Date | 5 January 1813 |
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Coordinates | 56°15′50″N9°30′06″E / 56.2639°N 9.5018°E |
Type | State Bankruptcy |
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Outcome |
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The Danish state bankruptcy of 1813 was a domestic economic crisis that began in January 1813 and had consequential effects until 1818. [1] As Denmark-Norway struggled with the financial burden that the Napoleonic Wars had on the economy, the devaluation of the currency had negative effects on merchants, citizens and businesses alike. [2]
As Denmark-Norway allied with France in 1807 in the aftermath of British attacks on Copenhagen, it incurred costs of rearmament as machinery, equipment and supplies were required for wartime efforts. [3] As a result, when the economic burden placed on the state began to take its toll, the collapse of the currency became imminent. [4] The loyalty shown to Napoleon and France by Frederik VI and Denmark-Norway was eventually cause for great loss. The Treaty of Kiel, signed in January 1814, saw Denmark lose considerable power in Europe. Frederik VI had to renounce the Kingdom of Norway to the king of Sweden. This event put even further pressure on export and import trading, as well as an already weak economy. [5]
Due to consequences of the Napoleonic Wars, Denmark-Norway was forced to declare bankruptcy on 5 January 1813. [6] The government through monetary and economic policy had two main objectives; stabilise the economy and create a unified state-wide monetary system. [7] The Rigsbank was the first governmental institution tasked with stabilising the economy by re-structuring the currency. In 1818, the Nationalbank, a privately operated institution was formed to extend credit benefits from citizens to businesses, and aid the revival of the Danish economy. [6] The objective was to reinstate silver as the overarching currency in the Danish economy and restore confidence in a central banking system. [7]
Denmark-Norway had remained adjacent to early precedings of the Napoleonic Wars. Russia and France both had vested interest in Denmark-Norway and its naval fleet and its use of Norwegian-Danish trade routes. [8] The British understood they would need to lay siege to the fleet if they were to gain control over vital sea lanes. [9] In September 1807, the British empire bombed Copenhagen, the capital of Denmark, in order to capture or destroy the Dano-Norwegian fleet. The bombardment on the Danish capital allowed the British to take vital sea lanes in the Baltic and North Sea. [8] Frederik VI and his monarchy viewed the ruling of Norway as essential to its European power. [10] A lack of stability in the Norwegian grain supply as well as the chance for French invasion drove the strategy for an alliance with Napoleon. [10]
Denmark-Norway had little to offer France as the naval strength had been eliminated. The cost of rearmament and war time preparations took a toll on the Danish-Norwegian economy. [4] Adding to the loss in the attack on Copenhagen in 1807, Frederik VI remained loyal to Napoleon and France, even as Sweden and Russia switched alliances to Great Britain. [11] When France attacked Russia in 1812, both nations effectively allied with Great Britain, leaving their alliance with France behind. After suffering a prolonged period of defeat between 1810 and 1812, King Frederik VI was increasingly concerned about losing claims to Norway and the lands owned in the North of Germany. [2]
On 5 January 1813 Denmark-Norway declared bankruptcy and a new state bank, the Rigsbank, was created to bring the economy out of hardship. [7] The main agenda for the Rigsbank was to re-organise and stabilise the state's monetary system. [7] When Denmark-Norway allied with France in 1807, the Treaty of Fontainebleau was signed between France and Denmark-Norway. Denmark-Norway was promised favourable loans and subsidies that would cover financial costs of wartime readying. [2] However, the terms of the treaty were not upheld and it was Denmark-Norway who covered the cost of the French push in Denmark in 1808. [2] Adding to this, the promise of troops and equipment to Napoleon throughout the war only furthered the costs Denmark-Norway were to bear.
The Treaty of Kiel was a 14 article document signed in January 1814 between Denmark-Norway, Sweden and the United Kingdom, ending the Napoleonic wars. [12] Sweden and the United Kingdom, under the sixth coalition were united in battle against Denmark and Norway who was allied with France. [10] Denmark, due to its defeat in the war and the ensuing Treaty of Kiel, were obligated to cede Heligoland to the United Kingdom. [13] King Frederik VI Denmark's rule of the Kingdom of Norway was relinquished to King Charles XIII of Sweden, a great disappointment to King Frederik VI. [14]
Under Article III, Denmark were able to get ruling geographical claims on Greenland, Iceland and the Faroe Islands. [15] The culmination of significant land claim losses, the dissolution of the union with Norway, and the humiliation of defeat to the United Kingdom and its allies, had severe economic and social impacts on Denmark. [7]
The cost of wartime efforts had a major effect on the Danish-Norwegian economy. In an effort to subsidise the cost of rearmament, the Danish government issued a substantial amount of banknotes. [10] As it stood, the national currency was silver and as a result of excessive issue of banknotes, the former value of silver was lost. The Danish government could not ensure loans from the population were paid, leading to an excessive printing of more money to account for wartime expenditure. [4] Denmark's efforts to prepare for the war economically led to the devaluation of the currency.
