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2016 | OriginalPaper | Chapter

3. Sveriges Riksbank, and the Four Criteria

Author : Steffen Elkiær Andersen

Published in: The Origins and Nature of Scandinavian Central Banking

Publisher: Springer International Publishing

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Abstract

From the 15th century until 1866, Sweden was governed by a combination of the king/government and the Ständerförsamling (representatives of the “Four Estates”, i.e. the nobility, the burghers, the clergy, and the farmers). For the history of “central banking” in Sweden, the year 1544 is of some relevance.

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previous chapter Defining “Central Banks”: Four Criteria

next chapter Danmarks Nationalbank and the Four Criteria

The period was named after three kings, all named Karl (Karl X Gustav, 1654–60, Karl XI, 1660–97, and Karl XII, 1697–1718).

For a more detailed account of the history of Stockholms Banco (in English), see Steffen Elkiær Andersen (2010) The Evolution of Nordic Finance (Palgrave Macmillan), pp. 21–24.

The history of Stockholms Banco and Sveriges Riksbank has been analysed in great detail (in Swedish) by Professor Sven Brisman et al. in (1918-30) Sveriges Riksbank 1668 -1918, bd. I-V. (Sveriges Riksbank), the official history of Sveriges Riksbank. In references below this work will be referred to just as Sveriges Riksbank I–V.

The letter is reprinted (in German) in Sveriges Riksbank I-V, bd. I, Bilaga II, pp. 19–21 together with the statutes for the Amsterdamsche Wisselsbank (Bilaga III, pp. 23–25, in Dutch). In the words of the letter: “…durch anstell und einrichtung einer Wechsel Bancq, umb nach der Venetianer, Amsterdammer, Hamburger etc. gebrauch undt weise…”

“….at emedan wij erachta én nyttigh, helsosam och nödigh ting for negotierne i Wårt Rijke, at Wexelbäncker ther uthi må blifwa anstälte och oprättade…”…..and: “Wårt egne inländska Kopparmynt skal förmodentligen therigenom til thess rätta och skälig valor kunna bringas, och här emoot alt …obilligt stegrande aff fremmande Mynt …hindrat blifwa.”

Here quoted from the preamble to the Charter for the Stockholms Banco, as reprinted in Sveriges Riksbank I – V, bd. I, Bilaga IV, p. 26.

In the latter half of the 17th century, Swedish copper production and exports equalled between half and two thirds of Europe’s copper consumption, cf. Svensk Uppslagsbok 1947–55 (Malmö), and S.Kristiansson (Falun, 1997): “Strömningar till och från Stora Kopperberget”, p.82.

The name “wechsel bank” was copied from the Amsterdam Wisselsbank, but not all the Wisselsbank’s ways and means were copied in Stockholm, cf. below. For a detailed comparison of the Amsterdam Wisselsbank with Stockholms Banco/Sveriges Riksbank, see E.F. Heckscher: The Bank of Sweden in Its Connection With the Bank of Amsterdam in J.G. van Dillen (ed), 1934, reprinted 1964): History of the Principal Public Banks (Frank Cass & Co. Ltd).

cf. Sveriges Riksbank I-V, bd. I, p. 76. The commission set up to investigate the course of events made some efforts to establish a closing balance sheet. The result was not quite as bad as might have been imagined, but still far beyond what Palmstruch and his associates could have reimbursed. Palmstruch did not particularly enrich himself.

Sveriges Riksbank celebrated its 300-year anniversary in 1968, which shows that it considers 1668 as the year of its foundation.

Reprinted in Sveriges Riksbank I–V, bd. I, Bilaga VII, pp. 78–81.

In this period the Estates convened with a few years of intervals and with sessions lasting a couple of months.

“…Wij nu widh thenna Rijksdag hafwe allernådigst gifwit samptlige Rijksens Ständer vnder händer thet at öfwerläggia, och så sluta som thet allmenne bästa kunde vara tient medh…; altså hafwe Wij än wijdara, på theras …begiäran, och til bädre styrkia..theraf, för got funnit..at tillägia…Banken, som nu efter …Ständernes …förodning blifwer inrättat…efterskrefne wilkor... . ”

Kongl. May:tz nådige Försäkring gifwen Rijksens Ständer, på några wilkår och Fördelar til Bankens Bästa

Stockholm, den 17. September 1668. Reprinted in Sveriges Riksbank I–V, bd. I, Bilaga VII.

