Bank of Poland

From Wikipedia, the free encyclopedia

Bank Polski (the Bank of Poland) is the name of two former banks in Poland, each of which acted as a central bank. The first was founded by Franciszek Ksawery Drucki-Lubecki in 1828 in Congress Poland and functioned until 1885, when it was absorbed by the State Bank of the Russian Empire.

The second was founded in 1924 in the Second Polish Republic by Władysław Grabski and was liquidated in 1952.

Their legacy is continued by Poland's present central bank, the Polish National Bank, founded in 1945.

[edit] History

The first Bank of Poland was founded in Warsaw in 1828 by Prince Franciszek Ksawery Drucki-Lubecki. An institution of the government of the Kingdom of Poland, it was entitled with issuance of the Polish currency as well as control over the credit rates. It was also entitled with a concession to operate foreign currencies and buy off credits issued by foreign companies and banks.

Throughout its existence, the Bank of Poland was allowed to issue banknotes and coins up to the amount of its stock (initially 30,000,000 złotych, 42 millions in 1834 and 53 millions in 1841). As a legal entity, the bank also financed a number of important enterprises in Russian-held Poland. Between 1829 and 1837 it spent a large part of its income on road construction, until 1842 it was also the main sponsor of the coal mining development in the region of Zagłębie and the Old Polish Industrial Area around Skarżysko-Kamienna. Seriously crippled by administrative measures after the November Uprising, after the January Uprising it was made subordinate directly to the Russian Imperial Ministry of Treasury. During the period of liquidation of Polish institutions following the failed uprising, in 1870 it was deprived of the rights of a currency issuing organ and banned from giving long-term credits. On January 1, 1886 it was officially closed down and by 1894 its assets were swallowed by the State Bank of Russia.

When Poland regained its independence in 1918, it was lacking a central bank. Following the State Treasury Repair Act of January 11, 1924, minister Władysław Grabski created a new Bank of Poland as a joint stock company. Its stock was soon raised from the initial 100,000,000 złotych to 150 million, split onto 1.5 million shares. The bank was independent of the government of Poland, though it carried out its monetary policies. As the main shareholder, the President of Poland had the right to name the chairman and deputy chairman of the bank's board of trustees.

Until December 31, 1944 the bank had a monopoly for printing currency, with the gold reserves of 40% or higher. The dividend could not exceed 8% of income. In case of higher income the state treasury had the right to 50% to 66% of it. Prior to the Polish Defensive War of 1939, all of the gold reserves were evacuated from Poland to Paris and then to London and Canada. The Bank continued its functioning in exile, as the central bank of the Polish Government in Exile and financed most of its armed forces. In 1946 the remaining pre-war gold reserves were returned to the new communist authorities of Poland, while the Bank of Poland itself was closed down and finally swallowed by the newly-created National Bank of Poland in 1952.