Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-22T20:31:39.089Z Has data issue: false hasContentIssue false
  • English
  • Français

Market leader: the Austro-Hungarian Bank and the making of foreign exchange intervention, 1896–1913

Published online by Cambridge University Press:  27 October 2009

CLEMENS JOBST
CLEMENS JOBST*
Affiliation:
Economic Analysis Division, Oesterreichische Nationalbank, [email protected]
Get access

Abstract

This article challenges the conventional view that the gold standard was stabilized by quasi-automatic central bank intervention and/or private arbitrage whenever the spot exchange rate reached the ‘gold points’. New archival evidence on the central bank of Austria–Hungary between 1896 and 1913 documents the use of sophisticated instruments such as foreign exchange forward and repo (sale-repurchase) contracts and a quest for market dominance both with respect to reserves held and the share in market turnover. The resulting change in the working of the foreign exchange market is shown to have supported the conduct of monetary policy, underlining the importance of market micro structure in the design and conduct of monetary policy. The picture that emerges is that of a much more ‘modern’ approach to exchange rate stabilization during the classical gold standard than is traditionally recognized.

Type
Research Article
Information
European Review of Economic History , Volume 13 , Issue 3: Foreign Exchange Reserves and the International Monetary System , December 2009 , pp. 287 - 318
Copyright
Copyright © European Historical Economics Society 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anonymous (1898). Die Agioreserve der Oesterreichisch-ungarischen Bank. Vienna: Alfred Hölder.Google Scholar
Baltzer, M. (2006). Cross-listed stocks as an information vehicle of speculation: evidence from European cross-listings in the early 1870s. European Review of Economic History 10, pp. 301–27.Google Scholar
Bartsch, F. (1916). Statistische Daten über die Zahlungsbilanz Österreich-Ungarns vor Ausbruch des Krieges. Mitteilungen des k. k. Finanzministeriums XXII.Google Scholar
Bindseil, U. (2004). Monetary Policy Implementation: Theory, Past, and Present. Oxford: Oxford University Press.CrossRefGoogle Scholar
BIS (1998). Enhancing transparency regarding the authorities’ foreign currency liquidity position. Report of a Working Group established by the Euro-currency Standing Committee of the central banks of the Group of Ten countries, Bank for International Settlements.Google Scholar
Bloomfield, A. I. (1959). Monetary Policy under the International Gold Standard, 1880–1914. New York: Federal Reserve Bank of New York.Google Scholar
Bloomfield, A. I. (1963). Short-term capital movements under the pre-1914 gold standard. Princeton Studies in International Finance 11, Princeton University.Google Scholar
Bopp, K. (1954). Die Tätigkeit der Reichsbank von 1876 bis 1914. Weltwirtschaftliches Archiv 72, pp. 34–58, 179–221.Google Scholar
Bordo, M. D., Humpage, O. and Schwartz, A. J. (2007). The historical origins of US exchange market intervention policy. International Journal of Finance and Economics 12, pp. 109–32.Google Scholar
Bordo, M. and MacDonald, R. (1997). Violations of the rule of the game and the credibility of the classical gold standard 1880–1914. NBER Working Paper 6115.CrossRefGoogle Scholar
Bordo, M. and MacDonald, R. (2005). Interest rate interactions in the classical gold standard, 1880–1914: was there any monetary independence? Journal of Monetary Economics 52 (2), pp. 307–27.CrossRefGoogle Scholar
Borio, C. (1997). Monetary policy operating procedures in industrial countries. BIS Conference Papers 3. Basle: BIS.Google Scholar
Bradel, (1900). Der staatliche Golddienst. Vienna: K.k. Finanzministerium.Google Scholar
Chiu, P. (2003). Transparency versus constructive ambiguity in foreign exchange intervention. BIS Working Paper 144.CrossRefGoogle Scholar
Conant, C. A. (1910). A History of Modern Banks of Issue. 4th revised and enlarged edition. New York and London: G. P. Putnam's Sons.Google Scholar
