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

PublikationArtikel (med peer review)
Ekonomisk historia, Företagandets villkor, Per Hortlund, Real bills doctrine

Sammanfattning

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.

Baserat på innehåll

Is the Law of Reflux Valid?
Artikel (med peer review)Publikation
Hortlund, P.
Publiceringsår

2006

Sammanfattning

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

In Defense of the Real Bills Doctrine
Artikel (med peer review)Publikation
Hortlund, P.
Publiceringsår

2006

Publicerat i
Sammanfattning

For over seventy years, the question of what caused the Great Depression in the United States (1929–1933) has been one of the most debated economic issues. Since Friedman and Schwartz (1963), the cause has prominently been attributed to monetary mismanagement by the Fed, which let the money stock contract and thus failed to act as a lender of last resort. Recently, some authors have seen this contraction as a necessary consequence of the gold standard, which “fettered” the Fed’s hands making it unable to respond to increased currency demands (Bernanke 1993, Eichengreen 1992 and 2002, Temin 1989 and 1994, Wheelock 1992). In the previous issue of Econ Journal Watch, Richard Timberlake takes issue with this view. In my judgment, Timberlake successfully argues against “golden fetters” and exonerates the gold standard. But there is a secondary aspect of Timberlakes’s article. Timberlake blames the Great Contraction on the Fed’s adherence to the so-called Real Bills Doctrine.

The Provision of Liquidity in the Swedish Note-Banking System, 1878-1901
Article (with peer review)Publikation
Hortlund, P.
Publiceringsår

2007

Sammanfattning

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).

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