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Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking

Author

Listed:
  • Hugh Rockoff

    (Rutgers)

Abstract
Adam Smith and Milton Friedman are famous for championing Laissez Faire, yet both supported government regulation of the banking system. In both cases their deviation from free market orthodoxy was based on a careful reading of financial history: especially Smith's reading of the Crisis of 1772 and Friedman's reading of the Crisis of 1929-33. In both cases they based their reading on a complex and nuanced account of human nature. This paper describes their parallel journeys to the conclusion that banking requires government regulation.

Suggested Citation

  • Hugh Rockoff, 2010. "Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking," Departmental Working Papers 201004, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:201004
    as

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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2010-04.pdf
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    References listed on IDEAS

    as
    1. White, Eugene Nelson, 1984. "A Reinterpretation of the Banking Crisis of 1930," The Journal of Economic History, Cambridge University Press, vol. 44(1), pages 119-138, March.
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    7. Jadlow, Joseph M, 1977. "Adam Smith on Usury Laws," Journal of Finance, American Finance Association, vol. 32(4), pages 1195-1200, September.
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    10. Schwartz, Anna J., 2009. "Money in Historical Perspective," National Bureau of Economic Research Books, University of Chicago Press, number 9780226742298, September.
    11. Rockoff, Hugh, 1974. "The Free Banking Era: A Reexamination," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(2), pages 141-167, May.
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    15. Albert G. Hart, 1935. "The "Chicago Plan" of Banking Reform: I A Proposal for Making Monetary Management Effective in the United States," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 2(2), pages 104-116.
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    Cited by:

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    2. Alfred Duncan & Charles Nolan, 2020. "Reform of the UK Financial Policy Committee," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(1), pages 1-30, February.
    3. Sabina Andreea Cazan, 2021. "The financial crisis: a history of the economic schools of thought," Journal of Financial Studies, Institute of Financial Studies, vol. 10(6), pages 48-57, May.

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    More about this item

    Keywords

    banking; Adam Smith; Milton Friedman;
    All these keywords.

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General

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