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Money in the Western Legal TraditionMiddle Ages to Bretton Woods$
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David Fox and Wolfgang Ernst

Print publication date: 2016

Print ISBN-13: 9780198704744

Published to Oxford Scholarship Online: April 2016

DOI: 10.1093/acprof:oso/9780198704744.001.0001

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Banknotes and their Vindication in Eighteenth-Century Scotland

Banknotes and their Vindication in Eighteenth-Century Scotland

Chapter:
(p.556) 25 Banknotes and their Vindication in Eighteenth-Century Scotland
Source:
Money in the Western Legal Tradition
Author(s):

Kenneth G. C. Reid

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198704744.003.0025

The first banknotes in Scotland were issued in 1695 following the incorporation of the Bank of Scotland and were an almost immediate success. A century later no fewer than 21 banks, mainly private, issued notes, and Scotland was awash with paper money. This proliferation of paper would hardly have been possible without a stable legal framework. In 1749, the case of Crawfurd v The Royal Bank considered, and settled, one of the key legal issues: whether the holder of a banknote took free from infirmities of title which affected those from whom it had been acquired. In the battle of doctrine against policy, Roman law was used as a proxy, with both sides calling on Digest texts and on the account of vindication in Voet’s Commentarius ad Pandectas. Victory for the Royal Bank was obtained only by re-characterizing a rule of bona fide consumption, by spending, as one of bona fide acquisition; and so with this flimsiest of doctrinal veneers, the free circulation of banknotes was assured.

Keywords:   legal history, bank notes, Scotland, paper money, Bank of Scotland, Lending and Borrowing Money, vindication, bills of exchange, David Hume, Adam Smith

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