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.
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...Finish reading @Source
