Stockholms Banco (also known as the Bank of Palmstruch or Palmstruch Bank) in Sweden was the first European bank to print banknotes. The bank was founded in 1657 by Johan Palmstruch and began printing banknotes in 1661. It was to be the precursor to the Sveriges Riksbank, the central bank of Sweden. A £20 Ulster Bank banknote. ... Events January 8 - Miles Sindercombe, would-be-assassin of Oliver Cromwell, and his group are captured in London February - Admiral Robert Blake defeats the Spanish West Indian Fleet in a battle over the seizure of Jamaica. ... Johan Palmstruch (born 1611 in Riga, died 1671; named Johan Wittmacher before he was ennobled) was a Dutch merchant credited with the introduction of paper money to Europe. ... Events January 6 - The fifth monarchy men unsuccessfully attempt to seize control of London. ... Sveriges Riksbank is the central bank of Sweden, sometimes called just the Bank of Sweden. ...

The founding of Stockholms Banco

Johan Palmstruch had made two failed proposals for the creation of a banking institution in the 1650s before his third proposal, with the addition of a promise to pay half of the bank's profits to the crown, was accepted. King Charles X Gustav thus signed two charters on November 30, 1656 to create an exchange bank and a loans bank. The first of these (which opened in July 1657) took deposits for a fee (and acruing no interest) with the account owner later able to withdraw the money as cash or to write cheques. The second (which opened at the beginning of 1659) provided loans, financed by the bank owners and secured against property. These two departments were combined in Stockholms Banko with Palmstruch as general manager. Johan Palmstruch (born 1611 in Riga, died 1671; named Johan Wittmacher before he was ennobled) was a Dutch merchant credited with the introduction of paper money to Europe. ... Centuries: 16th century - 17th century - 18th century Decades: 1600s 1610s 1620s 1630s 1640s - 1650s - 1660s 1670s 1680s 1690s 1700s Years: 1650 1651 1652 1653 1654 1655 1656 1657 1658 1659 Significant Events and Trends World Leaders King Frederick III of Denmark (1648 - 1670). ... Charles X or Karl X Gustav (1622-Sweden, son of John Casimir, Margrave of Pfalz-Zweibrücken, and Catherine, sister of Gustavus Adolphus, was born at the Castle of Nyköping on November 8, 1622. ... November 30 is the 334th day (335th on leap years) of the year in the Gregorian calendar, with 31 days remaining, as the final day of November. ... Events Mehmed Köprülü becomes Grand Vizier of the Ottoman Empire. ... July is the seventh month of the year in the Gregorian Calendar and one of seven Gregorian months with the length of 31 days. ... Events January 8 - Miles Sindercombe, would-be-assassin of Oliver Cromwell, and his group are captured in London February - Admiral Robert Blake defeats the Spanish West Indian Fleet in a battle over the seizure of Jamaica. ... Events May 25 - Richard Cromwell resigns as Lord Protector of England following the restoration of the Long Parliament, beginning a second brief period of the republican government called the Commonwealth. ...

The bank itself was no great innovation as it was simply an imitation of the large and successful banks in Amsterdam and Hamburg that had been founded earlier in the 17th century, but it was hoped that the bank would help to stabilise Sweden's currency. Sweden at that time did not have a single currency, rather there was one daler minted in copper (kopparmynt) and another minted in silver (silvermynt). As the metal content of a copper daler had to be worth as much as that of a silver one, this meant that copper daler were large and heavy plate-sized coins. In practice, however, the silver daler was worth more and these were often hoarded, so generally only these large kopparmynt daler were commonly available. Municipality of Amsterdam Alternate meanings: See Amsterdam Amsterdam  listen is the capital of the Netherlands. ... Position of Hamburg in Germany Hamburgs central broadway Jungfernstieg at the Alster lake, between 1900 and 1914 This article is about the city in Germany. ... (16th century - 17th century - 18th century - more centuries) As a means of recording the passage of time, the 17th century was that century which lasted from 1601-1700. ... The daler or the Riksdaler was the name of the currency used in Sweden until 1873 when it was replaced with the krona as an effect of the Scandinavian Monetary Union. ... General Name, Symbol, Number copper, Cu, 29 Chemical series transition metals Group, Period, Block 11 , 4, d Density, Hardness 8920 kg/m3, 3. ... General Name, Symbol, Number silver, Ag, 47 Chemical series Transition metals Group, Period, Block 11, 5, d Density, Hardness 10490 kg/m3, 2. ...

