Scotland, from 1707 to 1850, had an almost pure laissez-faire capitalist market economy. This economy developed spontaneously after a history-changing oversight when England forced Scotland into a political union for military reasons, and left Scotland without a central government. It is significant that Adam Smith, the founder of capitalist economic theory, came from Scotland during this period.

After the Union of 1707 secured its northern border, England treated Scotland with benign neglect for a century and a half. During this time, Scotland grew from an economic backwater to become a world leader in high-tech engineering and heavy industry.

Unencumbered by a government-mandated gold standard, Scottish banks issued paper currency that was backed by privately owned assets, rather than gold (the supply of which was inelastic) or government debt (the supply of which was infinitely elastic), Scotland enjoyed historically unprecedented growth, economic stability, and prosperity.

These happy circumstances continued until 1850, when England fixed what was not broken and put an end to Scotland’s period of free banking.

To learn more about this astonishing, yet little known period of economic freedom, a good place to start is with two books:
Rondo Cameron, “Banking in the Early Stages of Industrialization,” and Arthur Herman, “How the Scots Invented the Modern World: The True Story of How Western Europe’s Poorest Nation Created Our World & Everything in It.”