The gold ducat (used only in foreign transactions), the silver riksdaler (the species daler, an almost full value silver coin, also used mostly in foreign transactions), the silver daler (a less-than-full-value coin), the Karoliner daler (a silver coin minted almost only in the Karolinska period) and the copper coins/plates. The Karoliner daler was not minted after the death of King Karl XII although it was still circulated.

This is where the Stockholm Banco/Riksbank differed fundamentally from the Amsterdam and Hamburgische banks, whose main principle was to accept deposits in any currency offered, convert them to a single accounting unit, and to pay out withdrawals in any currency demanded, all at exchange rates decided by the bank, and to make account-to-account transfers in that accounting unit.

The spelling in the 17th century documents differs between rijksens, rijkens and rijkzens. The spelling sometimes differs even within the same document. The concept of “correct” spelling had not yet been invented…

The accounts of the Riksbank have been reprinted in Sveriges Riksbank I–V, bd. V.

“…altså hafwa Rijkzsens Ständer…och så gott funnit twennne af Rijkzsens Ridderskap och Adell, med sampt twenne af Prästeskapet och twenne af Borgerskapet, efter ther på utgifne Fullmacht att förordna…hafwa med begge föber:de Bankor een noga upsicht… .” Instruction from the Estates to their representatives, as reprinted in Sveriges Riksbank I–V, bd, I, Bilaga VIII, p. 104.

“Wij Rijksens Ständer, …yttermera lofwat …at then, som…Penningar i Banken insätter…skal ofelbart och vthan någon exception kunna them commandera…icke annorlunda än hade han samma Penningar vthi sitt eget Hus, Contor och Låda, hvaröfwer Wij och I alla måtto hand holle och thet beskydda och försvara wela och skola, Oss sampt och synnerligen på thet kraftigste ther til förbindandes.”

Sveriges Rijkes Ständers Beslut och Förordning om Banken I Stockholm, 22. Septemb. Åhr. 1668, § 1 as reprinted in Sveriges Riksbank, bd. I, Bilage VII, p. 83.

“Sveriges Riksbank, som är stäld under Riksdagens garanti, drifver bankrörelse enligt denna lag”. Lag för Sveriges Riksbank av 12. maj, 1897, § 1.

“Såsom igenom Creditiff Zedlar för thetta ett stort missbruk och oreda är förlupen; altså skola inga sådane Zedlar eller andre, som ther til kunna hafwa lijknelse,…här effter i thetta wärket brukas, men aldeles wara afskaffade och förbudne”, as reprinted in Sveriges Riksbank, vol.I, bilaga VII, p. 102, § LXXI.

This “new institution” was, in fact, not new, but rather a reorganization of a government debt office dating from 1716, and set up to arrange loans to finance king Karl XII’s wars.

For further discussions on the Riksgäldskontor and its role, see the section below on the Riksbank as bank for the government, and Chaps. 6 and 8.

The first such bank to be formed (1830) was Skånska Privatbanken (Ystad), later renamed Skånes Enskilda Bank. The best known and largest of these banks was the Stockholms Enskilda Bank (1856), which merged in 1972 with Skandinaviska Banken (1864) to become Skandinaviska Enskilda Bank (SEB).

cf. “Sveriges Riksbank, I-V, bd. IV, Avsnitt 1914–24”, p. 7.

Lag för Sveriges Riksbank, May 12, 1897.

“Riksbanken är….ensam berättigad att utgifva banksedlar Dessa sedlar utgöra lagligt betalningsmedel…och skola, n-ärhelst sådant påfordras, af Riksbanken inlösas eftger deras lydelse.”

In this context the word “myntrealisation” basically means no more than a reorganization of the monetary system and/or suspension of convertibility. It did not necessarily imply a devaluation against any foreign currency or accounting unit. With several different national currencies in circulation, a “myntrealisation” usually meant devaluation of one national currency against another national currency.

