This paper reexamines the view that banking regulation and central banking arose to counter market 'failures.' It investigates the factors that led bankers to form clubs and examines the 'regulations' imposed by clubs on their members. It suggests that such regulation is different from real-world regulation and central banking and would be unlikely to arise spontaneously from free banking anyway. It also suggests that this view is consistent with available evidence and compares it with the alternative views of Gary Gorton and Donald J. Mullineaux (1987), and of Charles A. E. Goodhart. Copyright 1994 by Ohio State University Press.