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1905 AD Russian Empire 3 Rubles Banknote
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The Russian Empire (Pre-reform
Russian orthography: Россійская Имперія,
Modern Russian: Российская Империя,
translit: Rossiyskaya Imperiya) was a
state that existed from 1721 until the
Russian Revolution of 1917. It was the
successor to the
Tsardom of Russia and the predecessor of the
Soviet Union. It was one of the
largest empires in world history, surpassed in
landmass only by the
British and
Mongolian empires: at one point in 1866, it
stretched from eastern Europe across Asia and into North America.
At the beginning of the 19th century, Russia was the largest country in the
world, extending from the Arctic Ocean to the north to the
Black Sea on the south, from the
Baltic Sea on the west to the Pacific Ocean on
the east. With 176.4 million subjects, it had the third largest population of
the world at the time, after
Qing China and the
British Empire. It represented a large
disparity in economic, ethnic, and religious positions. Its government, ruled by
the
Emperor, was one of the last
absolute monarchies in Europe. Prior to the
outbreak of World War I in August 1914 Russia was one of the five major
Great Powers of Europe.
The Russian Empire was a natural successor to the
Tsardom of Russia. Though the empire was only
officially proclaimed by Tsar
Peter I following the
Treaty of Nystad (1721), some historians[who?]
would argue that it was truly born when Peter acceded to the throne in early
1682.
The eighteenth
century
Peter I, the Great (1672–1725), integrated
autocracy in Russia and played a major role in bringing his country into the
European state system. From its beginnings in the 14th-century principality of
Moscow, Russia had become the largest state in the world by Peter's time. It
spanned the Eurasian landmass from the
Baltic Sea to the Pacific Ocean. Much of its
expansion had taken place in the 17th century, culminating in the
first Russian settlement of the Pacific in the
mid-17th century, the
reconquest of Kiev, and the
pacification of the Siberian tribes. However,
this vast land had a population of only 14 million. Grain yields trailed behind
those of agriculture in the West, compelling nearly the entire population to
farm. Only a small percentage of the population lived in the towns. The class of
kholops, close to the one of
slavery, remained a major institution in Russia
until 1723, when
Peter the Great converted the household kholops
into house
serfs including them into
poll taxation. Russian agricultural kholops
were formally converted into
serfs earlier in 1679.[2]
 Peter
was impressed by the advanced technology, warcraft, and statecraft of the West.
He studied modern tactics and fortifications and built a strong army of 300,000
made up of his own subjects, whom he
conscripted for life. The
Strelets Troops were incorporated into the
regular army. In 1697–1698, he
became the first Russian prince to ever visit the West,
where he and his associates made a deep impression. In celebration of his
conquests, Peter accepted the title of emperor as well as tsar, and Muscovite
Russia officially became the Russian Empire late in 1721.
Peter's first military efforts were directed against the
Ottoman Turks. His attention then turned to the
north. Peter still lacked a secure northern seaport except at
Archangel on the
White Sea, whose harbor was frozen for nine
months a year. Access to the Baltic was blocked by Sweden, whose territory
enclosed it on three sides. Peter's ambitions for a "window to the sea" led him
in 1699 to make a secret alliance with the
Polish-Lithuanian Commonwealth and Denmark
against Sweden, resulting in the
Great Northern War. The war ended in 1721 when
an exhausted Sweden sued for peace with Russia. Peter acquired four provinces
situated south and east of the Gulf of Finland, thus securing his coveted access
to the sea. There he built Russia's new capital,
Saint Petersburg, to replace Moscow, which had
long been Russia's cultural center.
Peter reorganised his government on the latest modern models, molding Russia
into an
absolutist state. He replaced the old boyar
Duma (council of nobles) with a nine-member senate, in effect a
supreme council of state. The countryside was also divided into new provinces
and districts. Peter told the senate that its mission was to collect tax
revenues. In turn tax revenues tripled over the course of his reign. As part of
the government reform, the Orthodox Church was partially incorporated into the
country's administrative structure, in effect making it a tool of the state.
Peter abolished the patriarchate and replaced it with a collective body, the
Holy Synod, led by a lay government official.
Meanwhile, all vestiges of local self-government were removed, and Peter
continued and intensified his predecessors' requirement of state service for all
nobles.
Peter died in 1725, leaving an unsettled succession and an exhausted realm.
