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A wadded history of the bank note

10 September, 2014Eoghan Hughes

With the Bank of England set to announce commercial bank note printer and passport manufacturer, De La Rue, as its preferred provider of new banknotes, we thought we’d take a quick look at the history of the printed note.

While “physical” money can trace its roots back to as early 900bc in Ancient China (metal tokens were used to barter for goods and services), it was not until c.1300 where paper money began to be used widely. European merchants, it is believed, found the transporting of metal coins too cumbersome to transport long distances and began to use paper and even cloth as a lighter substitute. This “paper” money however was unlikely to resemble anything like the printed notes we see today however; having more likely to have resembled IOUs, or cheques.

The first recognisably printed notes appeared in 1853, when the Bank of England decided to centralise the money-printing process, replacing the handwritten and cashier-signed alternatives that previously existed.

An article to commemorate the printed note also reveals many other interesting “scraps” of information about bank notes:

  • The contract with De La Rue will see plastic, rather than paper notes being produced
  • There are 3bn banknotes in circulation, worth £58bn
  • 760 million banknotes are issued each year, while 845 million are destroyed – the destroyed ones being turned into compost
  • £1 banknotes were in issue from 1796 until 1988
  • Despite notes being printed, each one has the signature of the Bank of England’s chief cashier
  • Until the UK removed itself from the Gold Standard in 1931, notes could be exchanged for lumps of gold of the same equivalent
  • There is a difference between “legal currency” and “legal tender” – the latter which relates to the settlement of debt

As you might expect, ifs University College has also played its part in the history of the bank note, too. Since its formation as the Institute of Bankers, the organisation received more than 30,000 historic items from the Bank of England. The Paper Money Collection, which was permanently gifted to the British Museum in 2009 contains items dating back to the 14th Century and includes a number of rare local and regional bank notes and an example of one of the earliest banknotes to be issued in Europe. The collection has also been the recipient of note number 9 of any new issue from the Bank of England, and as a result it represents an important historical record of the development of modern money.