Tyler Beck Goodspeed on Scottish free banking

His new book is titled Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772.  From Harvard University Press, here is one summary bit:

The central argument of my thesis is thus that the salient financial crisis of the Scottish free banking period, the obtrusive exception to the hypothesis of greater financial stability under free banking in Scotland,was, pace Adam Smith, made more rather than less likely by precisely those regulated or “unfree” elements of Scottish banking which the author of The Wealth of Nations promoted.  Further, I argue that this conclusion should hardly be cause for surprise once we realize that it was none other than the oldest, largest, and most established banks in Scotland that had lobbied for Smith’s legal restrictions on banking; regulations that had the effects of raising barriers to entry, lowering competition in the provision of short-term credit, increasing the efficient scale of banking, and therefore, ultimately, amplifying the level of systematic risk in Scottish credit markets.

Finally, in support of Selgin and White, among others, I find that the relative competitiveness of the Scottish financial system — certainly in contrast to the highly bifurcated English banking sector of the time — along with the unlimited legal liability of shareholders in Scottish private banks, were sources of considerable financial stability, both in 1772 and previously.

Here is the book’s home page.