Exchange rates in Sweden 1800―1914

By Håkan Lobell 

Foreign exchange rates in the 19th century Sweden are basically prices of foreign bills of exchange. Most of the trade, from which quotes are collected, took place at the stock exchanges. The Stockholm stock exchange and the Gothenburg exchange, after it had opened in 1842, were the centres of the foreign exchange market in Sweden until at least the 1870s. Trade with Swedish bills of exchange in foreign financial centres began only as late as 1882. Foreign exchange was traded at the exchanges on Tuesdays and Fridays at the Stockholm stock exchange.

Market quotes of bills from the Stockholm stock exchange are from two daily newspapers, Aftonbladet and Post och Inrikes Tidningar. The local newspapers regularly reported market quotes. The underlying data covers almost every trading day (i.e. twice a week) between 1800 and 1889. Another source, though based on the above mentioned newspapers, is the manuscript for the Statistical volume V of the History of the Riksbank which was published in 1931 [Sveriges Riksbank (1931) Statistiska tabeller. Sveriges Riksbank 1668-1924. Bankens tillkomst och verksamhet. V. Nordstedts; Stockholm]. Data from the manuscript is mainly used for the periods 1800―1834 and 1881―1889. However, the data is also based on the daily newspaper Post och Inrikes Tidningar, according to a remark on sources in Statistical volume V (Sveriges Riksbank (1931), p.142).

However, the trade and the way in which foreign exchange rates were quoted changed character during the second half of the century. The trade at the exchanges was gradually overrun, in terms of volume, by inter-bank trade and the Riksbank trade at the end of the period. Foreign exchange rates in this data base between 1890 and 1914 are so-called Riksbank rates and are assembled from the internal records of the Bank.

The Riksbank rates are probably very close to market rates. The First Deputy of the Bank, Bror Karl Johan Langenskiöld, described in 1911 the pricing of foreign exchange in a statement concerning increasingly more frequent changes of foreign exchange rates. It appears from his description that the Riksbank determined the exchange rates on the basis of telegraph transfers of information from foreign stock exchanges. The domestic banks normally seem to have followed the Riksbank’s prices. Langenskiöld explained how commercial banks could retrieve exchange rate information from the Riksbank either by sending a messenger or by telephone. (Riksbank Archives: F1A:3 Riksbankschefers protokoll. V. Moll, Valutor, utländska)

Sight and Date Bills

The collection of exchange rate data from especially the 19th century does not let itself be done entirely without difficulties. We are interested in actual exchange rates, but since bills of exchange are financial instruments it is important to recognise that prices sometimes contain other components than “pure” exchange rates. Market quotes of foreign bills of exchange in the first half of the century were usually a usans or time, which implies that customary or specified time to maturity of the foreign bills has to be considered before the actual a vista exchange rate can be extracted. For example, drafts on Hamburg before 1847 were usually 67 days to maturity.

The time to maturity was usually discounted when prices of foreign bills were determined. However, we can obtain the spot rate, or a vista, for a sight bill E_ssimply by reversing the discounting of a date bill E_d. Consider a date bill E_dwith d days to maturity and the interest rate in the financial centre in which the bill was drawn i.

Discount rates in The Bank of England are from NBER online Macro History Data Base.  Interest rate data from Hamburg are obtained from Soetbeer, A. (1855) Beiträge und Materialen zur Beurtheilung von Geld- und Bank-Fragen mit besonderer Rücksicht auf Hamburg. Unfortunately, monthly interest rate data from Hamburg and London are only available from 1824 and 1836. A standard interest rate of 4 per cent has been applied for 67 days Hamburg date bills for the period 1800―1823 and for 90 days sterling date bills for the period 1800―1835.

List of variables and their definitions: