CONTENTS
Preface by Douglas E. French . . . . . . . . . . . . . . . . . . . . . . . . xi
Foreword by Joseph T. Salerno . . . . . . . . . . . . . . . . . . . . . . . xv
I. Money: Its Importance and Origins. . . . . . . . . . . . . . . . . . . 1
1. The Importance of Money . . . . . . . . . . . . . . . . . . . . . . . 1
2. How Money Begins . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. The Proper Qualities of Money . . . . . . . . . . . . . . . . . . . 6
4. The Money Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II. What Determines Prices: Supply and Demand . . . . . . . . 15
III. Money and Overall Prices . . . . . . . . . . . . . . . . . . . . . . . . 29
1. The Supply and Demand for Money and Overall
Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. Why Overall Prices Change . . . . . . . . . . . . . . . . . . . . 35
IV. The Supply of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
1. What Should the Supply of Money Be? . . . . . . . . . . . . 44
2. The Supply of Gold and the Counterfeiting Process . . 47
3. Government Paper Money . . . . . . . . . . . . . . . . . . . . . 51
4. The Origins of Government Paper Money . . . . . . . . . 55

V. The Demand for Money . . . . . . . . . . . . . . . . . . . . . . . . . 59
1. The Supply of Goods and Services . . . . . . . . . . . . . . . 59
2. Frequency of Payment . . . . . . . . . . . . . . . . . . . . . . . . . 60
3. Clearing Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4. Confidence in the Money . . . . . . . . . . . . . . . . . . . . . . 65
5. Inflationary or Deflationary Expectations . . . . . . . . . . 66
VI. Loan Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
VII. Deposit Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
1. Warehouse Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . 85
2. Deposit Banking and Embezzlement . . . . . . . . . . . . . . 90
3. Fractional Reserve Banking . . . . . . . . . . . . . . . . . . . . . 94
4. Bank Notes and Deposits . . . . . . . . . . . . . . . . . . . . . . 104
VIII. Free Banking and the Limits on
Bank Credit Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
IX. Central Banking: Removing the Limits . . . . . . . . . . . . . 125
X. Central Banking: Determining Total Reserves . . . . . . . . 141
1. The Demand for Cash . . . . . . . . . . . . . . . . . . . . . . . . 141
2. The Demand for Gold . . . . . . . . . . . . . . . . . . . . . . . . 148
3. Loans to the Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4. Open Market Operations. . . . . . . . . . . . . . . . . . . . . . 153
XI. Central Banking: The Process of Bank
Credit Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
1. Expansion from Bank to Bank . . . . . . . . . . . . . . . . . . 161
2. The Central Bank and the Treasury . . . . . . . . . . . . . . 170
XII. The Origins of Central Banking. . . . . . . . . . . . . . . . . . 177
1. The Bank of England . . . . . . . . . . . . . . . . . . . . . . . . . 177
2. Free Banking in Scotland . . . . . . . . . . . . . . . . . . . . . . 183
3. The Peelite Crackdown, 1844–1845 . . . . . . . . . . . . . 186