The indecisiveness of Frederik VI, the king of Denmark, to not act in the interests of Denmark by remaining loyal to Napoleon and France in 1812, was cause for significant loss of power. [10] As France and her allies were defeated, king Frederik VI surrendered the kingdom of Norway to the king of Sweden and lost claim to significant land claims in North Germany [2] As a result, financial pressure on the currency was increased and not only had great effects on the economy, but led to poverty and a reduction in the quality of life for citizens. [16]
Britain's bombardment of Copenhagen in September 1807 ended the neutrality of Denmark in the Napoleon war. Denmark-Norway were forced to ally with France, with little military power after losing their naval fleet. The trade embargo on Denmark by Britain coupled with the destruction of the Danish naval fleet saw trade between Norway and Denmark essentially ceased. [17]
The alliance between Denmark-Norway and France was a key reason for the loss of Norway to Sweden in the Treaty of Kiel. [8] Norway was aligned with the economic motives of Great Britain and the loss of trade between Denmark and Norway due to the blockade, saw trade between Norway and Great Britain begin. The decision to join the war along with the effects of the trade embargo meant significant financial burden would be placed on the state to ready for battle as the control of the vital sea lanes was lost. [18]
Frederik VI's decision to halt all trade with Britain following on from the bombardment of Copenhagen, negatively affected the import and export market. The Danish timber market was dependent on trade to other European nations and reported a drop of 99% from 1806 to 1808. [19] Throughout the period from 1808 to 1813, inflation was rising and in 1813 alone prices rose by some 300 per cent. [4] The central government lost faith in the Danish currency, evidenced by certain taxes being payable by kind (grain) instead of banknotes. [4] The Treaty of Kiel and the loss of geographic claim saw Denmark encounter problems with the circulation of banknotes. As Denmark's total population reduced, this was not met with a reduction in the stock of circulating banknotes, only increasing inflationary effects on the currency. [4] As a result of the war, Denmark was forced to suspend foreign debt and interest payments until 1815. [20]
Denmark-Norway, before France was defeated by Russia in 1812, were offered permission to side with Britain and its allied forces. [21] This would have reduced the burden that was placed on Denmark following the war and allowed the state to retain claims to land already conquered. Michael Bregnsbo, argues that Frederik VI was loyal to Napoleon, as he believed Napoleon would be the leading figure in the peace proposals if victory was achieved. [10] Historian, Morten Ottosen, argues that the stubbornness of Frederik VI in remaining loyal to Napoleon was foolish and was at the heart of future failures. [2]
The British blockade on Norway and Denmark was having consequences on the entire population. [22] The halting of trade meant employment opportunities stopped as goods were not being made, financial incentives were not either. In response to the bombardment of Copenhagen, King Frederik VI, prohibited all trade and communication with Great Britain in 1807. [2] However, merchants and citizens understood the need for a relaxed prohibition as British goods were valued at a premium. [2]
Instances of corruption were widespread as the financial burden of inflation and lower wages took a toll on the population. Civil servants were increasingly being tried for corruption, most commonly, in regards to embezzlement. [22] The betrayal of the King by his civil servants put pressure on the monarchy to instil public confidence in an absolutist rule in order to dispel ideas of democracy. [22]
On 5 January 1813 the "Decree on changing the currency system for the Kingdoms of Denmark and Norway and the duchies of Schleswig and Holstein” was declared by the Minister for Finance, Ernst Schimmelmann. [4] The Decree stated:
“Since the government’s existing currency system is shaken to the core, we have decided to bring order and stability to the system by establishing a permanent and unshakeable foundation for it". [23]
The revival of the economy began with the establishment of the Rigsbanken, who were given authority to re-issue banknotes in a new currency, the rigsbankdaler. A compulsory 6% priority mortgage rate was to be paid in silver as well as a 61⁄2% interest rate placed on all real estate. [1] The government had requested the donation of silver or currency in the form of a loan to further add strength to the newly established Rigsbanken. [2] This immediate cash inflow became the basis of the Rigsbank's allocation of capital. Remaining banknotes from the Napoleonic wars could be exchanged to the new currency at a ratio of 6:1, a great devaluation of finance. The objective; to cease the issuing of notes until silver and banknotes were interchangeable. [18]
