George Selgin

That deposit insurance wasn’t the only way to keep a banking system from collapsing was evident enough in 1933 from other countries’ experiences.

If Canada’s relatively “free” banking system was so stable, why did the Canadian government establish the Bank of Canada in 1935? And why did it establish a Canadian Deposit Insurance Corporation (CDIC) some three decades later?

“Although commercial bankers often err in deciding who to lend to, I believe they are far less likely to do so than a body of government-appointed bureaucrats.” – George Selgin

The 1933-37 recovery fell far short of reversing the collapse the U.S. economy suffered between 1929 and 1933, and that this disappointing outcome was the result of New Deal policies aimed at boosting wage rates. The resulting higher wage rates prevented the revival of spending from sponsoring a corresponding revival of employment.

The causes of the gold inflow that fueled the post-1933 recovery, and especially the part played by FDR’s decision to devalue the dollar.

During the opening days of March, 1933, the U.S. economy resembled a stricken body slowly bleeding out, its organs failing one by one. The Federal Reserve System was hemorrhaging gold, and entire state banking systems were shutting down one after another. I

To understand how the world’s largest economy ended up shutting-down its entire banking system, one must first be aware of a long-standing defect of that system and of how it led, first to the proliferation of small and under-diversified banks, and then to as many bank failures.

If ever an administration had control over Fed policy, and monetary policy more generally, FDR’s was it. It follows that, if monetary policy did less than it should have to end the Great Depression, the Roosevelt administration must bear a good share of the blame.

Although almost everyone assumes that fiscal stimulus played a big part in bringing the Great Depression to an end, the truth is that its contribution was insignificant.

The New Deal wasn’t a grand scheme at all, but an assemblage of steps and programs, many of which were decided upon or concocted only after Roosevelt took office.

I hope to introduce my readers to evidence casting doubt on the view that New Deal programs ended, or mostly ended, the Great Depression.

When I say “the New Deal,” I mean the “series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939.”

Any official effort to link the dollar to gold today would be just another act of monetary central planning.

Blame the Bankers, Not Freedom in Banking

That there was widespread support for the Scottish bank suspension did not, however, mean that the suspension left the Scottish public unscathed.

Does the Scottish suspension suggest that fractional reserve banking is, inconsistent with genuine freedom in banking, including the consistent honoring of bank customers’ property rights?

Forget about monetary policy for a moment or two, and imagine, instead, that you’re back in 6th grade. You and your classmates are about to go on a camping trip, involving some strenuous hiking, and lasting several days.

Forget about monetary policy for a moment or two, and imagine, instead, that you’re back in 6th grade. You and your classmates are about to go on a camping trip, involving some strenuous hiking, and lasting several days.

The real lessons to be learned from Canada’s 19th-century currency system.

The real lessons to be learned from Canada’s 19th-century currency system.

The real lessons to be learned from Canada’s 19th-century currency system.

Instead of endeavoring to influence a market-determined federal funds rate by reducing or increasing the supply of bank reserves, the Fed now adjusts a pair of rates determined solely by its own administrative decrees, while conducting open-market operations without any particular reference to these rate adjustments.