Copper coins and banknotes

The display case shows a selection of the coins and banknotes issued during the period 1624-1776. From the 1620s to the mid-18th century, Swedish coinage and money history is dominated by copper. At the beginning of the 17th century, there was a shortage of coins in the country after Sweden had paid the ransom for Älvsborg to Denmark following the Kalmar War of 1611-1613. The supply of silver was limited, but copper was plentiful. By making copper coins, the shortage of coins would be remedied and at the same time the price of copper would go up because there was not as much copper available on the market.

Twenty years after the first copper coins were made, in 1644, plate money made its entrance under Queen Christina. They were presented as portable coins in higher denominations. The first coins were of the 10 daler silver denomination and weighed almost 20 kilos. After a few years, plate money was introduced in lower denominations, down to ½ daler silver. Plate money was mainly produced in Avesta in Dalarna, but also in Kengis in Norrbotten, Ljusnedal in Härjedalen, Huså and Semlan in Jämtland and in Stockholm.

During the 17th century, the production of gold coins also took off. In 1654, King Karl X Gustav had a Swedish ducat coin struck, and after him all the rulers struck ducats. The gold was mainly imported, but from 1738 some of the gold came from the Ädelfors mine in Småland. Gold from Östra silverberget in Dalarna was also minted for a few years.

In 1715, when the Swedish economy was under severe pressure after many years of war, King Karl XII decided to issue a new type of copper coin, known as ‘mynttecken’ or necessity money. The idea was to bring in copper and silver to the treasury by encouraging the population to exchange silver and copper coins for the necessity money. This was a loan to the state, which was to be repaid to the lenders when the economy recovered.

In 1776, during the reign of Gustav III, it was decided that the riksdaler would be Sweden’s only main coin. This abolished the coinage in mark, öre and penningar that had existed since the Middle Ages. The copper coinage also disappeared.

Banknotes

The period 1624-1776 also saw the first Swedish banknotes. They were called credit notes and were first issued by Stockholms Banco in 1661. The bank’s founder, Johan Palmstruch, invented the notes as a solution to the problem that the bank did not have enough plate money in its coffers. Too much lending meant that there was no way of returning plates to customers who wanted to withdraw the money they had deposited. At the same time, Palmstruch had long had ideas about a banknote coin. Various forms of banknote-like documents had been used long before, by both private individuals and, for example, mining companies.

What was new in 1661 was that the banknotes were not necessarily linked to a bank balance. Instead, the system was based entirely on the public’s trust in the bank’s ability to exchange banknotes for metal coins – if the banknote holder so wished. This meant that the credit notes functioned in practice as modern banknotes. Although Sveriges Riksbank no longer promises to redeem banknotes for metal coins, the value of banknotes still rests entirely on our trust in the bank.

Credit notes became very popular because they were easier to handle than the clumsy copper plates. Everything worked fine in the beginning, but due to large loans to the Crown and other borrowers, the system fell apart. When the public began exchanging their banknotes for metal coins in 1663, the Stockholm Bank’s coffers were quickly emptied, the banknotes lost value, and the bank run intensified. Despite attempts to save the business, the bank ended up being wound up in 1668.

The “Sveriges Rikes Ständers Bank” (later Sveriges Riksbank, the central bank of Sweden) was established in the same year and initially banned the issue of banknotes. But many people missed the banknotes. Various forms of deposit receipts, cash notes and the like were used by the public instead of banknotes. This was not allowed, but the bank had great difficulty in doing anything about it.

In 1701, banknotes made a comeback with the first transport notes issued by the Sveriges Rikes Ständers Bank. These banknotes were something else. Unlike the Stockholms Banco credit notes, they were not anonymous but had a strong link to the holder in that he or she had to sign the note with his or her name when using it. Similar transport notes had already been issued by Stockholms Banco in parallel with the credit notes.

Another difference compared with the credit notes was that the value of the transport banknotes was initially based on actual deposits at the bank, either of plate money, other types of coins or pledges. Public confidence in the banknotes could therefore be maintained. This relationship continued until around 1739, when the bank was forced by a parliamentary decision to increase its credit to the Crown.

The transport banknotes consisted of sheets folded in the centre to four sides. The first and second sides were the banknote itself, while the third and fourth sides were for signatures. They were not an immediate success, but in 1726 it became possible to pay taxes to the Crown using banknotes, which significantly increased their popularity. Initially, the transport notes were issued in the denominations requested, which made circulation difficult. Eventually this changed and from 1743 all transport notes were issued in fixed denominations. The fact that the banknotes had to be transported (signed by the user for each transaction) was considered impractical and cumbersome. Moreover, not everyone could even write their name. Instead, the part of the banknote intended for transport was often simply torn off. Eventually, the transport requirement was abolished, although the name “transport note” remained. Banknotes were then printed in smaller formats and without space for signatures.

By the latter part of the 18th century, most Swedes had become completely comfortable with using banknotes as a means of payment. The development of transport banknotes in the 18th century led to a means of payment that was almost as practical as the first credit notes.

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