Template-type: ReDIF-Paper 1.0
Author-Name: N. H. Dimsdale
Author-Workplace-Name: The Queens College, University of Oxford
Author-Email:nicholas.dimsdale@queens.ox.ac.uk
Title: The Bank of England and the British Economy 1890-1913
Abstract: The paper examines the behavior of the British economy 1890-1913 by using a newly 
assembled quarterly data set.  This provides a basis for estimating a small macroeconomic model, 
which can be used to explore the relationship between the policy responses of the Bank of England 
and the course of the economy.  It is one of the few papers to make use of UK quarterly data and 
seeks to extend the earlier work of Goodhart (1972).  The paper goes on to look into the determinants 
of external and internal gold flows and relates these to an extensive historical literature.  The 
outcome is compared with the traditional representation of the working of the gold standard, as set out 
in the well-known Interim Report of the Cunliffe Committee (1918).  It is found that operation of the 
model accords in general with the view of the Committee.  The views of the Committee were applicable to 
the pre 1914 gold standard, but less so to the restored interwar gold standard.

The next question to be considered is how far the Bank observed ‘The Rules of the Game’ in the sense of 
relating the reserves of the commercial banks to the gold reserves held at the Bank.  It is shown that 
the relationship between the Bank’s reserves and the reserves of the commercial banks was severely 
distorted by the massive gold movements of 1895-6.  These flows were associated with US political 
conflicts over the monetization of silver.  With the exception of this episode, the Bank is shown to 
have had a limited measure of discretion in operating the gold standard.  The final question to be 
considered is whether a similar model can be estimated from US data and related to the views of 
Friedman and Schwartz.
X-Classification-JEL: 
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Length: 31 pages
Creation-Date: 2013-10-30
Number: _123
File-URL: http://www.economics.ox.ac.uk/materials/papers/13111/Dimsdale.pdf
File-Format: application/pdf
Handle: RePEc:nuf:esohwp:_123