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History of Money in Latvia

The Last special issue of the Latvian 1 Lat coin

The Last special issue of the Latvian 1 Lat coin

Only a few weeks left until another currency change takes place in Latvia. This time Latvia joins the Eurozone and replaces its national currency Lats with one of the largest currencies in the world – Euro. But, the history of money in Latvia has been long and many currencies have been used here. This is a concise history of the various currencies in Latvia during the centuries

During the Prehistoric times for the exchange of goods various valuable objects were used. Nauda means money in Latvian and originates from the word cattle, similar to Lithuanian nauda, Norvegian nautr. Also the Indian rupee originates from word in Sanskrit rupa that also means cattle. That’s because the cattle exchange was used before the proper means of currencies were introduced. Other valuable and often symbolic objects were used. The Baltic region was known across the ancient world for its amber a fossilized tree resin was favored by the Greeks and Romans. Used primary for jewelry it was also known to make electricity giving it divine reputation. First signs of amber trade were found Middle Neolithic Stone Age. At the swamp village of Sārnate locals built amber manufacture. They exchanged amber for flint and shale work tools.

The Roman Silver Denarii found in Latvia

The Roman Silver Denarii found in Latvia

First coin money is known to appear in the 7th  century BC Lydian kingdom in modern day Turkey. As the metal was recognized as the most effective mean of exchange – solid and easily divided and with precise weight. Now the metal was made as a round coin with inscriptions and pictures on the both sides. First coins found in Latvia dates to Early Iron Age 1-4 century AD (according to Latvian specific periodization). The first coins in Latvia came from Roman Empire, the Baltic tribes were reached by Roman traders. They visited Latvia using the so called Amber way from the city of Carnuntum (modern day Austria) to the East Prussia and Courland where the valuable amber was mostly found. Another way was by the sea route from the lower river Rhine and the Gallic provinces to the Baltic coastline. The Roman historian Tacitus in his Germania reported that the Baltic people that he called Aesti receives a money reward with wonder for their amber. It’s probably because local Balts did not know what to do with coin money; they viewed it as just as some pieces of metal. Despite that they kept and made deposits and took them in their graves, believing it could be valuable in the afterlife.

Mostly the Roman silver denaries and bronze semis were found by archaeologists in the ancient grave sites and hidden deposits. After the fall of the Roman empire the territory of Latvia was no longer reached by the Roman coins. The silver was used as the main currency coming from Russia and Scandinavia.

The Arabian Dirham

The Arabian Dirham

During the 8th-9th century in the ascent of the Muslim civilization the Arabian currency dirham became the most valuable across Europe. Dirhams came to Baltic lands from the Kievan Rus, using Volga- Daugava waterway. From Persia to Volga Bulgaria (modern day Tatarstan), from Volga to Ladoga, then trough river Neva to the Finnish Strait. And then with the help of the Scandinavian Vikings reached Courland. Another route was from Middle East trough Caucasus region and then by river Dnepr to the lake of Ladoga. Arab traders never entered the Baltic lands and mostly stopped and the Volga Bulgaria as it was Islamic country. Their goods were then transported by Vikings who had their trade bases in Novgorod, Smolensk and Old Rostov. The national museums in Tallinn, Stokholm, St Perersburg and Moscow holds more Arabian dirhams than in whole Middle Eastern countries. In Latvia 2 473 dirhams have been discovered, originating from Iran, Turkey, Baghdad, Syria and the Central Asia. At the middle of the 11th century dirhams became less used as the Muslim Caliphate collapsed and whole Europe became affected by the silver deficit.

The Western European rulers adopted their own coins and with the help of Vikings the Baltic lands were now reaching by the silver dinars. German phenings were commonly found in Latvia. As the Holy German Empire was not a unified country, but a union of the many smaller states, that had rights to forge their own coins there are many types of denars in Latvia. Also Danish coins from the time of the Knut the Great was found in Latvia.

