S O FAR, the most important event in American banking history was the adoption of the free banking act in New York ninety-eight years ago. With that act, after a half-century of imitation of European models, a distinctively American system of banking was established. The principles embodied in the act and the language in which it was expressed have been taken over by nearly every state and by the federal government. With the shift from note liabilities to deposit liabilities banking underwent a change in its appearance and in its public and legal relationships that was profound, without, however, suffering alteration of its structure and its function. These have remained essentially true to the original pattern; and the Federal Reserve banks, the Reconstruction Finance Corporation, and the Federal Deposit Insurance Corporation are evidence that free banking, too firmly vested to have its defects remedied from within, has had to have them compensated from without. Free banking is a direct heritage from Jacksonian democracy. The interest of Jackson himself in banking was mainly destructive, but the people who gave him his following-the mass of rugged individualists imbued with what Gallatin called with dismay the fierce spirit of enterprise-wanted not to stop with the destruction of the Bank of the United States, but beginning with that to erect thousands of local banks owned by local capitalists. They wanted to destroy the monopoly and make banking open to all. The popular movement of the time was toward the destruction of centralization and the untrammeled exploitation of the continent under individualism and laissez faire. For the history not only of banking but also of corporate enterprise in general, the New York free banking legislation of i838