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Charles Calomiris on FinTech

Policy@McCombs

CHAPTER

What We Learned From the Free Banking Area

In 18 61, the government placed all its debt into the banks in the fall of 18 61. But when the civil war came it was a completely different story. All the debt they had just put banks fell in value dramatically. And so how did they solve that problem? You can guess: They issued bills. So what did we learn? I think we learned that this is a much better way to run a banking system. We learned that instead of giving special privileges to a few people, that it was better to have free entry, an competition.

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