National currency of the Republic of Lithuania in the interwar period
After the restoration of the State of Lithuania on 16 February 1918, the Seimas and the Government began discussing the issue of the adoption of national currency. But only in 1922 the Seimas urgently passed the laws on the adoption of the national currency unit and on the establishment of the Bank of Lithuania. The national currency unit was named the litas and a one-hundredth part of it – as centas.
The contract on the production of banknotes was signed on 29 August 1922 with the Andreas Haase printing house in Prague. It obligated to deliver the banknotes to Kaunas in November-December; hence the new currency could only start circulating from early 1923. Rising inflation prompted to take a decision that, prior to the appearance of permanent banknotes, provisional currency should be produced and put into circulation. The contract on its production was signed with the Otto Elsner printing house in Berlin on 31 August. The printing house had different drawings of banknotes and background patterns, thus all that was to be done was to choose desirable drawings and add a text and a Vytis to them. The printing plates were produced within three days and the printing house promised to print and deliver the banknotes within three weeks. The provisional currency in six denominations was dated 10 September 1922. Due to the urgency of the order, the banknotes were small, their drawings were simple, and their quality was poor.
By order of the Ministry of Finance the litas was to be adopted on 1 October 1922, yet actually the exchange of litas started one day later, as 1 October was Sunday. Therefore, the official date of the adoption of the national currency is considered to be 2 October 1922 when the exchange of Ostmarks into litas started, at the fixed official rate of 1 litas to 175 auksinas. Tight monetary policy of the Bank of Lithuania helped maintain the litas exchange rate stable even during the years of economic crises.
The permanent banknotes in twelve denominations dated 16 November 1922 were printed at the Andreas Haase printing house in Prague. Their designs were created by A. Varnas. Their quality was higher than that of the provisional notes which were produced to their graphic designs yet printed without watermarks, using unsophisticated techniques, and thus they have not avoided counterfeiting.
With a considerable increase in currency in circulation in 1924, the Bank of Lithuania, seeking to facilitate payments and settlements, decided to issue banknotes of higher denominations – 500 litas and 1000 litas. Bradbury, Wilkinson & Co Ltd of England printed the banknotes. Banknotes were high quality and of an exclusive design, they were produced on special paper with watermarks, colour fibres, an intricate background drawing, and the serial numbers and prefixes of the banknotes were printed in red ink.
Having ascertained the perfectly accomplished work and the high quality of the banknotes it was decided to print all other Bank of Lithuania banknotes at the same English company. In 1927, the General Council of the Bank of Lithuania decided to print new 10 litas notes to the design of the artist A. Žmuidzinavičius. The banknotes of subsequent issues were printed to the designs of A. Galdikas. The contracts with the English company provided for high technological requirements for banknote printing: the main drawings were to be printed using hand engraved steel plates. The 10, 50 and 100 litas banknotes appeared in circulation in 1928, 5 litas notes – in early 1930, and the last 20 litas notes – in 1931.
In was planned to issue a 10th anniversary litas banknote in 1938 as well. On that occasion, the artist A. Galdikas created a design for the banknote, the front of which featured a portrait of A. Smetona and a facsimile of the Act of Independence, and the back of it – a picture of the Signatories to the Act of Independence. The banknote was not issued into circulation, only specimen banknotes are known.
On 20 June 1924, the Seimas passed the Law on Coins, granting the State Budget the exclusive right to mint metal currency and issue it into circulation. The bronze coins were minted at King’s Norton Metal Works of Birmingham, the silver ones – at the Royal Mint in London. The coins were put into circulation in early 1925. In 1936, the Spindulys Mint in Kaunas started minting coins as well. The author of the coins was the artist J. Zikaras. In preparation for marking the 20th anniversary of Independence of Lithuania, a 10 litas silver commemorative circulation coin, with a portrait of President A. Smetona and the Columns of Gediminas, was issued into circulation.
When Lithuania was occupied by the Soviet Union on 15 June 1940, Soviet currency, the rouble, was put into circulation next to the litas. The circulation of litas was banned completely on 25 March 1941. It was not until 25 June 1939 that the litas reappeared after a long break.