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Evolution of Central Banking? De Nederlandsche Bank 1814-1852

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Evolution of Central Banking? De Nederlandsche Bank 1814-1852 Evolution of central banking? De Nederlandsche Bank 1814-1852 Evolutie van centraal bankieren? De Nederlandsche Bank 1814-1852 (met een samenvatting in het Nederlands) Proefschrift ter verkrijging van de graad van doctor aan de Universiteit Utrecht op gezag van de rector magnificus, prof.dr. G.J. van der Zwaan, ingevolge het besluit van het college voor promoties in het openbaar te verdedigen op dinsdag 25 maart 2014 des ochtends te 10.30 uur door Roland Alexander Uittenbogaard geboren op 12 maart 1972 te Tilburg 1 Promotoren: Prof. dr. J.L. van Zanden Prof. dr. J. de Haan 2 Table of contents FOREWORD .................................................................................................................................................... 5 A NOTE ON SOURCES AND HISTORICAL STATISTICS ............................................................... 6 1 INTRODUCTION ............................................................................................................................... 1 1.1 De Nederlandsche Bank, two hundred years on .................................................................. 1 1.2 Central question ......................................................................................................................... 4 1.3 Focus on DNB and the first half of the nineteenth century .............................................. 8 1.4 Structure of this thesis ............................................................................................................... 9 2 THEORIES ON THE EMERGENCE AND DEVELOPMENT OF CENTRAL BANKING ................................................................................................................................................................ 11 2.1 Introduction .............................................................................................................................. 11 2.2 The free banking explanation for the development of central banks ............................. 11 2.3 Goodhart’s emphasis on systemic risk and last resort lending ......................................... 15 2.4 The fiscal theory: Glorious Revolution or monetary finance? ......................................... 19 2.5 Political economy of establishment and development of central banks ......................... 21 2.6 Conclusion and structure of the rest of the study .............................................................. 27 3 DUTCH ECONOMY AND STATE 1800-1860 ......................................................................... 30 3.1 Introduction .............................................................................................................................. 30 3.2 The political dimension ........................................................................................................... 30 3.2.1 Political unification (1795-1813) ..................................................................................... 30 3.2.2 The rule of King Willem I 1814-1840 ............................................................................. 34 3.2.3 1840-1860 The liberal decades ........................................................................................ 37 3.3 Economic growth from 1800-1860: transitional growth ................................................... 41 3.3.1 Heritage from the 18th century ........................................................................................... 42 3.3.2 The nature of transitional growth 1814-1860 ................................................................... 43 3.3.3 Sectoral developments ........................................................................................................ 45 3.4 Conclusion ................................................................................................................................ 47 4 ESTABLISHMENT OF DE NEDERLANDSCHE BANK IN 1814 ..................................... 49 4.1 Introduction .............................................................................................................................. 49 4.2 Dutch historiography on the establishment of DNB ........................................................ 49 4.3 The proposal of and debate on a national bank in the Netherlands ............................... 51 4.3.1 Gogel’s plan for a General Batavian Lending, Discount and Deposit Bank ...................... 52 4.3.2 Opposition to the national bank ........................................................................................ 58 4.4 The DNB Charter .................................................................................................................... 61 4.5 International comparative perspective ................................................................................. 64 4.6 Conclusion ................................................................................................................................ 67 5 CORPORATE GOVERNANCE OF DNB ................................................................................. 70 5.1 Introduction .............................................................................................................................. 70 5.2 Formal arrangements 1814-1864 ........................................................................................... 70 5.3 Shareholders’ interest in practice ........................................................................................... 75 5.4 Management ............................................................................................................................. 80 5.5 Conclusion ................................................................................................................................ 84 6 RELATIONSHIP TO THE GOVERNMENT ........................................................................... 85 6.1 Introduction .............................................................................................................................. 85 6.2 Instruments for government .................................................................................................. 85 6.2.1 Government as shareholder ................................................................................................ 86 6.2.2 Appointment of Board members ........................................................................................ 87 6.2.3 Financial dependence ......................................................................................................... 87 6.2.4 Legislation ........................................................................................................................ 88 6.3 Government as a client to DNB ........................................................................................... 90 6.3.1 Cashier to government ....................................................................................................... 90 6.3.2 DNB’s lending to the government ...................................................................................... 91 6.4 DNB’s refusal to branch out .................................................................................................. 96 3 6.5 Operational and advisory role in currency issues ............................................................. 100 6.6 Conclusion .............................................................................................................................. 104 7 DNB’S ROLE IN THE PAYMENT SYSTEM (1814-1852) ................................................... 106 7.1 Introduction ............................................................................................................................ 106 7.2 The Amsterdam payment system ........................................................................................ 107 7.3 Cashiers ................................................................................................................................... 107 7.4 DNB’s payment services....................................................................................................... 111 7.4.1 Current account balances ................................................................................................. 112 7.4.2 Banknote acceptance ....................................................................................................... 113 7.5 International comparison ..................................................................................................... 116 7.6 Explaining the development of banknote circulation ...................................................... 117 7.6.1 Explaining the slow growth of the banknote circulation ................................................... 117 7.6.2 The marginalisation of the cashiers .................................................................................. 118 7.6.3 Explaining the rapid expansion of the banknote circulation after 1848 ........................... 124 7.7 Conclusion .............................................................................................................................. 124 8 DNB’S CREDIT POLICY (1814-1870) ....................................................................................... 127 8.1 Introduction ............................................................................................................................ 127 8.2 DNB’s lending ........................................................................................................................ 128
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