Contamin, R. (2003). Interdépendances financières et dilemme de politique monétaire. La Banque de France entre 1880 et 1913. Revue Economique 54 (1), pp. 157–80.Google Scholar
De Grauwe, P. (1996). International Money: Postwar Trends and Theories. Oxford: Oxford University Press.Google Scholar
Dominguez, K. M. and Frankel, J. A. (1993). Does Foreign Exchange Intervention Work? Washington, DC: Institute for International Economics.Google Scholar
Eichengreen, B. J. and Flandreau, M. (eds.) (1997). The Gold Standard in Theory and History. London: Routledge.Google Scholar
Einzig, P. (1937). The Theory of Forward Exchange. London: Macmillan.Google Scholar
Einzig, P. (1961). A Dynamic Theory of Forward Exchange. London: Macmillan.Google Scholar
Einzig, P. (1962). The History of Foreign Exchange. London: Macmillan.Google Scholar
Esteves, R. P., Reis, J. and Ferramosca, F. (2009). Market integration in the golden periphery: the Lisbon/London exchange, 1854–1891. Explorations in Economic History 46 (3), pp. 324–45.Google Scholar
Fama, E. (1984). Forward and spot exchange rates. Journal of Monetary Economics 14 (3). pp. 319–38.CrossRefGoogle Scholar
Federn, W. (1910). Das Problem gesetzlicher Aufnahme der Barzahlungen in Österreich-Ungarn. Schmollers Jahrbuch 34, pp. 151–72.Google Scholar
Federn, W. (1911). Moderne Geldtheorie im österreichisch-ungarischen Bankprivilegium. Schmollers Jahrbuch 35, pp. 1379–98.Google Scholar
Fellner, F. (1911). Die Währungsreform in Ungarn. Mit besonderer Rücksicht auf die Aufnahme der Barzahlungen. Vienna: Manz'sche K.u.K. Hofverlags- und Universitäts-Buchhandlung.Google Scholar
Flandreau, M. (1996). Les règles de la pratique: la Banque de France, le marché des métaux précieux et la naissance de l’étalon-or 1848–1876. Annales. Histoire, Sciences Sociales 51 (4), pp. 849–72.CrossRefGoogle Scholar
Flandreau, M. and Gallice, F. (2005). Paris, London, and the international money market: Lessons from Paribas, 1885–1913. In Cassis, Y. and Bussière, E. (eds.), London and Paris as International Financial Centres in the 20th Century. Oxford: Oxford University Press, pp. 78–106.Google Scholar
Flandreau, M. and Komlos, J. (2002). Core or periphery? The credibility of the Austro-Hungarian currency 1867–1913. Journal of European Economic History 31 (2), pp. 293–320.Google Scholar
Flandreau, M. and Komlos, J. (2006). Target zones in history and theory: efficiency, credibility, and policy autonomy. Journal of Monetary Economics 53 (8), pp. 1979–95.CrossRefGoogle Scholar
Flood, R. P. and Rose, A. K. (1996). Fixes: of the forward discount puzzle. Review of Economics and Statistics 78 (4), 748–52.CrossRefGoogle Scholar
Geraats, P. (2002). Central bank transparency. Economic Journal 112, pp. 532–65.Google Scholar
Hallwood, C. P., MacDonald, R. and Marsh, I. W. (1996). Credibility and fundamentals: were the classical and interwar gold standards well-behaved target zones? In Bayoumi, T., Eichengreen, B. and Taylor, M. P. (eds.), Modern Perspectives on the Gold Standard. Cambridge: Cambridge University Press.Google Scholar
Hertz, F. (1903). Die Diskont- und Devisenpolitik der Österreichisch-Ungarischen Bank 1892–1902. Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 12, pp. 463–526.Google Scholar
IMF (1999). Code of Good Practices on Transparency in Monetary and Financial Policies: Declaration of Principles. Adopted by the Interim Committee on 26 September 1999, International Monetary Fund.Google Scholar
Jobst, C. (2001). How to join the gold club. The credibility of Austria–Hungary's commitment to the gold standard. Diploma thesis, Vienna University.Google Scholar
Finanz-Ministerium, K.k. (1892). Statistische Tabellen zur Währungs-Frage der Österreichisch-ungarischen Monarchie. Vienna: Kaiserlich-königliche Hof- und Staatsdruckerei.Google Scholar
Finanz-Ministerium, K.k. (1903–1906). Tabellen zur Währungs-Statistik. 3. Ausgabe. Vienna: Staatsdruckerei.Google Scholar
