Inequality Challenged and Restored

In the 1710s, under pressure from an ongoing war, Sweden’s absolute king, Charles XII, implemented a number of fiscal and monetary measures that displayed a disdain for traditional privileges and carried a potential for social change. Taxation was made progressive and credit became more important to finance the war. Liquidity was radically expanded, most significantly by the release of very large amounts of fiat coins. Following the death of Charles XII in November 1718, there was a political reaction against the war policies and the fiscal and monetary measures were reversed, resulting in the dismantling of royal absolutism and a partial government default. This study consists of two parts. In the first, we investigate the impact of the war policy and the monetary measures of Charles XII’s regime on the social redistribution of resources in Swedish society, especially in the years 1715 to 1718. In the second, we focus on how the socioeconomic changes were addressed by political agents between the death of Charles XII and the default of 1719. Our results show that the fiat money permeated the economy and reached all social groups, and that in some locations its distribution upset the prevailing social order. Peasants and other low-ranking groups were targeted by the partial default, which largely deprived them of their monetary assets.