5 ms·

That wasn't a central bank anything like a central bank acts today. It was more a "national bank". It wasn't lender of last resort. It didn't regulate other ban

That wasn't a central bank anything like a central bank acts today. It was more a "national bank". It wasn't lender of last resort. It didn't regulate other banks. Banks didn't have an account there. It didn't play a part in settling payments like the fed does now. You can read a little about that bank here: https://en.wikipedia.org/wiki/First_Bank_of_the_United_States https://en.wikipedia.org/wiki/First_Bank_of_the_United_State... By comparison, modern central banks like the Fed are very interwoven into the banking system and financial system and have a lot of power. They settle interbank payments. They set interest rates for short term lending between them. They regulate banks. They supervise banks. They do all kinds of buying and selling of securities. There isn't anything to my knowledge to suggest Hamilton was imagining something like the Fed.

kasey_junk 5y ago
What Hamilton got was of course a watered down version of what he wanted precisely because of the Jeffersonian objections. He had argued even during the revolutionary war that there was a need for a Bank Of England equivalent in the States. The Bank of England also didn’t look exactly like a central bank does today but was an explicit instrument of governmental monetary policy. Hamilton and his supporters believed the federal government would fail without a similar institution so it’s just not correct to say that the founders didn’t envision a central bank. It was a contentious issue then like slavery was. If the central bank uses different technologies and processes now that’s to be expected. But even the original bank had as part of its central mission the management of federal monetary policy. Dealing with revolutionary war scrip and resolving a fiat currency were stated aims. The founders didn’t envision that the Department of State would send an ambassador to the UN either but it’s a natural extension of the duties of that department they did establish. Any appeal to the founders implies allowing for reasonable differences between the world of then and now or it’s a pointless appeal. And the founders certainly did envision a governmental central bank that enacted monetary policy. It was a central argument of the day.
- danielmarkbruce 5y ago
  It's seems you know a lot more history than I do :) In all seriousness though - is there somewhere you can point to which shows the debate around a central bank that suggests they wanted the central bank to: clear interbank payments, set short term rates between banks (and themselves), act as a lender of last resort, regulate and supervise other banks? I've never seen anything that suggested anyone wanted to do any of those five things. I've only seen the arguments for functions which one would consider a national bank.
  - danielmarkbruce 5y ago
    Here are a couple docs I dug up, I'll read them later: https://founders.archives.gov/documents/Hamilton/01-07-02-0229-0003 https://founders.archives.gov/documents/Hamilton/01-07-02-02... https://www.philadelphiafed.org/-/media/frbp/assets/institutional/education/publications/the-first-bank-of-the-united-states.pdf https://www.philadelphiafed.org/-/media/frbp/assets/institut...

kasey_junk 5y ago

What Hamilton got was of course a watered down version of what he wanted precisely because of the Jeffersonian objections. He had argued even during the revolutionary war that there was a need for a Bank Of England equivalent in the States. The Bank of England also didn’t look exactly like a central bank does today but was an explicit instrument of governmental monetary policy. Hamilton and his supporters believed the federal government would fail without a similar institution so it’s just not correct to say that the founders didn’t envision a central bank. It was a contentious issue then like slavery was. If the central bank uses different technologies and processes now that’s to be expected. But even the original bank had as part of its central mission the management of federal monetary policy. Dealing with revolutionary war scrip and resolving a fiat currency were stated aims. The founders didn’t envision that the Department of State would send an ambassador to the UN either but it’s a natural extension of the duties of that department they did establish. Any appeal to the founders implies allowing for reasonable differences between the world of then and now or it’s a pointless appeal. And the founders certainly did envision a governmental central bank that enacted monetary policy. It was a central argument of the day.

danielmarkbruce 5y ago
It's seems you know a lot more history than I do :) In all seriousness though - is there somewhere you can point to which shows the debate around a central bank that suggests they wanted the central bank to: clear interbank payments, set short term rates between banks (and themselves), act as a lender of last resort, regulate and supervise other banks? I've never seen anything that suggested anyone wanted to do any of those five things. I've only seen the arguments for functions which one would consider a national bank.
- danielmarkbruce 5y ago
  Here are a couple docs I dug up, I'll read them later: https://founders.archives.gov/documents/Hamilton/01-07-02-0229-0003 https://founders.archives.gov/documents/Hamilton/01-07-02-02... https://www.philadelphiafed.org/-/media/frbp/assets/institutional/education/publications/the-first-bank-of-the-united-states.pdf https://www.philadelphiafed.org/-/media/frbp/assets/institut...