Ancient Latvian made replicas of the Western European money

Ancient Latvian made replicas of the Western European money

The 11th century was known for its monetary crisis. Again silver bars were used as a currency. There are reports of the ancient Livonian tribes making their own replicas of the Western denars. 39 such local made coins were found in 13 places within Latvia. It was a sign of early state development among Baltic and Finno-Ugrian tribes.

The Phenning of the Bishop Albert

The Phenning of the Bishop Albert

The 12-13th century is the time of the Crusades in Latvia. The first minted coins in Riga were the Bishop Albert Phenings made at the Castle of Mārtiņsala. After the Confederation of Livonia was established on 14th century, Riga started to forge their own silver coins. Every city of state within the confederation that had its own rights for minting issued their own currencies Currencies in Livonia were many. 1 Marc was 4 Verdins or 36 Shillings. Sometimes in Livonia silver Dalders and golden Ducats.

The Dalderis of the Free City of Riga

The Dalderis of the Free City of Riga

After the collapse of the Livonian Confederation and its annexation by Poland – Lithuania in 1561, a new era of money begun in Latvia. Riga for a long time tried to become independent from Poland -Lithuania and rejected the Polish minting rules.  So they issued their own coins for a long time. The Duchy of Pārdaugava issued shillings and verdins at the Castle of Dole in 1572. The city of Riga known for its hostile stance to the Polish king banned the use of these coins. On 1589 Riga convinced the Polish king Sigismund III to become the only city in whole Livonia to mint coins. Riga issued Ducats and Graši.

1780 Dalderis showing Peter Biron the last duke of Courland

1780 Dalderis showing Peter Biron the last duke of Courland

The Duchy of Courland and Semigallia was an autonomous state within Poland and Lithuania with its own royal family. Its capital was Jelgava (Mittau) where the first shillings were made in 1575. On 1577 Polish king Stephan Batory canceled the Jelgava minting rights. They were restored in 1579 in accordance to the Polish-Lithuanian rulers. Despite the economical upswing during the rule Duke Jacob the money was issued on small numbers. Last coins were issued during the rule of Duke Peter Biron called Dalderis.

The Swedish dalderis minted in Riga showing Gustav Adolf the II

The Swedish dalderis minted in Riga showing Gustav Adolf the II

In 1621 Sweden annexed Riga and the region of Vidzeme. Latvian lands became even more divided in the terms of currencies. Sweden hoped to establish unified Swedish currency rules within the new Baltic province, but failed to do so. Riga still kept its rights to forge money according to Polish rules. Only on 1630 Sweden forced Riga to issue silver shillings according to Swedish rules.

1704 Russian 1 Ruble showing Peter I the Great

1704 Russian 1 Ruble showing Peter I the Great

On 1710 Riga and Vidzeme was taken over by the Russian Empire. During the next decades of the 18th century whole territory of Latvia was annexed by the Imperial Russia. The decimal money system established by Peter I the Great finally ended rather chaotic money times and united whole Baltic region under one Russian currency.

Golden 15 Rubles showing Tsar Nicholas II

Golden 15 Rubles showing Tsar Nicholas II

The Riga money mint was closed. Pleas to restore the minting rights were denied by Petersburg authorities. Slowly the Baltic lands were adopted to the Russian ruble and the Russian unified economic system. In 1786 first Russian paper money called asignatsia (from french assignet- paper money). There were 100, 75, 50 and 25 ruble assignatsias. On 1843 they were replaced by the state credit tickets fixated by silver and gold equivalent. On the end 19th century Russia entered the Gold Standard and minted golden rubles.

1917 postamp-money in value of 3 kopeks

1917 postamp-money in value of 3 kopeks

On 1915 the German army invaded the Latvian territory sparking a new currency chaos. Plagued by the deficit of coins Russia even issued money stamps as equivalent of kopek. The paper money lost its value, after the 1917 February revolution the Provisional government issued paper state cash signs or so called kerenkas after the Prime Minister Alaxander Kerensky. With the old imperial rubles still in effect the money flow was in chaos.

