History
Traces of the real bills doctrine can be found in the writings of John Law (1705), Simon Clement (1710), Adam Smith (1776), Charles Bosanquet (1810), Thomas Tooke (1845) and many others. It was at the heart of the Bullionist debates of 1810, the Banking School/Currency School debates of the 1840s, the Greenback debates of the 1870s, etc.
The Real Bills Doctrine was the cornerstone of the US Federal Reserve Act of 1913—which established the Federal Reserve System with the power to discount high-quality self-liquidating commercial paper; however it did not become a major policy tool of the Federal Reserve until after Benjamin Strong, governor of the New York Federal Reserve Bank died in October 1928. Since 1945, it has been regarded as "thoroughly discredited" (Mishkin, 2000) among mainstream economists.
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