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2015 | OriginalPaper | Buchkapitel

4. Establishment of De Nederlandsche Bank in 1814

verfasst von : Roland Uittenbogaard

Erschienen in: Evolution of Central Banking?

Verlag: Springer International Publishing

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Abstract

On 25 March 1814 De Nederlandsche Bank was established by Royal Decree. This chapter answers the question of why De Nederlandsche Bank (DNB) was established and why in 1814. Dutch historiography on the emergence of DNB in 1814 generally regards this as a more or less inevitable and logical event, given the ‘obvious’ shortcomings of the financial system in the late eighteenth century. The fiscal theory points at the utter financial distress of government after the Napoleonic era. DNB is implicitly assumed to provide the logical solution for both. However, institutions do not simply emerge when needed. In order to understand the establishment of DNB, we also need to understand why it was established in 1814 and not earlier or later. This can only be explained by looking at the political context and the interplay of the different interest groups involved. By looking at that context this chapter answers the question of whether DNB was established in order to address market failure, i.e. with an economic rationale, or for political or fiscal purposes.

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Vorheriges Kapitel Dutch Economy and State 1800–1860

Nächstes Kapitel Corporate Governance of DNB

De Jong I-1, Chapter .1 With more details on the financial market context see: De Jong (1934), pp. 319–334; echoed by de Vries and Van der Woude (1994) and later: Vanthoor (2004) and Wytzes (2002).

De Vries and Van der Woude (1994), p. 192. Most other historiography on the establishment of DNB does not analyse this process, but only touches on the subject and builds on existing historiography. In ’t Hart, Van Zanden and Jonker, ‘Financial history of the Netherlands’ and in Van Zanden and Van Riel, who generally take a closer look at institutional development, the establishment of DNB is left unexplored.

Jonker (1996), passim.

Fritschy (1988), pp. 226–228.

Royal Decree no. 5, d.d. 25 maart 1814. In: Staatsblad no. 40 (1814).

Letter King Willem I to DNB, 3-3-1824, De Jong I-2 in which the King refers to the Bank as ‘eldest daughter’ (see Chap. 6).

It took the King just about three conferences with several experts (including the ministers of Finance and Goldberg, Hogguer and Bondt), to discuss the details of the proposal. These took place from 10 to 14 March, the Decree was published on March 25. NA, NL-HaNA, Goldberg, 2.21.006.51, inv.nr. 223c; unfortunately the notes made by Goldberg are illegible. Zappey (1967), pp. 61 and 62.

Vles (2009).

Pfeil (1996), p. 243.

Fritschy (1988), p. 218.

The documents from which the debate was reconstructed are listed in Annex 1.

Here the generic terms (1) Government and (2) Parliament are used for different bodies bearing changing names and shapes during this rather hectic time in Dutch political history, but that constitute, respectively, (1) the Governing power (e.g. Staatsbewind, Uitvoerend Bewind) and (2) the representative bodies of the legislative power (e.g. Wetgeevend Lichaam).

Fritschy (1988), pp. 203 ff.

Braudel (1987), pp. 449 ff., argued that shortage of money was a permanent problem from the Middle Ages, not only leading to innovations but also to increasing velocity of money. Innovations like improvements in coinage, and the introduction of the bill of exchange and later fiduciary money were meant to ensure a sufficient supply of money to prevent deflationary pressure. The Amsterdam money market had from the early seventeenth century developed into the centre of world trade in bullion and specie and scarcity of money had for a long time not been a problem.

De Jong I-1, Chapter 1 extensively discusses these crises, but the link to the establishment of DNB remains somewhat unclear.

Schnabel and Shin (2004), MIT Press, pp. 929–968 describe the crisis mechanism of fire sales of assets when there is a scramble for liquidity. Earlier studies of this first documented liquidity crisis in Amsterdam are: Sautijn Kluit (1865) and van Dillen (1922), pp. 400–408.

Nieuwe Nederlandsche Jaarboeken (NNJb) 1773.

NNJb (1773): “Wealth owners sat on their vaults.” [“Renteniers bleven op hun geldkisten zitten.”].

de Vries (1968), p. 76.

