Adam Smith and Milton Friedman are famous for championing Laissez Faire, yet both supported government regulation of the banking system. In both cases their deviation from free market orthodoxy was based on a careful reading of financial history: especially Smith's reading of the Crisis of 1772...

The most sophisticated monetary and banking policy advice available in the decades after 1776was found in Adam Smith’s Wealth of Nations. Smith recommended free competition amongnationwide banks of issue with only minimal legal restrictions and no legal privileges. Yetneither Alexander...