THE 10-DINAR BANKNOTE-THE LAST BANKNOTE OF THE KINGDOM OF SCS AND THE FIRST BANKNOTE OF THE KINGDOM OF YUGOSLAVIA

Poslednja emitovana novčanica Kraljevine SHS je od 10 dinara, stalnog drugog izdanja tipa 1. Ona nosi datum 26.5.1926, a puštena je u opticaj 25.7.1928. godine. Ista novčanica, ali sa datumom 1.12.1929, puštena u opticaj 21.1.1931. godine, označena je kao novčanica tipa 2. Obe novčanice imaju istu veličinu, crteže i boje, jedino se razlikuju: u nazivu Narodne banke koja je kod prve NB Kraljevina SHS, a kod druge NB Kraljevina Jugoslavija; kod člana uprave NB i guvernera, umesto D. K. Protića je Andrija Radović i umesto Đorđa Vajferta je Ignjat Bajloni. Novčanice tipa 1 su izrađene u Banci Francuske, a tipa dva u novoosnovanom Zavodu za izradu novčanica Narodne banke Kraljevine Jugoslavije.


Legal Stabilisation of the Dinar
The monograph entitled The National Bank 1884-1934 records the economic and financial conditions in the country and the business activities of the Ministry of Finance and the National Bank in the period before and during the circulation of this 10-dinar banknote.
"Further strengthening of the dinar, at the beginning of 1925, was much more precarious. Some of our products, and above all our most important export item -wood, have lost the ability to compete on foreign markets, becoming costly to the extent that their export was almost disabled. The policy of "strengthening the dinar in stages" that attracted speculators "a la hos" and just as rapidly drove the dinar exchange rate to skyrocket, ultimately caused adverse consequences. This was the moment when one could see that the constantly strengthening dinar is almost no less evil than the constantly weakening dinar, and that it is best for the economy when the currency rate is stable.
On 2 January 1925, the dinar started off with a rate of 7.935, climbed to 9.35 at the end of July, and finished the year with a rate of 9.15 against the Swiss franc...At that time it could easily have exceeded 10 Swiss francs had there not been an intervention...The National Bank, in agreement with the Ministry of Finance, purchased all foreign currency on the stock exchange (the so-called surpluses), which in free-trading caused the strengthening of the dinar. The National Bank started offering the dinar, which allowed it to neutralize the negative effect of speculations." The Board of Directors of the National Bank, in order to better protect and strengthen the dinar, proposed to continue with the previous work on the purchase and sale of foreign currency in order for these interventions to prevent fluctuations in the value of the dinar in the money market. Moreover, it was necessary to prevent the dinar from rapidly weakening or strengthening as a result of speculation, as well as to ask the Minister of Finance to define a permanent principle for future work on the dinar, through a decision of the Ministerial Council, but also by the law. The Minister of Finance, Dr Stojadinović, accepted these proposals, which resulted in a period of practical stabilisation that lasted for six years, until the legal stabilisation of the dinar.
"Having found himself in the situation where, due to the scarcity of funds, he had to abandon all of his previous work on the defence of the dinar, the Minister of Finance quickly decided to create new funds by amending the Law on the National Bank. Since the need was urgent and the regular procedure for amending the law was slow, the Minister proposed to the Parliament, along with the draft law on budgetary twelfths for December 1923, the interpretation of the provision of Art. 20 of the Law on the National Bank, according to which the banknotes issued for the purchase of promissory notes and checks on foreign markets pursuant to Art. 11 Item 1 of the Law on the National Bank shall not be included in the regular contingent which the Bank may issue for its own account if it does so on account of the state." The Assembly adopted this proposal by the Minister and enacted it together with the budget twelfths. Thereby, a formal possibility was created for the efficient implementation of the currency policy. This interpretation provided the National Bank with funds that, according to the order of the Ministry of Finance, could always buy all the foreign currency that appears on the market in order to prevent the strengthening of ulaze u redovan kontingent koji Banka sa svoje strane može izdati ako taj posao vrši za račun državni." Skupština je usvojila ovaj ministrov predlog i ozakonila ga zajedno sa budžetskim dvanaestinama. Na taj način je bila stvorena i formalna mogućnost za efikasno sprovođenje valutne politike. Ovo tumačenje je obezbedilo Narodnoj banci sredstva sa kojima je po nalogu ministarstva finansija mogla uvek kupovati sve devize koje se pojave na tržištu u cilju da spreči jačanje dinarskog kursa i da iz tog fonda vrši prodaju deviza uvek kada bi kurs dinara usled velike tražnje pokazivao tendenciju padanja. Pored toga, istim Zakonom o dvanaestinama ovlašćen je bio ministar finansija da zaključi nov ugovor o tom poslu sa Bankom, kojim bi dopunio onaj iz 1921. godine o nabavci deviza za državna plaćanja. Ministar finansija je ujedno u cilju kontrole nad deviznim stokom dobio i ovlašćenje da "po odobrenju Ministarskog saveta, a u sporazumu sa Narodnom bankom, određuje koliki stok deviza kod Narodne banke treba da bude".

