'For Fisher, fractional reserve banking is “a very risky affair,” and “It is obvious that such a top-heavy system is dangerous.” .. the 100% plan is “incomparably the best proposal ever offered for speedily and permanently solving the problem of depressions.” ''The deposit business is older than recorded history. Deposit banking first emerged in the ancient Mesopotamian temples. Initially, the temples took deposits in grain. But eventually, the temples stored other crops, livestock, farming equipment, and the precious metals. Accountants in ancient Mesopotamia invented writing around 3300 BC to record the ownership of property, including property held on deposit.
Around 1775 BC, rules of banking were enshrined in the Code of Hammurabi. Laws 100-191 deal with trade, and these laws distinguish between the deposit contract and loan contract. Laws 120-125 deal with deposits, and law 120 affirms that the owner of deposited goods is the depositor, not the depository. Moreover, this law prohibits the depository from using goods left on deposit. Law 120 of the Code of Hammurabi constitutes a 100% reserve requirement for depositories..
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Francisco de Vitoria (1483-1586) is the father of international law and the founder of the school of Salamanca. He echoes Aquinas: “He who lends money transfers the ownership of the money to the borrower…. On the other hand he that entrusts his money to a merchant or craftsman so as to form a kind of society, does not transfer the ownership of his money to them, for it remains his.” Following Aquinas, Vitoria must be considered an advocate of 100% reserves..
..For Saravia de la Calle, those who engage in fractional reserve banking commit a mortal sin..
The Bank of Amsterdam is the most famous 100% bank in history. The bank was established in 1609 after a period of monetary chaos in Europe..
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For Fisher, fractional reserve banking is “a very risky affair,” and “It is obvious that such a top-heavy system is dangerous.” He argued the business cycle is a creature of the fractional reserve system: “Inflation and deflation of bank loans and so of ‘check-book money’ are largely responsible for great booms and depressions.” Fisher lists the benefits of 100% banking: “There would be practically no more runs on commercial banks … There would be fewer bank failures … Our Monetary System would be simplified … Banking would be simplified … [and] Great inflations and deflations would be eliminated.” Most importantly, the 100% plan is “incomparably the best proposal ever offered for speedily and permanently solving the problem of depressions.” '
- Edward W. Fuller,
100% Banking and Its Advocates: A Brief History, October 23, 2019
ContextHayek Was Right, Keynes Was Not An Economist - '..Keynes ducks entirely the role of bank credit in inflating the money-quantity..'(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'Affective Human Action - Management & Organization in The Third Millennium