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The Provision of Liquidity in the Swedish Note-Banking System, 1878-1901

PublicationArticle (with peer review)
Ekonomisk historia, Företagandets villkor, Per Hortlund, Real bills doctrine

Abstract

The working of the “asset currency” provided by the Swedish note banking system in 1878–1901 is described. Natural and institutional conditions caused the demand for currency to peak in March and September, with troughs in July and January. The paper investigates how the Enskilda banks provided liquidity to solve the problem. This is done by describing how the volume of notes varied over the year, and how other balance sheet items co-moved with them. Strong seasonal co-variation is found particularly between lending and foreign payments media, varying like communicating vessels over the sailing season in May–October (when the sea was ice free and shipments were made).

Hortlund, P. (2007). ”The Provision of Liquidity in the Swedish Note-Banking System, 1878-1901.”Scandinavian Economic HistoryReview, 55(1): 20-40.

Based on content

Is the Law of Reflux Valid?
Article (with peer review)Publication
Hortlund, P.
Publication year

2006

Abstract

In the classical monetary debates, the Banking School held that notes would be equally demand-elastic whether supplied by many issuers or a single one. The Free Banking School held that notes would be less demand-elastic if supplied by a single issuer. These assertions have rarely, if ever, been subject to more stringent statistical testing. In this study the elastic properties of the note stock of the Swedish note banking system in 1880–95 is compared with those of the regime in 1904–13, when the Bank of Sweden held a note monopoly. Evidence suggests that notes did not become less elastic after monopolisation, thus lending support to the views of the Banking School.

Related content: Working Paper No. 61

The Provision of Liquidity in the Swedish Note-Banking System, 1878-1901
Artikel (med peer review)Publication
Hortlund, P.
Publication year

2007

Abstract

The working of the “asset currency” provided by the Swedish note banking system in 1878–1901 is described. Natural and institutional conditions caused the demand for currency to peak in March and September, with troughs in July and January. The paper investigates how the Enskilda banks provided liquidity to solve the problem. This is done by describing how the volume of notes varied over the year, and how other balance sheet items co-moved with them. Strong seasonal co-variation is found particularly between lending and foreign payments media, varying like communicating vessels over the sailing season in May–October (when the sea was ice free and shipments were made).

Is the Law of Reflux Valid?
Article (with peer review)Publication
Hortlund, P.
Publication year

2006

Abstract

In the classical monetary debates, the Banking School held that notes would be equally demand-elastic whether supplied by many issuers or a single one. The Free Banking School held that notes would be less demand-elastic if supplied by a single issuer. These assertions have rarely, if ever, been subject to more stringent statistical testing. In this study the elastic properties of the note stock of the Swedish note banking system in 1880–95 is compared with those of the regime in 1904–13, when the Bank of Sweden held a note monopoly. Evidence suggests that notes did not become less elastic after monopolisation, thus lending support to the views of the Banking School.

Related content: Working Paper No. 61

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