ABSTRACT
The historian can add little to these largely theoretical reflections, for the history of credit creation in economic growth has not yet been well studied. All the same, the hints thrown out by modern studies of early banking and finance tend to suggest that in the past we have allowed ourselves to be too easily impressed by orthodox pre-Keynesian monetary theory in making our judgments of credit creation in early industrial and frontier societies. The 'wildcat5 banks of the American West and their English counterparts in the new industrial regions doubtless contributed to instability, but they may well have contributed more to growth than the scholars of a generation ago, too much in awe of another breed of bankers, were willing to recognize.83 The snag, of course, is that growth via credit creation is too easy. If there is one thing that governments find harder than to know what to do, it is when (and how) to stop doing it. The government which embarks on a course of growth-via-credit-creation without mastering this secret will soon find itself in the situation of the sorcerer's apprentice.
