In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold standard) by which tools and technics the "cost of borrowing money" or in simple terms the interest rate was determined?
[NOTE: Answer based on a real historical Gold standard is fully appreciated. By the gold-based economy, I meant where there is no ratio between the gold reserve and the banknotes. where notes are fully backed by 100% of gold.]
My guess is because the bond has still existed at that time so the yield of the bond determined the cost of borrowing money or the interest rate for the government and companies. On the other hand for personal borrowing, local banks and open markets did determine the cost of borrowing money or the interest rate.
Actually I just want to know that, back then by which tools and technics the money supply was controlled. how the cost of borrowing money was controlled for the government, companies, and for the retailer also?
[NOTE: By tools and technics, I meant something like interest rate, fed fund rate, QE, bond yield, and all the other things that can control the money supply. But back then they didn't exist. so back then besides the actual supply and demand of the gold, what other factors possibly could exist that affected or determined the supply of money or the cost of borrowing money?]