The Mystery of Banking
The Mystery of Banking (1983, second edition 2008) is Rothbard’s accessible book-length treatment of money creation, fractional-reserve banking, central banking, and the history of US banking institutions. It is the popular companion to the technical treatment in Man, Economy, and State (Man, Economy, and State) and the specialized historical work in America’s Great Depression (America’s Great Depression). The full 322-page text is now ingested into the corpus.
What the book argues
The book builds up the case against fractional-reserve banking in stages: (1) the origins of money and the regression theorem, (2) the warehouse-receipt theory of banking and the property-rights case for 100% reserves, (3) how fractional reserves create money in the broader Misesian sense and drive the credit-expansion mechanism that powers Austrian Business Cycle Theory, (4) the political economy of central banking and the Federal Reserve as an institutional amplifier of bank credit expansion, and (5) a history of US monetary regimes from the colonial era through the Federal Reserve’s founding.
The book is also the source most often cited for Rothbard’s broad money-supply criterion — every claim genuinely redeemable, in fact, on demand at par in cash is part of the money supply — which Joseph T. Salerno later formalized as the True Money Supply. Salerno’s 1987 TMS paper cites Mystery of Banking (pp. 254–62) as a primary source for the criterion.
Why the wiki cites it
The 100%-reserve-banking position the wiki adopts in 100% Reserve Banking is most accessibly stated here. Where MES (Man, Economy, and State) Ch. 11 §B and Ch. 12 §A develop the technical apparatus and AGD (America’s Great Depression) Ch. 4 applies the broad money-supply criterion to a specific historical episode, Mystery of Banking is the integrated narrative version that operators and contributors should send people to as the first reading on the Austrian case against fractional reserves.
Bibliographic note
- First edition: Richardson & Snyder / Dutton, 1983.
- Second edition: Ludwig von Mises Institute, 2008 (Douglas E. French sponsorship); this is the version ingested and the one available free as a PDF from the Mises Institute.
- ISBN (2nd ed.): 978-1-933550-28-2.
- Source: https://mises.org/library/book/mystery-banking
- PDF: https://cdn.mises.org/Mystery%20of%20Banking_2.pdf
See Also
- Murray N. Rothbard — author reference
- Man, Economy, and State — Rothbard’s technical treatment of the same material
- America’s Great Depression — empirical application of the broad money-supply criterion
- The Theory of Money and Credit — Mises’s earlier work that Mystery of Banking extends and popularizes
- Joseph T. Salerno — the Austrian monetary economist who formalized Rothbard’s money-supply criterion from this book into TMS
- 100% Reserve Banking — the position the book most accessibly defends
- Monetary Aggregates and Credit Expansion — the measurement framework whose Rothbardian basis is this book
Sources
- The Mystery of Banking — Full Text Aggregate — 322-page PDF extracted via pdftotext -raw (~10.5k lines). OCR clean; standard book-front-matter / index artifacts at boundaries.
- The “True” Money Supply (Salerno 1987) — endnote 1 cites Mystery of Banking (pp. 254–62) as one of Rothbard’s three primary statements of the broad money-supply criterion; this is what backs the “Salerno later formalized” claim above.