His reign raised questions about Russia's backwardness, its relationship to the
West, the appropriateness of reform from above, and other fundamental problems
that have confronted many of Russia's subsequent rulers. Nevertheless, he had
laid the foundations of a modern state in Russia.
Nearly forty years were to pass before a comparably ambitious ruler appeared
on the Russian throne.
Catherine II, the Great, was a German princess
who married Peter III, the German heir to the Russian crown. She contributed to
the resurgence of the Russian nobility that began after the death of Peter the
Great. State service had been abolished, and Catherine delighted the nobles
further by turning over most government functions in the provinces to them.
Catherine the Great extended Russian political control over the
Polish-Lithuanian Commonwealth with actions
including the support of the
Targowica confederation, although the cost of
her campaigns, on top of the oppressive social system that required lords' serfs
to spend almost all of their time laboring on the lords' land, provoked a major
peasant uprising in 1773, after Catherine legalised the selling of serfs
separate from land. Inspired by another Cossack named
Pugachev, with the emphatic cry of "Hang all
the landlords!" the rebels threatened to take Moscow before they were ruthlessly
suppressed. Instead of the traditional punishment of being drawn and quartered,
Catherine issued secret instructions that the executioner should carry the
sentence out quickly and with a minimum of suffering, as part of her effort to
introduce a tone of compassion. She also ordered the public trial of
Darya Nikolayevna Saltykova, a member of the
highest nobility, on charges of torture and murder. These gestures to compassion
garnered Catherine much positive attention from Enlightenment Europe, but the
specter of revolution and disorder continued to haunt her and her successors.
In order to ensure continued support from the nobility, which was essential
to the survival of her government, Catherine was obliged to strengthen their
authority and power at the expense of the serfs and other lower orders.
Nevertheless, Catherine realized that serfdom must be ended, going so far in her
"Nakaz"
("Instrution") to say that serfs were "just as good as we are" - a comment the
nobility received with disgust. Documents were also found after Catherine's
death that showed she hoped to introduce a form of parliamentary democracy in
Russia, but - like the problem of serfdom - realized the empire was not yet
ready for such a move. Catherine
successfully waged war against the
Ottoman Empire and advanced Russia's southern
boundary to the
Black Sea. Then, by plotting with the rulers of
Austria and
Prussia, she incorporated territories of the
Polish-Lithuanian Commonwealth during the
Partitions of Poland, pushing the Russian
frontier westward into Central Europe. By the time of her death in 1796,
Catherine's expansionist policy had made Russia into a major European power.
This continued with
Alexander I's wresting of Finland from the
weakened kingdom of Sweden in 1809 and of
Bessarabia from the Ottomans in 1812.
First
half of the nineteenth century
Napoleon made a major mistake when, following a
dispute with Tsar Alexander I, he launched an
invasion of the tsar's realm in 1812. The
campaign was a catastrophe. Although Napoleon's
Grande Armée made its way to Moscow, the
Russians'
scorched-earth strategy prevented the invaders
from living off the country. In the bitterly
cold Russian weather, thousands of French
troops were ambushed and killed by peasant guerrilla fighters. As Napoleon's
forces retreated, the Russian troops pursued them into Central and Western
Europe and to the gates of Paris. After Russia and its allies defeated Napoleon,
Alexander became known as the 'savior of Europe,' and he presided over the
redrawing of the map of Europe at the
Congress of Vienna (1815), that ultimately made
Alexander the monarch of
Congress Poland.
Although the Russian Empire would play a leading political role in the next
century, secured by its defeat of Napoleonic France, its retention of serfdom
precluded economic progress of any significant degree. As West European economic
growth accelerated during the
Industrial Revolution, which had begun in the
second half of the 18th century, Russia began to lag ever farther behind,
creating new problems for the empire as a great power. Russia's status as a
great power concealed the inefficiency of its government, the isolation of its
people, and its economic backwardness. Following the defeat of Napoleon,
Alexander I had been ready to discuss constitutional reforms, but though
a few were introduced, no changes were
attempted.
The liberal tsar was replaced by his younger brother,
Nicholas I (1825–1855), who at the beginning of
his reign was confronted with an uprising. The background of this revolt lay in
the Napoleonic Wars, when a number of well-educated Russian officers traveled in
Europe in the course of the military campaigns, where their exposure to the
liberalism of Western Europe encouraged them to seek change on their return to
autocratic Russia. The result was the
Decembrist Revolt (December 1825), the work of
a small circle of liberal nobles and army officers who wanted to install
Nicholas' brother as a constitutional monarch. But the revolt was easily
crushed, leading Nicholas to turn away from the modernization program begun by
Peter the Great and champion the
doctrine of
Orthodoxy, Autocracy, and Nationality.
