Hostname: page-component-76fb5796d-x4r87 Total loading time: 0 Render date: 2024-04-26T18:51:22.536Z Has data issue: false hasContentIssue false
  • English
  • Français

The impact of the Scandinavian Monetary Union on financial market integration

Published online by Cambridge University Press:  05 November 2007

Lars Fredrik Øksendal
Lars Fredrik Øksendal
Affiliation:
Department of Economics, Norwegian School of Economics and Business Administration, Helleveien 30 N 5045 Bergen, Norway, lars.fredrik.oksendal@nhh.no
Get access Rights & Permissions [Opens in a new window]

Extract

In the period from 1877 until the outbreak of World War I, Sweden, Denmark and Norway constituted a currency area – the Scandinavian Monetary Union (SMU). They shared the same unit of account, the gold krone. Both full-bodied gold coins and token coins of the three countries served as legal tender and circulated freely within the union. Initially set up to preserve the traditional circulation of neighbouring coins in the border regions, the central bank cooperation was extended to a mutual settlement mechanism (1885) and later reciprocal acceptance of notes at par (1901). A desire for economic integration was present under the surface of this practical approach, mirroring the predominant liberal worldview of the 1870s. For instance, the Norwegian government saw a common coinage as an instrument for ‘knitting together the three nations to a single commercial territory’. In the parliamentary debate on Norwegian entry into the union a supporter argued that ‘the real objective of unity in coin had to be to bring the countries closer together’. Thus, from the outset, the SMU was a combination of practical arrangements and lofty ambitions.

Type
Research Article
Information
Financial History Review , Volume 14 , Issue 2 , October 2007 , pp. 125 - 148
Copyright
Copyright © European Association for Banking and Financial History 2007

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

1 In writing this article I have benefited from stimulating discussions with Jan Tore Klovland, Stig Tenold, Ola Grytten, all from the Norwegian School of Economics and Business Administration, as well as Magnus Lindmark of the University of Umeå. I acknowledge their contributions as well as the valuable suggestions made by the anonymous referees of this journal.

2 Henriksen, I. and Kærgard, N., ‘The Scandinavian Currency Union’, in Reis, J. (ed.), International Monetary Systems in Historical Perspective (London 1995)Google Scholar.

3 Odelstingsproposisjon (legislative bill) no. 1 (1873), Om Overgang til Guldmyntfot (The transition to the gold standard).

4 Stortingstidende (Parliamentary proceedings) (1873), pp. 589–97.

5 M. Bordo and L. Jonung, ‘The history of monetary regimes – some lessons for Sweden and the EMU’, Swedish Economic Policy Review, 4 (1997); M. Flandreau, ‘The economics and politics of monetary union: a reassessment of the Latin Monetary Union, 1865–1871’, Financial History Review, 7.1 (2000); L. Jonung, ‘Den skandinaviske myntunionen – vad sager den om EMU’, Ekonomisk Debatt, 4 (2003); M. Flandreau and M. Maurel, ‘Monetary union, trade integration and business cycles in 19th century Europe’, Open Economics Review, 16 (2005).

6 Nielsen, A., Den skandinaviske møntunion. Et historisk rids (The Scandinavian Monetary Union – a historical sketch) (Copenhagen 1917)Google Scholar.

7 Ibid., pp. 51–5. The gold points had previously been around 0.067%.

8 Ibid., p. 51.

9 Ibid., p. 58.

10 Ibid., pp. 63-4. From 12 January 1910 to 2 March 1912 Norges Bank charged a quarter pro mille for drafts on Nationalbanken, subsequently increased to half pro mille. Drafts on Riksbanken were also subjected to charges. From 28 June 1910 to 22 February 1911 Nationalbanken charged a quarter pro mille on drafts both on Norges Bank and Riksbanken and then increased twice to half and 1 pro mille respectively. Keilhau claims that the Norges Bank had already implemented a surcharge on drafts on Riksbanken 1907 of a quarter pro mille. Keilhau, W., Den norske pengehistorie (Oslo, 1952)Google Scholar.

11 Between 1905 and 1913 the volume of returned Danish and Norwegian notes from Sweden doubled while return of Swedish notes from Denmark was reduced by more than 90%. Nielsen, Et historisk rids, p. 64.

