Share of Overdue Liquidation Debts

[Pellinore]

This is a bank note guaranteed to a certain amount by the City of Rotterdam (Netherlands) in 1815. Don't know the English term for a paper of value like this! Translate says: Proof of paid 2/3 Interest at the expense of the City of Rotterdam, that was published in 1812.

It is signed by the treasurer (left, his name is Van Teylingen) and one of the College of Mayors, Marinus Hoog.

That year saw the start of a vigorous young Dutch kingdom after the last throes of the French occupation of the Netherlands were removed. Probably the town, with its important harbour, was in debts and preparing for better times after the French (I'm not an economist). Literally, the note enables its possessor to exchange it for 44 guilders, 13 stivers and 6 pennies in receipts, that will be given out in capitals of 100 guilders, resulting from the liquidation of overdue debts of the city of Rotterdam of the years 1812 and 1813, with an interest of 4%, to be paid in capital in January, 1818.

44.69 guilders was about 728 euros of 2016. A month's net wage of many people. (Dollars). In 1815 there was no official exchange rate. In a newspaper of that year I saw someone offering a rate of 1 dollar = 2.5 silver guilders. But no guarantee.

(British pounds). There might have been an exchange rate of about 1:12 or one pound = 12 guilders. 

And I love the sea green print and its obscure little flowery encadrement, its severe amounts and lightly set signatures, the feel of the heavy paper and the relief of the lettering on the blank side of the paper.

-- Paul

[Figleaf]

Interesting piece! The municipal debt is being re-organised in a very classical way: exchange short-term non-negotiable debt for long-term, negotiable debt. This lowers the interest rate, increases the duration of the debt and even opens the possibility of purchasing your own debt below par, but that's a bit sneaky.

I presume the French occupiers demanded payment for its troops in Rotterdam (in addition to demanding quarters for higher officers), as well as payments in kind. This would have created short-term debts towards specific citizens.

When the occupiers had been kicked out, the city was left with a probably very short-term debt (payable immediately) and did not have the means to pay it. It apparently decided to reorganise it, by issuing these anonymous debt certificates to people it owed money to. As the certificates are anonymous, they are negotiable, so recipients could sell their debt, probably below par, if they needed cash right away or didn't trust the city to pay up eventually.

In 1815, the city planned to issue a 4% bond loan in chunks of ƒ100. This debt certificate could be used to buy (part of) that Rotterdam municipal bond. The bond loan would run for 3 years before it was redeemed, giving the city financial breathing space at the price of 4%, while the bonds would be listed on the Amsterdam stock exchange and therefore be completely liquid. Such bonds were known as "Stad Rotterdam".

Peter