Did taxes, decrees or credibility drive money? Early nineteenth century Finland from a chartalist perspective

ABSTRACT

Chartalist theories assume the government determines the currency used by the public. Finland’s experience following the Russo-Swedish war in 1808–1809 would seem to contradict the chartalist view. Having become a Grand Duchy under Russia, the Finnish Government sought to replace Swedish riksdalers in circulation with roubles. However, due to a resilient trade surplus with Sweden and the resulting flood of Swedish money into Finland, bans on the riksdaler were largely ineffective. Taxation proved a particularly clumsy tool for leveraging the switch to roubles. Taxpayers almost forced the government to accept payments in a foreign currency. Even the government had to use Swedish money. Issuing roubles was of limited use. As a result, the rouble failed to establish itself as Finland’s main currency until the introduction of a silver standard in 1840–1842.

KEYWORDS:

• Chartalism
• money
• currency
• Finland

JEL CODES:

• B59
• E42
• E58
• N13
• N23
• N43

Acknowledgement

Thanks to Dr Juha Tarkka, Professor Jari Ojala, Professor Alistair Milne and my two anonymous referees for their insightful and useful comments. All errors are mine.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 A. E. Tudeer (1939) does not cover the 1809–1842 period.

2 The English translation of Kuusterä and Tarkka (2011) may be the only English language publication that details early nineteenth century Finnish monetary history.

3 For a general description of the theory of network economics, see Shy (2001).

4 Mikkelin Wiikko-Sanomia 15 December 1864, p. 1; Suometar 24 December 1864, p. 2; Suometar 12 January 1865, p. 1; Suometar 10 March 1865, p. 3.