The retaliation for the revolt made "December Fourteenth" a day long
remembered by later revolutionary movements. In order to repress further
revolts, censorship was intensified, including the constant surveillance of
schools and universities, in which students were provided with official
textbooks. Police spies were planted everywhere. Would-be revolutionaries were
sent off to Siberia; under Nicholas I hundreds of thousands were sent to
katorga there.
After the Russian armies occupied[citation
needed] the allied
Georgia in 1802, they
clashed with Persia over control of
Azerbaijan and got involved into the
Caucasian War against the Caucasian Imamate.
Russian tsars had also to deal with two uprisings in their newly acquired
territories of the Polish-Lithuanian Commonwealth: the
November Uprising in 1830 and the
January Uprising in 1863.
The question of Russia's direction had been gaining attention ever since
Peter the Great's program of modernization. Some favored imitating Western
Europe while others were against and called for a return of the traditions of
the past. The latter path was advocated by
Slavophiles, who gathered contempt on the
"decadent" West. The Slavophiles were opponents of bureaucracy, preferred the
collectivism of the
mediaeval Russian
mir, or
village community, to the
individualism of the West. Alternative social
doctrines were elaborated by such Russian radicals as
Alexander Herzen,
Mikhail Bakunin, and
Peter Kropotkin.
Second
half of the nineteenth century
Flag of the Russian Empire for "Celebrations" from 1858 to 1883. [3][4][5][6][7]
However, it was not as popular as the white-blue-red civil ensign,
which was adopted in 1883 for land use. In the XX century,
widespread myth that has its base incorrect statements of one of the
leading Soviet historians, K. Ivanov, that Russia has changed
official flag in 1858.
The Imperial Standard of the
Emperor, used from 1858 to 1917.
Tsar Nicholas died with his philosophy in dispute. One year earlier, Russia
had become involved in the
Crimean War, a conflict fought primarily in the
Crimean peninsula. Since playing a major role
in the defeat of Napoleon, Russia had been regarded as militarily invincible,
but, once opposed against a coalition of the great powers of Europe, the
reverses it suffered on land and sea exposed the decay and weakness of Tsar
Nicholas' regime.
When
Alexander II came to the throne in 1855, desire
for reform was widespread. A growing humanitarian movement, which in later years
has been compared to that of the
abolitionists in the United States before the
American Civil War, attacked serfdom. In 1859,
there were more than 23 million serfs living under conditions worse than those
of the peasants of western Europe on 16th-century
manors. Alexander II made up his own mind to
abolish serfdom from above rather than wait for it to be abolished from below
through revolution.
The
emancipation of the serfs in 1861 was the
single most important event in 19th-century Russian history. It was the
beginning of the end for the landed aristocracy's monopoly of power.
Emancipation brought a supply of free labor to the cities, industry was
stimulated, and the middle class grew in number and influence; however, instead
of receiving their lands as a gift, the freed peasants had to pay a special tax
for what amounted to their lifetime to the government, which in turn paid the
landlords a generous price for the land that they had lost. In numerous
instances the peasants wound up with the poorest land. All the land turned over
to the peasants was owned collectively by the mir, the village community,
which divided the land among the peasants and supervised the various holdings.
Although serfdom was abolished, since its abolition was achieved on terms
unfavorable to the peasants, revolutionary tensions were not abated, despite
Alexander II's intentions. Revolutionaries believed that the newly-freed serfs
were merely being sold into
wage slavery in the onset of the industrial
revolution, and that the bourgeoisie had effectively replaced landowners.
Alexander II took
Outer Manchuria from
Chinese Empire between 1858–1860 and sold
Russian America to USA in 1867. In the late
1870s Russia and the Ottoman Empire again clashed in the Balkans. From 1875 to
1877, the Balkan crisis intensified with rebellions against Ottoman rule by
various Slavic nationalities, which the Ottoman Turks suppressed with what was
seen as great cruelty in Russia. Russian nationalist opinion became a major
domestic factor in its support for liberating Balkan Christians from Ottoman
rule and making
Bulgaria and
Serbia independent. In early 1877, Russia
intervened on behalf of Serbian and Russian volunteer forces when it
went to war with the Ottoman Empire. Within one
year, Russian troops were nearing Constantinople, and the Ottomans surrendered.
