-
How U.S. Government Paper Currency Began, and How Private Banknotes Ended
A couple months ago, in arguing that “The Fed should give everyone a bank account,” journalist Matt Yglesias cited what he took to be an instructive precedent: “Once upon a time, governments didn’t issue paper currency, and instead banknotes were printed privately by banks. But over time, we came to see this as a worthwhile public service.” His first sentence is certainly correct. Banknotes were redeemable paper claims on the issuing banks, which circulated as currency. Systems of freely competitive note‐issue worked quite well, as in Canada and Scotland, with the notes of different banks trading at ... (full story)