ISSN 2299-632X Money Centre No 10 in memory of Sławomir S. Skrzypek 2nd Quarter of 2017 Bankoteka HISTORY • ECONOMY • EDUCATION Visit our website www.cpnbp.pl The NBP Money Centre Magazine Ladies and Gentlemen, On the front cover of “Bankoteka” we have In the We discover Multimedia section, displayed a copper plate which was legal we show what is hidden in multimedia in tender in Sweden in the 17th century. This the Exchanges and financial markets room. copper money was so heavy and required We convince how rich and interesting the using such a quantity of (depleting) metal history of individual commodity exchanges that, besides other economic conditions of is, e.g. those where diamonds, cereals, sugar Sweden at that time, it forced the decision and coffee are traded. to replace money made of bullion with paper money. On the other hand, on the The Money Centre rooms come alive thanks back cover we have placed a certificate to our guests, who visit in large numbers which is recognised as the first printed from Tuesday to Sunday. School groups banknote in Europe. Its history can be read make up the majority of visitors. We show in the Education section. one of the groups from a lower secondary school in the photo reportage. You can read Was a 5-million banknote ever used in how their visit ended in the material A Story Poland? You will find the answer to this of Bank Street. question in the same section, in the second article, which is the continuation of At the end of the magazine, as usual, there the article “Redenomination of the złoty, or is an invitation to a foreign money museum, how Poles stopped being ‘millionaires’”. this time in Amsterdam. The extended, modern interiors were commissioned in In the next section, Exhibits, we draw the new building of the central bank of attention to an extremely rare one-sided the Netherlands in 2015. banknote originating from the November Uprising period. As in the previous issues I wish you pleasant reading and discovery of of the magazine, we show where the most the world of money. interesting of the exhibits described can be found in the NBP Money Centre. Stanisław Gorący Editor of the “Bankoteka” magazine 3 Education The time of the Platmynt and the first European paper money Sweden – the homeland of the first banknote in Europe pp. 5–7 Redenomination of the złoty, or how Poles stopped being “millionaires” 5,000,000 złoty – did such a banknote exist? Part II pp. 8–11 4 The NBP Money Centre Magazine Sweden – the homeland of the first banknote in Europe After numerous wars in the 16th century and during the wars in the 17th century, Sweden was plunged into a financial crisis. The country lacked bullion silver and gold. Due to its properties, bullion has proven to The first Swedish money produced from the As the price of this metal was considerably be the best means of trade exchange. It is alloy of silver and copper was introduced lower than that of silver, copper dalers had very durable, has a stable value and its small in 1534, and it was known as the daler. It to be much heavier than silver coins with the volume facilitates storage, transport and replaced the silver guilder (Swedish: gulden) same denomination. They had the shape of exchange. However, under the conditions used up to that date. In the years 1592- a large square plate – this is where the name of crisis, when Sweden was approaching 1599, when Sigismund Vasa was the king of platmynt came from. The first plate coins bankruptcy, the decision was made to Poland and Sweden, hyperinflation boosted were manufactured in 1644. The weight of increase the quantity of money using in Poland’s northern neighbour. At that 1 platmynt was 19.7 kg and it was worth copper, which was relatively inexpensive time, the decision to increase the amount 10 conversion units called riksdalers. As and available in Sweden in abundance. of copper in coins was taken. communicated on the website of Sweden’s Sigismund Vasa, the king of Poland, Sweden and Lithuania. A portrait by the Polish painter, Marcin Kober 1550–1598 The MONETARY SYSTEMS room – Platmynts Photo: Wikimedia Commons Photo: NBP collections 5 Education Charles X Gustav, the King of Sweden A portrait by Sébastien Bourdons of 1652 National Museum in Stockholm 100-daler banknote of 1666 at the exhibition of the NBP Money Centre Photo: Wikimedia Commons Photo: NBP collections central bank, the Risksbank, it was possible In the meantime, on 30 November 1656, King Palmstruch had a problem to pay out to buy a cow for this money. These big coins Charles X Gustav, on request of the Dutch the money to his clients in the form they were mainly used in foreign trade. Other merchant, Johan Palmstruch, established demanded; he had to visit people to whom plates, with a weight of over 3 kg, constituted Stockholms