This article commemorates the grisly end of Baron George Heinrich de Goertz - a good man who found himself in the central banker's hot-seat at the wrong time.

Sweden in the 17th century was not the peaceable country of today. Enjoying the best metalworking and gunmaking technology of the day the Swedes were the military masters of northern Europe. There were frequent wars against Russia, Denmark, Poland or Germany. They were expensive too.

In 1604 an equivalence of bullion to coined money was enacted in Sweden, but it established a 15% premium on coins, a profit which would have accumulated to the treasury and helped to finance the Swedish army.

This was a steep cost and it made the scheme ineffective. Swedish silver bullion simply exited to Amsterdam to be coined by Dutch banks into Florins, which were used to buy trade goods which were in turn sold back in Sweden. Sweden's silver reserves quickly disappeared overseas.

A follow up enactment by the Swedish king Charles IX in 1607 decreed that silver could be deposited ounce for ounce in return for redeemable dalers, the Swedish currency. The invitation was not widely taken up, presumably because the public understood the value of custody. Nonetheless an unlimited statutory right existed to coin privately owned bullion. It became known as a "Patent of Free Coinage". In effect there was now a two way capability of transfer between bullion and coin in unlimited amount - even if there was still little in the way of precious metals in Sweden.

There were yet more silver depletions through the treaty of Alvsborg, under which the Swedes paid pretty much everything they had in ransom for the return of a fortress lost to the Danes in war. Thereafter, in the absence of anything better, and because Sweden controlled the world's best copper mines, an old currency of highly overvalued copper coins started to circulate.

The Swedes may have been running on empty as regards precious metals, but they were still a mighty military force, and these copper coins were further issued in large numbers by Gustavus II in 1625 to finance war against the vengeful and expansionist Ferdinand II of Germany. It was Sweden's Gustavus who destroyed Ferdinand's catholic armies in four campaigns and finally secured northern Europe for its predominantly protestant population.

But now the military debts of the state combined with a substantially overvalued copper coinage and a legislative structure designed for commodity money to launch Sweden into an absurd copper currency system. Copper came in, was minted to achieve its overvalued status, and promptly sunk the money to its commodity production cost - which in a country rich in copper mines was tiny.  The monetary reserves of the majority of the population were wiped out.

Gustavus' daughter Christina who ascended the throne aged 6, had 12 years of childhood to comprehend these monetary mysteries before her majority at 18, whereupon she instructed the issue of copper backed exchequer bills called assignats which circulated as money, and then a bank was incorporated which took in copper and issued receipts called transport notes which were the origin of the modern banknote. The notes were pleasing to use and - a problem with early paper - easy to forge.

To begin with this popular paper filled the bank with copper.  But the paper lost credibility and demand swerved back to the solidity of metal. So the copper was cut into sheets, stamped not very elegantly, and issued back into circulation as money in lumps weighing as much as 15 kilograms [the example shown, from the British Museum, is dated 1658 and about 65 cm long] 

People had to walk the streets carrying these great slabs balanced on their heads.  It was only inconvenient at first, but then the world market dumped the commodity copper price as Swedish mines lost their dominance and the money became useless as well.

It eventually fell to Baron George Heinrich de Goertz to offer his services as central banker to this copper rich, but otherwise now poor country.

He minted a representative currency in copper, validated with the kings head and a legal tender face value of a daler. He did not limit the issue, nor ensure the quality of the coins which were beneath the technical capabilities of the day. Moreover he attempted this exercise on behalf of an administration which had lost virtually all financial credit with its population, and compounded the error by allowing to develop a widely held belief that at some unspecified time in the future collectors would refuse the coins as legal tender payment of taxes.  In other words he broke every rule in the central banker's book. The coins were detested, and sloshed around the Swedish economy depreciating rapidly.

Goertz had been a successful minister in other areas of government and he never profited from the debacle, but he was still blamed for the financial misery and the associated evaporation of Swedish power.

By all accounts in defence to the charge of "ruining public credit with imaginary money" he put up a brave and articulate defence - on his own behalf because he was denied counsel. It was not enough. He was the modern world's first central banker to be beheaded, on March 3rd 1719, and the punishment was popular.

Paul Sustain