Russia's nationalist diplomats and generals persuaded Alexander II to force the
Ottomans to sign the
Treaty of San Stefano in March 1878, creating
an enlarged, independent Bulgaria that stretched into the southwestern Balkans.
When Britain threatened to declare war over the terms of the Treaty of San
Stefano, an exhausted Russia backed down. At the
Congress of Berlin in July 1878, Russia agreed
to the creation of a smaller Bulgaria, was depended as autonomous principality
to Ottomans. As a result,
Pan-Slavists were left with a legacy of
bitterness against Austria-Hungary and Germany for failing to back Russia. The
disappointment as a result of war stimulated revolutionary tensions in the
country.
. However, he helped
Serbia,
Romania and
Montenegro's independence from Ottomans and
their enlargement against Ottomans.
Following Alexander's assassination by the
Narodnaya Volya, a
Nihilist
terrorist organization, in 1881, the throne
passed to his son
Alexander III (1881–1894), a reactionary who
revived the maxim of "Autocracy,
Orthodoxy, and Respect to the People" of Nicholas I. A committed
Slavophile, Alexander III believed that Russia
could be saved from turmoil only by shutting itself off from the subversive
influences of Western Europe. In his reign Russia concluded the
union with republican France to contain the
growing power of Germany, completed the conquest of Central Asia and demanded
important territorial and commercial concessions from China.
The tsar's most influential adviser was
Konstantin Petrovich Pobedonostsev, tutor to
Alexander III and his son Nicholas, and procurator of the Holy Synod from 1880
to 1895. He taught his royal pupils to fear freedom of speech and press and to
dislike democracy, constitutions, and the parliamentary system. Under
Pobedonostsev, revolutionaries were persecuted and a policy of
Russification was carried out throughout the
empire.
Early twentieth
century
In 1914, the white-blue-red tricolor with a canton of the imperial
arms was introduced by imperial decree on 19 November 1914. It
replaced the black-orange-white tricolor, which had been the civil
flag since 1858, and also the plain white-blue-red tricolor. [3][4][5][6][7]
Alexander was succeeded by his son
Nicholas II (1894–1917). The
Industrial Revolution began to put forth a
significant influence in Russia. The liberal elements among the industrial
capitalists and nobility believed in peaceful social reform and a constitutional
monarchy, forming the Constitutional Democrats, or
Kadets. The
Socialist-Revolutionaries (SRs) combined the
Narodnik tradition and advocated the distribution of land among those who
actually worked it—the peasants. Another radical group was the
Social Democrats, exponents of
Marxism in Russia. The Social Democrats
differed from the SRs in that they believed a revolution must rely on urban
workers, not the peasantry.
In 1903 in London the party split into two wings — the gradualist
Mensheviks, and the more radical
Bolsheviks. The Mensheviks believed that the
Russian working class was insufficiently developed and that socialism could be
achieved only after a period of bourgeois democratic rule. They thus tended to
ally themselves with the forces of bourgeois liberalism. The Bolsheviks, under
Vladimir Lenin, advocated the formation of a
small elite of professional revolutionists, subject to strong party discipline,
to act as the vanguard of the proletariat in order to seize power by force.[8]
Defeat in the
Russo-Japanese War (1904–1905) was a major blow
to the Tsarist regime and increased the potential for unrest. In January 1905,
an incident known as "Bloody
Sunday" occurred when
Father Gapon led an enormous crowd to the
Winter Palace in
Saint Petersburg to present a petition to the
tsar. According to revolutionary propaganda,[citation
needed] when the procession reached the palace, Cossacks
opened fire on the crowd, killing hundreds. The Russian masses were so furious
over the massacre that a general strike was declared demanding a democratic
republic. This marked the beginning of the
Russian Revolution of 1905.
Soviets (councils of workers) appeared in most
cities to direct revolutionary activity. Russia was paralyzed, and the
government was desperate.
In October 1905, Nicholas reluctantly issued the famous
October Manifestoo, which conceded the creation
of a national Duma (legislature) to be called without delay. The right to vote
was extended and no law was to go into force without confirmation by the Duma.
The moderate groups were satisfied; but the socialists rejected the concessions
as insufficient and tried to organise new strikes. By the end of 1905, there was
disunity among the reformers, and the tsar's position was strengthened for the
time being.
