Adam Smith on Too Big to Fail

“To restrain private people, it may be said, from receiving in payment the promissory notes of a banker for any sum, whether great or small, when they themselves are willing to receive them; or, to restrain a banker from issuing such notes, when all his neighbours are willing to accept of them, is a manifest violation of that natural liberty, which it is the proper business of law not to infringe, but to support. Such regulations may, no doubt, be considered as in some respects a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as of the most despotical. The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.”


4 comments so far

  1. tania on

    Brilliant quote. So does the perversion of the ideology of “pure, unrestrained capitalism” occur in the 19th C under modern classical liberalism, then?
    Of course, Smith was a moral philosopher first and foremost. There was a reasoning conscience in there somewhere 😉

  2. Phil on

    Hi Michael,

    What is the source?

  3. tania on

    I believe it’s from Wealth of Nations, Book II

    • mperelman on

      The quote is from Wealth of Nations, Book 2, Chapter 2, paragraph 94 II.ii.94, p. 324 of the Oxford University Press edition.

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