Bankenfreiheit und Noten-Überemission MCCULLOCH, LONGFIELD, der Schweizer Franken und die "small note mania" in Schottland

The confidence in the alleged stability of a free banking system chiefly rests on two pillars: the so called law of adverse clearings and the possibility of an external drain. Already in the first half of the 19th century, however, McCULLOCH and LONGFIELD have shown that this position may at least be questioned for theoretical reasons. During the small note mania in Scotland (c. 1760-1765) and the final years of the free banking era in Switzerland (1880-1906), moreover, considerable over-issues of banknotes had been observed, and the conditions under which they had taken place completely conform to the picture depicted by these two critics and their adherents.