Evolution of Central Banking? (eBook)

Foreword 8
Preface 10
A Note on Sources and Historical Statistics 12
DNB Sources 12
Statistics 13
Contents 14
Chapter 1: Introduction 17
1.1 De Nederlandsche Bank, Two Hundred Years on 17
1.2 Central Question 20
1.3 Focus on DNB and the First Half of the Nineteenth Century 23
1.4 Structure of This Thesis 25
References 25
Chapter 2: Theories on the Emergence and Development of Central Banking 27
2.1 Introduction 27
2.2 The Free Banking Explanation for the Development of Central Banks 28
2.3 Goodhart´s Emphasis on Systemic Risk and Last Resort Lending 31
2.4 The Fiscal Theory: Glorious Revolution or Monetary Finance? 34
2.5 Political Economy of Establishment and Development of Central Banks 36
Conclusion and Structure of the Rest of the Study 42
References 44
Chapter 3: Dutch Economy and State 1800-1860 46
3.1 Introduction 46
3.2 The Political Dimension 46
3.2.1 Political Unification (1795-1813) 47
3.2.2 The Rule of King Willem I 1814-1840 49
3.2.3 1840-1860 The Liberal Decades 52
3.3 Economic Growth from 1800 to 1860: Transitional Growth 55
3.3.1 Heritage from the Eighteenth Century 56
3.3.2 The Nature of Transitional Growth 1814-1860 57
3.3.3 Sectoral Developments 58
Conclusion 60
References 61
Chapter 4: Establishment of De Nederlandsche Bank in 1814 62
4.1 Introduction 62
4.2 Dutch Historiography on the Establishment of DNB 63
4.3 The Proposal of and Debate on a National Bank in the Netherlands 64
4.3.1 Gogel´s Plan for a General Batavian Lending, Discount and Deposit Bank 65
4.3.2 Opposition to the National Bank 70
4.4 The DNB Charter 73
4.5 International Comparative Perspective 76
Conclusion 80
References 81
Chapter 5: Corporate Governance of DNB 83
5.1 Introduction 83
5.2 Formal Arrangements 1814-1864 84
5.3 Shareholders´ Interest in Practice 88
5.4 Management 92
Conclusion 95
References 96
Chapter 6: Relationship to the Government 97
6.1 Introduction 97
6.2 Instruments for Government 98
6.2.1 Government as Shareholder 98
6.2.2 Appointment of Board Members 99
6.2.3 Financial Dependence 99
6.2.4 Legislation 100
6.3 Government as a Client to DNB 102
6.3.1 Cashier to Government 102
6.3.2 DNB´s Lending to the Government 103
6.4 DNB´s Refusal to Branch Out 107
6.5 Operational and Advisory Role in Currency Issues 111
Conclusion 114
References 115
Chapter 7: DNB´s Role in the Payment System (1814-1852) 116
7.1 Introduction 116
7.2 The Amsterdam Payment System 117
7.3 Cashiers 118
7.4 DNB´s Payment Services 121
7.4.1 Current Account Balances 122
7.4.2 Banknote Acceptance 123
7.5 International Comparison 125
7.6 Explaining the Development of Banknote Circulation 126
7.6.1 Explaining the Slow Growth of the Banknote Circulation 126
7.6.2 The Marginalisation of the Cashiers 127
7.6.3 Explaining the Rapid Expansion of the Banknote Circulation After 1848 132
Conclusion 132
References 134
Chapter 8: DNB´s Credit Policy (1814-1870) 136
8.1 Introduction 136
8.2 DNB´s Lending 137
8.2.1 Advances on Collateral (Lombarding) 138
8.2.2 Discounting 139
8.3 Credit Management: Rationing and Rate Setting 141
8.3.1 Rationing 141
8.3.2 The Bank Rate 143
8.4 Objectives of DNB According to the Qualitative Sources 146
8.5 Quantitative Evidence 150
8.5.1 Keeping the Rate Low and Stable 150
8.5.2 Maintaining Convertibility 151
8.5.3 Market Conditions 154
8.6 Did DNB Do What It Said? 154
Conclusion 158
References 159
Chapter 9: Summary and Conclusion 161
Annex 1: Granger Causality Test, Market Rate & Bank Rate
1814-1870/2 Lags 169
Annex 2: Ordered-Probit Regressions 170
Whole Period 1814-1870 171
Factors Explaining Lowering the Rate (Entire Period) 172
Factors Explaining Raising the Rate (Entire Period) 173
Subperiod 1: 1814-1848 174
Factors Explaining Lowering the Rate (1814-1848) 175
Factors Explaining Raising the Rate (1814-1848) 176
Subperiod 2: 1848-1870 177
Factors Explaining Lowering the Rate (1848-1870) 178
Factors Explaining Raising the Rate (1848-1870) 178
Annex 3: A Monetary Policy Reaction Function for DNB 1814-1870I am grateful to Bastiaan Overvest (ACM) for his help in this ex... 180