1916 German Ostkopek for Eastern Frontlines

1916 German Ostkopek for Eastern Frontlines

Meanwhile the Germans occupying the Courland and Semigallia issued their own Ostmarks and Ostrubles. Also a iron kopeks and loan sings were issued within the German owned lands. After the German capitulation on 1919 the currency chaos deepened. Some cities like Liepāja, Venstpils and Jelgava issued their own municipal currencies. They were allowed to use until 1925 and was allowed to convert to Lats until 1931.

Riga Soviet of Workers 3 rubles 1919

Riga Soviet of Workers 3 rubles 1919

Meanwhile the Bolsheviks invading Latvia made their own currencies. Cēsis had its Cēsis district Workers Deputy Soviet executive committee loan coupons 5 to 1o rubles. Riga Soviet made its own currency sign 3, 5 and 10 rubles. Even the Baltic German and White Russian army of Bermont issued its own money that was used only for a month.

The money of the Army of Bermont

The money of the Army of Bermont

Northern Latvia was for a long time occupied by the Estonian army assisting the Latvian army in their fight for independence. So also the Estonian money was in effect along the Vidzeme region. Estonian marks were used there until 1920. On 1919 Riga town council issued their own rubles after the city was taken over by the Latvian government.

Latvian 500 rubles 1919

Latvian 500 rubles 1919

The Latvian government had to stop this never ending chaos of currencies. On  January 29 1919 decision was made to release Latvian State cash signs and on March 22 a design competition was called for the new Latvian currency. Even the hostile pro-German government kept issuing these banknotes. After was for freedom was won a work was underway for a a unified Latvian currency. The Latvian ruble was a provisional currency and was in effect during the post war economic stabilization. On 1922 all was ready to adapt the new national currency Lats.

Latvian 100 Lats 1923

Latvian 100 Lats 1923

On August 3 1922 Lats became the official currency. Without taking the loans from abroad Latvia managed to stabilize its currency in short time. On September 19 the Latvian State Bank was founded to issue the new currency. Most Latvian paper lats were made in UK, only in 1939 100 Lats banknote was printed in Latvia. Designed by Rihards Zariņš the Latvian paper money was one of the most beautiful in Europe.

The famous Five Lats silver coin from 1931

The famous Five Lats silver coin from 1931

Latvian Lats and its demoniation santīms were released also in coins minted in Switzerland and UK. On 1937 first Latvian coins were minted in Riga. Latvia was known for its silver 5 Lats coins showing a Latvian woman in traditional costume and the cout of arms of Latvia in reverse. Designed by Rihards Zariņš who chose his employe Zelma Brauere. The coin became famous across the world, Latvians nicknamed it as “Milda” a common Latvian female name. The coin was valued after the occupation of Latvia as the symbol of the independent Latvia.

50 Latvian Lats with dictator Kārlis Ulmanis

50 Latvian Lats with dictator Kārlis Ulmanis

After the 1934 coup by Kārlis Ulmanis, his portrait appeared on 50 Lats banknote. On 1939 Ulmanis was looking forward to make a new five lats silver coin with his face on it. Soviet occupation halted his ambitions however the British minting company received the orders and managed to make a prototype of silver five lats replacing Milda with Ulmanis.

Latvian five lats from 1940

Latvian five lats from 1940

The last Latvian banknote was issued in 1940. The Latvian Soviet puppet government first promised to keep lots. However, soon on August 25 1940 the Soviet ruble was issued as a parallel currency. On March 25 1941 the last was abolished and completely replaced with the ruble.

Soviet ruble of 1937. Showing soviet paratrooper a symbol of Soviet expansionist plans

Soviet ruble of 1937. Showing soviet paratrooper a symbol of Soviet expansionist plans

When Nazi Germany invaded Latvia, some patriots restored the work of Latvian State bank and tried to restore Lats as a national currency by imprinting “Latvia July 1 1941″ on the pre war Latvian Lats. Nazi Germany was no less hostile to Latvian national efforts as soviets and issued the Reichmark as the official currency. After Soviets returned on 1944 ruble came back with them.

