Editing David Ricardo (section)

===Banking===

[[Adam Smith]] argued that [[Commercial banking|free commercial banking]], such as the banking system in Scotland which had no [[central bank]] when ''[[Wealth of Nations]]'' was written in 1776, was favourable to economic growth. Writing just a few decades later, Ricardo argued for a central bank, a cause that was taken up by his students, including [[John Stuart Mill]], who was known to favour the ''[[laissez-faire]]'' policies in every place but banking.

Ricardo wrote the ''Plan for the Establishment of a National Bank'' (published posthumously in 1824), which argued for the autonomy of the central bank as the issuer of money.<ref name=bindseil2019>{{cite book |title=The Oxford Handbook of the Economics of Central Banking |date = 15 March 2019|url=https://books.google.com/books?id=jtmUDwAAQBAJ |page=59|publisher = Oxford University Press|isbn = 978-0-19-062619-8}}</ref>

Ricardo proposed that a ratio of gold and Treasury bills, and a fixed claim (asset) against the government, would secure the central bank's liquidity:<ref name=binsdseil2019>{{cite book |last=Bindseil |first=Ulrich |title=Central Banking Before 1800: A Rehabilitation |publisher=Oxford University Press |date=2019 |isbn=978-0-19-884999-5 |url=https://books.google.com/books?id=fNrBDwAAQBAJ}}</ref>

<blockquote>The public, or the Government on behalf of the public, is indebted to the Bank in a sum of money larger than the whole amount of Bank notes in circulation; for the Government not only owes the Bank fifteen million, its original capital, which is lent at 3 per cent. interest, but also many more millions which are advanced on Exchequer bills, on half-pay and pension annuities, and on other securities. It is evident, therefore, that if the Government itself were to be the sole issuer of paper money instead of borrowing it of the Bank, the only difference would be with respect to the interest: the Bank would no longer receive interest and the Government would no longer pay it; but all other classes in the community would be exactly in the same position in which they now stand.</blockquote>

Ricardo was a man of many trades, economically and financially speaking. Ricardo was able to recognize and identify the problem presented through banking within regulations and debauched standards of approval at certain times. Ricardo knew that banks in rural areas as well as the Bank of England had increased note lending and overall lending in 1810. Through this, Ricardo proved subsequent changes in price level through the market was also affected and thus new regulations needed to be made available. Furthermore, Ricardo was able to understand and distinguish the socioeconomic makeup that created and established parameters around different classes within the economy. Ricardo advocated for the productive powers of labour to be held in high concern as the most influential of devices that played a role in the progression of the American Economy along with others. In addition, Ricardo made notable advancements in the concept build involving reactions in the open market when considering banking altercations, stock investments, or other considerable impacting events. Ricardo wanted to establish a firm ground between the bank and the control over monetary policy because there was power within the banking system that Ricardo believed needed to be considered carefully. In 1816, Ricardo said “In the present state of the law, they have the power, without any control whatever, of increasing or reducing the circulation in any degree they may think proper: a power which should neither be entrusted to the State itself, nor to anybody in it; as there can be no security for the uniformity in the value of the currency, when its augmentation or diminution depends solely on the will of the issuers.” Ricardo felt the circulation of money and the decision behind how much is available at any time should not be entrusted to either the State, or any individual. Ricardo argued for the most even distribution possible with the highest control readily available.