Banco by decree. Palmstruch he had granted loans and demand earlier the equivalent of 2 riksdalers. Platmynts was granted the privilege to operate a private repayment. This made him aware that he became heavier and heavier and finally it was bank in Stockholm. Although Stockholms would not always have the adequate quantity only possible to transport those enormous Banco belonged to the private entrepreneur, of bullion available (copper and silver) in coins by a horse and cart. Their dimensions the King of Sweden selected its management order to satisfy all clients’ claims. Under such and mass made the owners deposit them at board. circumstances, he had a revolutionary idea a bank, which issued a deposit certificate in – he decided to issue deposit certificates in The Regency Council, which ruled the exchange. order to cover those deficits. Subsequently, country from 1661 on behalf of the minor, he made the decision to issue banknotes. The minting of platmynts was suspended Charles XI, after the death of King Charles in 1645; however, it was resumed as early as X Gustav, decided to devalue the riksdaler The first banknote in Europe – called the 4 years later. From 1649, copper coins with (conversion unit), thus, also the daler dalar, like its bullion predecessor – was issued lower denomination were also struck – 1, 2 functioning in the market. Only one reaction in Sweden in 1661 and the oldest dalars and 4-daler coins as well as an 8-daler coin (a of Stockholms Banco clients could have been preserved date back to 1666. They offered silvermynt). They were used more commonly, expected: they appeared in front of the bank an alternative to massive copper coins, with however, only in the country. demanding the withdrawal of their money. the heaviest weighing approximately 20 kg. 6 The NBP Money Centre Magazine Unlike the paper certificates The excessive issue of banknotes drove functioning before, the banknotes Stockholms Banco to bankruptcy. were not assigned to a single In response to the alarming events, account and it was possible to the Swedish authorities ordered Johan pass them from hand to hand Palmstruch to collect the granted loans and freely. Moreover, they confirmed repay the deposit holders. This triggered the obligation to pay out the a decline in the quantity of money in adequate quantity of coins, but circulation, which affected entrepreneurs they did not certify that a given already accustomed to cheap loans and person had deposited a specified operating under conditions of inflation. As amount at the bank. Therefore, a consequence, the artificially propagated they were known as credit notes good economic conditions collapsed and – kreditivsedlar. the Swedish economy entered a period of Palmstruch found it unlikely turmoil. that all banknote holders would In 1664, Palmstruch’s bank practically ceased simultaneously demand the to operate. At that moment, the authorities withdrawal of the equivalent in started to act, commencing the bank’s bullion. Although he ensured liquidation. Its liabilities were taken over the continuity of withdrawals, by the state. he ceased to maintain the strict correspondence between the Palmstruch was accused of bad bookkeeping quantity of banknotes issued and and mismanagement of the bank. He was the number of coins deposited. given time to replenish deficits of funds This way, he abused his powers. which he, however, was unable to do. In 1668, he was deprived of titles and privileges In the framework of widespread and subsequently imprisoned. Either death lending, in 1668 Stockholms or exile awaited him. Ultimately, the Swedish Banco issued banknotes with the authorities waived the main penalty. nominal value much higher than Palmstruch spent 2 years in prison. He died the assets it held. Over a certain in 1671 at the age of 60. period of time, it was possible to hand out coins to people In 1668, the special purpose institution – bringing banknotes. However, Riksens Ständers Bank – took over oversight once the bank had started to of Stockholms Banco. Afterwards, a new close its doors to clients more bank, Riksens Ständers Wexel-Banco, i.e. and more frequently, on a certain Royal Properties Bank, was set up. The MONETARY SYSTEMS room day a man appeared at the bank, In order to prevent the next crisis, Riksdag, The showcase with the Swedish banknote demanding the withdrawal of the Photo: NBP collections the Parliament of the Kingdom of Sweden, equivalent of 10,000 riksdalers. managed the new bank. In 1866, the bank was Meanwhile, the treasury held given the name Sveriges Riksbank (Swedish It was possible to exchange the banknotes only 4,000 riksdalers. The news of the National Bank). From that moment, one can to the corresponding quantity of the bullion bank’s problems started to spread rapidly.