Tip 1
Novčanice od 10 dinara (stalno II izdanje, tip 1) u potpunosti su izrađene u Banci Francuske ( the dinar exchange rate and sell foreign currency from that fund whenever the exchange rate of the dinar would, due to high demand, experience a tendency to decline. In addition, the same Law on Budget Twelfths authorised the Minister of Finance to conclude a new contract on this deal with the Bank, which would supplement the one from 1921 on the purchase of foreign currency for state payments. At the same time, in order to control the foreign currency stock, the Minister of Finance was given the authority to "define the amount of foreign currency in the National Bank with the approval of the Ministerial Council, and in agreement with the National Bank". The period of practical stabilisation of the dinar is determined to have lasted from August 1925 to 28 June 1931, therefore covering a period of almost six years. For all that time, the dinar kept the same parity against one of the most consolidated global golden currencies, the Swiss franc, and thus against other foreign currencies, if they were stable. This parity amounted to 9.12 to 9.13 Swiss francs per 100 dinars. The dinar was so stabilised that it fluctuated less than any gold currency. For all that time, the total international payment transactions developed completely normally and without disruptions. In a purely technical sense, the dinar was a currency of golden foreign currency standard; it could at any moment and for any justified amount have been replaced for gold currency.

Type 1
The 10-dinar banknotes (permanent II issue, Type 1) were all created in the Banque de France in Paris, but the exact number produced is not known. Based on the available documents it is assumed that in 1926, the production of 20 million pieces of this banknote was ordered, followed by 10 million in 1927, and another 30 million pieces in 1928. All in all, a total of 60 million pieces were ordered in the nominal value of 600 million dinars. The exact amount of produced banknotes cannot be determined because the National Bank's records from 1930 keep track of their number by putting them together with the 10-dinar banknotes Type 2, which were created in the newly established Institute for Manufacturing Banknotes and Coins of the National Bank of the Kingdom of Yugoslavia. From the existing documentation we learn that from 24 November 1927 to 14 May 1930 a total of 49,238,766 pieces of the 10-dinar Type 1 banknotes were received from the Banque de France in Paris.

Type 2
According to the National Bank's records, the 10-dinar banknotes bearing the date 1 December 1929 are designated as the notes of the permanent II edition, such as the ones from 1926, but as the Type 2. The 1930 report of the National Bank states that at the end of that year, a total of 49,344,701 pieces of Type 1 and 2 banknotes were made. If it is known that from 24 November 1927 to 14 May 1930, a total of 49,238,766 pieces of Type 1 banknotes arrived from Paris, it can be concluded that the difference between these two amounts -106,000 -is a possible number of Type 2 banknotes that were created at the National Bank's Institute for Manufacturing Banknotes and Coins.
This 10-dinar banknote from 1929 has many similarities with the one from 1926, however, there are also differences that relate only to the text given on the banknote. Namely, Type 2 banknotes have the same size, drawings and colours as those from 1926. What makes them different is that the issuer changed to the National Bank of the Kingdom of Yugoslavia, since the Kingdom of Serbs, Croats and Slovenes on 3 November 1929 changed its name to the Kingdom of Yugoslavia, in which King Aleksandar Karađorđević was still the king.
Apart from the name of the state and the year of issuing, the remaining changes refer to the member of the management of the National Bank, now Andrija Radović, as well as the Governor, now Ignjat Bajloni. Unlike the Type 1 banknotes that were all created in France, this revised existing cliché was made in the National Bank's newly established Institute.
The banknote was released into circulation on 21 January 1931 in an unspecified amount since the National Bank, in its reports from 1931, published only the aggregated data on the quantities of all banknotes. The withdrawal from circulation of these and Type 1 banknotes was undertaken from 4 January 1933 to 4 May 1936.

Institute for Manufacturing Banknotes and Coins
U pon the founding of the Kingdom of Serbs, Croats and Slovenes after the First World War, the need for establishing a special organisational unit of the National Bank, which would deal with the production of banknotes and securities, was becoming ever more urgent because, ever since the liberation wars against Turkey, all banknotes were made in other countries, most often in France. On 30 December 1925, the Main Board of the National Bank passed a decision on the establishment of a domestic institute, the construction of which began in August 1927 in Topčider, Belgrade. The architect Josif Najman developed the project of the Institute in the likeness of the same purpose facilities at the Banque de France. The grand opening of the Institute for Manufacturing Banknotes and Coins was held on 26 January 1930. The training of staff for the work at the Institute was supervised by the Director of the Banque de France, since the entire technology for making banknotes was French, and among the best in the world at the time. At the beginning of its operations, the Institute for Manufacturing Banknotes and Coins had 137 employees. The annual production was 30 million pieces of banknotes, which matched the national need for banknotes. The production of government bonds did not start until 1934.