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commerce because there wasn’t enough money circulating. The Swedes had a word for a banking system, but not the system itself.
    An outsider would change that.
    Hans Witmacker was born in 1611 in what is now the Latvian capital of Riga, the son of a successful Dutch merchant. As a young man, he went to work as an entrepreneur in Amsterdam, which had the world’s most highly developed banking system at the time. At the age of twenty-eight, Witmacker was jailed for failing to pay his debts. Once released, he made his way to Stockholm, then a bustling world capital of forty-five thousand people, to remake himself. He even took on a new name: Johan Palmstruch.
    No portraits of Palmstruch or descriptions of his personal manner have survived. But it seems fair to assume that he was a smooth talker. He must have conveyed seriousness, probity, and wisdom and been able to make people trust him without a second of doubt. Those abilities were surely coupled with enough charm and charisma to endear him to the wealthy and powerful. If that wasn’t the case, none of what happened next makes any sense.
    King Karl X Gustav was hoping to realize Gustavus Adolphus’s dream of establishing a bank that would finally modernize Swedish commerce. He trusted a forty-five-year-old foreigner who presumably talked a good game about his knowledge of the Dutch banking system. By royal decree, the king authorized the creation of Stockholms Banco on November 30, 1656, to be run by Johan Palmstruch. It is unclear whether he knew anything of Palmstruch’s checkered past.
    Palmstruch certainly knew how to cover all his political bases. Half of the bank’s profits were to be given over to the king. And Palmstruch gave more than a dozen powerful Swedes, the chancellor of the realm and the president of the board of trade among them, a share of the bank’s profits without requiring them to put up any capital. One of those shareholders was later named by the king as “ chief inspector of the banking system ”—which, it is safe to say, isn’t currently considered a best practice in the field of bank regulation.
    Palmstruch, not unlike the investment bankers who were inventing new mortgage securities in the 2000s, was a master of what is now called financial innovation. There were numerous problems attached to using copper as the nation’s official currency standard, as Sweden had done since 1624. For one thing, when copper is stored in bank vaults, it can’t be used for all the other practical uses that it’s good for. And as later governments that tied the value of their money to a precious metal have learned, having a copper-based currency created wild swings in the value of money due to factors beyond any one country’s control. When the German economy was devastated following the Thirty Years’ War, for example, it dramatically drove down the price of copper and thus caused a collapse in the value of Sweden’s currency.
    Then there was a more practical problem, one specific to a country that had recently begun to issue coinage as not so pocket-sized metal plates: Copper is really heavy. A ten-daler plate , the most common unit of currency, measured about twelve by twenty-four inches and weighed more than forty-three pounds. It was enough to buy sixty-six pounds of butter or thirty-three days of work from an unskilled laborer. The copper plates still turn up now and again in the waters around Stockholm, because when one was dropped while being loaded or unloaded onto a ship, there was no retrieving it. Daler plates were, presumably, hell on bank tellers’ backs.
    Palmstruch’s first innovation was to hold the giant plates in Stockholms Banco’s vault, while offering a paper note as a receipt. This idea was compelling to King Karl X Gustav. In the bank’s charter, he mentioned the “ good convenience ” Swedish subjects would receive in the form of relief from “hauling and dragging and other trouble that the copper coin entails in its