Kamitz, R. (1949). Die österreichische Geld- und Währungspolitik von 1848 bis 1948. In Mayer, H. (ed.) Hundert Jahre österreichische Wirtschaftsentwicklung 1848–1948. Vienna: Springer, pp. 127–221.CrossRefGoogle Scholar
Knapp, G. F. (1905). Staatliche Theorie des Geldes. Leipzig: Duncker & Humblot.Google Scholar
Kövér, G. and Pogány, Á. (2002). Die binationale Bank einer multinationalen Monarchie: Die Österreichisch-Ungarische Bank (1878–1922). Stuttgart: Steiner.Google Scholar
Krugman, P. R (1991). Target zones and exchange rate dynamics. Quarterly Journal of Economics 106, pp. 669–82.Google Scholar
Lindert, P. (1969). Key currencies and gold, 1900–1913. Princeton Studies in International Finance 24, Princeton University.Google Scholar
Lotz, W. (1889). Die Währungsfrage in Österreich-Ungarn und ihre politische Bedeutung. Schmollers Jahrbuch 13 (4).Google Scholar
Lyons, R. K. (2001). The Microstructure Approach to Exchange Rates. Cambridge, MA: MIT Press.CrossRefGoogle Scholar
MacDonald, R. (1988). Floating Exchange Rates: Theories and Evidence. London: Unwin Hyman.Google Scholar
März, E. (1968). Österreichische Industrie- und Bankenpolitik in der Zeit Franz Josephs I. Vienna: Europa Verlag.Google Scholar
März, E. and Sochor, K. (1973). Währung und Banken in Cisleithanien. In Brusatti, A. (ed.), Die Habsburgermonarchie 1848 – 1918, Die wirtschaftliche Entwicklung. Vienna: Verlag der Österreichischen Akademie der Wissenschaften, pp. 323–68.Google Scholar
Mecenseffý, E. E. von (1896). Die Verwaltung der Oesterreichisch-ungarischen Bank 1886–1895. Vienna: Alfred Hölder'sche k. k. Hof- und Universitäts-Buchhandlung.Google Scholar
Mecenseffý, E. E. von (1897). Bericht über den Goldbesitz der Oesterreichisch-ungarischen Bank erstattet an den Generalrath der Oesterreichisch-ungarischen Bank. Vienna: Oesterreichisch-ungarische Bank.Google Scholar
Michel, B. (1976). Banques et banquiers en Autriche au début du 20e siècle. Paris: Presses de la Fondation Nationale des Sciences Politiques.Google Scholar
Mises, L. von (1907). Die wirtschaftspolitischen Motive der österreichischen Valutaregulierung. Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 16, pp. 561–82.Google Scholar
Mises, L. von (1909a). Das Problem gesetzlicher Aufnahme der Barzahlungen in Österreich-Ungarn. Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reich 33, pp. 985–1037.Google Scholar
Mises, L. von (1909b). The foreign exchange policy of the Austro-Hungarian Bank. Economic Journal 19, pp. 201–11.Google Scholar
Mises, L. von (1912). Das vierte Privilegium der Österreichisch-ungarischen Bank. Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 21, pp. 611–24.Google Scholar
Morgenstern, O. (1959). International Financial Transactions and Business Cycles. Princeton: Princeton University Press.Google Scholar
Reis, J. (2007). An ‘art’, not a ‘science’? Central bank management in Portugal under the gold standard, 1854–87. Economic History Review 60 (4), pp. 712–41.Google Scholar
Sarno, L. and Taylor, M. P. (2001). Official intervention in the foreign exchange market: is it effective and, if so, how does it work? Journal of Economic Literature 39 (September), pp. 839–68.Google Scholar
Sayers, R. S. (1976): The Bank of England 1891–1944. Cambridge: Cambridge University Press.Google Scholar
Spitzmüller, A. (1900). Die österreichisch-ungarische Währungsreform. Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 11, pp. 338–93; 497–59.Google Scholar
Svensson, L. E. O. (1994). Why exchange rate bands? Monetary independence in spite of fixed exchange rates. Journal of Monetary Economics 33 (1), pp. 157–99.Google Scholar
White, H. D. (1933). The French International Accounts, 1880–1913. Cambridge, MA: Harvard University Press.Google Scholar
Wittelshöfer, [O.] (1897). Börse. In Mischler, E. and Ulbrich, J. (eds.), Oesterreichisches Staatswörterbuch. Vienna: Alfred Hölder, vol. 2–2, pp. 193–7.Google Scholar
Zuckerkandl, R. (1909–11). Oesterreichisch-ungarische Bank. Handwörterbuch der Staatswissenschaften. 3rd edition. Jena.Google Scholar