Johan Palmstruch
Johan Palmstruch | |
|---|---|
| Born | Template:Birth date Riga, Livonia |
| Died | March 8, 1671 (aged 59) |
| Occupation(s) | Entrepreneur, financier |
| Known for | Pioneer of paper currency in Europe, founder of Stockholms Banco |
Johan Palmstruch, originally named Wittmacher (born June 13, 1611 – died March 8, 1671), was an entrepreneur and financier from Sweden who is recognized for pioneering the use of paper currency in Europe.
Biography
Johan Wittmacher entered the world in Riga (then part of Livonia) within a merchant family likely of Dutch descent. Around 1634, he relocated to Amsterdam, where he wed Margrieta van der Bosch in 1644. That very year, their daughter was baptized at Oude Kerk, Amsterdam.
In 1647, he settled in Sweden and took on the role of commissioner at the National Board of Trade. Beginning in 1654, he presented several banking plans to King Charles X Gustav; his third submission, which proposed sharing half of the bank’s profits with the monarchy, received approval. Ennobled in 1651, he adopted the surname Palmstruch and held a commissioner position at the National College of Commerce.
Palmstruch established Stockholms Banco in Stockholm in 1657 and assumed its directorship. While inspired by deposit banks in Amsterdam and Hamburg, he introduced two significant innovations. Firstly, he utilized deposited capital to issue loans—a practice that created a liquidity gap due to the mismatch between short-term deposits and long-term lending. Secondly, to mitigate this issue, he launched credit paper (Kreditivsedlar) in 1661, marking Europe's inaugural banknotes redeemable for gold and silver coins.
Despite early achievements, the bank extended credit beyond sustainable limits and issued excessive banknotes without adequate reserves. This mismanagement culminated in its failure in 1668 and led to the foundation of the Sveriges Riksbank.
Palmstruch was blamed for deficient bookkeeping and insufficient backing for issued notes. In 1668, his noble status and banking rights were revoked; he faced possible exile or execution. The death sentence was reduced to imprisonment, during which he remained until 1670. He passed away in 1671 at age 60.