Post-Keynesians disagree about whether money is intrinsically endogenous, or whether it has become endogenous over time with the emergence of modern central banking. In this chapter, monetary history and institutional analysis are brought to bear on the issue. The chapter examines two early monetary systems that lacked central banks: metallic money in fifteenth- to seventeenth-century western Europe, and paper money in eighteenth-century Britain and British North America. These systems are found to have been imperfectly endogenous, owing to inadequacies in their mechanics of supply. Furthermore, endogeneity did not evolve in an unremittingly forward path historically, as the literature suggests: in some respects, metallic-money systems were more flexible than paper-money systems.
The First and Second Banks of the US (1791–1811 and 1816–1836 respectively) provide historical examples of quasi central banking institutions that fulfilled purposes beyond and other than monetary stabilization. Both Banks were chartered and organized for the purpose of addressing postwar public finance problems facing a young national government seeking to establish its independence from external powers and its internal integrity as a national entity. Both Banks performed monetary stabilization services as well, as a by-product of their public finance and nation-building roles.