From: tribble@xanadu.com (E. Dean Tribble)
Date: Mon, 30 Nov 92 11:15:21 PST
To: uunet!us.oracle.com!rchilder@uunet.UU.NET
Subject: credibility and banking It seems to me that there are many parallels between this state of affairs and that which prevailed in the American West of the 1800s, with respect to banking .... there were no agencies insuring deposits, and only the rep- -utation of the bank's president - usually a leader of the community - was guarantee upon the funds. Bank robberies were not uncommon, depositors were
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Our mechanisms for estimating credibility of a guarantor partly assume
that life can be made difficult for the guarantor if they renege.
Those intuitions are often completely wrong if the guarantor is
anonymous.  That's the main point of what I was saying.

	 few, runs on the bank, I speculate, may not have been unknown in those cir-
	 -cumstances where the community of bank depositors lost confidence in the
	 bank or its officers.

My understanding of the history of banking is that there are ZERO
documented cases of runs on banks before the gov't started mucking
with the banking industry.  They started that mucking based on some
economists projection that such a run could happen, so the gov't had
to protect the pipul from it.

	 It would be interesting to further study the origins of banking, as I expect
	 such a study would provide many such parallels by which the case for digi-
	 -tized banking could be made stronger ...

It also has strong arguments for free banking, which is consequence of
cryptographic electronic banking.

dean