Obligations of the Kingdom of Westphalia
The bonds of the Kingdom of Westphalia were a series of compulsory bonds issued by the Kingdom of Westphalia from 1808 onwards. As these could also be used to pay state claims, they also had the character of cash and are early pre-forms of paper money .
background
The Kingdom of Westphalia was established in 1807 after the Treaty of Tilsit . On the one hand (like the Grand Duchy of Berg and the Grand Duchy of Frankfurt ) it was supposed to be a model Napoleonic state in which the administration and state (based on the French model) were modernized, and on the other hand, in terms of power politics, it was a satellite state of the French Empire. Napoleon Bonaparte installed his younger brother Jérôme Bonaparte as king. The French franc was introduced as a bimetallic currency .
The finances of the kingdom were shattered by constant contributions to France and by the fact that Napoleon and Jérôme left a large part of the once taxable goods to French officers as appanages. Finance minister Jean-Baptiste-Moïse Jollivet was also faced with the challenge that the administrative organization and tax law were fragmented in the large number of predecessor territories.
The first forced loan
The financial situation of many European countries was shattered due to the Napoleonic Wars . The willingness of investors to subscribe for government bonds was low due to the bad experience with the assignats and the massive increase in the number of issues that were to lead, among other things, to the Austrian bankruptcy of 1811 . This was particularly true of the new state, whose future was not foreseeable.
The State Council therefore presented the Imperial Estates of the Kingdom of Westphalia with a proposal to introduce a compulsory loan of CHF 20 million, which was approved by the Estates on July 17, 1808. With a royal decree of October 19, 1808, this bill became law. All subjects had to submit a declaration of assets (if the declaration was missing or incorrect, the authorities were allowed to estimate), which became the basis for the obligation to sign. Each bond had a face value of CHF 200.
| capital | Subscription volume | Subscription amount |
|---|---|---|
| 5,000 to 10,000 francs | half an obligation | 100 francs |
| 10,000 to 20,000 francs | a whole bond | 200 francs |
| from 20,000 to 40,000 francs | two bonds | - |
| every additional 20,000 francs or part thereof | an additional obligation | at CHF 200 |
| Maximum amount: from 180,000 francs | 100 bonds | 20,000 francs |
In order to provide an incentive to subscribe the bonds quickly, the interest rate was staggered according to the date of subscription. For payments made before January 1, 1809 the interest rate was 6%, for payments up to July 1, 1809 only 5% annually, for later payments from January 1, 1810 to 4% (those liable to pay who did not pay voluntarily received 3% ). The interest was paid quarterly in cash. A repayment installment should be drawn every year.
Instead of a cash payment, the coupons could also be used to pay personal taxes. This gave the papers a rudimentary paper money function, which was expanded in the following bonds.
The second forced loan
The first forced loan yielded just under half of the planned amount. With a decree of December 1, 1810, a second forced loan was issued, this time with a target volume of 10 million francs.
What was new was that fixed repayment dates were now set (three tranches, on March 1st of the years 1812, 1813 and 1814). Above all, however, these bonds could also be used for payments when replacing basic charges and services. The state's lack of finance soon made it impossible to even pay the interest due. In order to settle this, treasury bills were issued by decree of May 17, 1811 to pay the interest. These and, according to the decree of February 2, 1812, the bonds of the second bond due on March 1, 1812, could now also be used to pay the purchase price of monastery and domain goods and for half of the deposits. The secularization of the monasteries was an essential source of income for the Napoleonic states.
The third forced loan
A third and final loan of 5 million francs was requested by decree of June 12, 1812. Again, fixed repayment dates (August 1, 1815 and October 1, 1816) were promised. This third bond could also be used for the purchase of domains and for the replacement.
Devaluation and speculation
Furthermore, the treasury lacked the means to make payments due. The other government bonds apart from the compulsory bonds described here were reduced to a third (capital and interest) by decree of June 28, 1812. Treasury bills were once again issued to settle the coupons due.
With a decree of January 20, 1813 it was determined that all interest coupons could be used for all taxes to be paid to the state. This strengthened the paper money character of coupons and treasury bills. However, there was no relief from the state treasury, since the income that was paid for with paper instead of money was naturally missing from the state treasury.
The bonds traded well below par in the market . This gave speculators the opportunity to buy up these bonds, coupons and treasury bills at high discounts and thus buy state domains and former monastery properties. In the case of auctions of domains, one third of the purchase price was demanded in accordance with the decree of January 9, 1813, in cash, in compulsory bonds and in treasury bills. Ultimately, this speculation was unsuccessful: After the dissolution of the Kingdom of Westphalia after the Battle of Leipzig in 1813, Elector Wilhelm I regulated with the Restitution Ordinance of January 14, 1814 that all domain sales of the Kingdom of Westphalia were void.
But even those who had kept the bonds came away empty-handed. These were declared lapsed by the electoral ordinance of August 19, 1814. Only a third of the coupons due have been paid.
literature
- Andreas Kaiser: The paper money of the Electorate of Hesse - methods of state borrowing in the 19th century . 2003, pages 27–31, online (PDF; 1.4 MB)
- H. Jacobson: What legal claims do the owners of the bonds resulting from the compulsory bonds of the former Kingdom of Westphalia have on the states involved? 1842 online
- The bonds of the Jérômes compulsory loans . Technical article (PDF; 878 kB)
Web links
Individual evidence
- ↑ GBW 1808, No. 60, pp. 216-231.
- ↑ GBW 1810, No. 45, pp. 366-375.
- ↑ a b GBW 1811, No. 13, pp. 228-231.
- ↑ GBW 1812, No. 19, pp. 422-431.
- ↑ GBW 1812, No. 22, pp. 2-13.
- ↑ Law Bülletin des Kingdom of Westphalia (GBW) 1813, No. 4, pp. 64-77.
- ↑ GBW 1813, No. 1, pp. 2-5.
- ↑ KLV 1814, p. 10f.
- ↑ KLV 1814, p. 78f.