From the history of Lithuanian money. Liquidation of the litas


25 March marks a sad day in Lithuanian history. On this day in 1941, the Soviets withdrew the Lithuanian currency litas from circulation. Lithuania was a young country which quickly lost its independence and the national currency litas that had been in circulation for 19 years during the interwar period. However, the litas was taken out of circulation the last when compared to the currencies of other occupied countries. After 25 March 1941, it was replaced by occupation money, and made its return only 52 years later – in 1993. How did the credit system’s liquidation process go and what losses did Lithuanian residents incur?

On 14 June 1940, the Soviet Union presented an ultimatum to Lithuania and, shortly after that, deployed the Red Army’s troops, while a couple of days later – set up a puppet government. The country was occupied. Soviet representatives started insisting on adopting the rouble from the very first days. The Minister of Finance Ernestas Galvanauskas tried his best to delay it and strongly opposed this idea. He bravely declared that as long as he was the Minister of Finance, he would not allow the adoption of the rouble. This strict patriotic attitude caused him to receive threats and he even risked being imprisoned or receiving a death penalty. Galvanauskas was soon fired from his position as the Minister of Finance and fled the country. During his last days in office, he even passed a law prohibiting the rouble from being used in Lithuania. 

Sadly, Galvanauskas’ efforts were not sufficient to save the litas. The new government could not care less about the laws that were passed, as they could change them whenever they wanted to. New rules prevented residents from taking out more than 250 litas from their deposits with credit institutions. As of 17 July 1940, larger companies had to transfer their income to banks and use them for settlements instead of cash. This was done in order to keep litas in accounts so that they would be later exchanged into roubles. On 21 July, Lithuania was officially incorporated into the Soviet Union and the nationalisation of banks soon followed. Prices were constantly artificially increased so that residents would spend the saved cash, especially silver litas coins. 

The Soviet authorities also attempted to take over the Bank of Lithuania’s gold reserves held abroad. However, the attempt was mostly unsuccessful – all the countries refused to return the gold except for Sweden which stayed neutral. However, the Soviets took over the valuables that were accumulated in Lithuania. All the jewellery, precious metals and stones that were in stores had to be transferred to the bank to be “securely stored”. Valuables were also taken from residents’ houses during organised searches. Today it is difficult to say what exactly happened to the valuables that were in Lithuania, but this could surely be guessed.

August saw the beginning of the official Lithuanian credit system’s liquidation and switching over to the rouble. Prices were constantly boosted which, in turn, increased the turnover of the litas, and in October, the Bank of Lithuania was officially incorporated into the State Bank of the USSR and turned into its republican office. 

The litas was liquidated by employing a parallel currency system. On 25 November 1940, an order was announced to introduce the rouble alongside the litas. This decision was justified as a means of facilitating economic relations with the other Soviet Union’s republics. Referring to the rouble and litas’ gold parity, 1 litas was equated to 90 kopeks. Regarding the fact that prices were constantly increased, the litas was artificially depreciated by three to four times compared to its actual value. When the rouble was introduced, prices of goods and services as well as other payments were set in this currency. Wages and deposits were also paid only in roubles. Truth be told, residents could still pay in litas for a while, although litas that entered banks were not released back into circulation. 

Until the end of 1940, only around 60 million litas still remained in circulation. As much as 24 million of those were silver coins. Lithuanian residents were deliberately trying to keep their silver coins. On 11 November 1940, it was prohibited to exchange litas to roubles and vice versa. 

In the end, the parallel circulation of two currencies was totally liquidated on 25 March 1941. The order was not publicly announced but it prohibited from accepting litas for payments from that very day. The litas was annulled. About 11 million litas were still in residents’ possession, whereas deposits that exceeded 1,000 litas were simply confiscated. Therefore, the national currency was withdrawn and residents were literally robbed. 

The litas banknotes that were taken out of circulation were burned in the boiler room of the Bank of Lithuania’s building in Kaunas, whereas the coins were transported to Moscow. They were most likely remelted and minted into rouble and kopek coins. Interestingly, some of the coins were not transported to Moscow in time and thus were taken by Nazi Germany which later occupied Lithuania. The Bank of Lithuania’s Chairman Aleksandras Drobnys managed to avoid a death penalty for “not preserving the bank’s assets”. The Deputy Chairman was sentenced to death instead. It should be noted, however, that Latvia’s Chairman did not manage to escape a death penalty. 

Therefore, the litas was withdrawn after 25 March 1941 and the Soviet chervonets, roubles and kopeks entered the circulation. 

Last updated: 2021-06-25