Figures for Sweden’s foreign debts during the18th century are presented in: James C. Riley (1980) International Government Finance and the Amsterdam Capital Market, Cambridge University Press, pp. 144–50.

Samuel Söderling (1722–98) had been employed by the Riksbank in 1737 and had worked his way up in the system. In 1761 he was appointed “commissarie” (one of the six governors in the daily management).

In the Riksdag, the affairs of the Riksbank were taken care of by the Banking Committee inside the “Secret Committee” (det Secrete Utskottet), which dealt with secret affairs of state. Since the financial strength of the state depended on the silver holdings of the Riksbank, the affairs of the Riksbank were considered a national secret.

cf. G.Wetterberg (2009) Pengarna & Makten, Sveriges Riksbank, p. 110.

cf. G.Wetterberg (2009) Pengarna & Makten, Sveriges Riksbank, p. 122.

“§ 1. Såsom Banken här i Stockholm blifwer stående, så wele Wij, at alla Wåre Räntor af Store Sjötullen samt Portetullen och accisen…skola uti Banken …upbäras…”

“§ 2. The andre Wåre och Cronenens inkomster, som annorstädz vpbäreas…allahanda extraordinarie medel, eller hwad Namn the hafwa kunna…skal och Banken hafwe mackt och tilstånd…til sig at indraga.”

“§ 3. Wij bewillie och särdeles, at all Wår och Chronones Kopperränta, antingen Kopparen tå förmyntas eller för redbare medel försäljes, skal och gå igenom Banken…”.

For a comprehensive analysis of the background and history of the Riksgäldskontor, see Sveriges Riksdag: Historisk och Statsvetenskablig Framställning, Senare Avdelingen, trettonde Bandet, Stockholm, 1934.

For a more detailed account in English of the discount houses, see Steffen Elkiær Andersen (2010): The Evolution of Nordic Finance, pp. 36–41. Palgrave Macmillan, 2010.

In Tables 3.2 and 3.3, a substantial amount of the assets and liabilities headed “Other” relate to the winding up of the discount houses.

Wetterberg (2009) Pengerna & Makten, Sveriges Riksbank, p. 228.

Wetterberg (2009) Pengerna & Makten, Sveriges Riksbank, p. 230.

Wetterberg (2009), p. 215.

“Riksbanken…var lika mycket en affärsbank som en centralbank, med samma slags rörelse som de enskilda bankerna och levande i en ständig konkurrens med dessa”. Sv. Brisman et al. Sveriges Riksbank (I– V), vol. IV (1931), 1860–1909, p. 211.

Lag om bankrörelse, 22. Juni, 1911.

The formation of joint stock banks had been allowed by the Companies Act of 1864, which accepted that companies with limited liability could also conduct banking business, but without note-issuing rights.

cf. K.Kock (1932) Svenskt bankväsen i våra dagar, Kooperativa förbundets bokförlag, pp. 32–33, and G. Wetterberg (2009) Pengarna och Markten (Sveriges Riksbank), p. 240.

Sveriges Riksbank I–V, vol. IV (1904–1924). p. 33.

Lag om bankrörelse av 22. juni 1911.

§ 1: “Förut om Sveriges riksbankmå ej annan här i riket drifva bankrörelse än (1) bankaktiebolag, (2) solidarisk bankbolag, (3) enskild man eller handelsbolag, i hvars firma ingår personnamn. Med bankrörelse förstås i denna lagsådan verksamhet, i hvilken ingår inlåning från allmenheten på räkning, som av bank almänneligen begagnas. Angående emissionsbank, postsparbanken, sparbank, järnkontoret, så ock angående aktiebolag, som uteslutande har til ändamål att idka fastighetsbelåning eller pantlånerörelse, är särskildt statgadt.”

Title: Sveriges Riksbank, and the Four Criteria
Author: Steffen Elkiær Andersen
Publisher: Springer International Publishing
Book: The Origins and Nature of Scandinavian Central Banking
Print ISBN: 978-3-319-39749-8

Electronic ISBN: 978-3-319-39750-4

Copyright Year: 2016
DOI: https://doi.org/10.1007/978-3-319-39750-4_3