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The Bank of England as the World gold market-maker during the Classical gold standard era, 1889-1910

Author

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  • Stefaano Ugolini

    (Sciences Po Toulouse and LEREPS – University of Toulouse 1 Capitole.)

Abstract

This paper studies the microfoundations of the so-called “gold device” policy by analysing a new dataset on the Bank of England’s operations in the gold market at the heyday of the classical gold standard. It explains that “gold devices” must be understood in connection to the Bank’s role as gold market-maker in London and to the position of London as world gold market. Contrary to the literature, the paper shows that “gold devices” were sophisticated monetary policy tools intended to complement – not to substitute – interest rate policy and aimed at smoothing – not at hampering – international adjustment. These findings demonstrate the potential of adopting a microstructural approach to the study of monetary policy, and call for a reassessment of efficiency measurement for the gold standard.

Suggested Citation

  • Stefaano Ugolini, 2012. "The Bank of England as the World gold market-maker during the Classical gold standard era, 1889-1910," Working Paper 2012/15, Norges Bank.
    • Handle: RePEc:bno:worpap:2012_15
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    File URL: https://www.norges-bank.no/en/news-events/news-publications/Papers/Working-Papers/2012/WP-201215/
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    Cited by:

    1. Stephen F. Quinn & William Roberds, 2017. "An Early Experiment with \"Permazero\"," FRB Atlanta Working Paper 2017-5, Federal Reserve Bank of Atlanta.
    2. Klovland, Jan Tore & Øksendal, Lars Fredrik, 2013. "The decentralised central bank: regional bank rate autonomy in Norway, 1850-1892," Discussion Paper Series in Economics 6/2013, Norwegian School of Economics, Department of Economics.
    3. Anthony John Arnold, 2016. "Business returns from gold price fixing and bullion trading on the interwar London market," Business History, Taylor & Francis Journals, vol. 58(2), pages 283-308, March.
    4. Nils Herger, 2016. "Interest parity conditions during the classical gold standard (1880 -1914) - Evidence from the investment demand for bills of exchange in Europe," Discussion Papers 1607, University of Exeter, Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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