Conclusion

Summary

The profit of a public bank has been a source of revenue to more considerable states … not only to Hamburgh, but to Venice and Amsterdam. Revenue of this kind has even by some been thought not below the attention of so great an empire as that of Great Britain … The orderly, vigilant and parsimonious administration of such aristocracies as those of Venice and Amsterdam, is extremely proper, it appears from experience, for the management of a mercantile project of this kind. But whether such a government as that of England, which, whatever may be its virtues, has never been famous for good oeconomy; which, in time of peace, has generally conducted itself with the slothful and negligent profusion that is perhaps natural to monarchies and in time of war has constantly acted with all the thoughtless extravagance that democracies are apt to fall into; could be safely trusted with such a project, must at least be a good deal more doubtful.’

A. Smith, The Wealth of Nations (1776), p. 880

Since Adam Smith, liberal economists have remained sceptical about government banking. Smith rejected government banks as a source of public revenue, but his arguments anticipate those of recent critics. Government banks are mercantilist and interfere with free market relations. Government banks are subject to mismanagement ranging from ‘slothful and negligent profusion’ under monarchies in times of peace to ‘thoughtless extravagance’ under democracies in times of war.