Bulgaria didn't have her own national
unit of currency in the first years after the Liberation. Together with
the rest of gold Turkish liras, silver medjidias, beshlics, altalacs and
etc Hungarian mangers, Austrian fiorins, Deutsche thalers and marks,
Netherlands, Danish and Swedish riksdalers could be found in circulation
in the young state. Besides a lot of silver Russian roubles went into
circulation in the country during the Russian-Turkish war too. In this
wide variety of money the coins dropped out of circulation in their own
countries were spread in Bulgaria and caused an additional mess at the
market.
Because of the long circulation these coins
were seriously erased and it was very difficult to recognize them. So
people knew them only by their size and form and named them direklee,
kimlee, Hungarians and so on.
In order to stop that
chaos the young state needed a National Bank and its own unit of currency.
Thus on the 16-th of December 1878 K. Buh - a
manager of the financial department of the occupying Russian government
presented the project of "The Statute of the Bulgarian National Bank"
(Óñòàâú áîãàðñêîãî íàðîäíîãî áàíêà) to the Russian imperial commissioner
in Bulgaria prince Dondoukov-Korssakov, who ratified it in on the 25-th of
January 1879.
What were the motives of Buh for the
quickly preparation of the project for Bulgarian National Bank we could
understand from one of his statements?
"The
Liberation of Bulgaria found a confusion of coins that could exist only in
a primitive state where no civilization has ever
penetrated."
But that's not all. Several months have
passed after the Liberation of Bulgaria from Turkish Slavery and the new
way of life is in its full swing all over the country, new unknown sources
of wealth have been found, trade come back to life. This country,
generously endowed by the nature and populated by thrifty and hard-working
people will soon develop its own industry and trade
activities.
The birthday of the Bulgarian National
Bank (BNB) is the 25-th of January 1879 when prince Dondoukov-Korssakov
signed and ratified its first statute. According to it the capital of the
BNB would run up to 2 000 000 francs deposited by the state and it was
also expected that the capital would be repaid quadruple owing to the work
of the Bank. On the 4-th of April, 1879 Karbonyor was appointed as a first
director of the Bank. He was a government official in the Financial
Department of the Board of Managers.
The official
opening of the BNB was on the 23-th of May 1879 and prince Dondukov -
Korssakov and the members of the Board of Managers attended it.
The first bank operation was made on the 6-th of
June in the same year when the state deposited 8687043 francs, 2 000 000
of which should be the capital of the
Bank.
Originally the plan was for deposit-trading
bank but in fact in the first years it worked with agricultural and
municipal credits. The first credit operation was accomplished on the 17th
of August 1879.
At that time the business accounts
of all state institutions and the state budget were calculated in French
francs. The currency of the countries, which were members of the Latin
Monetary Union, was accepted as an equivalent to the French franc, and for
the coins of the rest countries it was fixed a rate of exchange. Thus for
instance one Russian rubles was exchanged four 4 francs.
The first Bulgarian postage stamps were imprinted in
Russia at the request of prince Dondoukov-Korssakov for the post needs of
the Provisional government. Their prices were marked in francs and
centimes. Even the first experimental Bulgarian cooper coins of 10
centimes and silver coins of 1 franc were minted. Never mind the Bulgarian
State Emblem was not approved yet it was cut out on their back of the
coins.
In the spring of 1879 the first Grand National
Assembly was convened to elect the first Bulgarian prince after the
Liberation. Alexander Batenberg, a German prince and a relative of the
Russian Emperor was elected.
Before arriving in
Bulgaria Batenberg visited the Russian Empire and introduced himself to
his "suzerain"- the Sultan. On the 26-th of July 1879 after his arriving
in Bulgaria Alexander Batenberg swear as a Bulgarian prince.
Almost a year later from the 4-th of June 1880 the
"Law for the legal right of coin minting in the principality" came into
force. At last Bulgaria had its own unit of currency - lev, divided into
100 stotinki. The Second Ordinary National Assembly approved this law.
There were some disputes about the appellation of the monetary unit but
the name "lev" (in Bulgarian lev is the old for lion) was adopted with
majority. Much more controversies aroused about the name of the coins
whether to be "stotinka" "santims", "sotnitses" and etc. Finally was
approved stotinka.
The only one who disagreed with
both designations was the 26 years old Stephan Stambolov who in 1886 after
the abdication of prince Batenberg became a regent and soon after that a
prime minister. Probably by his order when he was a premier, experimental
coins of 10 centimes were minted again. But the lev had already
dominated.
