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MoneyWhence It Came, Where It Went$
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John Kenneth Galbraith

Print publication date: 2017

Print ISBN-13: 9780691171661

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691171661.001.0001

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The bank

The bank

(p.33) Chapter 4 The bank

John Kenneth Galbraith

James K. Galbraith

Princeton University Press

This chapter discusses the history of central banks, with emphasis on the case of the Bank of England. For a long time after John Law, Frenchmen remained deeply suspicious of banks and bank notes, of any money that was not made of metal. The chapter considers the reforms that occurred in the banking industry, led by the Bank of England, which gradually emerged as the guardian of the money supply as well as of the financial concerns of the government of England during the period 1720–1780. It also examines the 1811 debate on the nature of money and its management, focusing on David Ricardo's arguments about money in relation to the gold standard. Finally, it looks at the Bank of England's role in introducing the use the two historic instruments of central bank policy: open-market operations and the bank rate.

Keywords:   central banks, Bank of England, banks, bank notes, money, money supply, David Ricardo, gold standard, open-market operations, bank rate

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