshall repeated Hamilton's args in Dunne 1960 'Monetary Decisions of the Supreme Court'

p. 72 merchants favored recharter;
-note 41 says state banks also favored recharter, not restrained terribly by central bank...

P. 73 War of 1812 -New England against, few bonds;
-claims fed. gov. encouraged inflationary banks in rest of country, used those notes to buy goods in New England
--now he makes 'heroic assumptions' to guess estimate money stock in 1811...
*[note great methodology imho...]


P. 74 New England banks asking other banks to redeem in specie blamed for August 1814 suspending of specie payments 'to stop all redemption of notes and deposits in gold or silver' while operating
-calls a flagrant violation of property rights'

P. 75 says banks increased, reserves dropped, inflation major 1815
-claims other historians blame inflation on lack of central bank
-he blames Federal Government
-many Treasure notes; used as money and reserves (accepted for debts & taxes so it was quasi-legal tender)

P. 76 -> inflation & Gresham's Law drove specie to New England & abroad
-cites wholesale price increase especially w/imports
-set precedent for banks to ignore contracts during crisis
P. 77 -says free banking only when banks just like any other business, but they weren't ;
-complains 'Burdened by he tradition of allowing general suspensions that arose in the United States in 1814, the pre–Civil War banking system, despite strong elements of competition when not saddled with a central bank, must rather be termed in the phrase of one economist, as “Decentralization without Freedom.�46 '

P. 78 'bank note detectors' = monthly journals by 'money brokers' listing note - specie ratios of various banks
-wildcat banks just issued money & didn't redeem, located in hard to find places

p. 79 says if gov didn't allow banks to suspend specie payment this wouldn't have happened
-says money brokers often not welcomed in small towns by locals, blamed stranger for bank collapse
-panic of 1819: MD & PA passed laws requiring full redemption, but allowing ignoring of money brokers
-note 48
P. 80 -note 48 show VT & NY cases dubbing money brokers as money grubbers...
-GA banks pennies & oaths for specie;
-NC & MD not paying & charging licensing fees to money brokers

[[Obviously the locals see a problem with large redemptions from out of state; but if the point of money is to help the local economy, their POV is right...]]

P. 81 MD par laws and penalties only helped specie leave
-KY, TN, Missouri forced debtors to accept bank paper
-claims all states accepted bank notes for taxes or state debts
P. 82 quotes 'Philadelphia state Senator Condy Raguet, and the eminent English economist David Ricardo' letter: all USA either own bank stock or in debt to them...

P. 83 1816 Second Bank of US -opened January 1817, gave loan to NY, Phil. Baltimore & VA banks before they resumed specie payments
-mutual support agreement (he says = prop up state banks)

P. 85 paper stayed, specie (quotes Bray Hammond) better, but not good
P. 86 -claims inflation, lack of redemption in specie, & fraud, esp. in Phil. & Baltimore branches (esp. in Baltimore, he says)

P. 87 -says western & southern branches inflated notes & redeemed in NY & Boston
-blames Second Bank for inflation & expansion of state banks

P. 88 money ; credit expansion -> 'fullscale inflationary boom. Prices rose greatly in real estate, land, farm improvement projects, and slaves, much of it fueled by the use of bank credit for speculation: real estate.'
...[interesting: shaky state banks were good for locals, but centralizing on a North Eastern model would hurt planters; Banks owned the land...]]

( )

The book was assembled by Joseph Salerno from pieces that Rothbard had published over decades, and other comments that he left only in manuscript form. The ‘Introduction’ by Salerno describes and details these sources. After that preamble, the result is pure Rothbard, who reports a centuries long struggle by government and banking forces to replace sound money with inflated currency. He also shows how this struggle was the basis of financial panics, recessions, and depression throughout that time. In our early history these were shorter lived and sometimes localized, while in current times they began in WWI and have accelerated ever since.

