Heralds of modernity? Market penetration of Dutch joint-stock banks in the early twentieth century

December 20, 2022 | Blog
Home > Heralds of modernity? Market penetration of Dutch joint-stock banks in the early twentieth century

By Oscar Gelderblom (University of Antwerp and Utrecht University), Joost Jonker (University of Amsterdam and International Institute for Social History), Ruben Peeters (University of Antwerp), and Amaury de Vicq (University of Groningen and Paris School of Economics)

This blog post is based upon the authors’ article forthcoming in the Economic History Review.


From Gerschenkron onwards, joint-stock banks have been regarded as the heralds of financial modernity, their services superior to supposedly inefficient, person-to-person arrangements before. Were they? If so, one would expect them to have replaced such arrangements fairly quickly, as people came to recognise the advantages of joint-stock banking over having to rely on interpersonal relationships.

Inspired by Hoffman, Postel-Vinay, and Rosenthal’s book, Dark matter credit (2019), about the continuing importance of credit arranged by notaries in the face of rising joint-stock banks, we decided to examine what happened in the Netherlands. Joint-stock banking appeared comparatively late there, during the 1860s and 1870s, but developed rapidly between 1910 and 1920, when bank money (as a percentage of the money supply) and bank assets to GDP both peaked before entering a long slump. How deep had the banks penetrated Dutch society by then? Our article forthcoming in the Economic History Review gives the surprising answer: considerably less than we had expected, because peer-to-peer lending remained a clear favourite.

We came to this conclusion by using the approach pioneered by Di Matteo, Redish, and Lindgren, in the cases of Canada and Sweden, for analysing a national, stratified sample of the inheritance tax returns for 1921, which yielded 2,325 estates of top wealth owners. Having coded each item, we grouped receivables and liabilities by the sort of the relationship they represented, that is to say, bank-related or non-bank related. We added personal and socio-economic information about the deceased whenever available, then extrapolated the sample to obtain estimated numbers for all wealth owners who died in 1921.

Person-to-person lending dwarfed bank intermediated loans by number and by value on both sides of the balance; see Table 1. More than 67 per cent of the debts listed in the estates, ordinary household debt excluded, had been transacted between private persons, and even a staggering 82 per cent of the claims. Debt formally registered by notaries tended to have higher amounts, as did bank loans and deposits. However, peer-to-peer lending for large amounts without a formal contract or even a defined collateral was very common, suggesting social ties were considered sufficient security.

As for bank intermediation, only half of the people in our sample had an account at all. Cost and distance do not appear to have had an impact on whether or not people opened an account, though top urban wealth owners were more likely to have one. Age and gender did not matter in the overall assets and liabilities pattern, but younger people tended to have more bank accounts, presumably because they grew up with them, whereas women had fewer.

The estates show that, after fifty years of bank growth, their form of modernity had failed to persuade the majority of potential customers to give up traditional ways of finance. Banks were irrelevant for household payments, as reflected by the amounts of cash and shop credit. Nor did people need banks for trading the large volume of securities owned, done through omnipresent stockbrokers. The banking system’s only competitive advantage existed in savings accounts for people unwilling or unable to buy securities, and in current accounts for businesses.

Turning to one’s family, neighbours, business relations, or local investors was still far more common than going to a local bank. Therefore, the pace with which banks penetrated Dutch society depended less on personal income levels, the cost and quality of service, or the ease of access, than on a social evolution changing people’s preferences from mutual dependency to formalized contracting with more or less anonymous institutions. With this finding we add a dimension to the growing body of literature on the social history of finance, which, rich for the early modern period, awaits exploration for the twentieth century.



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Hoffman, P. T., Postel-Vinay, G., and Rosenthal, J. L., Dark matter credit: the development of peer-to-peer lending and banking in France (Princeton, NJ, 2019).