Tsar Nicholas II and his subjects entered World War I with enthusiasm and
patriotism, with the defence of Russia's fellow Orthodox Slavs, the
Serbs
BANKNOTEE
A banknote (often known as a bill, paper money or simply
a note) is a kind of
negotiable instrument, a
promissory note made by a
bank payable to the bearer on demand, used as
money, and in many jurisdictions is
legal tender. Along with
coins, banknotes make up the
cash or bearer forms of all modern
fiat money. With the exception of
non-circulating high-value or precious metal commemorative issues, coins are
used for lower valued monetary units, while banknotes are used for higher
values.
Advantages and
Disadvantages
A sampling of banknotes from around the world
Originally, precious and semi-precious metals were made into coins and were
used to negotiate and settle trades. Banknotes offer an alternative bearer form
of money, but the advantages and disadvantages between the two forms of bearer
money are complex and so in different circumstances the overall advantage can
lie with either form.
The costs of using bearer money include:
- Manufacturing or issue costs. Coins are produced by industrial
manufacturing methods that process the precious or semi-precious metals, and
require additions of alloy for hardness and wear resistance. By contrast
bank notes are printed paper (or polymer), and typically have a lower cost
of issue, especially in larger denominations, compared to coin of the same
value.
- Wear costs. Banknotes do not lose economic value by wear, since, even if
they are in poor condition, they are still a legally valid claim on the
issuing bank. However, banks of issue do have to pay the cost of replacing
banknotes in poor condition and paper notes wear out much faster than coins.
- Cost of transport. Coins can be expensive to transport for high value
transactions, but banknotes can be issued in large denominations that are
lighter than the equivalent value in coins.
- Cost of acceptance. Coins can be checked for authenticity by weighing
and other forms of examination and testing. These costs can be significant,
but good quality coin design and manufacturing can help reduce these costs.
Banknotes also have an acceptance cost, the costs of checking the banknote's
security features and confirming acceptability of the issuing bank.
- Security.
Counterfeiting paper notes is easier than
forging coins[citation
needed], especially true given the proliferation of
color photocopiers and computer
image scanners. Numerous banks and nations
have incorporated many types of countermeasures in order to keep the money
secure.
The different advantages and disadvantages between coins and banknotes imply
that there may be an ongoing role for both forms of bearer money, each being
used where its advantages outweigh its disadvantages.
History
Paper money originated in two forms: drafts, which are receipts for value
held on account, and "bills", which were issued with a promise to convert at a
later date.
Money is based on the coming to pre-eminence of some commodity as payment.
The oldest monetary basis was for agricultural capital: cattle and grain. In
Ancient
Mesopotamia, drafts were issued against stored
grain as a unit of account. A "drachma"
was a weight of grain.
Japan's feudal system was based on rice per
year –
koku.
At the same time, legal codes enforced the payment for injury in a
standardized form, usually in precious metals. The development of money then
comes from the role of agricultural capital and precious metals having a
privileged place in the economy.
Such drafts were used for
giro systems of banking as early as
Ptolemaic Egypt in the 1st century BC.
The perception of banknotes as money has evolved over time. Originally, money
was based on
precious metals. Banknotes were seen as
essentially an
I.O.U. or
promissory note: a promise to pay someone in
precious metal on presentation (see
representative money). With the gradual removal
of precious metals from the monetary system, banknotes evolved to represent
credit money, or (if backed by the credit of a
government) also
fiat money.
Notes or bills were often referred to in 18th century novels and were often a
key part of the plot such as a "note drawn by Lord X for £100 which becomes due
in 3 months time"
First banknotes
in the world
Song Dynasty Jiaozi, the world's earliest paper money
In
ancient China coins were circular with a
rectangular hole in the middle. Several coins could be strung together on a
rope. Merchants in China, if they became rich enough, found that their strings
of coins were too heavy to carry around easily. To solve this problem, coins
were often left with a trustworthy person, and the merchant was given a slip of
paper recording how much money he had with that person. If he showed the paper
to that person he could regain his money. Eventually, the paper money called "jiaozi"
originated from these
promissory notes.
In the 7th century there were local issues of paper currency in China and by
960 the
Song Dynasty, short of copper for striking
coins, issued the first generally circulating notes. A note is a promise to
redeem later for some other object of value, usually
specie. The issue of credit notes is often for
a limited duration, and at some discount to the promised amount later. The
jiaozi nevertheless did not replace coins during the Song Dynasty; paper money
was used alongside the coins.
