François Velde of the Federal Reserve Bank of Chicago has pointed out in e-mail that my 2001 Cato Journal article was not the first to observe that note issue by banks in the United States was legal again. Though I made no claim to originality in the article, until now I thought nobody else had stumbled across the fact before. Jeffrey Lacker, then an economist at the Federal Reserve Bank of Richmond and now the president of the bank, had however published an article in the bank’s quarterly bulletin in 1996, “Stored Value Cards: Costly Private Substitutes for Government Currency.” In it he observed that that note issue was apparently legal both for state and federally chartered banks.
Where did he make his observation? Twenty pages into the article, in one sentence plus a footnote! He buried his most important finding in one sentence deep into the article and did nothing to publicize it. I missed Lacker’s paper in my search of the literature, or, if I saw it, the title put me off the trail. When researching the article I contacted some other economists, lawyers at the Federal Reserve Board of Governors, and persons knowledgeable about bank regulation, and none of them were aware either that note issue by banks was legal, or of the finding in Lacker’s article.
So, humility in claiming priority of discovery is always in order. And if you make a discovery, you need to make other people aware of it!