Danish Krone - History

History

The first actual organised coinage was created by Knud den Store (Canute the Great) in the 1020s. Lund was the principal minting place and one of Denmark's most important cities in the Middle Ages, but coins were also minted in Roskilde, Slagelse, Odense, Aalborg, Århus, Viborg, Ribe, Ørbæk and Hedeby. For almost 1,000 years, Danish kings – with a few exceptions – have issued coins with their name, monogram and/or portrait.

The coinage was based on silver, but to give the kings – and thus the state – an easy source of income, the metal value was gradually reduced, and thus did not correspond to face value. In addition, taxes were sometimes imposed via the coinage, e.g. in connection with compulsory substitutions where the value of the new coins received did not match that of the old coins handed in.

Until the late 18th century, the krone was a denomination equal to 8 mark, a subunit of the Danish rigsdaler. A new krone was introduced as the currency of Denmark in January 1875. It replaced the rigsdaler at a rate of 2 kroner = 1 rigsdaler. This placed the krone on the gold standard at a rate of 2480 kroner = 1 kilogram fine gold. The latter part of the 18th century and much of the 19th century saw expanding economic activity and thus also a need for means of payment that were easier to handle than coins. Consequently, banknotes were increasingly used instead of coins.

The introduction of the new krone was a result of the Scandinavian Monetary Union, which came into effect in 1873 (with the coins being adopted two year later) and lasted until World War I. The parties to the union were the three Scandinavian countries, where the name was krone in Denmark and Norway and krona in Sweden, a word which in English literally means crown. The three currencies were on the gold standard, with the krone/krona defined as 1⁄₂₄₈₀ of a kilogram of pure gold.

The Scandinavian Monetary Union came to end in 1914 when the gold standard was abandoned. Denmark, Sweden and Norway all decided to keep the names of their respective and now separate currencies.

Denmark returned to the gold standard in 1924 but left it permanently in 1931. Between 1940 and 1945, the krone was tied to the German Reichsmark. Following the end of the German occupation, a rate of 24 kroner to the British pound was introduced, reduced to 19.34 (4.8 kroner = 1 US dollar) in August the same year. Within the Bretton Woods System, Denmark devalued its currency with the pound in 1949 to a rate of 6.91 to the dollar. A further devaluation in 1967 resulted in rates of 7.5 kroner = 1 dollar and 18 kroner = 1 pound.