Coinage Struck on Paper, the Promise of Leiden

The covers were stripped from church books, and the paper was hardened in many layers. Upon this, the die of a coin was struck. This was coinage struck on paper. It happened in the city of Leiden, which was besieged twice from 1573 to the following year.

Depleted Metal

A siege tightens a city's purse strings. Specie cannot enter from outside the walls, and it becomes impossible to pay mercenaries' wages or the price of bread. A besieged city had no choice but to make its own currency.

In many cities, silverware was collected from the public, and plates and cups were melted down in furnaces to be turned back into bullion to make emergency money. Much of it was simply stamped while still in a square shape and is known as Klippe. With no king's face or guarantee of fineness, the city's stamp alone was the basis of its credit. This type of currency survives from both rebel-held Haarlem and Spanish-held Middelburg.

In Leiden, however, during the second siege, the silver itself ran out. There was no more silverware in the city to be melted down.

A Stamp Struck on Paper

So Leiden created a currency that no one had ever seen before: paper money made from the covers of books.

On its face stood a lion, and the city's coat of arms, a shield with crossed keys, was engraved. And the inscription read: HAEC LIBERTATIS ERGO—this is for the sake of liberty. Coins made during the same siege are also known to bear the inscription PVGNO PRO PATRIA—I fight for the fatherland.

Paper money itself had been pioneered much earlier in China. However, this paper, issued by a besieged city without metallic backing, is considered to be among the earliest forms of paper currency in Europe.

Credit Backed by a Promise

Why did this paper currency circulate? It had no metallic backing. What supported it was a single promise.

If the city held out, this paper would later be redeemed for specie. It was a currency of pledge. It was not silver that backed its credit, but a promise. The moment when the backing for currency shifted from metal to a promise appeared in the extreme conditions of a siege.

On October 3, 1574, the day that tested this promise came to an end. The dikes were breached, and the flat-bottomed boats of the Sea Beggars crossed the flooded fields to deliver food to the starving city. Leiden was liberated, and the city continues to celebrate this day still.

The following year, 1575, a university was founded in the city. An anecdote tells that the city was offered a choice between tax exemption or a university as a reward for its endurance, but this is considered a later legend and lacks support from contemporary historical sources.

The story of the dollar calls the paper money of 1690 a child of war. The paper of Leiden predates it by 116 years.