12 These points were estimated to be between one-third and half pro mille. Ibid., p. 66.

13 Nielsen, Et historisk rids, pp. 58–60.

14 Ibid., p. 67.

15 Bartel, R. J., ‘International monetary unions: the XIX century experience’, Journal of European Economic History (1974), p. 702Google Scholar.

16 Ibid., p. 703.

17 M. Bergman, S. Gerlach and L. Jonung, ‘The rise and fall of the Scandinavian Currency Union 1873–1920’, European Economic Review, 37 (1993).

18 Ibid., p. 513.

19 Jonung, ‘Den skandinaviske myntunionen’, p. 8.

20 Flandreau and Maurel, ‘Monetary union, trade integration and business cycles’, pp. 137–40.

21 Flandreau, ‘The economics and politics of monetary union’, p. 31.

22 Flandreau, M., ‘The bank, the states, and the market: an Austro-Hungarian tale for Euroland, 1867–1914’, in Capie, F. and Woods, G. (eds.), Monetary Unions: Theory, History, Public Choice (London, 2003)Google Scholar.

23 Henriksen and Kærgard, ‘Scandinavian Currency Union’, p. 91.

24 Ibid., p. 109.

25 Talia, K., The Scandinavian Currency Union, 1873–1924 – Studies in Monetary Integration and Disintegration (Stockholm, 2004), p. 98Google Scholar.

26 Ibid., p. 32.

27 Ibid., pp. 110–12.

28 Ibid., pp. 120–2.

29 Ibid., p. 147.

30 Kindleberger, C. P., The World in Depression, 1929–1939, revised and enlarged edition (Berkeley, 1984), pp. 289, 294Google Scholar.

31 Gallarotti, G. M., The Anatomy of an International Monetary Regime: the Classical Gold Standard 1880–1914 (Oxford, 1995), pp. 3–13Google Scholar.

32 Henriksen and Kærgard, ‘Scandinavian Currency Union’.

33 Mitchell, B. R., International Historical Statistics Europe 1750–1993, 4th edition (London, 1998), pp. 668–9Google Scholar.

34 Norges Bank, Annual reports, 1909–11.

35 For a thorough discussion of the historical context of the international move towards monetary unity in the 1860s and early 1870s, see Einaudi, L., Money and Politics: European Monetary Unification and the International Gold Standard (1865–1873) (Oxford, 2001)Google Scholar.

36 Norges Bank, Annual report, 1911.

37 Nielsen, Et historisk rids, pp. 63–4.

38 Odelstingsproposisjon no. 1 (1873), Recommendation from the Royal currency commission; Stortingstidende (1875), pp. 86–7.

39 Fleetwood, Elin Elver, Sweden's Capital Imports and Exports (Geneva, 1947), pp. 107–19Google Scholar.

40 Lars Fredrik Øksendal, ‘The Norwegian debate on the gold standard and monetary integration in the 1870s’, Scandinavian Economic History Review (2006).

41 See, for instance, Farmand, 5.6.1897, 12.6.1897, 4.6.1898, 10.12.1898, 11.5.1901, 14.12.1901, 31.5.1902, 7.6.1902, 14.6.1902, 23.5.1903, 4.6.1904, 26.11.1904, 9.12.1905, 1.12. 1906, 17.12.1910.

42 See, for instance, Norges Bank, Annual report, 1906.

43 See, for instance, Farmand, 13.4.1907, 20.4.1907 and 4.5 1907.

44 Farmand, 27.8.1904.

45 Farmand, 6.3.1897.

46 Norges Bank, Annual report, 1899.

47 Grytten, O. H., ‘The gross domestic product for Norway 1830–2003’, in Ø. Eitrheim, J. T. Klovland and Qvigstad, J. F. (eds.), Historical Monetary Statistics for Norway 1819–2003, Norges Bank Occasional Papers, no. 35 (Oslo, 2004)Google Scholar.

48 Farmand, 23.3.1907.

49 See, for instance, Farmand, 29.2.1896, 7.3.1896, 18.4.1896, 9.5 1896, 1.5.1897, 5.6 1897, 14.12.1901, 4.6.1904, 26.11.1904, 2.12.1905, 21.12.1907.

50 Norges Bank, Annual reports, 1900–13.

51 L. F. Øksendal, ‘Monetary policy under the gold standard – examining the Norwegian evidence, 1893–1914’, paper presented at the Sixth Conference of the EHES, Istanbul 9–10 September 2005.