The linchpin of colonial administration under regulatory imperialism was the royal governor. The crown relied on royal governors to control the colony’s political agenda, especially on fiscal matters. Yet, in most colonies, assemblies managed to invert this plan and claim almost complete fiscal power for themselves – one of the most important developments under imperial administration in the New World. To explain this, the present chapter develops a strategic logic of bargaining between assemblies and governors and the accountability of governors to the crown. The logic shows how governors were able to make major political concessions to assemblies, yet evade accountability to the crown for them. As a result, regulatory imperialism was unable to restrain the independence of colonial legislatures.

This chapter explores the terms of letters patent for internal colonial government. It observes that every patent to a private colonizer prescribed a balanced colonial constitution: Some type of independent legislature in the colony, separate from the colonial executive, was to consult on laws and taxes. The chapter presents a strategic model to explain why this served the crown’s interest: An independent colonial legislature could restrain excessive extraction from colonists by colonial executives, which the crown itself – given the distance and its limited capacity – could not do.

In Chapter 2, we briefly discuss causes and consequences of inflation to lay the foundation for a detailed analysis of the relation between monetary policy and other policy fields

Chapter 4 is dedicated to the more recent history of monetary policy in the period labelled Great Moderation. We focus on the Federal Reserve Board (Fed), the Bank of England (BoE) the Bundesbank and its successor, the European Central Bank as well as on the South African Reserve Bank (SARB), which offers an interesting and contrasting perspective.

In the final Chapter 9 we discuss the latest reactions of central banks to the rise of inflation, which can be interpreted as an attempt to safeguard their independence against governments. We consequently argue for a return to a division of labour in line with the Tinbergen-rule of economic policy, which can be translated as: one objective, one instrument, one agency. This shift would place much more responsibility for broader economic outcomes on the shoulders of governments, leaving central banks to tend to the narrower agenda of monetary stability.

How did colonies develop under contractual imperialism? This chapter reviews three important cases – Virginia, Massachusetts Bay, and Barbados – and argues that contractual imperialism had important successes. Under contractual imperialism, colonizers did search vigorously for resource endowments, and made and re-made their economies at significant cost to exploit them. Patent terms for balanced colonial polities did restrain some of the excesses of colonial government under their founding elites. At the same time, experience revealed important problems with contractual imperialism: It was not effective at coordinating an empire of multiple colonies, and it provided such strong incentives that it generated significant factional disputes within colonies. Nevertheless, under contractual imperialism, English colonies established successful cash-crop economies.

A key component of regulatory imperialism was controlling the colonial government. While the crown accepted colonial assemblies as independent bodies, it attempted to regulate the laws they passed. In particular, imperial officials in London asserted the power to review all colonial legislation and declare acts void if they violated English law or imperial policy. This chapter examines royal legislative review from a strategic perspective as an auditing system. It shows that legislative review worked in part by inducing royal governors to exercise stricter scrutiny over colonial legislation before it ever reached London. At the same time, the analysis shows that legislative review was inherently imperfect. The cost of review to imperial officials ensured that colonial assemblies could pass laws that imperial officials opposed. As a result, legislative review was unable to eliminate the autonomy of colonial assemblies.

We start it with a brief historical overview about the emergence of independent central banks in Chapter 1. The chapter looks at different historical periods to work out ways to secure price stability that have been chosen in the past.

This is followed by a more general analysis of balance sheet operations of central banks against the background of CBI in Chapter 6.

This chapter takes stock of institutional configurations in the New World colonies at the time of the American Revolution. It observes that the same bundle of institutions that made individual colonies autonomous relative to the crown also made them autonomous relative to each other. In turn, this mutual autonomy presented major constraints when American state elites bargained over a national constitution. These bargaining constraints, as well as the institutional models of imperial government, resulted in some of the core institutions of the American state that structure so much policy making today: Federalism, checks and balances with a powerful legislature, judicial review, and even specific executive bureaucracies. The chapter concludes with a summary of the book’s argument.