While the detail can be overbearing, there is a great deal of material provided to support his overall view, and the clarity of his thought is unavoidable. The thoughts are obvious, his conclusions are largely unarguable. The only drawback is that combining fragments written at various times means that sometimes the sequence of history is a bit hard to follow. But the book provides an excellent source if you are trying to understand the inflation process. ( )

Now I'd probably rate this book a 2, but at the time, I enjoyed his style, or something...
Very elitist pov.
This book = Austrian School orientation;
p. 7 -Rothbard first to use interpretive appr. of Austrian monetary theory

p. 7 'praxeology' -" distinguishes Rothbard : In Rothbard's view, economic laws can be relied upon in interpreting these nonrepeatable historical events because the validity of these laws”or, better yet, their truth—can be established with certainty by praxeology, a science based on the universal experience of human action that is logically anterior to the experience of particular historical" events econ.= science

--horse hockey!

P. 8 "new economic historians view history as a laboratory in which economic theory is continually being tested." cites 'Douglass C. North, a Nobel Prize-winner in economics' as pioneer in this method...
p. 9 North = positivist w/2 problems: 1. his method limited to quantifiable vs. motivation related issues Who benefits from changes in policies and institutions
2. (p. 10) -2nd flaw = claimed rel. betw. theory history

P. 9 --says new economic historians methods leave quanti. data unexplained, miss 'purposive actions ... aimed at ' goals

p. 10 North uses history as empirical data to gather stats to test theory - economic history always changing [[he says this like it's a bad thing...]

-Rothbard focuses on motives, dismisses, J. K. Galbraith, and insists that one must understand other values and goals

P. 24 'when the steel industry lobbies for higher tariffs or reduced quotas, no sane adult, and certainly no competent historian, believes that it is doing so out of its stated concern for the public interest or national security. Despite its avowed motives, everyone clearly perceives that the primary motivation of the industry is economic,'
-Marshall Plan was to 'promote and subsidize' US export strength

P. 25 -so contextual events don't matter? 'the fact that heavy speculation against the German mark accompanied its sharp plunge on foreignexchange markets is not significant for an Austrian-oriented economic historian seeking to explain the stratospheric rise in commodity prices that characterized the German hyperinflation of the early 1920s.' --since he has supply-and-demand purchasing-power-parity theory of exchange rates,
p. 26 instead, looks at German Reichsbank motives;
--hmmm, -so he says check the motives of the decision-makers, not other factors...

P.27 states must be oligarchies because: 1. ruling class extorts taxes from productive classes, and if too many become ruling class, system breaks down,
and
2. law of comparative advantage: not everyone is talented at ruling [reminnds me of Sugar Ray Leonard's comment on his talent = 'beating up on ppl']

p. 29 'The ruling class, however, confronts one serious and ongoing problem: how to persuade the productive majority, whose tribute or taxes it consumes, that its laws, regulations, and policies are beneficial; '
--mass tax resistance on large scale bad for ruling class; intellectuals convince public to submit (claim else anarchy chaos)
P. 47 Great Britain on silver standard colonial America: pounds pence shillings;
' shilling defined as equal to 86 pure Troy grains of silver' & legal tender; 'gold guinea, weighing 129.4 grains ... equal ... silver.' -> bimetallic standard -> Gresham's Law;
-said overvalued $ circulates, undervalued leaves (out of the country or into hoards)

P. 48 government does it w/privldg of legal tender '17th, 18th-century Britain, the government maintained a mint ratio between gold and silver that consistently overvalued gold and undervalued silver in relation to world market prices'
-loss of silver, flood of gold;

-Rural areas: north: beaver fur, wampum for Indian trade, fish & corn = money; rice =$ in SC, pound of tobacco = VA currency via warehouse receipts w/full 100 % backing;
-urban & foreign trade: coins English & European (French
P. 49 'guinea, the Portuguese “joe,� the Spanish doubloon, and Brazilian coins, while silver coins included French crowns and livres.'

-asserts no need for national gov monopoly on coinage: 'indeed foreign gold and silver coins constituted much of the coinage in the United States until Congress outlawed the use of foreign coins in 1857.' free market -> foreign coin circulate w/value proportion to market weights;

-'leading specie coin circulating in America was the Spanish silver dollar, defined as consisting of 387 grains of pure silver.

-says was no scarcity of specie despite constant complaints in colonies; admits 'true that England, in a mercantilist attempt to hoard specie, kept minting for its own prerogative and outlawed minting in the colonies; it also prohibited the export of English coin to America. But this did not keep specie from America, for, as we have seen, Americans were able to import Spanish and other foreign coin, including English, from other countries'
--[[somehow this strikes me as saying if we couldn't take pounds sterling from England into Bath, that we could get by in Bath via notes from other countries -not very likely...]]

