In December 1933, John Maynard Keyes published an open letter to President Roosevelt, where he wrote: ‘The recent gyrations of the dollar have looked to me more like a gold standard on the booze than the ideal managed currency of my dreams.’ This was a criticism of the ‘gold-buying program’ launched in October 1933. In this article I use high-frequency data on the dollar–pound and dollar–franc exchange rates to investigate whether the gyrations of the dollar were unusually high in late 1933. My results show that although volatility was pronounced, it was not higher than during some other periods after 1921. Moreover, dollar volatility began to subside towards the end of the period alluded to by Keynes.

Framing tulipmania in terms of sequestered capital – capital whose quantities, usages and future yields are hidden from market participants – offers a richer and more straightforward explanation for this famous financial bubble than extant alternatives. Simply put, the underground planting of the tulip bulbs in 1636 blindfolded seventeenth-century Dutch speculators regarding the planted quantities and their development and future yields. The price boom began in mid November 1636, coinciding with the time of planting. The price collapse occurred in the first week of February 1637, coinciding with the time of bulb sprouting – signaling bulb quantities, development and future yields. Also consistent with our explanation is the initial price collapse location, in the Dutch city of Haarlem, where temperature and geography favored early sprouting and sprout visibility.

This article explores the economic issues related to financial crises at insurance companies, using an example from the Great Depression, the National Surety Company. National Surety was a large and diverse American insurance company that experienced a major crisis in 1933 due to losses from its guarantees of mortgage-backed securities. I find that policyholders were able to stage a massive run on the company by demanding the return of their unearned premiums. A key dynamic of the crisis was that policyholders at an insurance company have a dual role as holders of liabilities and as providers of income. In addition, I establish that government officials believed National Surety to be systemically important, due to the size of its insurance business and because many of its counterparties were societal actors that these officials sought to protect. As a result, the New York State Insurance Commissioner used emergency powers to reorganize the company, with the goal of providing continuity to its business lines outside mortgage-backed security insurance.

This article documents and analyses monetary reform in Bulgaria, Greece, Serbia and Romania from 1815 (Serbian autonomy within the Ottoman Empire) to 1910, when Greece became the last country in the region to join the gold standard. It explains the five key steps towards monetary reform which the four countries took in the same chronological order, and asks why national coinage and the foundation of a bank of note issue came late in the reform process. The South-East European countries tried to emulate West European prototypes, yet economic backwardness meant such institutions were often different from the outset, remained short-lived or both.

A previously unknown pricing anomaly existed for a few years in the late 1840s in the British government bond market, in which the larger and more liquid of two very large bonds was underpriced. None of the published mechanisms explains this phenomenon. It may be related to another pricing anomaly that existed for much of the nineteenth century in which terminable annuities were significantly underpriced relative to so-called ‘perpetual’ annuities that dominated the government bond market. The reasons for these mispricings seem to lie in the early Victorian culture, since the basic economic incentives as well as laws and institutions were essentially the familiar modern ones. This provides new perspectives on the origins and nature of modern corporate capitalism.

Using individual balance sheet data from the state banks in one state that was deeply impacted by the 1893 crisis, this article presents evidence that correspondent networks played an important role in transmitting the crisis. In particular, the unexpected closure of a single large national bank in Kansas City considerably increased the probability of suspension among the state banks that were connected to it through the correspondent networks. This episode thus illustrates how contagion can spread through interbank networks and sheds new light on the nature of the 1893 crisis.

This article studies the relationship between the Irish and London stock markets over the period 1869 to 1929, using monthly data on capital gains. A bivariate GARCH model shows that there were significant volatility spillovers from the London to the Irish market, but not vice versa. This suggests that shocks originating in London were transmitted to Ireland, but that the reverse did not occur. Furthermore, the time-varying correlation indicates that the co-movement between London and Ireland declined during the Irish independence struggle and the establishment of the Irish Free State. The correlation appears to stabilise in the late 1920s.

Both states that constituted the Austro-Hungarian Monarchy issued considerable amounts of perpetual bonds from the 1870s to World War I. These bonds constituted the greater part of the state debt, which was relatively larger in Hungary than in Austria. Movements in bond prices were not uniform for different kinds of securities such as gold bonds, paper bonds and bonds of the common debt of the pre-1867 era. Price movements and movements in the spread between Hungarian and Austrian bond yields followed a stochastic trend. Most fiscal factors such as the share of the state debt, and of state expenses, in GDP, the share of state consumption in overall state expenses, the relation between the debt service and the tax revenues, or the deficit in the state budget, had little or no impact. The conversion of debt instruments reveals a high degree of efficiency on the part of investors. Political crises affected relative price movements in the short run but were unimportant in the context of the middle- and long-term development. Throughout the period, Hungarian bonds as compared to Austrian bonds had lower prices in the Vienna Stock Exchange, suggesting a preference of Viennese investors for domestic securities independently from economic and political circumstances.

