Like certain weeds and infectious diseases, some myths about banking seem beyond human powers of eradication.
I was reminded of this recently by a Facebook correspondent’s reply to my recent post on “Hayek and Free Banking.” “We had free banking in the US from 1830 until 1862,” he wrote. “It didn’t work out too well.” “During the Wildcat Era,” he added, “banks were unregulated and failed by the hundreds.”
Imagine the effect my critic must have anticipated — the crushing blow his revelations would surely deal to my cherished beliefs. Upon reading his words, my eyes widen; my jaw goes slack. Can this really be so?, I ask myself? I read the ominous sentences again, more slowly, sub-vocalizing. Beads of sweat gather across my brow. Then, pursing my lips, my eyes downcast, I turn my head, first left, then right, then left again. If only I had known! All these years…no one ever…I mean, how was I supposed…it never occurred to me… DARNITALL! Why didn’t I think of looking at the U.S. experience before shooting my mouth off about free banking?
Well, that isn’t what happened. “What cheek this fellow has!” was more like it. (OK, it wasn’t exactly that, either.) Of course I’ve looked into the U.S. record. So has Larry White. And Kevin Dowd. And every other dues-paying member of the Modern Free Banking School. We’ve looked into it, and we’ve found nothing there to change our minds concerning the advantages of freedom in banking.