Bank Notes History

A BRIEF HISTORY

OF BANKNOTES BY WILLIAM SIMMONDS Paper money is a way of reducing the amount of coins that you have in your pocket. It can be folded and put into a purse, for a lady, or a wallet, for a gentleman. The first ever recorded use of paper money was in the seventh century by the Chinese. The practice of paper money did not become widespread in Europe until a thousand years later. The 16th century goldsmith-bankers began to accept deposits, make loans and transfer funds. They also gave receipts for gold coins, deposited with them. Gold was the favoured way of financing. In 1694 the Bank of England was established in order to raise money for King William III’s war against France. Almost immediately the bank started to issue notes in return for deposits. The crucial feature that made Bank of England notes a means of exchange was the “promise to pay the bearer the sum of the note on demand.” This promise is shown on banknotes today. The Bank of England is often referred to as, “The Old Lady of Thread Needle Street.” Why is this? The gold, needed to finance William’s war with France, was becoming hard to obtain and the Bank of England had to stop paying out gold for its notes... It issued £1 and £2 notes instead of the usual gold coins. This became known as, “The Restriction Period.” It lasted until 1821 when gold sovereigns replaced the £1 and £2 notes. The restriction period prompted Irish playwright and MP, Richard Brinsley Sheridan, to refer angrily to the Bank as “an elderly lady in the city.” This was quickly changed by cartoonist, James Gilray to the “Old Lady of Thread Needle Street,” a name that has stuck ever since.

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The First World War saw the link with gold broken once again. The government needed to preserve its stock of gold bullion and the bank ceased to pay out gold for its notes. In 1914 the Treasury printed and issued 10 shilling and £1 notes, a task that returned back to the Bank of England in 1928. The gold standard was partially restored in 1925 and the bank, was once again, obliged to exchange its notes for gold but only in multiples of 400 ounces or more. Britain finally left the gold standard in 1931 and the note issue became entirely fiduciary, that is wholly backed by securities instead of gold.

HOW ARE BANKNOTES PRINTED? The Bank of England has issued banknotes since 1694 and today all banknotes are printed by the Thomas De La Rue group of security printers. This is now known as De La Rue Currency a subsidiary of De La Rue plc, and are situated in Loughton in Essex One of the aims, at every stage of printing a banknote, is to ensure that the banknote is as difficult to counterfeit or to forge. This is done by the three different printing processes:  OFFSET LITHO  INTAGLIO  LETTERPRESS OFFSET LITHO – The printing plates transfer the ink to the paper via an intermediate offset roller. This process is used to print most of the front and the back of the note except for the portrait of Her Majesty the Queen, the lettering and the numbering. OFFSET printing involves a number of separate plates with different colours superimposed in close register to produce high quality clearly defined images. INTAGLIO – This process is used to add the portrait of Her Majesty the Queen and the raised print on the front of the note. The ink rests in grooves engraved in the printing plate. When the plate comes into contact with the paper the ink is forcibly “Drawn “from the plate onto the paper under very high pressure. This produces the raised print which is one of the characteristics that gives Bank of England notes their distinctive feel. LETTERPRESS – This process is used for the cipher and serial numbers on the font of the note. Ink is transferred onto raised letters and digits which are then printed onto the note. Bank of England notes are printed on paper made by specialist paper manufacturers and is made up of cotton fibre and linen rag. This makes for a tougher and durable banknote.

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WHO CAN WE EXPECT TO SEE ON OUR BANKNOTES? Many of the latest series of banknotes have, or have .had famous people shown on them. Many of these have been suggested by members of the public. Out of 149 famous people suggested, 13 have already been used in various new issues of banknotes some of the people suggested are shown below. SUBJECT Nancy Witcher Langhorne Astor Edith Cavell Robert Falcon Scott

BIRTH 1879

DEATH 1964

PROFESSION/BACKGROUND First Woman MP

1865 1868

1915 1912

Reginald Mitchell William Willberforce Lady Mary Wortley Montagu Thomas Chippendale Roger Bacon John Capability Brown Geoffrey Chaucer

1895 1759 1689

1937 1833 1762

Nurse British Royal Navy and Antarctic Explorer Aeronautical Engineer Social Reformer Feminist Author

1718

1779

Furniture Designer

1220 1716

1292 1783

Philosopher Landscape Architect

1340

1400

Writer

These are some of the many celebrities and famous people who are destined to possibly appear on our banknotes, some time in the future. If there are any famous people, or celebrities, that you think are suitable to appear on any of our banknotes the Bank of England would welcome your suggestions. You can contact the Bank of England, on their web site, at www.bankofengland.co.uk These are only a small selection of the famous people, and celebrities, that the general public have already suggested should appear on British banknotes.

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COUNTERFEIT BANKNOTES Many questions often get asked about counterfeiting and the forgery of banknotes. Andrew Bailey, the current Chief Cashier of the Bank of England, says, “There is no way that a banknote can be made completely counterfeit and forgery proof.” “What can be done is to make the counterfeiting and forging of banknotes extremely difficult for the counterfeiters and forgers.” Variable optical Ink or a variable optical device are some of the devices that can be used to make it difficult for the forgers. Polymer, which is a special kind of plastic that is only used in the manufacture of banknotes in Australia, is yet to be used in the manufacture of British banknotes. In 2008 £13.7 million of counterfeit notes were taken out of circulation... just like the one shown below.

The note has no visible watermark... This is a counterfeit note that has possibly been photocopied using a colour photocopier. Photocopying a banknote will not copy a watermark and is a perfect example of a counterfeit or forged note. With the advancement of technology there will always be counterfeiters and forgers. This is why the production of banknotes are made to the specifications you have just been reading about. The counterfeiter will go to any lengths to disrupt our economy and finances. So you can see how important it is to make the counterfeiter’s job difficult. This is just a synopsis of the History of British Paper Money. There are many other interesting topics relating to British Paper Money. I collect British banknotes & foreign banknotes. My hobby is known as notaphilly and I am known as a notaphillist.

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BIBLOGRAPHY www.bankofengland.co.uk English Paper Money by Vincent Dugglery W Wary for allowing me to use his image of a counterfeit £20 note.

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