Why free banking? part 2

At the time of more financial problems occur due to the instability caused by central banks, some people like Dowd start to argue the benefits of free banking. In his book of “the experience of free banking”, he was concentrating on the advantages of free banking and against the banking system with central bank by the introducing the successful example of free banking in the history.

In Dowd’s book, all the basic supporting ideas of free banking are more or less similar as those mentioned in the last post. More important thing in here is the illustration of free banking’s performance in different aspects.

1. The growth rate of economic. With the successful of Scottish free banking system been proved by Rondo Cameron, free banking can benefit economy on this point.
2. Improve efficiency of intermediation. For example, it argued that the loan interest rate is lower in free banking than that in system with central banks.
3. The stability of price. As in the free banking, it is easier for people to convert notes to gold. The price would be more stable in free banking than that with central banks in long-term.
4. Fraud. This point was not well supported, it just said that the fraud happened, but not spread too much.
5. The lender of last resort. As we know, one important function of central bank is that it can help banks in trouble. But this also potentially allows banks to take more risk. Dowd said that this situation would not happen in free banking because banks would be much more carefully on handling this problem.
6. Panics. It is no doubt that deposit insurance must be useful to avoid panics, but Dowd seemed to say that the history of free banking did not show the deposit insurance is necessaries.

Obviously, most of those points are defenced by the successfull past free banking example. Is it convincing?