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Journal Article
Lessons from a laissez-faire payments system: the Suffolk Banking System (1825-58)
A classic example of a privately created interbank payments system was operated by the Suffolk Bank of New England (1825?58). Known as the Suffolk Banking System, it was the nation?s first regionwide net-clearing system for bank notes. While it operated, notes of all New England banks circulated at par throughout the region. Some have concluded from this experience that unfettered competition in the provision of payments services can produce an efficient payments system. But another look at the history of the Suffolk Banking System questions this conclusion. The Suffolk Bank earned ...
Working Paper
The Suffolk Banking System reconsidered
The best-known example of a privately created and well-functioning interbank payments system is the Suffolk Banking System. Operating in New England between 1825 and 1858, it was the first regionwide net-clearing system for bank notes in the United States. Some historians portray the System as being owned and managed by a coalition of large Boston banks in order to achieve a public purpose. They argue that while the System was not particularly profitable, it maintained par circulation of bank notes throughout the region. We reconsider this history and find the public-purpose view of the ...
Working Paper
Lessons from a laissez-faire payments system: the Suffolk Banking System (1825–1858)
The classic example of a privately created and well-functioning interbank payments system is the Suffolk Banking System that existed in New England between 1825 and 1858. This System, operated by the Suffolk Bank, was the first regionwide net-clearing system for bank notes in the United States. While it operated, notes of all New England banks circulated at par throughout the region. The achievements of the System have led some to conclude that unfettered competition in the provision of payments services can produce an efficient payments system. In this paper, we reexamine the history of the ...
Working Paper
Private money creation and the Suffolk Banking System
Recent legislation has removed U.S. legal impediments to issuing private bank notes. At the same time, improved transaction technologies have enabled banks and other entities to issue various forms of "e-cash." Consequently, developed economies may soon see the reemergence of privately issued substitutes for currency. The authors examine the potential economic consequences using the Bank of Suffolk as a model.