Home > Uncategorized > Interest rates in The Netherlands (1590-2012) and the UK (1703-1912)

Interest rates in The Netherlands (1590-2012) and the UK (1703-1912)

I should be doing other things but Paul Krugman mentioned a Bank of England study by Sally Hills, Ryland Thomas and Nicholas Dimsdale with an Excell sheet which contains three centuries of UK interest rates. Which can of course be compared to four centuries of Dutch interest rates (sources here), the UK series has been extended wit three years…

Interest rates

The main take away: differences between the UK and the Netherlands were, except for the years of high inflation in the UK around 1970, limited. No bond vigilantes in normal years, not even when Dutch government finances were in very dire straits, i.e. between 1815 and 1860. Dutch government rates were up to about 1880 significantly higher than in the UK (spread in normal years about 1880 0,8/1.5%) but this is quite small compared with present differences in the -Eurozone. It is also remarkable that household rates (mortgages) after 1780 were not higher than government rates, unlike today. But we do see spikes in years of political upheaval:

1 . 1815. Establishment of the new Dutch-Belgian Kingdom of the Netherlands

2. 1830. Belgian revolt, Kingdom splits into The Netherlands and Belgium

3. 1848. Constitutional crisis (this was a very revolutionary year in Europe)

4. 1920. Height of WW I induced inflation, after 1920 prices however fall from a cliff

5. 1974. Height of first oil crisis

6. 1980. Volcker interest shock (which forced the Netherlands to increase interest rates, despite much lower levels of inflation than in the USA’

7. 1990, Reunification of Germany (which led to higher interest rates in the Netherlands)



  1. William Neil
    October 29, 2013 at 12:36 am

    Well, thanks very much for this. When I was researching my long essay, “Debt, Deficits and Balanced Budget Bull,” in 2010, and we were all waiting with Niall Ferguson for the ride of the bond vigilantes, I came across a paper by a West Coast economist who studied interest rates on British government bonds when their national debt was at its 19th Century height – a supposedly catastrophic level, at least by current vigilante standards, somewhere in the neighborhood of 200- 230% of GDP, with due caution given by the author to compiling these statistics from those early 19th century years. He maintained there was no crowding out, interest rates did not take off and Great Britain went on – think about those years, to fund the heyday of its industrial revolution; or at least its private entrepreneurs were able to round up the capital to built those satanic mills. And these peak debt years were 1815-1840 or so, the debt having been run up by the nearly constant warfare, the Napoleonic Wars from the 1790’s until Waterloo in 1815.

    Anyone else want to wade into those years and the conclusions; this was little before current efforts to debunk Rogoff and Reinhart. I had reached my own conclusions after reading James Galbraith’s book “The Predator State” and its Chapter entitled “The Impossible Dream of Budget Balance.

    Here’s the link to the paper by Gregory Clark, published in 2001:


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