On 4 July 1818, King Frederik VI enacted Denmarks Nationalbank, authorising the institution to operate as the central bank. [4] The Nationalbank’s constitution was signed and allowed the bank to have sole handling of the countries issuing of banknotes. It was formed to ensure independence from the government and provide assurance to the Danish people that in future the state would not over issue the currency. [6]
The Nationalbank halved the circulation of banknotes between 1818 and 1838, culminating in the restoration of silver and notes being of equal value in 1838. [6] The success of the Nationalbank is grounded in historical power. The institution is today the central bank in Denmark and is attributed with restoring financial trust. [6]
The work of the Nationalbank and the Rigsbanken eventually stabilised the economy. During the period of bankruptcy, primary education between the ages of seven and fourteen was made compulsory, in an effort to minimise the disparity between the wealthy and peasant citizens, all of which were being affected. [24] In 1838, the circulation of banknotes and silver had reached equality. This meant that debt repayments began and the economy began to return to the once former power it originally held. By reducing the amount of notes in circulation, the Nationalbank was able to allow the convertibility of silver into banknotes by 1845.[ citation needed ]
The Napoleonic Wars (1803–1815) were a series of conflicts fought between the First French Empire under Napoleon (1804–1815) and a fluctuating array of European coalitions. The wars originated in political forces arising from the French Revolution (1789–1799) and from the French Revolutionary Wars (1792–1802), and produced a period of French domination over Continental Europe. The wars are categorised as seven conflicts, five named after the coalitions that fought Napoleon, plus two named for their respective theatres; the War of the Third Coalition, War of the Fourth Coalition, War of the Fifth Coalition, War of the Sixth Coalition, War of the Seventh Coalition, the Peninsular War, and the French invasion of Russia.
Frederick VI was King of Denmark from 13 March 1808 until his death in 1839 and King of Norway from 13 March 1808 to 7 February 1814. He was the last king of Denmark–Norway. From 1784 until his accession, he served as regent during his father's mental illness and was referred to as the "Crown Prince Regent". For his motto he chose God and the just cause and since the time of his reign, succeeding Danish monarchs have also chosen mottos in the Danish language rather than the formerly customary Latin.
Sweden and Norway or Sweden–Norway, officially the United Kingdoms of Sweden and Norway, and known as the United Kingdoms, was a personal union of the separate kingdoms of Sweden and Norway under a common monarch and common foreign policy that lasted from 1814 until its peaceful dissolution in 1905.
The Continental Blockade, or Continental System, was a large-scale embargo by Napoleon Bonaparte against the British Empire from 21 November 1806 until 11 April 1814, during the Napoleonic Wars. Napoleon issued the Berlin Decree on 21 November 1806 in response to the naval blockade of the French coasts enacted by the British government on 16 May 1806. The embargo was applied intermittently, ending on 11 April 1814 after Napoleon's first abdication.
The krone is the official currency of Denmark, Greenland, and the Faroe Islands, introduced on 1 January 1875. Both the ISO code "DKK" and currency sign "kr." are in common use; the former precedes the value, the latter in some contexts follows it. The currency is sometimes referred to as the Danish crown in English, since krone literally means crown. Historically, krone coins have been minted in Denmark since the 17th century.
The Napoleonic era is a period in the history of France and Europe. It is generally classified as including the fourth and final stage of the French Revolution, the first being the National Assembly, the second being the Legislative Assembly, and the third being the Directory. The Napoleonic era begins roughly with Napoleon Bonaparte's coup d'état, overthrowing the Directory, establishing the French Consulate, and ends during the Hundred Days and his defeat at the Battle of Waterloo. The Congress of Vienna soon set out to restore Europe to pre-French Revolution days. Napoleon brought political stability to a land torn by revolution and war. He made peace with the Roman Catholic Church and reversed the most radical religious policies of the Convention. In 1804 Napoleon promulgated the Civil Code, a revised body of civil law, which also helped stabilize French society. The Civil Code affirmed the political and legal equality of all adult men and established a merit-based society in which individuals advanced in education and employment because of talent rather than birth or social standing. The Civil Code confirmed many of the moderate revolutionary policies of the National Assembly but retracted measures passed by the more radical Convention. The code restored patriarchal authority in the family, for example, by making women and children subservient to male heads of households.