Using cross-country differences in the degree of isolation before the advent of technologies in sea and air transportation, we assess the relationship between geographical isolation and financial development across the globe. We find that prehistoric geographical isolation has been beneficial to development because it has contributed to contemporary cross-country differences in financial intermediary development. The relationship is robust to alternative samples, different estimation techniques, outliers and varying conditioning information sets. The established positive relationship between geographical isolation and financial intermediary development does not significantly extend to stock market development.

The period from the 1950s to the late 1970s saw an almost uniform decline of cash-to-GDP ratios in industrial countries. A closer look at the German payment system suggests that the factor causing such a change was a shift towards cashless wage payments. In this period, in Germany, the branch network of banks expanded significantly and at the end of the period almost all economically active individuals had a current account. This change was triggered by rising wages and income. Rising wages increased the burden of weekly wage payments in cash, and rising income made the average earner more attractive for banks. Moreover, regulation and deregulation, by triggering both price and non-price competition, may also have played a role. Technological change was not an independent driver. In the 1950s, the number of giro accounts per German adult was comparable to the current situation in many developing countries. Yet, I argue that the German post-war experience does not provide a blueprint for most of these countries.

This article studies how the emergence of new political elites and changes in land tenure relationships shaped the socio-economic profile of local credit markets in the Ottoman Balkans between the late seventeenth and early nineteenth centuries. By using probate inventories and court records for the cities of Salonika (including Karaferye), Vidin and Ruse, I compare how the expansion of tax-farming institutions and the concentration of land ownership influenced the social characteristics of lending activities. I find that, in spite of institutional and political similarities, the evolution of local credit markets did not follow a homogeneous pattern. Contrary to the consensus view in the existing literature, local political and military elites, which most tax farmers and large landowners belonged to, did not play a dominant role as moneylenders. Civilians (such as merchants and artisans) together with other social groups, including janissaries and religious functionaries, provided the bulk of informal credit to local communities (including elites) in the three urban areas.

This article explores long-term trends in risks and returns within central banking using Danmarks Nationalbank as a case study. Core earnings generated by the basic functions and the associated risks typical of a central bank accounted on average for most of the Nationalbank's financial returns over the past 175 years. For a long period, this was the result of a passive risk-management strategy under which financial risks and returns just reflected the various functions performed by the Nationalbank and not the outcome of a deliberate decision-making process. A formalised and holistic risk-management framework was introduced only in the 1990s.

This study demonstrates the existence of a private, informal and lively credit market in rural Sweden during the 1840s, a period that predates the development of a modern banking system. The market, mainly based on private promissory notes, was concentrated in the hands of a limited number of wealthy farmers who specialized in lending, They facilitated access to credit to well-off farmers, regardless of whether they owned their farms or leased taxed land. By using information from probate inventories, the article analyses the wealth portfolio and characteristics of the lending business of the largest creditors (‘parish bankers’) in a judicial district of southern Sweden in 1841–5. The heart and soul of their business was an intimate knowledge of borrowers’ creditworthiness and mutual trust, as typical of local credit networks. The article also explores the existence of an intergenerational transmission of parish banking business – a dimension of private lending that opens an original path of research on local credit markets in early modern Europe.

This article examines perceptions and practices of habitual usury, a crime consisting of lending above the legal rate of interest on multiple occasions, in early nineteenth-century France using descriptions of usury trials found in the popular legal periodical the Gazette des Tribunaux. Following the French Revolution, French law legitimized lending at interest in principle, but punished ‘habitual usurers’ who ‘made a profession’ from lending above the legal limit. The decades that followed witnessed striking growth in banking, joint-stock companies and other financial institutions. Highlighting the connections between cultural constructions of the usurer and the actual processes deemed usurious, this article seeks to understand a paradox: that usury was deemed omnipresent in French society yet it was rarely prosecuted. By examining how habitual usury was defined and prosecuted in French courtrooms, this article shows how habitual usurers both validated and undermined stereotypical notions of predatory lending behavior found in popular culture of the time. Habitual usury trials also reveal the actual practices that allowed those excluded from formal financial networks to participate in the growth of capitalist relations. This article argues that the nineteenth-century obsession with the usurer can be explained by the crucial role played by usurious practices in the credit economy of the period. As such, prosecution of usury tended to focus on the character of the usury rather than the actual practice of illegal lending. This article suggests that by occasionally prosecuting particularly egregious ‘immoral’ moneylenders, the legal system and journals like the Gazette des Tribunaux worked to keep credit accessible to the ‘underbanked’.

The British monetary authorities have traditionally focused on broader monetary aggregates than their counterparts elsewhere. The reasons include: the willingness of UK banks to allow customers to make payments by drawing on time deposits, the particularities of the UK approach to managing the national debt and the foreign exchange reserves, and the flow-of-funds system of national accounts developed after World War II. This article outlines these reasons, and explores the implications for the UK's often fractious relationship with the International Monetary Fund during the 1950s and 1960s. It explains why IMF conditionality on loans to the UK focused on broad aggregates.