Was the National Bank a Precursor to the Federal Reserve?

Many seem to think so, especially the Federal Reserve. However, Richard Salsman at Duke University doesn’t agree:

Hamilton’s proposed “Bank of the United States” was to be a national bank, but not a central bank in the modern sense of a banker to government, or a bank that issues a monopoly fiat money, controls system reserves, and at root is beholden to the government that sponsors it and makes sure it underwrites (monetizes) and trades its own debt securities, the more so as more debt accumulates. For Hamilton the purpose of establishing a national bank was to asset the Treasury in collection and disbursing revenues (thus more easily servicing the nation debt) and to ensure that the national currency be gold-backed and that private banks issue their own currency by reference to the same uniform standard; above all, the national bank (what became the Bank of the United States, with a limited twenty-year charter lasting from 1791 to 1811) would not be co-opted into becoming the government’s pet bank. (“Hamiltonian Principles of Public Finance as a Guide to Current U.S. Debt Dilemmas,” April 2012)

Salsman is the only person I know who makes this case. I will have to do some more research on this issue. (Stay tuned!)


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