This introductory chapter lays out the historical background of English New World colonization and sketches the argument of the book. It explains the English crown’s formal authority over colonization and introduces the principal–agent perspective as a framework to analyze the crown’s use of that authority. The chapter lays out the concept of contractual imperialism, or the early crown’s policy of early colonization embedded in letters patent to private colonizers, and of regulatory imperialism, or the later crown’s policy of regulating colonial political economies.

Chapter 8 adds to a clarification of the confusion about CBI by discussing the need for transparency and accountability in light of a growing – mainly political science driven – literature on the perceived democratic deficit of technocratic policy solutions. We show that this literature overlooks important aspects of CBI.

Chapter 7 takes an Olsonian perspective. We ask the question of what drove central bank balance sheet policies in democracies. This development is understood from the perspective of Mancur Olson’s ground-breaking theory of the ‘rise and decline of nations’ which accounts for the increasing difficulty to reform as distributional coalitions impose the ‘slavery of the rent-seeking society’ (as the former chief economist of the GATT, Jan Tumlir, so appropriately put it) on democratic societies. In light of these considerations, the factual degree of central bank independence might lower than it appears at first glance.

Chapter 5 offers a description and an interpretation of the policy responses of four leading central banks (Fed, ECB, Bank of England and Bank of Japan) to the Great Recession.

As English state capacity grew and the crown faced growing financial constraints at home, colonies became tempting targets. This chapter explores the crown’s attempts to unwind the institutions of contractual imperialism and assert unilateral, direct control over colonies. However, when the crown made these attempts, colonial institutions had taken deep root over decades. The chapter explains why the crown was unable to force its vision of government on the colonies autocratically, and instead pivoted to a negotiated model of governance: Regulatory imperialism.

This chapter explores the terms of letters patent for early colonies, particularly in their economic dimensions. It shows the textual basis for colonial autonomy in these patents as grants from the crown. In particular, patents granted long-term control of colonies to private actors, protected their control over colonial economic operations, and obliged minimal sharing of their economic output with the crown. The chapter presents the theory of contractual imperialism to explain why these contract terms solved an important incentive problem: To induce colonial agents to identify profitable resource endowments, despite great cost and risk, and to exploit them fully.

The crown’s pivot to regulatory imperialism accepted colonial institutions as they existed, and attempted to direct them more vigorously in the English state’s interest. This chapter explores the economic side of that regulation through the Navigation Acts, in particular a strategic perspective on their administration. It shows that the administrative structure of the acts evolved with a sophisticated understanding of the incentive problems of agents charged with their enforcement. The imperial customs bureaucracy in the New World and a crown court system were erected to deal with these problems. At the same time, the chapter explains how the acts were rarely administered so well in practice, which undermined their effectiveness.

Chapter 3 is a summary of the theoretical concepts that lead to the logic to grant independence to central banks, ways to measure CBI and its empirical effects on price stability. We show that different schools of thought (Chicago, Virginia, Freiburg) come to similar conclusions, although their methodological starting points are very different.