Recommend you scan "Free Banking, Theory, History, and a Laissez-Faire Model" by Larry J. Sechrest, IG 1588, Quarm Books, 1993, ISBN 0-89930-815-5.  It's objectively and factually written.  The free market works in banking too, even with fractional reserve banking.

The following is an excerpt from Foundations of the market economy series "Laissez-faire banking" by Kevin Dowd, Published in 1993 by London and New York, Pages 276-277, Monetary and banking reform, Does Europe need a Fed?

US EXPERIENCE WITH THE FEDERAL RESERVE SYSTEM

Since the proposed European Federal Reserve System is modeled to some extent on the US system it makes sense to see what could be learned from the American experience. The Federal Reserve was established in 1914 to provide the US banking system with protection against the periodic crises to which it was prone.18 During the early 1930s however the Fed's failure to provide that protection escalated relatively minor banking problems into waves Of hank failures that had catastrophic effects on economic activity. As Friedman and Schwartz concluded (1963: 391):

The leadership which an independent central-banking system was supposed to give the market and the ability to withstand the pressures Of politics and of profit alike and to act counter to the market as a whole these - the justification for establishing a quasi-governmental institution with broad powers - were conspicuous by their absence.

Recent work on the Fed's performance supports this assessment. Morton (1986) examined the impact of the Fed by carrying out a counterfactual experiment to predict what would have happened is the pre-Fed regime had continued after 1914. His results indicate that although a panic would have occurred in December 1929 the Failure and loss percentages would have been an order of magnitude lower' (p. 29) in the absence of the Fed. This result suggests that there would have been a downturn in the early 1930s, but not the major disaster that actually occurred. Studying the periled up to 1940, Miron (1989: 290-1) found that 'the variance of both the rate of growth of output and or the inflation rate increased substantially while the average rate of growth of output fell, and real stock prices became substantially more volatile'. He suggested that these conclusions hold even if the period of the Great Depression is ignored. Miron's analysis also suggested that these changes were not merely coincidental with the founding of the Fed but could be directly attributed to it. The record of the Fed since the Second World War has not been much better. Output variability does not appear to have decreased (Romer 1986) and prices have become much less stable than they were earlier. The postwar era was also the period when the Fed shook itself free or the discipline imposed by the gold standard and it used its new-found freedom to create an inflation unprecedented in peacetime US history which still shows no sign of ending.

The way in which the Fed has evolved since its foundation is also disturbing. It started out as a system of twelve autonomous Federal Reserve Banks with a Federal Reserve Board as a kind of liaison committee - much like the European central bank proposed by Delors. Subsequently, however, it evolved into a system in which 'the Board in Washington is all powerful and the Federal Reserve Banks not much more than administrative units' (Timberlake 1986: 759). In the process the Fed turned into an institution whose every act is to enhance the power and prestige or itself and the government. Unless one can argue that what is good for the government is good for the general public one cannot defend either the mutation of the Fed as it has occurred. or the Fed's continued existence as an all-powerful central bank. Its 70-year history as a bureaucratic institution confirms the inability of Congress to bring it to heel. Whenever its own powers are at stake, the Fed exercises an intellectual ascendancy over Congress that consistently results in an extension of Fed authority. This pattern reflects the dominance of bureaucrats expertise for which there is no solution as long as the Fed continues to exist.
(Timberlake 1986: 759)