-blames specie shortage on paper money issues via Gresham's law

-1642 MA dollar = 5 shillings; (led general colonial debasement) to attract more span. dollars to mk MA exports cheaper in dollar terms;
-> inflation & end of temporary export stimulus; English outlawed it in 1707;

P. 51 but they already had paper (MA = first in 1690 in Western wrld w/paper $ ...
not counting '“card money.� The governing intendant of Quebec, Monsieur Mueles, divided some playing cards into quarters, marked them with various monetary denominations, and then issued them to pay for wages and materials sold to the government. He ordered the public to accept the cards as legal tender, and this particular issue was later redeemed in specie sent from France.' ...)

-cites medieval China as first w/paper & printing;
-claims China had boom-bust too: See GordonTullock, Paper Money "Cycle in Cathay"

-MA 'plunder expeditions' against Quebec; lost this one, no loan from merchants - December 1690 printed lbs 7000 ; paid mutinous soldiers w/ pledge: 1. redeem in gold or silver from later tax collections 2. no new notes!
-says they lied in both: months later dropped issue limit -that's inflationary, yes...

-[[but 'the bills continued unredeemed for nearly 40 years.' not a problem,since lack of redemption was due to circulating use as currency w/benefits to local economy, imho...

-Feb. 1691 issued 40,0000 lbs more -> rapid depreciation vs. specie by 40% in 1 year
- 1692 made paper $ 'compulsory legal tender for all debts at par with specie, and by granting a premium of 5 percent on all payment of debts to the government made in paper notes.' -> via Gresham's L. specie left colony, drove up prices, hampered exports from MA;
-claims thus that paper issue was caused the shortage of specie, except that gee whiz, MA couldn't pay the guys in 1690 due to lack of specie in the first place!!


'in 1690, before the orgy of paper issues began, £200,000 of silver money was available in New England; by 1711, however, with Connecticut and Rhode Island having followed suit in paper money issue, £240,000 of paper money had been issued in New England but the silver had almost disappeared from circulation.'
***----But where does he get these figures from??

---the later lack of silver does not mean paper caused the shortage -again, MA couldn't pay soldiers, BEFORE paper issue...

-He also neglects MD colony successfull issue (thus far...)
(seems he may have his own motives and point to make about fiat money...)

P. 53 gov benefited from paper which he alleges did not solve shortage...

This is only in New England, all accepting each other's notes (so what one does all must do...)

P. 54 cites MA, CT, NC & SC, RI & PA depreciations; detailed NJ -inflationary boom & deflationary depression as supply contracted;
1748 after war w/France parliament pressed to retire paper; 1751 New England paper issues prohibited -> 1764 all new paper issues prohib. & retirement of notes
RI only New England colony not to resume specie payment & retire notes rapidly

[I wonder what he means by a ' brief adjustment" to specie resumption...]
also how is he defining 'more prosperous' ?

P. 55 claims 'Rhode Island still on depreciated paper, the result was that Newport, which had been a flourishing center for West Indian imports for western Massachusetts, lost its trade to Boston and languished in the doldrums'
-claims in note 7 that RI exported inflation to MA via paper money [a bit like the Western world does via the US Dollar nowadays...]

-claims lower deflation via wheat prices for Boston than Philadelphia (specie vs. paper), stable exchange rates

***Finally mentions MD:
'8 If Rhode Island was the most inflationary of the colonies, Maryland's monetary expansion was the most bizarre. In 1733, Maryland's public land bank issued £70,000 of paper notes, of which £30,000 was given away in a fixed amount to each inhabitant of the province. This was done to universalize the circulation of the new notes, and is probably the closest approximation in history of Milton Friedman's helicopter model, in which a magical helicopter lavishes new paper money in fixed amounts of proportions to each inhabitant. The result of the measure, of course, was rapid depreciation of new notes. However, the inflationary impact of the notes was greatly lessened by tobacco still being the major money of the new colony. Tobacco was legal tender in Maryland and the paper was not receivable for all taxes. '

-clearly favors metal (specie) -gold or bimetallic?

