The Dutch banknote: trust, but verify

Banknotes were introduced in the Netherlands in 1814. That seems like a long time ago, but coins have been around for about two millennia – ten times as long. With coins, you knew where you stood: the value of a coin represented an agreed standard weight of gold or silver. This intrinsic value of the precious metal could be measured, so it was self-evident. Coins made of non-precious metals, such as copper, often had a lower intrinsic value than the face value displayed on the coin. Their value was based on a ‘social contract’: an implied agreement that the coin’s value was guaranteed by the authority issuing it and depicted on it. Over the centuries, this could be the Roman emperor, the duke of Brabant, the king of Spain, the city of Groningen or the Republic of the Netherlands, to name a few examples. Of course there was cheating and counterfeiting, but generally people could trust the value of money.

In 1814, their trust was challenged. Newly established, De Nederlandsche Bank was given the right to issue banknotes. This was quite a shock, as the Dutch had bad experiences with paper money: during the French rule of the Netherlands, the French revolutionaries had issued large quantities of assignats from 1790 onwards. This paper money was not backed by gold , but by confiscated lands and possessions that used to belong to the church and the French monarchy. The Dutch were obliged to accept these assignats, but they were subject to runaway inflation. This had caused substantial financial losses and gave rise to discontent. So trust in paper money was low.
Extra security
It took some time getting used to the first DNB banknotes, as can be seen from the items we still keep today - 210 years later - in our National Numismatic Collection. On the reverse side of this 1833 note, we see all kinds of texts that were added after the note had been printed. If you look closely, you will see names and dates. These are payment details: when people were paid using a DNB banknote, they wrote down the name of the payer and the date of payment. If the banknote should turn out to be worthless after all, at least they knew who to turn to for the ‘real’ payment!

Naturally, DNB also tried to emphasise that its banknotes were fully-fledged new means of payment. For example, the banknotes contained a promise of payment. DNB promised that whoever bore and handed in this banknote at its office at Oude Turfmarkt 127 in Amsterdam would receive in return its value in gold or silver coins. So the new means of payment – banknotes – used the old means of payment – coins – as an anchor of trust. Besides its payment promise, DNB tried to make the note as secure as possible so that people could use it with confidence. And as if that were not enough, each note was signed by hand by no fewer than four people: DNB’s President, two directors and the secretary!

Even though DNB tried very hard, counterfeiters are of all times. In 1836 fake notes started circulating. Eventually, a notable suspect was arrested: Miss Hendrica Leurs. Hendrica was from a well-to-do family and ran a boarding school in Utrecht for 'young ladies of the most civilised and decent class'. Not exactly the most obvious suspect. Still, all clues led to Hendrica. The criminal prosecutor demanded the death penalty, but Hendrica was fortunate enough to have a good lawyer – she was acquitted. The fake notes were copied in pen and the DNB officers' signatures were misspelled – surely this highly educated lady would never make such a mistake? As soon as she was acquitted, poor Hendrica fainted. She had had enough of the Netherlands and moved to the Dutch East Indies to become a teacher. The counterfeiters were never found.

Getting used to the ‘redback’ and the ‘yellow’

Back to DNB’s banknotes. After their introduction in 1814, the Dutch were initially reluctant to adopt this innovative means of payment. In the first half of the 19th century, most people still paid mainly with coins. Banknotes were mainly used for large payments. The lowest denomination was 25 guilders, about a month's wages at the time. As you can imagine, these notes were mainly used by merchants and businesspeople. Nevertheless, banknotes became increasingly popular for payments. From a distrusted innovation in the early 19th century, they developed into a widely accepted commodity by the end of the century. In 1860, DNB issued a new series of banknotes: better secured, with images and... in colour! These colours led to nicknames that remained in vogue for more than a hundred years. The 1,000 guilder note was given a red reverse (back), and soon this was popularly called a redback (rooie rug). The 25 guilder note, with had a yellow reverse, became known as the yellow (geeltje). Until well into the 1990s, the 1,000 and 25 guilder notes retained their nicknames, although by then they had a very different appearance and colour.

By 1904, the Netherlands had become so familiar with DNB banknotes that, like coins, they were formally given legal tender status. DNB was also allowed to issue a 10 guilder note from then on. Yet trust was still not a given. When DNB decided to remove the payment promise from the notes in the early 20th century, there was so much pushback that it was forced to reverse its decision. That’s how important this guaranteed trust was. This innovative means of payment took some getting used to in the Netherlands, but the banknote is here to stay. On to the next 210 years?