The informal moneylenders and city brokers were not governed by the central bank’s interest rate. They could therefore quickly adapt their own interest rates, loan periods and other factors according to the economic situation and world events. A good broker also knew the people who lived in Gothenburg.
He knew who could be trusted. This flexibility and knowledge about the borrowers gave the city brokers an advantage over the banks, especially regarding loans to individuals and small businesses. A city broker could also function as a consultant helping people to get a bank contact and to deal with the bureaucracy.
The city brokers were most numerous between 1860 and 1880. The most powerful of them during the 1870s was Jacob Dahl. When the banks had a minor crisis in 1878-79, the amount of money lent out via Dahl increased from 6 million kronor to 12 million kronor in one year. During the same period Göteborgs Sparbank (Gothenburg’s Savings Bank) lent out about 3 million kronor. Dahl additionally operated both informally and formally: he ran his own business while simultaneously sitting on the board of Göteborgs Sparbank.
During the 1890s the banks in Gothenburg became more established and acquired the same knowledge as the city brokers. Gradually the banks took over the entire lending market.