Central banking has been a corrupt, mercantilist scheme and an engine
of corporate welfare from its very beginning in the late 18th century.
The first central bank, the Bank of North America, was "driven through
the Continental Congress by [congressman and financier] Robert Morris
in the Spring of 1781," wrote Murray Rothbard in The Mystery of Banking
(p. 191). The Philadelphia businessman Morris had been a defense
contractor during the Revolutionary War who "siphoned off millions from
the public treasury into contracts to his own … firm and to those of
his associates." He was also "leader of the powerful Nationalist
forces" in the new country.

The main objective of the Nationalists, who were also known as
Federalists, was essentially to establish an American version of the
British mercantilist system, the very system that the Revolution had
been fought against. Indeed, it was this system that the ancestors of
the Revolutionaries had fled from when they came to America. As
Rothbard explained, their aim was

To reimpose in the new United States a system of mercantilism and
big government similar to that in Great Britain, against which the
colonists had rebelled. The object was to have a strong central
government, particularly a strong president or king as chief executive,
built up by high taxes and heavy public debt. The strong government was
to impose high tariffs to subsidize domestic manufacturers, develop a
big navy to open up and subsidize foreign markets for American exports,
and launch a massive system of internal public works. In short, the
United States was to have a British system without Great Britain. (p.
192)

An important part of the "Morris scheme," as Rothbard called it, was
"to organize and head a central bank, to provide cheap credit and
expanded money for himself and his allies. The … Bank of North America
was deliberately modeled after the Bank of England." The Bank was given
a monopoly privilege of its notes being receivable in all tax payments
to state and federal government, and no other banks were permitted to
operate in the country. It "graciously agreed to lend most of its newly
created money to the federal government," wrote Rothbard, and "the
hapless taxpayers would have to pay the Bank principal and interest."

Despite these monopolistic privileges, a lack of public confidence
in the Banks inflated notes led to their depreciation and the Bank was
privatized by the end of 1783. But Morris did not give up on his
scheme. He recruited a young Alexander Hamilton to serve more or less
as his political puppet within the Washington administration. (Rothbard
called Hamilton "Morriss youthful disciple.") In fact, the reason why
Hamilton became Treasury secretary, despite having no reputation at all
in the field of finance, was the recommendation by Morris to George
Washington. (During the Revolutionary War, when he was an aide to
Washington, Hamilton took the time to write Morris a 30-page letter
proclaiming that he agreed with every one of his ideas about
protectionist tariffs, corporate subsidies, and a government-run bank
to finance them.)

Morris and his fellow Nationalists wanted a king-like chief
executive who would rule over a mercantilist empire, just as the king
of England ruled over his mercantilist empire. They, of course, would
be the ones to advise and instruct the "king" and benefit financially
from such an empire. So their young protégé Hamilton commenced his
seven-year crusade to overthrow the first US constitution — the
Articles of Confederation — by calling for a new constitutional
convention to supposedly "revise" the Articles of Confederation. At the
convention, Hamilton laid out his (really Morriss) plan: a permanent
president who would appoint all the governors and who would have veto
power over all state legislation. Under such a plan, state sovereignty
would have been destroyed, and there would have been no escape from the
central governments high taxes, protectionist tariffs, heavy debt, and
foreign-policy imperialism — the agenda of the Nationalists.

The Hamilton/Morris plan was defeated, of course, as was the
proposal made at the convention to include a central bank among the
delegated powers to the federal government. But the government was
more highly centralized, as "the Nationalist forces pushed through a
new Constitution" and "were on their way to re-establishing the
mercantilist and statist British model…" (p. 193). They begrudgingly
acquiesced in a Bill of Rights in return for the anti-Federalists’
support for the new Constitution. And most importantly, writes Rothbard,

A critical part of their program was put through in 1791 by their
leader, Secretary of the Treasury, Alexander Hamilton, a disciple of
Robert Morris. Hamilton put through Congress the First Bank of the….
United States…. modeled after the old Bank of North America
[whose]….longtime president and former partner of Robert Morris, Thomas
Willing of Philadelphia, was made president of the New Bank.

In making his case to President Washington for the constitutionality
of a central bank, which had been explicitly rejected at the
constitutional convention, Hamilton invented the idea of "implied
powers" of the Constitution. These were "powers" that were not
expressly delegated to the federal government in the document, but
could be "implied" by clever lawyers like Hamilton. This of course
became a roadmap for the total destruction of constitutional
limitations on the powers of the federal government.

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The First Bank of the United States "promptly fulfilled its inflationary potential," Rothbard writes in his History of Money and Banking in the United States
(p. 69). It issued millions of dollars in paper money and demand
deposits "pyramiding on top of $2 million in specie." The Bank invested
heavily in the US government, and "The result of the outpouring of
credit and paper money by the new Bank of the United States was … an
increase [in prices] of 72 percent" from 1791–1796.

Northern merchants provided the main political support for
Hamiltons Bank, whereas southern politicians like Jefferson supplied
most of the opposition to it, seeing it as nothing more than a vehicle
for financing an American version of the corrupt British mercantilist
system, which would be destructive of liberty and prosperity. They were
right, of course, and remain right to this day.