Abstract
The rapid industrialization and urbanization sweeping through Scandinavia during the 1890s and early 20th century left all three countries with sizeable net foreign debts by 1914. Large sums were owed to German, British, French, Swiss, and American banks, and large amounts of Scandinavian bonds and stocks were circulating on the stock exchanges, particularly in Berlin and Paris. Also, large blocks of real estate in the Scandinavian capitals had been acquired by German and British insurance companies.
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Notes
- 1.
Estimates of the amounts have been made, and some figures are known (public sector debts), but comprehensive and reliable statistics including private sector assets and liabilities are not available for these years, except for Denmark (to some extent). For Sweden the amounts of foreign debts and assets are available for the banking sector (Sveriges Riksbank, Vol. V), and various estimates have been made for the period 1850–1940, cfr. L. Schön (1989) Kapitalimport, kreditmarknad och industrialisering 1850–1910, in E. Dahmén, ed, (1989.) Upplåning och utvrckling I 200 år (Riksgäldskontoret).
- 2.
“Ved Møde den 7. Oktober 1916 af delegerede fra de tre nordiske Centralbanker overvejedes det, om en fælles Valutapolitik var mulig, og man kom enstemmig til det Resultat, at den var uigennemførlig, saalænge Landenes Handelspolitik var forskellig.” Annual Report from Natiionalbanken i Kjøbenhavn, 1916/17.
- 3.
The original documentation for this incident is kept in the archives of the SEB bank in Stockholm, including the names of the four bankers and their powers of attorney. The incident is described in R.Lundström “Bank, Industri, Utlandsaffärer, Stockholms Enskilda Bank 1910–1924”, Handelshögskolan I Stockholm, 1999. It is repeated in G. Wetterberg: “Pengarna & Makten”, Sveriges Riksbank, 2009, pp. 257–58.
- 4.
cf. L.Schön En modern svensk ekonomisk historia, SNS Förlag, 2000, p. 281.
- 5.
cf. C.Franzén: “När utlandsk statsskuld blev inhemsk”, pp. 290–94, in E.Dahmén (ed.) Upplåning och Utveckling, Riksgäldskontoret 1789–1989, Riksgäldskontoret, 1989.
- 6.
K. Hildebrand (1939) Riksgäldskontoret 1789–1934 in ”Sveriges Riksdag”, Senera Avdelingen, Band XIII, p. 207.
- 7.
This kind of “capital market control” was reinforced after 1945 and continued until the mid-1980s, cf. Chap. 8.
- 8.
This was one of the rare occasions when the finance minister made use of the right given to him in the 1907 Charter to attend a rate setting meeting of the governors, without voting rights, see Section 4.2.3. above.
- 9.
cf. Rubow (1918) I Nationalbankens Historie, p. 149, and “Dansk Pengehistorie II”, pp. 29–30.
- 10.
C. Th. Ussing, the newly appointed governor, pointed out that according to the 1907 charter, the interests of the shareholders should be the dominating consideration. Ussing (1926) Nationalbanken 1914–1924, p. 48.
- 11.
Handwritten protocol of meeting of the governors (National Archives).
- 12.
Ussing (1926): ”Nationalbanken 1914-1924”, p. 77.
- 13.
According to the Danish Constitution, the government can only take loans with parliamentary approval. The legal and political question in this case was whether making an overdraft on a current account should be regarded as taking up a loan. There were no loan documents.
- 14.
cf. N.Rygg (1954): ”Norges Bank’s Historie”, Vol. II, pp. 321–23 (Norges Bank).
- 15.
Statistisk Sentralbyrå, 1919, cfr. Rygg, Vol. II, p. 323.
- 16.
The foreign investors were mainly Swedish and French. Norsk Hydro, for example, was originally built mainly with Swedish (Wallenberg) money, which was later refinanced with capital from Banque Nationale de Paris, which had seats on the Norsk Hydro board until 1940. Elkem and Hafslund are much the same story, except that in the case of Hafslund, German banks were the main capital suppliers.
- 17.
cf. Rygg, pp. 322–3.
- 18.
Rygg, Vol. iI, pp. 356–57. The matter was formally settled by law on August 18, 1914.
- 19.
These negotiations and the views of the government and Bank are summarized in Rygg, Vol. II, pp. 389–96, and Jahn, Eriksen & Munthe, p. 205.
- 20.
As reprinted in Rygg, p. 391.
- 21.
cf. Rygg, p. 393.
- 22.
The Hambros have had close connections to both Denmark and Norway since the late 18th century.
- 23.
Jahn, Eriksen & Munthe, p. 206, and Rygg, p. 517.
- 24.
Rygg, p. 515.
- 25.
cf. Jahn, Eriksen & Munthe, pp. 203–4.
- 26.
“Finansrådet”, created by Royal Resolution of Feb.1, 1918, chaired By Norges Bank’s governor Bomhoff. On its first meeting (May 23, 1918), its agenda included Norwegian investments in foreign assets, gold trade, and foreign exchange rates, cf. Rygg, p. 503.
- 27.
The main results have been published in Meddelelser fra Det statistiske Centralbyrå, 1919.
- 28.
cf. Rygg, p. 546, and Statistisk Centralbyrå (1994): ”Historisk statistikk”, p. 647.
- 29.
“…(man) stod i Danmark under verdenskrigen ganske uden kendskab til tidens penge- og kreditteori.” Here quoted from Dansk Pengehistorie II, p. 46.
- 30.
“Hvad Professor Cassel i øvrigt udtaler om Nationalbankens Mangel på Forståelse af Guldspærringspolitikken, svæver i Luften, da Professoren ikke har, ikke kan have og ikke indtil videre vil få Kendskab til den politik, som Nationalbanken følger og må følge af vægtige hensyn til dansk Samfunds- og Statsliv, men selvfølgelig ikke, som Professoren tillader sig at insinuere, af Gevinsthensyn…” Here quoted from Dansk Pengehistorie II, p. 53.
- 31.
“…det forventedes ikke, at man ved Discontoforhøjelsen kunde standse Spekulationen, vende Forbruget, nedsætte Priserne. I Tider som disse forslaar de almindelige, svagt varierende Diskontoændringer kun lidet… ” Nationalbanken i Kjøbenhavn, Aarsberetning 1918/19, p. 6.
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Andersen, S.E. (2016). How the Great War Formed Scandinavian Central Banking. In: The Origins and Nature of Scandinavian Central Banking. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-39750-4_7
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