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

646 Money, Bank Credit, and Economic Cycleslater, in 1920, that he expounded his famous theorem of theimpossibility of socialist economic calculation, initiating theimportant debate that would surround this topic in the followingdecades. No explicit evidence suggests Mises was awarethat the fundamental arguments he raised in 1920 on theimpossibility of socialism were also directly applicable to fractional-reservebanking, and especially to the establishment andoperation of a central bank. However in the next section wewill defend the thesis that our analysis on fractional-reservebanking and the central bank is simply a specific case whicharises when the general theorem of the theoretical impossibilityof socialism is applied to the financial sphere. 71The classification of theorists into four schools (Fractional-ReserveFree Banking, Fractional-Reserve Central Banking, Free Banking with a100 percent reserve, and Central Banking with a 100 percent reserve) ismuch clearer and more accurate than the method chosen by (amongothers) Anna J. Schwartz and Lawrence H. White, who identify onlythree schools, the Currency School, the Banking School, and the Free-Banking School. (See Anna J. Schwartz, “Banking School, CurrencySchool, Free Banking School,” pp. 148–52.)71 On the development in Spain of the doctrine in favor of the centralbank and on this doctrine’s influence on the establishment of the Spanishbank of issue, see Luis Coronel de Palma, La evolución de un banco central(Madrid: Real Academia de Jurisprudencia y Legislación, 1976), and thereferences cited therein. See also the writings of Rafael Anes, “El Bancode España, 1874–1914: un banco nacional,” and Pedro Tedde de Lorca,“La banca privada española durante la Restauración, 1874–1914.” Bothappear in volume 1 of La banca española en la Restauración (Madrid: Serviciode Estudios del Banco de España, 1974). Despite the valuable referencesincluded in these works, a history of Spanish economicthought on the debate between central- and free-banking supportershas yet to be written. The most important (fractional-reserve) free bankingtheorist in Spain was Luis María Pastor (1804–1872). See his bookLibertad de Bancos y Cola del de España (Madrid: B. Carranza, 1865).