The successive
Yuan Dynasty was the first dynasty in China to
use paper currency as the predominant circulating medium. The founder of the
Yuan Dynasty,
Kublai Khan, issued paper money known as
Chao in his reign. The original notes during
the Yuan Dynasty were restricted in area and duration as in the Song Dynasty,
but in the later course of the dynasty, facing massive shortages of specie to
fund their ruling in China, began printing paper money without restrictions on
duration. By 1455, in an effort to rein in economic expansion and end
hyperinflation, the new
Ming Dynasty ended paper money, and closed much
of Chinese trade.
Banknotes in Europe
In
medieval
Italy and
Flanders, because of the insecurity and
impracticality of transporting large sums of money over long distances, money
traders started using
promissory notes. In the beginning these were
personally registered, but they soon became a written order to pay the amount to
whoever had it in their possession. These notes can be seen as a predecessor to
regular bank notes[1].
The first proper European banknotes were issued by
Stockholms Banco, a predecessor of the
Bank of Sweden, in 1660, although the bank ran
out of coins to redeem its notes in 1664 and ceased operating in that year.
Until Louis XIV, banknotes were issued by small creditors, had limited
circulation, and were not backed by the authority of the state. Economist
John Law helped establish banknotes as formal
currency, backed by capital consisting of French government bills and government
accepted notes.
Banknotes
in the United States
In the early 1690s, the
Massachusetts Bay Colony was the first of the
Thirteen Colonies to issue permanently
circulating banknotes. The use of fixed denominations and printed banknotes came
into use in the 18th century.
In the early 18th century each of the thirteen colonies issued
their own banknotes. During the
American Revolutionary War, the
Continental Congress issued
Continental currency to finance the war. The
federal government of the United States did not
print banknotes until 1862. However, almost immediately after adoption of the
United States Constitution in 1789, the
United States Congress chartered the
First Bank of the United States and authorized
it to issue banknotes. The bank served as quasi-central
bank of the
United States. The bank closed in 1811 when
Congress failed to renew its charter. In 1816, Congress chartered the
Second Bank of the United States. When its
charter expired in 1836, the bank continued to operate under a charter granted
by the Commonwealth of Pennsylvania until 1841.
In the United States, public acceptance of banknotes in replacement of
precious metals was hastened in part by
Executive Order 6102 in 1933. This order
carried the threat of a maximum $10,000 fine and a maximum of ten years in
prison for anyone who kept more than $100 of gold in preference to banknotes.
Issue of banknotes
Generally, a
central bank or treasury is solely responsible
within a state or
currency union for the issue of banknotes.
However, this is not always the case, and historically the paper currency of
countries was often handled entirely by private banks. Thus, many different
banks or institutions may have issued banknotes in a given country. In the
United States, commercial banks were authorized to issue banknotes from 1863 to
1935. In the last of these series, the issuing bank would stamp its name and
promise to pay, along with the signatures of its president and cashier on a
preprinted note. By this time, the notes were standardized in appearance and not
too different from the Federal Reserve Notes that circulated for most of the
20th century.
In a small number of countries, private banknote issue continues to this day.
For example, by virtue of the complex constitutional setup in the
United Kingdom, certain commercial banks in two
of the union's four
constituent countries (Scotland
and
Northern Ireland) continue to print their own
banknotes for domestic circulation, even though they are not
fiat money or declared in law as
legal tender anywhere. The UK's central bank,
the
Bank of England, prints notes which are legal
tender in
England and Wales; these notes are also usable
as money (but not legal tender) in the rest of the UK (see
Banknotes of the pound sterling).
In
Hong Kong, three commercial banks are licenced
to issue
Hong Kong dollar notes.[2]
As well as commercial issuers, other organizations may have note-issuing powers;
for example, until 2002 the
Singapore dollar was issued by the
Board of Commissioners of Currency Singapore, a
government agency which was later taken over by the
Monetary Authority of Singapore.[2]
Materials used
for banknotes
Paper banknotes
Most banknotes are made from
cotton paper (see also
paper) with a weight of 80 to 90 grams per
square meter. The cotton is sometimes mixed with
linen,
abaca, or other textile fibres. Generally, the
paper used is different from ordinary paper: it is much more resilient, resists
wear and tear (the average life of a banknote is two years)[3],
and also does not contain the usual agents that make ordinary paper glow
slightly under
ultraviolet light. Unlike most printing and
writing paper, banknote paper is infused with polyvinyl alcohol or gelatin to
give it extra strength. Early Chinese banknotes were printed on paper made of
mulberry bark and this fiber is used in
Japanese banknote paper today.
