The Rationale of Central Banking and the Free Banking Alternative

Vera Smith's book remains an authoritative and accurate summary of the theoretical arguments for and against free banking, a subject that has recently received renewed attention.

Milton Friedman, Hoover Institution

The Rationale of Central Banking was first published in England in 1936. Vera Smith spent her professional career in a variety of research positions. She wrote articles and books on money, banking, economic development, and the labor market and translated into English books by Wilhelm R pke, Oskar Morgenstern, and Fritz Machlup.

This book provides a scholarly review and judicious assessments of the experience and theory that bear on the issues of free banking and central banking. Its wide-ranging discussion identifies both the fallacies in the arguments for central banks and the influential fallacies in the arguments against free banking. Vera Smith's work should play a prominent role in any reappraisal of our monetary institutions.

Leland B. Yeager is Ludwig von Mises Distinguished Professor of Economics at Auburn University.