Soviet banknotes

Soviet banknotes

Despite the original Marxist teachings about the abolishment of money, Lenin and his successor Stalin had no clear idea of how to do it. And again rubles with Lenin replacing Peter the I returned. On 1947 Soviets made a significant currency reform stabilizing the ruble for years to come. However, it failed to thwart the speculation and corruption. Efforts on reforming the soviet economy followed after the death of Joseph Stalin. Nikita Khrushchev made many advancements but failed and lost his power. Leonid Brezhnev a moderate neo-Stalinist perfectly understood that radical reforms in the Soviet social system would mean its collapse. In so the Soviet Union was caught in stagnation for many years to come. In the era of total deficit various vouchers for products became the unofficial Soviet currency. The attempt to cure the plague of deficit and corruption by Mikhael Gorbachev ended in the collapse of the Soviet Union.

A 1991 sketch of the new Latvian lats

A 1991 sketch of the new Latvian lats

As the spirit of regaining independence was in the air, on 1991 the Latvian Cultural Fund issued a design competition of the restored future Lats. Some 20  projects including Sergey Kovalenko from Kharkiv were made. Most of the ideas resembled the past Latvian lats. Some wanted to place Kārlis Ulmanis, while others wanted to add Baltic German writer Garibl Merkel on 2 lat banknotes.

Latvian rubles 1992

Latvian rubles 1992

In 1990 the Latvian government made real steps to replace the Soviet ruble. The Latvian State bank was restored. After full independence was gained a fast moves were made to leave the inflation driven Soviet ruble. On May 7 1992 the Latvian ruble was again in effect. Nicknamed “repšiki” after the first president of the Latvian Bank Einārs Repše the Latvian Lats was introduced successfully. On 1993 Latvian Lats returned as the national currency. Latvian currency survived the hard economical situation during the 90′ies. Despite the relative ecomical upswing during the 2004-2007 Lats was plagued with inflation. Calls of devavation during the 2008-2009 economic crisis, were not met instead an inner devaluation was made.

Special 1 Lat coin. The Middle coin with a salmon is standart 1 lat

Special 1 Lat coin. The Middle coin with a salmon is standart 1 lat

Latvian Bank made a great tradition of releasing the special 1 Lat coins for special events. They became admired by coin collectors for their great design. Many special coins won special international prices. However, when Latvia entered the European Union one of its obligations to enter the Eurozone. Unlike Poland, where the constitution prevents from changing currency, Latvia had no law to prevent the entry into Eurozone. Instead the Prime Minister Valdis Dombrovskis was pushing to enter the Eurozone despite the crisis and problems within the Eurozone. And it was achieved despite large numbers of Eurosceptics within the government and society. However, their efforts were rather passive. Latvia in the XXI century has only three choices all of them not positive. First is to keep going west with its EU and US allies despite their instability, second is going East with Russia that has become semi-totalitarian and hostile, and third keep full neutrality, that is completely impossible. The third choice was made by Kārlis Ulmanis on 1934-1940 that doomed the state of Latvia. This time the currency change was made by the Latvian government and the people that elected them. The Latvia future with Euro is a story to be told by the next generation historians.

Selected Sources:

Ozoliņa, Anda, Ducmane, Kristīne (2013). Naudas Laiki Latvijā. No mārkas un vērdiņa līdz Latam un Eiro. Rīga. Lauku Avīze.

Ducmane, Kristīne. (2004). Nauda : enciklopēdija par savu un svešu naudu Latvijā no seniem laikiem līdz mūsdienām. Riga : Zvaigzne ABC.
Ducmane, Kristīne and Veciņš, Ēvalds.(1995) Nauda Latvijā. Riga. Latvijas Banka.
Paiders, Juris. (2002) Arābu laiki Latvijā. Riga. Zvaigzne ABC.

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