Palmstruch's first major innovation in combining these two departments was to use the money deposited by account holders to finance the loans rather than requiring capital to be provided by himself or the other bank owners. This soon became a problem, however, as deposits were usually short-term and the loans long-term, meaning that deposited money was unavailable to be withdrawn by account holders. This problem was rendered more acute when the copper content of the coins was lowered 17% in 1660 as account holders demanded the return of the copper daler they had deposited since they were now worth more as metal than as coins. It was impossible for the bank to fulfil these requests as the money had been paid out as loans. Events Expulsion of the Carib indigenous people from Martinique by French occupying forces. ...

Kreditivsedlar - Europe's first banknotes

Palmstruch's second major innovation was the introduction of paper banknotes as a solution to the bank's problems balancing deposits and loans. To cover the amounts requested by the account holders, in 1661 he began to make out credit notes (Kreditivsedlar) in round denominations which were freely transferable and backed by the promise of future payment in metal. These were the first European banknotes. A £20 Ulster Bank banknote. ... Events January 6 - The fifth monarchy men unsuccessfully attempt to seize control of London. ...

These banknotes became very popular very quickly simply because they were much easier to carry than the large copper daler, especially for making large payments (a note could be sent in an envelope - previously the large coins had to be transported by horse and cart). A further reason was that when the amount of copper in the coins was reduced the old coins were taken out of circulation faster than new ones could be minted, meaning that there was a shortage of money which could only be solved by replacing the coins with banknotes.

The fall of the bank

The invention of banknotes by Palmstruch eventually caused more problems than it solved. The bank was able to print banknotes on a seemingly unlimited scale and as lending rose rapidly in 1663, the bank's loans ceased to be dependent on the deposits of other account holders. By autumn of that year loans and note issues had reached such levels that the value of the banknotes began to fall. Events Prix de Rome scholarship established for students of the arts. ...

When people returned to the bank to have their credit notes honoured, the bank did not have enough metal reserved to fulfil all these requests and from October onwards the bank was increasing obliged to refuse with operations ceasing entirely in 1664. The government and Riksdag (Swedish Parliament) were forced to take over, reducing the outstanding loans and exchanging the notes for coins. The liquidation of the bank was completed in 1667 and Palmstruch was imprisoned, blamed with the bank's losses. Events March 12 - New Jersey becomes a colony of England. ... Events January 20 - Poland cedes Kyiv, Smolensk, and eastern Ukraine to Russia in the Treaty of Andrusovo that put a final end to the Deluge, and Poland lost its status as a Central European power. ...

On September 17, 1668, Palmstruch's privilege to operate a bank was transferred to the Riksens Ständers Bank, operated by the parliament. Due to the failure of Stockholms Banco, this new bank was not permitted to issue banknotes until the 18th century. The Riksens Ständers Bank was later renamed Sveriges Riksbank and remains the central bank of Sweden to this day. September 17 is the 260th day of the year (261st in leap years). ... Events January - The Triple Alliance of 1668 is formed. ... (17th century - 18th century - 19th century - more centuries) As a means of recording the passage of time, the 18th century refers to the century that lasted from 1701 through 1800. ... Sveriges Riksbank is the central bank of Sweden, sometimes called just the Bank of Sweden. ...

Palmstruch's banknotes

The first banknotes, issued in 1661, were all signed by Palmstruch himself as well as by the other clerks of the bank. These were issued in denominations of 5, 25, 100 and 1000 copper daler (kopparmynt). Events January 6 - The fifth monarchy men unsuccessfully attempt to seize control of London. ... The daler or the Riksdaler was the name of the currency used in Sweden until 1873 when it was replaced with the krona as an effect of the Scandinavian Monetary Union. ...

A second series of these banknotes, known as Palmstruchare, was issued in 1666 in denominations of 10, 25, 50 and 100 silver daler (silvermynt). Events September 2 - Great Fire of London: A large fire breaks out in London in the house of Charles IIs baker on Pudding Lane near London Bridge. ...

References

• 'Stockholms Banco' from Sveriges Riksbank (http://www.riksbank.com/templates/Page.aspx?id=8183)
• Stockholms Banco 1657-1668 (http://hem.passagen.se/sedel/Stockholm/) (in Swedish)

External link

• Images of daler banknotes (http://www.moneymuseum.com/standard_english/raeume/geld_machen/bank/geschichte/sachen/geschichte_papier/gesch_papierEuro_unten.html)