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The first paper money of the Polish-Lithuanian Commonwealth

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More than 200 years ago, in 1794, the first paper money entered into circulation in Lithuania’s territory. It was issued in the Polish-Lithuanian Commonwealth and became the first paper money in the country’s history. Why was it issued? What is the story behind it?

Short history of paper money around the globe


Paper was invented in China more than a thousand years ago and this same place gave birth to the idea to print the first paper money, designed to replace hefty metal coin bundles in large commercial transactions. The first paper money came into existence in the 7th and 8th centuries but the first true, state-wide money of this kind appeared in the 11th century, during the Song dynasty. It already possessed certain security features and was popular amongst citizens. Also, there were special institutions (bank prototypes) in operation, where you could exchange it for metal coins or perform other actions.

Although European explorers and pilgrims had encountered Chinese paper money, the leaders of Europe remained sceptical of it for a long time. Paper was only used to issue debit notes, not as a substitute for money. It all changed in the 17th century when the shortage of gold forced England’s banks to issue paper notes and receipts to their clients for their precious metals stored in banks. For the first time, paper was pegged to precious metals and these receipts may be considered the first banknotes. Sweden was the first to issue banknotes state-wide. In 1661, Stockholms Banco (world’s first central bank, a predecessor of Sweden’s central bank) began printing banknotes that were meant to replace copper dalers, large copper plates that were in circulation at the time.

Before long, England’s bank also started issuing paper banknotes and this type of money soon gained popularity in Europe and around the globe, constantly improving and becoming more modern, as well as possessing a growing number of security features. A little more than a hundred years after the first banknotes in Europe, the first paper money was also issued in the Polish-Lithuanian Commonwealth. However, the circumstances surrounding this were quite sombre.

The Kościuszko Uprising

The second half of the 18th century saw the starting collapse of one of the biggest countries in Europe - the Polish-Lithuanian Commonwealth, comprised of the Crown of the Kingdom of Poland and the Grand Duchy of Lithuania, and it was finalised in the very end of that century. The Commonwealth was divided between Russian, Prussian and Austrian Empires. Three partitions took place: in 1772, in 1793 and the last one in 1795, after which the Commonwealth ceased to exist.

Due to complicated political circumstances, these partitions were met with almost no resistance, although there were some efforts to do so. Probably the most prominent example of such resistance was the Kościuszko Uprising of 1794, after the second partition (named after its initiator Tadeusz Kościuszko). The uprising consisted of opposition and officers who, alongside their regiments, refused to join Prussian and Russian armed forces. The uprising started in March and soon spread throughout the entire Commonwealth, both Polish and Lithuanian territories. Although there were a couple tens of thousands of rebels and they managed to reach several significant victories, but the armed forces of Russia and its allies had much larger numbers, therefore the uprising was quelled before November. Another significance of this uprising was that the first paper money was printed in the Commonwealth during it.

The first paper money in the Polish-Lithuanian Commonwealth

The issuance of paper money is directly related to the foundation of a central bank, and the idea of such a bank was widely discussed since the middle of the 18th century, because central banks were already functioning in almost all the European countries and the Commonwealth was going through some tough times, so it felt a shortage of money in the market. However, due to various political and economic circumstances, this idea did not come into fruition. In 1774, projects of possible paper money were actually introduced but Sejm turned them down. After that, neither bank nor banknote projects were accepted (even though they had the support of the King). Probably the last state effort to found a central bank was in 1790, when Andrzej Kapostas, a banker and merchant from Warsaw, submitted the projects of a national bank and of banknotes. These projects were also turned down.

The idea of a central bank and paper money became a reality only in 1794, in the thick of the Kościuszko Uprising, when a significant shortage of metal and money was felt. To solve this problem, a special committee was established to look after obtaining loans and tax collection, whereas the National Supreme Council (the government) established the Treasury Ticket Directorate on 8 June 1794, which became the first institution responsible for money issuance. It was also responsible for issuing paper money. A decision was made to issue treasury tickets for a total value of 70 million zloty. A counterfeiting law was also immediately passed, which provided for the most severe punishment, the death penalty, and the confiscation of assets for counterfeiting money.

The first paper treasury tickets entered into circulation on 16 August 1794, when Warsaw was surrounded by Russia’s military units. The value of this money was equal to the value of coins that were in circulation, but in actuality, it depended on the acts of war, so it could not stay stable and high. Therefore, locals did not particularly like it and they were already wary of paper money as a whole. However, a bit later, banknotes of smaller denominations were also issued; their value equalled 5 and 10 copper groszes as well as 1 zloty. The last issue also saw a treasury ticket equal to 4 zloty.
Paper treasury tickets were in circulation from 16 August to 6 November 1794. When the uprising was quelled, treasury tickets were banned and their circulation ceased. In total, treasury tickets were issued for the value of at least 10 million zloty. Around 8 million of them remained in the possession of citizens.

In the 19th century, Lithuania was already incorporated into the Russian Empire, where Russian banknotes entered into circulation. Eventually, paper money became customary and used daily.

Treasury ticket design

Treasury tickets of seven denominations were designed (5, 10, 25, 50, 100, 500 and 1,000 zloty). Their design was created by an artist Karol Michał Gröll (1770–1852) and they were printed in Piotr Dufour and Karol Michał Gröll’s workshops as well as in Jan Abraham Willing’s press. Both the design and size of the money were the same, only denominations, colour and paper were different. All of them featured symbols of freedom, connected to freedom itself and the French Revolution: the Phrygian cap, the armament of Sans-culottes, a destroyed prison, the chains of absolutism, the thunderbolt of the nation and the wings of freedom. Over this symbolic group, two symbols of the Commonwealth were pictured: an eagle on the left and Vytis on the right. The resolution text of the uprising was also printed on all the banknotes. The denomination was written both in numbers and words, letters B and S were printed on the banknotes (the first letters of the Polish words biliet skorbowy, meaning treasury ticket), as well as a stamp of the Treasury Ticket Directorate, signatures and a banknote number. Tickets also contained watermarks – vertical and horizontal lines.

The tickets of smaller denomination that their issued later (5 and 10 groszes as well as 1 and 4 zloty) had a different design. It was much simpler – denominations written in Latin and Roman numerals, date of issue, an eagle and Vytis. Actually, these banknotes were already two-sided, the name F. Malinowski was written on the other side. Filip Malinowski was one the Directorate’s directors. The watermark featured the denomination written in Roman numerals.
 

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Last updated: 2020-07-04