History

The Bank of England has issued banknotes since 1694. The Bank of England has not always had a monopoly of note issue in England and Wales. Until the middle of the Nineteenth Century, private banks in Great Britain and Ireland were free to issue their own banknotes.

Provincial banknote issues

Attempts to restrict banknote issue by other banks began in 1708 and 1709, when Acts of Parliament were passed which prohibited companies of more than six people to set up banks and issue notes. Many provincial banks, however, were small enough to escape this prohibition, and money issued by provincial English and Welsh banking companies continued to circulate freely as a means of payment.

Gold shortages

Gold shortages in the 18th Century caused by the Seven Years' War and war with Revolutionary France began to affect the supply of gold bullion reserves, giving rise to the "Restriction Period". The result was that the Bank was often unable to pay out gold for its notes, and the bank started to issue lower denominations of £1 and £2 notes. Other private note-issuing banks were affected by the gold shortage, with many going out of business, rendering their banknotes worthless. Confidence in the value of banknotes was adversely affected.

Restriction of banknote issues

The Country Bankers’ Act 1826 relaxed some of the laws of 1709, allowing joint-stock banks with more than six partners to issue notes, as long as they were over 65 miles from London. This Act also allowed the Bank of England to open branches in major provincial cities, enabling better distribution for its notes.

Introduction of legal tender

With the passing of the Bank Notes Act 1833, Bank of England notes over £5 in value were first given the status of "legal tender" in England and Wales, effectively guaranteeing the worth of the Bank's notes and ensuring public confidence in the notes in times of crisis or war. The Currency and Bank Notes Act 1954 extended the definition of legal tender to ten-shilling and £1 notes; unlike the 1833 act, this law also applied to Scotland, meaning that English notes under £5 were classed as legal tender. The Bank of England ten-shilling note was withdrawn in 1969 and the £1 was removed from circulation in 1988, today leaving a legal curiosity in Scots law whereby there is no paper legal tender in Scotland[6] (Scottish notes were not included in the 1833 or 1954 acts).

Note-issuing monopoly

The Bank Charter Act 1844 began the process which gave the Bank of England exclusive note-issuing powers. Under the Act, no new banks could start issuing notes, and note-issuing banks were barred from expanding their note issue. Gradually, these banks vanished through mergers and closures, and their note-issuing powers went with them. The last privately issued banknotes in Wales were withdrawn in 1908, on the closure of the last Welsh bank, the North and South Wales Bank. The last private English banknotes were issued in 1921 by Fox, Fowler and Company, a Somerset bank. Today, the Bank of England has a monopoly on banknote issue in England and Wales.

Note printing

Notes were originally hand-written; although they were partially printed from 1725 onwards, cashiers still had to sign each note and make them payable to someone. Notes were fully printed from 1855, no doubt to the relief of the bank's workers. Until 1928 all notes were "White Notes", printed in black and with a blank reverse. During the 20th century White Notes were issued in denominations between £5 and £1000, but in the 18th and 19th centuries there were White Notes for £1 and £2.

The 20th century

In the twentieth century, the Bank issued notes for ten shillings and one pound for the first time on 22 November 1928 when the Bank took over responsibility for these denominations from the Treasury which had issued notes of these denominations three days after the declaration of war in 1914 in order to remove gold coins from circulation.

In 1921 the Bank of England gained a legal monopoly on the issue of banknotes in England and Wales, a process that started with the Bank Charter Act of 1844 when the ability of other banks to issues notes was restricted.

The first coloured banknotes were issued in 1928, and were also the first notes to be printed on both sides. At the start of World War I, the UK government issued £1 and 10-shilling Treasury notes to supplant the sovereign and half-sovereign gold coins. World War II saw a reversal in the trend of warfare creating more notes when, in order to combat forgery, higher denomination notes (at the time as high as £1,000) were removed from circulation.

As of 13 March 2007 the Bank of England banknotes in circulation, known as Series E, did not exceed £50. The notes were as follows:

5 pound note depicting Elizabeth Fry, showing a scene with her reading to prisoners in Newgate Prison.

10 pound note depicting Charles Darwin, a hummingbird and the HMS Beagle.

20 pound note depicting Sir Edward Elgar, with a view of the west face of Worcester Cathedral.

50 pound note depicting Sir John Houblon, with a view of his house in Threadneedle Street.