Anders Ögren

Financial revolution and economic modernisation in Sweden

The development of a well-adapted financial system was a main part of the successful Swedish economic modernisation in the latter half of the nineteenth century. In this article it is shown that this development followed the pattern of a financial revolution. Major institutional and organisational changes that took place roughly between the late 1850s and early 1870s led to a rapid increase in liquidity and financial services. This financial revolution preceded the acceleration in economic growth in general and in the modern, industrial sector in particular. Monetisation especially encouraged growth, both in the industrial sector and in GDP as a whole. The basis of the financial system, measured as commercial bank assets and equity capital, affected overall GDP growth. The results also clearly promoted the importance of the development of the financial sector and monetisation as an interlinked and complementary process.

Multiple paper monies in Sweden 1789–1903: substitution or complementarity?

Complementarity of money means that two or more kinds of monies together fulfil the demands of the users better than they would without the existence of the other(s). In this article we study complementarity between paper monies in Sweden. We address four questions: 1. What was used as money at a macro-level (money supply) and at a micro-level (monetary remittances)? 2. What was the relative value of different monies in parallel circulation? 3. Were there seasonal variations in use and/or value of these monies? 4. Were there geographical variations in use and value? What we find is that the complementarity helped to solve the problem of providing sufficient liquidity domestically over time and space and thus contributed to the maintenance of a stable value of the currency.

Banks and Swedish financial crises in the 1920s and 1930s

Financial crises occur at regular and unpredictable moments in capitalist economies. However, an absence of shared theoretical approaches to and even definitions of the subject still plague the analysis of financial crises. This situation makes historical analysis even more important. This article compares two Swedish financial crises, one in the 1920s and the other in the 1930s. The comparison shows that despite their temporal and spatial proximity, the crises seemed to have had quite different underlying causes, links to international circumstances, severity, and government responses. The 1920s crisis in Sweden was for instance much deeper than the crisis in the 1930s, a marked contrast to the experience of most countries during these two periods. In focusing on the driving forces behind the crises, their development and governmental policies, the article also provides an opportunity to reflect on both financial crisis theories, on the current crisis and on recent historical research concerning crises.

The Swedish Financial Revolution

Notes on Contributors The Swedish Financial Revolution: An In-Depth Study A.Ogren The Early Modern Financial System and the Informal Credit Market K.Nyberg The Revolution of a Market for Household Savers, 1820-1910 K.Lilja The Growth and Characteristics of Bank Lending, 1860 1910 T.Petersson The Modernization of the Bank of Sweden, 1850 1880 A.Ogren The Evolution of Secondary Financial Markets, 1820-1920 H.Lindgren Financial Market Integration, 1830 1890 H.Lobell Incorporation and Financial Modernization O.Broberg The Financial Revolution and the Insurance Industry M.Lonnborg & M.Olsson The State and the Financial System - Regulation and Regime Change around 1900 M.Larsson Institutional Clash and Financial Fragility: Swedens Financial Crises H.Sjogren & S.Knutsen What We Can Learn from the Swedish Financial Revolution: An International Comparison A.Ogren & R.Sylla Notes Bibliography Index

Central Banking and Monetary Policy in Sweden during the Long Nineteenth Century

The working of the gold standard is surrounded by interpretations and explanations based on theory. The most fundamental of these is the idea of central banks and their monetary policy as summarized in the expression ‘the rules of the game’. The ‘rules of the game’ means that the monetary policy of the central banks should aim to facilitate the effects of capital inflows or outflows on domestic markets — i.e. central banks’ monetary policy should work in a pro-cyclical manner. It is even said that a central bank should amplify the effects of the capital flows to ensure a quicker and more efficient adjustment of the current account.

The Case for the Peripheries

In a world that is presently experiencing increased volatility and pressure on exchange rates, and when one of the most ambitious fixed exchange rate projects in history — the European Monetary Union — is on the brink of destruction, the classical gold standard again rises as a spectacular event in global monetary history. How, despite all the difficulties inherent in fixed exchange rate regimes, could this system remain for such a long time only to be interrupted by the outbreak of World War I? Even more intriguing is the question of how all the small, peripheral and capital-importing economies successfully managed to remain on the gold standard — especially as these economies were the first to experience deflationary pressure in times of international capital shortage. Consider: adherence to the gold standard was up to each economy and it was thus always possible for economies suffering from the negative effects of the fixed exchange rate to opt out. Yet, in Western Europe this only occurred on one occasion; when Portugal, the second country to adopt the gold standard in 1854, left the gold standard as a result of the Baring crisis in 1890.

What we can learn from the Swedish financial revolution : an international comparison

One of the aims of this book was to understand the occurrence of a financial revolution and its consequences by studying the financial revolution in Sweden in depth. In addition to understanding the Swedish financial revolution in particular, there is also an underlying motive to understand what general implications or conclusions can be drawn from this case. In this chapter, we summarize the Swedish financial revolution and put it into an international perspective with the purpose of extracting which findings in the Swedish case can be generalized and what findings point to particular Swedish phenomena. Before we turn to the evaluation of the Swedish financial revolution, we will again make a short definition of what a financial revolution implies.

The modernization of the Bank of Sweden : The Riksbank

Notes on Contributors The Swedish Financial Revolution: An In-Depth Study A.Ogren The Early Modern Financial System and the Informal Credit Market K.Nyberg The Revolution of a Market for Household Savers, 1820-1910 K.Lilja The Growth and Characteristics of Bank Lending, 1860 1910 T.Petersson The Modernization of the Bank of Sweden, 1850 1880 A.Ogren The Evolution of Secondary Financial Markets, 1820-1920 H.Lindgren Financial Market Integration, 1830 1890 H.Lobell Incorporation and Financial Modernization O.Broberg The Financial Revolution and the Insurance Industry M.Lonnborg & M.Olsson The State and the Financial System - Regulation and Regime Change around 1900 M.Larsson Institutional Clash and Financial Fragility: Swedens Financial Crises H.Sjogren & S.Knutsen What We Can Learn from the Swedish Financial Revolution: An International Comparison A.Ogren & R.Sylla Notes Bibliography Index

The Swedish financial revolution : an in depth study

Research on financial revolutions has gained increased attention in the last ten years. Previously focused exclusively on the breakthroughs of financial centers such as the Netherlands, England and the U.S., the geographical scope has now been enlarged. In addition to this geographical broadening of the concept, the time aspect has also been broadened to include current examples.

Banking Crises and Lender of Last Resort in Theory and Practice in Swedish History, 1850-2010

This paper is a first attempt to make a comparative analysis of Swedish banking crises over time—focusing on how the crises were handled. The empirical material is also compared to economic theories on crises management, i.e. lender of last resort and bank bailouts. The main questions are: How do the crises management relate to economic theories, i.e. to what extent did the crises management follow any economic rationale? To what extent were the crises management seen as necessary by authorities and market agents, and to what extent were the designs of the crises management made by market agents and/or by authorities? Were there any common features of the crises management over time that can explain why crises were handled in a certain fashion? I also make an estimation of the relative costs for the state to manage each crisis.