The Scandinavian Monetary Union was a monetary union formed by Denmark and Sweden on 5 May 1873, with Norway joining in 1875. It established a common currency unit, the krone/krona, based on the gold standard. It was one of the few tangible results of the Scandinavian political movement of the 19th century. The union ended during World War I.
In the War of the Sixth Coalition, sometimes known in Germany as the Wars of Liberation, a coalition of Austria, Prussia, Russia, Spain, Great Britain, Portugal, Sweden, Sardinia, and a number of German States defeated France and drove Napoleon into exile on Elba. After the disastrous French invasion of Russia of 1812 in which they had been forced to support France, Prussia and Austria joined Russia, the United Kingdom, Sweden, and Portugal, and the rebels in Spain who were already at war with France.
The Treaty of Kiel or Peace of Kiel was concluded between the United Kingdom of Great Britain and Ireland and the Kingdom of Sweden on one side and the Kingdoms of Denmark and Norway on the other side on 14 January 1814 in Kiel. It ended the hostilities between the parties in the ongoing Napoleonic Wars, where the United Kingdom and Sweden were part of the anti-French camp while Denmark–Norway was allied to France.
The Battle of Sehested was fought between Danish and Russian-Prussian-British troops at Sehested on 10 December 1813 during the War of the Sixth Coalition. The Danish Auxiliary Corps, which fought on the side of the French defeated the coalition forces commanded by Major General Ludwig von Wallmoden-Gimborn.
In 1814, the Kingdom of Norway made a brief and ultimately unsuccessful attempt to regain its independence. While Norway had always legally been a separate kingdom, since the 16th century it had shared a monarch with Denmark; Norway was a subordinate partner in the combined state, whose government was based in Copenhagen. Due to its alliance with France during the Napoleonic Wars, Denmark was forced to sign the Treaty of Kiel in January 1814 ceding Norway to Sweden.
The history of Scandinavia is the history of the geographical region of Scandinavia and its peoples. The region is located in Northern Europe, and consists of Denmark, Norway and Sweden. Finland and Iceland are at times, especially in English-speaking contexts, considered part of Scandinavia.
The Swedish–Norwegian War, also known as the Campaign against Norway, War with Sweden 1814, or the Norwegian War of Independence, was a war fought between Sweden and Norway in the summer of 1814. According to the Treaty of Kiel, Norway would enter a union with Sweden under Charles XIII of Sweden. The war resulted in Norway being forced into the United Kingdoms of Sweden and Norway, but with its own constitution and parliament. The war marked the last time Sweden participated in an armed conflict with another nation, and its conclusion signalled the beginning of the country's long period of military neutrality.
The rigsdaler was the name of several currencies used in Denmark until 1875. The similarly named Reichsthaler, riksdaler and rijksdaalder were used in Germany and Austria-Hungary, Sweden and the Netherlands, respectively. These currencies were often anglicized as rix-dollar or rixdollar.
Danmarks Nationalbank is the central bank of the Kingdom of Denmark. It is a non-eurozone member of the European System of Central Banks (ESCB). Since its establishment in 1818, the objective of the Nationalbank as an independent and credible institution is to issue the Danish currency, the krone, and ensure its stability. The Board of Governors holds full responsibility for the monetary policy.
British–Danish relations are foreign relations between the United Kingdom and Denmark. The United Kingdom has an embassy in Copenhagen and Denmark has an embassy in London. Both countries are full members of Council of Europe and NATO.
The Battle of Bornhöved or Bornhöft took place on 7 December 1813 between a Swedish cavalry regiment under Bror Cederström and Prince Frederik of Hesse's Danish troops reinforced by smaller numbers of Polish cavalry and German infantry. The clash occurred at the small village of Bornhöft in what is now Schleswig-Holstein in north Germany. The engagement occurred during the War of the Sixth Coalition, part of the Napoleonic Wars, and was the last time Swedish and Danish forces met on the battlefield.
The English Wars were a series of conflicts pitting the United Kingdom and Sweden against Denmark-Norway as part of the Napoleonic Wars. It is named after England, the common name in Scandinavia for the United Kingdom, which declared war on Denmark-Norway due to disagreements over the neutrality of Danish trade and to prevent the Danish fleet falling into the hands of the First French Empire. It began with the Battle of Copenhagen (1801) and its latter stage from 1807 onwards was followed by the Gunboat War, the Dano-Swedish War of 1808–09 and the Swedish invasion of Holstein in 1814.