Most banknotes are made using the mould made process in which a
watermark and thread is incorporated during the
paper forming process. The thread is a simple looking security component found
in most banknotes. It is however often rather complex in construction comprising
fluorescent, magnetic, metallic and micro print elements. By combining it with
watermarking technology the thread can be made to surface periodically on one
side only. This is known as windowed thread and further increases the
counterfeit resistance of the banknote paper. This process was invented by
Portals, part of the
De La Rue group in the UK. Other related
methods include watermarking to reduce the number of corner folds by
strengthening this part of the note, coatings to reduce the accumulation of dirt
on the note, and plastic windows in the paper that make it very hard to copy.
Counterfeiting and security measures on paper banknotes
The ease with which paper money can be created, by both legitimate
authorities and counterfeiters, has led both to a temptation in times of crisis
such as war or revolution to produce paper money which was not supported by
precious metal or other goods, thus leading to hyperinflation and a loss of
faith in the value of paper money, e.g. the
Continental Currency produced by the
Continental Congress during the
American Revolution, the
Assignats produced during the
French Revolution, the paper currency produced
by the
Confederate States of America and the
Individual States of the Confederate States of America,
the financing of
World War I by the
Central Powers (by 1922 1 gold
Austro-Hungarian krone of 1914 was worth 14,400
paper Kronen), the devaluation of the
Yugoslav Dinar in the 1990s, etc. Banknotes may
also be
overprinted to reflect political changes that
occur faster than new currency can be printed.
In 1988,
Austria produced the 5000
Schilling banknote (Mozart),
which is the first foil application (Kinegram)
to a paper banknote in the history of banknote printing. The application of
optical features is now in common use throughout the world.
Many countries' banknotes now have embedded
holograms.
Polymer banknotes
In 1983,
Costa Rica and
Haiti issued the first
Tyvek and the
Isle of Man issued the first
Bradvek polymer (or plastic) banknotes; these
were printed by the
American Banknote Company and developed by
DuPont. In 1988, after significant research and
development by the
Commonwealth Scientific and Industrial Research
Organisation (CSIRO) and the
Reserve Bank of Australia,
Australia produced the first
polymer banknote made from
biaxially-oriented polypropylene (plastic), and
in 1996 became the first country to have a full set of circulating polymer
banknotes of all denominations. Since then, other countries to adopt circulating
polymer banknotes include
Bangladesh,
Brazil,
Brunei,
Chile,
Guatemala,
Indonesia,
Israel,
Malaysia,
Mexico,
Nepal,
New Zealand,
Papua New Guinea,
Romania,
Samoa,
Singapore, the
Solomon Islands,
Sri Lanka,
Thailand,
Vietnam, and
Zambia, with other countries issuing
commemorative polymer notes, including
China,
Kuwait, the
Northern Bank of
Northern Ireland,
Taiwan and
Hong Kong. Other countries indicating plans to
issue polymer banknotes include
Nigeria and
Canada. In 2005,
Bulgaria issued the world's first hybrid
paper-polymer banknote.
Polymer banknotes were developed to improve durability and prevent
counterfeiting through incorporated security
features, such as optically variable devices that are extremely difficult to
reproduce.
Apart from Australia, other countries such as Vietnam, Brunei, New Zealand,
Papua New Guinea and Romania have all their circulating banknotes on polymer.
Other materials
Over the years, a number of materials other than paper have been used to
print banknotes. This includes various textiles, including
silk, and materials such as
leather.
Silk and other fibers have been commonly used in the manufacture of various
banknote papers, intended to provide both additional durability and security.
Crane and Company patented banknote paper with
embedded silk threads in 1844 and has supplied paper to the
United States Treasury since 1879. Banknotes
printed on pure silk "paper" include "emergency money"
Notgeld issues from a number of German towns in
1923 during a period of fiscal crisis and
hyperinflation. Most notoriously,
Bielefeld produced a number of silk, leather,
velvet, linen and wood issues, and although these issues were produced primarily
for collectors, rather than for circulation, they are in demand by collectors.
