12 Skilling – Denmark

In 1716, Denmark found itself in a precarious monetary crisis, a direct consequence of its prolonged involvement in the Great Northern War (1700-1721). The state's finances were exhausted from decades of funding a large army and navy, leading to severe coinage debasement. The government, under King Frederick IV, had drastically reduced the silver content in coins to create more currency from the same amount of bullion, a practice that led to rampant inflation and a collapse in public trust. Older, high-value coins were hoarded or melted down, leaving circulation dominated by poor-quality, low-intrinsic-value money.

The situation was exacerbated by the issuance of kreditosedler (credit notes) in 1713, an early and disastrous experiment with paper currency intended to stabilize the economy. These notes were not properly backed by silver reserves and quickly depreciated, trading at a fraction of their face value. This created a chaotic dual-currency system where goods had one price in silver coin and a much higher price in paper notes, crippling trade and causing widespread economic distress, particularly among the peasantry and soldiers paid in the nearly worthless paper.

Facing economic paralysis, the Danish government took drastic action in late 1716. A monetary reform was decreed, demonetizing the debased coins and the discredited paper notes entirely. A new, stable silver-based currency was introduced, but the conversion rates were highly unfavorable to the public, effectively functioning as a forced loan to the crown. While this harsh measure restored a stable metallic currency and ended the hyperinflation, it came at a tremendous social cost, wiping out savings and deepening poverty, leaving a lasting scar on the Danish economy and populace.