Adam Smith on the New £20 Banknote

The Bank of England announced the making of a new £20 banknote which will feature Adam Smith (see here, and here is what The Times says). It will come out in the Spring 2007. It is ironic in some way that the Bank of England features the most prominent Scottish economist on its notes.

According to Lawrence White’s Free Banking in Britain, Scotland had a free banking system from 1716 (or 1727) until it was suppressed by the Peel Act in 1845. Open-entry with note-issuing rights was given to any bank accepting unlimited liability. The irony is that the Peel Act established a Bank of England monopoly on the right of note issuance, thereby putting an end to (at least some form of) free banking in Scotland—a system Adam Smith would probably have endorsed more than a Bank of England monopoly. (For a critique of White’s thesis see Murray Rothbard’s review.) In any case, a new £20 banknote with Adam Smith is a good reason to go to the UK on vacation.

Since we are on the subject of banknotes, it is worth mentioning that the Central Bank of Kazakhstan recently made a spelling mistake on its new banknotes. The work “bank” was wrongly spelt... (see here).

Comments

[Gavin Kennedy]

The Bank of England was founded by a Scottish entrepreneur, William Paterson, so it's less surprising to have Adam Smith featured on the £20 note.

Moreover the Bank of England is the central bank for the whole of the United Kingdom and its four constituent countries, England, Scotland, Wales, and Northern Ireland, and its writ on money supply, bank regulation and interest rates apply with equal effect.

While ther is a Bank Of Scotland it is not a central bank.

Finally, Paterson was one of the powers behind the ill-fated Darien Scheme at Panama which bankrupted Scotland and the ensuing depression led to the 1707 Union of parliaments.

[Mario Rizzo]

I guess Borat is right about Kazakhstan!