Question
cap 4 4. Walter Bagehot argued that in a natural banking system under laissez faire, none of [the banks] gets so much before the others
cap 4
4. Walter Bagehot argued that in a "natural" banking system under laissez
faire, "none of [the banks] gets so much before the others that the
others voluntarily place their reserves in its keeping."
(a) Does the Bank of England in the nineteenth century, a dominant
private commercial bank that did receive interbank deposits, provide
a counter-example to Bagehot's argument? Why, or why not?
(b) Do the CHAs in the late nineteenth-century US, in whose keeping
commercial banks did voluntarily place their reserves, provide
a counter-example? Why, or why not?
(c) What historical systems, if any, support Bagehot's argument?
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