Europe’s first banknotes issued in Sweden

Richard Cavendish explains how Europe's earliest modern-style banknotes were introduced by the Bank of Stockholm in the 17th century.

Anything can be used as money that other people are prepared to accept and items employed as currency in different parts of the world over the centuries range from cows, sea shells, feathers, rice, lumps of salt, dogs’ teeth, pigs’ teeth and whales’ teeth, to eggs, pieces of telephone wire, cigarettes and lipstick. The history of metal coins goes far back into antiquity and the Chinese had invented paper money by the time of the Tang Dynasty in the seventh century ad.

By the time of the Renaissance European bankers were keeping customers’ gold and silver safe for them, with a written receipt promising to produce the cash money on demand. These ‘running cash notes’ frequently undertook to hand the cash over to whoever was in possession of the note – the bearer – and could be handed around from one person to another in business dealings, which made them convenient for merchants and traders.

Europe’s earliest modern-style banknotes, available to all and sundry with each note worth a fixed sum, were introduced by the Bank of Stockholm. The bank had been started in 1657 by Johan Palmstruch in close collaboration with the royal government which pocketed half the profits. It was Palmstruch who suggested the kreditivsedlar (credit notes) and they provided a welcome alternative to Sweden’s massive copper coins, which were dismayingly heavy and clumsy. Colloquially known as Palmstruchers the notes were printed on thick, white watermarked paper with the word banco as the watermark and carried the date, the bank’s seal and eight signatures, headed by Palmstruch’s, as an assurance of reliability. They were in stated denominations and payable to the bearer and anybody who had one was promised payment by the bank.

Unfortunately Palmstruch issued far too many of the notes. He did not have enough gold and silver tucked away to redeem them on demand and the bank collapsed. He was tried and sentenced to death or exile but was sent to prison instead and died soon after, in 1671.