# *The Mystery of Banking* (1983) Back to [[Murray Rothbard]] · [[Bibliography]] · Companion: [[What Has Government Done to Our Money (1963)]] **What it is:** Rothbard's textbook on money and banking (Gordon: "a textbook"). First edition Richardson & Snyder (Dutton), 1983; 2nd ed. Mises Institute 2008. It explains fractional-reserve banking with T-accounts, then traces central banking from the Bank of England to the Federal Reserve. ## Outline (from the 2nd ed. contents) 1. **Money: Its Importance and Origins** 2. **What Determines Prices: Supply and Demand** 3. **Money and Overall Prices** 4. **The Supply of Money** 5. **The Demand for Money** 6. **Loan Banking.** Lending of genuine savings is legitimate. 7. **Deposit Banking.** Warehouse receipts; **fractional reserve banking** creates money and is fraudulent in his view; bank notes and deposits. 8. **Free Banking and the Limits on Bank Credit Inflation.** Under free banking, clearing and redemption limit inflation, but do not eliminate it. 9. **Central Banking: Removing the Limits** 10. **Central Banking: Determining Total Reserves.** Demand for cash; demand for gold; loans to banks; open market operations. 11. **Central Banking: The Process of Bank Credit Expansion.** Bank-to-bank expansion; the central bank and the Treasury. 12. **The Origins of Central Banking.** The Bank of England; free banking in Scotland; Peel's Acts, 1844–45. 13. **Central Banking in the US I: The Origins.** Bank of North America; First and Second Banks of the US. 14. **US II: 1820s to the Civil War.** The Jacksonian Bank War; decentralised banking. 15. **US III: The National Banking System.** Civil War legislation; origins of the Fed. 16. **US IV: The Federal Reserve System.** Its inflationary structure and policies. 17. **Conclusion: The Present Banking Situation and What to Do About It.** The road to the present; the present money supply; "How to Return to Sound Money" (100% gold-backed dollar; abolish the Fed). - **Appendix: "The Myth of Free Banking in Scotland."** Added in the 2nd edition. It is Rothbard's critical review of Lawrence H. White's *Free Banking in Britain: Theory, Experience, and Debate, 1800–1845*, first printed in the *Review of Austrian Economics*. The 2008 preface says it was included "to correct Rothbard's initial support of White's work in the first edition." It marks the continuing split between Rothbardians (100% reserve) and free-banking Austrians (White, Selgin). ## Sources - Full text (2nd ed.): https://cdn.mises.org/Mystery%20of%20Banking_2.pdf - Wikipedia, "Murray Rothbard," Works: https://en.wikipedia.org/wiki/Murray_Rothbard - Gordon biography: https://mises.org/profile/murray-n-rothbard