Banknotes printed on
cloth include a number of Communist
Revolutionary issues in China from areas such as
Xinjiang, or Sinkiang, in the United Islamic
Republic of East
Turkestan in 1933. Emergency money was also
printed in 1902 on
khaki shirt fabric during the
Boer War.
Leather banknotes (or coins) were issued in a number of
sieges, as well as in other times of emergency.
During the Russian administration of
Alaska, banknotes were printed on sealskin. A
number of 19th century issues are known in Germanic and Baltic states, including
the towns of
Dorpat, Pernau, Reval, Werro and Woisek. In
addition to the Bielefeld issues, other German leather
Notgeld from 1923 is known from
Borna, Osterwieck, Paderborn and Pößneck.
Other issues from 1923 were printed on wood, which was also used in
Canada in 1763-1764 during
Pontiac's Rebellion, and by the
Hudson's Bay Company. In 1848, in
Bohemia, wooden checkerboard pieces were used
as money.
Even
playing cards were used for currency in France
in the early 19th century, and in French Canada from 1685 until 1757, in the
Isle of Man in the beginning of the 19th
century, and again in Germany after
World War I.
Vending
machines and banknotes
People are not the only economic actors who are required to accept banknotes.
In the late 20th century machines were designed to recognize banknotes of the
smaller values long after they were designed to recognize coins distinct from
slugs. This capability has become inescapable in economies where
inflation has not been followed by introduction
of progressively larger coin denominations (such as the United States, where
several attempts to introduce
dollar coins in general circulation have
largely failed). The existing infrastructure of such machines presents one of
the difficulties in changing the design of these banknotes to make them less
counterfeitable, that is, by adding additional features so easily discernible by
people that they would immediately reject banknotes of inferior quality, for
every machine in the country would have to be updated.
Destruction
Banknotes have a limited lifetime, after which they are collected for
destruction, usually recycling or shredding. A banknote is removed from the
money supply by banks or other financial institutions due to everyday
wear and tear from its handling. Banknote
bundles are passed through a sorting machine that determines whether a
particular note needs to be shredded, or are removed from the supply chain by a
human inspector if they are deemed unfit for continued use – for example, if
they are mutilated or torn. Counterfeit banknotes are destroyed unless they are
needed for evidentiary or forensic purposes.
Contaminated banknotes are also decommissioned. A Canadian government report
indicates:
Types of contaminants include: notes found on a corpse, stagnant water,
contaminated by human or animal body fluids such as urine, feces, vomit,
infectious blood, fine hazardous powders from detonated explosives,
dye pack and/or drugs...[4]
These are removed from circulation primarily to prevent the spread of
diseases.
When taken out of circulation, Australian bank notes are melted down and
mixed together to form plastic garbage bins.
Literary references
Paper money is created by the devil in the 1832
Faust, Part II, Act I, by
Johann Wolfgang von Goethe, to save the
imperial finances. In
The Master and Margarita, by
Mikhail Bulgakov,[5]
the devil turns paper into money, which then reverts into paper. In both cases,
the implication is that fiat money is black magic, and but paper.
Paper money
collecting as a hobby
Banknote collecting, or
Notaphily,
is a rapidly growing area of
numismatics.
Although generally not as widespread as coin and
stamp collecting[citation
needed], the hobby is increasingly expanding. Prior to the
1990s, currency collecting was a relatively small adjunct to coin collecting,
but the practice of currency auctions, combined with larger public awareness of
paper money have caused a boom in interest and values of rare banknotes
Catalogs
Collectors often use a
banknote catalog to find information about
their banknotes or banknotes they may be interested in.
Trades
For years, the mode of collecting banknotes was through a handful of mail
order dealers who issued price lists and catalogs. In the early 1990s, it became
more common for rare notes to be sold at various coin and currency shows via
auction. The illustrated catalogs and "event nature" of the auction practice
seemed to fuel a sharp rise in overall awareness of paper money in the
numismatic community. Entire advanced collections are often sold at one time,
and to this day single auctions can generate well in excess of $1 million in
gross sales[citation
needed]. Today,
eBay has surpassed auctions in terms of highest volume of sales of
banknotes. However, as of 2005, rare banknotes still sell for much less than
comparable rare coins. There is wide consensus[citation
needed] in the paper money collecting arena that this
disparity is diminishing as paper money prices continue to rise.
There are many different organizations and societies around the world for the
hobby, including the International Bank Note Society (IBNS).
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