The first paper money
The first projects of issuing paper money appeared in the Polish-Lithuanian Commonwealth in the last quarter of the 18th century; however, they were not considered seriously. In the middle of 1790, the banker of Warsaw Andrzej Kapost prepared and submitted to the Sejm the project of establishing the Bank of the State, which would have the right to disseminate bank tickets. There was no time to consider the project because at that time the Sejm was busy discussing other laws, which had to change the life of the State. The most important of them was the Law on Government called the Constitution, which was adopted on 3 May 1791.
Tickets of the empty Treasury
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The appearance of the first paper money in the Grand Duchy of Lithuania is related to a difficult financial condition in the country during the 1794 uprising and the necessity to provide for the army of the rebels. Putting the Treasury tickets or paper money into circulation was planned as a provisional measure to ensure sufficient circulation of money and to stabilize the financial condition of the State. It was established that every year the immovable property of the State would be sold at 10 million paying for it with the Treasury tickets, which had to be taken out of circulation. After the uprising had collapsed, they turned into valueless pieces of paper.
The first paper money was printed during the time of the 1794 uprising. Their appearance was influenced by a difficult economic and financial condition of the state: it was impossible to provide for the army of the rebels properly. Therefore three months after the beginning of the uprising, on 8 June, the government of the rebels – the Supreme National Council announced the following: “Inevitable and urgent needs of the Republic seeking to liberate our Motherland from the oppression of the foreigners as soon as possible disturbed the circulation of money, their borrowing from abroad. As it is impossible to leave the citizens without any money, and, what is most important, seeking not to burden them with new taxes at this time when the nation must use the State’s assets to save the Motherland, makes us take extraordinary measures giving a new stimulus to regulating the disturbed circulation of money. With this end in view the Supreme National Council establishes tickets of the Treasury, which will have the same value as money all over the Republic.”
Putting the Treasury tickets or paper money into circulation was planned as a provisional measure to ensure sufficient circulation of money and to stabilize the financial condition of the State.
The guarantee by the State’s assets had to ensure the value of paper money. It was established that every year the immovable property of the State would be sold at 10 million paying for it with the Treasury tickets, which had to be taken out of circulation. All in all, the emission of the value of 60 million gold roubles was planned.
Financial alchemy: how to turn paper into gold?
The forgery of money always has been considered to be a grave crime therefore the Law provided for death sentence for engaging in this activity, and those who helped to reveal the counterfeiters were given a bonus of 50 thousand gold roubles.
The Treasury Tickets Administration established had to be in charge of issuing paper money. The preparation took two months and on 16 August the Treasury tickets were put into circulation. The value of the first Treasury tickets was 5, 10, 25, 50, 100, 500, 1 000 gold roubles. They were high-quality paper sheets 9,5×18 cm in size, printed according to the projects of A. Kapost and Karol Groll who also carried out supervision of manufacturing banknote copperplate matrices. The nominal value and the text informing that the Treasury tickets were a legal payment tool and its value was guaranteed by the state’s assets were indicated on the banknotes.
The emblems of Poland and Lithuania – the Eagle and a white Vytis against a red background – were represented on the banknote, and between them – the symbols of revolutionary France with which the rebels sympathised – the Phrygian cap (a red cap with a tall narrow top bent forwards; it was worn by the Jacobins during the French Revolution; it was called after the old country Phrygia, a region of central Anatolia), sans-coulottes guns, towers of the prisons, chains of absolutism, the people’s lightning and wings of freedom.
Seeking to protect the banknotes against forgery, water signs were used, banknotes were numbered, had “invisible features known to the Administration only”. The Supreme National Council appointed 12 representatives to confirm the validity of each Treasury ticket by their signatures (all the Treasury tickets had to be signed by two persons appointed to put their signatures on the banknotes of a certain value). To recognise the value of paper money more easily they were printed on coloured paper. Their colour had to be as follows: “the banknote worth 5 gold roubles was violet, the 10 gold-rouble-worth banknote had the colour of lily, the 25 gold-rouble-worth banknote was orange, that of 50 gold roubles was brown, the 100 gold-rouble-worth banknote was rosy, the 500 gold-rouble-worth banknote was brick-red and the 1000 gold-rouble-worth banknote was yellow. In September and October the Treasury tickets of a smaller value were put into circulation: 4 gold-rouble-worth, one gold rouble, 10 and 5 grosz. They were printed on a lower quality paper, had fewer protective measures and were smaller in size.
Distrust in “pieces of paper”
The Supreme National Council had no illusions that the inhabitants would be willing to use paper money as a means of settling accounts therefore it even gave the following warning: “if anyone refuses to take these tickets for the goods or work, s/he will be punished in local courts: the first time he will have to pay a 10 per cent fine to the Treasury of the State, the second time the punishment will be 20 per cent from the amount refused to be taken in paper money. If this Law is violated for the third time, if the goods have not been sold, it will be confiscated and resold to the buyer, and if the Treasury tickets are refused to be taken for work, the local authorities shall have the right to take the money for the benefit of the Treasury, and the customer will not be in debt for the work done.”
From the middle of August to the beginning of November, when the uprising practically ended, a total of almost 10 million gold roubles was printed and about 8 million was in circulation. Almost one million units of 4 gold rouble-worth Treasury tickets, five hundred 500 gold-rouble-worth banknotes were issued.
The Treasury tickets were not used for a long time in Lithuania because at the time of putting them into circulation a large part of the Grand Duchy of Lithuania was already occupied by the Russian Army, and at the beginning of October, Russia controlled its entire territory. After the uprising had collapsed, all the activities of the rebels were recognised as illegal therefore the Treasury tickets became illegal too. Having turned into valueless pieces of paper they were neither exchanged not accepted as a means of payment.
Eduardas Brusokas
