Bank Quote by Murray Rothbard
“The expansionary operations of the Second Bank of the United States, coupled with its laxity toward insisting on specie payment by the state banks, impelled a further inflationary expansion of state banks on top of the spectacular enlargement of the central bank. Thus, the number of incorporated state banks rose from 232 in 1816 to 338 in 1818.”
About This Quote
Source Book: Man, Economy, and State, 1962
The Second Bank’s lax policies let state banks over‑issue paper, causing rapid inflation and a boom in bank numbers.
In simple terms: Loose central rules caused state banks to over‑expand, inflating the economy.
Key Takeaway
Watch for policy looseness that fuels credit booms.
Themes
economics
banking
inflation
policy
history
Mood
analytical
critical
Type
historical
economic
When to use this quote
- early 19th‑century US banking
- modern monetary policy debates
- financial regulation design
Key Concepts
monetary theory
federalism
financial cycles
Questions to Reflect On
- How do modern central banks prevent similar over‑expansion?
- What safeguards could limit state bank inflation?
A Different Perspective
If banks ignore specie standards, inflation can spiral despite central control.
