we must go back to the early 1800s and a fundamental problem: state governments were eager to spur rapid economic growth through infrastructure projects but could not raise local taxes.
“Instead of raising taxes, state governments issued charters to private companies in exchange for ownership interest. Charters were essentially monopoly or exclusive rights to run certain businesses, among which banking was especially profitable. The value of charters rested on exclusivity, but the more exclusive the charters, the greater “the possibility of creating (and charging for) private rents by limiting charters against the benefits of wider public access to corporate forms and lines of business.””
— How China Escaped the Poverty Trap (Cornell Studies in Political Economy) by Yuen Yuen Ang
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