According to the monetary law in force
from the 4-th of June1880 all state bargains and money documents and those
of the public institutions and private persons should be already
calculated in levs and stotinki instead of francs and centimes.
The state budget should be voted in the national
monetary unit too.
Here are some passages from the
"Law for the legal right of coin minting in the principality":
Article 1: The state holds the exclusive right of
coin minting. The National Assembly, at the proposal of the Minister of
Finance, determines how much and of what kind coins should be
minted.
Article 3: The Bulgarian coins are gold, silver
and cooper. The gold are 20 and 10 levs, the silver - 5, 2,1 levs and 50
stotinki and the copper - 10, 5 and 2 stotinki. Of course the events
didn't proceed according to the law. The first Bulgarian copper coins of
2, 5 and 10 stotinki were minted in 1881 in England. The silver coins of 1
and 2 levs were minted in Russia a year later and in 1883 were minted
those of 50 stotinki. The standards of the Latin Monetary Union were
adopted for the content of pure gold and silver the weight and size of the
coins. Unfortunately the gold coins appeared too late - in 1894. The
situation in the young state was still unsteady because of lack of gold.
First bulgarian copper coins |
First bulgarian silver coins |
The minted copper coins were to a total
value of 2 100 000 levs that means: 15 000 000 coins of 10 stotinki ; 10
000 000 of 5 stotinki, 5 000 000 of stotinki.
The
minted silver coins of 1 and 2 levs and 50 stotinki were to a total value
of 10 000 015 levs.
After 1883 all silver coins
went into circulation were approximately 3 levs per capita. According the
Latin Monetary Union the maximum of the silver coins in circulation had to
be 7 levs per capita. Having in mind that in were still in circulation the
monetary units of the countries from the Latin Union, Turkey, Russia and
some other countries, it was obvious that the money in circulation were
enough.
In the same 1883 Turkey dropped out of
circulation all foreign silver coins and a great flow of silver money in
Bulgaria. On the 15-th of November 1884 in order to overtake this
situation the Bulgarian government passed a law with which dropped out of
circulation the Romanian and Serbian silver coins in Bulgaria. A year
later in January the rate of the Russian silver roubles was reduced too.
With a law in force from the 27 th of June 1886 the Russian roubles were
completely dropped out of circulation and within a year they had to be
exchanged with Bulgarian silver coins (money). That's why in 1884 and 1885
in order to conpensate for the withdrawn foreign currency another silver
coins of 5 levs were minted. They were to total value of 10 000 000 levs.
Finally in the second half of 1887 the Bulgarian money market dropped out
of circulation all foreign silver coins.
The first
adopted statute of BNB of 1879 made no provisions banknote to be issued.
After the reformation and with a law passed by the IV Ordinary National
Assembly on the 27-th of January 1885 the BNB become an issuing
institution and a long-term credit bank. The law was worked out from the
Bank manager Ivan Geshov and the Minister of Finance Petko Karavelov
proposes it in the National Assembly.
According to
the law the BNB was an independent from the state institution. The banking
capital amounted to 10 000 000 levs deposited by the state as property of
the Bank. The state reserved the rights only upon 30 % of the pure gain,
which built up the state reserve capital. The Bank activities provided by
the law were various but the most important for us was that the state
assigned the exclusive privilege to BNB of money issuing.
Here are some main articles from the law:
Art. 4 : The BNB holds the exclusive privilege to
issue banknotes… The Bank must always keep gold coins equal to one third
(1/3) of the value of the issued money… The banknotes will be immediately
paid in gold to the bearer…
Art.94 : The Minister of Finance is the only one
who approves the paper for money printing as well as the native or foreign
printing houses where the money to be issued.
Art.96 : The
signatures of the manager and the teller are printed on the notes. The
signing is made by a special machine in the presence of the official
appointed by the Board of Managers person under the supervision of the
teller.
Art.103 : The ragged banknotes are exchanged with
others or are completely paid in gold if they are a piece larger than half
of the note.
Art.104 : The tellers keep all ragged, dirty or
damaged banknote presented in the bank without being put in circulation
anymore.
Art.106 : The damaged notes are pierced by the
teller with the help of a mechanical punch printing upon them the word
"invalid ".
Art.109 : The banknote are burnt out 5 years
after they have been dropped out of circulation in the presence of a
committee… A statement is made about that….
The law says
also:
The Bank will issue banknotes of the four
categories: 20, 50, 100 and 500 levs.
The Board of
Managers of the Bank coordinated with the Ministry of Finance fixes the
form of the banknote as well as their emission in
categories.
Whether it happened according to the
laws or not you will understand in the part "EMISSIONS"