City Archive Amsterdam (GAA), Stadsbeleeningskamer Archives (inv. nr. 5043) contains ‘Administration and minutes’ of the Fund.

Fritschy (1988), p. 192.

The activities are listed in the draft charter.

Goldberg: “In this époque the Bank of England notes have no basis, they rest on credit and public spirit.” NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22, doc. 3: Contraremarques op de reflectien van J.G. en wederbeantwoording van dezelven; [“In deze epoque circuleren de engelse bankbiljetten eigenlijk op niets, dan op dezelven krediet en de publieke geest in Engeland.”].

He did this on purpose: to avoid discussion on details in parliament.

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22, Doc 5: Voorstel Staatsbewind.

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22; Reflectiën van drie bijzondere personen: “the Bank is also necessary in normal times, because lending by the wealthy will never be systematic and are incomparable to the services a well-directed bank can render.”

NL-HaNA, Gogel, 2.21.005.39, inv. nr. 22, Doc 11 Rapport van den TG en Raden van Financien over de gronden van weigering van het WL. “more than one institution of this kind in competition would be disastrous for each of them. Competition would induce them to try to increase dividends, by expanding business, raising the rate of interest and taking more risk. If the idea of monopoly to be relinquished, the whole construct would have to be revised: the maximum interest rate would have to be left out and riskier lending would have to be allowed, etc.”

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22 (doc. 12) ‘Ontwerp eener bank door particulieren op te rigten: Algemeene Beleen Discompto en Deposito faciliteit te Amsterdam.’

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22, doc. 2 reflectiën en remarques van Jan Goldberg.

Pfeil (1996), pp. 240ff.

van Leeuwen-Canneman (2009), p. xxxvi.

van Leeuwen-Canneman (2009), Proposal ABB, d.d. 21-5-1802 met missive op 25 mei 1802 van Staatsbewind aan Wetgevend Lichaam.

Letter from Communality of Rotterdam, 14-6-1802; ‘Memorie van bezwaren van comité van koophandel Rotterdam’ (d.d. 10-6-1802) and ‘Rapport van de Commissie van het Wetgevend Lichaam’ d.d. 29-7-1803; leading up to the decision to decline: [Declinatoir besluit d.d. 2-8-1803]; Decision 44, Staatsbewind (d.d. 15-8-1803).

Fritschy (1988), p. 192.

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22, doc. 2 reflectiën en remarques van Jan Goldberg: “there are people that want the Bank of Exchange to do this, and those people may be able to rally a lot of opposition.”

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22, doc 11. Report on the grounds for refusal by the parliament. [Rapport van den TG en Raden van Financien over de gronden van weigering van het WL.]

Fritschy (1986), p. 131.

At the request of the Ministry of Finance in the autumn of 1803. Gogel resented the opponents’ lack of good judgment and of understanding. He particularly resented the anti-centralist, federalist tendencies.

NL-HaNA, Gogel, 2.21.005.39, inv.nr. 22 (document 12) ‘Ontwerp eener bank door particulieren op te rigten: Algemeene Beleen Discompto en Deposito faciliteit te Amsterdam.’

Jan Bondt was partner in the Associatie-Cassa and active lawyer in the Amsterdam money market. After its establishment, he became legal counsel of DNB.

De Jong I-2, doc. 2 ‘Brief Jan Bondt, winter 1813.’

van Leeuwen-Canneman (2009), p. xl.

Nationaal Archief, Den Haag, Collectie Goldberg, 1578–1830, nr. 2.21.006.51, inventarisnummer 223c Notes of the conference with the H.M the King, Canneman and Six.

The Gogel draft and Goldberg’s revision are published in De Jong I-2, documents 1 and 3. The Royal Decree with the Charter was published in Staatsblad no. 40, 1814. Below we refer to the three documents respectively as ‘Gogel’ or ‘Charter’.

Compare Gogel art. 3 with Charter art. 8.

Charter art. 8.

Compare Gogel art. 7 with Charter art. 12 and 13.

Compare Gogel art. 11 with Charter art. 20.

Charter art. 21.

Compare Gogel art. 6 and 22 with Charter artt. 29 and 30.

Charter art. 60.

Gogel art. 21.

Compare Gogel art. 47 and 48 with Charter art. 51.

