At the beginning of the Age of Liberty the Bank of the Estates of the Realm became an independent bank under the Riksdag. The Great Northern War comes to an end and is followed by a period of economic recovery.
This was broken when the Hat Party came into power in the Riksdag. The Hat Party was a coalition of several different opposition groups in the Riksdag that arose in the 1730s. They used the Bank to finance the Pomeranian war, as well as an expansionary trade and industry policy which led to high inflation.
During the Age of Liberty the first economists pointed out that there is a link between the banknote stock, inflation and the exchange rate against other countries. In 1766-1767 the Riksdag adopts a programme to restore price stability, but the measures that ensue trigger a deflation crisis.
Time axis
| 1719 |
Autocracy ends. The Bank reverts to
being the Bank of the Estates of the
Realm.
Johan Thegner directs the economic
recovery.
|
| 1719/1720 |
Ulrika Eleonora abdicates and is
succeeded by her husband,
Fredrik I.
|
| 1721 |
The Treaty of Nystad confirms peace
with Russia.
|
| 1738–1739 |
The Hats force Arvid Horn to
resign. The Riksdag insists on greatly
increased Bank lending.
|
| 1741 |
Thegner is forced to resign and is
replaced as board chairman by
Fredrik Gyllenborg.
|
| 1741–1743 |
War against Russia. The Bank
finances the Crown’s expenditures.
|
| 1740s |
Transfer notes come into general use.
|
| 1745 |
Notes cease to be convertible.
Paper standard.
|
| 1751 |
Fredrik I dies and is succeeded by
Adolf Fredrik.
|
| 1757–1762 |
The PomeranianWar (a part of
the Seven Years’War). The Bank
again finances the Crown.
|
| 1759 |
Fredrik Gyllenborg dies.
|
| 1765–1766 |
The Caps regain power and hold
the Hats to account. The Bank’s directors
are replaced. A programme is
prepared to restore the exchange rate. |