Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Central and Free Banking Theory 613THE RESPONSE OF THE ENGLISH-SPEAKING WORLDTO THESE IDEAS ON BANK MONEYAlthough a comprehensive analysis of the evolution ofmonetary thought from the scholastics to the English ClassicalSchool would exceed the scope of this book, 20 it is fitting thatwe should comment briefly on the evolution of ideas concerningfractional-reserve banking up to the time the controversybetween the Banking and Currency Schools officially arose, innineteenth-century Britain.The seminal monetary ideas conceived by members of theSchool of Salamanca later won the support of Italians BernardoDavanzati 21 and Geminiano Montanari, whose book, La moneta,was published in 1683. 22 In their treatises these theoriststake the contributions of the School of Salamanca as a startingpoint and go on to develop the quantity theory ofmoney as presented by Azpilcueta and other scholastics.Although the influence of this intellectual monetary trendsoon spread to England, basically through the works of SirWilliam Petty (1623–1687), 23 John Locke (1632–1704), 24 and20 A brilliant, concise summary of this monetary history appears withthe title, “English Monetary Policy and the Bullion Debate,” in chapters9–14 (part 3) of volume 3 of F.A. Hayek’s The Collected Works. See alsoD.P. O’Brien, The Classical Economists (Oxford: Oxford University Press,1975), chap. 6; and Rothbard, Classical Economics, chaps. 5 and 6.21 An English translation of Davanzati’s book, entitled A Discourse uponCoins, was published in 1696 (London: J. D. and J. Churchill, 1696).22 Montanari’s book was originally entitled La zecca in consulta di statoand was reprinted as La moneta in Scrittori classici italiani di economíapolítica (Milan: G. Destefanis, 1804), vol. 3.23 See Sir William Petty’s Quantulumcumque Concerning Money, 1682,included in The Economic Writings of Sir William Petty (New York: AugustusM. Kelley, 1964), vol. 1, pp. 437–48.24 Locke’s writings on monetary theory include “Some Considerations ofthe Consequences of the Lowering of Interest, and Raising the Value ofMoney” (London: Awnsham and John Churchill, 1692) and his “FurtherConsiderations Concerning Raising the Value of Money” (London:Awnsham and John Churchill, 1695). Both of these pieces were reprintedin The Works of John Locke, 12th ed. (London: C. and J. Rivington, 1824),