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Historical Constraints on Central Banking and Modern Implications
Historical Constraints on Central Banking and Modern Implications
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The First and Second Banks of the United States faced an unexpected constraint on money printing: each bill required a handwritten signature from the bank''s president or cashier. This procedural hurdle, rooted in Jeffersonian skepticism of centralized financial power, effectively capped currency issuance despite institutional ambitions.
Nicolas Biddle''s 1827 lament captures the absurdity—producing $2 million in $5 notes demanded 400,000 signatures. His innovation of interbank drafts foreshadowed modern credit instruments, circumventing physical limitations through financial engineering. The historical parallel to contemporary debates about monetary expansion remains striking.
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