How did the Bank of England and others respond to America's 1907 gold drain?
Research question: How did the Bank of England and other European central banks respond to the 1907 gold drain on the US, as reported in their minutes, discount-rate decisions, and newspaper coverage?
The New-York Tribune reported that the Bank of England raised its minimum discount rate from 6 to 7 percent on November 7, 1907, to protect its reserves against the gold drain to the US 1. The Bank of France raised its discount rate from 2.5 to 4 percent and its loan rate from 4 to 4.5 percent to discourage foreign demand for gold 2. On the same day, the Bank of England bought £1,101,000 and sold £237,000 in American eagles for shipment to the United States 3, and the Bank of Bombay raised its discount rate from 4 to 5 percent 5. Lord Avebury, chairman of the Central Association of English Bankers, attributed the temporary difficulty to the prosperity of the United States 4. Earlier, bankers had begun negotiating to import gold from London and Paris and expected to draw about $6,000,000 if needed 79. These figures come from newspaper reporting 123, and the verified facts contain no bank minutes, so the account of the central banks' own records is incomplete 123.
Sources
"The directors of the Bank of England put up the minimum discount rate this norni from 6 to 7 per cent. ... In the absence of such an assurance the Bank of England utilized the only weapon at hand to protect its reserves."Image 2 of New-York tribune (New York [N.Y.]), November 8, 1907
"The Bank of France raised its discount rate from 23; to 4 per cent to-day, and edvanced the rate on loans from 4 to 41, per cent. ... the unusual step of rais raising - ing raising the rate on loans above the discount rate , being taken for the special purpose of discour discour mging - mging discour mging the foreizn demand."Image 2 of New-York tribune (New York [N.Y.]), November 8, 1907
"The bank of England bought £1,101,000 in American eagles to-day and sold £237.000 in American eagles for shipment to the United States."Image 2 of New-York tribune (New York [N.Y.]), November 8, 1907
"Lord Avebury, chairman of the Central Asso Assoviation - viation Assoviation of English Bankers, said he thought the present bank rate would prove sufficient, and . that it would be injudicious to raise it further. He expressed the opinion that it was the pros prosperity - perity prosperity of the United States which gave rise to the temporary financial difficulty there."Image 2 of New-York tribune (New York [N.Y.]), November 8, 1907
"Bormpay, Nov. 7.—The rate of discount of the | Bank of Bombay was raised to-day from 4 to o | per cinL"Image 2 of New-York tribune (New York [N.Y.]), November 8, 1907
"global arbitrage of U.S. securities allowed the U.S. to draw significant liquidity from European markets in times of crisis."Systemic Risk, Missing Gold Flows and the Panic of 1907 (2010)
"It is understood that negotiations were begun today by International bankers looking to the importation of gold from London and Paris."Image 1 of The Billings gazette (Billings, Mont.), October 26, 1907, (Morning)
"We show that contractual arrangements in the securities markets helped to minimize spill over effects"Systemic Risk, Missing Gold Flows and the Panic of 1907 (2010)
"It is expect expected - ed expected that some $6,000,000 will be en engaged - gaged engaged from those centers"Image 1 of The Billings gazette (Billings, Mont.), October 26, 1907, (Morning)
"The $25,000,000 made up by a pool headed by .Mr. Morgan and sent into the stock.market yesterday after afternoon"Image 1 of The Billings gazette (Billings, Mont.), October 26, 1907, (Morning)
"These, with others, constituted that now traditional group which gathered in the Morgan library which flanks his Madison avenue home, and were there In session all night."Image 3 of The Birmingham age-herald (Birmingham, Ala.), September 17, 1915