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A Policy Framework for the Bank of Amsterdam, 1736–1791

Published online by Cambridge University Press:  05 September 2019

Stephen Quinn  and
William Roberds
Stephen Quinn
Affiliation:
Stephen Quinn is Professor, Texas Christian University, 2855 Main Drive, Fort Worth, TX 76129. E-mail: s.quinn@tcu.edu
William Roberds
Affiliation:
William Roberds is Research Economist and Senior Adviser, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309. E-mail: William.Roberds@atl.frb.org
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Abstract

This article describes and measures how the Bank of Amsterdam supplied a successful fiat money in a world of specie by offering the unlimited repo of large coins at a near-zero rate. Our data from 1736 to 1791 finds that such liberal access led to volatile loan levels and that the Bank responded with sterilization by means of open market operations. In this way, the Bank held its money stock at a roughly constant level and helped stabilize its value. Profit was another part of the Bank’s policy framework, and the pursuit of seigniorage eventually compromised stabilization.

Type
Article
Information
The Journal of Economic History , Volume 79 , Issue 3 , September 2019 , pp. 736 - 772
Copyright
© The Economic History Association 2019 

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Footnotes

Views expressed are those of the authors and not those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. The authors are grateful to participants in presentations at the Federal Reserve Bank of Richmond’s Monetary and Financial History Workshop, the Bank of Canada’s Festschrift for Charles Kahn, Federal Reserve Bank of New York’s Workshop in Honor of Jamie McAndrews, Rutgers University, the Financial History Group at the University of Utrecht, the 2016 Joint Central Bankers’ Conference in Nashville, Tennessee, the 2017 meeting of the Caltech Early Modern Group, and the 2017 Federal Reserve System Macro Meeting. For helpful detailed comments, we thank Bill Colllins, Ben Chabot, Joost Jonker, Ellis Tallman, François Velde, Dan Waggoner, Warren Weber, and three anonymous referees. François Velde provided us with data on Hamburg gold prices, and Larry Neal shared data on London bill of exchange prices. Pamela Frisbee, Hongyi Fu, and Brian Robertson provided research assistance. Finally, we are grateful to the staff of the Amsterdam Municipal Archives (Stadsarchief Amsterdam) for the special attention given to our many requests for archival materials.

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