P. 56 Private Bank Notes
-1st European banks in Venice 14th century (calls credit 'money lenders' who lent own savings)

-puts 1st England banks (lending other ppls savings) to 'scriveners' early 17th c: clerks of contracts bonds

-no deposit banks in England 'til mid-17th c after
P. 57 king Charles I confiscated lbs 200,000 in gold 1638 as 'a loan' - merchants using goldsmiths warehouses in 1660's fractional reserve banking via receipts

[how many times have we heard this story, let us count the ways...]]
-note 12 cites Tullock 'Paper Money' on China 8th century fractional reserve banking

-cite MA Land Bank of 1740 alternative to gov. paper; 1741 Parliament outlawed land bank silver banks

P. 58 MA land bank backed by wealthy merchants & land speculators

P. 59 1775 Rev. War -Gouverneur Morris of NY landed aristocracy idea fiat paper $
-retire via future state taxes
-issued
$6 million 1775 (one year); Continental paper ; total $225 million 5 years
-dramatic depreciation against specie
[which specie -silver?]

P. 60 soldiers paid in Continentals -worthless, farmers forced to accept
p. 61 -by war's end all state paper withdrawn; loan certificates also used as currency, depreciated, remained as peacetime federal debt due to Robert Morris (Phil.) agitated for par redeemable debt & fed assumption of state debts
-claims reasons 1. subsidize speculators 2. to gain federal taxing power

P. 62 Morris disciple = Alexander Hamilton
-claims Morris wanted: strong central government, federal tax power, public debt payable by permanent taxes;
-'spring of 1781, Morris introduced a bill to create the first commercial bank, as well as the first central bank, in the history of the new Republic. This bank, headed by Morris himself, the Bank of North America, was not only the first fractional reserve commercial bank in the U.S.; it was to be a privately owned central bank, modeled after the Bank of England.'
-money backed by specie, but inflationary; opened 1782 w/it's notes good for taxes at par with specie; claims all other banks forbidden

--V. very interesting note 18: 'Morris candidly put it, this windfall to the public debt speculators at the expense of the taxpayers would cause wealth to flow into those hands which could render it most productive. [b:The Power of the Purse: A History of American Public Finance 1776-1790|750100|The Power of the Purse A History of American Public Finance 1776-1790|E. James Ferguson|https://d.gr-assets.com/books/1347310546s/750100.jpg|736238] p. 124.

P 63
-bank lent to government to buy pub. debt, reimbursed via taxes
-also deposited all congressional funds, lent Congress 1.2million $
-depreciated outside Phil. (bank hq);
-end 1783 Morris had sold fed gov. stock
---note claims, in prev. Rothbard book, Morris embezzled lots for him & friends...

P. 64 end of Rev. war contraction of paper resumed imports (from G Britain he says...) - deflation by half by mid 1780's
-states trying to pay war debt w/out high taxes;
-again claims paper issues 'shortage' of money; cites NC: merchants had to accept local paper in NC but couldn't pay foreign creditors w/it.
-claims Bank of No America didn't help: Banks of NY & MA (Boston) both got regional

P. 65 monopolies -> expansion & then contraction of credit, making recession worse

-bimetallic coin -quotes Jefferson in J. Laurence Laughlin 1901: spanish silver dollar ubiquitousness -> dollar = basic US currency

- new Constitution (Article I section 8) coinage powers -> 'Coinage Act of 1792 on the recommendation of Secretary of Treasury Alexander Hamilton’s “Report on the Establishment of a Mint� of the year before.25 '
-fixed 15-1 silver - gold, silver dollar & $10 gold eagle;
-problem = market fluxuations via Mexican silver mines -> '15.75-to-1. The latter figure was enough of a gap between the market and mint ratios to set Gresham’s Law into operation so that by 1810 gold' -> gold leaving US, silver flooding US
-says 1810-1834 only had silver coin in US


p. 68 complex left 'of Gresham’s Law, the United States was left, especially after 1820, with no gold coins and only Spanish fractional silver coin in circulation.32'
-alleges 'scarcity' of specie was made up...
-claims Hamilton allied w/Morris, continuation of Bank of No America: 'Bank of the United States in February 1791. The charter of the bank was for 20 years, and it was assured a monopoly of the privilege of having a national charter...'