Compare Gogel artt. 33–35, 38, 40 and 41 with Charter artt. 53–56.

Grossman (2010), p. 43.

Historiography of central banking has a bias towards institutions that survived into the twentieth century, if only because surviving institutions ordered their own history to be written. Therefore, it is hard to collect sufficient information to include institutions that did not become modern central banks. Data collection to make the overview comprehensive in order to make useful comparison requires careful case study work in a common conceptual framework. Ideally, this would be a collaborative effort.

‘It is important to note that ‘the Bank of England of 1694 … is a far cry from the Bank of England in 1913.” Giannini (2011), p. xxv.

Notable exceptions are the United States, which had a federal character, and France and Denmark, which had long been unitary states. The French and Danish banks established in the nineteenth century had eighteenth century predecessors, which in this light is perhaps not surprising.

Clearly with the Amsterdam Bank of Exchange the phenomenon of the public bank to manage money (payment system motivation) had been accepted in the Netherlands and had occurred, but not at the national level.

Grossman (2010), p. 44 distinguishes a third: facilitating trade by extending banking services, referring to the Netherlands. Indeed, the Charter of DNB mentioned ‘facilitating trade’ as an objective. But as shown above, the King’s primary objective with DNB was fiscal.

The Danish National Bank was founded in order to restore monetary stability after the ‘state bankruptcy’ and inflation which ensued from excessive government spending during the Napoleonic Wars. Stabilisation of the monetary system was the main priority of the National Bank, whose task it was to bring the value of banknotes up to par so as to restore redeemability into silver. This took until 1845 (Capie et al. 1994, p. 149).

Suomen Pankki (the Bank of Finland) has as its major initial aim to drive Swedish money out of circulation replacing it with rouble notes. This was achieved in the 1840s (Capie et al. 1994, p. 136).

Grossman (2010), p. 41.

Fritschy (1988), p. 197; Dickson (1967) argued that the Bank of England was established to overcome the difficult relationship between ‘financial cliques’ and the Government. In the Dutch Republic this relationship had been much less problematic.

Braudel, F. (1987). Beschaving, economie en kapitalisme (15e-18e eeuw) vol. 1 De structuur vanhet dagelijks leven. Amsterdam: Contact.

Capie, F., Fischer, S., Goodhart, C., Fischer, S., & Schnadt, N. (1994). The future of central banking: The tercentenary symposium of the bank of England. Cambridge: Cambridge University Press.

De Jong, A. M. (1934). The origin and foundation of the Netherlands Bank. In J. G. van Dillen (Ed.), History of the principal public banks: Accompanied by extensive bibliographies of the history of banking and credit in eleven European countries. The Hague: Nijhoff.

de Vries, J. (1968). De economische achteruitgang van de Republiek in de achttiende eeuw. Leiden: Stenfert Kroese.

de Vries, J., & Van der Woude, A. (1994). Nederland 1500–1815. De eerste ronde van moderne economische groei. Amsterdam: Balans.

Dickson, P. G. M. (1967). The financial revolution in England. A study in the development of public. Credit, 1688–1756. London: Macmillan.

Fritschy, W. (1986). De ‘Generale Beleenbank’ en de financiële problemen in de beginjaren van de Bataafsche Republiek. Jaarboek voor bedrijf en techniek, 3, 109–134.

Fritschy, J. M. F. (1988). De patriotten en de financiën van de Bataafse Republiek. Hollands krediet en de smalle marges voor een nieuw beleid (1795–1801). ’s-Gravenhage: stichting Hollandse Historische Reeks.

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Lindgren, H., & Sjögren, H. (undated). Banking systems as “Ideal Types” and Political Economy. The Swedish Case, 1820–1914. http://www2.hhs.se/personal/hlindgren/download/banking_systems.pdf.

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Titel: Establishment of De Nederlandsche Bank in 1814
verfasst von: Roland Uittenbogaard
Verlag: Springer International Publishing
Buch: Evolution of Central Banking?
Print ISBN: 978-3-319-10616-8

Electronic ISBN: 978-3-319-10617-5

Copyright-Jahr: 2015
DOI: https://doi.org/10.1007/978-3-319-10617-5_4