p. 69 -'Bank of the United States engaged in massive temporary lending to the government, which reached $6.2 million by 1796' -> inflation (cites 'wholesale prices rose from an index of 85 in 1791 to a peak of 146 in 1796, an increase of 72 percent.34In addition, speculation boomed in government securities and real estate values were driven upward.35'
-loves to use the word 'pyramiding' as in pyramid scheme? ...
-claims commercial banks boomed: 'eight new banks were founded shortly thereafter, in 1791 and 1792, and 10 more by 1796.' -> 18 new banks in 5 years
--> 'grave constitutional argument, the Jeffersonians arguing that the Constitution gave the federal government no power to establish a bank. Hamilton, in turn, paved the way for virtually unlimited expansion of federal power by maintaining that the Constitution “implied� a grant of power for carrying out vague national goals. The Hamiltonian interpretation won out officially in the decision of Supreme Court Justice John Marshall in McCulloch v. Maryland(1819).37'
-says Justice John Marshall repeated Hamilton's args in Dunne 1960 'Monetary Decisions of the Supreme Court'

p. 72 merchants favored recharter;
-note 41 says state banks also favored recharter, not restrained terribly by central bank...

P. 73 War of 1812 -New England against, few bonds;
-claims fed. gov. encouraged inflationary banks in rest of country, used those notes to buy goods in New England
--now he makes 'heroic assumptions' to guess estimate money stock in 1811...
*[note great methodology imho...]


P. 74 New England banks asking other banks to redeem in specie blamed for August 1814 suspending of specie payments 'to stop all redemption of notes and deposits in gold or silver' while operating
-calls a flagrant violation of property rights'

P. 75 says banks increased, reserves dropped, inflation major 1815
-claims other historians blame inflation on lack of central bank
-he blames Federal Government
-many Treasure notes; used as money and reserves (accepted for debts & taxes so it was quasi-legal tender)

P. 76 -> inflation & Gresham's Law drove specie to New England & abroad
-cites wholesale price increase especially w/imports
-set precedent for banks to ignore contracts during crisis
P. 77 -says free banking only when banks just like any other business, but they weren't ;
-complains 'Burdened by he tradition of allowing general suspensions that arose in the United States in 1814, the pre–Civil War banking system, despite strong elements of competition when not saddled with a central bank, must rather be termed in the phrase of one economist, as “Decentralization without Freedom.�46 '

P. 78 'bank note detectors' = monthly journals by 'money brokers' listing note - specie ratios of various banks
-wildcat banks just issued money & didn't redeem, located in hard to find places

p. 79 says if gov didn't allow banks to suspend specie payment this wouldn't have happened
-says money brokers often not welcomed in small towns by locals, blamed stranger for bank collapse
-panic of 1819: MD & PA passed laws requiring full redemption, but allowing ignoring of money brokers
-note 48
P. 80 -note 48 show VT & NY cases dubbing money brokers as money grubbers...
-GA banks pennies & oaths for specie;
-NC & MD not paying & charging licensing fees to money brokers

[[Obviously the locals see a problem with large redemptions from out of state; but if the point of money is to help the local economy, their POV is right...]]

P. 81 MD par laws and penalties only helped specie leave
-KY, TN, Missouri forced debtors to accept bank paper
-claims all states accepted bank notes for taxes or state debts
P. 82 quotes 'Philadelphia state Senator Condy Raguet, and the eminent English economist David Ricardo' letter: all USA either own bank stock or in debt to them...

P. 83 1816 Second Bank of US -opened January 1817, gave loan to NY, Phil. Baltimore & VA banks before they resumed specie payments
-mutual support agreement (he says = prop up state banks)

P. 85 paper stayed, specie (quotes Bray Hammond) better, but not good
P. 86 -claims inflation, lack of redemption in specie, & fraud, esp. in Phil. & Baltimore branches (esp. in Baltimore, he says)

P. 87 -says western & southern branches inflated notes & redeemed in NY & Boston
-blames Second Bank for inflation & expansion of state banks

P. 88 money ; credit expansion -> 'fullscale inflationary boom. Prices rose greatly in real estate, land, farm improvement projects, and slaves, much of it fueled by the use of bank credit for speculation: real estate.'
...[interesting: shaky state banks were good for locals, but centralizing on a North Eastern model would hurt planters; Banks owned the land...]]

( )